Offi ce of the Auditor General Business Plan 2013–2016 and Budget 2013–2014 pot

Office of the Auditor General Business Plan 2013–2016 1 The Office The Office of the Auditor General serves the Legislative Assembly and the people of Alberta.. Office of the Auditor G

Offi ce of the Auditor General Business Plan 2013–2016 and Budget 2013–2014

Offi ce of the Auditor General Business Plan 2013–2016

Office of the Auditor General Business Plan 2013–2016 1

The Office

The Office of the Auditor General serves the Legislative Assembly and the people of Alberta Our mandate is to examine and report publicly on government’s management of, and accountability

practices for, the public resources entrusted to it Under the Auditor General Act, the Auditor General

is the auditor of all government ministries, departments, funds and provincial agencies

We focus our priorities and resources to improve:

protected

To succeed, we must be, and be seen to be, independent and accountable

Independence

Our independence from those we audit ensures our work is objective—based on facts, not

preconceived opinions The independence requirement is symbolized through the appointment of the Auditor General by the Legislative Assembly and our liaison with the Assembly through the Standing Committee on Legislative Offices A primary element of the relationship is the Assembly’s

prerogative to authorize financing of the Office’s operations

Our business practices are designed to ensure that our staff remains free of any association that could potentially impair their objectivity

Accountability

We are accountable for our responsibilities under the Auditor General Act through our public reports,

the tangible expressions of our work Those who use public resources, as we do, should also

demonstrate their accountability through clear and concise plans and reports on results

The first part of accountability is preparing and then acting on a plan; hence this business plan It guides us in meeting our mandate and showing accountability through relevant audits, reliable

findings, and reasonable costs

The second part of accountability is reporting on results and costs in relation to the plan and on how

the Year Ended March 31, 2012

Office of the Auditor General Business Plan 2013–2016 2

We carry out our work using our vision, mission, and values

Vision

Adding value through expert auditing

Mission

To serve Albertans by conducting comprehensive risk-based audits that provide independent

assessments to help the Legislative Assembly hold government accountable

Values

• Respect—Everyone has the right to be heard and deserves to be treated with dignity and

courtesy

• Trust—We earn it with everything that we say and do We are accountable for our actions

• Teamwork—With integrity, we work together to generate better solutions

• Growth—We view individual success as professional growth together with a fulfilling personal

life We value both

Core business

Our core business is legislative auditing We have six lines of interrelated but different types of audit work, so we can allocate resources and assess our performance We are the auditor of every ministry, department, regulated fund, and provincial agency This responsibility includes universities, colleges,

The six lines of auditing

Every year we audit the financial statements of those entities for which we have been appointed auditor, including the consolidated financial statements of the Government of Alberta Our auditor’s report on each of these entities provides our opinion on whether the financial

statements are presented fairly in accordance with appropriate standards These recurring annual audits provide assurance on the quality of financial reporting to the Legislative Assembly

A variety of rules in statutes, regulations, central agency directives and policies, and

departmental procedures govern the proper conduct of government In all our audits, we test transactions and activities to identify and report publicly if there has been non-compliance with the law Compliance with laws, regulations, and other rules is an important part of assessing accountability

Office of the Auditor General Business Plan 2013–2016 3

For departments and some agencies, we review selected non-financial performance measures in the entity’s annual report And we audit selected measures in the annual progress report on the

government’s business plan, titled Measuring Up We report on the reliability,

understandability, comparability, and completeness of the selected performance measures But our work is not designed to provide assurance on the relevance of the measures to users

Each ministry annual report contains a results analysis Essentially, management’s purpose is to integrate the financial and non-financial performance information into a clear and concise interpretation of actual performance in relation to plans We are considering how we can add credibility to management’s results analysis

Sections 19(2)(d) and (e) of the Auditor General Act require us to report when “accounting

systems and management control systems, including those systems designed to ensure economy and efficiency, …were not in existence, were inadequate or had not been complied with” or

