Report to the Legislative Assembly

2020
 7. IMPLEMENTATION OF RECOMMENDATIONS
2016 SPECIAL ASSIGNMENT
CHAPTER SUMMARY

Why it’s important

In October 2016, we issued a report on Government Involvement with the

E-gaming Initiative and Financial Services Platform. This special
assignment was requested by Executive Council pursuant to the Audit Act.
It is important that MLAs and Islanders receive an update on the progress
government is making in implementing the recommendations arising from
that report.

What we found

Our report on Government Involvement with the E-gaming Initiative and

Financial Services Platform included 15 recommendations. We concluded
that action was taken on all recommendations as of October 31, 2019. We
have assessed some recommendations as ongoing as there is a continuing
requirement to comply with legislation and policies.

BACKGROUND

7.1 We are providing information on the status of implementation of

recommendations made in our 2016 Special Assignment on Government
Involvement with the E-gaming Initiative and Financial Services Platform.
The recommendations are intended to address the findings and issues
identified. We do not infringe on management’s right to select the best
course of action to deal with the issues identified. However, we expect
action to be taken to address the issues.

7.2 The recommendations in the original report were directed to

various government entities. We requested management of these entities
to indicate whether the recommendations were complete or not complete
as of October 31, 2019. Management indicated that all 15
recommendations were complete. We requested details on the action
taken and we conducted follow-up work to determine the status of
implementation of each recommendation.

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 7. Implementation of Recommendations 2016 Special Assignment

7.3 The objective of our follow-up work was to provide limited

assurance on the implementation of the recommendations. We did not
conduct a follow-up audit, but we conducted sufficient procedures to
obtain limited assurance to support our conclusion.

7.4 The following section provides information on the results of our

work. Appendix A in this chapter lists all of the recommendations from
this special assignment and the status of implementation as of October 31,
2019. Appendix B provides further details on the objective and scope of
our work.

7.5 In March 2015, our Office was asked by Executive Council to

undertake a special assignment. The assignment involved an examination
of “government support to the Mi’kmaq Confederacy of Prince Edward
Island in relation to E-gaming, along with steps taken by government,
throughout its relationship with MCPEI, to protect the interests of
taxpayers.” We were further asked to “consider government’s dealing
with Simplex, Capital Markets Technologies (CMT) and related
companies in relation to E-gaming and financial services, including the
conduct of current and former elected officials and staff.”

Our original report examined:

• Financial Support to Mi’kmaq Confederacy of PEI: E-gaming

Initiative

We assessed whether due diligence was applied in approving, disbursing,

and monitoring the loan and grants provided to MCPEI.

• Financial Services Platform: MOU with Trinity Bay Technologies

We assessed whether appropriate due diligence was applied prior to

entering into and extending the Memorandum of Understanding signed
with Trinity Bay Technologies.

• Conduct: E-gaming/Financial Services Platform Initiatives

We assessed whether elected officials (both current and former) and

selected government employees (both current and former) respected the
applicable conflict of interest legislation and/or policies and basic

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 7. Implementation of Recommendations 2016 Special Assignment

principles of good governance, including, but not limited to integrity,

stewardship and transparency.

• Consultants and Third Parties

We assessed whether government complied with selected aspects of

Treasury Board policy on contracting for consultants and other third
parties engaged to conduct work in relation to the E-gaming initiative, the
loyalty card program, and/or the financial services platform MOU.

OBSERVATIONS

7.6 Government’s involvement with E-gaming and the financial

services platform was a unique, one-time initiative. Many of the
recommendations in the 2016 report reflected the need to strengthen
existing policies and procedures, and also comply with legislation and
policies. Strong management of financial reporting practices and controls
as well as compliance with legislation and policies are fundamental to the
management of government programs.

7.7 We used three categories to conclude on the status of

implementation of recommendations: complete, not complete, and
ongoing. The categories are defined as follows:

• Complete - action taken and no further action required OR action

taken to strengthen practices and we expect these practices will be
followed on a go forward basis.
• Not complete - no action taken.
• Ongoing - action taken to strengthen or reinforce existing government
legislation and policies, and the need to comply is ongoing.

7.8 We concluded that action was taken on all 15 recommendations.

We assessed 53% of the recommendations as complete as of October 31,
2019 and 47% as ongoing as shown in Exhibit 7.1.

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 7. Implementation of Recommendations 2016 Special Assignment

EXHIBIT 7.1
STATUS OF IMPLEMENTATION OF
RECOMMENDATIONS*
BASED ON LIMITED ASSURANCE
2016 SPECIAL ASSIGNMENT

Original Report Section Complete Not Ongoing Total

Complete
Relationship between - - 1 1
Government and External
Parties
Funding and Costs 3 - 1 4
Financial Reporting 2 - 2 4
Approval Process 2 - - 2
Records Management - - 2 2
Whistleblower Protection 1 - 1 2
Total 8 - 7 15
Percentage 53% - 47% 100%
* As of October 31, 2019

7.9 The recommendation noted as complete under the whistleblower

protection section relates to a recommendation made for government to
consider adopting whistleblower legislation. Government did consider
legislation and a Public Interest Disclosure and Whistleblower Protection
Act has received Royal Assent, but it had not been proclaimed and
implemented at the time of our follow up work.

