Annual Report to the Legislative Assembly

2021
Table of Contents
CHAPTER PAGE

Introduction

Office of the Auditor General

1. Office of the Auditor General ...............................................................................1

Public Accounts Committee

2. Public Accounts Committee .................................................................................9

Performance Audits and Examinations

3. Introduction to Performance Audits and Examinations ......................................13
4. Prince Edward Island International Student Program .........................................16
5. Crown Corporations Governance Survey ...........................................................44
6. Report in Accordance with Climate Leadership Act ..........................................81
7. Report in Accordance with Government Advertising Standards Act..................83
8. Update on COVID-19 Special Examination .......................................................84

Previous Recommendations
9. Follow-up on Performance Audits 2017 and 2018 .............................................89
10. Follow-up with Treasury Board ........................................................................113

Financial Audits
11. Introduction to Financial Audits .......................................................................117
12. Indicators of Financial Condition .....................................................................120
13. Audit of the Consolidated Financial Statements ...............................................140
14. Issues Noted in Other Financial Audits ............................................................150
15. Appropriations and Special Warrants ...............................................................154
 INTRODUCTION

REPORT OVERVIEW

The Audit Act requires the Auditor General to report annually to the
Legislative Assembly.

This 2021 Annual Report provides findings, recommendations, and

information in accordance with section 16 of the Audit Act. It also
includes information pertaining to performance audits and special
investigations, and previous recommendations completed by our Office
during the year.

Following is a brief overview of my 2021 Annual Report:

Chapter 1: Office of the Auditor General

This chapter includes information on the mandate and responsibilities of
the Auditor General. Summary information is also presented on our
assurance engagements, Office resources, professional standards and
professional affiliations.

Chapter 2: Public Accounts Committee

The Public Accounts Committee plays an important role in holding
government accountable for the management of public resources. A
primary focus of the Committee is the review of the Auditor General’s
Annual Report to the Legislative Assembly, and following up with Crown
corporations, agencies, funds and departments on recommendations
included in the report. This chapter includes summary information on the
Committee and its interactions with our Office.

Chapter 3: Introduction to Performance Audits and Examinations

This chapter provides information on the mandate and processes for
conducting performance audits and examinations.

Chapter 4: Prince Edward Island International Student Program

This chapter includes findings and recommendations on the delivery of the
Prince Edward Island International Student Program. We outline our
findings and make a number of recommendations.

Report of the Auditor General of Prince Edward Island - 2021

 Introduction

Chapter 5: Crown Corporations Governance Survey

This chapter reports on a survey sent to a number of board of directors of
different Crown corporations and agencies to gather information around
governance. We provide summary comments and recommendations
resulting from the survey.

Chapter 6: Report in Accordance with Climate Leadership Act

The Auditor General reports annually to the Legislative Assembly the
amount of the levy collected under this Act and the amounts returned to
consumers, businesses and municipalities.

Chapter 7: Report in Accordance with Government Advertising

Standards Act
The Auditor General reports annually to the Speaker of the Legislative
Assembly about those matters the Auditor General considers appropriate
relating to his or her powers and duties under this act.

Chapter 8: Update on COVID-19 Special Examination

This chapter provides an update on the status of our Office’s COVID-19
special examination.

Chapter 9: Follow-up on Performance Audits 2017 and 2018

Our performance audits result in recommendations to various departments,
Crown corporations, and agencies. This chapter includes information on
the status of implementation of recommendations reported in our 2017 and
2018 annual reports.

Chapter 10: Follow-up with Treasury Board

In March 2019, Treasury Board informed all departments of the
requirement to report quarterly on the status of the implementation of the
recommendations of the Auditor General. This chapter includes
information on the review of this reporting requirement.

Chapter 11: Introduction to Financial Audits

This chapter provides introductory comments to summarize standards and
Office responsibilities related to financial audits.

Report of the Auditor General of Prince Edward Island - 2021

 Introduction

Chapter 12: Indicators of Financial Condition

This chapter provides summary financial information on the Province’s
operating results and financial position from 2016 to 2020. Information is
also provided on a number of financial indicators, based primarily on the
Province’s audited consolidated financial statements.

Chapter 13: Audit of the Consolidated Financial Statements

Each year, we audit the Province’s consolidated financial statements. This
chapter provides summary comments, findings and recommendations from
our March 31, 2020 audit.

Chapter 14: Issues Noted in Other Financial Audits

This chapter provides a summary of issues communicated to management
as a result of our financial audits of government organizations,
government business enterprises and trust funds.

Chapter 15: Appropriations and Special Warrants

This chapter provides summary information on appropriations and special
warrants for the year ended March 31, 2020.

SUMMARY COMMENTS

The Office of the Auditor General of Prince Edward has a long history of
serving Islanders. We conduct independent audits and examinations that
provide objective information, advice and assurance to the Legislative
Assembly. We promote accountability and best practices in government
operations.

The Office serves Members of the Legislative Assembly with integrity and
independence, which is the foundation of our work. We strive to make a
positive difference for Islanders.

On May 26, 2020, the Members of the Legislative Assembly unanimously

approved my appointment as Auditor General of Prince Edward Island. It
is an honour and a privilege to serve as Auditor General for the people of
Prince Edward Island.

Report of the Auditor General of Prince Edward Island - 2021

 Introduction

I would like to thank the departments and government organizations that

assisted us in completing our audits this year. We continue to encourage
senior government officials to implement our recommendations, which are
important for improving the efficiency and effectiveness of government.

Lastly, I would like to thank the staff of the Office of the Auditor General
of Prince Edward Island for welcoming me with such great support and
enthusiasm.

Report of the Auditor General of Prince Edward Island - 2021

 INTRODUCTION

APERÇU DU RAPPORT

L’Audit Act (loi sur la vérification des comptes publics) stipule que le
vérificateur général doit déposer un rapport devant l’Assemblée législative
tous les ans.

Le présent rapport de 2021 fournit conclusions, recommandations et

renseignements conformément à l’article 16 de l’Audit Act. Cela inclut
aussi l’information concernant les vérifications de gestion et les enquêtes
spéciales ainsi que les recommandations effectuées par notre Bureau au
cours de l’année.

Voici un aperçu du contenu du rapport annuel de 2021.

Chapitre 1 : Bureau du vérificateur général

Ce chapitre comprend des renseignements sur le mandat et les
responsabilités du vérificateur général. De l’information sommaire est
également fournie sur les missions de certification, les normes et
affiliations professionnelles et les ressources du Bureau.

Chapitre 2 : Comité des comptes publics

Le Comité des comptes publics joue un rôle important en rendant le
gouvernement responsable de la gestion des ressources publiques. L’une
des tâches principales du Comité est d’examiner le rapport annuel du
vérificateur général pour l’Assemblée législative et de faire le suivi avec
les sociétés de la Couronne, les organismes, les fonds et les ministères sur
les recommandations incluses dans le rapport. Des renseignements
sommaires sur le Comité et ses interactions avec le Bureau sont fournis
dans ce chapitre.

Chapitre 3 : Introduction aux vérifications et aux examens de gestion

Ce chapitre offre des renseignements sur le mandat et les processus liés à
la réalisation des vérifications et des examens de gestion.

Rapport du vérificateur général de l’Île-du-Prince-Édouard - 2021

 Introduction

Chapitre 4 : Programme des élèves internationaux de l’Île-du-Prince-

Édouard
Ce chapitre présente les conclusions et les recommandations concernant la
prestation du Programme des élèves internationaux de l’Île-du-Prince-
Édouard. Nous soulignons nos conclusions et présentons un certain
nombre de recommandations.

Chapitre 5 : Sondage sur la gouvernance des sociétés de la Couronne

Ce chapitre rend compte d’un sondage envoyé à un certain nombre de
conseils de différents organismes et sociétés de la Couronne pour recueillir
de l’information concernant la gouvernance. Nous fournissons des
commentaires généraux et des recommandations découlant du sondage.

Chapitre 6 : Rapport conformément à la Climate Leadership Act (loi sur

le leadership climatique)
Le vérificateur général doit présenter un rapport annuellement à
l’Assemblée législative concernant le montant de prélèvement recueilli en
vertu de cette loi et le montant retourné aux consommateurs, aux
entreprises et aux municipalités.

Chapitre 7 : Rapport conformément à la Government Advertising

Standards Act (loi sur les normes de publicité gouvernementale)
Le vérificateur général doit présenter un rapport annuellement au président
de l’Assemblée législative concernant les questions que le vérificateur
général considère comme appropriées relativement à ses pouvoirs et
tâches en vertu de la loi.

Chapitre 8 : Mise à jour sur l’examen spécial lié à la COVID-19

Ce chapitre fait le point sur le statut de l’examen spécial lié à la COVID-
19 réalisé par notre Bureau.

Chapitre 9 : Suivi sur les vérifications de gestion 2017 et 2018

À la suite des vérifications de gestion, des recommandations sont faites à
divers ministères, sociétés de la Couronne et organismes. Ce chapitre
fournit de l’information sur l’état de la mise en œuvre des
recommandations émises dans les rapports annuels de 2017 et de 2018.

Rapport du vérificateur général de l’Île-du-Prince-Édouard - 2021

 Introduction

Chapitre 10 : Suivi auprès du Conseil du Trésor

En mars 2019, le Conseil du Trésor a informé tous les ministères de
nouvelles exigences de déclarations trimestrielles pour rendre compte au
Conseil du Trésor du statut de la mise en œuvre des recommandations du
vérificateur général. Ce chapitre comprend de l’information sur l’examen
de cette exigence de rapport.

Chapitre 11 : Introduction aux vérifications financières

Ce chapitre fournit des commentaires d’introduction qui résument les
normes et les responsabilités du Bureau quant aux vérifications
financières.

Chapitre 12 : Indicateurs de l’état des finances

Ce chapitre fournit de l’information financière sommaire sur les résultats
d’exploitation et la situation financière de la Province entre 2016 et 2020.
Il fournit également de l’information sur un certain nombre d’indicateurs
financiers, tirée principalement des états financiers consolidés vérifiés de
la Province.

