7 Audit of the National Energy Board

Table of Contents

Table of contents

Summary

7.1 The Public Service Commission (PSC) has conducted an audit of the National Energy Board (NEB) to determine whether the NEB had an appropriate framework, systems and practices in place to manage its appointment activities and whether appointments and appointment processes complied with the Public Service Employment Act(PSEA), the Public Service Employment Regulations (PSER), the PSC Appointment Framework and other governing authorities.

7.2 The NEB operates in the highly competitive energy sector labour market in Calgary. The NEB requires skilled employees to meet its business objectives and must compete with the compensation packages offered by the private sector. The NEB works to attract and retain employees through performance pay and market allowances. The energy sector economy has a highly fluctuating labour market. The NEB must contend with this challenge in implementing staffing strategies.

7.3 The NEB's Chair and Chief Executive Officer (Chair/CEO) established and maintained a sub-delegation instrument that was consistent with the controls identified in the Appointment Delegation and Accountability Instrument (ADAI). However, we found weak controls governing the implementation of the sub-delegation process at the NEB.

7.4 Our audit found that the NEB's staffing strategies lacked the detail that described how staffing would be conducted to meet requirements and the measurements to evaluate performance against expectations.

7.5 We found that the NEB put in place all of the expected mandatory policies of the PSC Appointment Framework. In addition, the NEB developed an extensive and comprehensive suite of policies, processes, guides and templates to support employees, human resources (HR) staff, hiring managers and sub-delegated managers with staffing activities.

7.6 We found that 60% (24 out of 40) of the appointments we reviewed demonstrated that the individual appointed to the position met merit. Merit could not be demonstrated in 28% (11 out of 40) of appointments reviewed; the most common cause for merit not being demonstrated was the absence and quality of documentation in external non-advertised appointments. Merit was not met in 12% (5 out of 40) of appointments reviewed. The NEB's own education qualification standard was not respected in four of these five appointments.

7.7 We found that the NEB did not actively monitor the variance of its planned and actual staffing activities. Monitoring the compliance of appointment processes to the PSEA was done through ad-hoc reviews; however, the NEB did not have a process in place to incorporate the lessons learned for continual improvement across the organization. The NEB did not monitor or report on all the mandatory elements required by the PSC Choice of Appointment Process Policy.

7.8 The NEB accepted the findings and developed an action plan to address the issues raised in the audit report.

7.9 The PSC will monitor the NEB's follow-up action to the audit recommendations through regular monitoring activities, including its annual Departmental Staffing Accountability Report; as a result the PSC has decided not to amend the existing delegation agreement with the deputy head of the NEB.

Background

The National Energy Board

7.10 The NEB was established in 1959 through the National Energy Board Act and reports to Parliament through the Minister of Natural Resources. The NEB is headed by a Chair, who also acts as its Chief Executive Officer. The NEB became a separate employer under the Public Service Staff Relations Act in 1992, but its employees are appointed in accordance with the PSEA.

7.11 The NEB regulates the construction, operation and abandonment of pipelines that cross international or provincial borders, international power lines and designated interprovincial power lines, and pipeline tolls and tariffs. The NEB also regulates natural gas imports and exports, oil and natural gas liquid exports, electricity exports, and certain oil and gas exploration activities on frontier lands, particularly in Canada's North and certain offshore areas. In addition, the NEB provides Canadians with information about the country's energy markets.

7.12 In 1991, the NEB's headquarters were relocated from Ottawa, Ontario to Calgary, Alberta. As of March 31, 2010, the NEB had 346 employees, all located in Calgary. The NEB has six business units divided into two streams, Regulatory and Business Integration. The business units that make up the regulatory stream are Applications, Operations, and Strategy and Analysis. Those that make up the integration stream are Secretary and Regulatory Services, People and Communication Services, and Corporate and Information Solutions.

