Audit of Investment Planning

Table of contents

Executive summary

Effective investment planning is essential to ensure that a department invests in its highest priorities and areas of greatest risk in achieving departmental objectives. Through investment planning, departments are expected to allocate resources to both existing and new investments, in a diligent and rational manner to support program outcomes and government priorities.

Agriculture and Agri-Food Canada’s (AAFC) current five-year investment plan covers the period of 2019-20 to 2023-24 and includes $560.5-million in planned spending for several investment categories: real property assets, information management / information technology (IM/IT), scientific equipment assets, and acquired services.

The Audit of Investment Planning was included in the Office of Audit and Evaluation’s 2019-20 Integrated Audit and Evaluation Plan due to the high materiality and complexity of AAFC investments and the risk of not investing in departmental priorities.

The objective of the audit was to determine whether an adequate management control framework was in place and functioning as intended to support investment planning.

The audit examined whether governance structures were in place to support horizontal integration and strategic investment planning for AAFC. The audit also examined whether adequate guidance and processes had been established to support the development of AAFC’s investment plans in compliance with the Treasury Board Policy on the Planning and Management of Investments. In addition, the audit assessed whether adequate monitoring and reporting were performed to inform investment decisions.

Overall, the audit found that AAFC had an adequate investment planning framework in place. AAFC had a core governance structure in place for investment planning with appropriate roles and responsibilities. Investment planning and prioritization processes were in place and being followed within separate investment categories. The Department also established a performance framework with adequate measures to monitor the implementation of its investment plan.

However, the investment planning framework was not functioning as intended, and its implementation could be improved by:

  • Strengthening the investment planning governance oversight to ensure it provides strategic, holistic oversight of AAFC’s investment planning and is commensurate with the materiality, needs, complexity, risk, and scope of investment projects.
  • Developing a process for ensuring appropriate prioritization for all investment categories.
  • Providing oversight and developing guidance on life-cycle costing of investments, and considering life-cycle costs when making investment decisions.
  • Considering the greatest risks to achieving departmental objectives when making investment planning decisions.
  • Reporting annually on the Investment Plan’s performance framework results to the appropriate governance body.

1.0 Introduction

1.1 Risk context and audit objective

Agriculture and Agri-Food Canada’s (AAFC) current five-year investment plan covers the period of 2019-20 to 2023-24 and includes $560.5-million in planned spending on the following investment categories: real property assets, information management / information technology (IM/IT), scientific equipment assets, and acquired services (see Table 1).

Table 1: AAFC Planned Investments for 2019-20 to 2023-24
Investment category Responsible branch Planned spending
($ Million)
Percentage
Real Property Assets Corporate Management Branch 172.0 31
IM/IT Information Systems Branch 118.7 21
Scientific Equipment Assets Scientific and Technology Branch 65.5 12
Acquired Services Corporate Management Branch and Information Systems Branch 204.3 36
Totals 560.5 100
Source: AAFC’s five-year Investment Plan 2019-20 to 2023-24

The three main branches involved in AAFC’s investment planning process are the Corporate Management Branch, Information Systems Branch, and Science and Technology Branch. These branches plan and manage real property, IM/IT projects, and scientific equipment investments respectively. The Corporate Management Branch is responsible for compiling AAFC’s investment priorities into the AAFC’s five-year investment plan, preparing the annual updates and submitting these to the Treasury Board of Canada Secretariat (TBS).

The Audit of Investment Planning was included in the Office of Audit and Evaluation’s 2019-20 Integrated Audit and Evaluation Plan due to the high materiality and complexity of AAFC investments, and the risk of not investing in departmental priorities.

The objective of the audit was to determine whether an adequate management control framework was in place and functioning as intended to support investment planning.

The scope of the audit included key activities that supported the Department’s investment planning process. The audit focused on the following higher-risk and complex investment categories: real property assets, IM/IT, and scientific equipment assets. The audit did not examine acquired services as they represented operational expenses.