Chapitre 13 : Vérification des états financiers consolidés

Chaque année, le bureau vérifie les états financiers consolidés de la
Province. Ce chapitre présente les commentaires, conclusions et
recommandations sommaires découlant de la vérification allant jusqu’au
31 mars 2020.

Chapitre 14 : Questions soulevées dans le cadre d’autres vérifications

financières
Ce chapitre présente un résumé des questions portées à l’attention des
hauts dirigeants à la suite de vérifications financières auprès
d’organisations gouvernementales, d’entreprises publiques et de fonds de
fiducie.

Chapitre 15 : Comptes de crédits et mandats spéciaux

Ce chapitre fournit de l’information sommaire sur le compte de crédits et
les mandats spéciaux pour l’exercice qui s’est terminé le 31 mars 2020.

COMMENTAIRES SOMMAIRES

Le Bureau du vérificateur général de l’Île-du-Prince-Édouard est au

service des Insulaires depuis longtemps. Il s’occupe d’effectuer des

Rapport du vérificateur général de l’Île-du-Prince-Édouard - 2021

 Introduction

vérifications et des études indépendantes qui permettent de donner de

l’information, une assurance et des avis objectifs à l’Assemblée
législative. Le Bureau promeut ainsi la responsabilisation et les pratiques
exemplaires en ce qui concerne les activités du gouvernement.

Le Bureau sert les membres de l’Assemblée législative en faisant preuve

d’intégrité et d’indépendance, la nature même de notre travail. Nous
visons à générer des retombées positives pour les Insulaires.
Le 26 mai 2020, j’ai été nommé vérificateur général de l’Île-du-Prince-
Édouard à l’accord unanime des membres de l’Assemblée législative.
C’est un honneur et un privilège pour moi de remplir cette fonction au
service des Insulaires.

Je souhaite remercier les ministères et les organisations gouvernementales

qui nous ont aidés à effectuer nos vérifications cette année. Nous
continuons d’encourager les hauts dirigeants à mettre en œuvre nos
recommandations afin d’améliorer l’efficacité du gouvernement.

Pour conclure, j’aimerais remercier le personnel du Bureau du vérificateur

général de m’avoir accueilli avec tant de soutien et d’enthousiasme.

Rapport du vérificateur général de l’Île-du-Prince-Édouard - 2021

OFFICE OF THE AUDITOR GENERAL
 1. OFFICE OF THE AUDITOR GENERAL

AUDITOR GENERAL’S MANDATE

1.1 The Auditor General is an independent officer of the Legislative

Assembly appointed under the authority of the Audit Act. The Audit Act
establishes the framework for an independent audit office. This
independence enables the Office of the Auditor General (the Office) to
offer impartial opinions, observations, and recommendations on
government operations and management practices.

1.2 The key components of the Office’s independence are:

• the authority of the Auditor General to select audits and examinations;

• the right of access to records, information, and individuals necessary to
conduct audits and examinations;
• the power to request and receive required information and
explanations;
• the requirement to report at least annually to the Legislative Assembly;
and
• a Legislative Audit Committee that reviews the Office’s budget.

1.3 The Audit Act provides the Office with the authority to conduct
audits and examinations of provincial departments, Crown corporations,
agencies, and funds. Financial audits include the Province’s consolidated
financial statements, as well as various other financial statement audits.
Special audits and examinations conducted by our Office include
performance audits, which may sometimes be referred to as value-for-
money audits.

1.4 In accordance with the Audit Act, the Auditor General reports at
least annually to the Legislative Assembly. The annual report

• provides observations, recommendations, and information pertaining

to the audits and examinations of government operations conducted by
the Office during the year;

Report of the Auditor General of Prince Edward Island - 2021 1

 1. Office of the Auditor General

• calls attention to anything that the Auditor General considers

necessary to be brought to the attention of the Legislative Assembly;
and
• includes other specific reporting requirements pursuant to the Audit
Act.

1.5 By exercising these responsibilities, the Auditor General assists the

Legislative Assembly in its responsibility to hold Government accountable
for its management of public resources.

1.6 The Audit Act was amended in July 2020, which expanded the
authority of the Auditor General in conducting audits and examinations,
and in reporting to the Legislative Assembly. These amendments include:
the Auditor General may now conduct work within organizations outside
of government, that have received government funding, and the Office
may report to the Legislative Assembly more than once per year. It is
anticipated that the frequency of reporting by the Auditor General will
increase in the future.

1.7 In 2020, the Office established a Strategic Advisory Committee.

The Strategic Advisory Committee will assist with updating the Office’s
Strategic Plan and choosing potential topic areas for future performance
audits, and will serve as a special committee to challenge our report
findings before reports are finalized.

AUDITS AND OTHER ASSURANCE ENGAGEMENTS

1.8 Each year, we conduct a variety of audits and examinations, some

of which are mandated by legislation, while others are selected at the
discretion of the Auditor General.

1.9 The Office annually completes approximately 13 financial audits,

including the consolidated financial statements of the Province. On an
annual basis, the Office completes a number of performance audits and
examinations. Various factors are considered in establishing priorities for
performance audits and examinations. In addition, follow-up work is
completed on previous audit recommendations. Work plans of the Office
can also be impacted by requests from the Legislative Assembly and/or
Executive Council.

2 Report of the Auditor General of Prince Edward Island - 2021

 1. Office of the Auditor General

1.10 The Climate Leadership Act and the Government Advertising

Standards Act require the Auditor General to report annually to the
Legislative Assembly on specific matters.

1.11 The Office staff complement consists of three audit directors,

sixteen professional auditors and two administrative staff.

1.12 All audit staff in the Office have a professional accounting

designation and continue to meet the annual professional development
requirements of the Chartered Professional Accountants of Prince Edward
Island (CPAPEI). We strive to provide staff with relevant and timely
professional development opportunities and training. Individual staff
members attend various professional courses, conferences, webinars, and
meetings. Staff also participate in various committees of the Canadian
Council of Legislative Auditors (CCOLA). ERSONNEL,

1.13 The Legislative Audit Committee is responsible for administrative

oversight of the Office of the Auditor General. This Committee includes
the Speaker of the Legislative Assembly (Chairperson), the Leader of the
Opposition, and the Minister of Finance. On an annual basis, the
Committee reviews the budget estimates submitted by the Auditor
General.

PROFESSIONAL STANDARDS

1.14 The Accounting Standards Board and the Auditing and Assurance
Standards Board establish the accounting and assurance standards which
apply to public sector entities and our work. In conducting our work, we
rely on these standards as well as guidance provided by the Chartered
Professional Accountants of Canada (CPA Canada) and other authoritative
sources.

1.15 For financial audits, the Office is subject to a periodic practice

inspection conducted by CPAPEI, which is the regulatory body that
provides oversight of the public accounting profession in the province. A
practice inspection is designed to protect the public interest by ensuring
Office practices meet professional standards. The next practice inspection
by CPAPEI is expected in 2021.

Report of the Auditor General of Prince Edward Island - 2021 3

 1. Office of the Auditor General

1.16 The Office also participates in the CCOLA peer review process for
financial statement audits and performance audits and examinations. This
peer review process provides additional assurance that the Office is
conducting audits in compliance with the applicable standards of CPA
Canada. The peer review process also exposes our Office to practices and
methodologies of other offices, which assists in improving our
professional practices.

1.17 In addition, the Office complies with the Canadian Standard on

Quality Control 1 of CPA Canada. This standard requires that internal
quality assurance systems be established and maintained. Our quality
assurance system is designed to provide us with reasonable assurance that:

• the Office and staff comply with professional standards, regulatory and
legal requirements, and internal policies; and
• the reports issued are appropriate in the circumstances.

PROFESSIONAL AFFILIATIONS

1.18 The Office maintains an affiliation with a number of professional

organizations to share information, experience, knowledge, and
methodology, with a view to contribute to the ongoing development of
legislative audit practices and standards. We strive to remain current in
audit practices and new developments within the profession.

1.19 Key affiliations include:

• Canadian Council of Legislative Auditors (CCOLA) - The Auditor

General is a member of CCOLA. CCOLA brings together legislative
auditors of the federal government, the provinces, and the territories.
Office staff also serve on various CCOLA committees. CCOLA
provides an opportunity for professional development and practice
improvement through information exchange, peer reviews, discussion,
and sharing of audit methodologies and practices.

4 Report of the Auditor General of Prince Edward Island - 2021

 1. Office of the Auditor General

• Canadian Audit and Accountability Foundation (CAAF) - The

Office has been a member and supporter of CAAF since its inception
in 1980. CAAF is an organization dedicated to promoting and
strengthening public sector performance audit, oversight, and
accountability, in Canada and abroad, through research, education, and
knowledge sharing.

• Chartered Professional Accountants of Canada and Chartered

Professional Accountants of Prince Edward Island - The Office
maintains an important professional relationship with these
organizations. We provide input into the development of accounting
and assurance standards and receive information on various topics
relevant to the profession.

1.20 Exhibit 1.1 provides a summary of the value and benefits provided
by a Legislative Audit Office to the Legislative Assembly and the public.

EXHIBIT 1.1
THE VALUE AND BENEFITS OF A LEGISLATIVE AUDIT OFFICE

Better scrutiny of
Increased productivity Government performance

Improved effectiveness Assurance: Standing Committee

• Attest reports on recommendations
Government organizations’ Better parliamentary
Better program performance reports
performance • Direct reports on Government control
organizations’ performance Implementation of
Deterrent to poor management Independence, recommendations
systems and practices knowledge, skills, and Better informed Legislative
resources of a Assembly
Improved management
systems and practices Advice: Legislative
• Management letters Audit Trained professionals Better Government
• Recommendations for public service performance
Office
• Public Accounts Committee reports

Reduced fraud and dishonesty Improved public Government acceptance

of our recommendations
confidence
Deterrent to fraud and Increased compliance
dishonesty with authority
Deterrent to non-compliance
with authorities

Light yellow: Value and benefits of a Legislative Audit Office

Light blue: Key services and products of a Legislative Audit Office
Adapted from a Canadian Legislative Auditors Working Group

Report of the Auditor General of Prince Edward Island - 2021 5

PUBLIC ACCOUNTS COMMITTEE
 2. PUBLIC ACCOUNTS COMMITTEE

REVIEW OF AUDITOR GENERAL’S REPORTS

2.1 The Standing Committee on Public Accounts (the Committee) is

charged with matters concerning the Public Accounts of the Province, the
Annual Report and other reports of the Auditor General, and fiscal
management. The Committee is dedicated to improving public
administration in partnership with the Auditor General. Through its work
and reporting to the Legislative Assembly, the Committee contributes to
improvements in operations, transparency, and accountability in the
province’s public sector.

