Audit of NRCan Values and Ethics Framework (AU1506)

Table of Contents

Executive Summary

Introduction

A strong ethical framework ensures that the corporate culture of the Public Service fosters ethical behaviour in all employees based on the Public Sector values. It recognizes and addresses real, apparent, and potential conflicts of interest (CoI); and mitigates the risks of CoI, conflict of duties, and issues related to duty of loyalty. It also contributes to maintaining public confidence and trust in the institutions of government, and to assuring that there is good value and probity in the expenditure of taxpayer dollars.

Within this context, it is the responsibility of every Natural Resources Canada (NRCan) employee to ensure that their actions are reflective of the expected values and ethical conduct established in both the NRCan and the Treasury Board (TB) Codes. Employees must also be cognizant of real, apparent (or perceived), and potential CoI, declare them to the organization, and collaborate with any mitigation measures identified, as required.

In 2010, the Office of the Auditor General (OAG) tabled an audit on “Managing Conflict of Interest” in Chapter 4 of their Fall Report. NRCan was one of the five Departments examined. As a result of the audit, the OAG recommended that all Departments, including NRCan, implement CoI service standards, training, declarations, risk assessments as well as mitigation measures. Since that audit, NRCan has made significant progress in implementing multiple Values and Ethics (V&E)-related initiatives.

As required by the Public Servants Disclosure Protection Act (PSDPA) the TB established the Values and Ethics Code for the Public Sector (the TB Code), and NRCan developed the NRCan Values and Ethics Code (NRCan Code). The NRCan Code aims to support the Department’s business culture and operational requirements and addresses ethical risks, CoI, conflict of duty, and duty of loyalty situations that its employees face in their daily activities. Both of these Codes came into effect on April 2, 2012.

In addition, through its V&E Centre of Expertise (V&E CoE), NRCan also adopted a V&E Framework, an ADM-level V&E Champion was appointed, and various V&E committees were established. NRCan also developed a Corporate Ethical Risk Profile and launched CoI training sessions for all employees, as well as developed CoI-related tools such as the Employee Confidential Reports (ECR).

The V&E CoE falls under the portfolio of NRCan’s Corporate Management and Services Sector (CMSS) who provides strategic and functional leadership on the Department’s V&E Program. The audit of NRCan’s Values and Ethics Framework was included in the Department’s Risk-Based Audit Plan, approved by the Deputy Minister on February 27, 2014. 

The objective of this audit was to provide reasonable assurance that the Department’s V&E framework and practices are adequate and being implemented.

Strengths

Overall, NRCan has an adequate V&E governance structure in place that is well supported through senior management leadership and culture. A V&E CoE exists, providing a central point of contact for V&E matters within the Department. The Department’s V&E framework and practices provide the fundamental elements needed to support a culture within NRCan that embraces sound V&E in the conduct of its activities. In addition to providing tools and guidance materials, the V&E CoE is in the process of providing training across the Department to all employees and working towards ensuring completion of ECR. NRCan’s V&E policies, guidelines, tools, and processes are documented and communicated. It is worth noting that NRCan’s results for all of the questions included in the “Respectful Workplace’’ section of the 2014 Public Service Employee Survey were equal to or higher than the results of the overall Public Service; and the audit found that, overall, employees interviewed expressed satisfaction in management’s commitment to foster an environment of V&E.

Areas for Improvement

Opportunities for improvement were identified with regards to clarifying the roles and responsibilities of V&E committees and of the V&E Champion; further strengthening Employee Confidential Reports (ECR)/Conflicts of Interest (CoI) training and application of related tools through a risk-based approach and clarification of mandatory requirements related to the completion of ECR forms; and to improve monitoring, performance measurement, and reporting mechanisms.

Internal Audit Conclusion and Opinion

In my opinion, the Department’s Values and Ethics framework and practices are adequate and in the process of being implemented. Opportunities for improvement were identified to strengthen existing processes, as well as improve monitoring and reporting to provide additional information in support of senior management.

Statement of Conformance

In my professional judgement as Chief Audit Executive, the audit conforms with the Internal Auditing Standards for the Government of Canada, as supported by the results of the Quality Assurance and Improvement Program.

Christian Asselin, CPA, CA, CMA, CFE
Chief Audit Executive

Acknowledgements

The audit team would like to thank those individuals who contributed to this project and particularly employees who provided insights and comments as part of this audit.

Introduction

Federal public servants have a fundamental role to play in serving Canadians, their communities and the public interest under the direction of the elected government and in accordance with the law. As professionals whose work is essential to Canada's well-being and the enduring strength of the Canadian democracy, public servants uphold the public trust. Public servants must ensure their actions and decisions uphold the values and conform to the ethical standards of the Public Service.

