Management Response and Action Plan (MRAP) - Audit of Capital Asset Management

December 2009

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Recommendations	Management Response	Planned Actions	Deliverables	Expected Completion Date	Accountability
Recommendation No. 1 The Chief Financial Officer should ensure that the mandate and membership of the Assets Management Committee is modified to facilitate integration of the operational and financial aspects of asset management.	The Chief Financial Officer will ensure the alignment of the financial and operational management aspects of Capital Assets at Health Canada by using an existing governance structure within the Senior Management Board Finance, Evaluation and Accountability (SMB-FEA), with support and reports from working level committees such as the Asset Management Committee (AMC).  This will be implemented in December 2009.	The Asset Management Committee reports through SMB FEA, including major decisions on the financial and operational management aspects.			Material and Asset Management Directorate (MAMD) and Financial Operations Directorate (FOD)
		The Terms of Reference for the AMC will be updated to include a representative from Finance (financial management aspects) and reflect its formal link to SMB FEA.	Updated Terms of Reference for the AMC	December 31, 2009	MAMD
Recommendation No. 2 The Chief Financial Officer should ensure that a process is implemented to ensure that all expenses incurred on capital projects are capitalized.	A module in the department Financial System (SAP) is being developed to automate the capitalization of work in progress. However, it will not be ready until July 2010.  In the mean time, the Chief Financial Officer Branch will continue to use an existing manual process to capitalize work-in-progress for capital projects on a quarterly basis during 2009-2010., The new SAP module will commence capitalizing work-in-progress on an automated basis in 2010-2011.	Use an existing manual process to capitalize work-in-progress for capital projects on a quarterly basis during 2009-2010
		Development and implementation of an automated system in SAP for capitalizing work-in-progress on a monthly basis.	Automated system in SAP for capitalizing work-in-progress on a monthly basis.	July 1, 2010	FOD / Accounting Operations & Systems Division (AOSD) / Public Accounts & Policy Division (PAPD)
Recommendation No. 3 The Chief Financial Officer should ensure better enforcement of departmental policies for documentation of recapitalizations as well as accounting treatment for asset-bundling and assets under construction.	The Chief Financial Officer Branch is in the process of finalizing a new Policy on Accounting for Capital Assets.  Once approved and implemented, this policy will provide the basis for a formalized and consistent process for the capitalization of assets including the capture of work in progress data throughout the asset development process.  The same policy will provide specific direction with respect to asset-bundling.	Implementation of the new Accounting for Capital Assets Policy that will prescribe that assets under construction are correctly entered into the system and will provide specific direction with respect to bundling.	A new Accounting for Capital Assets Policy.	March 1, 2010	FOD / PAPD
Recommendation No. 4 The Chief Financial Officer should implement measures to ensure the consistency of the two main information systems that capture data on assets.	An annual reconciliation of two SAP modules will be performed to ensure the ongoing consistency between the two systems. The Chief Financial Officer Branch will also perform a feasibility analysis for integrating and linking the two SAP modules that capture data on assets. This analysis will be performed in the first half of 2010-2011. This enhancement, if judged feasible, could be completed by the end of March 2011.	Capital Assets Inventory information collected and verified in the Plant Maintenance Module in SAP.	Capital Assets Inventory	December, 2009	MAMD
		Capital Assets inventory information reconciled / inputted into the Asset Accounting Module of SAP.	Capital Asset Reconciliation and required adjustment entries	March 2010	FOD
		Feasibility analysis (including cost effectiveness of solution).	Feasibility Analysis	June 2010	MAMD and FOD
		Implement system enhancement which will result in the linking/integration of the two modules that capture asset data (if deemed feasible and cost effective).	Integration of the two modules that capture asset data in SAP.	March 2011	MAMD and FOD