2.2 The Auditor General’s Annual Report and other reports to the
Legislative Assembly, are referred to the Committee for review and
consideration. The Committee may request the Auditor General and other
witnesses to appear and answer questions on matters raised in the reports.
The Auditor General met with the Committee on several occasions in
2020 to complete the review of the 2020 Annual Report.

2.3 During the year, the Committee has been very active in following
up with Crown corporations, agencies, funds and departments, on their
progress with the implementation of the recommendations of the Auditor
General. This is a critical component of making positive improvements to
government operations.

2.4 Representatives from the Canadian Audit and Accountability

Foundation provided a workshop to members of the Public Accounts
Committee. The workshop discussed the review and interpretation of the
annual Public Accounts, in an effort to provide a better understanding of
debt management in government.

2.5 The working relationship between the Public Accounts Committee

and the Office of the Auditor General has improved significantly over the
last couple of years. We would like to thank the Committee for their
work.

Report of the Auditor General of Prince Edward Island - 2021 9

 2. Public Accounts Committee

COMMITTEE REPORTS

2.6 On June 16, 2020, the Committee submitted a report to the

Legislative Assembly on its activities. The Committee made a
recommendation encouraging audited government entities to implement
the recommendations of the Auditor General in a timely manner, and to be
dedicated in working toward 100% implementation.

2.7 The Committee reported to the Legislative Assembly again on

December 3, 2020, to provide a further update on its activities. The
Committee endorsed all of the recommendations and observations made in
the 2020 Annual Report of the Auditor General, and expressed concerns
over the implementation rates of the recommendations from past annual
reports of the Auditor General. The Committee stressed the importance
for agencies, boards and Crown corporations to meet their audited
financial statement reporting deadlines, and to ensure annual reports are
submitted in a timely manner, in accordance with legislative, regulatory or
policy deadlines.

10 Report of the Auditor General of Prince Edward Island - 2021

PERFORMANCE AUDITS AND EXAMINATIONS
 3. INTRODUCTION TO PERFORMANCE AUDITS
AND EXAMINATIONS
3.1 The Auditor General has a broad mandate for conducting
performance audits and examinations. Section 13(2) of the Audit Act
states that the Auditor General may conduct any audit or examination
considered necessary to determine whether any agency of government is
achieving its purpose, is doing so economically and efficiently, and is
complying with the applicable statutory provisions. In July 2020, the
Audit Act was amended by broadening the powers of the Auditor General.
The Auditor General may now audit activities of funding recipients,
related to the receipt and expenditure of government funding, and the
activities of any public contractors that have provided services to or on
behalf of government.

3.2 Given the complexity and magnitude of government operations,

we cannot examine all government programs on an annual basis. We
focus our efforts to make the best use of our resources. To determine our
annual work plan, we consider numerous factors including:

• financial magnitude of the entity or program;

• significance of potential issues;
• impact of the subject matter on Islanders;
• complexity of the operations;
• results of previous audits;
• availability of Office resources;
• timing of previous audit work;
• input from our Office’s Strategic Advisory Committee; and
• results from other jurisdictions.

3.3 Under the Audit Act, the Auditor General must conduct any audits
or examinations requested by Executive Council. In addition, the Office
may receive a request from the Public Accounts Committee or the
Legislative Audit Committee. These are completed at the discretion of the
Auditor General.

Report of the Auditor General of Prince Edward Island - 2021 13

 3. Introduction to Performance Audits and Examinations

3.4 On April 10, 2020, the Honorable Dennis King requested the
Auditor General, under Section 14(d) of the Audit Act, to undertake a
special assignment to examine Government’s COVID-19 pandemic
response. In particular, “a financial examination of the provincial
government COVID-19 programming and supports and the special
warrants associated with COVID-19 for the period starting March 13,
2020, with a report back to Executive Council no later than August 1,
2021”.

3.5 Due to the special COVID-19 request, the Office of the Auditor
General of Prince Edward Island was required to defer two previously
scheduled performance audits. The demands that the COVID-19 special
examination placed on our staff resources, resulted in this annual report
only including chapters for a performance audit completed for the Prince
Edward Island International Student Program and for a survey related to
governance sent to a number of Crown corporations. Previously
scheduled performance audits related to Crown Lands and Property Tax
Arrears will be reported on in the future.

3.6 Performance audits are objective assessments that assist in

determining how well government is fulfilling its responsibilities. These
audits provide reasonable assurance and are planned, performed, and
reported, in accordance with the Canadian Standards on Assurance
Engagements (CSAE) 3001 for direct engagements. In performing these
audits, the Office complies with independence and other ethical
requirements of the Chartered Professional Accountants of Prince Edward
Island Rules of Professional Conduct, and the Code of Conduct of the
Office of the Auditor General.

3.7 These audits assess the broad practices affecting an organization or

program, and may examine topics such as accountability relationships,
economy, efficiency, compliance with legislation, and procedures to
measure effectiveness. There are three distinct phases in conducting
performance audits: planning, implementation, and reporting.

3.8 In the planning phase, audit staff obtain a thorough knowledge of

the function, organization, or program selected for audit, and the
environment in which it operates. Auditors consider the risks facing the
organization or program and the processes to mitigate those risks. Using

14 Report of the Auditor General of Prince Edward Island - 2021

 3. Introduction to Performance Audits and Examinations

this knowledge, an audit plan is developed which establishes the audit

objectives, criteria, scope, and timing.

3.9 Audit criteria are the standards against which performance is

assessed. The audit criteria are determined by the audit team and are often
based on regulations, policies, other generally accepted sources, or best
practices. These are communicated to, and discussed with management
responsible for the subject matter, to gain their agreement on the nature of
our engagement prior to the commencement of the detailed audit work.

3.10 During the implementation stage, the auditor gathers sufficient and
appropriate audit evidence using various audit procedures, such as
interviewing key personnel, reviewing documentation and legislation,
analyzing data and information, and testing samples of files. Audit
evidence is evaluated and assessed against the criteria established in the
planning phase. Audit findings are identified and discussed with
management.

3.11 During the reporting phase, a draft audit report is prepared, which
includes audit conclusions, audit findings, and recommendations. The
draft audit report is discussed with senior management responsible for the
subject matter of the audit. At the conclusion of the audit, a final draft
report is provided to the organization subject to audit, and we request a
written response from management to each recommendation. These
responses are included in our final report.

Report of the Auditor General of Prince Edward Island - 2021 15

 4. PRINCE EDWARD ISLAND
INTERNATIONAL STUDENT PROGRAM

CHAPTER SUMMARY

Why it’s important

International student programs create new relationships between our

residents and people from countries beyond Canada. These relationships
bring strong social and cultural benefits to our communities.

In addition, international student programs provide significant

contributions to the economy, through both direct and indirect student
spending. In the 2020 fiscal year in Prince Edward Island, the
international student program had 137 international students attend Island
public schools and generated direct revenues of approximately $1.5
million.

What we found

The Department of Education and Lifelong Learning (the Department)

does not have processes to effectively manage the PEI International
Student Program (PEIISP):

• There is no documented and approved long-term strategic plan for the

PEIISP.
• Documented and approved policies and procedures have not been
developed for the PEIISP.
• Required documentation is not always maintained in application files.
• Tuition fees are not always collected in a timely manner.
• The Department has not developed standardized, documented
agreements with education agents, who recommend international
students to the PEIISP.
• There is no screening or monitoring of homestay arrangements for
PEIISP students.
• There are no formal agreements with homestay providers.
• Management is not able to access reliable and timely program data.
• There is limited reporting on program results.
• There is limited monitoring and feedback on PEIISP students.

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 4. Prince Edward Island International Student Program

We have made 13 recommendations to the Department of Education and

Lifelong Learning. The recommendations and responses from the
Department are included in Appendix A.

BACKGROUND

4.1 International student programs help diversify the education sector,

promote global relationships and grow local economies. International
students in Canada spent an estimated $21.6 1 billion on tuition,
accommodation and other expenses in 2018.

4.2 International student programs provide educational services for

students who are not citizens or residents of Canada. Canada's public
schools have been accepting international students since the 1980's,
according to the Canadian Association of Public Schools - International
(CAPS-I). CAPS-I is a non-profit association that sets the standards for
quality international student programs across Canada. Membership of the
association is comprised of 128 publicly-funded school districts/branches,
with students from kindergarten to completion of high school, including
the Department of Education and Lifelong Learning (the Department) in
PEI.

4.3 International students studying in PEI are recruited and accepted

through the Prince Edward Island International Student Program (PEIISP).
The Program allows international students to enter the Island’s public
school system as fee-paying students. There are several ways for students
to become part of the PEIISP. Students may apply to the PEIISP through
the process posted online, or may engage the services of an education
agent who recommends the PEIISP. Applicants who enter the program
through these options are referred to as non-resident program students as
neither they, nor their parents, are pursuing Canadian residency.

4.4 The PEIISP is also informally connected to immigration. The

program has grown over the years largely due to the growth in provincial
immigration programs, which has attracted many families with school
aged children. Students may enroll in the program as non-resident
immigration students if their parents are in the process of applying for a

1
This amount includes university programs.
Source: Building on Success: International Education Strategy 2019-2024 - Global Affairs Canada.

Report of the Auditor General of Prince Edward Island - 2021 17

 4. Prince Edward Island International Student Program

Canadian residency permit. Once the permit is received, the students are
no longer considered affiliated with the PEIISP, and can register and
attend PEI schools without having to pay tuition fees.