A strong ethical framework ensures that the corporate culture of the Public Service fosters ethical behaviour in all employees based on the Public Sector values of Respect for Democracy, Respect for People, Integrity, Stewardship and Excellence. It recognizes and addresses real, apparent and potential conflicts of interest (CoI); and mitigates the risks of CoI, conflict of duties, and issues related to duty of loyalty. It also contributes to maintaining public confidence and trust in the institutions of government, and to assure that there is good value and probity in the expenditure of taxpayer dollars.

In 2010, the Office of the Auditor General (OAG) audit on “Managing Conflict of Interest” in Chapter 4 of their Fall Report, also informed Natural Resources Canada’s (NRCan’s) Values and Ethics (V&E) Program. NRCan was one of the five Departments examined. As a result of the audit, the OAG recommended that all Departments, including NRCan, implement CoI service standards, training, declarations, risk assessments as well as mitigation measures.

Within that context, Deputy heads of Public Sector organizations that are subject to the Public Sector Disclosure Protection Act have specific responsibilities, including establishing codes of conduct for their organizations and an overall responsibility for fostering a positive culture of V&E in their organizations. Establishing a culture that embraces the V&E of the Public Sector requires that employees are aware of their obligations under the Values and Ethics Code for the Public Sector, as well as their specific organizational code of conduct.

As required by the PSDPA, the Treasury Board (TB) established the Values and Ethics Code for the Public Sector (the TB Code) and NRCan developed its NRCan Values and Ethics Code (NRCan Code). The NRCan Code aims to support the Department’s business culture and operational requirements, and addresses ethical risks, CoI, conflict of duty, and duty of loyalty situations that its employees face in their daily activities. Both of these codes came into effect on April 2, 2012.

Since the OAG 2010 audit, NRCan has made progress in implementing multiple V&E initiatives through the establishment of a V&E Centre of Expertise (V&E CoE). Among many, the V&E CoE has developed the NRCan Code approved by the Deputy Minister; a V&E Framework (see Appendix B) made up of five key activity areas (including leadership; outreach and partnering for ethical success; policies, procedures, and processes; guidance and advice; and oversight and enforcement); adopted Service Standards for responding to declarations, appointed a V&E Champion; and established various V&E committees. In addition, NRCan has also developed a Corporate Ethical Risk Profile, launched a CoI training session initiative in support of the roll-out of NRCan’s CoI declaration forms - Employee Confidential Reports (ECR).

The TB Code and its instruments, as well as the NRCan Code, form part of the Terms and Conditions of Employment of every NRCan employee, including indeterminate and term employees, executives, students in student employment programs, casual, seasonal and part-time workers, and emeritus scientists. Employees on leave, including leave without pay, continue to be subject to these instruments.

Consequently, it is the responsibility of every NRCan employee to ensure that their actions are reflective of the expected values and ethical conduct established in both the NRCan and the TB Codes. This includes conducting themselves in a manner that embraces common principles such as acting with integrity, respecting people, respecting the democratic values of the public service, being sound stewards of public funds, and demonstrating professional excellence. Employees must also be cognizant of real, apparent (or perceived), and potential CoI, declare them to the organization, and collaborate with any mitigation measures identified, as required.

The V&E CoE falls under the portfolio of NRCan’s Corporate Management and Services Sector (CMSS) and provides strategic and functional leadership on the Department’s V&E Program. This includes the provision of guidance material, tools, and training as well as other related activities/support to facilitate common values and ethical behaviors across NRCan.

Audit Purpose and Objectives

The objective of the audit was to provide reasonable assurance that the Department’s Values and Ethics framework and practices are adequate and being implemented. 

Specifically, the audit focused on the framework put in place by NRCan and examined:

• Whether governance structures are in place to foster leadership and a culture based on NRCan’s V&E code;
• Whether policies, guidelines, tools, and processes are clearly documented and communicated; and
• Whether the framework and policies are being monitored to ensure implementation across the Department.

Audit Considerations

A risk-based approach was used in establishing the objectives, scope, and approach for this audit engagement. A summary of the key underlying potential risks that could impact the effective management of Values and Ethics, including but not limited to real, perceived or potential conflict of interests, and related reputational risk exposure to the Department, include:

• Governance structure and processes, including roles and responsibilities, may not support a department-wide V&E culture;
• NRCan’s control framework supporting V&E may not be fully implemented, as designed;
• Guidance and tools to support a V&E climate may not be accessible and/or effectively  communicated to promote awareness of expectations to relevant stakeholders; and
• Monitoring and oversight of the Department’s control framework surrounding V&E may not be adequate to support senior management decision-making.

Scope

The scope of the audit included relevant activities of the NRCan’s Values and Ethics Framework, including the NRCan Code and related systems, processes, and practices used to manage, communicate, and promote awareness of the Department’s V&E culture. The audit focused on the period starting with the date the NRCan V&E Code came into effect, specifically April 2, 2012, and ending on January 31, 2015.

