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Report of the Auditor General of Québec to the National Assembly for 2013-2014 Value-for-Money Audit Fall 2013 Presentation of the Report’s Content
Report of the Auditor General of Québec to the National Assembly
for 2013-2014
Value-for-Money Audit
Fall 2013
Presentation of the Report’s Content
Table of Contents
Chapter 1 – Observations of the Acting Auditor General, Mr. Michel Samson
Chapter 2 – Tourisme Québec and Regional Tourism Associations Chapter 3 – Montreal University Health Centre: Administrative
Management and Governance
Chapter 4 – Agence métropolitaine de transport: Governance and Management of Major Infrastructure Projects
Chapter 5 – Offences to Laws Involving Penal Provisions
Chapter 6 – Disasters: Risk Management and Financial Assistance
Chapter 7 – Société immobilière du Québec: Measures to Assess Effectiveness and Performance
2
Observations of the Acting Auditor General, Mr. Michel Samson
C H A P T E R
1
Expanded Mandate for Value-for-Money Audits
Amendment to the Auditor General Act (June 14, 2013) Possibility of carrying out VFM audits among government’s
“enterprises” without the prior agreement of the board of directors One exception: the Caisse de dépôt et placement du Québec Impact of this legislative amendment VFM audit intervention possible without agreement in more than
20 additional entities Improvement of parliamentary control towards these entities
4 Ch. 1, Par. 4-7
Expanded Mandate for Value-for-Money Audits (cont.)
5 Ch. 1
Five among entities concerned by the amendment to the Act
Expanded Mandate for Value-for-Money Audits (cont.)
Challenges and issues minimize the impact on the AGQ’s current work respect the commitments of our strategic planning for 2012-2015 (priority
intervention sectors) and increase the labour force in Montréal. Current actions assessment of the scope of the added work integration into the VFM audit intervention strategy (5-year cycle) and discussions with the Secrétariat du Conseil du trésor and the Office
of the National Assembly on the possible scenarios.
Ch. 1, Par. 8-16 6
Tourisme Québec and Regional Tourism Associations
Audited Entities: Ministère des Finances et de l’Économie (Tourisme Québec) Association touristique régionale des Cantons-de-l’Est Association touristique régionale de Chaudière-Appalaches Association touristique régionale de Québec Association touristique régionale de Montréal
C H A P T E R
2
Context
Tourisme Québec
Mission to support the development and promotion of tourism in Québec
Partnership with 22 regional tourism associations (ATRs) Administers 2 assistance programs
– Programme de soutien au développement et à la promotion touristiques (PSDPT)
– Programme d’aide financière aux projets d’infrastructures portuaires et touristiques
8 Ch. 2, Par. 2, 3, 5
Our Audit
Objectives of our audit work
To obtain the assurance – that Tourisme Québec effectively orients and coordinates government
interventions with regard to tourism and reports the results obtained – that Tourisme Québec awards and controls financial assistance and
visibility agreements in accordance with adopted orientations and established rules, in a perspective of developing sustainable tourism
– and that the audited ATRs economically and effectively manage the funds entrusted to them.
Work scope
Work was carried out among Tourisme Québec, the ATR des Cantons-de-l’Est, the ATR de Chaudière-Appalaches, the ATR de Montréal and the ATR de Québec.
9 Ch. 2, Appendix 1
Audit Results
Good practice
Deficiency
Evidence
Consequence
10
Situations Common to the ATRs
About 56% of all revenues from ATRs come from the accommodation tax and from the PSDPT’s operating subsidy.
In 2011-2012, $55.8M out of $100M came from these 2 sources.
The contract award process must be better supervised to ensure a sound use of public funds.
Certain practices deserve to be revised. – Minimum threshold for launching a call for tenders not met – Lowest tenderer not selected – Procedures sent to suppliers insufficient – Conservation of documents for too short a period
Ch. 2, Par. 13, 22-25 11
Situations Common to the ATRs (cont.)
The subsidy award process does not favour the objective and fair selection of projects. – Project assessment does not include the ranking of projects based on
their merit – Non-compliance with the eligibility criterion related to the promoter’s
investment – Presentation by the ATRs of their own projects, which places them in
an appearance of a conflict of interest situation
The justification of amounts awarded and the monitoring of the fulfillment of obligations imposed on recipient organizations are insufficient. – Inadequate monitoring with respect to the achievement of the expected
economic benefits – Clause of the agreement not met with respect to the time of the financial
assistance payment
Ch. 2, Par. 28-38 12
Situation Specific to the ATR de Montréal
In 2011-2012, the ATR de Montréal had expenditures of $33.3M and had 78 employees.
The proportion of public funds allocated to the ATR de Montréal is important. – 75% of its revenues come from the Government of Québec. – 10% come from the federal government and the Ville de Montréal.
The ATR de Montréal sometimes uses public funds inappropriately.
13 Ch. 2, Par. 42, 43, Table 2
Situation Specific to the ATR de Montréal Remuneration and Other Financial Benefits
of the Former President and CEO Very important difference between the remuneration and other
financial benefits of the former president and CEO of the ATR de Montréal ($398,300) compared to – those of the most senior officers of the other audited ATRs: 2.6 to 4.4 times
higher – the salary of the government’s secretary general ($241,500) and the
maximum salary of a deputy minister ($201,300) – and the salary of the president and CEO of an organization in the same
activity sector: $170,000 and no bonus.
