PARKS CANADA AGENCY
ESPACE 400e AUDIT
QUEBEC CITY
FINAL
OCTOBER 2007
Espace 400e Audit
Parks Canada Agency
© Her Majesty the Queen in right of Canada, represented by
the Chief Executive Officer of the Parks Canada Agency, 2007
Catalogue Number:
ISBN:
OIAE
2
September 2007
Espace 400e Audit
Parks Canada Agency
TABLE OF CONTENTS
SUMMARY
4
1. BACKGROUND
5
2. OBJECTIVES AND SCOPE
5
3. METHODOLOGY
6
4. ASSURANCE STATEMENT
7
5. CONCLUSION
7
6. OBSERVATIONS AND RECOMMENDATIONS
7
6.1 Management control framework
7
6.1.1
Conceptualization
8
6.1.2
Planning
9
6.1.3
Performance
11
6.1.4
Completion
11
6.2 Funds spent as planned
12
6.3 Fair and optimal use of contracting resources
13
APPENDIX A
14
OIAE
3
September 2007
Espace 400e Audit
Parks Canada Agency
SUMMARY
2008 will be the 400th anniversary of the founding of Quebec City, the first permanent
French colony in North America. A committee made up of federal, provincial,
Aboriginal and municipal government representatives is coordinating the anniversary
celebrations.
In May 2005, Treasury Board allocated $24 million to the Parks Canada Agency to
develop the Louise Basin and the Espace 400e Pavilion, which will become a Parks
Canada Discovery Centre in 2009.
The Espace 400e project audit, a requirement of the Treasury Board submission, had been
included in the Office of Internal Audit and Evaluation’s three-year plan for the 2007-08
fiscal year and was conducted by a team from the Office of Internal Audit and
Evaluation.
The objective of the audit was to provide senior management with an independent
evaluation of the existence of an effective management control framework and give
assurance that the funds allocated were spent as planned and that there was fair and
optimal use of contracting resources.
Visits to the Quebec City Field Unit and Service Centre were conducted between
August 6 and August 31, 2007. Managers and staff in the field unit responsible for key
financial processes were interviewed. The relevant supporting documents, contracts and
invoices for the period of April 2005 to July 2007 were examined.
In our opinion, the audit work carried out and the evidence gathered are sufficient to
support the findings set out in this report.
Overall, the audit team observed sound management and good cooperation between the
various stakeholders involved in managing the Espace 400e project. The systems and
controls in place are adequate and minimize the risk of non-compliance with PCA
policies and procedures.
The management control framework, expenditure of allocated funds, and fair and optimal
use of contracting resources are under control; no recommendation is needed.
According to the rating system used for audit reports, our observations allow us to
conclude that the overall rating is:
GREEN
OIAE
Controlled
Controls are functioning as intended and no additional
actions are necessary at this time.
4
September 2007
Espace 400e Audit
Parks Canada Agency
1. BACKGROUND
2008 will be the 400th anniversary of the founding of Quebec City, the first permanent
French colony in North America. This oldest city in Canada is the source of the
Canadian values of cultural diversity and linguistic duality. In addition, the historic
district of Quebec City is a UNESCO World Heritage Site.
A committee made up of federal, provincial, Aboriginal and municipal government
representatives is coordinating the anniversary celebrations. In May 2004, the
committee, known as the Société du 400e anniversaire de Québec, commissioned an
analysis of potential sites for “Espace 400e - un lieu de rencontre,” a focal point for the
festivities marking the 400th anniversary. The Louise Basin in the Old Port of Quebec
City was selected as the ideal venue for Espace 400e.
In May 2005, a Treasury Board submission was approved giving the Parks Canada
Agency (PCA) $24 million to develop the Louise Basin and the Espace 400e Pavilion
(hereinafter referred to as “the project”). The Director General for Eastern Canada is
responsible for establishing the general direction of the project and approving the
management structure. Under his authority, the Director of the Quebec City Field Unit is
responsible for overall management of the project. The Director works with the Quebec
City Port Authority, the Société du 400e, the Commission de la capitale nationale du
Québec, Public Works and Government Services Canada and Quebec City.
The project consists more specifically in the expansion of the Old Port interpretation
centre, which will become a Parks Canada Discovery Centre in 2009; production of
cultural and thematic exhibits; upgrading of infrastructures around the Louise Basin; and
development of temporary facilities for Espace 400e.
