Audit of the Primary Health Care Transition Fund Contributions to the Ministry of Health and Long-Term Care of the Province of Ontario - October 4, 2006

Summary

This audit engagement was undertaken at the request of Health Canada's Associate Deputy Minister, under the authority of Health Canada's Audit and Accountability Bureau.

On November 1, 2002, Health Canada's Primary and Continuing Health Care Division (PCHCD) (formally "Primary Health Care Division") signed a Contribution Agreement with the Ministry of Health and Long-Term Care of the Province of Ontario (MOHLTC). The purpose of this agreement was to fund the Province of Ontario's participation in the Federal initiative called "Primary Health Care Transition Fund" (PHCTF), up to an amount of $213 million, for the period September 12, 2002 to September 30, 2006. The objectives of the PHCTF Initiative were to:

• Increase the proportion of the population with access to primary health care organizations which are accountable for the planned provision of comprehensive services to a defined population;
• Increase emphasis on health promotion, disease and injury prevention, and management of chronic diseases;
• Expand 24 hour 7 day a week access to essential services;
• Establish multi-disciplinary teams, so that the most appropriate care is provided by the most appropriate provider; and
• Facilitate coordination and integration with other health services, such as hospitals and health care specialists.

The objectives of the audit were to assess the effectiveness of the management control framework put in place by Health Canada for this Contribution Agreement and to determine whether payments made by PCHCD to MOHLTC during fiscal years 2003-04 and 2004-05 were made in compliance with the terms and conditions of the Contribution Agreement, the Treasury Board Secretariat (TBS) Guide on Grants and Contributions and the TBS Policy on Transfer Payments, and the Financial Administration Act.

Key Observations

• PCHCD has not monitored on an on-going basis the management control framework put in place by MOHLTC, in accordance with the Contribution Agreement, to ensure that sound practices are maintained for financial planning, expenditures control and reporting.
• PCHCD did not require that the MOHLTC submit the details of Program and Delivery Expenditures for which it is seeking reimbursement, as this is not stipulated in the Contribution Agreement. This lack of substantiation means that the PCHCD does not obtain a sufficient level of assurance that all expenses claimed by the MOHLTC are eligible under the terms of the Contribution Agreement.
• On a number of occasions during fiscal years 2003-04 and 2004-05, budget changes were made for which no written evidence was found to indicate that PCHCD had authorized the changes. In the majority of cases, the approval of budget changes was provided verbally; in other cases, budget changes were approved retroactively. In addition, during the same period, PCHCD has not enforced compliance with Section 6.3 of the Contribution Agreement, which requires that MOHLTC submit its annual detailed budget for the next fiscal year before June 30. Compliance with this section is important to ensure that PCHCD has sufficient time to review proposed budgets and request any desired changes. For the 2005-06 fiscal year, the deadline has been complied with.

Recommendations

It is recommended that PCHCD:

• ensure that appropriate financial and management controls are in place in the MOHLTC;
• request that, on a quarterly basis, the MOHLTC provide a list of all payments made to ultimate recipients, as well as a breakdown of its Delivery Expenditures, which should be reconciled with the total expenditure amounts reported by the Ontario Ministry in its progress reports;
• confirm policies and procedures related to budget changes, clarify them within the PHCTF Program Monitoring Guidelines and communicate them to the MOHLTC; and
• strengthen the monitoring of budget changes to ensure compliance with policies and procedures.

Management' Response

The Management of the PCHCD is in general agreement with our recommendations.