January 2016

Table of Contents

1. Executive Summary
2. Background
3. Audit Objective and Scope
4. Audit Approach
   • 4.1 Sampling Methodology
5. Audit Findings
   • 5.1 Existence of authorities, responsibilities and accountabilities
   • 5.2 Adequacy of instruments, policies and procedures
   • 5.3 Compliance with human resources authorities
6. Conclusion
7. Statement of Conformance
8. Management Response and Action Plan
9. Annex 1 – Excerpt from the Human Resource Delegation Matrix

1 EXECUTIVE SUMMARY

The delegation of authority establishes one of the fundamental internal controls in the management of government.  The following quote from the Privy Council Office comes from a guide prepared for Ministers and Ministers of State that outlines their role in their respective departments:

Given the scope and complexity of the powers, duties and functions vested in Ministers, by practical necessity the majority are exercised on the Minister's behalf by departmental officials pursuant to common law principles that have been codified in legislation or pursuant to express delegations of authority from the Minister.^{Footnote 1}

Delegated authorities empower managers to achieve departmental and government objectives, while maintaining accountability for decisions.

At Infrastructure Canada (INFC), human resource authorities are delegated through the Instrument of Sub-Delegation of Human Resource Authorities.  This document outlines how staffing authorities in the Public Service Commission's (PSC) Appointment Delegation and Accountability Instrument are sub-delegated to various levels of managers.  The sub-delegation instrument also provides guidance on other human resource related authorities, such as the granting of leave, performance management, and awards and recognition.

Audit Objective and Scope

The audit objective is to provide assurance that INFC is administering its delegated human resource authorities in accordance with legislative and policy requirements.
Specifically, the audit criteria are:

• Authority, responsibility and accountability instruments are established, and documented;
• Internal human resources management policies and procedures are adequate, up to date, and communicated; and
• Compliance with authorities was attained and monitored.

The scope for this audit included the period between April 2013 and June 2015 and examined departmental policies and procedures, as well as those established by relevant central agencies, and relevant legislation.  Information obtained through December 2015 was also considered as part of the analysis.

Conclusion

The audit found that INFC generally administered its delegated human resource authorities in accordance with legislative and policy requirements. Internal audit identified one issue requiring immediate attention.  To address the immediate concern, it is recommended that the Assistant Deputy Minister (ADM), Corporate Services Branch:

• Review all employees with delegated authority to ensure that all required training has been taken.

Four areas for improvement were found that focus on improving the clarity of the delegation instrument, improving internal processes, and developing department specific training or guidance for delegated managers.

It is also recommended that the ADM, Corporate Services Branch:

• Update the Instrument of Sub-delegation of Human Resource Authorities to reflect the changes to the governance structure. This will clarify the roles and responsibilities of those who are expected to execute delegated human resource authority.
• Formalize the risk assessment process when authorities are delegated. This would justify why delegations are being made and to ensure that appropriate monitoring is in place.
• Create formal procedures for the administration of human resource delegation. Clear and formal procedures are needed to ensure that legislative, as well as departmental and Treasury Board policy requirements are being adhered to.
• Develop a training/guidance/awareness package for officials with delegated human resource authority.

2 BACKGROUND

Introduction

The delegation of authority establishes one of the fundamental internal controls in the management of government.  The following quote from the Privy Council Office comes from a guide prepared for ministers and ministers of state that outlines their role in in their respective departments:

Given the scope and complexity of the powers, duties and functions vested in Ministers, by practical necessity the majority are exercised on the Minister's behalf by departmental officials pursuant to common law principles that have been codified in legislation or pursuant to express delegations of authority from the Minister.^Footnote2

Delegated authorities empower managers to achieve departmental and government objectives, while maintaining accountability for decisions.

Two key authorities related to the day-to-day management of government are delegated: financial authorities and human resource authorities.

Human Resource Authorities

Government Context

The authority and responsibility for human resources is shared among the Office of the Chief Human Resources Officer (Treasury Board of Canada Secretariat), the PSC and Deputy Ministers (DM). The PSC delegates to DMs all the related authorities required to enable staffing in their respective departments.

