Archived - Audit of Financial Forecasting

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January 2014

1.0 Introduction

Canadians expect the federal government to manage public funds well by effectively planning, budgeting and making decisions on the allocation, reallocation and use of financial resources based on reliable information and sound analysis of that information.Footnote 1 To achieve this, the federal government has instituted related policies and directives with the expectation that spending authority is managed in a manner that maintains effective control and through which financial resources are used appropriately, based on the right authority, and losses due to waste, abuse, mismanagement, errors, fraud, omissions and other irregularities are minimized.Footnote 2

Financial forecasting is the process by which the Canada Border Services Agency (the CBSA or the Agency) directs and allocates its budget to meet strategic goals and objectives. The Agency’s budget has two parliamentary appropriations: Vote 10 – Operating Expenditures and Vote 15 – Capital Expenditures. Each vote is divided into a series of salary and non-salary funds that are aligned with the Agency’s program activities (A-Base) and projects (B-Base). The Agency’s spending authorities are the result of current Treasury Board (TB) submissions, the ongoing costs identified in past TB submissions, and the Agency’s TB-approved Five-Year Capital Investment Plan. In 2012-13, the Agency had planned operating expenditures of $1.67 billion and capital expenditures of $104.7 million.Footnote 3

The Agency’s budget is derived from a planning database that tracks all funding that has come into the Agency by fund (salary, non-salary, capital salary and capital), and program sub-sub activity (PSSA) level. Each Responsibility Centre ManagerFootnote 4 (RCM) is allocated a budget by fund based on the activities for which they are responsible. 

The Agency operates within a decentralized model which includes a National Headquarters and seven regions. At National Headquarters, a branch chief financial officer is responsible for assisting the financial management of each branch and reports directly to the Deputy Chief Financial Officer and Resource Management Directorate, who then reports to the Vice-President (VP) of the Comptrollership Branch, the Agency’s Chief Financial Officer (CFO). Each vice-president is accountable for the financial results of their respective branch and submits their results to the CFO. Similarly, each of the CBSA regions is supported by a regional manager of finance, who reports to the regional Director of Corporate and Program Services Division, who then reports to the Regional Director General (RDG). Each RDG reports their financial information to the VP of the Operations Branch, who then submits this regional information to the CFO. Lastly, the CFO presents the Agency’s financial forecasting results to the Executive Committee chaired by the President.

The CBSA participated in a horizontal internal audit of financial forecasting carried out in 2013 by the Office of the Comptroller General (OCG). Financial forecasting was ranked as a very high audit priority in the Office of the Comptroller General’s (OCG) risk-based audit planning process because the quality of forecasting practices currently varies across government departments. To determine the cause of this variation, this audit assessed the effectiveness of forecasting processes and compliance with central legislation, policies and directives for both large departments and agencies (LDAs) and small departments and agencies (SDAs).  

The OCG intends to issue its own, government-wide report on financial forecasting. The report may not name specific LDAs or SDAs and recommendations will be made based on shared observations and themes. This CBSA internal audit report communicates the results of the audit from the Agency’s perspective. While this report may include similar themes to those identified in the OCG report, it intends to provide greater detail about the CBSA’s forecasting.

2.0 Significance of the Audit

The Agency has annual expenditures of nearly $1.75 billion.Footnote 5 An audit in this area was particularly relevant in an environment of fiscal constraint as accurate forecasting and budgeting controls become more important.Footnote 6

The objective of the audit was to determine whether the Agency was performing financial forecasting appropriately to make informed decisions. To achieve this objective, the audit assessed the effectiveness of forecasting processes and their compliance with related requirements in the Policy on Financial Resource Management, Information and Reporting and the Policy on Financial Management Governance.

3.0 Statement of Conformance

The audit conforms to the Internal Auditing Standards for the Government of Canada, as supported by the results of the quality assurance and improvement program. The audit approach and methodology followed the International Standards for the Professional Practice of Internal Auditing as defined by the Institute of Internal Auditors and the Internal Auditing Standards for the Government of Canada, as required by the Treasury Board’s Policy on Internal Audit.

4.0 Audit Opinion

The Agency has a defined governance structure as well as established guidance and procedures in place to support all levels of financial forecasting. However, some opportunities exist to improve the training of those involved in the forecasting process, the consistency of coding across regions and branches, and the overall accuracy of the Agency’s forecasting accuracy for operating and maintenance expenditures, as well as capital assets.  