Approach and Methodology

The approach and methodology followed the Internal Auditing Standards for the Government of Canada, which incorporates the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing. These standards require that the audit be planned and performed in such a way as to obtain reasonable assurance that audit objectives are achieved.

The audit included tests considered necessary to provide such assurance. Internal auditors performed the audit with independence and objectivity as defined by the Internal Auditing Standards for the Government of Canada.

The audit approach included the following key tasks:

• Obtaining a sufficient understanding of NRCan’s Values and Ethics framework; 
• Assessing the extent to which NRCan’s Values and Ethics framework has been implemented;
• Reviewing key documents and relevant background documentation related to NRCan’s Values and Ethics; 
• Interviewing key personnel, business process owners, and employees; and
• Reviewing the monitoring and oversight of controls / practices. 

Criteria

The criteria were developed primarily from the NRCan’s Values and Ethics Program Framework and were also based on the NRCan and Government of Canada-related policies on Values and Ethics. The criteria guided the fieldwork and formed the basis for the overall audit conclusion. Appendix A summarizes the detailed audit criteria.

Findings and Recommendations

Governance Structure and Leadership

Summary Finding

Overall, there is a governance structure in place to foster leadership and culture based on the NRCan Values and Ethics Code (the NRCan Code). The audit; however, noted that there is an apparent overlap between the responsibilities and mandate of two working-level groups related to V&E as well as an opportunity to formally approve the Terms of Reference for V&E Groups and to clarify the expected role of the V&E Champion.

Supporting Observations

Integration of V&E within the culture of an organization is dependent on an organization’s leadership embracing and demonstrating expected behaviours in their actions, as well as establishing a sound governance framework to support this agenda. These form the basis of a corporate culture that fosters ethical behaviour in all employees which enables the recognition and ability to address real, apparent, and potential CoI as well as mitigating related risks related to conflicts of interests, conflicts of duties, and/or issues related to duty of loyalty. Sound V&E are fundamental to maintaining public confidence and trust in the institutions of any organization, and assuring that there is good value and probity in the expenditure of taxpayer dollars.

Governance

The audit sought to determine whether the governance structure at NRCan is in place to foster leadership and a culture based on Values and Ethics. The audit found that core fundamentals were in place such as the development of the NRCan Code, which was approved by the Deputy Minister in 2012. The NRCan Code includes the key elements stated in the Values and Ethics Code for the Public Sector and clearly outlines the values and behaviours that are expected of all NRCan employees. For example, the NRCan Code addresses ethical risks or potential conflict of interest situations that the Department or its employees face in their daily activities, and supports NRCan’s business culture and operational requirements. Furthermore, it also outlines responsibilities and requirements for employees to disclose real, apparent or potential CoI. A tool tailored to NRCan has been developed to support employees in making these disclosures – the Employee Confidential Report (ECR). 

In addition, the audit found that roles, responsibilities and accountabilities of the V&E CoE were clearly documented and communicated. For example, information on services provided, guidance available, and contact information for the V&E CoE is communicated to employees through the Department’s internal Wiki Portal. In addition to employees within the CoE, other examples of the key positions that support a culture of V&E include a Senior Official Responsible for Values and Ethics in the Corporate Management and Services Sector, a Senior Disclosure Officer, and a Manager of Values and Ethics, including responsibilities to administrator CoI Measures, political activities, and resolution of harassment issues.

NRCan also has three main groups in place to support V&E within the Department: the Values and Ethics Advisory Committee (VEAC), the Science and Technology Conflict of Interest Working Group (STWG), and the recently established V&E Ambassadors’ Network (VEAN). The VEAC, chaired by the NRCan’s V&E Champion, is a Director General-level committee whose mandate is to provide senior-level advice to the Executive Committee, the V&E Champion, and to the V&E CoE. This committee enables communication on key issues to managers and employees within their respective Sectors.

The STWG is a working-level group, co-chaired by the Office of the Chief Scientist and the CoI Administrator, with S&T representatives from most of the Department’s Sectors. The STWG focuses on CoI risks as they relate to science and technology activities, and identification of tools to assist employees in recognizing and addressing those risks. Thirdly, the VEAN was created in June 2013 to further promote awareness and understanding of the 2012 TB and NRCan Codes within their sectors. The VEAN brings together Director-level representatives from across the Department’s Sectors, including representatives from NRCan’s regional offices. The initial objective in creating the VEAN was to provide an opportunity for regional employees to discuss V&E issues locally and link back with the CoE. Management advised that the VEAN is intended to support the V&E CoE in identifying emerging trends in their sectors and/or branches, in testing tools, developing case studies, and assisting in organizing V&E training. The audit noted that the VEAN has only met twice since its creation in 2013.