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 7. Implementation of Recommendations 2016 Special Assignment

APPENDIX A
Page 1 of 2

2016 SPECIAL ASSIGNMENT

RECOMMENDATIONS

Status of
Implementation
Audit Para. Recommendation
as at
Oct 31, 2019
Relationship between Government and External Parties
3.24 When engaging in joint initiatives with external parties,
government should ensure taxpayers' interests are protected
through written agreements. These agreements should
Ongoing
address, at a minimum, roles and responsibilities, conflict of
interest, confidentiality and government access to files and
information.
Funding and Costs
3.56 Innovation PEI should ensure grant approval documents and
Complete
agreements accurately reflect the project being funded.
3.57 Innovation PEI should monitor grant funding in accordance
Complete
with the terms and conditions in the letter of offer.
3.58 IIDI should not disburse loan proceeds prior to signing loan
Complete
agreements and obtaining security.
3.59 In accordance with the Financial Administration Act and
Treasury Board policy, government loan guarantees should be Ongoing
authorized by the Lieutenant Governor in Council.
Financial Reporting
3.66 The Department of Finance should strengthen its financial
reporting practices to ensure all loss provisions are reflected in Ongoing
the consolidated financial statements of the province.
3.67 IIDI should strengthen its financial reporting practices and
Complete
ensure all significant information is disclosed.
3.68 In accordance with the Financial Administration Act, IIDI
should recommend to Executive Council the write off of the Complete
loan to MCPEI.
3.69 IIDI should provide the required information on its loan
Ongoing
portfolio in its quarterly reporting to Treasury Board.
Approval Process
5.17 Innovation PEI should perform adequate due diligence prior to
entering into commitments or agreements with external Complete
parties.
5.18 Treasury Board policy on contracting should be expanded to
Complete
address conflict of interest situations with contractors.

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 7. Implementation of Recommendations 2016 Special Assignment

APPENDIX A
Page 2 of 2

2016 SPECIAL ASSIGNMENT

RECOMMENDATIONS

Status of
Implementation
Audit Para. Recommendation
as at
Oct 31, 2019
Records Management
The Public Archives and Records Office, in cooperation with
public bodies, should monitor compliance with records
7.14 Ongoing n-g
management policies and procedures and submit compliance
reports to the Minister of Education.
The Minister of Education, as the Minister responsible for the Ongoing
7.15 Archives and Records Act, should take necessary action to
enforce compliance with the Act.
Whistleblower Protection
Treasury Board should take action to enforce compliance with
8.9 Ongoing
its policies on contracting.
Government should consider adopting whistleblower
8.10 Complete
legislation.

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 7. Implementation of Recommendations 2016 Special Assignment

APPENDIX B
Page 1 of 2

OBJECTIVE, SCOPE AND CONCLUSION

STANDARDS This independent limited assurance attestation engagement report was

prepared by the Office of the Auditor General of Prince Edward Island on
the status of the implementation of recommendations made in our 2016
Special Assignment. Work conducted for this review was performed to a
limited level of assurance in accordance with the Canadian Standards on
Assurance Engagements (CSAE) 3000 - Attestation Engagements Other
Than Audits or Reviews of Historical Financial Information set out by the
Chartered Professional Accountants of Canada (CPA Canada).

The Office of the Auditor General of Prince Edward Island applies

Canadian Standard on Quality Control 1, and accordingly maintains a
comprehensive system of quality control, including documented policies
and procedures regarding compliance with ethical requirements,
professional standards, and applicable legal and regulatory requirements.

In conducting this assurance work, we have complied with independence

and other ethical requirements of the Rules of Professional Conduct of the
Chartered Professional Accountants of Prince Edward Island and the Code
of Conduct of the Office of the Auditor General of Prince Edward Island.
Both the Rules of Professional Conduct and the Code of Conduct are
founded on fundamental principles of integrity, objectivity, professional
competence and due care, confidentiality, and professional behavior.

OBJECTIVE Our objective was to provide limited assurance on those recommendations

assessed as implemented, do not intend to implement, or action no longer
required, to determine if government’s assessment was free from material
misstatement.

SCOPE AND The scope of our work included only recommendations from the 2016
APPROACH Special Assignment. We provide limited assurance on those
recommendations assessed by management as complete as at October 31,
2019.

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 7. Implementation of Recommendations 2016 Special Assignment

APPENDIX B
Page 2 of 2

Our approach included

• obtaining assertions from management on the status of implementation

of each recommendation;
• interviewing management and staff;
• examining documents; and
• reviewing specific controls and processes.

The procedures performed in a limited assurance engagement vary in

nature and timing from, and are less in extent than for, a reasonable
assurance engagement. As a result, the level of assurance obtained in a
limited assurance engagement is substantially lower than the assurance
that would have been obtained had a reasonable assurance engagement
been performed.

CONCLUSION We concluded that action was taken on all recommendations as of

October 31, 2019. Overall, 53% of the recommendations are complete as
of October 31, 2019 and 47% are ongoing.

Based on the limited assurance procedures performed and evidence

obtained on completed recommendations, no matters have come to our
attention that cause us to believe that the status of the recommendations
reported as implemented has been materially misstated. Additional
information provided in this report is not intended to take away from our
overall conclusion.

DATE OF We obtained sufficient evidence on which to base our limited assurance

REPORT conclusion on March 5, 2020, in Charlottetown, Prince Edward Island.

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