Unjustified payment to the former president and CEO of an annual allowance of $10,800 for costs related to the use of an automobile, when a car was provided to him by the ATR – Following our comments, he reimbursed the ATR an amount of $72,000.
14 Ch. 2, Par. 47-50, 53
Situation Specific to the ATR de Montréal Travel and Entertainment Expenses of the Former President and CEO
The amount of some of the former president and CEO’s expenses represents, in our opinion, a misuse of public funds. – For 6 of 10 trips abroad, the price paid for accommodation expenses
exceeded double the limit indicated in the government policy, and it even exceeded 4 times that amount on 2 occasions.
– For the last 2 years, $39,700 was reimbursed to him for meal expenses without the purpose of the meetings always being documented.
– A receipt for $1,600 from the SAQ was reimbursed to him in 2011-2012 ($2,500 in 2012-2013) without the purpose of the meetings and the people present being specified.
Approximately $10,000 expenses were reimbursed twice to the former president and CEO over 3 years. After this finding was presented to him, he reimbursed the ATR.
15 Ch. 2, Par. 57-63
Situation Specific to the ATR de Montréal Donations and Sponsorships
The donations and sponsorships paid by the ATR de Montréal do not arise from an established analysis process. No documentation justifies their relevance. – More than $750,000 was paid for the last 2 years. – The link with the ATR’s mission is not clear. – Several organizations received this type of assistance on a recurring
basis over the last 3 years.
The former president and CEO was reimbursed for donations of approximately $64,000 by the ATR de Montréal for which he was issued tax slips, which allowed him to reduce his taxable income. After he was informed of this finding, he mentioned having made a
voluntary disclosure to Revenu Québec and to the Canada Revenue Agency.
16 Ch. 2, Par. 65-68
Programme de soutien au développement
et à la promotion touristiques The assistance awarded by the PSDPT from 2008-2009 to
2011-2012 was $125.5M (1,009 projects).
For several components of the PSDPT, the subsidy award process does not always favour the objective and fair award of subsidies. 29 of the 60 audited files did not meet the eligibility criteria (project
characteristics, deadline, promoter’s investment). For 2 events, the assistance paid exceeds the maximum prescribed, with
an over-expenditure over 4 years of $1.5M for the first event and of $400,000 for the second.
An event received $675,000 whereas based on its tourism performance and its expenditures of the previous year, the amount should have been $415,000.
17 Ch. 2, Par. 78-88, Tables 5 and 6
Programme de soutien au développement
et à la promotion touristiques (cont.) Tourisme Québec does not always ensure
that recipient organizations meet the requirements provided for in the assistance agreements
that program objectives have been reached and that related party transactions are reasonable and that they justify the
amount of financial assistance.
18 Ch. 2, Par. 90, 95
Government Coordination
Large number of actors: 10 federal departments and agencies, 19 provincial departments and agencies, 21 regional conferences of elected officers, 87 regional county municipalities, 120 local development centres and municipalities.
Measures put in place by Tourisme Québec insufficient for ensuring a greater coherence of government interventions in the tourism sector – A report from 2011 addresses the confusion and overlap of roles and
responsibilities, the overly large number of actors and the lack of coherence between those actors.
– No action in the 2012-2020 development plan for the tourism industry allows corrective measures to be made to the overly large number of structures.
19 Ch. 2, Par. 114-117
Supervision of the ATRs
Tourisme Québec does not ensure that each of the ATRs efficiently manages the amounts entrusted to it. – Subsidy for operation paid mainly on a historical basis – Little use of the information obtained from the ATRs to compare their
performance – Absence of supervision and of monitoring for costs related to solicitation
(gratuities) despite the risks related to this type of expense.
20 Ch. 2, Par. 121-125, 131
Comments of the Audited Entities
The audited entities accepted all our recommendations.
However, the ATR de Montréal and the former president and CEO of that association do not agree with some of our findings, including – the remuneration and other financial benefits of the most senior officer – the travel and entertainment expenses – the donations and sponsorships.
Reaction to the ATR de Montréal’s comments Given that 75% of its revenues come from the Government of
Québec, the ATR must have a greater concern for the sound management of public funds.
21 Ch. 2, P. 33-40
Montreal University Health Centre: Administrative Management and Governance
C H A P T E R
3
Context
CHUM Established in 1996 following the merger of the Hôtel-Dieu,
Hôpital Notre-Dame and Hôpital Saint-Luc – Specialized and highly specialized services to an adult clientele – Half a million patients every year – More than 12,000 people working there
Revenues in 2012-2013: close to $894M
– Funds coming mainly from the government – Contribution from the Fondation du CHUM of close to $9M
23 Ch. 3, Par. 1-3
Our Audit
Objective – To obtain the assurance that the CHUM complies with the laws and
regulation related to the appointment and remuneration of executives, the expenses incurred by some executives, the awarding of professional service contracts as well as the administrative operating expenses, and that it applies sound management practices in the matter.