The audit acknowledges that these groups are valuable in engaging both senior leaders and employees towards promoting a V&E culture within the organization. There is; however, an apparent overlap between the responsibilities and mandates of the two working-level groups. There may be an opportunity to create efficiencies by streamlining the mandate of the STWG and expand its membership to include regions, as opposed to maintaining a third group through the VEAN. It should also be noted that the Terms of Reference (ToR) for the VEAC and the STWG have not been formally approved, and that finalizing these documents could further strengthen the governance framework.

In addition to sound governance, leadership is a cornerstone to creating a workplace that embraces a culture of V&E. The audit found that senior leadership is engaged and supports a values-based culture at NRCan. In addition to the examples previously provided, such as a Deputy Minister approved Code of Conduct and a Director General (DG)-level Committee, the Department’s Deputy Minister and senior management are actively engaged in this portfolio. For example, during town hall meetings across the Department, the Deputy Minister often discussed the importance of V&E in the organization. In addition, management advised that the Deputy Minister required that all departmental employees receive training on CoI.

Another example of leadership in support of V&E is the existence of a V&E Champion at the Assistant Deputy Minister-level, appointed by the Deputy Minister. The role of the Champion is to enhance V&E visibility and importance within the Department as well as demonstrate leadership through the creation of discussions, dialogues, and reflections on V&E matters. For instance, in 2013, the V&E Co-Champions at the time (the Chief Scientist and ADM-IETS, and the General Counsel) presented opposing sides on a specific V&E issue through a debate – CoI versus collaboration and science, to employees. During interviews, the former and newly appointed V&E Champions, both General Counsel, confirmed a general understanding of their roles as Champions; however, the recent appointment of a new V&E Champion at NRCan presents an opportunity to clarify this role further.

Public Service Employee Survey Results – Climate at NRCan

As per the NRCan Code, employees are expected to demonstrate Public Sector values in their daily decisions, actions, processes, and systems. Similarly, employees can expect NRCan policies and procedures to respect these values and can expect to be treated in accordance with these values by managers and co-workers. Within this context, a core Public Sector value that has a direct impact on an organization’s V&E Climate is Respect for People.

Every three years, since 1999, the Office of the Chief Human Resources Officer within the Treasury Board of Canada Secretariat, in collaboration with Statistics Canada, conducts a Public Service Employee Survey (PSES). The Survey measures employees’ opinions in relation to employee engagement, leadership, the workforce, and the workplace. Results are compiled by department, enabling each organization to analyze them and create action plans, as required, to address areas of concern. The most recent PSES was conducted in 2014.

The audit reviewed the results of the survey, with a particular focus on respect for people and found that:

• 80% of the NRCan’s employees who completed the 2014 PSES thought that the Department was treating them with respect, in comparison to 76% in 2011;
• 82% of the NRCan’s respondents thought that individuals behave in a respectful manner in their working unit;
• 81% of NRCan’s respondents thought that the Department implements activities and practices that support a diverse workplace;
• 73% of the NRCan’s respondents believed that every individual in their work unit is accepted as an equal member of the team; and
• 84% of the NRCan’s respondents had not been victim of harassment on the job in the past two years.

It is worth noting that NRCan’s results for all of the questions included in the “Respectful Workplace’’ section of the 2014 Public Survey were equal to or higher than the results of the overall Public Service.

With regards to leadership, the 2014 PSES results highlighted that the majority of NRCan’s respondents have confidence in senior management and that they lead by example in ethical behavior. These results were consistent with interviews conducted during the audit where employees at all levels expressed that, overall, they believe NRCan maintained a culture of ethical behavior. Employees in particular generally expressed satisfaction in management’s commitment to foster an environment of V&E and the demonstration of integrity and ethical values through their actions. 

RISK AND IMPACT

A potential overlap in mandates between committees responsible for V&E activities may result in a duplication of efforts and possibly impact the clarity of the committees’ mandates.

RECOMMENDATIONS

1. It is recommended that the Director General and Chief Human Resources Officer, in collaboration with other members of the Values and Ethics Advisory Committee, re-assess the roles, responsibilities, and expectations of the various committees that support Values and Ethics activities within the department and formalize them through updated and approved Terms of Reference.
2. It is recommended that the Values and Ethics Champion, in consultation with the Deputy Minister, assess their role and establish measures to most effectively support the Values and Ethics activities within the Department.

MANAGEMENT RESPONSE AND ACTION PLAN

Management agrees.

In response to recommendation 1, the terms of reference for both committees have been developed and will be approved by the appropriate parties. 

Position Responsible: Director General Human Resources and Workplace Management Branch and Chief Human Resources Officer/Chief Scientist/Values and Ethics Champion

Completion Date: March 31, 2015

Management agrees.