The Espace 400e project audit, a requirement in the Treasury Board submission, had been
included in the Office of Internal Audit and Evaluation’s three-year plan for the 2007-08
fiscal year and was conducted by a team from the Office of Internal Audit and
Evaluation.
2. OBJECTIVES AND SCOPE
The objectives of the audit, set out in the Treasury Board submission, were to provide
senior management with an independent evaluation of:
- the existence of an effective management control framework;
and give assurance that:
- the funds allocated were spent as planned; and
- there was fair and optimal use of contracting resources.
The criteria used to attain these objectives are listed in Appendix A.
OIAE
5
September 2007
Espace 400e Audit
Parks Canada Agency
The audit covers only transactions posted between April 1, 2005, and July 31, 2007, and
processes developed and implemented during that period. The audit is the first of two
included in the Treasury Board submission. The second audit is to be done when the
project ends in 2009.
3. METHODOLOGY
Visits to the Quebec City Field Unit and Service Centre were conducted between
August 6 and August 31, 2007. The following activities were carried out during these
visits:
-
interviews with managers and staff in the field unit responsible for key financial
processes;
visit to the Espace 400e site;
examination of relevant documents, including analyses, studies, agreements
between PCA and Public Works and Government Services Canada and between
PCA and the Quebec City Port Authority, miscellaneous financial reports and
minutes of meetings;
examination of contracts and invoices.
-
-
Our observations and recommendations were made in accordance with the audit report
rating system described below:
Audit Reporting Rating System
RED
Unsatisfactory
Controls are not functioning or are nonexistent.
Immediate management actions need to be taken to
correct the situation.
ORANGE Significant
Improvements
Needed
Controls in place are weak. Several major issues were
noted that could jeopardize the accomplishment of
program/operational objectives. Immediate
management actions need to be taken to address the
control deficiencies noted.
YELLOW Moderate
Improvements
Needed
Some controls are in place and functioning. However,
major issues were noted and need to be addressed.
These issues could impact on the achievement or not
of program/operational objectives.
Minor
Improvements
Needed
Many of the controls are functioning as intended.
However, some minor changes are necessary to make
the control environment more effective and efficient.
Controlled
Controls are functioning as intended and no
additional actions are necessary at this time.
BLUE
GREEN
OIAE
6
September 2007
Espace 400e Audit
Parks Canada Agency
Once the on-site work was completed, a preliminary report was submitted to the project
manager.
4. ASSURANCE STATEMENT
In our opinion, the audit work carried out and the evidence gathered are sufficient to
support the findings set out in this report.
5. GENERAL CONCLUSION
Management of the Espace 400e project exemplifies sound management and good
cooperation between the various stakeholders. The management control framework in
place is effective. The project has clearly-identified objectives, the roles and
responsibilities are defined, and the division of tasks is clear. In periodic meetings with
the various stakeholders, cost and schedule changes were examined and monitored in
order to comply with the project limitations. All of the funds allocated by Treasury
Board and used to date have been spent solely for the purposes of the project. The
contracting process was followed to the letter. The following section describes the
various elements.
6. OBSERVATIONS AND RECOMMENDATIONS
6.1 Management control framework
GREEN
Controlled
Controls are functioning as intended and no additional
actions are necessary at this time.
A management control framework is a set of procedures and directives aimed at ensuring
that the established objectives are met. Establishing a management control framework
facilitates cohesion and coordination between activities and provides direction for the
various stakeholders involved. Implementing an effective management control
framework enables the manager to track the progress of a project, quickly identify
situations or activities that present a risk (for example, late delivery, cost overrun) and
maximize the chances of completing the project on time and within budget.
By definition, a project is a temporary undertaking aimed at meeting a specific goal. The
chances of a project succeeding are increased if the following four steps are put in place
and monitored:
•
•
•
OIAE
conceptualization (i.e., setting objectives, a budget and general deadlines);
planning (i.e., acquiring financial and human resources, assigning duties and
coordinating activities);
execution (i.e., monitoring operations and costs, adjusting or modifying plans, and
completing the project on time and within budget);
7
September 2007
Espace 400e Audit
Parks Canada Agency
•
delivery (i.e., delivery to the user).
In most cases, completion of a project requires input from various stakeholders and
coordination of multiple simultaneous or consecutive activities. The temporary nature of
a project often assumes the existence of a time limit that is an important consideration in
making decisions.
