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7.2 Objective 2 - Adequacy and Accuracy of Information

7.2.1 Analysis, Comparison and Explanation of Financial Variances

Sound stewardship is demonstrated by conducting reviews of financial information in an effort to analyse, compare and explain financial variances on planned versus actual spending. VAC conducts financial reviews on a monthly basis on planned versus actual spending and provides the results to senior management. The forecasts for health related travel have proven to be accurate and therefore, there have been no variances noted. If there had been variances, VAC finance division would have been required to analyse and provide rationale to senior management on the nature, reason and impact of variances and recommend corrective action. In the auditors' opinions, VAC is demonstrating stewardship in this aspect of reporting.

7.2.2 Financial and Non-financial Reporting

A key aspect to managing VAC benefits and programs is to ensure that financial and non financial reporting is complete, accurate, relevant, timely, appropriate and reasonable. Avenues to report significant control breakdowns must also exist to ensure they are reported to management. Reporting should be proactive rather than reactive and should be standardized and scheduled to ensure management has accurate information for decision making.

Recently, and on the instruction of senior officials, VAC has implemented monthly post payment verification reporting for health related travel. Results are communicated to the regional and district offices for followup actions. The implementation of this process is a good practice. However, the results of the post-payment are statistically valid on an annual basis, at a national level and includes approximately 30 claims per month. The monthly post-payment reporting and communication of results points to a need for monthly and regional reporting on errors. However, reviewing the errors on a month by month and region by region basis within the current sampling methodology does not necessarily provide meaningful information. For example, a region that has a monthly sample of four cases can have substantial variations in their error rates from month to month because one error would represent a 25% error rate for that particular region. Reviewing the sampling methodology for post payment reporting, or consideration of supplementary ad hoc or judgmental sampling could provide early warning signs for systemic issues that could arise and would also ensure greater oversight on health related travel, which is particularly important when high error rates are consistently experienced.

In terms of non-financial reporting, it is currently limited to turn around times (TAT's) in VAC processing of health related travel. Some areas monitor TAT's, but it's specific to their office and not the TAT from the time the claim is received to the time the cheque is issued. TAT should be monitored from the time the claim is received at VAC until the time the cheque is issued for payment from Medavie to get a clear accurate picture on how long it takes for a client to receive payment. There is a national report called "TAT Report" available online. It is informative in respect to TAT, but could be enhanced to include average costs per transaction, average cost per client, dollar values by benefit code, client complaints, etc. This would ensure VAC is measuring program performance and would enable VAC to identify inconsistencies.

Recommendation 5 (Important)

It is recommended that the Director General, Program Management, develop a schedule of reporting, including the relevant information required to determine program performance and objective achievement.

Management Response

Management agrees. It is important to develop a schedule of reporting, including the relevant information required to determine program performance and objective achievement with respect to Health Related Travel (as per Section 6, Supplementary Benefits, of VHSRs). As part of the requirements of the Programs of Choice Analysis Audit (finalized June 2009), a performance measurement plan has been developed for the Treatment Benefits Program. This plan includes a schedule of reporting and also identifies performance levels, indicators and measurements for the Treatment Benefits Program, which includes Supplementary Benefits.

The performance measurement plan addresses Supplementary Benefits, specifically, under items 6, 12, 18 and 22. The performance measurement plan was signed off by the Director General of Audit and Evaluation in July 2009.

Implementation of this plan is underway and the Program Performance unit is currently investigating the data sources. Implementation will be completed in April 2010.

Management Action Plan

Management Action Plan
Corrective Actions to be taken OPI (Office of Primary Interest) Target Date
Audit and Evaluation Division will be following up with the Director General, Program Management, to ensure that the Performance Measurement Plan has been implemented. DG, PM April 2010

Recommendation 6 (Essential)

It is recommended that the Director General, Finance Division, review the sampling methodology to ensure it is meeting the reporting needs.

Management Response

Management agrees that the sampling methodology requires updating. Management has considered statistically valid sampling by region or by month, but that would mean either a 4-fold or 12-fold increase in the number of transactions to be sampled. To sample monthly by region would mean a 48-fold increase. It is unlikely that enough valuable additional information would be gleaned by more rigorous sampling to warrant the increased workload on an ongoing basis. However, ad-hoc reviews have been carried out in the past and may be continued from time to time if circumstances require it.

Management Action Plan

Management Action Plan
Corrective Actions to be taken OPI (Office of Primary Interest) Target Date
A new sampling plan for 2010 will be submitted to the ADM CS for approval DG, FIN January 31, 2010
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