“when appropriate and reasonable procedures could have been used to measure and report on the effectiveness of programs, those procedures were either not established or not being

complied with” We meet this expectation in two ways:

undertakes to achieve its goals In a stand-alone systems audit, we answer the question,

“Does the organization have the policies, processes, and controls to accomplish its goals and mitigate its risks economically and efficiently?” Such systems include procedures to measure and report on the effectiveness of programs

in areas such as governance and accountability, internal control over financial

management, information technology, or performance reporting, we make

recommendations to management

We decide what work to perform based on input from Members of the Legislative Assembly, Albertans who contact us, management, and staff Annually, we also receive advice from the Provincial Audit Committee Often this input requires research to understand the issue or to identify best practices Alternatively, at the request of an organization that we audit, or a

committee of the Legislative Assembly, we may give advice on a proposed course of action or a matter being studied

Office of the Auditor General Business Plan 2013–2016 4

Goal, risks, strategies, performance measures and key initiatives

Last fiscal year, we involved all staff levels in our risk management process Then we used the results

Elements of the business cycle

Our vision is to add value through expert auditing, so our goal is to maximize relevance within the constraints of reliability and reasonable cost

An important consideration is that we identify the root causes of weak systems recognizing that management owns the systems

Our audits must be:

reports

Operationally, we must manage:

risk in our six lines of auditing?

Office of the Auditor General Business Plan 2013–2016 5

Auditors General

audits This requires the following improved efficiencies in doing our work:

- Challenge junior staff to do more complex work earlier, with proper supervision, so they can develop This will help free up senior staff to undertake more system audit projects

Office

audits

- Use findings from an external independent peer review to improve current audit and operational processes

- Use our internal sector auditing partnerships to assist in deciding on priority systems audits

- Type: use of internal staff versus temporary or agent resources

audits

projects

As our business plan 2012–2015 described, all staff helped review our risk management

process One key deliverable was a review of our performance measures to ensure they help us and our stakeholders (MLAs, government and our staff) understand our performance—key in showing accountability The risk management review helped us confirm, refine or develop

21 measures—8 external and 13 internal Annually, we will continue to review performance measures for external reporting For example, peer review will be an external measure in the next business plan, as the information will then be available

Priority initiatives

We will conduct a stand-alone systems audit of the processes used by ministries to prepare results analysis sections in ministry annual reports We view this as a prerequisite to the

potential development of a methodology to provide assurance, in relation to appropriate criteria,

on management’s analysis of performance

Office of the Auditor General Business Plan 2013–2016 6

We will continue to execute our plan to be ready for an independent peer review The review will be commissioned to provide conclusions on whether we do relevant, reliable work at a reasonable cost, and will be made public The external peer review will report on the Office’s operational design of our systems in July 2013 and operating effectiveness of our systems in July 2014

Creating an organization that thrives in dealing with challenges and new initiatives, while delivering extraordinary performance to all our stakeholders, is our aim We draw on the potential in every employee Success is more likely if we accelerate challenging opportunities

and improve training and mentoring for all staff In 2013–2014, we will ensure our training

program continues to improve the overall effectiveness, efficiency and personal excellence of all staff

As we outlined in the Report of the Auditor General of Alberta—October 2012, there are

165 outstanding numbered recommendations Numbered recommendations require a formal public response from the government It is our intention to focus on the 25 numbered

recommendations more than three years old that departments or agencies have notified us are ready for follow-up audits These follow-up audits will be completed prior to December 2013 The recommendations include a cross-section of important services such as food safety, seniors care, post-secondary institutions, school boards, infrastructure needs, and sand and gravel resources

Office of the Auditor General Business Plan 2013–2016 7

External performance measures

2013–2014

Target 2012–2013

Actual 2011–2012

1.a Percentage of the Auditor General’s

1.b Auditor General’s recommendations not implemented

1.c Issue our auditor’s report on the consolidated

financial statements of the Province by June 30

each year

June 30,

2013

June 21,

2012 (Actual)