7.13 The NEB requires specific skills to meet its business objectives. The professionals possessing these skills include economists, financial analysts, market analysts, engineers, geologists, geophysicists, environmental specialists, lawyers, regulatory analysts, regulatory officers and employees in corporate services positions. The skills needed by the NEB are the same ones highly sought after by companies in the Calgary-based private energy sector. These companies provide incentives (including bonuses and stock options) and salaries that can be higher than the NEB is able to provide. Further, the NEB reports that these companies can, in many cases, hire staff more rapidly than the NEB. This competition for skilled employees has a significant impact on the NEB's human resources.

7.14 Over the past several years, the NEB, in conjunction with the Treasury Board of Canada, has taken significant steps to compete with the private energy sector for talent. First, a job classification system was implemented specifically for the NEB in 1992. Second, a pay incentive program was implemented in 2006-2007. This program provides a pay bonus to reward performance of employees at all levels within the NEB. Third, also in 2006-2007, the NEB's salaries were augmented with a market allowance to compensate for the cost of living in the Calgary market. Fourth, also in recognition of retention difficulties faced by the NEB and specific to Calgary's economic situation, a "Calgary Allowance" is paid to employees who are members of the bargaining unit. Finally, the NEB has placed significant emphasis on work-life balance for its staff, along with a comprehensive learning and development program to maintain expert knowledge and support employee training and career progression.

7.15 In 2007-2008, the NEB experienced an overall attrition rate of almost 17%. The NEB's Safety and Engineering team and Market Analyst team experienced an attrition rate of almost 30% during this same year. During the 2007-2008 period of high attrition, the NEB had two HR advisors. The NEB reported to us that it was not equipped with enough HR advisors to react to the competition with the private energy sector for skilled employees. The NEB explained that, during this period, appointments were completed rapidly to meet the immediate needs of the organization and to avoid losing talent to other employers. As a result of these competitive circumstances, the NEB stated that appointment processes may have been carried out with less rigour than required.

7.16 The economic boom that put pressure on the Calgary labour market in 2007-2008 and 2008-2009 began to ease in 2009-2010. However, despite the global recession in 2009-2010, the demand for NEB regulatory oversight continued to grow. This growth was a result of the demand for Canadian crude oil, the development of unconventional gas resources that needed to connect to the North American pipeline grid and a 51% increase in the length of pipeline under the NEB's responsibility following the transfer of a major pipeline system from provincial to federal jurisdiction.

7.17 The PSC is responsible for the administration of the PSEA. This Act gives the PSC exclusive authority to make appointments, based on merit, to and within the public service. It further allows the PSC to delegate to organizational deputy heads its authority for making appointments. The PSC signed an Appointment Delegation and Accountability Instrument (ADAI) with the NEB's Chair/CEO, delegating these appointment authorities. The Chair/CEO had full delegation authority during the period covered by our audit.

Purpose and methodology of the audit

7.18 The objectives of the audit were to determine whether the NEB had an appropriate framework, systems and practices in place to manage its appointment activities and whether appointments and appointment processes complied with the PSEA, the PSER, the PSC Appointment Framework and other governing authorities.

7.19 Based on a risk assessment of the Appointment Framework and its application, we focused on the NEB's policies, staffing strategies, monitoring of appointment activities and delegation of authorities through interviews with managers, HR advisors and senior managers as well as reviewing key documentation for the period of April 1, 2009, to November 30, 2010.

7.20 Our approach to assessing compliance with PSEA requirements included examining a representative sample of appointments for the period of April 1, 2009, to September 30, 2010. For more details about our methodology and sampling, refer to About the audit at the end of this report.

Observations and recommendations

Observations on the Appointment Framework

Sub-delegation authorities were established, but controls were weak

7.21 We expected the NEB to establish a sub-delegation instrument that was consistent with the PSEA and the PSC Appointment Framework.

7.22 We found that the Chair/CEO established and maintained a sub-delegation instrument to manage the sub-delegation of appointment authorities in accordance with the ADAI. Through this instrument, the Chair/CEO required that managers complete specific training and testing; as well a review of their performance during appointment processes was mandatory prior to their being sub-delegated. The instrument also identified that authority may be withdrawn if the conditions are not respected.