The audit focused on the following areas:

  • Governance: Whether governance structures had been established with appropriate roles and responsibilities to support horizontal integration and strategic investment planning for AAFC.
  • Guidance and processes: Whether adequate guidance and processes had been established to support the development of AAFC’s investment plans and compliance with the Treasury Board Policy on the Planning and Management of Investments.
  • Monitoring and reporting: Whether adequate monitoring and reporting had been established to assess the implementation of the departmental investment plans and whether performance reporting was provided to inform senior management investment decisions.
  • COVID-19 pandemic: Impacts to the investment planning process due to the COVID-19 pandemic were assessed as part of the review of the governance, guidance, processes, monitoring, and reporting areas.

The audit team gathered evidence through various methods: conducted interviews with AAFC management and employees, performed analysis of investment planning documentation and data, and reviewed a sample of investments.

More details about the audit objective, scope, criteria, and approach are in About the Audit in Annex A.

1.2 Overview of investment planning

Effective investment planning is essential to ensure that a department invests in its highest priorities, while appropriately considering areas of greatest risk to achieving departmental objectives. Through effective investment planning, federal departments are expected to allocate resources to both existing and new investments, in a diligent and rational manner to support program outcomes and government priorities.

The Treasury Board Policy on the Planning and Management of Investments (the Policy) governs investment planning. The objective of the Policy is to ensure that the Government of Canada has the necessary assets and services in place to support program delivery to Canadians. This Policy requires departments to have effective governance, processes, systems, and controls for the planning and management of investments. It also requires federal departments and agencies to submit a five-year investment plan to the (TBS) at least every three years, and to provide an updated list of planned projects and programs annually between the five-year investment plan submissions.

The Departmental Management Committee approved AAFC’s current five-year Investment Plan 2019-2024 on April 15, 2019. As part of the five-year Investment Plan’s submission to TBS, AAFC included an Organizational Project Management Capacity Assessment. AAFC obtained a Level 3 capacity class rating as part of this self-assessment, which provides the Department with a project authority threshold of $10-million without requiring separate TBS project approval.

2.0 Observations

The following sections present the audit observations organized by the audit’s three primary focus areas: governance, guidance and processes, and monitoring and reporting.

Recommendations for improvement are provided after the observations. Management responded to each recommendation and provided the following:

  • an action plan to address each recommendation
  • a lead responsible for implementation of the action plan
  • a target date for completion of the implementation of the action plan

2.1 Governance

The Policy states that governance and oversight are to be effective for investment planning and project governance. Effective governance bodies are essential to oversee, direct, and monitor a department’s investments. Governance bodies should have appropriate and documented roles and responsibilities to support their oversight function. Governance bodies should provide strategic and holistic oversight to ensure that investments support the achievement of departmental objectives and priorities. The Policy requires governance to be proportionate to the materiality, needs, complexity, risk, and scope of projects.

2.1.1 Governance structure and oversight

Audit criteria: The audit examined whether governance structures had been established with appropriate roles and responsibilities and whether governance provided effective oversight to support horizontal integration and strategic investment planning.

What the audit found: The audit found that the Department had a governance structure in place for investment planning through two committees: The Investment Planning Committee (IPC) and the Departmental Management Committee (DMC). The audit examined the Terms of Reference for these committees and determined that the committees had appropriate roles and responsibilities in investment planning. However, the audit found that the governance committees were not adequately fulfilling their strategic and holistic oversight roles in investment planning and further clarification was needed to ensure that committee activities are proportionate to materiality, complexity, risk, and scope of investment projects, as required by the Policy.

Investment planning committee

According to the Terms of Reference, the IPC reports to the DMC and is co-chaired by the Chief Financial Officer and the Chief Information Officer. It includes Directors General from all branches except the International Affairs Branch. IPC’s mandate is to ensure that investments represent good value for money and align to AAFC’s strategic priorities.
Members are responsible for playing a corporate challenge role in the discussion of investments.

IPC's roles and responsibilities include:

  • Reviewing and recommending to the DMC at least annually recommended investments, alignment of the investments with the Department’s strategic direction, selection and prioritization of projects based on the contribution to the Investment Plan, and performance measures of the Investment Plan.
  • Advising the DMC on proposed investments and ensuring that the mix of investments is aligned with the Department’s strategic plan.
  • Providing assurance to the DMC that investments represent good value for money.
  • Advising the DMC on appropriate action to take in the event of deviations from the Investment Plan.
  • Ensuring the risk and complexity of AAFC’s investments are in line with the capacity of the Department.
  • Ensuring alignment with departmental project management procedures, including project gating decisions.