4.5 The PEIISP falls under the Department of Education and Lifelong
Learning. It was initially managed by the section English as an Additional
Language (EAL), but in 2019 an International Education Section was
established which now manages the PEIISP. The International Education
Section also manages the Affiliated Schools Program, but this program is
not included in the scope of our audit. Exhibit 4.1 shows the primary
positions involved in the management and delivery of the PEIISP.

EXHIBIT 4.1
MANAGEMENT AND DELIVERY OF THE
PEI INTERNATIONAL STUDENT PROGRAM
AS AT JUNE 30, 2020

Department of Education
and Lifelong Learning

Minister

Deputy
Minister
Educational
Services
Division

International
EAL/FAL
Education
Section
Section

Director of
International
Education

Coordinator of
Administrative
International
Assistant
Education

Source: Excerpt adapted from the Department of Education and Lifelong Learning organizational
chart

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 4. Prince Edward Island International Student Program

4.6 There is no legislation specific to the PEIISP; however, the

Education Act and regulations do provide some requirements for non-
resident fee-paying students. The Education Act and regulations include
sections on

• the authority to charge tuition to a non-resident student;

• the right to access education in PEI;
• education service agreements;
• application requirements;
• the placement of students into PEI schools; and
• tuition amounts.

4.7 To apply to the PEIISP, students complete an application form,

provide supporting documentation, and pay an application fee. If a
student is accepted to the program, a letter of acceptance is issued and the
student can then apply for a study permit through Immigration, Refugees,
and Citizenship Canada. Once the study permit has been issued, students
may register at a school based on their place of residence in PEI.

4.8 The number of PEIISP students had been increasing over the last
several years, primarily due to immigration. Tuition and application fees
paid by international students are included in the revenues of the
Department, and are currently prescribed by the Education Act Student
Regulations as $10,600 for a full school year or $5,300 per semester.
Exhibit 4.2 depicts the number of fee paying, non-resident students and
the estimated revenue over the last six years.

4.9 The numbers presented in Exhibit 4.2 represent a combination of

non-resident program students and non-resident immigration students. For
example, of the 137 fee-paying students in the 2019-20 school year, 46 (34
percent) are ‘non-resident program’ students and 91 students (66 percent)
are ‘non-resident immigration’ students. Non-resident program students
are those that have chosen PEI solely for educational purposes, while non-
resident immigration students are those that are awaiting residency
(temporary or permanent) permits.

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 4. Prince Edward Island International Student Program

EXHIBIT 4.2
DEPARTMENT OF EDUCATION AND LIFELONG LEARNING
INTERNATIONAL EDUCATION
PEI INTERNATIONAL STUDENT PROGRAM

2015 2016 2017 2018 2019 2020

Number
39 87 114 181 183 137
of
Students 1

Estimated
Revenue 2 329 789 1,061 1,713 1,751 1,488
($000s)

Source: Department of Education and Lifelong Learning

4.10 Each international student program delivered across Canada is

unique, as education falls under provincial jurisdiction. Appendix D
provides a comparison of key features among the international student
programs in each of the Maritime Provinces.

AUDIT OBJECTIVE AND SCOPE

4.11 The objective of this audit was to determine whether the

Department of Education and Lifelong Learning has processes to
effectively manage the Prince Edward Island International Student
Program.

4.12 On March 11, 2020, the World Health Organization declared

COVID-19 a global pandemic. Following this declaration, the PEI Chief
Public Health Office suspended in-school classes in PEI for a two-week
period, effective March 23, 2020. The suspension was eventually
extended for the remainder of the school year ending June 30, 2020. Our
audit scope covered the 2019-2020 school year.

1
Based on school year-end
2
Based on the fiscal year-ends and estimated using Government’s financial information

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 4. Prince Edward Island International Student Program

4.13 This report includes 13 recommendations which are listed in

Appendix A. Details on the audit standards, objective and scope are
included in Appendix B, and the audit criteria are included in
Appendix C of this chapter. The following sections of our report provide
information on the findings, related recommendations, and conclusions
from our audit.

OBSERVATIONS AND RECOMMENDATIONS

STRATEGIC Summary of Findings

DIRECTION
4.14 The PEIISP has operated for approximately ten years without a
documented or approved strategic plan. As a result, the program does not
have defined goals and objectives, action items or performance measures.
Draft business plans have been developed for the PEIISP over the years,
but have not been implemented or approved.

4.15 A strategic plan is important to provide management with a

framework for the activities required to achieve a program’s goals. It is a
tool used to guide decision making and evaluate performance, which in
turn helps management make the changes necessary to achieve desired
outcomes.

No documented and approved strategic plan

4.16 Since its inception, there have been changes to the management
structure of the PEIISP, as well as to applicable legislation. There have
been actions taken in an attempt to develop strategic direction for the
PEIISP. These actions included requests to Treasury Board to establish a
separate corporation for international education in 2011, to the forming of
an interdepartmental task force to make recommendations for the future of
the program in 2015. As of the date of this audit report, there is no
documented and approved strategic plan for the PEIISP. Exhibit 4.3
provides a summary timeline that outlines key events which impacted the
PEIISP from 2010 to 2020.

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 4. Prince Edward Island International Student Program

EXHIBIT 4.3
PEI INTERNATIONAL STUDENT PROGRAM
TIMELINE OF KEY EVENTS

2010 • PEIISP was established and put under the management of

EAL.
• The 2010 Minister's Directive entitled Tuition and
Entitlement to Schooling Privileges for Permanent Residents,
Non-Residents, and Exchange Students was issued under the
School Act. The Directive prescribed the following:
o definition of a non-resident fee paying student;
o tuition fees to be paid to the Department;
o refund stipulations;
o contract agreement requirements for third-party student
recruiters (education agents); and
o application requirements for the PEIISP.

• Treasury Board denied a request to establish an arm’s-length

2011 body to administer and facilitate the marketing and
recruitment of international fee-paying public school students.

• An interdepartmental working group on international

2015 education was established and tasked with summarizing the
current status of the program, and making recommendations
regarding future operations. The working group was
subsequently disbanded.
• A draft business plan was prepared by EAL management, but
was not formally approved.

• The Education Act was proclaimed superseding the School

2016 Act and the 2010 Minister’s Directive.

• In 2019, the Director of International Education position was

2019 established for the PEIISP. The program was no longer
managed by EAL staff.

• A new business plan was drafted by management of

2020
International Education. It was not implemented or approved
as of the date of our report.

Source: Department of Education and Lifelong Learning

4.17 In February 2020, a draft business plan was developed by

management of International Education. The business plan contained
components of a strategic plan including a timeline, performance
indicators, and risk management strategies. At the time of this report, this
plan has not been implemented or approved.

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 4. Prince Edward Island International Student Program

Recommendation

4.18 The Department of Education and Lifelong Learning should

document and approve a strategic plan for the PEI International
Student Program.

POLICIES, Summary of Findings

PROCESSES, AND
DOCUMENTATION 4.19 There are no documented and approved internal policies for the
PEIISP. Some internal processes were not consistently followed.
Student application files did not always contain all supporting
documentation, or certain supporting documentation had expired. The
application process also lacked evidence of a quality control process.

4.20 Program policies are important because they provide a framework

of processes and procedures designed to achieve program objectives. We
would expect that staff would have internally documented policies to
provide guidance for such things as:

• assessing student applications;

• maintaining documentation, managing applicant data, and managing
collection of payments;
• outlining appropriate approval levels for admissions, education agent
payments, refund payments and authorizing supports; and
• managing education agents and homestay provider relationships.

No documented policies, and processes not always followed

4.21 At the time of our audit, the Department’s website provided

general PEIISP information, application forms, program FAQs, and an
overview of the program for potential applicants. Program processes,
including application steps, fees, and refund protocols were also available
on the website. With the exception of these processes, the PEIISP does
not have any documented and approved internal policies for administering
key aspects of the program.

4.22 In lieu of documented policies, we used the processes posted

online to conduct our audit testing. We noted areas where these processes
were not consistently followed. For example, although the PEIISP
admissions process required students to take language proficiency

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 4. Prince Edward Island International Student Program

assessments, 24 percent of students in our sample were permitted to opt-

out of the assessments. These assessments are important to determine to
what extent a student may require language supports while attending
Island schools.

4.23 Implementing well-defined, documented policies helps to ensure

applications are consistently assessed, program decisions are supported,
and legislative requirements are met.

Recommendation

4.24 The Department of Education and Lifelong Learning should

document, approve and implement policies and procedures for the
PEI International Student Program.

Supporting documentation missing from applicant files

4.25 We selected a sample of approved applications to the PEIISP for

the 2019-2020 school year and, in the absence of formally approved
policies, tested the files to determine if students were accepted to the
program in accordance with the Education Act and established internal
procedures. Staff use an internal procedure form as a checklist to collect
all required documentation. We reviewed each application in our sample
to determine if files contained

• a complete and authorized internal procedure form;

• sufficient supporting documentation such as:
o PEIISP application form;
o physician’s statement of health;
o waiver release form;
o fee receipts;
o proof of immigration status;
o proof of health insurance coverage;
o letter of acceptance; and
• proof of a completed language proficiency assessment.

These documents are important to support application decisions and

decisions regarding the supports students may require at school.

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 4. Prince Edward Island International Student Program

4.26 We were unable to locate 10 percent of internal procedure forms in

our sample. The other 90 percent were examined and we noted that all of
the forms had incomplete sections.

4.27 All files examined, with the exception of one, contained letters of
acceptance issued by PEIISP to the applicant; however, 47 percent of
these files were either missing key documentation or the documentation in
the files was expired. Examples of the missing or expired documentation
included proof of health insurance and immigration status.

4.28 None of the applicant files tested contained evidence of a quality

control review. Such a review could assist in identifying inconsistencies
and errors. It could also help to ensure that appropriate documentation is
maintained.

Recommendations

4.29 The Department of Education and Lifelong Learning should

maintain all key supporting documentation in PEI International
Student Program files and include documentation requirements
within the policy guidance for the PEI International Student
Program.

4.30 The Department of Education and Lifelong Learning should

document and maintain a quality assurance process for PEI
International Student Program applications.