7.23 We found that the ADAI, roles and responsibilities of HR advisors and sub-delegated managers, appointment policies, staffing tools and other HR support materials were defined, communicated and accessible to all employees on the NEB's intranet site. The NEB had a Staffing Sub-delegation Policy that outlined both the authorities and responsibilities for the Chair/CEO, sub-delegated managers and the HR team. This policy also outlined the conditions of sub-delegation.

7.24 Prior to recommending an individual for sub-delegation, the HR technical specialist would review the individual's staffing-related experience and their completion of mandatory training and testing. The HR technical specialist would then use their professional judgment to determine whether sub-delegation was warranted. The Chair/CEO ultimately granted sub-delegation based on the advice from the HR technical specialist.

7.25 We expected mechanisms to be in place to ensure that sub-delegated managers had the necessary knowledge to carry out their staffing responsibilities, as required by the NEB's sub-delegation instrument. We found that three sub-delegated managers had not completed the mandatory training and testing required by the NEB Staffing Sub-delegation Policy. These three individuals signed 32% (43 out of 134) of the letters of offer specific to the scope of this audit. Therefore, these appointments were made by individuals who did not meet all the conditions required by the NEB Staffing Sub-delegation Policy.

Recommendation 1

The Chair and Chief Executive Officer of the National Energy Board should ensure that an individual has met all of the requirements set out in the National Energy Board's sub-delegation instrument prior to receiving sub-delegation.

Response from the National Energy Board:

Agreed. All sub-delegated managers meet all of the requirements of the sub-delegation instrument. Action has been taken to correct the discrepancies identified in the report, and a control mechanism is being developed to support this recommendation.

Staffing strategies did not explain the "how"

7.26 The fluctuating demand for specialized employee skills in the Alberta energy sector make staffing strategies vital to business needs. The NEB requires staffing strategies that can respond rapidly to employment demands for skilled resources as the region's economy changes.

7.27 We expected the NEB to have staffing strategies that support organizational staffing priorities. We also expected that staffing strategies and supporting tools would provide direction for the organization as a whole and guidance on how to make decisions concerning staffing activities.

7.28 We found that the NEB's 2009-2012 People Strategy and Implementation Plan (PSIP) documented the staffing requirements for different job families and included a detailed environmental scan of the organization as it relates to HR. However, with the exception of the Student Talent Recruitment Program, we found that the PSIP lacked details about how the NEB conducts staffing to meet its requirements. For example, the PSIP identified a shortage of market analysts at the NEB-12 level. However, the plan did not provide a strategy for reducing this gap other than to recruit staff at a lower level. Moreover, there was no indication as to how to recruit the staff or which type of appointment process was to be used.

7.29 We found that since the PSIP did not provide measurable strategies, the NEB was not able to monitor the variance of its staffing activities. As a result, the NEB was unable to determine whether any adjustments to the staffing strategies were required in order to remain competitive in the Alberta energy sector and to meet its organizational priorities.

Recommendation 2

The Chair and Chief Executive Officer of the National Energy Board should implement a mechanism to identify what staffing transactions have been conducted and how, compared to what had been planned, and to identify whether adjustments to its plan or staffing strategies are required.

Response from the National Energy Board:

Agreed. The NEB will complete the development of its integrated human resources plan by March 2012, which will include documenting measurable staffing strategies. This will complement existing initiatives such as a planning framework, staffing logs and the quarterly staffing reports which are currently reviewed by the Executive Team.

Mandatory policies were established and staffing tools were available

7.30 We expected the NEB's appointment policies to be consistent with the PSEA and the PSC Appointment Framework. The appointment policy component of the PSC Appointment Framework requires delegated organizations to establish mandatory policies for area of selection, corrective action and revocation and to establish criteria for the use of non-advertised processes. The Appointment Framework also allows delegated organizations to develop other appointment policies to respond to their specific needs and priorities. We found that the NEB had established these mandatory policies, which were available to all employees through the organization intranet and were compliant with PSC requirements. We expected and found that the NEB consulted its stakeholders for their input when revising and updating its appointment policies and practices.

7.31 The NEB's internal quality management system required that procedures and policies be reviewed and updated regularly. We expected and found that the NEB did monitor and update its staffing-related policies.