The audit team attended selected IPC meetings and reviewed the records of decision and meeting materials of all 13 IPC meetings held between April 2019 and September 2020 to determine whether the Committee was fulfilling its mandate.

The audit found that IPC did not fulfil its mandate to ensure that investments represent good value for money and align to AAFC’s strategic priorities. While the Committee met regularly, the meetings focused largely on overseeing individual projects, including approving project gating. The Committee did not focus on other core functions described in its Terms of Reference. For example, during the period examined, the IPC did not discuss the annual investment plan, including the overall investment portfolio and its alignment with the Department’s priorities and risks. The review of IPC meeting materials showed the following frequency of items being discussed:

  • Project gating – for approval: 13/13 (100%)
  • Investment portfolio reports – for information/discussion: 7/13 (54%)
  • Review of annual investment plan – to recommend for DMC’s approval: 0/1 (0%)
  • Review of annual investment performance framework results – for information: 0/1 (0%)

In general, the IPC reviews and approves project gating for projects over $400,000 and receives monthly reports for investment projects of $1-million and over. For example, the September 2020 investment portfolio reports covered 35 projects, which ranged in size from approximately $1 million to $39-million. There is no additional prioritization to ensure that the Committee’s work focuses more on higher risk or complex projects, such as investments
that impact all branches in the Department.

Departmental management committee

The DMC is chaired by the Deputy Minister and is comprised of branch heads and other senior management. As the decision-making body for investments, its roles and responsibilities included approving and monitoring the departmental investment plan, according to its Terms of Reference (April 2018). The audit found that the DMC was not adequately fulfilling this role.

For the 2020-21 annual planning cycle, the audit found that the DMC did not formally approve the investment plan. The investment plan’s projects were included in the approval of the Department’s budget. Embedding the investment plan in the Department’s budgeting process limited the DMC’s ability to provide strategic oversight of AAFC’s investment plan.

To gain a better understanding of the DMC’s role in investment planning oversight, the audit reviewed DMC’s investment planning-related meeting materials from the three prior years and found the following:

  • In 2017-18 and 2018-19, the DMC approved the annual Investment Plan. Members were briefed on the different investment categories, the approval process, sources of funds, and projects valued over $1-million. A listing of proposed projects was also provided as part of the annual Investment Plan.
  • In 2019-20, the DMC approved the five-year Investment Plan 2019-24 on April 15, 2019. Members were provided with an overview of planned projects in the context of funding pressures. A listing of proposed projects was also provided as part of the Investment Plan. The DMC then had a second discussion on May 7, 2019 on the prioritization of proposed projects and associated budget allocations, i.e. 2019-24 capital investments.

The audit found that the DMC did not clearly define the information it needs to provide effective, strategic oversight of the Department's investment plan.

Although the IPC and DMC are the only committees that have formally defined roles and responsibilities in the Department’s investment planning, some large investment projects have created additional governance structures in recent years, such as Director General- level and Assistant Deputy Minister-level Steering Committees. These may have created some duplication in governance oversight.

The audit found that, while the Department had a governance structure in place with appropriate roles and responsibilities, the committees were not adequately fulfilling their strategic and holistic oversight roles in investment planning to support horizontal integration. In addition, the core committees’ activities were not generally proportionate to the materiality, needs, complexity, risk, and scope of investment projects. As a result, the Department may not be optimizing its investments and resources to ensure that AAFC invests in its highest priorities and addresses the Department’s greatest risks in achieving departmental objectives.

Recommendation 1: Governance

The Assistant Deputy Minister of Corporate Management Branch, in consultation with the Information Systems Branch, Programs Branch, and Science and Technology Branch, should review and revise the roles and responsibilities of the governance bodies overseeing investment planning, including to determine the appropriate level of oversight to ensure investments support departmental objectives and priorities, and that governance activities are proportionate to the materiality, needs, complexity, risk, and scope of investment projects.