The development of Espace 400e fits this definition perfectly. Consequently, the
effectiveness of its management framework was evaluated according to the abovementioned steps other than delivery, since the audit was conducted before work was
completed. For that final phase, the emphasis was primarily on meeting deadlines in
order to ensure timely delivery of the product.
6.1.1 CONCEPTUALIZATION
Objectives
The objectives phase of the creation of Espace 400e was carried out before the Parks
Canada Agency became involved in the project. However, when it came on board with
the project, PCA embraced the development concept. A review of the various
preliminary studies conducted to evaluate potential sites and assess environmental impact
showed that every effort was made to maximize the selection of an ideal site for Espace
400e. Moreover, a risk analysis was conducted by Public Works and Government
Services Canada and was included in the Treasury Board submission.
Budget
From the outset of the project, budget management has been handled by one manager.
That person has now retired but will continue to oversee the project for the next six
months. The work will be done on a part-time basis as the project progresses. An
advisory committee has been set up, and signing authority will be given to the Executive
Director for Quebec.
Given that the initial budget estimates for the project submitted in April 2005 by Société
du 400e totalled more than $34 million, the budgets were reviewed and adjusted so as not
to exceed the allocated envelope. The original project was modified to ensure that the
total cost of the project would stay within budget.
The initial allocation of expenditures included $4.3 million for specific purposes:
$1.7 million to cover management and administrative costs and $2.6 million to cover the
Parks Canada exhibit. Rolling those costs into the project eliminated the financial
pressure that would otherwise have been placed on the field unit to manage the project.
This is a very good management practice.
Deadlines
Every sub-project has a delivery date. Possession of the site is scheduled for February
2008. Completion of work on the pavilion is scheduled for December 2007.
Development of the Louise Basin should be completed by the end of October 2007. The
OIAE
8
September 2007
Espace 400e Audit
Parks Canada Agency
temporary facilities should be ready by May 2008 and the Parks Canada exhibit should be
available in March 2009.
A timetable has also been established by the contractors for timely delivery of the
interpretation centre, the focal point of Espace 400e. The timetable is reviewed regularly
to ensure that there are no delays.
The site visit provided an opportunity to determine the status of the work and according
to the records, the project is on track.
6.1.2 PLANNING
Resources
The $24 million authorized by Treasury Board represents the full amount of the financial
resources allocated to Parks Canada for the Espace 400e project. This amount was
allocated over four years, and the field unit receives a payment in April of each year as
part of the previously established budget program. The only extra staff provision in the
field unit for Espace 400e was a student hired for the exhibit phase of the project. Current
staff will carry out the entire project in addition to their regular duties. Salaries for
project staff are therefore covered by the funds received for the project, and a separate
line item has been created.
Assignment of tasks
The Director General, Eastern Canada has designated the Quebec City Field Unit as the
Parks Canada representative. The field unit is therefore responsible for overall
management of the project, which includes identifying general project needs and specific
needs and coordinating activities, resources, committees and budget management in
accordance with PCA policies.
Owing to the specialized nature of the work, Parks Canada has signed an agreement with
PWGSC under which Public Works will assume responsibility for identifying technical
and professional needs, awarding and administering contracts, negotiating costs and
agreements with consultants and contractors, and providing goods and services. One
project manager and two component managers have been designated to represent Public
Works and Government Services Canada. Signing of contracts and validation of any
extras that arise throughout the life of the project but that are not included in the initial
contract are the responsibility of the project manager. Work is monitored by the
component managers, one of whom is responsible for the development of the Louise
Basin, the other for the pavilion project. These managers are responsible for validating
expenditures submitted to them and sending status reports to Parks Canada. A consulting
firm has been hired to be on site at all times in order to ensure the quality of the product.
The consultants validate the invoices submitted by contractors, sign them and send them
to PWGSC for processing. PWGSC then prepares invoices for Parks Canada. A
PWGSC employee carries out daily monitoring of the site; however, the manager
responsible for the Agency is very involved in project management.
OIAE
9
September 2007
Espace 400e Audit
Parks Canada Agency
Coordination of activities
When the Louise Basin was chosen as the site for Espace 400e, a five-year plan was
developed jointly with the various stakeholders involved in the project. A number of
committees were created, including a technical project development committee made up
of representatives of the Quebec City Port Authority, the Parks Canada Agency, Public
Works and Government Services Canada, the Société du 400e, the Commission de la
capitale nationale de Québec and the environmental monitoring committee, with input
from fifteen other organizations, including the Canadian Environmental Assessment
Agency, Health Canada and Environment Canada. At the start of the project, meetings
were held periodically to track information, timetables and costs. The committee is still
in place, but meetings are now held as needed.