The authority is formally delegated to Deputy Heads (DH) by the PSC through the Appointment Delegation and Accountability Instrument (ADAI). In the spirit of the preamble to the Public Service Employment Act (PSEA), DHs are further encouraged to sub-delegate these authorities within their organization. 

As of December 2015, the PSC has announced that a revised ADAI and related appointment policy will come into effect on April 1, 2016.  It will provide additional flexibility for departments as well as significantly change the monitoring and reporting of these authorities between departments and central agencies.

Departmental Context

As outlined in the 2015-2016 Report on Plans and Priorities, in 2015-16 INFC reported 370 employees and planned spending in excess of $3.6 billion.  The department has six Senior Executives at the DM, Associate Deputy Minister and ADM levels and 27 executives at the Director General and Director levels.  Supporting the executive level are managers at various groups and levels throughout the department.

Human resource authorities are delegated through the Instrument of Sub-Delegation of Human Resource Authorities approved by the DH. 

The instrument delegates more than 100 authorities across six generic management positions, and two functional authorities.  It documents how staffing authorities are sub-delegated to the various levels of management at INFC as well as provides guidance on other human resource related authorities, such as the granting of leave, performance management, and awards and recognition.

Diagram 1 – Overview of roles and responsibilities related to delegated Human Resource Authorities

3 AUDIT OBJECTIVE AND SCOPE

The audit objective is to provide assurance that INFC is administering its delegated human resource authorities in accordance with legislative and policy requirements.

Specifically, the audit criteria are:

• Authority, responsibility and accountability instruments are established, and documented;
• Internal human resources management policies and procedures are adequate, up to date, and communicated; and
• Compliance with authorities was attained and monitored.

The scope for this included the period between April 2013 and June 2015 and examined departmental policies and procedures, as well as those established by relevant central agencies, and relevant legislation.  Information obtained through December 2015 was also considered as part of the analysis.

This audit was conducted in accordance with INFC's Risk-Based Audit Plan 2015-2018.

4 AUDIT APPROACH

The approach and methodology used conforms to generally accepted practices, processes, procedures and standards of internal audit in the Government of Canada, and conforms to the Treasury Board Policy on Internal Audit and the Institute of Internal Auditors International Standards for the Professional Practice of Internal Auditing.

The PSC's Appointment Framework, Treasury Board Directive on the Administration of Required Training, and INFC's Instrument of Sub-Delegation of Human Resources Authorities were the main sources of audit criteria used in this audit. In addition, the Office of the Comptroller General's most recent version of the Core Management Controls and relevant practices and reports from other Government of Canada Departments and Agencies were also consulted.

The audit work was conducted in three phases - planning, examination, and reporting - with deliverables prepared at key points. The planning phase included interviews with INFC officials, document review and an audit risk assessment. The audit plan was presented to the client to validate facts and to confirm the accuracy and completeness of the information prepared.

The examination phase of the audit included various tests as necessary to provide reasonable assurance on the administration of delegated human resource authorities.  Auditors interviewed departmental officials, reviewed documentation, and conducted process walk-throughs.

4.1 Sampling Methodology

Selected transactions from three types of delegated human resource authorities were examined as part of the audit:

5 AUDIT FINDINGS

5.1 Existence of authorities, responsibilities and accountabilities

Audit criterion

It was expected that authority, responsibility and accountability instrument were established, and documented. Specifically:

• Delegated authorities were written, and approved by the appropriate authority;
• The delegation instrument was clear in the communication of the delegated authorities;
• Delegated authorities were aligned with roles and responsibilities; and
• There was appropriate segregation of duties related to the exercise of delegated authorities.

This criterion focuses on the underlying delegation instrument

Delegated Authority for 5.1 Existence of authorities, responsibilities and accountabilities

The Instrument of Sub-Delegation of Human Resources Authorities is the written delegation of human resource authorities at INFC.  The most recent version was approved by the DM on December 15, 2014.