In response to recommendation 2, the Values and Ethics Champion, in consultation with the Values and Ethics Unit, will clarify the Champion’s role through the establishment of clear deliverables for the 2015-16 fiscal year to further promote Values and Ethics awareness within the Department.

Position Responsible: Values and Ethics Champion

Completion Date: May 31, 2015

Policies, Guidelines, Tools, and Processes

Summary Finding

Overall, NRCan’s V&E CoE policies, guidelines, tools, and processes are documented and communicated. Opportunities for improvement exist to further strengthen the delivery of the mandatory ECR/CoI training and related completion of the ECRs through a risk-based approach and clarification of mandatory requirements, as well as improved monitoring and follow-up to track progress.

Supporting Observations

One of the key components of maintaining a value-based culture within NRCan is adequately informing and educating employees across the Department on issues related to V&E. To facilitate this, the audit expected that codes, policies, guidelines, tools, and training sessions would be established and communicated to promote a value-based culture within the Department as well as communicate the expected behaviours to all NRCan employees.

Policies, Guidelines, Tools, and Processes

The audit found that a significant amount of information is available to employees on the Department’s intranet site. This includes the NRCan Code, along with other policies, guidelines, and tools made available through the V&E CoE’s Wiki page on NRCan’s intranet. In addition, the V&E CoE’s Wiki page includes information and tools for employees to manage conflict of interest, issues of harassment or bullying, duty of loyalty, conducting a political activities assessment, and wrongdoing disclosures. The Wiki page also provides V&E contact information to answer employee questions, as required. There are effective channels of communication at NRCan that allow employees to confidentially report issues such as wrongdoing or fraud in the workplace to the Senior Disclosure Officer, as per the Public Servants Disclosure Protection Act (PSDPA). The audit also found that on a quarterly basis, employees are linked to NRCan’s Code and are required to acknowledge their awareness and acceptance of Code when logging into the NRCan network.

With regards to more formal and direct communication and training, the CoE is currently providing mandatory training for all employees across the Department through multiple sessions within each of NRCan’s Sectors, with the goal of better informing them on CoI and their obligation to declare CoI by completing the ECR. This subject is of particular interest within NRCan as a science-based Department, as the nature of scientific research requires collaborative efforts with external stakeholders, such as industry or academia. Such collaborative activities present inherent risks of real, apparent, or potential CoI. For example, situations may occur where NRCan scientists working on a program are also working as adjunct professors in academic institutions receiving funding from NRCan.

As previously mentioned, the Deputy Minister requested that the CoE V&E provide CoI training for all NRCan employees. This strategy provides the Department with a comprehensive approach to promoting awareness about values and ethics, the NRCan Code and other requirements. It also enables all employees to have discussions about V&E in the context of conflict of interest, founded on real-life examples that participants deal with regularly in their work.

The CoI training and the initiative to complete the related ECR were launched in June 2013 with an original expected completion date in Summer 2014. In retrospect, management recognizes that the original target dates set were optimistic and were not reasonable considering the resources available.

Training

As of November 1, 2014, approximately 25% of NRCan’s 4,033 employees had received the mandatory ECR/CoI training. Overall, the employees and managers interviewed had a positive opinion of the training provided and found it useful in highlighting their responsibilities with regards to CoI. Interviewees, who included several Directors’ General, as well as multiple employee-level working groups, advised that the training was beneficial in helping them understand the nuances between perceived, potential, and actual CoI, in order to better identify, report, and mitigate such conflicts in their daily work activities. In fact, the majority of interviewees highlighted the importance of having these types of training sessions on a regular basis. Both employees and managers noted; however, that the portion of the training related to the completion of the ECR could be improved through additional guidance and instructions. 

The V&E CoE is delivering the ECR/CoI training to all employees on a Sector-by-Sector approach. Once training sessions within a Sector are completed, the V&E CoE begins conducting training in another Sector. Although this training is mandatory for all NRCan employees and the V&E CoE has a mechanism in place to track attendance, no monitoring or follow-up is conducted for employees who did not attend the mandatory training sessions.

Employee Confidential Report

As part of the 2010 Office of the Auditor General (OAG) audit on CoI, it was noted that NRCan did not remind its staff that they must submit confidential reports on CoI, if they find themselves in such a situation. Since then, the Department has developed and begun the implementation of the new Employee Confidentiality Report (ECR) initiative. This initiative was launched in conjunction with the CoI mandatory training and enables the systemic identification of real, apparent, or potential CoI.  

The ECR tool enables employees to consider their degree of influence and decision-making authority as well as to take into account the impact of the information to which they are exposed. In addition, employees are required to report any outside activity and/or self-directed investment that are related to NRCan’s mandate or activities. Furthermore, the ECR provides employees with an opportunity to identify mitigation measures to address the risks related to CoI. The ECR form protects the interests of both employees and the Department to ensure conflicts or potential conflicts are effectively managed.