Because the various project initiatives were being carried out on Government of Canada
property, including property owned by the Quebec City Port Authority, the Parks Canada
Agency and Public Works and Government Services Canada, agreements were made in
order to define the roles and responsibilities of the various stakeholders, define authority
and determine responsibility for infrastructure management.
Site meetings are held every two weeks. Minutes are kept. The schedules set by the
contractor are reviewed regularly, and copies are attached to the minutes.
Coordination of activities among the various stakeholders is going well, largely owing to
ongoing dialogue and regular meetings. One example of coordination is the development
of the bicycle path that cuts through the various properties, but is managed in its entirety
by Quebec City. Development takes the various needs into account in order to ensure
that work does not have to be redone because something was overlooked (e.g., water
pipes, wiring).
Regarding the coordination of activities within the Parks Canada Agency, the Director
General for Eastern Canada is PCA’s authority for the project as a whole. The project
has been incorporated into the activities of the Quebec City field unit, and a manager has
been specifically designated to oversee project operations. Once the work is done and the
portion related to the 400th anniversary activities is complete, project management will
be transferred to the Director of the Quebec City Field Unit, who will oversee the
conversion of the interpretation centre to a Parks Canada Discovery Centre by 2009.
Moreover, to enable the Director General for Eastern Canada to assume his designated
responsibilities, an internal monitoring committee was recently created. The committee,
headed by the Executive Director of Quebec, will report directly to the Director General.
Since this is a new committee, tasks among the members had not yet been determined at
the time of the audit.
Since the project started, presentations have been made to the Parks Canada steering
committee in order to provide progress reports. The last meeting was held in April 2007.
OIAE
10
September 2007
Espace 400e Audit
Parks Canada Agency
6.1.3 PERFORMANCE
Tracking of operations and costs
As stated earlier, management of operations related to construction and development of
the site has been assigned to PWGSC under a specific service agreement (SSA) for the
duration of the project. Since this is a multi-year project, Parks and PWGSC reach an
agreement at the beginning of each fiscal year on a budget envelope for the year. In
December, the numbers are reviewed and adjusted as needed. If there is any change, the
SSA is amended. The SSA and any amendments made at the time of the audit were in
the file.
Despite the project management agreement between PWGSC and Parks Canada, the
Quebec City field unit retained full responsibility for financial management of the Espace
400e project and had to put in place controls to ensure proper tracking of costs. The
involvement of the Parks Canada manager at all stages of the project and constant
communication among the various stakeholders made it possible to ensure very good
tracking, reflected in the fact that the project is on time and within budget.
Project adjustments and modifications
The contractors on the project carry out construction work from previously approved
plans. If changes become necessary, the contractors annotate the plans as the work
proceeds. At the end of the project, copies of the plans will be given to the consultant
representing the architectural firm; the consultant is responsible for updating the official
plans that will be given to Parks Canada when the project is delivered.
When a change is necessary, the consultant submits a notice of change and the contractor
submits a price. The consultant analyses and recommends proceeding with the notice of
change to PWGSC. The PWGSC manager is then responsible for validating the
information and allowing the contractor to proceed with the proposed change.
All change notices are numbered. The action taken on a change notice and the
authorizations granted are reflected in the minutes.
Expenditures are monitored closely, and budget amendments are made as planned
activities are changed. For example, a project to build a walkway at the end of the basin
was cancelled because the activities originally planned for that area would not be taking
place. That change in the project freed up money that will be redirected to other potential
projects related to Espace 400e.
6.1.4 COMPLETION
The involvement of the Quebec City Field Unit in the Espace 400e project was aimed at
meeting two separate objectives, namely:
(1)
preparation of the site as a gathering place during the festivities with a
temporary exhibit showcasing the 400th anniversary of the founding of
Quebec City
OIAE
11
September 2007
Espace 400e Audit
Parks Canada Agency
(2)
conversion of the pavilion to a Parks Canada Discovery Centre with
permanent exhibits.
Time is a major limitation for the Espace 400e project, because the product timelines
could affect the various activities that will take place as part of the festivities.
