Thank you.
Mr. Chair, thank you for this opportunity to discuss chapter 6, entitled “Transfer Payment Programs—Canadian Northern Economic Development Agency”, from our 2014 spring report. Joining me at the table is Glenn Wheeler, principal, who was responsible for the audit.
The Canadian Northern Economic Development Agency was created in 2009. It is Canada's first stand-alone entity dedicated to promoting economic development in Canada's three territories.
We examined whether the agency manages selected economic development transfer payment programs in accordance with key requirements of the Policy on Transfer Payments. We also examined whether the agency has established the organization and aligned its resources to carry out its overall mandate.
Our examination focused on three programs: the targeted investment program, the community economic development program, and the northern adult basic education program. Through contribution agreements with recipients, the agency provides funding for projects that are aligned with the objectives of these programs. As of March 31, 2013, the agency had signed 345 contribution agreements with recipients under these three programs, allocating approximately $100 million to various economic development projects.
We concluded that the agency was implementing a management framework for transfer payment programs and that its assessment of project eligibility was adequate for two of the three programs. However, its administration of agreements was weak. For example, we found that it took, on average, over nine months after an application was received for a contribution agreement to be signed. As a result, some of these agreements were signed late in the fiscal year they covered, and some recipients had only a short period of time to spend funds. Of the 42 agreements we examined, 23 were signed in the last quarter of the year.
We also noted that the agency was not adequately monitoring the contributions it paid out. It was not collecting enough information from recipients to know whether they were complying with the requirements set out in their contribution agreements.
Furthermore, in the 42 agreements we examined, we found that the agency had not received all required reports. For example, about 15% of the reports due for the 2010-11 and 2011-12 fiscal years had not been received. Of those received, about 80% were late, most by several months. The project file showed little evidence that the agency contacted recipients to obtain reports or to do other monitoring such as phone calls or site visits.
As a result, the agency did not know whether the economic development programs were achieving their intended objectives, or whether the funding it provided was making a difference to economic development in the north.
When the agency was established in 2009, the government determined that, as part of its strategy, the headquarters would be located in Iqaluit. However, at the time of our audit, the agency had not been able to fill some key positions in the north, and critical corporate functions continued to reside in the Ottawa liaison office. The agency was updating its human resources plan to guide future recruitment, but it did not have a plan to relocate corporate functions to Iqaluit.
The agency has agreed with our recommendations, and it has prepared an action plan to address each of our recommendations. The committee may wish to contact the agency for its schedule and expected outcomes.
Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.
Thank you.