In conjunction with the CoI training being provided, the CoE is also in the process of ensuring that all of NRCan’s employees also complete an ECR. At the time of the audit, approximately 25% of NRCan employees had completed and submitted their ECR forms, which is consistent with the number of employees that received the related mandatory training. Furthermore, the majority of the submitted ECRs had also been reviewed and assessed by the CoE.

As a result of turnover and competing priorities for the limited number of resources available within the CoE, as well as the significant number of NRCan employees that are still required to receive the mandatory training and complete their ECR forms, there have been substantial delays in the rollout of this Department-wide initiative. 

Considering that approximately 75% of the Department’s employees have yet to complete their ECR form, the Department could consider a risk-based approach moving forward. Although 100% coverage is certainly a good practice, it is an ambitious goal based on the availability of resources in the CoE. A risk-based approach; however, may be more reasonable and is still in line with TBS Guidance on Governance Structures for Values and Ethics.

For example, training sessions can continue to be provided for all NRCan employees; however, mandatory completion of ECRs could be restricted to employees with positions that have greater inherent risks of real or perceived conflict of interest reflective of their duties. This approach would require only higher-risk employees, such as executives and certain managers responsible for staffing and managing contracts, and scientific positions that regularly interact with external stakeholders, to complete ECR forms.    

In order for any mandatory practice to be effectively implemented, senior management needs to have sufficient information to ensure compliance. Within that context, the audit found that management is not being provided with detailed progress reports regarding completion of ECRs within their Sectors. Such information would enable ADMs to follow-up with employees who have not completed and submitted their ECRs, as required. 

The audit also found that although employees are advised that the CoI declaration is mandatory and refusal to declare a CoI is a violation of their Terms and Conditions of respective employment, the CoE does not require them to submit their ECR forms by a firm deadline. It should also be noted that employees are encouraged to revisit the ECR form on an annual basis; however, there is no process in place to ensure that declarations are formally reviewed.   

Finally, with regards to new employees, the audit also found some inconsistencies regarding their obligations to complete an ECR form. Specifically, in recent letters of offer signed by new employees, a condition of the offer required them to complete an ECR form within 60 days if they believed they were in a situation of apparent, potential or real conflict of interest. Alternatively, the ECR forms state that all employees must complete the form within 60 days of being hired, as well as any time there is a change in their personal or work situation. 

RISK AND IMPACT

There is a risk that V&E initiatives and related objectives may not be fully achieved if limited resources are not focused on areas of higher risk of potential conflict of Interest, and if senior management is not provided with timely progress reports enabling them to follow-up with staff to support department-wide initiatives.

RECOMMENDATIONS

3. It is recommended that the Director General and Chief Human Resources Officer ensures that:
   1. A risk-based approach is utilized to determine which Natural Resources Canada (NRCan) employees are required to complete an Employee Confidential Reports (ECR) and ensure they are revisited on an annual basis.
   2. The ECR form and the conditions of employment stated in the letters of offer, regarding the mandatory completion of the declaration of Conflict of Interest (CoI) within 60 days of appointment, are consistent.
   3. More robust monitoring and follow-up is conducted to track progress of the ECR/CoI training and the related completion of ECRs, including the provision of firm deadlines for employees and progress reports to be submitted to senior management.
   4. Messaging provided during the training sessions be clarified with regard to the completion of the ECR, including providing clarity on available guidance.

MANAGEMENT RESPONSE AND ACTION PLAN

Management agrees.

In response to recommendation 3a, all employees will be trained and ECRs will be triaged on the level of risk for assessment. We will continue to work strategically after full implementation, prioritizing new recruits and high risk positions and situations (e.g. employee activities during LWOP or post-employment). Subsequent to implementation, annual reminders will be sent to high risk employees to review and confirm their situation.

Position Responsible: Director General Human Resources and Workplace Management Branch and Chief Human Resources Officer

Completion Date: Fall 2015 (Timing it with mid-year review exercise)

Management agrees.

In response to recommendation 3b, the V&E CoE will work with Corporate Staffing and Executive Resourcing to ensure consistency of language between the NRCan Code, the ECR and the letters of offer.

Position Responsible: Director General Human Resources and Workplace Management Branch and Chief Human Resources Officer

Completion Date: June 30, 2015

Management agrees.

In response to recommendation 3c, a process has been developed to monitor completion rates and to allow follow-up on a more timely basis after training sessions are provided.

Position Responsible: Director General Human Resources and Workplace Management Branch and Chief Human Resources Officer

Completion Date: Fall 2015

Management agrees.

In response to recommendation 3d, all presentations related to the ECR include timing and contact information for additional guidance and support.

