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Report of the Auditor General of Alberta - April 2011 Released

Today, the Auditor General of Alberta, Merwan Saher, CA, arranged for tabling of the Report of the Auditor General of Alberta—April 2011 in the Legislative Assembly. The report contains the results of one new systems audit, 11 follow-up systems audits and our annual reporting on certain Alberta post-secondary institutions. There are 16 recommendations—11 are new and five are repeated. The highlights of our report include:

New systems audit

  • Credit Union Deposit Guarantee Corporation—On page 15, we report the results of a new systems audit. We found that the Corporation has effective oversight systems to identify, monitor and respond to risks within Alberta’s credit unions. This is good news and especially so in uncertain financial times. Alberta has 46 credit unions that hold $16 billion in deposits, which are guaranteed by the Corporation. We make no recommendations for improvement.

Follow-up systems audits

  • Alberta Treasury Branches (page 41)—In a follow-up of a systems audit, we assessed ATB’s progress in implementing 12 of 15 recommendations from our 2008 Treasury Management systems audit. ATB has made good progress, having implemented six of the original recommendations. We were not satisfied with ATB’s progress with interest rate risk modeling, so we have repeated our recommendation to do with the assumptions used in the models (see repeated Recommendation no. 1 on page 48).
  • Natural Resources Conservation Board (page 55)—In a follow-up of a 2004 systems audit, we assessed the Natural Resources Conservation Board’s progress in monitoring confined feeding operations. We are now satisfied with systems that deal with risks to groundwater. We are not yet satisfied that the Board’s approach to surface water risks is adequate, so have made a specific recommendation on this matter (Recommendation no. 2—page 59).
  • Energy—Albertans need to know that royalties calculated under the existing royalty regime are based on complete and accurate data. Our follow-up audits of the systems that provide assurance over collecting and recording industry data in the Department of Energy and the Energy Resources Conservation Board are now completed and we report that previous recommendations have been implemented (page 23 and page 27).

    A systems audit in 2007 examined the Department’s systems for royalty review and we made five recommendations on how royalty regimes are described, reviewed, measured and publicly reported. In our follow-up audit, we have concluded that all recommendations have been implemented, with one exception. The Department has improved performance measures for conventional oil and natural gas royalties but has not yet developed performance measures for the oil sands royalty regime (page 31).

Financial statement audits and other assurance work

  • Advanced Education and Technology—Starting on page 65, we present the results of new audits and follow-up work at Alberta’s universities, colleges and technical institutes. We report under three broad themes: improve periodic and year-end financial reporting; improve internal control systems; and preserve endowment assets. We also provide a progress report on the Department’s actions for improving enterprise risk management systems in the sector.

    We have made 14 recommendations, of which four are repeated because of limited progress toward implementation. The repeated recommendation (no. 3—page 75) to Grant MacEwan University is because the University is unable to demonstrate that it is managing the risks that arise from starting projects without the protection that contracts provide.

These results reflect the rebalancing of the Office’s work plans to do an increasing number of follow-up audits. Verifying that recommendations have been successfully implemented is important because the benefit of our work can only be demonstrated when we can confirm implementation. Follow-up audits confirm that sustainable change has taken place. It is the payback on the investment of audit dollars in producing a recommendation. We approach follow-up audits with the rigor Albertans expect from this Office, and will repeat our recommendations when managers have not satisfactorily implemented them. We will continue to work through outstanding recommendations in the coming months—applying the same rigor that we apply to all our audit work—to ensure that positive change in government operations continues.

Up to and including our October 2010 Report, our assessments of management control systems (as part of our financial statement audits) and our stand-alone systems audits resulted in 308 outstanding recommendations. That number is now 280, not including the 11 new recommendations in this report.

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