Recommendation of the Committee on Health and Social Services (June 2013) – That the Auditor General of Québec, in his current audit mandate at the
CHUM, pay particular attention to the following issues: contracts awarded without calls for tenders, in particular that of Mr. Philippe Massat, and possible contract splitting; the filling of executive positions without an authorization request to the Department; the remuneration of the director general since he assumed his duties, a portion of which may have come from the Fondation du CHUM; the selection process that determined the choice of the director general in 2009.
24 Ch. 3, Par. 7, Appendix 1
Audit Results
Good practice
Deficiency
Evidence
Consequence
25
Appointment and Remuneration Director General
Compliance with the regulation and sound management practices for the process of hiring the director general
Remuneration paid to the director general by the CHUM not in compliance with the regulation since April 2010 and over the authorized maximum amount by close to $70,000 – Table 1 presents the maximum amount authorized by the regulation, and
Table 2 presents the remuneration actually paid to the director general and the amount that exceeds the authorized maximum amount.
26 Ch. 3, Par. 12, 15
Appointment and Remuneration Director General (cont.)
Ch. 3 Non-compliant 27
Appointment and Remuneration Director General (cont.)
Non-compliance with the authorized maximum amount starting in 2010-2011 for the total remuneration of the director general – In 2010-2011, the authorized maximum was $295,617 because the
availability allowance was calculated differently and the allowance for the management of a CHU did not come into force until April 1, 2011.
– For 2011-2012 and 2012-2013, the maximum authorized ceiling was $350,000, according to a decision of the Conseil du trésor.
Payment of a performance bonus to the director general from April 1, 2010, to March 31, 2013, even though the law prohibits the payment of such a bonus – The performance bonus is provided for in the contract and in a 2003
decision of the Conseil du trésor. The amount paid during this period is $168,000.
– However, the Act to implement certain provisions of the Budget Speech of 30 March 2010, reduce the debt and return to a balanced budget in 2013-2014 makes the payment of this bonus non-compliant.
– The bonus was paid on each pay before the performance assessment.
28 Ch. 3, Par. 20-24
Appointment and Remuneration Director General (cont.)
Authorization by the CHUM’s BOD for the director general to receive additional remuneration from the Université de Montréal, although it should not have authorized this – According to a 2003 decision of the Conseil du trésor, if the CHUM grants
a performance bonus, the director general shall not receive any additional form of remuneration, such as compensation from a university.
– From December 2009 to November 2011, the Université de Montréal paid the director general an annual remuneration of $80,000. In November 2011, it put an end to the payment of this remuneration.
– We found no direct link between the amount of $30,000 paid by the Fondation du CHUM to a Université de Montréal fund and the remuneration of the director general coming from that university.
– The people interviewed in relation to this event had different opinions. Evidence is rare.
29 Ch. 3, Par. 27, 28, 33
Appointment Top Executives, Senior Executives
and Middle Management Absence of validation by the MSSS of the management positions that
were created or whose salary scale was amended in recent years, as is required by the regulation – 7 of the 35 top and senior executive positions not validated – 55 of the 66 middle management positions of level 16 and higher that
were created or whose salary scale has been modified since October 2008 not validated
Internal job postings or competitions – 51% of top and senior executive positions filled not posted internally, and
40% not subject to competition – However, almost all middle management positions filled were the subject
of a job posting and competition Authorization or prior authorization for the appointments of top and
senior executives, as is required by law – For 23% of appointments, no authorization – For 54%, no approval before the individuals assumed their duties
30 Ch. 3, Par. 39, 43, 45, 47, 53, Table 3
Remuneration Top Executives, Senior Executives
and Middle Management (cont.)
Overpayment to executives of at least $1.3M, including over $750,000 from January 2010 to March 2013
Non-compliance with the salary scale assigned by the Department – 2 management positions identified, which has generated significant
overpayments since 2003 – 3 senior executives hired by contract in 2007 for remuneration greater than
what the CHUM would have paid executives of the same salary scale – From January 1, 2010, to March 31, 2013, total difference of over
$376,000 for those 2 elements Allocation of the maximum of the salary scale to 6 top and senior
executives appointed since January 1, 2010, without sufficient justifications, including with regard to their experience and skills – Total amount paid since January 2010: $121,000
31 Ch. 3, Par. 58, 60, 63, 65, 68, Table 4
Remuneration Top Executives, Senior Executives
and Middle Management (cont.)
Excess remuneration paid to some executives, not in compliance with the regulation – A lump sum was overpaid to 1 top executive and to 3 senior executives
upon their appointment (since they assumed their duties: $180,000). – Bonuses were paid for the responsibility of a site to 3 people, although
the regulation does not provide for this type of bonus (from January 2010 to March 2013: $75,000).
Remuneration paid to a CHUM executive through the Fondation du CHUM even though, in our opinion, the law prohibits this – Since March 2009, that person has accepted, with the approval of senior
management, an amount totalling $104,000 over 4 years from the Fondation du CHUM for professional services.
32 Ch. 3, Par. 71, 73, 74, 77
Appointment and Remuneration of Executives
Intervention of the Department and the Agence Work carried out by the Agence de la santé et des services sociaux de
Montréal concerning compliance in the appointment and remuneration of the CHUM’s top and senior executives – Several deficiencies were detected, which are included in a report submitted
to the current chair of the CHUM’s BOD in August 2013. – The Agence asked the board chair, in July 2013, to stop paying the lump sums
and bonuses that the Agence deemed non-compliant. – The CHUM followed up on this request on July 8, 2013.