Position Responsible: Director General Human Resources and Workplace Management Branch and Chief Human Resources Officer

Completion Date: Complete

Monitoring and Performance

Summary Finding

There are mechanisms in place to monitor and report on the V&E framework activities to senior management on a regular basis. Opportunities exist to strengthen the V&E risk assessment process as well as to improve monitoring and reporting to provide additional information in support of senior management.

Supporting Observations

An integral part of any program or function is the set of processes and practices in place to monitor and measure performance. This allows management to determine whether the program or function is achieving its intended objectives and expected results. Monitoring and measuring performance related to V&E allows senior management to assess whether the framework is being implemented and provides insight on the ‘V&E climate’ within the organization. 

Accordingly, the audit assessed whether the CoE monitors performance to ensure the implementation of V&E activities across the Department. Specifically, the audit sought to determine whether the V&E framework and policies are monitored to ensure implementation across the Department. This included a review of the following: the V&E risk assessment process, CoI mandatory training, the ECR initiative, and the mechanisms in place to measure and report on the overall V&E activities within NRCan.

V&E Risk Assessment Process

With regards to assessing and mitigating V&E related risks, the audit found that the CoE has a formal V&E risk assessment process in place to enable this activity through the NRCan Ethical Risks Profile (ERP). The ERP identifies the list of potential risk exposures of NRCan in the field of V&E as well as existing mitigation strategies, residual risks, and potential consequences. It was developed by the V&E CoE, in collaboration with management from various committees, to identify and mitigate potential scenarios under several risk categories. In addition, the ERP allows the management of V&E risks that may have a negative impact on the achievement of NRCan’s objectives and adherence to the Department’s V&E Code. For example, risk categories include compromised Duty of Loyalty, Inappropriate Use of Government Resources or Time, and Bribery and Corruption.

The ERP is a valuable risk assessment tool for V&E; however, the audit noted that it has not been updated since 2011. A periodic exercise to update the ERP could serve as an awareness and training tool for department-wide committees, such as the DG-level VEAC as well as working-level committees.

Monitoring and Performance

With regards to monitoring, the audit found that the Department has various mechanisms in place to monitor and measure progress of the Department’s implementation of V&E requirements. For instance, NRCan requires its employees to periodically acknowledge their compliance with the NRCan V&E Code. Specifically, the Departmental IT system automatically requires employees to acknowledge compliance with the NRCan V&E Code every three months before allowing them to log on to the network. Refusal to acknowledge compliance with the NRCan V&E Code results in denying employee access to the Departmental system. Another example includes the fact that the CoE tracks the implementation of the ECR initiative, although as previously mentioned, opportunities exist to strengthen reporting on these results. The audit; noted; however, that the CoE has not developed a mechanism that allows senior management to periodically assess the ‘ethical climate’ within the organization.

Specifically, although the Department has several indicators that can provide insight on V&E within the organization, they are not formally tracked in a single report by the V&E CoE, but rather by functional leads in other areas within CMSS. These include, for example, tracking and periodic reporting of non-advertised appointments, non-competitive contracts in excess of $25,000, and other similar indicators tracked through human resources, labour relations, and/or financial management activities. Similarly, reporting against these indicators is conducted by various functions; however, they are not rolled up into a single report to senior management. 

As for measuring performance of the V&E CoE itself, the audit found that a service standard is in place to ensure that ECRs submitted are reviewed within 60 days; however, performance against this standard is not formally measured and reported to senior management. Another key role of the V&E CoE function is to provide NRCan employees with a mechanism to seek confidential advice related to V&E. NRCan employees can also seek confidential advice through the Senior Disclosure Office. It should be noted that during our interviews, both employees and managers that had sought advice from the V&E CoE were overall pleased with the services provided. With that said, there are no service standards in place with regards to any of the advisory services provided by the V&E CoE to employees, although management advises they are in the process of developing a database to track requests, issues, and closure of such issues.

On a regular basis, senior management receives reports on the overall performance of V&E activities. This includes presentations to the Executive Committee, the Labour Management Consultation Committee, and the Departmental Audit Committee. Such reporting; however, could be strengthened by reporting on V&E activities globally (i.e. training and completion of required ECRs), by amalgamating individual V&E indicators from various functional areas, and by  measuring performance of the V&E CoE against service standards.  

Amalgamating such information into a dashboard and presenting it to senior management on a periodic basis could provide valuable information to support decision-making and an overview of the V&E climate. This would also better inform the Departmental Audit Committee in support of their role to provide the Deputy Head with advice on V&E.

RISK AND IMPACT

The absence of comprehensive performance measurement and reporting can limit the value of information provided to senior management to support informed decision-making. Furthermore, the lack of a regularly updated ERP may limit the Department’s ability to effectively manage V&E related risks.