This results in a medium-low risk exposure for the Agency.

5.0 Key Findings

A governance structure is in place to ensure an appropriate level of review and approval of financial forecasts. Roles and responsibilities are defined and documented for those involved in the forecasting process at both National Headquarters and the regions. Accountability for forecasting has been established at the executive level by linking performance agreements to specific forecasting targets. Expanding this practice to non-executive employees who are assigned financial forecasting responsibilities will help increase accountability for budgeting and forecasting.

While practices, guidance, tools and training to support forecasting and decision making at the responsibility centre level have been developed and made available to those responsible for financial forecasting, opportunities exist to communicate consistent financial coding across all branches and regions.

Reporting and monitoring practices to support forecasting and decision making at the Agency level have been established. Although the Agency’s overall forecast is within established targets, opportunities exist to improve the accuracy of its respendable revenue, operating and maintenance and capital asset forecasts. 

Through periodic audits and other reviews, the CBSA conducts monitoring of compliance with the Policy on Financial Resource Management, Information and Reporting and the Policy on Financial Management Governance, and provides relevant reports and information to the Office of the Comptroller General. For the fiscal year 2012-13, the Agency did not identify any significant reporting issues or issues relating to the production of departmental financial information.

6.0 Sumary of Recommendations

The audit includes three recommendations:

  • Provide annual forecasting targets for inclusion into the performance agreements of non-executive employees who are assigned financial forecasting responsibilities;
  • Ensure that comprehensive financial coding guidance is provided to all branches and regions; and
  • Delegate financial forecasting responsibilities only to employees who have received the Comptrollership Branch’s training on the forecasting processes and systems.

7.0 Management Response

The Vice-President of the Comptrollership Branch is in agreement with the findings and the recommendations set out in this audit report. The Audit of Financial Forecasting allowed the Comptrollership Branch to validate the issues identified in its own internal assessment of the Financial Forecasting and to supplement the action plan already in place to address the gaps.

Further to the Action Plan, the Agency is currently investing in major enhancements to its Financial System. This will result in the development of a fully integrated enterprise financial system scheduled to be released in phases over the next two fiscal years. This initiative will not only support the Agency in addressing the gaps identified in this Audit report but will allow the CBSA to simplify and optimize its coding structure while providing it with leading practices in Project Portfolio Management. Most importantly, this state-of-the-art Integrated Enterprise Financial System will support the Agency in identifying, assessing, and prioritizing opportunities and making more effective decisions; thus, allowing the Agency to be more effective in responding to increasing internal and external financial management scrutiny.

8.0 Audit Findings

8.1 Governance

Audit Criteria:

  • The Agency has established clear roles and responsibilities for the review and approval of financial forecasts for responsibility centre managers.
  • The Agency has established clear accountability and oversight for the review and approval of financial forecasts by senior management.

Effective financial management governance requires that all Agency stakeholders have a clear understanding of the roles, responsibilities and accountabilities that must be exercised for the stewardship, management and oversight of public resources by the President, CFO and senior Agency managers.Footnote 7

8.1.1 Roles and Responsibilities

Financial forecasting requires the collective effort of many stakeholders across the Agency. The Agency has established clear roles and responsibilities for the preparation, support, review and approval of financial forecasts.

  • The Chief Financial Officer (CFO) is responsible for developing, communicating and maintaining a departmental financial management framework, and providing leadership and oversight on the proper application and monitoring of financial management across the Agency.
  • Branch chief financial officers and regional finance officers are responsible for providing financial advice to their respective branches/regions. They assist in the allocation and monitoring of budgets within their branch/region and process any internal transfers.
  • Responsibility Centre Managers (RCMs) are responsible for ensuring compliance with applicable policies and legislation, the integrity of financial information, staying within budget and identifying variances in a timely manner to allow management to make informed decisions and necessary transfers.
    Each responsibility centre level above manager is responsible for reviewing and approving the financial results of their direct reports. Vice-presidents (VPs) are responsible for the financial results of their branch and submit their results to the CFO, who presents the results to the Executive Committee.
  • The Executive Committee, chaired by the president as well as the Corporate Management Committee and Senior Management Review Board, reviews and approves the Agency’s financial results.

