Annual report of the Auditor General Alberta. Office of the Auditor General.

284 Pages·1996·15.5 MB·English

by  Alberta. Office of the Auditor General

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Annual Report of
the Auditor General
of Alberta
1995 - 9 6
ISSN 0228-314X
AUDITOR
GENERAL
Alberta
Mr. R. Hierath, MLA
Chairman
Standing Committee on Legislative Offices
I h ave the honour to transmit herewith my Report to the Legislative Assembly for the fiscal year
ended March 31, 1996, to be laid before the Legislative Assembly in accordance with the
requirements of section 19(4) of the Auditor General Act.
This is my second annual report to the Legislative Assembly and the eighteenth such report
issued by the Auditor General of Alberta.
Peter Valentine, FCA
Auditor General
Edmonton, Alberta
September 16, 1996
ive
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SECTION 1 1
Introductory Comments 1
SECTION 2 11
Executive Council 1 1
Advanced Education and Career Development 37
Agriculture, Food and Rural Development 57
Community Development 65
Economic Development and Tourism 69
Education 75
Energy 83
Environmental Protection 89
Family and Social Services 103
Federal and Intergovernmental Affairs 113
Health 115
Justice 141
Labour 143
Legislative Assembly 145
Municipal Affairs 147
Public Works, Supply and Services 159
Transportation and Utilities 163
Treasury 167
Section 12(b) Audits 205
SECTION 3 207
Legislative Mandate 207
Mission 208
Reporting Process 209
Reservations in Audit Reports on Financial Statements 210
Other Information Included in Audit Reports on Financial Statements 211
Report under Section 18 of the Auditor General Act 212
Public Accounts 213
Accounting Principles and Auditing Standards 215
APPENDICES 217
Office Operations 217
Committees and Agents 239
Explanation of Some Financial Terminology 243
Staff 247
Status Report of Recommendations 248
INDEX OF ENTITIES 272
AUDITOR I
1995-96 Report g^lF
AUDITOR I
^JSALf 1995-96 Report
Section 1 Introductory Comments
Report For The Year Ended March 31, 1996
Purpose of Auditor General The purpose of the Annual Report of the Auditor General is
annual reports to report the work of the Office. The Office is funded to
identify cases in which systems and business practices can
be improved. Our annual reports are designed to meet the
expectation that we assist government and public agencies in
improving their performance. Annual reports also serve to
assist legislators in their work to hold the executive
accountable for the management of public resources.
Scope of work The scope and extent of audit work completed for 1995-96
and recommended improvements for the specific financial
and management control systems examined by my Office are
described in section 2 of this report.
For every financial statement audited, the Auditor General
has issued an Auditor's Report. Section 3 contains
information on those auditor's reports that contained
reservations or reported a lack of compliance with
legislation.
I a m satisfied that those transactions and activities examined
in financial statement audits performed by my Office
complied, in all significant respects, with relevant legislative
authorities, apart from the instances of non-compliance
described in this report. I m ust caution, however, that it
would be inappropriate to draw a legislative compliance
conclusion about matters not examined by my Office.
Recommendations Recommendations are provided for the benefit of Public
Accounts Committee members, ministers, other MLAs, the
public, and management. When determining significance, I
consider the nature and materiality of the matter relative to
the individual entity and to the government as a whole.
This report contains 69 recommendations. Of these, the
35 recommendations that I c onsider particularly important
and therefore warrant a formal government response are
numbered. Of the 35 numbered recommendations, 10 are
repeat recommendations.
In my opinion, the most critical recommendations are
numbered 1, 2, 3, 4, 13, 14, 15, 16, 17, 32, and 35.
AUDITOR I
1995-96 Report 1 Gl^f
Section 1 Introductory Comments
Improving The Financial Administration Of The Province
The purpose of this introductory section of the report is
twofold: to provide a summary of the most significant
recommendations for improving the financial administration
of the Province; and to provide a broader view of a theme in
the report — setting performance expectations.
Government accountability
Overall, progress in As I b elieve that progress relating to the implementation of
improving government
the government accountability framework is satisfactory, I
accountability is
have not repeated recommendations of prior years or
satisfactory and
proceeding according to provided additional ones this year. My Office is committed
to assist in the implementation of the recommendations
plan
already made. The rapid and fundamental change is making
a difference. I s ee evidence of the new accountability in
meetings, plans, reports and even newspaper articles. There
is an increasing awareness that the government must