Analysis by the Agence of the remuneration paid to the director general by the CHUM, not in compliance with the regulation – The Department indicated to the Agence in September 2013 that the recovery
of the amounts paid in relation to the performance bonus is needed for the CHUM to comply with the regulation.
– The Agence required the BOD to reimburse this excess, which is an amount of nearly $70,000.
– In October 2013, the BOD chair was still in discussion with the Agence.
33 Ch. 3, Par. 25, 81, 82
Expenses Incurred by Some Executives
Appropriate supporting documents relating to travel expenses (airplane tickets) for most trips are missing from files, and when present, they are not sufficiently detailed.
More than 65% of claims for reimbursement made for accommodation expenses outside Québec exceed what is provided for in the directive of the Conseil du trésor and without justification.
Reimbursements for meal expenses significantly exceed the amount authorized by the Department, which is not in compliance.
The vast majority of meal expenses reimbursed by the CHUM are not supported by sufficient evidence.
There is no monitoring by the BOD of the expenses of the CHUM’s senior managers.
34 Ch. 3, Par. 91, 96, 100, 103
Awarding of Professional Service Contracts
Non-compliant solicitation method: contracts awarded by mutual agreement – For the majority of the 43 selected suppliers (65%), contracts for
professional services analyzed should have been the subject of a public call for tenders or an invitation to tender.
– For example, a professional service contract renewed for several years was awarded by mutual agreement to a supplier that had to guide the CHUM in contractualization. The sum initially provided for in the contract was $125,000, and, including renewals, it amounted approximately $277,000. Therefore, this contract should have been from the start the subject of a public call for tenders.
– In most cases, exception from the normative framework was neither documented nor adequately justified. In addition, the director general did not give his approval in a timely manner.
Contract splitting – For 3 of the 43 selected suppliers, the contracts should have been the
subject of a public call for tenders since the total amount of the contracts awarded to each supplier was greater than $100,000.
35 Ch. 3, Par. 109, 110, 113, 115
Awarding of Professional Service Contracts (cont.)
Positions filled through professional service contracts – Since 2010, the CHUM has awarded contracts to 7 of the 43 audited
suppliers, including 2 top executives and 1 senior executive, in order to fill full-time or part-time positions.
– The contracts were renewed or extended for several years, which is not consistent with the spirit of the law, because it is not an exceptional situation.
Non-participation of the division in charge of procurement in the contract awarding process for 67% of the selected suppliers
36 Ch. 3, Par. 118, 125
Governance
The board of directors does not receive sufficient information to fulfill its responsibilities for governance. – Despite efforts taken by certain members to change this, the situation
persists. – The BOD formulated few specific and clear requirements regarding the
information it wishes to obtain from the CHUM’s senior management. – BOD members do not discuss several important subjects.
As at March 31, 2013, the CHUM was in the process of achieving the
objective of reducing by 10% its administrative operating expenses, as provided for by law.
37 Ch. 3, Par. 131-133, 142
Comments of the Audited Entity
38 Ch. 3, P. 34-37
The CHUM accepted all our recommendations. However, comments regarding the allocation of the maximum of the salary scale to executives have generated a reaction from us.
Agence métropolitaine de transport: Governance and Management of Major Infrastructure Projects
Audited Entities: Agence métropolitaine de transport Ministère des Transports du Québec
C H A P T E R
4
Context
The Agence métropolitaine de transport (AMT) must plan, coordinate and integrate public transit services on its territory.
The AMT operates in a complex environment that involves numerous partners.
40 Ch. 4, Par. 1-3
Context (cont.)
To maintain and develop public transit infrastructures, the AMT has 2 main sources for paying its debt service.
Subsidies from the Ministère des Transports du Québec (MTQ) granted under the Programme d’aide gouvernementale au transport collectif des personnes – 75% or 100% of project expenditures eligible costs – $113M in 2012
Municipal contributions – one cent (1¢) per $100 of the standardized property assessment – $39M in 2012
41 Ch. 4, Par. 8, 9, 11
Our Audit
Objectives of our audit work – To assess whether the current operating structure and method favour the
overall good governance of the AMT’s major public transit infrastructure projects
– To assess whether its long-term planning regarding these projects is done based on the needs identified on its territory, its strategic objectives, government orientations and the planned financial framework
– To obtain the assurance that corrective measures have been applied to improve the management of the Train de l’Est project and the approval process for other major infrastructure projects
42 Ch. 4, Appendix 1
Audit Results
Good practice
Deficiency
Evidence
Consequence
43
Metropolitan Governance
The governance structure for public transit is characterized by the presence of numerous players, besides the AMT, but none of them is able to exercise a formal leadership role that is recognized by everyone. Transit players make up one part of the governance structure.
– MTQ – 3 public transport agencies – 9 intermunicipal boards of transit – 12 paratransit services, etc.
Municipal partners make up the other part. – Communauté métropolitaine de Montréal (CMM) – 2 agglomeration councils – 12 regional county municipalities – 83 municipalities – 1 Indian reserve
Ch. 4, Par. 18-19 44
Metropolitan Governance (cont.)