The roles and responsibilities for those involved in the forecasting process, budget transfers and costing activities are defined and documented in the Agency’s Guidelines for Budgeting, Financial Situation Reporting and Forecasting available upon request from Resource Management, Consolidated Monthly Projection and Analysis System (COMPAS) Manual and Calendar, costing model template, and financial management section of the Functional Management Model Toolkit on the Agency’s intranet. Specific roles and responsibilities for the Agency’s corporate and regional finance personnel are stated in the performance agreements. Additional roles and responsibilities for the various oversight bodies are stated in their respective terms of reference. Although the roles and responsibilities are comprehensive, opportunities exist for the documentation to be consolidated and made more accessible to all RCMs involved in the forecasting process.

8.1.2 Oversight Bodies

The Agency has established a structure for the review and approval of financial forecasts. Each month, vice-presidents are required to approve the financial forecasts for their respective branch. The results are then integrated into an Agency-level Financial Situation Report (FSR), which is reviewed by the CFO and presented to the Executive Committee for approval. Meeting minutes, including financial forecast decisions, are prepared and a follow-up regarding the decisions is carried out during the following month.

In addition, for each project funded through Treasury Board submissions, monthly results are summarized into dashboards which are reviewed by the Vice-President of the Information, Science and Technology Branch, Corporate Management Committee and the Executive Committee. In addition, the dashboards for projects related to the Beyond the BorderFootnote 8 initiative are reviewed by the Senior Review Board, which includes all members from the Agency’s Corporate Management Committee as well as other members from the Treasury Board.

8.1.3 Accountability

The forecasting accountabilities for RCMs are identified in the performance agreements. At the executive level, performance targets specifically state that:

  • Year-end actual expenditures must be within the allocated budget; and
  • Period seven (P7) forecasts are within three percent (3%) of year end actual expenditures.

Below the executive level, performance agreements are not linked to the specific forecasting targets; they indicate that RCMs are responsible for managing financial resources and allocated budgets. As a result, all RCMs responsible for financial forecasting do not have the same level of accountability.

Overall, a governance structure is in place to ensure an appropriate level of review and approval of financial forecasts. Expected forecasting accuracy has been established for the executive level and above, but not below. Clear roles and responsibilities are defined and documented for those involved in the forecasting process at both the National Headquarters and regions.

Recommendation 1:

The Vice-President of the Comptrollership Branch should provide annual forecasting targets to the Vice-President of the Human Resources Branch for inclusion into the performance agreements of non-executive employees who are assigned financial forecasting responsibilities.

Management Response

The vice-presidents of the Comptrollership and Human Resources branches agree that providing a financial forecasting performance target for all employees with authority over a budget will serve to emphasize the need for accurate financial forecasts as part of their budget management responsibilities.

Completion Date: March 2014

8.2 Forecasting Process

Audit Criteria:

  • The Agency has established guidance (i.e. policies, directives or guides) and provides support to enable the responsibility centres to perform financial forecasts, as well as related activities such as costing.
  • The Agency has established tools to support the forecasting process.
  • The Agency has effective forecasting practices in place to provide timely and accurate financial information for decision making at the responsibility centre.

8.2.1 Responsibility Centre-Level Forecasting Process

In 2009-10, the Agency implemented the Consolidated Monthly Projection and Analysis System (COMPAS) to conduct monthly forecasting exercises. Each Responsibility Centre Manager (RCM) with an assigned budget is required to review, update and approve its financial forecasts in the COMPAS on a monthly basis. Each forecasting period, the Agency’s COMPAS team downloads financial information from the Corporate Administrative System (CASFootnote 9) and the Salary Management System (SMSFootnote 10) into the COMPAS for all RCMs. The quality of the information found in the system is dependent on the accuracy and completeness of both CAS and SMS at the time it is downloaded. RCMs must review, make adjustments, approve and update their actual expenditures, commitments, salaries and forecasts for the rest of the fiscal year as well as justify any variances in the COMPAS. Once all forecasts have been reviewed and approved by each responsibility centre level (e.g. manager, director, director general and vice-president), dedicated personnel reviews and challenges the COMPAS information, and updates the two source systems.