demonstrate when it spends money that it does so with an
understanding of the desired result and that the government
should provide objective information on what was actually
achieved. As people gain a better understanding of the
information provided, there will be pressure for even more
useful information. As planning decisions improve, so will
performance.
Health sector
There is a major need The most critical recommendations that I h ave made this
for improved health
year include four directed at the Department of Health
information, and systems
to deliver that (Recommendation Nos. 14, 15, 16 and 17). Their thrust is
information that significant risks in the health system can be minimized
through effective governance and the use of suitable
information. I a m concerned that the Department of Health
has not made sufficient progress in resolving issues
previously identified.
Information systems in
Perhaps the most significant shortage of useful governance
the health sector do not
information today is in the health sector. Much of the
integrate clinical and
information produced is not directly linked to formalized
financial data in ways
that can help to improve accountability reporting processes. To be useful and fully
setting expectations, relevant, systems need to provide information in a way that
delivering service and
integrates clinical and financial data with processes
evaluating performance
necessary for planning and expectation setting, delivery of
health services and the evaluation of results. We have seen
AUDITOR I
pSS£"-r 2 1995-96 Report
Section 1 Introductory Comments
that information systems are often not designed in a manner
that would permit effective two-way communication about
results expected and the measurement of results achieved.
For example, budget processes often consist of a top-down
allocation of funds rather than a process of establishing the
best practices and related costs through consultation with the
various stakeholders, including those who work at the front
line.
Lottery grants
Benefits resulting from The Minister Responsible for Lotteries has recognized an
aursee onoft l okttery n fund o grwannts o verl.ap wi.th ot.her mi nistri es pr„oviding service s in are_a s
receiving lottery fund grants. Consequently, Lottery Fund
managers place reliance on other ministries for
accountability from grant beneficiaries. This division of
responsibility may be contributing to the fact that the
Province is not determining whether it is achieving the
expected benefits from the use of lottery fund grants.
Through Recommendation No. 1, 1 h ave asked the Executive
Council to consider having beneficiaries report results in
terms of expectations in their business plans. Also, I am
advocating that obtaining accountability from grant
beneficiaries be solely the responsibility of the appropriate
Ministry.
Year 2000
The government is Some information systems may fail on January 1, 2 000,
exposed to the risk of
because they do not provide for dates with years greater than
systems failure on
1999. I h ave completed a review of steps taken and
January 1, 2000
concluded that there is a risk that government information
technology will not be Year 2000 Compliant.
Recommendation No. 2 seeks to encourage the appropriate
action now by having the Office of the Chief Information
Officer evaluate Ministerial plans and monitor progress
towards ensuring that information technology is Year 2000
Compliant.
AUDITOR I
1995-96 Report 3
Section 1 Introductory Comments
PeopleSoft Project
The PeopleSoft Project The PeopleSoft Project is a computer development project
faces many challenges
and the Project structure whose end products will replace the Province's existing
central accounting and reporting systems, and provide
could be improved
human resource systems. In general, I a m concerned that
there are now three sub-projects, each with a steering
committee and an external consultant manager, addressing a
single integrated software program. For the Project to
succeed against the current schedule at the anticipated cost,
all areas affected by the Project must be closely coordinated
and integrated. In Recommendation No. 3, 1 h ave suggested
that the Deputy Ministers' Steering Committee restructure
the Project.
Tuition fees
There is inconsistent
The Department of Advanced Education and Career
understanding across the
Development's tuition fee policy is designed to balance
post-secondary
education sector on how students' and Provincial needs. The intention is to require
students to make a reasonable contribution towards the cost
to apply the tuition fee
policy of their education. Unfortunately, the policy is not being
applied consistently across the sector, in part because some
key terms have not been adequately defined. As the success
of the tuition fee policy depends on its application, I h ave
suggested that the Department work with the post-secondary
education sector to facilitate a consistent, reliable and well-
understood application (Recommendation No. 4).
AUDITOR I
]^beTlW 4 1995-96 Report