The responsibilities of the Agence and its partners overlap. – Legal framework ambiguous on the responsibilities of the AMT and the
CMM since the laws entrust them with powers in terms of planning of public transit systems
– On the same territory, planning of the metropolitan network by the AMT and of the local network by other transit organizations and the municipalities
– MTQ’s expanded responsibility in terms of integration of the different transit systems, including public transit
The AMT and its partners sometimes proceed with concurrent planning work without necessarily ensuring the coherence of actions. – Over the last months, the AMT and the CMM have both studied the
prioritization of public transit projects.
45 Ch. 4, Par. 21-23
Metropolitan Governance (cont.)
The strategic plans of the AMT and its partners are not integrated into a single global plan for the development of public transit at the metropolitan level that would – identify a consensus on the priorities – clarify the roles and responsibilities of each player – and favour a better synergy.
Most partners share common objectives, but differences arise when choosing the means for achieving objectives.
In the absence of a consensus on a single global plan for development, the different plans are more fragile and vulnerable to the influences of competing interests.
Ch. 4, Par. 28, 33, 34, 37 46
Agence’s Strategic Planning
The Agence’s strategic plan makes mention of 8 major projects, half of which aim to develop new public transit services.
The AMT has not updated the assessment of each project’s potential contribution to achieving the main targets of the strategic plan. For example, for the metro project, these assessments dated back to 2001.
The AMT made adjustments to its three-year capital expenditure plan (CEP) to make it a more useful planning tool that would enable the vision presented in the strategic plan to materialize.
Despite these adjustments, the CEP – does not clearly distinguish the projects that can be carried out and
operated with the funds available – and presents projects that are not justified on the basis of an adequate
prioritization method.
47 Ch. 4, Par. 47, 51, 57, 58, 67, 71, 73, 84, Appendix 3
Train de l’Est Project
The management assumed by the AMT and the controls and oversight exercised by the relevant government stakeholders have not allowed to ensure the Train de l’Est project was brought under control until the deployment of corrective measures starting from the beginning of 2012. – Cost: from $300M to over $700M – Timeframe: from 2009 to 2014
Eight years later, the management deficiencies and corrective measures imposed are the same as in the case of the metro extension project toward Laval in 2004. The AMT had to: – implement an organizational structure that would enable it to remain in
control of the project – retain the services of a person that would assume the functions of director
of cost planning, estimation and control – submit for approval by the Minister of Transport a detailed timeframe and
produce a reliable and high-quality monthly report.
48 Ch. 4, Par. 95, 101, 102, Table 3
Train de l’Est Project (cont.)
From 2007 to 2011, as part of the Programme d’aide gouvernementale au transport collectif des personnes, the MTQ received 19 subsidy applications, some of which contained signs of existing problems. – In May 2009, construction on none of the stations had started, although it
should have started in the spring of 2009 to respect the timeframe. – In April 2010, the revised cost of $478.5M represented an increase of 23%
compared to the initial budget. There were no questions with regard to this increase.
– In January 2011, another cost revision to $663M constituted an increase of 120% compared to the initial budget. The status quo was maintained with respect to the scope and the date of commission.
Authorizations were issued one by one, without a vision of the whole
and without requirements adapted to the reality of a major project.
Ch. 4, Par. 104-106, 108-113 49
Train de l’Est Project (cont.)
In 2011, the commitment of large amounts was authorized before the required minimum analyses had been conducted by the MTQ. – Awarding of contracts of a value of $133M in order to respect an
unrealistic timeframe, according to experts Corrective measures were applied starting in January 2012. In August 2013, the stewardship committee concludes that most of
the conditions requested by the Cabinet to redress the situation had been fulfilled satisfactorily (22 out of 24).
Potential risks persist about the ability of the Agence to respect the project’s authorized budget, scope and, especially, timeframe.
Ch. 4, Par. 114, 115, 126-128 50
Management of Future Projects
The AMT defined a new project management framework that is inspired by the industry’s best practices.
The integration of the new processes is too recent to make generalized conclusions, but certain improvements are required to favour the success of this approach, namely – respecting high quality standards in the preparation of all files and in all
follow-ups of budgets and timeframes – establishing contingencies while considering the project’s nature or level of
complexity and justifying them based on the uncertainty associated with the different work packages rather than applying a fixed percentage of the cost
– including reserves for risks in the costs estimated for projects on the basis of detailed analyses
– and determining in which situations it will be opportune to obtain the advice of a committee of independent experts as well as to a person responsible for the control of costs who is assigned exclusively to a project.
51 Ch. 4, Par. 148, 155, 166
Board of Directors
The AMT is the only entity referred to in the policy statement of 2006 on the revision of the governance rules of state-owned enterprises that did not see its act amended consequently.
The composition of the board of directors does not favour the exercise of an active role in the governance of major infrastructure projects. – The board of directors is made up of an insufficient number of
independent external members. – The president and chief executive officer’s functions and the board
chair’s functions are not always distinct. In this context, the major projects under way are delayed in being
submitted for oversight by independent administrators.
52 Ch. 4, Par. 168-171, 181
Comments of the Audited Entities
The AMT and the MTQ accepted all our recommendations.
Ch. 4, P. 48 53
Offences to Laws Involving Penal Provisions
C H A P T E R
5 Audited Entities: Ministère de la Justice du Québec (MJQ) Director of Criminal and Penal Prosecutions (DCPP) Commission de la santé et de la sécurité du travail (CSST)
Context
Penal law aims to make citizens adopt law-abiding behaviours. – It guides various activities such as the protection of the public, of the
environment and of public health. – Approximately half of the 500 laws in force involve penal provisions.