FEES Summary of Findings

4.31 PEIISP tuition fees were not always collected on a timely basis.
The PEIISP did not apply interest or late fees, and there is no policy
guidance for staff on what actions to take when payments are outstanding.

Applications Fees 4.32 The PEIISP charges an application fee of $275 for processing
applications. From our sample of applicants, we examined files to
determine whether application fees were collected prior to issuance of
letters of acceptance in accordance with established processes. In 13
percent of the sample files, there was no documentation in the application
file to support whether the application fee had been collected.
Management subsequently provided documentation for all but one
application fee.

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 4. Prince Edward Island International Student Program

4.33 Processes for remitting application fees and tuition payments are
posted on the PEIISP website. We expected collection of application and
tuition fees to be made in accordance with these processes and proper
documentation would be maintained in the files.

Tuition Fees Tuition fees not collected on a timely basis

4.34 We checked whether documentation was on file to support that the

applicant was charged the appropriate tuition amount and payment was
collected in accordance with the terms of payment applicable at the time
of application. In all cases, the correct tuition amount was charged.
However, 33 percent of the applicants in our sample paid their tuition fees
late. The PEIISP did not apply interest or late fees to any of these late
payments.

4.35 The PEIISP does not have policy guidance for staff on what
actions to take when payments are outstanding. Management informed us
that requests for payments are sent when amounts are overdue. Collection
of payments in a timely manner helps to ensure that appropriate
consideration has been received for education services provided.

Recommendation

4.36 The Department of Education and Lifelong Learning should

establish procedures for collecting overdue tuition fees and include
these procedures within the policy guidance for the PEI International
Student Program.

THIRD PARTY Summary of Findings

AGREEMENTS
4.37 The PEIISP does not have documented agreements with education
agents and does not perform due diligence on these agents. The PEIISP
does not provide homestay arrangements for its students, and also does not
have formal agreements with homestay providers. In addition, PEIISP
does not screen or monitor the homestay arrangements for its students to
ensure it is a safe environment and that basic needs are being met.

Education Agents 4.38 Education agents offer education advisory services to international
students and their parents or guardians. Education agents direct
applications to the PEIISP and are paid a 15 percent commission, based on
tuition fees collected by the program.

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 4. Prince Edward Island International Student Program

Education agent commissions calculated accurately and paid after

receipt of tuition

4.39 For a sample of commission payments made to education agents,

we tested whether there was an invoice on file, if the student had paid
tuition fees, and if the payment was calculated correctly. In all instances,
the necessary documentation was on file and payments to agents were
calculated accurately and paid to the proper education agent.

No standardized agreements with education agents

4.40 Treasury Board policy requires a contract to be in place when

services are provided for payment. The purpose of the contract is to
document elements, such as the work to be performed, the compensation
to be paid, and the roles and responsibilities of each party to the contract.
Conducting due diligence prior to entering into a contract is important, as
it should assist in identifying business and legal risks.

4.41 Education agents were used by 66 percent of the applicants in our

sample. However, there were no contractual agreements in place between
the PEIISP and these education agents. In addition, PEIISP did not
perform due diligence procedures on these agents, such as performing
background checks, conducting interviews, or verifying credentials.

4.42 When contractual agreements are not in place, there is a risk of

misunderstandings regarding expectations. Furthermore, the reputation of
the PEIISP and services provided to students could be jeopardized when
effective due diligence procedures are not carried out.

Recommendations

4.43 The Department of Education and Lifelong Learning should

develop and implement a standardized contractual agreement for
education agents in accordance with Treasury Board policy.

4.44 The Department of Education and Lifelong Learning should

perform due diligence procedures on education agents associated with
the PEI International Student Program.

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 4. Prince Edward Island International Student Program

Homestay 4.45 A valid fixed address in Prince Edward Island is necessary to

Providers enroll in the provincial education system. International students coming to
PEI to study must secure accommodations prior to arriving in the
province. If the student is not living with family or a legal guardian, they
seek out homestay accommodations. Successful applicants requiring
accommodations during their semesters in PEI schools are required to
make their own homestay arrangements. Alternatively, education agents
may make arrangements for homestay accommodations for applicants.

4.46 The PEIISP provides links on its website to two homestay

providers, but specifies that they do not arrange homestay
accommodations for students. For the 2019-2020 school year, 52 percent
of students used homestay providers for their living arrangements.

4.47 According to standards of practice established by CAPS-I,

Canadian international student programs, such as the PEIISP, should have
homestay standards of practice in place. Appendix E outlines the
standards of practice identified by CAPS-I related to homestay
arrangements. These are divided into two categories:

• screening and selection practices; and

• monitoring and support practices.

No screening or monitoring of homestay arrangements for students

4.48 Management confirmed that the PEIISP does not follow any of the
homestay standards of practice listed in Appendix E. PEIISP
management informed us that they do not have any direct involvement
with the management or operations of homestay providers or host
families. As a result, there is no screening or monitoring of homestay
arrangements for PEIISP students. This is not in accordance with CAPS-I
Standards of Practice.

4.49 There are also no mechanisms in place to monitor PEIISP students

using homestay accommodations. Monitoring mechanisms could identify
issues with the social, emotional and physical wellbeing of the students,
and help with conflicts and misunderstandings.

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 4. Prince Edward Island International Student Program

No formal agreements with homestay providers

4.50 CAPS-I Standards of Practice recommend if homestay programs

are outsourced, that there are agreements with the homestay provider. At
a minimum, we would expect an agreement with the homestay provider to
outline:

• criminal record and vulnerable sector check requirements for host

families;
• basic need requirements for the student using the homestay service;
and
• processes to allow regular monitoring by the PEIISP (ie. home visits).

4.51 In other provinces, homestay is often provided by the respective

international student program or there are agreements with homestay
providers providing accommodations to students in their international
student programs. The PEIISP does not have such agreements with
homestay providers. Agreements would reduce the business and legal risk
to the province, and can help to protect the well-being of students in the
PEIISP.

Recommendations

4.52 The Department of Education and Lifelong Learning should

implement a screening and selection process for homestay providers,
and regularly monitor the well-being of PEI International Student
Program students living in homestay accommodations.

4.53 In accordance with CAPS-I Standards of Practice, the

Department of Education and Lifelong Learning should have
agreements with homestay providers.

MONITORING Summary of Findings

AND
REPORTING 4.54 Management is unable to access reliable data on a timely basis.
There is no documentation of meeting minutes between the Director of
International Education and senior management. There is limited
monitoring of student satisfaction with the program and limited reporting
of the PEIISP is available to the public.

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 4. Prince Edward Island International Student Program

4.55 As previously discussed, the PEIISP does not have a documented

and approved strategic plan. Therefore, the program lacks formal
performance targets and indicators that it should have for management to
evaluate results. At a minimum, we expected that management of the
PEIISP would have access to complete and accurate student and financial
data on a timely basis.

Management not able to access reliable data on a timely basis

Information 4.56 Until April 1, 2019, the PEIISP was managed by the EAL Section
Systems of the Department. As a result, the student data for the program is
recorded within a database that was developed specifically for the EAL
Section. The database records key information of the PEIISP, such as:

• contact details of the applicant;

• status of study permits;
• education agent used (if applicable);
• living arrangements (homestay or other); and
• tuition payments made.

4.57 We did not audit the database used by the International Student
Program; however, management informed us that it is difficult to
segregate and retrieve reports from the database specifically for PEIISP
students. As a result, staff within PEIISP created an internal tracking
document to have more readily accessible information. However, we were
informed that this document had limited internal controls, and
management and staff were not regularly reviewing information to ensure
completeness and accuracy.

4.58 Management advised that neither the tracking sheet nor database,
could easily provide key management reports, such as outstanding tuition
fees. To obtain this information, staff are required to manually sort and
review information from both systems, which takes a significant amount
of time and is prone to human error. Timely and reliable information is
essential for management to make effective decisions and report on
results.

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 4. Prince Edward Island International Student Program

Limited reporting on program results

4.59 On a bi-weekly basis, meetings between the management of the

PEIISP and senior management of the Department are occurring; however,
no minutes are documented. Meeting minutes are an important tool for
recording decisions, responsibilities and deadlines. They can provide the
record of why decisions were made and who was involved. At a
minimum, we would expect that significant strategic or operational
decisions be documented.

4.60 Annual reports for the Department and Public Schools Branch are
being issued; however, the annual reports contain very limited reporting
on the PEIISP. Given its impact on the Island school system, it is
important that key program information specific to the PEIISP be
regularly reported to the public.

Recommendations

4.61 The Department of Education and Lifelong Learning should

obtain reliable program data on a timely basis to enable effective
management and oversight of the PEI International Student Program.

4.62 The Department of Education and Lifelong Learning should

document meeting minutes, noting any significant strategic or
operational decisions for the PEI International Student Program.

4.63 The Department of Education and Lifelong Learning should

report publically on the performance of the PEI International Student
Program on an annual basis.

Student Monitoring 4.64 For the 2019-2020 Island school year, there were 137 PEIISP
and Feedback students. The PEIISP students were enrolled in and attended 14 different
schools across PEI. These students and their families are the customers of
the PEIISP and the success of the program relies on the satisfaction of
these customers. Therefore, we expected management of the PEIISP to
monitor and gather feedback from its students.

Limited monitoring and feedback collected on PEIISP students

4.65 According to management of the PEIISP, as well as administrators

within the Public Schools Branch, there is no differentiation between
resident immigrant students and PEIISP students within the schools.

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 4. Prince Edward Island International Student Program

Therefore, there is little, if any, communication occurring between the

schools and PEIISP on the educational performance of the students within
the program. Also, the PEIISP does not gather feedback directly from the
students or the students’ parents, or guardians, in the form of exit
interviews, surveys or complaint processes.

Recommendation

4.66 The Department of Education and Lifelong Learning should

monitor student satisfaction with the PEI International Student
Program.

CONCLUSION

4.67 Overall, we concluded that the Department of Education and

Lifelong Learning does not have processes to effectively manage the PEI
International Student Program (PEIISP).

