8 Audit of Natural Resources Canada

Table of contents

• Summary
• Background
  • Natural Resources Canada
  • Purpose and methodology of the audit
• Observations and recommendations
  • Observations on the Appointment Framework
    • Sub-delegation of appointment authorities was granted and controls were in place
    • Mandatory policies were established and staffing tools were available
    • Staffing strategies were established and guided the management of staffing
    • Staffing roles, responsibilities and accountabilities were clearly defined and communicated
    • A monitoring framework was in place but did not cover all requirements
    • Compliance monitoring of appointment files was conducted
  • Observations on merit
    • Merit was met in the majority of appointments
  • Observations on guiding values
    • The guiding values were at risk in the majority of the appointment processes
    • Four appointments had indicators of either error, omission or improper conduct
• Conclusion
• Action taken by the Public Service Commission
• Overall response from Natural Resources Canada
• About the audit
  • Scoping considerations
  • Sample selection
  • Audit team

Summary

8.1 The Public Service Commission (PSC) conducted an audit of Natural Resources Canada (NRCan) to determine whether NRCan 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.

8.2 We found that NRCan had established a framework, systems and practices to manage its appointment activities.

8.3 The deputy head established a sub-delegation instrument and framework that was aligned with the PSEA and the PSC Appointment Framework. We found that the sub-delegation process was well controlled and that sub-delegation was granted appropriately.

8.4 NRCan had in place staffing plans that were developed based on the needs of the department. We found that NRCan developed staffing strategies that guided its management of staffing. Variance analysis was also conducted to compare and explain the difference between planned and actual staffing.

8.5 We found that NRCan had all of the mandatory policies and criteria required by the PSC Appointment Policy. As a result of this audit, NRCan updated its policies and criteria to reflect the current requirements. In addition, NRCan developed a comprehensive appointment framework that also provided guidance and described the accountabilities and responsibilities of various stakeholders.

8.6 NRCan developed a staffing monitoring framework and plan. However, we found that the plan lacked some of the monitoring required by the PSC and that it was not fully implemented.

8.7 We also found that NRCan conducted two monitoring activities on the compliance of appointment files. We were able to establish reliance on the monitoring activity of the National Capital Region files and we have incorporated NRCan's findings with ours.

8.8 A total of 56% (25 out of 45) of appointments reviewed demonstrated that the person appointed to the position met merit. Merit could not be demonstrated in the remaining 44% (20 out of 45) of appointments, due primarily to insufficient assessments.

8.9 We found that 60% (27 out of 45) of the appointments placed the guiding values at risk. The main reason for this was insufficient documentation to demonstrate respect for the values.

8.10 The PSC will monitor NRCan's follow-up action to these 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 NRCan.

Background

Natural Resources Canada

8.11 On January 12, 1995, the Department of Natural Resources Act came into force and created NRCan by merging Energy, Mines and Resources with Forestry Canada. Although NRCan was created by an Act of Parliament in 1994, the department can trace its roots back more than 150 years, as one of the Government of Canada's oldest organizations. Today, NRCan is one of the largest science-based organizations in the Government of Canada, specializing in the sustainable development and use of natural resources — energy, minerals and metals, forests and earth sciences.

8.12 NRCan's raison d'être is to improve the quality of life of Canadians by helping to create a sustainable resource advantage. The department's aim is to position Canada as a global leader in clean energy and sustainable resource development. Underpinning this objective is the premise that access to natural resources, and the sustainable ways in which they are produced and used, has emerged as a core source of competitive advantage among nations.

8.13 To fulfill its mandate, NRCan conducts activities in areas of core federal jurisdiction that fall within its legislated roles and responsibilities, working toward outcomes supportive of economic competitiveness, environmental responsibility, the safety and security of Canadians and the stewardship of natural resources.

8.14 As of March 31, 2010, NRCan had 4 743 employees. With its headquarters located in Ottawa, NRCan is divided into 11 sectors and has a presence in every province and territory, except Prince Edward Island. Managers are supported in their staffing activities by human resources advisors located in six regions. As of March 2010, 66.7% of NRCan employees were located in Ottawa. Almost half of its employees were in the scientific and professional classification, including scientific research, physical sciences and engineering and land survey.

8.15 In January 2010, the Government of Canada signed an agreement with McMaster University to relocate NRCan's Centre for Mineral and Energy Technology lab from Ottawa to Hamilton, Ontario. The relocation of staff began in the spring of 2010.

8.16 NRCan reported in its 2010-2011 Report on Plans and Priorities that "a strong focus has been put on human resources renewal, from recruitment to development of our staff and talent management. In 2009, NRCan completed a strategic review assessment of the priority and performance of its programs. Going forward, NRCan renewal will focus on priorities and continue to improve its management systems, renew its workforce, and strengthen accountabilities."