At the time of the audit, most of the activities related to the first objective were on time
and within budget. The only exception was site development: the expectation was that
there would be an overrun on the initial budget for that phase, but not on the total budget.
Regarding the second objective, namely preparing the exhibit for the discovery centre, it
was too early to audit these expenditures. This item will have to be covered in the second
audit, which will take place in 2009.
There were also a few clauses remaining to be finalized before signing a lease with
Société du 400e for use of the building. The document was supposed to be reviewed by
officials from the Department of Justice prior to signing. It should be noted, however,
that there is an agreement in principle between the parties.
At the time of the audit, various projects were being reviewed in order to complete the
site. Those new projects include negotiations with the American consulate for a small
U.S. square. The entire estimated cost of $25,000 would be covered by the United States.
Another project is being considered to highlight the exodus of Canadians to the
northeastern United States. The estimated cost of that project is $50,000 and should also
be covered entirely by the United States.
Recommendation:
None
6.2 Funds spent as planned
GREEN
Controlled
Controls are functioning as intended and no additional
actions are necessary at this time.
The specific purpose of this section is to evaluate the quality of internal control, that is,
ensure that controls are in place and functioning well, and that all expenditures are related
to the project for which the funds were allocated.
To facilitate tracking of project costs and payment of expenditures during the year, an
internal order number has been assigned to each sub-project. Very few purchases are
made directly by PCA. PWGSC is responsible for awarding and managing contracts,
which account for most of the project costs. Because they are the ones who monitor the
work, PWGSC managers validate invoices as the work proceeds. A total monthly invoice
covering the various costs incurred is then submitted to Parks Canada for payment. An
audit of the files showed that spending was tracked and some expenditures were
OIAE
12
September 2007
Espace 400e Audit
Parks Canada Agency
questioned such as corrections to hourly rates or changes to the work completion
percentage.
From PCA’s perspective, using the specific internal order number for each sub-project
makes it easier to monitor expenditures related to those sub-projects and thus
significantly improves tracking and accountability. The financial officer in the field unit
does allocation of costs among the various projects when the PWGSC invoices are
received. Data is not entered in the STAR financial system until everything has been
balanced. The same person enters the salaries of employees working on the project in
STAR. The data is taken from the Salary Management System (SMS).
Recommendation:
None
6.3 Fair and optimal use of contracting resources
GREEN
Controlled
Controls are functioning as intended and no additional
actions are necessary at this time.
By using PWGSC services, PCA delegated day-to-day project management authority, but
retained a veto. Analysis of the files showed that the contracting process was respected
and that no change was made to the project without justification or prior analysis.
An example of optimization of resources and thus, sound management, is the $1.4 million
Specific Service Agreement between Parks Canada and PWGSC. The agreement made it
possible to pre-purchase windows at a good price instead of waiting until it was time to
install and taking the chance that the cost would be higher because of market conditions.
We did not find any deficiencies in the awarding of contracts by the field unit. However,
some of the rationales for choosing a sole supplier were not sufficiently detailed.
Discussions with the manager responsible for the project made it possible to clarify the
specific needs regarding the themed exhibit and thus justify the use of a sole supplier.
Measures were taken to ensure that files were more complete.
Recommendation:
None
OIAE
13
September 2007
Espace 400e Audit
Parks Canada Agency
Appendix A: Criteria used to meet the objectives
Objective 1 – Effectiveness of the management control framework, i.e.,
conceptualization and planning of the project
Criteria:
1 Clear objectives are identified for the project
2
Roles and responsibilities are clearly defined, documented and disseminated
3
Costs are clearly identified and properly monitored
4
The control environment in place fosters sound, effective management; the
systems in place are reliable and provide quality information (i.e., information
available and easily accessible; project on time and within budget; adequate
controls)
Objective 2 – Funds spent as planned, i.e., project execution
Criteria:
1 Funds received from the Treasury Board Secretariat for the 400e project are used
only as planned;
2
All costs incurred (salaries, materials, etc.) are properly tracked and accounted
for;
3
All expenditures are supported and approved by the competent authority.
Objective 3 – Fair and optimal use of contracting resources, i.e., project completion
Criteria:
1. Before a contract is signed, needs are clearly identified and set out in writing.
2. Contracting activities comply with policies and procedures.
3. The contracting method used is appropriate.
OIAE
14
September 2007