Clarity of the delegation instrument

The ADAI imposes the same restrictions on all federal departments and agencies covered by the PSC.  The PSC also has the ability to impose additional restrictions to specific organizations. INFC was not subject to additional restrictions during the period covered by this audit.

INFC's Instrument of Sub-Delegation of Human Resources Authorities is clear and reflects all the delegations contained in the ADAI.  Moreover, it provides additional clarity on the delegation of other authorities, beyond those in the ADAI, such as who can approve various types of leave, and awards and recognition.

The most recent Instrument of Sub-Delegation of Human Resources Authorities givescertain responsibilities and accountabilities to a committee of senior management (Director General and ADM-level), the People Management Committee (PMC), such as the functional authority to grant approval for certain transactions prior to a delegated manager exercising their authority. Due to a change in the departmental governance structure in mid-2014, the PMC was dissolved.  The Human Resources and Administration directorate is currently updating the instrument to reflect this change, however as of December 2015 there was no target date for the completion of this update.  The PSC has released a new framework that comes into effect on April 1, 2016, and the Human Resources and Administration directorate is currently ensuring the update reflects any changes therein.

Risk and Impact:

The current delegation instrument puts certain responsibilities and accountabilities on a committee that no longer exists.  Various activities previously performed by the PMC are no longer occurring, or are being performed by other individuals or committees, which could result in the exercise of delegated human resource authorities that are not in accordance with policy or legislation.

Alignment of delegated authorities

The Instrument of Sub-delegation of Human Resource Authorities divides delegated authorities into six levels. As shown in Annex 1, there is a matrix of all delegable authorities, with each indicating what level(s) are authorized to exercise that authority.

The level of delegation in the Instrument of Sub-delegation of Human Resource Authorities generally aligns with the hierarchy of seniority in the department.  The level of authority granted in the instrument as compared to its corresponding rung on the hierarchy, coincided with the level of responsibilities expected of that position.

While the level of responsibilities and accountabilities assigned to a given position through the delegation instrument coincided with what was expected, there was no formal or documented risk assessment to support how far down the hierarchy delegations could be assigned.

It should be noted that the preamble to the PSEA suggests that the sub-delegation of appointment and appointment-related authorities should be pushed to public service managers, noting however, there is no definition of “manager” provided.

When the instrument is being updated, functional areas within the human resource branch reviews the part(s) of the instrument that relate to their areas of expertise.  Based on this review, suggested changes are made as a result of the reviewers knowledge of that area, including such items as recent and/or planned changes to underlying legislation, regulation, and Treasury Board or PSC policies.

Risk and Impact:

A risk assessment to support delegations is considered a best practice.  Without a documented risk assessment, there is a risk that the department is unable to explain the rationale behind decision making, which makes it difficult to determine whether the intended outcomes are being achieved. An informal process also faces risks related to corporate knowledge retention.

Segregation of duties

The Instrument of Sub-Delegation of Human Resource Authorities keeps with the DH those authorities that cannot be delegated (as outlined in the ADAI).  This includes the authority to revoke appointments, extend the agreement period for executives to become bilingual for non-imperative appointments, and the ability to sub-delegate appointment and appointment-related authorities.

Delegated human resource authorities do not face the same segregation of duty issues as delegated financial authorities.  For example, transactions with higher risk potential (such as position creation, or re-classification) require interaction with human resource staff prior to being implemented, which consequently limits the ability of an individual to unilaterally exercise delegated human resource authority.

Recommendation 1. It is recommended that the ADM, Corporate Services Branch update to the Instrument of Sub-delegation of Human Resource Authorities to reflect changes to the governance structure. This will clarify the roles and responsibilities of those who are expected to execute delegated human resource authority.

Recommendation 2. It is recommended that the ADM, Corporate Services Branch formalize the risk assessment process. This would justify why delegations are being made and ensure that appropriate monitoring is in place.