To encourage compliance with laws involving penal provisions, different measures are provided for, including – fines, imposed by a statement of offence – and administrative penalties or permit cancellation.
The procedure to be followed from the preparation of a statement of offence to the execution of a judgement as well as stakeholder obligations are specified in the Code of Penal Procedure.
55 Ch. 5, Par. 1-5
Our Audit
Objectives of our audit work Evaluate to what extent the MJQ uses the information at its disposal to
draw a portrait of the functioning of the penal system, in a continuous improvement perspective.
Verify the efficiency with which the audited stakeholders act concerning – the management process for statements, pleas and payments – court proceedings – and the execution of judgments.
Stakeholders concerned by our work
– The MJQ, including the Bureau des infractions et amendes (BIA), the DCPP and the CSST
Ch. 5, Appendix 1 56
Audit Results
Deficiency
Evidence
Consequence
57
Application of Penal Measures MJQ
The deterrent effect of the application of penal measures is compromised. The probability of “getting caught” is slim for certain laws.
– No statement served in 2011-2012 and in 2012-2013 for nearly 65% of the 159 laws with penal provisions for which the DCPP is the prosecutor
– For 10% of the laws, number of statements served annually is fewer than 10 Deficiencies were detected in the AGQ’s previous VFM audits
(9 reports). – In the supervision strategy (ex.: no risk analysis) (7 out of 9) – With regards to the conduct of inspections (ex.: small number of inspections,
inspections not performed in a timely manner) (7 out of 9) The consequence associated with the wrongdoing is small for several
laws. – Amount of fines unchanged for at least 15 years for 42% of the laws – Fines distributed generally correspond to the minimum amount – Long settlement period
Ch. 5, Par. 33-45, 52 58
Application of Penal Measures Settlement Period
The average settlement period between the date of the offence and the closure of a file is long. – It is approximately 2.5 years for statements from a general offence report
for which the defendants pled not guilty or did not respond. – 5 years after the offence, nearly 22% of those files had not yet been
settled.
Ch. 5, Par. 51-53 59
Settlement period: length between the date of the offence and the date of the closure of the file (settlement of the debt)
Application of Penal Measures Role of the MJQ
Many actors play an important role in this regard (departments and agencies responsible for the application of laws, the MJQ, judicial authorities, the DCPP).
The MJQ exercises superintendence over all matters connected with the administration of justice in Québec.
In our opinion, the MJQ is best placed to advise the government on means to implement for the results assessment of the process as a whole.
According to the opinion of the MJQ, it is not its responsibility to identify all problems and to seek out solutions aimed at improving the process as a whole.
This creates an important void with respect to the application of measures in penal matters.
Ch. 5, Par. 56-59 60
Statements of Offence and Pleas BIA and CSST
At the BIA, the preparation of statements based on general offence
reports is not always carried out diligently, which delays the service of the statement to the defendant. – More than 6 months to prepare 36% of those statements – Average timeframe of 132 days
In the absence of a plea, the BIA and the CSST wait a lot longer than the legal 30-day response period allocated to the defendant for sending the file to the DCPP or the prosecuting attorney. – The BIA records an average timeframe of 3 months for sending the file to
the prosecuting attorney. – 8,460 files for which the statement was served over 90 days were still
waiting to be sent to the DCPP during our audit. – The CSST takes on average 69 days to send the file to the prosecuting
attorney.
61 Ch. 5, Par. 67-70, 82, 83
Court Proceedings Oversight by the DCPP
The DCPP makes directives related to proceedings for prosecuting attorneys with the goal of ensuring coherence and fairness, among other things.
The DCPP has not established a control mechanism to ensure that the concerned prosecuting attorneys comply with its directives. Directive aiming to limit postponement requests
– In 2012-2013, for 9 laws, more than 30% of files required at least 3 postponements.
– It is not rare to see more than 6 postponements for the files of the CSST.
Directive according to which the prosecuting attorney must not agree with the opposing party to ask the judge to accept a guilty plea in exchange for the cancellation of costs – For 12% of files for which the defendants pled guilty after the opening of the
file in court, there was a conviction without costs.
62 Ch. 5, Par. 90-98
Court Proceedings DCPP and CSST
63 Ch. 5, Par. 111, 112, Table 2
Files for which a judgement was rendered in 2012-2013 for the DCPP and in 2012 for the CSST
Despite the long delay, neither the DCPP nor the CSST have
acquired the management information needed to separate the delay that is attributable to them from the delay they cannot control.
Execution of the Judgment BIA
64
As at March 31, 2013, $342.3M to be collected – more than 2 years old for nearly 51% of those debts – more than five years old for 24%
The organization of work at the BIA does not favour a rapid or optimal collection of debts. Insufficient risk analysis
– no prioritization based on risk: all debts less than $10,000 treated in the same way
– no particular analysis of files that approach the date of prescription Collection method not structured enough
– Sending numerous letters before moving to more coercive measures
Ch. 5, Par. 121, 124-129
Actions aimed at the collection of debts are not always performed in a timely manner. Example
– sending of the notice of judgment – sending of a reminder notice 3 months later – sending of a 2nd reminder notice 1 year later – sending of a 3rd reminder notice 2 years later – agreement reached 3.5 years after the judgment ($100 per month for a
debt of nearly $10,000)
For 9 out of the 35 examined files in default of payment, the opportunity to carry out collection measures is present, but no measure is taken and this inaction is not documented.
