An audit of purchasing practices in the department of Heritage Minister Pablo Rodriguez found that “there is no governance committee to actively serve.[s] Guidance and supervision of procurement activities. ”
The findings of this and other findings are the result of an audit conducted by the internal audit function of the Canadian Heritage Board (PCH), entitled “Audit of Procurement Practices”, as first reported by Blacklock’s Reporter. A report was compiled and published in June. .
PCH spent a total of $20.5 million in 2020-21, according to auditors.
“The audit team identified gaps in the department’s governance framework related to procurement. Specifically, the team’s work identified two governance bodies with some visibility into procurement as part of their function. However, neither agency has provided active guidance and oversight regarding the department’s procurement plans and activities,” the report said.
The auditor referred to PCH’s Executive Committee (EXCOM) and Finance, IT and Human Resources (FITHR) Committee.
The audit found that although EXCOM functions as a senior decision-making board, information about the division’s procurement plans or activities was “rarely presented or discussed” at its meetings.
FITHR, acting as a Level 2 committee, also [is] Also, the Commission does not actively request or discuss procurement information/data. ”
“No regular process”
The report highlights that fraud-related risks can arise if proper governance is not in place.
“This could include a variety of scenarios, such as staff exploiting conflicts of interest, bid rigging schemes, targeting specific suppliers, bribery and kickbacks,” the audit team said.
“Therefore, we need to ensure that the department has adequate internal controls in place to mitigate these risks, and that we can adequately demonstrate that value for money is being achieved through our procurement activities.”
Auditors also noted that a significant number of contracts were single sourced without competitive bidding.
“The department’s mandate and its core responsibilities require it to be involved in a relatively large number of procurements that do not involve traditional competitive processes,” the report said.
“While this does not necessarily imply a violation of government contracting requirements, it may pose risks related to the department’s ability to demonstrate value for money.”
The report added that “there is no regular process” for senior management in the heritage department to review and provide strategic direction for procurement.
“The planning process and allocation of procurement resources are not driven by the strategic allocation of resources or risk departments,” he said.
“No delegated authority”
The audit team randomly selected 145 files and found that 6 contracts were undocumented, 9 were undated, 1 was illegible, and 2 were provided by unauthorized personnel. I understand.
“Additionally, another seven contracts with amendments (out of the 51 tested) [contract] Either the documented expenditure initiation and commitment approval and/or approval date for the amendment was missing,” the auditor wrote.
Only 63% of the contracts put up for competitive bidding had established evaluation criteria, and only 53% had all bids fully evaluated.
The audit also found there was “very limited guidance material” for using government-issued credit cards for purchases under $10,000, and staff spent more than $3 million in 2019-20. .
“There is no documented process associated with tracking, monitoring and canceling acquired cards,” the report said. “It is therefore unclear who is responsible for these activities and whether they are being effectively carried out.”
As well as random checks of contract files, the audit team found “exceptions and discrepancies” in credit card transactions.
“Specifically, out of the 148 files tested, spending initiation and commitment authorization was provided by a delegated, unauthorized individual in 7 transactions and not in 17 transactions. It was illegible and was provided post-purchase for 9 transactions: 9) Transactions,” the auditor said.
In four cases, all records were ‘lost or destroyed’.