5.2 Adequacy of instruments, policies and procedures

Audit criterion

It was expected that authority instruments and related policies and procedures were adequate, up-to-date, and communicated. Specifically:

• Delegated human resource authorities were compatible with the organizational structure;
• Applicable policies and procedures were maintained, kept current and made available to persons with delegated authority;
• Delegated authorities were communicated to officials in a timely manner;
• Individuals are designated to exercise authority only after they have acquired the requisite training; and
• There was a process in place to regularly review and consult on the delegation instrument.

This criterion focuses on the administration of delegated human resource authority, specifically, the processes for granting and maintaining authority to individuals

Alignment of delegated authorities

The Instrument of Sub-delegation of Human Resource Authorities divides delegated authorities into six levels. For each item in the instrument, the authority is all or none; there are no additional or differing restrictions based on the level of the position.

The letter from the DH that formally delegates human resource authority does not specify which level on the authority matrix is being delegated. Instead, authority coincides with the incumbent position of the individual.  In the case of acting authority, an individual is delegated the authorities of the position in which they are acting.  This authority would then come into effect following the established procedures to invoke the acting assignment.

As the letter from the DH does not specify the authority level being granted, there is no potential for individuals to be granted authority that differs from that outlined in the delegation instrument.  As such, we found the levels outlined in the Instrument of Sub-delegation of Human Resource Authorities closely aligned with the organizational structure of the Department.

Policies and procedures are maintained, kept current and made available

The audit found that there was a recognized lack of formalized procedures in place to grant delegated authority to individuals.  In particular, the initial step to start the process to prepare letters from the DH granting an individual delegated authority can originate from multiple sources.  For example, such a request could come from the hiring area, from another human resources officer, or from the finance group.

The process for monitoring employee training requirements is also not formalized.  It is currently executed on an ad-hoc basis, and the entire process relies on a single employee. As the process is not documented, should that employee leave, there is a significant risk that the necessary monitoring and follow-up will not be done.

Risk and Impact:

Up-to-date, well maintained, and easily accessible policy and procedure documents are a key element of an efficient and effective business process.  These documents clearly articulate the expectations of management.  Failure to follow established policies and procedures increases the likelihood that legislative or policy requirements are not met. 

Communication of delegated authorities

Once approved by the DH, the Instrument of Sub-Delegation of Human Resources Authorities is posted INFC's intranet, and accessible by all employees.  The underlying ADAI from the PSC is also posted on INFC's intranet.

The letter from the DH that gives individuals delegated human resource authority states that the delegation stems from, and must comply with, the Instrument of Sub-Delegation of Human Resources Authorities, as well as any relevant policies, regulations, and legislation.

When an individual is first granted delegated human resource authority, they are provided with a package that includes the letter from the DH, as well as INFC‘s Instrument of Sub-Delegation of Human Resources Authorities and the ADAI.  A representative from human resources is also available to provide a quick, informal overview of the responsibilities and accountabilities that come with being delegated authority. 

Training and guidance on delegated authorities

The Treasury Board Directive on the Administration of Required Training states that an employee who exercises delegated signing authority in human resources is responsible for fulfilling the duties of their position with the exception of delegated signing authorities until successful completion of required training. The Canada School of Public Service (CSPS) is identified as the body to provide the required training, and the directive stipulates that the assessment and validation of the knowledge as related to delegated signing authorities occurs at least once every five years.

We found the requirement to ensure that employees completed all training mandated by Treasury Board prior to being granted delegated authority was followed. 

INFC has imposed additional training requirements within the Instrument of Sub-Delegation of Human Resources Authorities, whichrequires that all managers and supervisors complete the Canada School of Public Service course Performance Management for the Government of Canada (G140) prior to signing off on a performance agreement. 

We found one instance in our sample where a supervisor signed off on a performance agreement without having completed the mandatory training.