Execution of the Judgment BIA (cont.)
Ch. 5, Par. 134-136 65
Agreements for payment by instalments concluded from fragmentary information on the financial situation – For 16 instalment agreement files (12 months and more), assessment of
the financial situation determined based on incomplete information – Does not allow the assurance that the agreement is made according to
the debtor’s ability to pay
Important information not present in the files, which is detrimental to the efficiency and effectiveness of collection – 10 out of the 28 files for individuals in payment default examined: no
information on searches for surety – Date of revision of the agreements for payment by instalments that are
over one year old not recorded in 50% of the files examined
Execution of the Judgment BIA (cont.)
Ch. 5, Par. 138-143 66
Comments of the Audited Entities
Ch. 5, P. 33 67
The MJQ, the DCPP and the CSST accepted all our recommendations.
Disasters: Risk Management and Financial Assistance
C H A P T E R
6 Audited Entity: Ministère de la Sécurité publique
Context
A disaster is an event that causes serious harm to persons or substantial damage to properties and requires unusual action from the affected community.
Its origin may be natural or anthropogenic, that is, of human origin.
For the period from 2010 to 2012 84 disasters affected Québec $120 million was paid to disaster victims including
– $71.7 million for the 2011 spring floods in the Montérégie region – $21.3 million for the 2010 large tides in the Gaspésie region
Ch. 6, Par. 1, 5 69
Context (cont.)
In Québec, civil protection rests on the sharing of responsibilities between – Government authorities – Regional and local authorities – Citizens – Enterprises
As the responsible of the application of the Civil Protection Act, the
MSP holds a special role. Among other things, it must: – Orient, coordinate and manage actions related to civil protection – Ensure, in collaboration with the other stakeholders, the development of the
knowledge of disaster risks – Exercise leadership in the implementation of prevention measures – Manage financial assistance programs
Ch. 6, Par. 8, 11, 31 70
Our Audit
Our work aimed at assuring that the MSP, among other things – applies a global and integrated approach in its management of disasters in
order to increase Québec’s ability to deal with this type of event – efficiently and effectively manages the financial assistance earmarked for
disaster victims
Our work did not cover the rail accident that occurred on July 6, 2013 in the town of Lac-Mégantic.
Ch. 6, Par. 15, Appendix 1 71
Audit Results
Good practice
Deficiency
Evidence
Consequence
72
Disaster Risk Management
73 Ch. 6, Par. 19, 21, Figure 3
The approach adopted by the MSP is based on the risk management process recognized as a good practice by the United Nations.
The approach applied by the Department is partial, in particular in terms of policies, knowledge of disaster risks and prevention.
Establishing Context Policies
Twelve years after the adoption of the Act, the Department has not yet determined policies regarding civil protection. Such policies would guide the actors’ intervention and favour the
coherence and complementarity of actions. In the absence of policies, including those for regional and local
authorities – non-application of several sections of the Civil Protection Act, including
those referring to the establishment by RCMs and municipalities of civil protection plans and other related plans
– increase in the risks that local authorities are not sufficiently prepared to deal with a disaster
74 Ch. 6, Par. 25-27, 30
Assessing Risks
The MSP’s knowledge of the main disaster risks to which the Québec population is exposed is insufficient. The knowledge of anthropogenic hazards is fragmentary.
– No analyses which would allow it to identify the most important risks and to proceed with their assessment
– No portrait of the measures taken to mitigate the risks Work has enabled improvements in the knowledge of natural hazards
(floods, bank erosions and landslides), but some work has not been completed.
The information to propose, coordinate or accomplish actions which can limit the consequences and establish a processing priority is not sufficient.
Citizens cannot be adequately informed by the MSP of the main risks to which they are exposed.
75 Ch. 6, Par. 32-35, 37
Risk Treatment
The National Civil Protection Plan does not sufficiently integrate the dimension of risk prevention nor the recovery.
The actions to lead municipalities to prepare themselves to deal with disasters are insufficient. – The MSP is not monitoring municipalities’ level of preparedness in a
structured manner. – The last survey reveals municipalities’ insufficient level of
preparedness. A low level of preparedness risks resulting in
– a longer reaction time when a disaster occurs – more important consequences – and a work overload for other stakeholders.
76 Ch. 6, Par. 41, 50, 51, 53
Risk Treatment (cont.)
The recovery phase is not used enough to implement risk prevention and mitigation measures following a disaster. – The main natural hazards prevention framework is little used during the
recovery phase. – The financial assistance programs are not designed to include prevention
concerns, because they provide few incentives for adopting permanent prevention measures and do not contribute sufficiently to sensitize and to incite disaster victims to take their responsibilities towards the consequences.
77 Ch. 6, Par. 60-62
Financial Assistance for Disaster Victims
Three large disasters hit Québec from 2010 to 2012.