Although the COMPAS was consistently used by RCMs during the period examined, some limitations to the process were identified:

  • The COMPAS optimizes the systems currently in place. However, it is not integrated with CAS and SMS. As a result, data must be manually updated in multiple systems. At the time of reporting, a blueprint was drafted for the implementation of a new CAS financial forecasting module to address this issue. However, the CBSA uses the Canada Revenue Agency’s (CRA) CAS platform and cannot make changes without the CRA.
  • Coding decisions are made by individual branches and regions. Some code by initiatives, others code by funding type. Consequently, additional time is required to recode and results may not be comparable between branches and regions.
  • The COMPAS may not provide an accurate view of each responsibility centre’s actual financial position. Transactions that have been approved in the last days of the period may not have been entered into CAS and SMS by the time the data is downloaded into the COMPAS. This creates a timing difference between the COMPAS, SMS and CAS. To manage the timing difference, some RCMs have developed and implemented various tools to help them record and monitor their expenditures, commitment, forecasts and budget free balance. However, the comprehensiveness of the tools, and the level of scrutiny applied, varies amongst RCMs.

8.2.2 Guidance, Tools and Training

Forecasting Process

To support the forecasting process, each period the COMPAS team sends the COMPAS Manual to all RCMs via email. This manual provides instructions on how to log into the COMPAS, load their allocated cost centres and budget into the system interface, update each aspect of the forecasting process and includes a timeline for each responsibility cost level to update, review and approve the financial information in the COMPAS system. The manual also identifies the finance personnel for each branch and region individuals to whom financial related questions should be submitted. The email also includes the COMPAS Calendar which identifies the time allotted to each level of management to perform their financial forecasts and review those of their direct reports.

Additional forecasting guidance and templates are included in the Agency’s Guidelines for Budgeting, Financial Situation Reporting and Forecasting, available upon request from Resource Management, and financial management section of the Functional Management Model Toolkit on the Agency’s intranet.

The Comptrollership Branch has also developed and delivers training related to financial forecasting and the COMPAS within headquarters and the regions. However, training is not mandatory prior to the use of the COMPAS, which could affect the integrity of the forecasting data updated into CAS.

Funding and Costing Processes

The Agency has developed and implemented detailed guidance and templates for preparing business cases as well as costing templates for preparing cost recoveries from external clients or other government departments, projects funded from internal resources, and Treasury Board submissions. One Treasury Board submission was sampled for the audit and was prepared with the appropriate costing template and included the required CFO Attestation.

Respendable Revenue

The CBSA has the authority to collect respendable revenue. Respendable revenue forecasts are prepared and reported in the Main Estimates by program activity for the Agency as a whole, not by the individual site, district, region or branch that generate it. The Agency monitors respendable revenue on a monthly basis with the CAS revenue ledger and maximum vote-netted revenue amount as approved by the Treasury Board.

Overall, the Agency has established and implemented practices, guidance, tools and training to support forecasting and decision making at the responsibility centre level. 

Recommendation 2:

The Vice-President of the Comptrollership Branch should ensure that comprehensive financial coding guidance is provided to all branches and regions.

Management Response

The Vice-President of the Comptrollership Branch agrees with the recommendation that branches and regions should be provided with more comprehensive financial coding guidance.

Completion Date: March 2014

Recommendation 3:

The Vice-President of the Comptrollership Branch should ensure that financial forecasting responsibilities are delegated only to employees who have received the Comptrollership Branch’s training on the forecasting processes and systems.

Management Response

The Vice-President of the Comptrollership Branch agrees that all individuals involved in financial forecasting must understand their roles and responsibilities, know the process, and be trained to properly use the associated systems. The Comptrollership Branch developed in 2012 a multi-year roadmap to improve financial management knowledge, processes and supporting data and systems at the CBSA. Whereas the emphasis was initially on the Agency’s executive cadres, it is the natural progression of the roadmap to address the knowledge and skills of the individuals supporting the executives. The roadmap has several deliverables that taken together will meet the objectives of the recommendation.

Completion Date: February 2015

8.3 Monitoring and Reporting

Audit Criteria:

  • The Agency has effective forecasting practices in place to provide timely and accurate financial information for decision making at the Agency level.
  • The Agency’s President or delegates ensure that monitoring of compliance with the Policy on Financial Resource Management, Information and Reporting and Policy onFinancial Governance is performed.
  • The Agency’s President or delegates ensure that all of the reporting requirements in the Policy on Financial Resource Management, Information and Reporting and Policy on Financial Governance are respected.

