NL's AG finds "issues" with Fisheries Department

The Newfoundland Auditor General, John Noseworthy, presented his 2009 report to the Government on January 28. Among other areas, he revealed several “issues” with the administration of one particular program in the Department of Fisheries and Aquaculture.

There was no suggestion of wrong-doing – rather, questionable management practices.

Below is the actual section from the report:

“… The Department of Fisheries and Aquaculture administers the Fisheries Technology and New Opportunities Program (FTNOP). This is a $6 million program over the three fiscal

years 2008, 2009 and 2010. As at 31 March 2009, a total of $2.60 million had been approved for 63 projects.

The primary objective of the FTNOP is to fund eligible activities related to harvesting, processing, and marketing initiatives to diversify and increase the overall viability of the Provincial seafood industry. Its focus is to fund research and development in the

harvesting and processing sectors.

Our review indicated a number of concerns related to how the

Department is administering the FTNOP. We found that project

applications were not always assessed and approved in accordance

with program criteria, payments were sometimes made without the

required documentation and approvals, and projects were not always

adequately monitored to determine whether funds were spent as

intended. Furthermore, the Department did not establish measurable

criteria in order to determine whether the program objectives were

Approval and Assessment

The approval and assessment process is required in order to ensure

that only eligible activities relating to the primary objectives of the

FTNOP are funded. We reviewed 40 approved projects and found a

number of weaknesses in the approval and assessment process as

follows:

10 projects totalling $444,248 – the required application was not

on file to provide the required information necessary for a

proper assessment and to support either the approval or rejection

of the project. These projects were approved based on

proposals; however, the proposals did not contain all the

information and declarations as required in the application.

32 Auditor General of Newfoundland and Labrador

8 projects totalling $400,542 – the application on file was

incomplete. For 2 of these projects, only the signed declaration

on the last page of the application was on file. Without a

complete application on file, it is questionable how a proper

assessment could be performed to support either the approval or

rejection of the project.

10 projects totalling $416,607 – funding for overhead costs

totalling $68,416 was approved even though these expenditures

were not considered an eligible FTNOP cost as there was no

evidence on file to support that the overhead was directly a

result of the project. Existing overhead is not an eligible cost.

3 industry-related projects totalling $78,280 – funding was

approved in excess of the FTNOP limits. The FTNOP has a

limit of 60% funding capped at $100,000 for industry-related

projects; however, in these cases, the total maximum funding

should have been $38,759 while $49,030 was paid, representing

76% funding.

36 projects totalling $2.17 million - Project Summary and

Approval Forms (PSAFs) on file were incomplete as follows:

22 projects totalling $1.11 million with 22 PSAFs - there

was no information to specify the eligible costs of the

project;

15 projects totalling $963,105 with 16 PSAFs - there was

no evidence that comments from the Department of

Fisheries and Aquaculture, the Department of Fisheries and

Oceans and other agencies were obtained as required;

11 projects totalling $772,537 with 11 PSAFs - there was

no evidence that comments from the Department of

Fisheries and Oceans were obtained as required;

12 projects totalling $879,375 with 12 PSAFs - there was

no evidence that comments from other agencies were

obtained as required; and

Auditor General of Newfoundland and Labrador 33

2 projects totalling $104,926 with 2 PSAFs - the required

signatures to document the approval were not on file.

16 projects totalling $808,518 - the required supplier quotations,

to support the estimated costs of the project, were not provided

with the application.

24 projects totalling $1.55 million - these projects were not

approved within the 45 days as outlined in the policy. The delay

in processing these 24 projects ranged from 1 day to 108 days in

excess of the 45 days.

The minutes of the Management Committee meetings did not

always document the decisions of the Committee relating to

projects. For 7 projects totalling $355,709 there was no

evidence in the minutes that the projects were recommended for

approval by the Committee.

Payments

Adequate documentation and support for eligible project costs are

required in order to ensure that payments are made in accordance

with policies and procedures. Our review indicated that the required

documentation to support payments was not always on file as

follows:

6 projects with payments totalling $249,476 – there were no

supplier invoices on file to support that advance payments

totalling $212,122 were used within the required six month

timeframe.

16 projects with payments totalling $662,232 – there were no

supplier invoices on file to support actual costs incurred

totalling $511,794. As a result, it was not possible to verify

whether the costs were accurate, actually incurred or if they

were incurred after the application date.

26 projects with payments totalling $1.20 million – supplier

invoices to support actual costs incurred were not always signed

by the Project Officer to indicate that they were eligible costs.

34 Auditor General of Newfoundland and Labrador

4 projects with payments totalling $201,884 – the required

payment memos were not always prepared.

30 projects with payments totalling $1.29 million – the required

payment memos were prepared but incomplete.

Our review also identified errors totalling $44,747 in 7 projects as

follows:

$26,629 relates to payments for an industry-related project, in

excess of the 60% of eligible costs capped at $100,000.

Although maximum funding should have been 60% of $122,285

or $73,371, the actual funding was $100,000, $26,629 beyond

the maximum allowed.

$7,518 relates to payments for a project for management and

support costs that were not an eligible expense.

$1,805 relates to payments for a project for office supplies and

communications that were not an eligible expense.

6 projects (2 previous projects and 4 others) – HST of $8,795

was funded although this expenditure would not normally be

funded. In 11 other projects there was insufficient

documentation on file to determine whether HST was funded.

Payments were not made in compliance with the terms of the

contract. For example:

2 projects – final payments totalling $34,637 were made prior to

the receipt of the final report; and

1 project – final payments totalling $1,908 were made prior to a

site visit.

Monitoring

Project monitoring should be conducted by the Department to ensure

compliance with policies and procedures, to ensure that funds were

used for the approved purpose, to determine whether the funded projects were successful and whether FTNOP met its overall objectives. Our review identified the following:

40 projects totalling $2.23 million in approved funding – the

required audit and review process was not conducted for any

project. This process is intended to determine whether there was

compliance with policies and procedures and to determine

whether adequate documentation was available to support

payments.

•

11 projects totalling $434,585 in approved funding – no site

visits were made.

Department did not provide a Terms of Reference for a Final

Report to any proponent as required. As a result, it is likely that

Final Reports from proponents will not be comparable or

include all information necessary for the Department to

determine whether the project was completed in accordance

with the approved project’s objectives and costs.

•

10 projects with payments totalling $459,093 in approved

funding – a written comprehensive final report was not

submitted within 30 days of the project completion date as

required.

•

7 projects totalling $405,719 in approved funding – these

projects were not completed by the proponent as outlined in

their original submission. For example, in one instance the

proponent was paid $119,642 for 3 projects that were to

undertake a resource assessment of a fish species in certain

fishing zones. The Final Report identified a number of areas

where the actual project was different from the approved

project, including 20 sites done instead of 30 sites, 4 days of

data collection instead of 6 days and 34 days for surveying

instead of 50 days in one zone, 5 days of data collection instead

of 8 days and 8 survey days instead of 50 days in the other zone.

In addition, there was no evidence of a required power point

presentation, incorporation of other exploratory fisheries, and

feasibility of assessment of transmitter implants.

The Department did not identify performance indicators for each of its objectives or establish measurable targets for each of the performance indicators. As a result, it could not measure actual results against any targets to determine whether the FTNOP’s objectives were being met.