8.17 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. During the period covered by our audit, a new deputy head was appointed to NRCan. The PSC signed an Appointment Delegation and Accountability Instrument (ADAI) with NRCan's deputy head, delegating these authorities.

Purpose and methodology of the audit

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

8.19 The audit covered NRCan's appointment framework for the period of April 1, 2009, to December 31, 2010. The audit sample of appointments was taken from the total appointments carried out by NRCan from April 1, 2009 to June 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 of appointment authorities was granted and controls were in place

8.20 We expected and found that NRCan established a sub-delegation instrument that was consistent with the PSEA and the PSC Appointment Framework.

8.21 We also found that the deputy head established a process for granting sub-delegation. In order to be considered for sub-delegation, a manager had to occupy the position designated to be sub-delegated and complete mandatory training, receive a staffing sub-delegation agreement signed by the deputy head and accept this agreement in writing.

8.22 We found that this sub-delegation process was well controlled. Sub-delegation was granted following the deputy head's sub-delegation process and no letters of offer were signed by individuals who had not been sub-delegated.

Mandatory policies were established and staffing tools were available

8.23 We expected that NRCan's appointment policies would be consistent with the PSEA and the PSC's Appointment Framework. The PSC Appointment Policy requires delegated departments to establish mandatory policies for Area of Selection and Corrective Action and Revocation and to establish criteria for the use of non-advertised processes. The Appointment Policy also allows delegated departments to develop other appointment policies to respond to specific departmental needs and priorities.

8.24 We found that NRCan established the mandatory policies and criteria, and that these were available to all departmental employees through their intranet. However, the Area of Selection Policy and the criteria for choosing a non-advertised appointment required updating to ensure compliance with PSC requirements. The department updated this policy and criteria as a result of this audit.

8.25 In addition to the mandatory policies and criteria, we found that NRCan developed a comprehensive appointment framework, which included all of their staffing policies, guidelines, accountabilities and responsibilities. The guidelines and procedures were consistent with the PSC Appointment Framework.

8.26 NRCan also established and implemented a specialized framework for the career progression of its federal researchers. The annual appraisal process was integrated into the SE-RES (Research Scientist) Career Progression management process. The process involved the review and approval of a submission at various levels of management before final approval for the appointment was granted. We reviewed and found that appointments made through this framework were well controlled. As a result, these appointments were excluded from our file sampling.

Staffing strategies were established and guided the management of staffing

8.27 We expected that NRCan would have staffing strategies that support organizational staffing priorities.

8.28 We found that NRCan had two human resources (HR) plans covering the period of the audit. NRCan conducted an environmental scan and a gap analysis and developed its staffing plans with input from the sectors and regions. We also found evidence that NRCan was taking advantage of the flexibilities available to it under the PSEA, such as collective staffing and the use of non-advertised appointment processes. NRCan established departmental staffing strategies based on its needs, with a focus on development programs, student and post-secondary recruitment, collective staffing, implementation of a visible minority talent management program and reduction of term employment.

8.29 We found that the sectors at NRCan conducted a variance analysis on planned versus actual staffing actions and were required to explain their variances in order to incorporate the information into the following year's plan.

8.30 In addition, we found that there was an approval process in place should a staffing action not be part of the HR plan. This included cross-sector discussions, consultation with the management committee and approval from senior management.

Staffing roles, responsibilities and accountabilities were clearly defined and communicated

8.31 We expected that mechanisms would be in place to ensure that stakeholders were informed of their roles and responsibilities and had the necessary support to carry out their appointment-related responsibilities.

8.32 We found that roles, responsibilities and accountabilities for appointment-related authorities were defined for sub-delegated managers and HR advisors. These were communicated and accessible to all employees on the department's intranet site.

8.33 The HR advisors at NRCan demonstrated that they had the required knowledge to carry out their duties. We found that almost all of the HR advisors had their expertise in the Appointment Framework validated by the PSC. Even though the majority of the HR advisors were located in the National Capital Region, there was at least one validated HR advisor in each of the other five regions.

8.34 In addition, the HR advisors we interviewed indicated that they had a clear understanding of their role to provide advice and challenge sub-delegated managers throughout the appointment process. The sub-delegated managers we interviewed indicated that HR advisors did provide advice and challenge on appointments and appointment-related decisions.

A monitoring framework was in place but did not cover all requirements

8.35 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.

8.36 We expected NRCan to have control mechanisms in place to ensure that appointments and appointment processes were monitored and that appropriate actions were taken, as needed.