Management response and action plan

Agreed.

Corporate Management Branch, in collaboration with other branches, will review the current governance structure, and implement required changes.

 

Lead responsible: Assistant Deputy Minister of Corporate Management Branch

Target date for completion: June 2021

2.2 Guidance and processes

Guidance and processes provide employees with the necessary information and resources to support them in the development of AAFC’s investment plans in compliance with the Policy.

The Policy requires departments and agencies to have a strong investment management framework to direct the planning and prioritization of assets and services, to take into account the life-cycle costs of assets and services, and to consider the areas of greatest risk in achieving departmental objectives.

Overall, the audit found that branches had implemented an investment planning process that included guidance on how to prioritize investments. However, there was a lack of guidance and processes in areas such as department-wide prioritization, life-cycle costing, and consideration of corporate risks.

2.2.1 Investment planning and prioritization

The Policy requires departments to have a strong investment management framework to direct the planning and prioritization of assets and services. This includes providing information on the planning and approval process to follow and the criteria for prioritizing projects to direct the planning of investments.

Audit criteria: The audit examined whether there was a strong investment management framework to direct the planning and prioritization of investments.

What the audit found: The audit found that at the branch level, investment planning and prioritization processes were in place and being followed within separate investment categories. However, at the departmental level, there were no processes in place to prioritize investments across the three investment categories.

Branches provided guidance and tools for investment planning, which included call-out letters, associated instructions, and process documents to provide information on the annual investment planning process.

During the annual investment planning cycle, the Corporate Management Branch and Science and Technology Branch planned and prioritized real property and scientific equipment assets respectively. For IM/IT, all branches prepared their prioritized list of IM/IT investments, and the Information Systems Branch combined its IM/IT investments with those of other branches to generate a prioritized list of IM/IT projects for the whole department.

Next, the Corporate Management Branch coordinated a capital budgeting exercise with the other branches, which determined the funding allocation based on the prioritized lists of each of the three investment categories. The funding allocation approach for each branch was based on funding projects in progress, historical spending by investment category, and capital funding availability, after which the approved investment projects were compiled into a combined departmental investment plan.

The audit determined there was no department-wide prioritization across the three investment categories before the compilation of the departmental investment plan. The sample review of 24 investments confirmed that investments were prioritized and assessed based on different approaches within their respective branch.

Without a department-wide prioritization process, there is a risk that AAFC may not be prioritizing the most important investments for the department as a whole through the separate investment categories’ prioritization processes.

Recommendation 2: Department-wide prioritization

The Assistant Deputy Minister of Corporate Management Branch, in consultation with the Information Systems Branch and Science and Technology Branch, should develop a process for ensuring appropriate prioritization for all investment categories.

Management response and action plan

Agreed.

Corporate Management Branch will review current project prioritization categories with the Information Systems Branch and Science and Technology Branch to ensure appropriate processes are in place.

Lead responsible: Assistant Deputy Minister of Corporate Management Branch

Target date for completion: December 2021

2.2.2 Life-cycle costs

The Policy requires investment decisions to take into account the life-cycle costs of investments. Life-cycle costs include not just the initial construction, development, or acquisition costs but also all other relevant costs (for example, infrastructure, personnel, operating, and maintenance costs) over the expected useful life of an asset. Careful planning and full life-cycle costing are needed to ensure that adequate funds are available to support the assets over their life expectancy.

Audit criteria: The audit examined whether the Department considered life-cycle costs during the investment planning and decision making process.

What the audit found: The audit found that AAFC’s investment planning processes did not consistently consider the life-cycle costs of planned investments and the Department did not have guidance on how to include these costs when planning investment projects.

The audit reviewed a sample of 24 investments and found that costs were identified in the proposal until the project was completed or the asset was delivered. However, future operating and maintenance costs were not always identified:

  • Real property assets:
    • 8/10 (80%) projects identified future operating and maintenance costs (future operating and maintenance costs were not applicable for two of the 12 projects sampled in this category).
  • IM/IT:
    • 3/5 (60%) projects identified future operating and maintenance costs.
  • Scientific equipment assets:
    • 0/7 (0%) requests identified future operating and maintenance costs.