Monitoring and reporting on the use and performance of financial resources supports the effective oversight of the Agency’s budget and related resource allocations as well as decision making based on sound analysis of reliable information.Footnote 11

8.3.1 Monthly Reporting

After each period is closed in the COMPAS, the Branch Chief Financial Officers and project authorities prepare various reports and analyses based on the information in the financial system. Meetings are held at various levels of management to review, analyze and action the information in the reports. Follow-up activities are performed as required. Examples include:

  • The Agency’s monthly Financial Status Report (FSR) is prepared and provides a financial summary, analysis, comparatives and metrics of all branches as well as a high-level view of the Agency’s top 10 projects. The FSR is reviewed by the Corporate Management Committee and Executive Committee on a monthly basis. If the members have questions about the performance of a branch or project, they follow up with the appropriate VP / project authority, who consult with the branch chief financial officer and the appropriate director(s) general to provide the detailed answer.
  • The Operations Branch’s monthly Financial Status Report (Finstat) is prepared and provides a financial summary, analysis, comparative and metrics of all regions within the Operations Branch. The Operation Branch, which includes National Headquarters and seven regions, is allocated approximately 65% of the Agency's budget.Footnote 12 The Finstat, reviewed by the VP of Operations and regional director general (RDG) of each region on a monthly basis, provides a regional view of the Branch's financial position at the end of each period. If the VP has any questions about the results, variances, pressures and forecasts for a specific region, the VP communicates with that region’s RDG, who will relay the inquiry to the regional financial manager, and appropriate district director(s).
  • The forecasts for the Agency’s projects are managed by fund in the COMPAS, although they can span multiple branches, directorates and RCMs. As a result, to obtain detailed status reports for each project, the Agency’s Enterprise Project Management Office sends out a monthly call letter to each project authority with instructions to prepare an Enterprise Project Management Dashboard (EPMD or dashboard) and executive summary report. The actual and forecast data for the dashboard is rolled up from the individual cost centres associated with each project. The EPMDs clearly identify the approved project budget and the actual / forecasted expenditures for the year. Other sections of the EPMD and accompanying report disclose current risks, which may include financial risks, as well as mitigation strategies and a summary of the project’s overall financial health. The dashboards are reviewed by internal and external committees that direct questions to the project authorities.

8.3.2 Decisions to Reallocate Funds

Based on the review of the Agency-level reports, senior management makes decisions to reallocate funds to address surpluses, deficits, pressures and requirements in the current and future fiscal years.
Within the current year, the CBSA has defined and documented guidance, approval matrices and templates to transfer funds between cost centres. Our review of selected transfers concluded that they had been performed on the appropriate templates and approved according to the established practices.

The Agency has a two-year spending authority, as stated in the Canada Border Services Agency Act,Footnote 13 and can carry forward a surplus from one fiscal year to the next. The surplus carried forward to the next year will not lapse as long as the Agency spends more in the next year than it carried forward from the first year. The Agency 2012-13 carry forwardsFootnote 14 by vote for program activities and projects were detailed in the year-end FSR as follows:

  Vote 10 - Operating Expenditures
(in Millions)
Vote 15 – Capital Expenditures
(in Millions)
Program Activities (A-Base) $95 $66
Projects (B-Base) $167 $54
Total Surplus $262 $120

The CBSA also reviews operating forecasts over a multi-year period to identify surplus authorities that it may not be able to spend during the current or next fiscal year. As a result, the Agency can make a request to Treasury Board to re-profile the funds to a future fiscal year through the Annual Reference Level Update.

8.3.3 Agency-Level Forecasting Accuracy

The Agency’s performance targets require that the overall period seven forecasts of RCMs at the executive level be within three percent of year-end actual expenditures. While the Treasury Board authorizes the Agency to exceed its respendable revenue forecast by up to 25%, RCMs are not required to be within three percent for each type of forecast (i.e. salary, operating and maintenance, and capital).

The variancesFootnote 15 for the Agency’s 2012-13 period seven financial forecasts as a percentage of year-end actuals by type were as follows:

Financial Forecast Period Seven Forecast
(in Millions)
Period Twelve Actuals
(in Millions)
Period Seven Variance Forecasting Target

Respendable Revenue

$9

$15

40.4%

25%

Operating and Maintenance

$424

$331

-27.9%

Not Applicable

Capital Asset

$79

$83

5.2%

Not Applicable

SalaryFootnote 16

$1,093

$1,125

2.8%

Not Applicable

Agency

$1,591

$1,520

-4.7%

3%

Although individually, the respendable revenue, operating and maintenance and capital asset forecasts have more considerable variances, aggregation with the salary forecasts reduces the overall Agency variance to the established performance targets. The Agency’s overall period seven forecast was within 4.7% of year end actual expenditures.