June 23,

2011

1.d Percentage of costs dedicated to systems

auditing/other auditing (also Reasonable cost)

1.e Percentage of Members of the Legislative Assembly

who believe our work is valuable2 (also Reliable)

To be decided

Not conducted

Inadequate response rate

to draw conclusion

2013–2014

Target 2012–2013

Actual 2011–2012

2.a Institute of Chartered Accountants of Alberta’s

conclusion that Office’s financial statements audit

practice meets auditing standards3 (also Relevant and

Reasonable Cost)

Will not

Not done

2013–2014

Target 2012–2013

Actual 2011–2012

3.a Staff turnover rate4 (also Reliable) Under 20% Under 20% 22%

3.b Percentage of financial statement audits completed

measure

_

1

Acceptance does not include recommendations accepted in principle or under review.

3 The practice review is done triennially The next one will be completed in 2015–2016

4

Turnover rate includes voluntary and involuntary vacancies that affect our productivity and cost

Office of the Auditor General

Budget 2013–2014

OFFICE OF THE AUDITOR GENERAL OF ALBERTA

BUDGET BY OBJECT

(thousands of dollars)

2013–2014 2014–2015 2015–2016

Budget Actual Budget Forecast Estimate Target Target

EXPENSE

Personnel

Agent and other audit services fees 4,575 4,417 4,575 4,575 4,380 4,510 4,645

Employer contributions 2,535 2,649 3,050 3,095 3,285 3,380 3,485

Temporary staff services 1,300 1,700 1,470 1,410 1,350 1,350 1,350

Advisory services 220 257 220 325 265 245 245

Miscellaneous 10 - 10 10 10 10 10

21,545 21,864 23,220 23,085 23,870 24,510 25,200 Supplies and services Training and professional fees 850 778 805 805 825 825 835

Travel 580 605 560 600 570 580 585

Technology services 335 322 420 420 430 430 435

Materials and supplies 180 176 195 195 200 200 200

Telephone and communications 80 83 80 85 85 85 85

Rental of office equipment 70 66 70 50 50 50 50

Repairs and maintenance 20 22 25 25 25 25 25

Miscellaneous 30 18 20 20 20 20 20

2,145 2,070 2,175 2,200 2,205 2,215 2,235 VOTED OPERATING EXPENSE 23,690 23,934 25,395 25,285 26,075 26,725 27,435 Add: amortization of capital assets (non-voted) 295 275 290 330 295 380 370

Total operating expenses 23,985 24,209 25,685 25,615 26,370 27,105 27,805 Less: audit fee revenue (non-voted) (2,300) (2,924) (2,300) (2,350) (2,450) (2,520) (2,595) budget encumbrance from 2011 – 12 - - (94) - - -

-Cost of operations $ 21,685 $ 21,285 $ 23,291 $ 23,265 $ 23,920 $ 24,585 $ 25,210 VOTED CAPITAL INVESTMENT $ 155 $ 5 $ 255 $ 270 $ 560 $ 255 $ 260

TOTAL VOTED EXPENSE AND CAPITAL $ 23,845 $ 23,939 $ 25,650 $ 25,555 $ 26,635 $ 26,980 $ 27,695

OPERATING EXPENSE BY CORE BUSINESS

(Includes amortization of capital assets)

Systems audits 1

4,395

$ $ 5,097 $ 5,280 $ 5,975 $ 5,885 $ 5,965 $ 6,115

Other audits 2

19,590 19,112 20,405 19,640 20,485 21,140 21,690

23,985

$ $ 24,209 $ 25,685 $ 25,615 $ 26,370 $ 27,105 $ 27,805

1 Systems audits are audits of major programs or initiatives an organization undertakes to achieve its goals.

2 Other audits comprises auditing of financial statements, compliance with authorities, performance measures, results analysis, and

research/advice.

Comparable 2011–2012 Comparable 2012–2013