RECOMMENDATIONS

4. It is recommended that the Director General and Chief Human Resources Officer ensures that:
   1. The Ethical Risk Profile is reviewed and updated on a regular basis enabling Natural Resources Canada to better identify evolving Values and Ethics-related risks and leverage the Ethical Risk Profile as a training tool, whenever possible.
   2. Advisory and guidance services provided to Natural Resources Canada employees are formally tracked and documented. In addition, they are also assessed and monitored against established Values and Ethics Advisory and Guidance service standards.
   3. A more comprehensive periodic reporting strategy is provided for Values and Ethics to senior management that includes insight on both the performance of Values and Ethics activities and the overall Values and Ethics climate within the organization.  

MANAGEMENT RESPONSE AND ACTION PLAN

Management agrees.

In response to recommendation 4a, the Ethical Risk Profile is an ‘evergreen’ document, with regular updates (every four years) and ad-hoc updates if warranted by emerging issues.

Position Responsible: Director General Human Resources and Workplace Management Branch and Chief Human Resources Officer

Completion Date: June 30, 2015

Management agrees.

In response to recommendation 4b, this has already been developed and is being implemented. Appropriate documents are kept when required for formalized advice on Values and Ethics issues.

Position Responsible: Director General Human Resources and Workplace Management Branch and Chief Human Resources Officer

Completion Date: September 2015, and ongoing

Management agrees.

In response to recommendation 4c, quarterly reporting on the number of employees trained, and Employee Confidential Reports (ECRs) received and assessed will be provided through the Deputy Minister Tracker. The results of the Public Service Employee Survey will serve to inform on the ethical climate within the organization.

Position Responsible: Director General Human Resources and Workplace Management Branch and Chief Human Resources Officer

Completion Date: June 30, 2015

APPENDIX A – AUDIT CRITERIA

The criteria were developed primarily from the NRCan’s Values and Ethics Program Framework and were also based on the NRCan and Government of Canada related policies on Values and Ethics.

The audit objective was to provide reasonable assurance that the Department’s V&E Framework and practices are adequate and being implemented. Appendix B presents NRCan’s Values and Ethics Program Framework.

Specifically, the audit focused on the framework put in place by NRCan and examined:

Audit Sub-Objectives	Audit Criteria
Sub-Objective 1: Whether governance structures are in place to foster leadership and culture based on NRCan V&E code.	1.1 It is expected that roles, responsibilities and accountabilities are clearly documented and support the Department’s requirements with regards to Values and Ethics.
	1.2 It is expected that NRCan’s V&E Framework is supported through senior management leadership.
Sub-Objective 2: Whether policies, guidelines, tools, and processes are clearly documented, communicated.	2.1 It is expected that NRCan control framework for Values and Ethics includes the key elements stated in the Values and Ethics Code for the Public Sector.
	2.2 It is expected that the NRCan Values and Ethics Code, policies, tools, and procedures are clearly documented and communicated.
	2.3 It is expected that NRCan’s employees formally and periodically acknowledge their awareness of NRCan Values and Ethics Code.
	2.4 It is expected that employees receive adequate training and information regarding Values and Ethics, Conflict of Interest, Harassment and Fraud awareness.
	2.5 It is expected that the advisory and guidance services are provided in accordance with service standards established by the Values and Ethics function.
Sub-Objective 3: Whether framework and policies are being monitored to ensure implementation across the Department.	3.1 It is expected that Values and Ethics risks and issues are formally assessed on a regular basis and that corrective actions are taken to mitigate new risks identified.
	3.2 It is expected that anonymous channels of communication exist for people to report suspected improprieties and that they are operating effectively.
	3.3 It is expected that there are processes established to prevent, detect and manage conflicts of interests and that they are operating effectively.
	3.4 It is expected that management has performance   indicators in place to measure the overall V&E culture within NRCan and the results and outcomes are formally reported to senior management on a regular basis.

APPENDIX B – NRCAN VALUES AND ETHIC FRAMEWORK

The Appendix B presents NRCan’s Values and Ethics Program Framework. 

Text version

Appendix B: NRCan’s Values and Ethics Program Framework

This figure highlights the key areas of the NRCan’s Values and Ethics Framework, key outputs by area and expected outcomes. These areas include Leadership; Outreach/Partnering for Ethical success; Policies, Procedures and Processes; Guidance and Advice; and, Oversight and Enforcement.

The respective key outputs by area include governance structure; communication with the program, information and education; guide and tools for managers; advice on the Code of Values and Ethics; and reports to management. 

The chart also describes the expected outcomes in the short-term and medium-term including increased awareness and understanding of V&E issues across NRCan; accurate, annual reporting on high risk areas; ensuring an inclusive, supportive and respectful workplace and compliance with policies, regulations and legislation.

Finally, the chart describes the ultimate outcome of this framework is to achieve both work and a workplace that are effectively managed in accordance with Values and Ethics and aligned with NRCan’s Strategic Outcomes.