7.32 In addition to the mandatory policies, we found that the NEB developed a comprehensive set of staffing tools for employees, hiring managers and sub-delegated managers. This included a suite of policies, processes, guides and templates to support staffing activities. For example, in response to the challenge of retention, we found that the NEB had implemented a Career Progression Ladder Reclassification Policy. This policy established a promotional program called a "Career Ladder." Candidates were assessed against the essential qualifications and promoted through non-advertised appointments. This program accounted for 72% (64 out of 89) of non-advertised appointments made during the audit period. We found that access and transparency was met as the program criteria were communicated and available to all employees.

Sub-delegated managers had access to human resources advisors, staffing tools and training

7.33 We expected that mechanisms would be in place to ensure that stakeholders were informed of their roles and responsibilities and had the support to carry out their appointment-related responsibilities. This included ensuring that sub-delegated managers had the necessary knowledge to carry out their staffing responsibilities, as required in the NEB's sub-delegation instrument. In addition to the mandatory training and testing required by the NEB's sub-delegation policy, we found that the responsibilities for the NEB's HR advisors were set out to ensure that sub-delegated managers complied with staffing-related policies and the PSEA.

7.34 We found that sub-delegated managers had access to HR advisors whose expertise in the Appointment Framework was validated by the PSC. The NEB had increased the number of HR advisors to support its managers. In 2007, prior to the scope of this audit, the NEB had two PSC-validated HR advisors supporting the entire organization. By 2010, the NEB had six, each one of whom had their knowledge of the Appointment Framework validated by the PSC. Each of the six business units had an HR advisor assigned to support its HR activities. Three out of these six HR advisors had also completed the NEB's internal staffing certification based on content from the National Staffing Council.

7.35 The team leaders at the NEB, some of whom were sub-delegated managers, typically managed the appointment processes. In 2009, the NEB identified that the staffing knowledge of its team leaders required improvement. In the same year, the Executive Management Team approved additional staffing-related training for these individuals. We found that 5 of the 12 team leaders who were sub-delegated had completed this training.

7.36 We found that, to improve staffing knowledge and awareness, the NEB communicated all of its staffing-related guidelines, frequently asked questions, templates and links to staffing-related Acts and Regulations on its intranet site. We found that, for the purpose of staffing, the intranet site was well structured, user friendly and accessible to all employees.

Some monitoring activities took place

7.37 Monitoring is an ongoing process of gathering and analyzing qualitative and quantitative information on current and past staffing results. This allows organizations to assess staffing management and performance (including risk assessment related to appointments and appointment processes). It also makes it possible to identify early corrective action, to manage and minimize risk and to improve staffing performance.

7.38 We expected the NEB to have mechanisms in place to ensure that appointments and appointment processes were monitored and that appropriate actions are taken as needed.

7.39 The NEB monitored the compliance of appointments through an ad-hoc review of appointment files. We found that issues were corrected as they were discovered in the individual files, and in some situations, the NEB took steps to correct compliance issues found by creating new templates and tools to ensure compliance of future appointments. However, the NEB did not have a process in place to incorporate the lessons learned for continual improvement across the organization.

7.40 In addition, we expected the NEB to monitor and report to the PSC all of the mandatory monitoring elements required by the PSC Choice of Appointment Process Policy. We found that the NEB did not monitor or report on all these mandatory elements to the PSC.

Recommendation 3

The Chair and Chief Executive Officer of the National Energy Board should document and incorporate lessons learned from the review of appointment files; and monitor and report to the Public Service Commission all of the mandatory monitoring elements required by the PSC Choice of Appointment Process Policy.

Response from the National Energy Board:

Agreed. The NEB will establish and implement a comprehensive Staffing Compliance Monitoring Framework by February 2012. Actions have been taken to improve the documentation of appointment-related decisions, and quality-control findings will be reported to senior managers for action each quarter.

Observations on merit

Merit was met in the majority of appointments

7.41 Section 30 of the PSEA establishes that appointments must be made on the basis of merit. Merit is met when the Commission is satisfied that the person to be appointed meets the essential qualifications for the work to be performed, as established by the deputy head, and, if applicable, any other asset qualifications, operational requirements or organizational needs established by the deputy head.