4.68 The PEIISP has operated for approximately ten years without a
documented or approved strategic plan. Although there have been several
initiatives to establish strategic direction for the PEIISP, as of the date of
our audit report, there is no documented or approved long-term strategic
plan for the PEIISP. Draft business plans have been developed for the
PEIISP over the years, but have not been implemented or approved.

4.69 Formally documented and approved internal policies have not been
developed for the PEIISP. Posted procedures for such things as language
proficiency testing were not consistently followed.

4.70 As well, we noted student application files did not always contain
key supporting documentation or that the documentation on file had
expired. There was also no evidence that a quality control process was
conducted on application files.

4.71 There is no policy guidance for staff on what actions to take when
payments for tuition are outstanding. As a result, PEIISP tuition fees were
not always collected on a timely basis, and there was no interest or late
payment fees applied to outstanding balances.

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 4. Prince Edward Island International Student Program

4.72 There were no standardized documented agreements between the

Department and education agents, which is not in compliance with
Treasury Board policy. There was also no due diligence performed on
education agents prior to issuing commission payments.

4.73 The PEIISP does not screen or monitor the homestay arrangements
for its students. Also, the PEIISP does not have agreements with
homestay providers, which is not in accordance with CAPS-I Standards of
Practice.

4.74 Student data for the PEIISP is recorded in a database designed for
the EAL Section; however, timely and relevant information from this
database is difficult for management of the PEIISP to obtain. Although
regular meetings are being held with senior management, documentation
of key decisions is not maintained. Also, public reporting on the program
is very limited.

4.75 The PEIISP does not monitor or gather feedback from students to
assess student satisfaction with the PEI International Student Program.

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 4. Prince Edward Island International Student Program

APPENDIX A
Page 1 of 4

RECOMMENDATIONS* MANAGEMENT’S RESPONSE

Recommendation 4.18 The Department of Education and Lifelong Learning will develop a
The Department of strategic plan for the PEI International Student Program.
Education and Lifelong
Learning should document Timeline for completion: November 2021
and approve a strategic plan
for the PEI International
Student Program.
Recommendation 4.24 All policies and procedures are currently being reviewed for potential
The Department of required changes with the addition of a mandatory insurance
Education and Lifelong program, Western Union payment solution, TRUE North database
Learning should document, and an RFP for a homestay partner.
approve and implement
policies and procedures for Decisions made regarding the strategic direction may also impact
the PEI International Student policies and procedures.
Program.
Timeline for completion: New policies and procedures will be
finalized by January 2022 and will impact those applying for the
2022 school year.
Recommendation 4.29 Much of the current program relies on manual processes from
The Department of application to final maintenance. The PEIISP is currently negotiating
Education and Lifelong to purchase the service of TRUE North database which will
Learning should maintain all streamline many of the current processes to an electronic application
key supporting and maintenance system. Reducing the number of entry points for
documentation in PEI filing and information will significantly reduce the potential for error
International Student and all records will be maintained accurately. TRUE North is a
Program files and include secure, multi-user, web-based system to manage the information
documentation requirements tracking, reporting and collaborative needs of international education
within the policy guidance programs. TRUE North works with over 60 school boards from coast
for the International Student to coast in Canada. The PEIISP will have access to critical data,
Program. which includes but is not limited to:
● Student demographics
● Country of origin
● Agency and agent information
● Insurance, passport, and student permit details
● Homestay details
● Fees

TRUE North includes a robust suite of financial tools including

invoice creation, fee and payments tracking, receipting, as well as
expense and commission tracking. Invoices can be quickly generated
with custom letterhead and custom payment instructions.
*Recommendation numbers refer to the paragraph numbers in this chapter.

34 Report of the Auditor General of Prince Edward Island - 2021

 4. Prince Edward Island International Student Program

APPENDIX A
Page 2 of 4

RECOMMENDATIONS* MANAGEMENT’S RESPONSE

TRUE North allows detailed search and extract capabilities with all
financial information, to ensure synchronization with district
financial systems. There are financial search filters, so it is simple to
track students with outstanding fees.

There are also useful statistics on the homepage that give a quick
snapshot of district receivables, paid and owing, as well as expense
tracking.

An identified area of concern in the report was the maintenance of up

to date insurance information. The PEIISP has taken the step to
conduct an RFP for mandatory insurance provider for students in the
program. This is the most common practice across the country and
will significantly reduce the administrative challenges associated with
the current practice.

Timeline for completion: TRUE North will be operational and

current files converted to the operation system by June 30th, 2021.
Insurance program will be in place for students starting
September 2021.
Recommendation 4.30 Once the PEIISP adopts the TRUE North application system and
The Department of process, any further quality assurance steps will be determined
Education and Lifelong through the professional development and training offered by TRUE
Learning should document North.
and maintain a quality
assurance process for PEI Timeline for completion: Spring 2021
International Student
Program applications.
Recommendation 4.36 To the best of our knowledge, no other program has overdue tuition
The Department of policies and procedures. The tracking occurs up front and requires all
Education and Lifelong payments by a certain date or in full prior to beginning school.
Learning should establish
procedures for collecting The newly implemented policy of receiving tuition payment prior to
overdue tuition fees and the issuance of the Letter of Acceptance is a procedural step that will
include these procedures eliminate unpaid tuition occurrences for new students.
within the policy guidance Returning students will be better tracked with the Western Union
for the PEI International payments solution and with TRUE North allowing PEIISP staff to
Student Program. ensure a student does not begin school prior to tuition being paid in
full.

Timeline for completion: January 2022

*Recommendation numbers refer to the paragraph numbers in this chapter.

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 4. Prince Edward Island International Student Program

APPENDIX A
Page 3 of 4

RECOMMENDATIONS* MANAGEMENT’S RESPONSE

Recommendation 4.43 An agent agreement will be finalized in the spring of 2021 and in
The Department of practice for applications for September 2022.
Education and Lifelong
Learning should develop and Timeline for completion: September 2022
implement a standardized
contractual agreement for
education agents in
accordance with Treasury
Board policy.
Recommendation 4.44 All agents are required to complete and submit an Agent Profile Form
The Department of and at least one current reference is checked (this specifically applies
Education and Lifelong to agents with whom the PEIISP does not currently have a
Learning should perform due relationship).
diligence procedures on
education agents associated Timeline for completion: September 2021
with the PEI International
Student Program.
Recommendation 4.52 PEIISP is conducting an RFP to select a preferred homestay provider.
The Department of This homestay provider will not have exclusive rights to PEIISP.
Education and Lifelong Students and parents will have the right to select another provider.
Learning should implement
a screening and selection The RFP contains requirements for monitoring the well-being of
process for homestay students and communication with the PEIISP:
providers, and regularly
monitor the well-being of (From the RFP):
PEI International Student D.3.6 Communication with Department
Program students living in 3.6.1 The proponent(s) must be able to provide the Department
homestay accommodations. with comprehensive, accurate and timely student and host
information 24 hours a day, 7 days a week, upon request. Provide
details as to how you provide this service.
3.6.2 It is important that student and host family information be
communicated to the Department in a timely and accurate manner.
Outline your company’s strategy for communicating information –
initial host family information, host family changes, concerns that
arise about a host family or student, etc.
3.6.3 The Department must have the ability to access your secure
electronic database for communication purposes. Provide details of
how you can provide this access for the appropriate Department staff.

Timeline for completion: September 2021

*Recommendation numbers refer to the paragraph numbers in this chapter.

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 4. Prince Edward Island International Student Program

APPENDIX A
Page 4 of 4

RECOMMENDATIONS* MANAGEMENT’S RESPONSE

Recommendation 4.53 See response to recommendation 4.52.
In accordance with CAPS-I
Standards of Practice, the Timeline for completion: September 2021
Department of Education
and Lifelong Learning
should have agreements with
homestay providers.
Recommendation 4.61 See response to recommendation 4.29.
The Department of
Education and Lifelong Timeline for completion: June 30, 2021
Learning should obtain
reliable program data on a
timely basis to enable
effective management and
oversight of the PEI
International Student
Program.
Recommendation 4.62 The Department will develop a process of documenting any decisions
The Department of that can be captured in an operational binder.
Education and Lifelong
Learning should document
Timeline for completion: March 2021
meeting minutes, noting any
significant strategic or
operational decisions for the
PEI International Student
Program.
Recommendation 4.63 This can be accomplished through the Department’s annual report.
The Department of
Education and Lifelong Timeline for completion: 2022
Learning should report
publically on the
performance of the PEI
International Student
Program on an annual basis.
Recommendation 4.66 The PEIISP will complete a jurisdictional scan for similar
The Department of process/documents and create a process to monitor client satisfaction.
Education and Lifelong
Learning should monitor
Timeline for completion: September 2022
student satisfaction with the
PEI International Student
Program.
*Recommendation numbers refer to the paragraph numbers in this chapter.

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 4. Prince Edward Island International Student Program

APPENDIX B
Page 1 of 2

AUDIT STANDARDS, OBJECTIVE AND SCOPE

STANDARDS This independent assurance report was prepared by the Office of the
Auditor General of Prince Edward Island. The purpose of this audit is to
independently conclude on whether the Department of Education and
Lifelong Learning (the Department) complies in all significant respects
with the applicable criteria. The Department accepted responsibility for
the subject matter under audit.

Work conducted for this audit was performed to a reasonable level of

assurance in accordance with Canadian Standards on Assurance
Engagements (CSAE) 3001 - Direct Engagements set out by the Chartered
Professional Accountants of Canada (CPA Canada) in the CPA Canada
Handbook - Assurance.

The Office applies the 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 the audit 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
behaviour.

OBJECTIVE The objective of this audit was to determine whether the Department of
Education and Lifelong Learning (the Department) has processes to
effectively manage the Prince Edward Island International Student
Program (PEIISP).

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 4. Prince Edward Island International Student Program

APPENDIX B
Page 2 of 2

We developed a number of criteria to assess whether the Department had

met the objective. These criteria are listed in Appendix C.

Criteria were primarily based on literature review of widely used practices

and criteria used by other legislative audit offices. Management accepted
the relevance and suitability of the criteria used in the audit.

SCOPE AND The scope period of our audit was April 1, 2019 to June 30, 2020. We
APPROACH examined documentation outside that period as necessary.