Samples – 81 files selected randomly (large tides of December 2010 and the spring
floods of 2011)
78 Ch. 6, Par. 68, 71
Processing Financial Assistance
The MSP’s processing of financial assistance applications in terms of the audited files has deficiencies.
The audit procedure that aims to control the work of analysts was not applied for more than 50% of payments.
An analysis of the financial situation of disaster victims was not conducted for – 84% of the audited files of individuals (51 out of 61) – and 60% of the audited files of enterprises (6 out of 10).
The audit of the insurability of the disaster is incomplete or is not done in a timely manner for 10 of the 71 files.
Amounts were overpaid or there is a risk of not receiving the total amount of assistance permitted.
79 Ch. 6, Par. 72, 73, 74
Processing Time for Financial Assistance Applications
Important delays were observed in the processing of financial assistance applications, and the procedures implemented to reduce them did not give the desired results.
– Processing time varied between 7 and 26 months.
– The production of damage assessment report took on average just over 2 months (service contracts specify less than a month).
– The verification of payments took 3 weeks on average (objective of the MSP: 72 hours).
80 Ch. 6, Par. 75, 76, 78, 82
Processing Time for Financial Assistance Applications (cont.)
Some priority applications were processed more quickly by the MSP without objective criteria, and it did not always apply its verification procedure.
Advance payments of 50% had originally been planned in the financial assistance program. – Percentage increased to 80% and to 100%
There were procedures to recover the amounts overpaid. For our two
audited disasters: – 296 files – More than $860,000
81 Ch. 6, Par. 81, 82
Comments of the Audited Entity
The MSP accepted all our recommendations.
82 Ch. 6, P. 31
Société immobilière du Québec: Measures to Assess Effectiveness and Performance
C H A P T E R
7
Context
Ch. 7, Par. 2, 5, 6, 8
The Société immobilière du Québec (SIQ) is subject to the Act respecting the governance of state-owned enterprises. − The board of directors must adopt measures to assess the effectiveness
and performance of the SIQ, including benchmarking against similar enterprises.
− These measures must be carried out every three years by the Auditor General or by an independent firm.
The SIQ has 1,300 owned or rented buildings for assets of nearly $3.4B.
In 2011, it became the owner of nearly 300 buildings of the health and social services network.
More than 70 real estate projects are currently being carried out for a value of $2.1B.
84
Our Audit
Audit objectives
To ensure that the SIQ − established adequate assessment measures, including benchmarking
against similar enterprises, in order to conclude about its effectiveness and its performance in relation to all aspects of its mission
− and appropriately publishes the results of the measures to assess its effectiveness and its performance, including benchmarking against similar enterprises, in order to enhance its reporting.
Ch. 7, Appendix 1 85
Audit Results
Good practice
Deficiency
Evidence
Consequence
86
Assessment and Follow-Up Framework
The SIQ established a structured assessment and follow-up framework, which enables it to evaluate its effectiveness and its performance. − A management dashboard is produced on a regular basis. − The indicators are accurate, measurable and associated with a target,
and they deal with all the SIQ’s key activities. The assessment measures determined have not been completely
implemented. − 19 indicators (44%) appearing in the strategic plan and the sustainable
development action plan have not yet been used. − The information presented to the board of directors could be further
synthesized.
87 Ch. 7, Par. 17-19, 21, 22
Assessment Measures
For the audit of the measures to assess effectiveness and performance, we focused on 10 indicators.
7 indicators give, in all material respects, an adequate portrait of the aspect assessed, and 3 others have raised concerns on our part.
The portrait of the SIQ with respect to its real estate condition is partial. − The buildings of the health and social services network are not
considered in the facility condition index established by the SIQ. The responsibility related to the maintenance of these assets is the duty of that network.
− That indicator does not take into account all the work needed to maintain or restore the buildings.
Ch. 7, Par. 24, 25, 28, 29 88
Assessment Measures (cont.)
The information related to the management of real estate projects presented to the board of directors is incomplete.
Indicators dealing with compliance with budgets and schedules − The indicators exclude the projects carried out in the health and social
services network. − At least 36 projects carried out for departments and agencies are not
included in the calculation of the indicators (value of $7.5M).
Information sheets on current projects in the health and social services network − The sheets do not contain all information useful for monitoring. − The final cost of those projects is not presented.
Ch. 7, Par. 35, 36, 39 89
Benchmarking Process
An interesting benchmarking practice enables useful information to be obtained for the evaluation of the SIQ’s performance. − Partnerships with several Canadian public agencies to develop common
indicators and to obtain useful information
− Summary report on the results related to the compared indicators sent to each participating agency, which makes it possible to validate the conclusions to some extent
When our audit ended, the SIQ still had not finished the analysis of the results of the benchmarking process. As such, those results have not been presented to the board of directors.
Ch. 7, Par. 42-44 90
Reporting
The information is presented to the board of directors on a regular basis.
The annual report of activities does not allow for a complete evaluation of the SIQ’s effectiveness and performance. − It does not present the results of the indicators associated with project
management (important component of the SIQ’s mission).
− It does not sufficiently address the issues, risks and challenges that the SIQ is dealing with.
− It does not contain comparative information for several relevant indicators.
Ch. 7, Par. 47, 54-56 91
Comments of the Audited Entity
The Société immobilière du Québec accepted all our recommendations.
Ch. 7, P. 19 92