7.42 We expected appointments to respect the PSC's core value of merit. We also expected the NEB's appointment files to contain sufficient and appropriate documentation to support selection and appointment decisions.

7.43 We found that 60% (24 out of 40) of the appointments we reviewed demonstrated that the individual appointed to the position met merit. Table 1 illustrates the compliance results of these 40 appointments.

Table 1: Observations on merit
Observations Number of appointments by process type Total
Advertised Non-advertised
Merit was met Assessment tools or methods evaluated the essential qualifications and other merit criteria identified for the appointment; the person appointed met these requirements. 15 (65%) 9 (53%) 24 (60%)
Merit was not demonstrated Assessment tools or methods did not demonstrate that the person appointed met the identified requirements. 3 (13%) 8 (47%) 11 (28%)
Merit was not met The person appointed failed to meet one or more of the essential qualifications or other applicable merit criteria identified. 5 (22%) 0 (0%) 5 (12%)
Total appointments audited 23 (100%) 17 (100%) 40 (100%)

Source: Audit and Data Services Branch, Public Service Commission

7.44 As a separate employer, the NEB defined its own qualification standard for education requirements related to positions in the economics, environment and engineering job families. In 12% (5 out of 40) of the appointments reviewed, merit was not met. Four out of the five were a result of the NEB not meeting its own internal qualification standard for education. We found that this qualification standard was not referred to by the sub-delegated managers responsible for these appointments. We also found one appointment (Exhibit 1) where the appointee did not meet the minimum scores for essential qualifications for a multi-level appointment process.

Exhibit 1: Appointment not meeting merit

The appointee was assessed as part of an appointment process for multi-level positions. The appointee failed to meet the minimum marks required on questions related to knowledge, as well as leadership and teamwork for the higher-level position. While these results would have been sufficient for the lower-level position, the person was appointed to the higher level position.

Source: Audit and Data Services Branch, Public Service Commission

7.45 We found that 28% (11 out of 40) of the appointments we reviewed did not demonstrate merit. The most common cause for merit not being demonstrated was the absence or quality of documentation in non-advertised appointments. These documentation issues have been broken down as follows: eight of these eleven appointments were external non-advertised; of these eight, four had no assessment on file; two cases had a narrative email explaining why the candidate was appointed but did not demonstrate how they met the essential qualifications and, in the last two, the assessments did not address all of the essential qualifications.

7.46 The remaining three appointments were advertised. In one case the appointee was assessed after they were appointed, this resulted in merit not demonstrated, ultimately we found that the late assessment did demonstrate merit; in the second case the assessment did not demonstrate how the appointee met the essential qualifications; and in the third case the appointee was not assessed against two of the essential qualifications on the statement of merit criteria.

Observations on the guiding values

Guiding values in advertised processes were respected for most appointments

7.47 The process of selecting and appointing a candidate must also respect the guiding values of fairness, access, transparency and representativeness. The appointment files must contain evidence that these values were respected throughout the appointment process.

7.48 We expected advertised posters to contain all of the information required to ensure that candidates had the necessary information they needed to apply. We found that, in 96% (22 out of 23) of the appointments reviewed, this was followed.

7.49 We expected the screening of appointees to be administered fairly as part of advertised appointment processes. We found that, in 87% (20 out of 23) of cases, the screening of the appointee was fair. Once the screening was completed, we found that the assessment of other appointees was done fairly in 74% (17 out of 23) of the appointment processes we examined. The six cases where we found issues were characterized by rating guides that did not have minimum pass marks, essential qualifications that were not assessed and narrative assessments that did not demonstrate how the appointee met merit.

7.50 The PSEA imparted flexibilities on the NEB that allowed the selection of the person who is the right fit for the appointment, not necessarily the highest scoring person. In order for merit to be applied, the NEB still had to ensure that persons selected for appointment met the essential qualifications identified at the outset of the appointment process. The NEB also had other criteria established, namely, asset qualifications, operational requirements and organizational needs. We found that the NEB had justifications that respected the guiding values in all but one case.