Interviews and documents reviewed showed that the Department did not provide project costing guidance to the branches, although in some cases project sponsors obtained third party estimates for project costs.

Most of the IM/IT projects sampled (80%) were related to other IM/IT projects but were treated as separate projects. For example, one sampled IM/IT system had two separate, related projects, i.e. one project for the initial IM/IT infrastructure and another for a second phase of the IM/IT infrastructure. Reporting interrelated projects separately reduces transparency, as it does not provide a complete view of overall costs, including lifecycle costs, of investment projects.

Not considering the full costs, including life-cycle costs of projects, assets and services, may result in significantly under estimated total costs of investments and create future funding pressures.

Recommendation 3: Life-cycle costs

The Assistant Deputy Minister of Corporate Management Branch should provide oversight and develop guidance on life-cycle costing of investments and ensure these costs are considered when making investment decisions.

Management response and action plan

Agreed.

Corporate Management Branch will provide oversight, including through investment planning governance, regarding life-cycle costing to ensure best practices are adopted to ensure accuracy and completeness for investment decisions.

Lead responsible: Assistant Deputy Minister of Corporate Management Branch

Target date for completion: September 2021

2.2.3 Areas of greatest risks

The Policy requires investment decisions to consider the areas of greatest risk in achieving departmental objectives. Considering greatest risks when making investment decisions allows the Department to identify the investments needed to mitigate these risk areas and support the achievement of AAFC’s objectives.

Audit criteria: The audit assessed whether AAFC’s investment planning processes considered the areas of greatest risk in achieving departmental objectives.

What the audit found: The audit found that AAFC’s investment planning processes did not consider the areas of greatest risk in achieving departmental objectives.

AAFC’s areas of greatest risk were identified in the Department’s Corporate Risk Profile. While AAFC did not have a Corporate Risk Profile for 2019-20 or 2020-21, the audit reviewed AAFC’s 2018-19 Corporate Risk Profile, which identified corporate risks such as catastrophic crisis, market disruption and trade uncertainty, IM/IT, security of sensitive assets, and workforce.

Although AAFC’s five-year Investment Plan 2019-24 stated that it was a key element in the Department’s response to its corporate risks, it did not outline how these risks were considered when planning for investments.

The audit found that AAFC’s investment planning documentation for real property, IM/IT, and scientific equipment did not show how the areas of greatest corporate risks were considered. Also, the records of decision of IPC and DMC from April 2019 to September 2020 did not indicate that the areas of greatest risk were discussed during the annual investment planning cycle. In addition, the sample review of investment projects did not show any consideration of AAFC’s key risks.

While annual investment planning was not clearly linked to corporate risks, the Department used a risk and opportunity management review process, which considered several organizational risks when planning and managing investments. This included six risks and their corresponding response strategies, such as human resource capacity and aging infrastructure and assets. However, this risk management process did not fully address the Policy requirement of investment decisions to consider the areas of greatest risk in achieving departmental objectives.

By not considering the areas of greatest risk to achieving departmental objectives when making investment decisions, the Department may not direct investment into some of these areas to mitigate corporate risks.

Recommendation 4: Areas of greatest risks

The Assistant Deputy Minister of Corporate Management Branch, in consultation with the Information Systems Branch and Science and Technology Branch, should develop a consistent approach to assess and consider the risks to achieving departmental objectives when making investment planning decisions.

Management response and action plan:

Agreed.

Corporate Management Branch will work with the Information Systems Branch and Science and Technology Branch to develop a consistent approach to consider risks to achieving departmental objectives in investment planning decisions.

Lead Responsible: Assistant Deputy Minister of Corporate Management Branch

Target Date for Completion: December 2021

2.3 Monitoring and reporting

Monitoring and reporting include the processes in place to monitor investment performance on an ongoing basis and the degree to which performance results are provided to inform decision making and the next planning cycle.

The Policy requires departments and agencies to submit annually to TBS an updated list of planned projects for the upcoming five years along with their prioritization criteria. The Policy also requires departments to have a performance plan to assess the effectiveness of the investment planning function and to ensure that decisions are informed by timely and accurate performance information.