8.37 We found that NRCan established both a Staffing Monitoring Framework and a Staffing Monitoring Plan. The monitoring framework described the roles and responsibilities of stakeholders with regard to monitoring, types of monitoring to be conducted, including the cyclical monitoring of staffing files, and that a staffing monitoring plan should be established for each year. NRCan developed a staffing monitoring plan that clearly stated what was to be monitored over a two year period, such as the cyclical monitoring of staffing files.

8.38 However, we found that the monitoring plan was incomplete in that it did not cover all of the mandatory monitoring elements required by the PSC Appointment Policy. These included the need to monitor appointments of casual workers to term or indeterminate status through non-advertised processes; corrective action and revocations; and national area of selection. We found that NRCan did not report on these higher-risk areas. Although NRCan established a 2009-2010 monitoring plan, it has not completed most of the monitoring outlined in its own plan. NRCan indicated that this was due to conflicting priorities and resource constraints.

Response from Natural Resources Canada:

Natural Resources Canada is in agreement with this recommendation. The department has already taken action to implement the recommendation. A revised Staffing Monitoring Plan that includes all of the Public Service Commission's mandatory monitoring elements has been developed. This plan was presented to and approved by the department's Human Resources Renewal Committee (HRRC) on May 10, 2011. The revised plan is currently being implemented. The HRRC will also be monitoring implementation.

Compliance monitoring of appointment files was conducted

8.39 During the period of this audit, we found that NRCan conducted two compliance monitoring activities to determine the level of compliance of their appointment files with the PSEA. One activity was part of the departmental monitoring plan; the other was in addition to the plan and not conducted by the group responsible for monitoring. We found that, for both activities, the work was conducted independently by qualified staff and was documented appropriately.

8.40 However, we found that the first of the activities conducted did not produce complete and accurate findings for the appointment files reviewed, when compared to a review we conducted on a sample of those same files. The monitoring results reported that these six files met merit whereas our review indicated that only two of the six met merit. The remaining four files did not demonstrate merit. Therefore, the findings presented to senior management from this activity did not accurately reflect the compliance of the appointment files.

8.41 We found that another, ad hoc, compliance monitoring activity conducted outside of the regular departmental monitoring plan on files from the National Capital Region did produce complete and accurate findings of the appointment files reviewed; this ad hoc monitoring activity was conducted by another operational group as a learning opportunity for their HR advisors. The findings of this activity were used to raise awareness about compliance issues and to address required improvements. As a result, we were able to establish reliance on this monitoring work and their findings; 28 of these files were within our audit scope and have been incorporated into our file review findings and presented below in Observations on merit.

Observations on merit

Merit was met in the majority of appointments

8.42 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. Table 1 illustrates the compliance results of the 45 appointments reviewed.

Source: Audit and Data Services Branch, Public Service Commission

8.43 We expected that NRCan's appointments would respect the PSC's core value of merit and contain sufficient and appropriate documentation to support the selection and appointment decisions. We found that 56% (25 out of 45) of the appointments reviewed demonstrated that the individual appointed to the position met merit.

8.44 We found that merit was not demonstrated in 44% (20 out of 45) of the appointments we reviewed. We were unable to conclude whether merit was met in these appointments because not all qualifications from the statement of merit criteria (SoMC) were assessed or the assessments were insufficient. The ADAI requires that appointments and appointment-related decisions be fully documented.

8.45 Exhibit 1 illustrates an appointment in which merit was not demonstrated.

Exhibit 1: Merit was not demonstrated

Source: Audit and Data Services Branch, Public Service Commission

Observations on guiding values

The guiding values were at risk in the majority of the appointment processes

8.46 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.

8.47 We expected that NRCan's appointments and appointment processes would respect the guiding values of fairness, access, transparency and representativeness.

8.48 We found that 60% (27 out of 45) of the appointments we reviewed did not respect the guiding values. The most common situations where the guiding values were not being respected were as follows:

• Rationales for non-advertised processes. 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 has met the established organizational criteria and the appointment values. We found that almost none of the rationales addressed all four of the guiding values.
• Statement of merit criteria. We found some examples where the English and French versions of the SoMC were not identical. If the merit criteria being requested are not the same in both official languages, then access may not be the same for all potential applicants. For example, one file required more experience in the French version of the SoMC than in the English, which could have resulted in a potential applicant choosing not to apply.
• Screening and assessments. We found some examples where applicants were not screened consistently or appropriately at the first stage of the appointment process. Some files showed that candidates were being screened out based only on failing a criterion that was further assessed at other stages of the assessment process. Therefore, candidates who were screened out at one stage of the process could potentially have qualified during the next stage.
• Priority clearance process. We expected, pursuant to the PSEA, the PSER and the PSC Choice of Appointment Process Policy, that NRCan would have considered priority entitlements before making an appointment. We found some examples where the essential qualifications for the priority clearance request were not the same as those identified on the SoMC used for the appointment. This could have resulted in priority individuals not being referred for further consideration based on inaccurate essential qualifications.

