CAC PROGRAM AUDIT OF THE NEW SAR INITIATIVES FUND

NSS MANAGEMENT RESPONSE

JUNE 2006

This provides the National Search and Rescue Secretariat’s management response to the April 2005 audit of the New SAR Initiatives Fund (NIF), prepared by Consulting and Audit Canada (CAC). Comments on the factual aspects of the draft audit were previously provided.

As the renewal of the contribution component of the NIF program was initiated several months ago, many of the audit recommendations have already been identified by program managemenand are currently being incorporated into the new program design and the Terms and Conditions for which renewed Treasury Board approval is being sought. Similarly, chanbeing introduced this year to strengthen financial management of the non-contribution component of NIF. These changes to both the contribution and non-contribution compothe Fund will also be captured in accompanying documents, financial instruments and procedures, and business practices related to the management of the program.

Overall, management concurs and will implement all of the recommendations with the exception of one, on which the requirement has been removed by the redesign of the program.

SUMMARY OF AUDIT RECOMMENDATIONS AND MANAGEMENT RESPONSES

Audit Section 2.1 – AUTHORITIES AND EXTERNAL REPORTING

Audit Recommendation (s. 2.1) – 1:

Objectives and eligibility criteria (should be) developed for both the contribution and non-contribution portion of the fund.

CONCUR

The existing NIF program includes objectives and eligibility criteria for new proposals, and similar provisions will be included in the renewed program for application to contribution and non-contribution proposals. TB approval is being sought for the objectives and eligibility criteria applicable to the renewed contribution portion of the fund.

Recommendation (s. 2.1) - 2

Terms and Conditions (should be) developed and approved by Treasury Board, for both contributions by Federal Sponsors and contributions to Provincial/Territorial Sponsors, which meet the requirements of the TBS Policy on Transfer Payments in order that there is appropriate authority for the NIF contribution payments by Federal Sponsors.

CONCUR

Implementation in progress.

Recommendation (s. 2.1) - 3

These Terms and Conditions (should) clearly state the objective and eligibility criteria for the Fund as well as define the class of eligible recipient, the maximum amount payable, use of holdbacks, guidelines for advance payments and define conditions for repayable contributions.

CONCUR

Implementation in progress.

Recommendation (s. 2.1) - 4

The Results-Based Management Accountability Framework, Risk-based Audit Framework and the New Search and Rescue Initiatives Fund Program Guide (should be) revised to clearly reflect the changes in the authorities and funding mechanism for both the contribution and non-contribution portion of the fund.

CONCUR

Implementation in progress.

Audit Section 2.2 – REVIEW OF MANAGEMENT CONTROL FRAMEWORK

Recommendation (s. 2.2) - 1

Contribution Agreements (should be) developed that are consistent with the requirements of the TBS Policy on Transfer Payments.

CONCUR

Implementation in progress.

Recommendation (s. 2.2) - 2

Contribution Agreements (should) clearly identify the recipient, the extent of total government assistance (stacking provision), and expectations between the initial recipient and third parties.

CONCUR

Implementation in progress.

Recommendation (s. 2.2) - 3

The Results-Based Management Accountability Framework, Risk-based Audit Framework and the New Search and Rescue Initiatives Fund Program Guide (should be) revised to clearly reflect the changes in the management framework for both the contribution and non-contribution portion of the Fund including roles and responsibilities for project management, maintaining appropriate supporting documentation, and linking quarterly reports and invoices to allowable cost categories.

CONCUR

Implementation in progress.

Recommendation (s. 2.2) - 4

Training and information sessions with Federal, Provincial and Territorial Sponsors on the revised requirements of the program (should be) considered.

CONCUR

Implementation in progress; included in NIF renewal implementation plan.

Recommendation (s. 2.2) - 5

A file documentation procedure (should be) developed to ensure that all relevant information is properly maintained on the project files. As part of this procedure, file checklist should be developed for the general files related to proposal assessment and approval and for the individual project files maintained by NSS and the NIF Sponsors.

CONCUR

A review of the NSS-wide filing system will be carried out in FY 2005-06, as documented in the Secretariat’s Business Plan, with the NIF program files being treated as the highest priority.

Recommendation (s. 2.2) - 6

Holdbacks (should be) considered to ensure that final payment is related to final report and that guidelines on advances are amended to be in line with the TBS Policy on Transfer Payments.

CONCUR

The option of using holdbacks to ensure compliance with NIF reporting requirements will be retained in the new Terms and Conditions, and advances will be administered in compliance with the TBS policy.

Audit Section 2.3 – MONITORING AND REPORTING

Recommendation (s. 2.3) - 1

NIF information system (NIFIS) (should be) implemented to provide improved financial management and reporting so that projects can be appropriately monitored and reported.

CONCUR

System requirements will be reviewed during 2005/2006 to ensure they reflect the management and reporting requirements of the renewed program, and resources will be sought for implementation.

Recommendation (s. 2.3) - 2

Pending lapses (should be) identified as early as possible in the year in order to re-allocate funds to other projects.

CONCUR

The incidence of lapses is likely to be reduced with the renewed program design, and in addition the new program guide will strengthen this requirement.

Recommendation (s. 2.3) - 3

The criteria for recipient audits (should be) revised to review the adequacy and compliance with agreements between the NIF Sponsor and the recipient.

DO NOT CONCUR