Three appointments included indicators of either error, omission or improper conduct

7.51 The process of selecting and appointing a person requires that decisions be made objectively and respect the guiding values of fairness, transparency, access and representativeness. The appointment files must demonstrate that these values were respected throughout the appointment process.

7.52 In 8% (3 out of 40) of the appointments we reviewed, we found one or more indicators of either error, omission or improper conduct which could jeopardize the guiding values, particularly the perception of fairness. Exhibit 2 presents an example of an appointment with indicators of either error, omission or improper conduct.

Exhibit 2: Appointment with indicators of either error, omission or improper conduct

A position was advertised internally at the NEB. Prior to advertising, the hiring manager e-mailed HR twice to determine what was required in order to appoint a specific candidate indeterminately (full-time), and later to seek confirmation that their preferred candidate could be appointed. The preferred candidate was the only applicant and was subsequently appointed.

Source: Audit and Data Services Branch, Public Service Commission

Priority administration was not consistent

7.53 We expected that, pursuant to the PSEA, the PSER and the PSC Choice of Appointment Process Policy, the NEB would consider priority entitlements before making an appointment.

7.54 Prior to soliciting candidates for appointments, the NEB must first consider persons with entitlements under the PSEA to be applied in priority to all others and must receive a clearance number from the PSC before proceeding with another appointment process. Once the PSC confirms that there are no priorities, a clearance number is issued. We found that this process was followed in 85% (34 out of 40) of the appointments reviewed. In six cases the NEB did not obtain this clearance before the appointment was made. In November 2010, as a result of these observations, the NEB had the PSC provide a training session to all HR advisors on priority management.

7.55 If a priority person meets the essential qualifications, they must be considered for the position. We found one case where priority persons were referred in March 2009 but only assessed in August 2009. The appointment process had already been completed and appointments made by that time. In another case, we found that a priority was not given sufficient time to be tested for their second language capability.

Most external non-advertised rationales did not demonstrate the guiding values

7.56 We expected, pursuant to the PSC Choice of Appointment Process Policy, non-advertised appointments to be accompanied by a written rationale demonstrating how the process met the established organizational criteria and the appointment values. The NEB Non-Advertised Appointment Processes Policy requires that non-advertised appointments be accompanied by a written rationale demonstrating how the appointment decision respected the guiding values, the NEB's business plans, the PSIP and criteria for the choice of a non-advertised process.

7.57 We found that in 65% (11 out of 17) of the non-advertised appointment processes we reviewed, the rationale did not demonstrate how the process met the guiding values. We did find that, in 88% (15 out of 17) of the appointment processes, the rationale demonstrated how the appointment met established organizational criteria detailing the circumstances when a non-advertised process could have been used.

Exhibit 3: Rationale did not demonstrate the guiding values

In one process, the rationale to carry out a non-advertised appointment explained that two successive advertised processes did not yield bilingual candidates. The non-advertised appointment was ultimately for an English essential position. The focus of the rationale was on urgent organizational needs and did not address the guiding values. Moreover, had the NEB conducted an advertised appointment process for an English essential position the process could have yielded candidates.

Source: Audit and Data Services Branch, Public Service Commission

7.58 We expected the NEB to establish and communicate an organizational policy that complies with the PSC Area of Selection Policy. We also expected the area of recourse for the NEB's internal non-advertised processes to respect the PSC policy. We expected the NEB would have only considered and appointed candidates restricted to the area of selection. We found that in 96% (22 out of 23) of cases this was followed. In one case, the area of selection was not respected due to the appointment of a student who was not part of a recognized student employment program.

Conclusion

7.59 The PSC has conducted an audit that covers appointment activities and related decisions within the NEB for the period from April 1, 2009 to September 30, 2010.