While the CSPS training provides a good overview of delegation, it is not necessarily reflective of the day-to-day operating environment of INFC.  Given the wide scope and generic nature of the CSPS course, during interviews it was noted that some employees may not clearly understand the delegated authorities they are expected to exercise, and the related responsibilities and accountabilities that flow from exercising delegated authorities.  This comment is also supported by some of the isolated errors we found in our sample.  Given these findings, some sort of training or guidance would be helpful for those with delegated authorities.

Risk and Impact:

There is a risk that employees with delegated human resource authorities do not fully appreciate all their responsibilities and accountabilities.  Beyond non-compliance to policy, the lack of training may also lead to inefficiencies and/or errors. 

Process in place to review the delegation instrument

There is no formal timeline for updates to the delegation instrument; however, the last several years have seen updates to the delegation instrument approximately every 12 to 18 months.

The Instrument of Sub-Delegation of Human Resources Authorities is circulated amongst senior management whenever changes to the delegation instrument occur.  During prior updates, these changes were reviewed and approved by the PMC; however, as previously noted, PMC has been disbanded.  Until the delegation instrument is updated to reflect the disbandment of PMC, there is a lack of clarity regarding which body or bodies will review and/or approve future changes.

Recommendation 3. It is recommended that the ADM, Corporate Services Branch create formal procedures for the administration of human resource delegation. Clear and formal procedures are needed to ensure that legislative, as well as departmental and Treasury Board policy requirements are being adhered to.

Recommendation 4. It is recommended that the ADM, Corporate Services Branch review all employees with delegated authority to ensure that Treasury Board and INFC required training have been taken, where necessary.

Recommendation 5. It is recommended that the ADM, Corporate Services Branch develop a training/guidance/awareness package for officials with delegated human resource authority. 

5.3 Compliance with human resources authorities

Audit criterion

It was expected that compliance with human resources management legislation, policies and authorities was attained and monitored. Specifically:

• Delegated authorities are exercised in accordance with the Delegation instruments;
• There is a formal process for monitoring compliance of the delegation of authorities and related legislation, policies and authorities; and
• Results of quality assurance and monitoring are reported in a timely manner to Human Resource officials as well as senior management.

Delegated authorities are exercised in accordance with the delegation instruments

The Instrument of Sub-Delegation of Human Resources Authorities requires that the work descriptions be approved by an individual with delegated human resource authorities. 

We found one instance in the sample where the individual that authorized the work description did not have delegated human resource authority. The individual in question had completed all necessary training, but had not formally been delegated human resources authorities by the DH.

From a staffing perspective, we also found one instance where an individual signed a letter of offer without having the authority to do so.  The individual did have acting authority; however, there were no records to indicate that the acting was invoked at the time the offer was made.

Monitoring of compliance

Results of monitoring are reported

The Policy and Programs group provides a monitoring function within the Human Resources and Administration directorate. Each year, an annual plan is developed to review certain items, usually based on areas identified by the PSC as being of interest.

Quarterly, work is done in accordance with the annual plan. Delegated authorities would be examined (should it apply) to the files selected for review.

Results of these reviews were previously shared with the PMC.  Since the PMC was disbanded, it is not clear where the results will now be reported.

6 CONCLUSION

The audit found that INFC generally administered its delegated human resource authorities in accordance with legislative and policy requirements.  Internal audit identified one issue requiring immediate attention, as well as four additional areas for improvement.  To address the immediate concern, it is recommended that the ADM, Corporate Services Branch:

• Review all employees with delegated authority to ensure that all required training has been taken.

Four areas for improvement were found that focus on improving the clarity of the delegation instrument, improving internal processes, and developing department specific training or guidance for delegated managers.

It is also recommended that the ADM, Corporate Services Branch:

• Update the Instrument of Sub-delegation of Human Resource Authorities to reflect the changes to the governance structure. This will clarify the roles and responsibilities of those that are expected to execute delegated human resource authority.
• Formalize the risk assessment process when authorities are delegated. This would justify why delegations are being made and to ensure that appropriate monitoring is in place.
• Create formal procedures for the administration of human resource delegation. Clear and formal procedures are needed to ensure that legislative, as well as departmental and Treasury Board policy requirements are being adhered to.
• Develop a training/guidance/awareness package for officials with delegated human resource authority.

