Appendix A: Audit Criteria & Conclusion

• Conclusion on Audit Criteria
• Audit Objective 1: Management controls, risk management frameworks, and overall governance structure are adequate and effective
• Audit Objective 2: Controls are in place and effective to ensure accuracy of financial and operational information are effective.

Based on a combination of the evidence gathered through documentation examination, analysis and interviews, each of the audit criteria listed below was assessed and a conclusion for the audit criteria was determined using the following definitions:

Audit Criteria & Conclusion

Conclusion on Audit Criteria	Definition of Opinion
Criteria Met - Well Controlled	Well managed or no material weaknesses noted, controls are effective and sustainable.
Criteria Met with Exceptions - Controlled	Requires minor improvements.
Criteria Met with Exceptions - Moderate Issues	Requires improvement in the areas of material financial adjustments, some risk exposure.
Criteria Not Met - High Impact -Significant Improvements	Requires significant improvements in the area of material financial adjustments, serious risk exposure.

The following are the audit criteria and examples of key evidence and/or observations noted which were analyzed and against which conclusions were drawn. In cases where significant improvements and/or moderate issues were observed, these were reported in the audit report.

Audit Objective 1:  Management controls, risk management frameworks, and overall governance structure are adequate and effective

Audit Criteria	Conclusion	Examples of Key Evidence/Observation
Risks to the achievement of Program objectives are identified.	Moderate Issues	Results-Based Management and Accountability Framework / Risk-Based Audit Framework (RMAF/RBAF) are in place and satisfactory However, no contingency plan for third-party program delivery (Interviews, review of relevant files)
A formal risk management process is implemented within the Program that includes communicating risk and control information to appropriate areas.	Moderate Issues	RMAF/RBAF in place and satisfactory However, no formal rigorous risk mgmt process in place (Interviews, review of risk assessment, file review)
Policies and procedures and roles and responsibilities are developed and communicated to ensure the Program is consistently applied within the approved terms and conditions and other relevant policy requirements.	Well Controlled	Application Guide Financial viability assessment template Program procedural documents External web site
Appropriate resource levels are provided and resources have the necessary capabilities.	Well Controlled	Training plan and training budget Centre of Expertise training
Performance and financial plans are developed to demonstrate how Program objectives will be achieved.	Moderate Issues	Performance measurement plan in place No adequate financial plan for all program components (Interviews, review of relevant files)
Program performance measures, associated activities, and desired outcomes are clearly defined, measurable, and attainable.	Controlled	RMAF/RBAF Indicators in RMAF have no specific measurable targets
Appropriate governance process through which the Program is managed and through which values and goals are established, communicated, and monitored.	Moderate Issues	Management meetings not documented No formal management reporting package (interviews)
Ongoing monitoring activities are conducted to ensure Program activities result in appropriate outcomes and appropriate expenditures in accordance with the Program's strategic and annual plans.	Moderate Issues	Management meetings not documented No formal management reporting package No adequate tracking of budget and expenditures (interviews, review of relevant activities)
Timely and accurate performance information and financial reports are used by Program management.	Moderate Issues	Statistical reports  and summary reports are produced by Program No formal management reporting package on regular activities in place (Interviews, review of relevant activities)
Results are communicated to required parties to account for Program funds and demonstrate progress towards achievement of objectives.	Well Controlled	Performance reporting database Reports on Plans and Priorities / Departmental Performance Report (RPP/DPR)
Identified Program and project issues are resolved quickly.  Lessons learned through Program monitoring activities are incorporated within the Program's management practices.	Well Controlled	Program improvements as indicated in documentation

 

Audit Objective 2:  Controls are in place and effective to ensure accuracy of financial and operational information are effective.

Audit Criteria	Conclusion	Examples of Key Evidence/Observation
Recipients are assessed for eligibility using established criteria which are based on the Program's Terms and Conditions.	Well Controlled	Eligibility assessment Standard application forms
Funding decisions are fair, transparent, free of bias, and based on Program terms and conditions.  More deserving projects are funded at an appropriate level.	Well Controlled	Recommendation for Authorization Form Review and approval by management Ministerial letter
Funding decisions are made and communicated to recipients in a timely manner.	Moderate Issues	Approval process longer than expected Program issues payment for retroactive activities (file review)
Funding commitments resulting from individual agreements do not exceed available Program budget/funds (FAA Section 32 certification)	Significant Improvements (In part addressed to the FMB.)	Funds committed prior to Section 32 approval Reconciliation not documented and no independent validation in SAP (interviews, review of relevant documents)
Agreements are meaningful, complete, and consistent with Program terms and conditions and Departmental templates and are reflective of overall FAA and TBS requirements and authorities.	Controlled	Standard agreements used Minor issues noted regarding quantitative result requirements / reporting and more specific expected outcomes
Funding agreements are reviewed, approved and completed in a timely manner.  Appropriate levels of approval are obtained.	Controlled	Ministerial approval properly obtained and needs to be evidenced on file Ensure that all required documents are kept on file.
Payments made to recipients accurately reflect funding agreements and are compliant with TB Policy on Transfer Payments.	Well Controlled	Payment schedule included in agreements Holdbacks used
Recipient performance and financial reporting is in line with the funding agreement and provides the necessary information.	Well Controlled	Interim reports Final reports Analysis of reports
Payments are processed in accordance with the FAA requirements (Section 34) to ensure funding is used for the purposes agreed and any money owed to the government is collected.	Moderate Issues	Transfers of Section 34 authorities not appropriately documented, communicated and activated according to Finance's requirements (Walkthrough, file review)
Continuous monitoring activities are conducted to determine compliance to Program Terms and Conditions and the funding agreement and to provide feedback to recipients regarding opportunities for improvement.	Significant Improvements	Monitoring activities conducted, but not adequately documented No formal risk-based monitoring plan (interview, file review)
Reporting systems and other supporting tools provide management with timely, accurate, and useful information and ensure consistent, efficient, and effective processes and procedures.	Controlled	Performance reporting database Grants and Contributions Information Management System (GCIMS)
Information is timely, accurate, and complete to ensure good decision making and results of funding agreements are communicated appropriately.	Moderate Issues	Performance measures included in agreements Industry reports are prepared Management meetings not documented Lack of an adequate financial plan which could be used for monitoring progress and achievement of program (interview, file review)

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