The audit found that the Department fulfilled its external reporting requirements by providing annual updates to TBS. For internal reporting, the Department had developed a performance framework with adequate measures to monitor the implementation of AAFC investment plan, however it had not been reported annually.

2.3.1 External reporting

Audit criteria: The audit examined whether AAFC provided TBS on an annual basis with an updated list of planned projects for the upcoming five years.

What the audit found: The audit observed that the Department had provided annual updates to TBS for 2019-20 and in prior years. Due to the COVID-19 pandemic, an update for 2020-21 was not required.

2.3.2 Internal reporting

Audit criteria: The audit examined whether adequate performance measures had been established to monitor the implementation of the departmental investment plan. The audit also assessed whether performance reporting was performed and provided on an annual basis as required to inform senior management decision making.

What the audit found: The audit found that the Department had developed a performance framework with adequate measures to monitor the implementation of AAFC investment plan, but there had not been regular annual performance reporting.

AAFC’s five-year Investment Plan 2019-24 documented a performance framework to monitor the implementation of AAFC’s investment plan, specifically for investments equal to or greater than $1-million. This framework included adequate expected results and metrics. For example, effective management and oversight was measured by the percentage of projects completed on time, on budget and within scope with a target of 70%.

The five-year Investment Plan 2019-24 stated that an annual report to the IPC on the performance framework results was required, along with a gap analysis for future improvements. However, the audit found that performance framework results for AAFC’s Investment Plan 2019-24 were not compiled and provided to the IPC for fiscal 2019-20.

To gain a better understanding, the audit reviewed performance framework reporting during AAFC’s previous five-year Investment Plan (2016-21). Only one performance report was produced in recent years, which covered September 2016 to August 2018.

Without annual performance reporting, senior management may not receive timely investment performance information to determine whether AAFC is meeting its planning targets and whether improvements are needed.

Recommendation 5: Monitoring and reporting

The Assistant Deputy Minister of Corporate Management Branch, in consultation with the Information Systems Branch and Science and Technology Branch, should ensure the Investment Plan’s performance framework results are reported annually to the appropriate governance body.

Management response and action plan:

Agreed.

Annual updates required under the Treasury Board Policy on the Planning and Management of Investments will be prepared and provided to Treasury Board of Canada Secretariat and the appropriate internal governance committees.

Due to streamlining of processes during the COVID-19 pandemic, this report and update were not required in 20/21.

Lead responsible: Assistant Deputy Minister of Corporate Management Branch

Target date for completion: March 2022

2.4 COVID-19 pandemic impacts and response

The audit examined the COVID-19 pandemic’s impacts on the investment planning process and any associated responses.

The audit noted that the 2020-21 investment planning cycle for the three investment categories was completed just prior to the pandemic affecting the Department’s operations in March 2020.

Following March 2020, procurement and other supply chain disruptions due to the pandemic affected investment activities in real property and scientific equipment and the ability to complete certain projects on time. These challenges may result in a greater number of carry over projects in next year’s investment planning cycle. For IM/IT, the pandemic resulted in some changes to the types of investment projects that were originally planned for 2020-21 by placing greater priority on pandemic-related IM/IT investments, for example, projects to support employees working from home and strengthening AAFC’s remote network connection.

3.0 Conclusion

The audit concluded that AAFC had an adequate investment planning framework in place. AAFC had a core governance structure in place for investment planning with appropriate roles and responsibilities. Investment planning and prioritization processes were in place and being followed within separate investment categories. The Department also established a performance framework with adequate measures to monitor the implementation of its investment plan.

However, the investment planning framework was not functioning as intended, and its implementation could be improved by:

  • Strengthening the investment planning governance oversight to ensure it provides strategic, holistic oversight of AAFC’s investment planning and is commensurate with the materiality, needs, complexity, risk, and scope of investment projects.
  • Developing a process for ensuring appropriate prioritization for all investment categories.
  • Providing oversight and developing guidance on life-cycle costing of investments, and considering life-cycle costs when making investment decisions.
  • Considering the greatest risks to achieving departmental objectives when making investment planning decisions.
  • Reporting annually on the Investment Plan’s performance framework results to the appropriate governance body.