7 STATEMENT OF CONFORMANCE

This audit conforms to the International Standards for the Professional Practice of Internal Auditing and the Internal Auditing Standards for the Government of Canada as supported by the results of the quality assurance and improvement program.

8 MANAGEMENT RESPONSE AND ACTION PLAN

#	Recommendation	Management Response and Action Plan	OPI and Due Date
1	It is recommended that the ADM, Corporate Services Branch update the Instrument of Sub-delegation of Human Resource Authorities to reflect changes to the governance structure. This will clarify the roles and responsibilities of those that are expected to execute delegated human resource authority.	ADM Corporate Services agrees and accepts this recommendation.  HR will complete the review of the Instrument of Sub-delegation of Human Resources Authorities taking into consideration the new governance structure. This review will also incorporate the New Direction in Staffing that will take effect April 1st 2016.	ADM, Corporate Services Branch Targeted completion date: April 1, 2016
2	It is recommended that the ADM, Corporate Services Branch formalize the risk assessment process. This would justify why delegations are being made and ensure that appropriate monitoring is in place.	ADM Corporate Services agrees and accepts this recommendation.  A risk assessment process will be developed as part of the review of the Instrument of Sub-delegation of Human Resource Authorities	ADM, Corporate Services Branch Targeted completion date: April 1, 2016
3	It is recommended that the ADM, Corporate Services Branch create formal procedures for the administration of human resource delegation. Clear and formal procedures are needed to ensure that legislative, as well as departmental and Treasury Board policy requirements are being adhered to.	ADM Corporate Services agrees and accepts this recommendation.  To ensure INFC is in compliance with legislation and Treasury Board policy requirements, HR will create formal procedures, including roles and responsibilities, for the administration of human resources delegation.	ADM, Corporate Services Branch Targeted completion date: July 31, 2016
4	It is recommended that the ADM, Corporate Services Branch review all employees with delegated authority to ensure that Treasury Board and INFC required training have been taken.	ADM Corporate Services agrees and accepts this recommendation.  A review of all employees with delegated authority will be conducted and the results shared with DMC members. For those employees who have not completed the required training, an action plan will be completed to ensure that all delegated managers have the required training for HR delegation.	Policy and Program unit. Targeted completion date: February 29, 2016. Targeted completion date: April 1, 2016.
5	It is recommended that the ADM, Corporate Services Branch develop a training/guidance/awareness package for officials with delegated human resource authority.	ADM Corporate Services agrees and accepts this recommendation. HR will develop a package for managers with delegated human resources authority. This will include an information session on delegation in collaboration with the Finance group.  Information in the onboarding package will also be included when applicable.	ADM, Corporate Services Branch Targeted completion date: July 31,  2016

Management Response and action plan: Terms used in management action plans: DMC- Departmental Management Committee. Senior most committee comprised of the DM , Associate and Assistant Deputy Ministers, and the Chief Audit Executive.

9 Annex 1 – Excerpt from the Human Resource Delegation Matrix

Item	Level						Functional Authorities
	1.DM	2.Associate DM	3.EX to DM	4.All other EX*	5.EX minus 1 (with financial delegation of HR)	6.Supervisor	DG HR	PMC
Approve security requirement of position – unique work descriptions	Yes	Yes	Yes	Yes	No	No	No	No
Approve security requirement of positions – generic work descriptions	Yes	Yes	Yes	Yes	No	No	No	No
Authority to make administrative changes to positions (such as position title, location of work, linguistic profile etc.) *PMC to be consulted only when creating or changing the linguistic profile of a position to unilingual	Yes	Yes	Yes	Yes	Yes	No	No	Yes

Footnotes

Footnote 1 & 2

Canada. Privy Council Office. Machinery of Government Secretariat. Accountable government: a guide for ministers and ministers of state. [Ottawa], Privy Council Office, 2011, 44

Return to Footnote 1

Return to Footnote 2