8.3.4 Periodic Audits and Reviews

The Agency conducts monitoring of compliance with the Policy on Financial Resource Management, Information and Reporting and the Policy on Financial Management Governance through periodic audits and other reviews. Since 2009, the Agency has conducted nine internal audits and reviews that cover various elements of the policies. The Agency’s Risk-Based Audit Plan for the fiscal years 2013-14 to 2015-16 identifies three planned audits that also cover elements of the Agency’s financial management governance.

The Agency’s produced a Statement of Management Responsibility Including Internal Control over Financial Reporting Fiscal Year 2012-13, which includes a section on ongoing monitoring programs that assesses key financial controls.

8.3.5 Reporting Requirements

The Policy on Financial Resource Management, Information and Reporting indicates that the Agency’s President is responsible for:

  • Ensuring that appropriate and timely action is taken to address any significant reporting issues or issues relating to the production of departmental financial information; and
  • Providing reports or information as requested by the Office of the Comptroller General.

For the fiscal year 2012-2013, the Agency did not have any significant reporting issues or issues relating to the production of departmental financial information. As well, for this same period, the Agency provided the reports and information requested by the OCG. 
The CBSA has established and implemented reporting and monitoring practices to support forecasting and decision making at the Agency level. Although the Agency’s overall forecast is within established targets, opportunities exist to improve the accuracy of its respendable revenue, operating and maintenance and capital asset forecasts. Through periodic audits and other reviews, the CBSA conducts monitoring of compliance with the Policy on Financial Resource Management, Information and Reporting and the Policy on Financial Management Governance.

Appendix A – About the Audit

Audit Objectives and Scope

The objective of the audit was to determine whether the Agency was performing financial forecasting appropriately to make informed decisions. To achieve this objective, the audit assessed the effectiveness of forecasting processes and their compliance with related requirements in the Policy on Financial Resource Management, Information and Reporting and the Policy on Financial Management Governance.

The audit scope included the processes that were in place during the fiscal year ending March 31, 2013, to support the Agency’s efforts to effectively forecast, as well as comply with the related requirements of the Policy on Financial Resource Management, Information and Reporting and the Policy on Financial Management Governance. The audit also examined the Agency’s expenditure and respendable revenue forecasting processes with a particular emphasis on in-year activities, including supporting analysis, decisions, timeliness and accuracy of results.

The audit did not examine compliance with the requirements under the Policy on Investment Planning. Although this policy addresses budgeting and planning, it goes beyond the intended scope of this audit. The audit also did not assess compliance with requirements under the Policy on Management, Resources and Results Structures. This policy was recently the subject of a horizontal audit in large and small departments. The scope also excluded forecasting for non-respendable revenues and processes related to the preparation of budgets and financial reports for the purpose of external reporting.

RISK ASSESSMENT

The following risk areas were identified:

Risks Associated with Inaccurate or Untimely Forecasts

Information for Decision Making

  • Failure to produce accurate and timely financial forecasts may lead to poor decision-making.
  • Inadequate controls or processes to identify variances and gaps in resources may not allow the organization to reallocate funds to more pressing needs.

Financial Management

  • Failure to accurately project financial estimates for the department could lead to unfulfilled priorities and initiatives for the department.
  • Failure to accurately project financial estimates and track spending could lead to a department overspending its voted budget.

Risks Affecting the Ability to Forecast
Information Systems

  • Inadequate systems to support financial forecasting could lead to potential inefficiencies and inaccuracies in financial forecasts used for decision making at the responsibility centre level as well as with senior management.

Human Resources

  • Inadequate human resources capacity to meet reporting requirements, including financial forecasting, could result in difficulties in preparing accurate forecasting for decision making purposes.

APPROACH AND METHODOLOGY
The examination phase of this audit was performed using the following approach:

  • Interviewed a sample of managers, chiefs of operations, district directors, regional directors general, and vice-presidents.
  • Identified, obtained and reviewed evidence of corporate and regional finance guidance and tools as well as local practices in place to support forecasting process at the RCM and Agency-level.
  • Performed an analytical review of the COMPAS data from period six, seven and nine forecasting data for the period of April 2012 to March 2013.
  • Visited three regions for a total of 12 responsibility centres.