Annex A: About the audit

Statement of conformance

The audit conforms to the Institute of Internal Auditors' International Professional Practices Framework, as supported by the results of AAFC’s 2020 internal audit quality assurance and improvement program. Sufficient and appropriate evidence was gathered in accordance with the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing to provide a reasonable level of assurance over the findings and conclusion in this report. The findings and conclusion expressed in this report are based on conditions as they existed at the time of the audit and apply only to the areas included in the audit scope.

Audit objective

The audit objective was to determine whether an adequate management control framework was in place and functioning as intended to support investment planning.

Audit scope

The audit team looked at key branch and departmental investment planning processes to develop five-year investment plan and annual updates, with a focus on the period from April 1, 2019 to the second quarter of 2020-21. However, to gain a better understanding of the subject matter of the audit, the audit also looked at relevant activities that occurred prior to this period.

The audit did not assess the following areas:

  • Project management: Management of investment projects includes project-level planning (for example, project complexity and risk assessment), execution, and closeout. Project management is a separate process from the investment planning processes
  • Procurement of AAFC investments: Procurement follows a separate process that begins after investment projects are approved.
  • Acquired services: Acquired services are operational transactions carried out under separate procurement and financial processes requirements. They include real property services such as tenant services, payment in lieu of taxes, and utilities, and IM/IT services such as contracts for software licenses, print services, and cloud computing services, amongst other.

Audit criteria

The following criteria were developed to ensure sufficient and appropriate evidence was collected and examined to support the audit conclusion:

  • Governance: Governance structures are in place to support investment planning.
  • Guidance and processes: Adequate guidance and processes have been established to support the development of AAFC’s investment plans in compliance with the Treasury Board Policy on the Planning and Management of Investments.
  • Monitoring and reporting: Adequate reporting has been established and performed to monitor the implementation of the departmental investment plans and to inform decision making.
  • COVID-19 pandemic: Assessment of impacts to the investment planning process due to the COVID-19 pandemic, as part of the review of the governance, guidance, processes, monitoring, and reporting areas.

Audit approach

The audit approach was risk-based and consistent with the International Standards for the Professional Practice of Internal Auditing and the Mandatory Procedures for Internal Auditing in the Government of Canada, as required under the Treasury Board Directive on Internal Audit. These standards require that the audit be planned and performed in such a way as to conclude against the audit objective. The audit was conducted in accordance with an audit program that defined audit tasks to be performed in the assessment of each audit criterion.

For each criterion established, an audit methodology was developed to ensure that sufficient and appropriate audit evidence was collected to enable the audit team to conclude on the audit objective.

To complete the engagement, the audit team used the following methods:

  • Interviews with AAFC management and employees involved in AAFC’s investment planning processes.
  • Review of a sampling of investments from the 2020-21 investment planning process to assess compliance with key Treasury Board Policy requirements, such as project prioritization, project alignment with the Departmental Results Framework, and assessment of life-cycle costs.
  • Analysis of data within investment monitoring and performance reports, such as AAFC Investment Plan / Portfolio Report(s) and the Investment Planning Committee Monthly Portfolio Status Reports.
  • Review of investment planning related documentation at the branch and departmental levels, such as branch investment planning call-out requests, written procedures, the Investment Planning Committee’s Terms of Reference and meeting materials.

The audit team selected a judgmental sample of 24 investments from the 2020-21 investment planning cycle, with 12 from real property assets, five from IM/IT, and seven from scientific equipment assets.

Table 2: Audit sample selection
Investment Category Number of Investments Sampled Number of Investment Proposals Percentage of Investment Proposals
Sampled (%)
Requested Budget Sampled ($) Requested Budget ($) Percentage of Requested Budget
Sampled (%)
Real Property
Assets
12 171 7 78,174,117 130,060,000 60
IM/IT 5 77 6 3,782,339 39,712,000 10
Scientific
Equipment Assets (1)
7 81 9 1,273,601 7,502,335 17
Totals 24 329 7 83,230,057 177,274,335 47
Note 1: Scientific equipment with funding from approved Treasury Board submissions was not included.