Our approach included

• interviewing management and staff of the Department and PEIISP;

• examining a sample of 30 PEIISP applications and supporting
documentation during the scope period;
• interviewing stakeholders of the PEIISP;
• interviewing directors of Maritime Provinces with international
student programs;
• examining a sample of five education agent commissions paid during
the scope period; and
• examining minutes, procedure documents, reports and other
documentation as required.

It is important to note that our observations and conclusions relate only to

the management practices of the Department and the PEIISP, and
consequently, our comments and conclusions do not pertain to the
practices or performance of any third parties.

DATE OF We obtained sufficient and appropriate audit evidence on which to base

REPORT our conclusions on February 19, 2021, in Charlottetown, Prince Edward
Island.

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 4. Prince Edward Island International Student Program

APPENDIX C

AUDIT CRITERIA
1. The Department has a long-term strategic plan as well as documented policies for the
PEIISP.
2. The Department administers the PEIISP in accordance with approved policies and
general best practice.
3. The Department has accountability mechanisms established for the PEIISP for effective
monitoring and reporting on the results of the program.

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 4. Prince Edward Island International Student Program

APPENDIX D

International Student Program - Maritime Comparison

The following highlights some of the key similarities and differences between the international
student programs in Prince Edward Island, New Brunswick and Nova Scotia.

INTERNATIONAL STUDENT PROGRAMS

MARITIME COMPARISON ANALYSIS

PEI New Brunswick Nova Scotia

International International International
Comparison Type
Student Student Student
Program Program Program

Only ‘non-resident’ program students No Yes Yes

Tuition fees 1 $10,600 $10,000 $9,000

Application fees1 $275 $7002 $6002

Homestay coordinated by province? No Yes Yes

Mandatory language proficiency

Yes Yes No
assessment?

Agent agreements in place? No Yes Yes

Approximate number of students

1373 800 1400
enrolled in the 2019/2020 school year

1
Sourced from CAPS-I
2
Includes orientation fees
3
PEI does not distinguish between non-resident program and non-resident immigration students. Therefore, all
students in the PEIISP program are included for comparison basis.

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 4. Prince Edward Island International Student Program

APPENDIX E
Page 1 of 2

CANADIAN ASSOCIATION OF PUBLIC SCHOOLS-INTERNATIONAL (CAPS-I)

HOMESTAY SCREENING AND SELECTION PRACTICE STANDARDS

CAPS-I - Homestay Screening and Selection Practices 1

1. Providing homestay services either in-house or outsourced and having an oral/written
agreement with the homestay service provider if outsourced.
2. Utilizing a comprehensive application form to compile a profile of prospective homestay
families.
3. Conducting criminal/police record/vulnerable sector/child abuse registry checks (as
applicable in each province) and personal reference checks with initial screening of all host
family members (that are the age of majority at a minimum) and updated/reviewed per
individual Board policy and/or procedures.
4. Conducting home visits and interviews with prospective homestay families to ensure the
following is in place: private, single room, key/security to the home, meals, desk, access to
laundry, access to internet and in compliance with local building codes.
5. Having a formal Code of Conduct/agreement which clearly defines expectations of homestay
families to ensure a minimum level of service/care/support is provided to all students.
6. Having staff responsible for the homestay program as well as an established process for
record keeping that complies with protection of privacy legislation.
7. Ensuring both students and host families receive profile information in a timely fashion.
8. Having host families consult with their insurance provider, advise they will be hosting and
update their policy as necessary.

1
Sourced from CAPS-I Standards of Practice

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 4. Prince Edward Island International Student Program

APPENDIX E
Page 2 of 2

CANADIAN ASSOCIATION OF PUBLIC SCHOOLS-INTERNATIONAL (CAPS-I)

HOMESTAY MONITORING AND SUPPORT PRACTICE STANDARDS

CAPS-I - Homestay Monitoring and Support Practices 1

1. Providing homestay families with a profile of their student and attend an orientation session or
provide a welcome package prior to arrival. International students should receive a profile of
the homestay family, emergency information card, welcome package, Homestay Coordinators
contact info, city map, timetable and orientation session information.
2. Clearly defining expectations for both students and homestays.
3. Monitoring all host families to ensure the social, emotional and physical well-being/needs of
the international student are satisfied.
4. Having a process in place to deal with homestay conflicts and misunderstandings.
5. Conducting exit interviews or utilize evaluation forms with homestay families and students
regarding their experience.

1
Sourced from CAPS-I Standards of Practice

Report of the Auditor General of Prince Edward Island - 2021 43

5. CROWN CORPORATIONS GOVERNANCE SURVEY
EXECUTIVE SUMMARY

Strong governance in the public sector plays a critical role in ensuring

government services are delivered in an effective and efficient manner,
ensuring the safeguarding of public funds.

Crown corporations in Prince Edward Island work in all major industry

sectors of the province’s economy and manage assets totalling over
$1 billion. These corporations are governed by boards of directors. Poor
governance in these organizations could lead to adverse consequences,
including financial losses, real or perceived conflicts of interest, as well as
loss of confidence in public institutions.

This chapter includes results from a governance survey sent to board

members of 32 Crown corporations. In total, we sent surveys to 117
individuals and received 50 responses from 17 Crown corporations, for a
response rate of 43 percent. Surveys were sent to individuals the week of
July 20, 2020 with responses requested by August 14, 2020.

What we found

Based on our survey, respondents stated the following:

• 28 percent did not receive an orientation when they joined the board;
• 50 percent felt more training was needed for board members;
• 50 percent of boards do not set time aside to deal with strategic
planning issues;
• 88 percent either did not have an IT strategic plan, or were unsure if
one had been developed for their board;
• 24 percent were not satisfied with how often the responsible Minister
meets directly with the board;
• 16 percent felt their board does not do a good job of reporting
organizational performance publicly;
• 30 percent did not sign a conflict of interest declaration when they
joined the board;
• 76 percent of respondents indicated their board either did not have, or
they were unsure if they had, an audit committee;

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 5. Crown Corporations Governance Survey

• 18 percent of boards have not established clear, measurable objectives

for the CEO’s performance; and
• 46 percent of boards do not conduct a formal evaluation of its
performance.

We have made 11 recommendations to Treasury Board. Our

recommendations and the response from Treasury Board are included in
Appendix A.

We sincerely thank each individual who responded to our survey. This

survey and its results will provide information on current best practices for
public sector governance and highlight areas for discussion. The survey
and its related results will help board members identify any areas of
weakness, and identify where improvements in board practices can be
made.

Each Crown corporation and its board of directors is unique in its size,
structure, mission, and level of independence from the responsible
government department. Users of this report should consider the results of
the survey and how the results might impact the practices and needs of
each individual Crown corporation and its board.

BACKGROUND

5.1 In its simplest form, the term governance refers to the act of
overseeing the control and direction of an organization. In practice,
governance of an organization is much broader. It includes the structures,
systems and practices that an organization uses for establishing its
strategic direction, overseeing its service delivery, and reporting on its
performance. Exhibit 5.1 summarizes the five basic principles of good
governance.

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 5. Crown Corporations Governance Survey

EXHIBIT 5.1
PRINCIPLES OF GOOD GOVERNANCE

1. Accountability: is the process whereby organizations, and the

individuals within them, take responsibility for their decisions and
actions.
2. Leadership: is the “tone at the top” which is critical if an entire
organization is to embrace good governance.
3. Integrity: is acting in a way that is impartial, ethical and not misusing
information or resources.
4. Stewardship: is the act of looking after resources on behalf of the
public and is demonstrated by maintaining or improving capacity to
serve the public interest over time.
5. Transparency: is achieved when decisions and actions are open,
meaning stakeholders, the public and employees have access to full,
accurate and clear information on these matters.
Source: Adapted from Public Sector Governance: A Guide to the Principles of Good Practice,
Office of the Auditor General of British Columbia.

5.2 The role of a board of directors should be separate from that of

management; however, communication between these two oversight
bodies is key for effective governance practices. A board of directors
should focus on high level aspects of the organization, such as establishing
strategic direction and risk tolerances, as well as overseeing performance.
The board relies on management to provide complete and timely
information. In turn, management must be made aware of the decisions of
a board, so they can operate the organization in accordance with board
direction. Exhibit 5.2 depicts the relationship between the board of
directors and management.

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 5. Crown Corporations Governance Survey

EXHIBIT 5.2
RELATIONSHIP BETWEEN BOARD OF DIRECTORS AND
MANAGEMENT

Board of Directors
(Oversight Body)
Oversight

Accountability
Communication
Information
of information
provided
needs

Management
(Accountable Body)

Source: Adapted from Practice Guide to Auditing Oversight, Canadian Audit & Accountability
Foundation

5.3 Our survey included boards of directors for Crown corporations in

Prince Edward Island which are responsible for providing public sector
services, managing public assets and spending public dollars in most
sectors of the Island’s economy.

5.4 Crown corporations in Prince Edward Island are accountable

through a Minister to the Legislative Assembly. These corporations vary
in size, extent of financial resources and the level of autonomy of their
operations from the responsible government departments.

5.5 As shown in Exhibit 5.3, the expenses of Crown corporations are

significant. Total government expenses, for the year ending March 31,
2020, were approximately $2.3 billion. Crown corporations account for
approximately 56 percent of these expenses.

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 5. Crown Corporations Governance Survey

EXHIBIT 5.3
FISCAL EXPENSES
YEAR ENDING MARCH 31, 2020
($000)

Crown Corporation Departmental

56%
44% $1,297,456
$1,012,677

Source: Derived from Public Accounts of the Province of PEI Volume I Consolidated Financial
Statements for the year ended March 31, 2020.

5.6 Engage PEI oversees the recruitment and appointment process for
boards of directors for Crown corporations in the province. It is
administered by staff of the Executive Council Office.

5.7 Applications are reviewed as vacancies arise. A list of

recommended applicants is then forwarded to a cabinet committee for
review and recommendation to Executive Council. Once Executive
Council nominates a candidate and the appointment is accepted, an Order-
in-Council is issued and published in the Royal Gazette with the name of
the successful applicant.