AUDIT CRITERIA
The audit criteria were derived from the Office of the Comptroller General’s Guide to Costing and the Guideline on Common Financial Management Business Process: 1.2 - Manage Forecasting and Budget Review, and the Treasury Board Policy on Financial Resource Management, Information and Reporting, Policy on Financial Management Governance, Directive on the Stewardship of Financial Management Systems and Guide on the Preparation of Future-Oriented Financial Statements.

Lines of Enquiry Audit Criteria
Governance 1.1 The Agency has established clear accountability and oversight for the review and approval of financial forecasts by senior management.
1.2 The Agency has established clear roles and responsibilities for the review and approval of financial forecasts for responsibility centre managers.
Forecasting Process 2.1 The Agency has established guidance (i.e. policies, directives or guides) and provides support to enable the responsibility centres to perform financial forecasts, as well as related activities such as costing.
2.2 The Agency has established tools to support the forecasting process.
2.3 The Agency has effective forecasting practices in place to provide timely and accurate financial information for decision making at the responsibility centre level.
Monitoring and Reporting 3.1 The Agency has effective forecasting practices in place to provide timely and accurate financial information for decision making at the Agency level.
3.2 The Agency’s President or delegates ensure monitoring of compliance with the Policy on Financial Resource Management, Information and Reporting and the Policy on Financial Management Governance.
3.3 The Agency’s President or delegates ensure that all of the reporting requirements in the Policy on Financial Resource Management, Information and Reporting and the Policy on Financial Management Governance are met.

Appendix B - List Of Acronyms

CBSA
Canada Border Services Agency
CAS
Corporate Administrative System
CFO
Chief Financial Officer
COMPAS
Consolidated Monthly Projection and Analysis System
EPMD
Enterprise Project Management Dashboard
Finstat
Operations Branch Financial Status Report
FSR
Agency Financial Status Report
LDA's
Large Departments and Agencies
OCG
Office of the Comptroller General
RCM
Responsibility Centre Manager
RDG
Regional Director General
SDAs
Small Departments and Agencies
TB
Treasury Board
VP
Vice-President

Footnotes

Footnote 1

Policy on Financial Resource Management, Information and Reporting, section 3.1.

Return to footnote1 referrer

Footnote 2

Directive on Expenditure Initiation and Commitment Control, section 5.2.

Return to first footnote2 referrer

Footnote 3

The Canada Border Services Agency’s 2012-13 Report on Plans and Priorities.

Return to footnote 3 referrer

Footnote 4

The Agency’s President, as well as the managers, directors, directors general, and vice-presidents who are responsible for managing an assigned budget.

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Footnote 5

The Agency’s Report on Plans and Priorities and Departmental Performance Report for 2010-11 to 2012-13.

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Footnote 6

The CBSA’s Risk-Based Audit Plan 2013-14 to 2015-16, p. 20.

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Footnote 7

Policy on Financial Management Governance, section 4.1 and 4.2.

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Footnote 8

Canada’s Economic Action Plan: http://actionplan.gc.ca/en/content/beyond-border. On February 4, 2011, the Prime Minister of Canada and the President of the United States issued Beyond the Border: A Shared Vision for Perimeter Security and Economic Competitiveness. The Declaration established a new long-term partnership built upon a perimeter approach to security and economic competitiveness.

Return to footnote 8 referrer

Footnote 9

The Corporate Administrative System (CAS) is the Agency’s system of records and contains all Agency budgets, expenditures, and commitments.

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Footnote 10

The Salary Management System (SMS) is used to generate salary forecasts for each employee based on classification, level, as well as actual and planned time worked in each responsibility centre during the fiscal year.

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Footnote 11

Policy on Financial Resource Management, Information and Reporting, section 6.2.

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Footnote 12

Based on the 2012-13 COMPAS data from Period 12.

Return to footnote 12 referrer

Footnote 13

Canada Border Services Agency Act, section 15, http://laws-lois.justice.gc.ca/eng/acts/c-1.4/FullText.html

Return to footnote 13 referrer

Footnote 14

The FSR indicated that, with the exception of minor technical adjustments, the reported surplus was eligible for carry forward; no surplus will be lapsed. The audit did not include an assessment of the data reported in the FSR.

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Footnote 15

The variances were identified at the Agency level and were aggregated from all responsibility centres. The audit did not assess the rationale for the variances

Return to footnote 15 referrer

Footnote 16

Salaries represent 74% of the Agency’s 2012-13 year-end expenditures.

Return to footnote 16 referrer

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