Audits of Selected Capital Contribution Agreements for the Design, Construction and Modification of On-Reserve Health Facilities in the British Columbia/Yukon Region - March 8, 2007

Summary

Health Canada is responsible for ensuring the availability of health services for First Nations and Inuit communities. In this context, the Department uses transfer payment programs (i.e., capital contribution agreements) to provide funding to First Nations organizations for the design, construction and modification of necessary on-reserve health facilities. These capital contribution agreements (CCAs) are administered at the regional level.

The objectives of the audits were to assess the effectiveness of the management of such capital projects in the British Columbia/Yukon Region and the degree to which the recipients of contribution funding complied with the terms and conditions of their agreements with Health Canada. The audits focussed on a sample of ten capital projects undertaken between January 2000 and March 31, 2005, by four different First Nations organizations. The related contribution agreements ranged in value from $80,000 to over $1.2 million, and totalled $4,597,937 in funding.

The audits were conducted by Consulting and Audit Canada on behalf of Health Canada's Audit and Accountability Bureau (AAB) in accordance with AAB's audit policies and practices, Health Canada's Ministerial Audit Guide related to FNIHB contribution programs, the Treasury Board Secretariat Internal Audit Policy and the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing.

AAB reported the detailed results of the examination of each of the ten capital contribution agreements in separate audit reports. In response, Management Action Plans were developed by the British Columbia/Yukon Region to address the recommendations contained in the ten AAB audit reports, which describe detailed results of the examination of each agreement. AAB acknowledges that the implementation of the necessary corrective action is well underway.

Nevertheless current report underlines the need to improve Health Canada's management practices related to capital contribution agreements by:

• strengthening the Department's oversight of the contracting practices followed by recipients;
• improving the segregation of incompatible duties, both within the organization and between the Department and recipients;
• strengthening the controls in place within Health Canada for processing and releasing related payments; and
• initiating suitable action to recover the contribution funding that was not supported by the audit.