Response from Natural Resources Canada:

Natural Resources Canada is in agreement with this recommendation. The department has already taken action to implement the recommendation. As part of the revised Staffing Monitoring Plan, NRCan took corrective measures to ensure the monitoring findings are complete and accurate and can be presented to senior management to raise awareness about compliance issues and to address required improvements.

In particular, NRCan implemented a new monitoring control checklist that captures all relevant information needed to assess compliance with the Public Service Employment Act and the PSC appointment framework. The information gathered in the checklist serves to ensure that the core and guiding values are taken into consideration in all staffing actions, and provides evidence of the Human Resources Advisor's advice and challenge function.

With regard to the conduct of its staffing operations, NRCan has developed an action plan to correct the deficiencies noted in the audit. Actions include ensuring that human resources advisors and hiring managers receive training on the latest staffing policy and program developments. Mandatory use of People Soft Staffing Checklists for all staffing files has also been implemented. Additional measures regarding the application of merit and the importance of properly documenting staffing decisions are also in preparation.

Four appointments had indicators of either error, omission or improper conduct

8.49 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.

8.50 In 8% (4 out of 45) 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 value of fairness. These appointment processes were characterized by the following:

• The appointee had already occupied the position in some manner prior to the appointment. For example, there were two appointments reviewed where the person gained the necessary experience as a casual worker and was then appointed to an indeterminate position through an external non-advertised process ;
• The official language requirements of the position had been adjusted during the appointment process in favour of the appointee ;
• The location of the position was changed to suit the appointee and this option had not been identified in the SoMC; and
• The use of an external appointment process was not reasonable for the situation in that there would have potentially been a sufficient pool of candidates available internally.

8.51 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

Source: Audit and Data Services Branch, Public Service Commission

Conclusion

8.52 The first objective of this audit was to determine if NRCan had an appropriate framework, systems and practices in place to manage its appointment activities.

8.53 We concluded that NRCan, with the exception of monitoring, had all of the elements of an appropriate framework in place. The monitoring plan developed by NRCan requires modifications to ensure that it fully reflects all of the PSC's mandatory monitoring elements and that the plan is implemented.

8.54 The second objective was to determine whether appointments and appointment processes complied with the PSEA, the PSER, the PSC Appointment Framework and other governing authorities.

8.55 We concluded that most appointments and appointment processes generally complied with the PSEA and the PSC Appointment Framework. Although the majority of the appointments we reviewed met merit, there were many appointments in which merit was not demonstrated. The assessment tools and processes were found to be incomplete or insufficient to demonstrate that the appointee fully met the qualifications of the position.

8.56 We are concerned that the guiding values are at risk, as the majority of the appointments we reviewed did not fully respect them. We found that this was due in part to improper completion of the rationales for using a non-advertised process, statements of merit criteria not being the same in both French and English, inconsistencies in the administration of both the screening and assessments and inconsistencies with the priority clearance process.

Action taken by the Public Service Commission

The PSC will monitor the Natural Resources Canada 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 NRCan.

Overall response from Natural Resources Canada

Natural Resources Canada (NRCan) has reviewed the Public Service Commission (PSC) audit report and is in agreement with its observations and recommendations. NRCan concurs with the findings of the report to the effect that the department has in place: a framework, systems, practices to manage its appointment authorities; a sub-delegation process that is well-controlled; well-developed staffing plans and strategies; a comprehensive appointment framework that provides guidance and that is aligned with the PSC appointment framework; a staffing monitoring framework and plan.

With regard to the audit report's two recommendations on the conduct of staffing monitoring and staffing appointment files, as indicated below in NRCan's management response to these recommendations, the department has already taken action to correct the deficiencies noted.

About the audit

Scoping considerations

The objectives of the audit were to determine whether NRCan 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.

The audit covered all appointment activities and related decisions within NRCan for the period of April 1, 2009, to December 31, 2010.

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

Sample selection

Our sample of appointments was taken from the total appointments carried out by NRCan between April 1, 2009, and June 30, 2010. The sample included the relevant findings from a file monitoring exercise conducted by NRCan. Appointments to be included were indeterminate internal and external appointments, as well as term appointments. Table 2 provides details of the types of appointment processes audited.

Source: Audit and Data Services Branch, Public Service Commission

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

Audit team

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

Director General, Audit Directorate
Yves Genest

Director
Darren Horne

Manager
Cathy Rodrigue

Auditors
Louise Bard
François Bélanger
Debi Borbridge
Erica Moores
Sandra Perrone

Functional Expert
Paul Pilon

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