7.60 This audit had two objectives. First, to determine whether NEB had an appropriate framework, systems and practices in place to manage its appointment activities. We concluded that, with the exception of monitoring, the NEB had an appropriate framework, systems and practices in place to manage its appointment activities. The implementation of a monitoring program will provide ongoing measurement, feedback and, ultimately performance of the staffing framework. This includes the monitoring of: variance of actual to planned staffing activities; appointment and appointment process compliance against the PSEA and the PSC Appointment Policy; and the controls for its sub-delegation instrument to ensure that mandatory training and testing have been successfully completed. Monitoring of appointment compliance will provide the Chair and Chief Executive Officer with performance information allowing corrective action to be taken when compliance issues are found.

7.61 We found that the NEB has established a comprehensive system of policies, processes, guidelines and templates available to its employees, human resources staff, hiring managers and sub-delegated managers. Consistent use of these tools, specifically during external non-advertised appointments, would address the compliance issues outlined in this report.

7.62 The second objective of this audit was to determine whether appointments and appointment processes complied with the PSEA, the PSER, the PSC Appointment Framework and other governing authorities. We concluded that the majority of appointments and appointment processes in the NEB complied with the PSEA, PSER, the PSC Appointment Framework and other governing authorities. We found that 60% (24 out of 40) of the appointments were reviewed met merit. Merit could not be demonstrated in 28% (11 out of 40) of appointments, mostly as a result of documentation issues with non-advertised appointments. Merit was not met in 12% (5 out of 40) of appointments. The NEB's own education qualification standard was not respected in four of these cases. Ensuring compliance with the organization's own education qualification standard will resolve most of these issues in the future.

Action taken by the Public Service Commission

The PSC will monitor the National Energy Board follow-up action to the audit recommendations through its regular monitoring activities, including the annual Departmental Staffing Accountability Report; as a result, the PSC has decided not to amend the existing delegation agreement with the deputy head of the NEB.

Overall response from the National Energy Board

The NEB recognizes the value that the Public Service Commission provides to the greater public service by examining compliance with the Public Service Employment Act and other governing authorities. The NEB remains very committed to managing its appointment processes in accordance with the PSEA, its core values of merit and non partisanship, and the PSEA's guiding values of fairness, transparency, accessibility and representativeness. The NEB will improve its documented evidence of this commitment and will ensure appropriate controls and reporting mechanisms are in place for ongoing compliance. With respect to the recommendations provided by the PSC, the NEB is pleased to report that it has completed its actions regarding the first recommendation and improvements related to the final two recommendations are well underway.

About the audit

Scoping considerations

Our audit covered appointment activities and related decisions within the NEB for the period from April 1, 2009, to November 30, 2010. This audit had two objectives. The first objective was to determine whether the NEB had an appropriate framework, systems and practices in place and implemented to manage its appointment activities. Second, to determine whether appointments and appointment processes complied with the PSEA, the PSER, the PSC Appointment Framework and other governing authorities.

For more information regarding our methodology and audit criteria, refer to the section entitled Overview of audit approach at the end of this publication.

Sample selection

We reviewed a sample of the NEB's appointment files, excluding actings, deployments, students, bridgings, roll-overs, Special Assignment Pay Plan, extensions of terms, career assignment programs and non-advertised processes for reclassifications from April 1, 2009, to September 30, 2010. There were a total of 89 non-advertised appointments during the scope of the audit. We scoped out 69 non-advertised appointments as follows: 64 appointments from the career progression ladder; 4 re-classifications; and 1 incorrectly coded internal non-advertised appointment. This left us with 20 non-advertised appointments as part of our population. Table 2 provides details of the types of appointment processes audited.

Table 2: Appointments audited
Type of process Total
Advertised 23/114
Non-advertised 17/20*
Total 40/134*

Source: Audit and Data Services Branch, Public Service Commission

Assuming a measured deviation rate of 20% or less, we can expect a confidence interval equal to or less than 10% at a confidence level of 90%. This allows for unqualified reporting of audit findings for cells marked with an asterisk.

Audit team

Vice-President, Audit and Data Services Branch
Elizabeth Murphy-Walsh

Director General, Audit Directorate
Yves Genest

Director
Darren Horne

Manager
René Lajzerowicz

Auditors
Jill Hawkins
Claude Saintonge
Claude Zaor

Functional Expert
Paul Pilon

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