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 5. Crown Corporations Governance Survey

OBJECTIVE AND SCOPE

5.8 We conducted a survey of Crown corporations to compile and

report on an overview of current governance practices. This study is not
an audit, an evaluation of the board of directors, or an assessment of
governance practices being utilized by these boards. The purpose of this
report is to provide information on existing practices within PEI Crown
corporations and highlight areas for discussion and improvement among
the various boards.

5.9 We identified 32 Crown corporations to take part in the survey.

Appendix B provides a listing of those Crown corporations. Appendix C
provides our survey methodology, including the criteria for which Crown
corporations were included in, or excluded from, the survey. Our report
provides responses for selected survey questions. See Appendix D for the
complete survey with a summary of all responses.

5.10 A total of 117 individuals received the survey. Some individuals

who received the survey were members of senior management who also
sit on the respective boards. There were some board members who sit on
several boards, and in these situations, the individual was directed to select
one Crown corporation to complete the survey for.

SURVEY RESULTS

BOARD 5.11 Board education should be ongoing, beginning with a formal

ORIENTATION orientation and including regular learning opportunities for board members.
AND Increasing knowledge of the roles and responsibilities, as well as the
TRAINING environment in which the organization operates, increases the value board
members add to the organization.

Board 5.12 Board orientation helps each board member understand the role of
Orientation the board and its committees, as well as the expectation of individual
board members. A board should always provide the guidance necessary to
assist new board members in understanding the nature and operations of
the organization.

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 5. Crown Corporations Governance Survey

Board Orientation
Yes No Unsure

After your appointment as a Board

58% 28% 14%
member, did you receive orientation?

Recommendation

5.13 Treasury Board should ensure a formal board orientation

program is used by all Crown corporations. It should provide a clear
outline of board roles, responsibilities, and structural relationships,
along with board by-laws and mandates or terms of reference.

Board 5.14 In addition to board orientation, regular training for board

Training members is important to provide them with knowledge of the organization
and the environment in which it operates. This training may include
courses specific to governance, the industry, or business of the Crown
corporation.

Board Training
Agree Neutral/ Disagree
Neither

Government should provide greater

50% 40% 10%
training opportunities for board members

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 5. Crown Corporations Governance Survey

Recommendation

5.15 Treasury Board should ensure regular training opportunities

for board members are provided by all Crown corporations.

STRATEGIC 5.16 The board of directors is responsible for setting the strategic
PLANNING direction of an organization. It is important to have the strategic plan
documented to ensure all parties, including all board members, have an
understanding of the goals of the organization, and how the goals align
with the organization’s mandate. Once a strategic plan is completed, it
should be reviewed and updated regularly.

Strategic Planning
Yes No Unsure

A documented strategic plan exists 52% 24% 24%

Specific time is set aside to deal with

28% 50% 22%
strategic planning issues

Strategic plan is updated annually 32% 40% 28%

Recommendation

5.17 Treasury Board should require the board of directors of all

Crown corporations to document a strategic plan and regularly
update the plan as the goals and mandate of the organization change.

INFORMATION 5.18 Information technology (IT) has become an important part of

TECHNOLOGY every organization. Since technology often changes and is a large
STRATEGIC investment for most organizations, it is important that IT be a part of all
PLAN strategic plans.

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 5. Crown Corporations Governance Survey

IT Strategic Plan
Yes No Unsure

IT strategic plan has been developed 12% 30% 58%

IT strategic plan is tied into the

12% 30% 58%
organization's overall strategic plan

Recommendation

5.19 Treasury Board should require all Crown corporations to

include information technology strategies in their strategic plan.

RELATIONSHIP 5.20 Although the extent to which an organization can operate

WITH independently of government varies, government holds the ultimate
GOVERNMENT responsibility for a Crown corporation. As such, it is important that the
board have a clear picture of government’s public policy objectives with
respect to the organization.

Relationship with Government

Agree Neither/Neutral Disagree

The board has a clear picture of

government's public policy objectives with 58% 32% 10%
respect to this organization.

I am satisfied with how often the Minister

28% 48% 24%
meets directly with our board

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 5. Crown Corporations Governance Survey

Recommendations

5.21 Treasury Board should ensure Government’s public policy

objectives are clearly communicated to all boards of directors of
Crown corporations.

5.22 Treasury Board should establish a minimum number of board

of directors meetings which departmental ministers, or
representatives, are to attend annually for each Crown corporation.

BOARD 5.23 Board accountability occurs when the board takes responsibility
ACCOUNTABILITY for the activities of the entity, and reports the results to the stakeholders of
the organization. Transparency is a key value in the public sector and it is
important that Crown corporations demonstrate high ethical behaviour,
given that they are utilizing public monies. Transparent public reporting
of such items as strategic plans, annual reports, audited financial
statements, and other accountability information is important to obtaining
and maintaining public trust and confidence.

Board Accountability
Agree Neutral/Neither Disagree

Board does a good job of reporting

56% 28% 16%
organizational performance publicly

Recommendation

5.24 Treasury Board should ensure all boards of directors of Crown

corporations report publically on the mandate and performance of
the organization, on an annual basis.

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 5. Crown Corporations Governance Survey

CONFLICT 5.25 Board members are obligated to act in the best interests of the
OF organization. Individual board members have additional responsibilities
INTEREST beyond sitting on an organization’s board, such as jobs, relationships, or
investments. These additional responsibilities could lead to either an
actual or perceived conflict of interest. It is important that policies be
implemented to reduce the risk of conflicts of interest arising, and that
these policies be communicated to board members and to the staff of the
organization.

Conflict of Interest
Yes No Unsure

I signed a conflict of interest declaration

44% 30% 26%
form when I joined this board

We are required to update and sign the

20% 44% 36%
conflict of interest form annually

Recommendation

5.26 Treasury Board should require all Crown corporations to have

members of its board of directors complete a conflict of interest
declaration form annually.

AUDIT 5.27 An audit committee is a subcommittee of the board of directors.

COMMITTEES The purpose of an audit committee is to provide oversight of the financial
reporting and audit processes. Members of this committee should also be
well informed of the organization’s internal controls and compliance with
applicable laws and regulations. This committee should include members
that are financially literate.

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 5. Crown Corporations Governance Survey

Audit Committees
Yes No Unsure

Board has an Audit Committee 24% 38% 38%

Recommendation

5.28 Treasury Board should require Crown corporations to have an

audit committee.

EVALUATION 5.29 The most senior management position of a Crown corporation

OF CEO (often referred to as Chief Executive Officer (CEO), which is the term we
will use in this report) is responsible for the overall management of the
organization and is typically hired by the board of directors. They are the
main point of communication between the board of directors and the
organization, and are held accountable on their performance by the board
of directors.

Evaluation of CEO
Agree Neither/Neutral Disagree

Board has established clear, measurable

48% 34% 18%
objectives for the CEO's performance

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 5. Crown Corporations Governance Survey

Recommendation

5.30 Treasury Board should ensure standardized performance

evaluations are completed annually for Chief Executive Officers (or
equivalent) of Crown corporations.

BOARD 5.31 Board effectiveness is important, and cannot be measured only by

EVALUATIONS the financial success or lack thereof of an entity, but should focus on how
the board is able to carry out its mandate. A standard approach to
measuring effectiveness is by completing evaluations.

5.32 Evaluations are a helpful tool to aid in the performance and growth
of an individual, group of people, or an organization. They offer feedback
and give an opportunity for reflection and goal setting. They are most
effective when they are transparent on the scope of the evaluation and are
done periodically. As a result, boards who partake in regular evaluations
are seen to be more successful.

Board Evaluations
Yes No Unsure

Conducts a formal evaluation of its

16% 46% 38%
performance

Evaluated on pre-set criteria 12% 46% 42%

Conducts a formal evaluation of the

4% 58% 38%
contribution of individual board members

Provides an assessment of its effectiveness

16% 38% 46%
to the responsible Minister

Recommendation

5.33 Treasury Board should ensure evaluations on the effectiveness

of boards of directors for Crown corporations are completed
periodically. These evaluations should include documented
performance measures which are important to each Crown
corporation.

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 5. Crown Corporations Governance Survey

5.34 As our report includes only selected survey questions and

responses, please see Appendix D for the complete survey and
summarized responses.

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 5. Crown Corporations Governance Survey

APPENDIX A
Page 1 of 2

RECOMMENDATIONS* MANAGEMENT’S OVERALL RESPONSE

Recommendation 5.13 The Functions, Duties and Powers assigned to Treasury Board
Treasury Board should ensure a are outlined in the Financial Administration Act (FAA). Part of
formal board orientation program the duties includes setting rules and guidelines for the
is used by all Crown administration of departments and directing the coordination of
corporations. It should provide a administrative functions among and within department and
clear outline of board roles, reporting entities.
responsibilities, and structural
relationships, along with board Reporting entities are accountable for the administration of their
by-laws and mandates or terms of financial affairs and resources to a Minister or through a
reference. Minister to the Legislative Assembly. Most, if not all, reporting
Recommendation 5.15 entities are established through legislation and through the
Treasury Board should ensure legislation, boards are established and their powers and duties
regular training opportunities for defined.
board members are provided by
all Crown corporations. To assist reporting entities in their administration, the Treasury
Recommendation 5.17 Board Policy and Procedures Manual has been compiled to
Treasury Board should require provide a current source of reference for employees of
the board of directors of all Government departments, Crown corporations and reporting
Crown corporations to document entities. This Manual is intended to assist management in
a strategic plan and regularly administration and in the decision-making process, and provide a
update the plan as the goals and basis for consistent application of policy and procedures
mandate of the organization throughout Government.
change.
Recommendation 5.19 To enhance accountability and assist in stewardship, Treasury
Treasury Board should require all Board will develop a policy that will guide boards and their
Crown corporations to include members by establishing minimum expectations for their
information technology strategies operations, while carrying out their fiduciary function.
in their strategic plan.
Recommendation 5.21 Timeline for completion: December 2021
Treasury Board should ensure
Government’s public policy
objectives are clearly
communicated to all boards of
directors of Crown corporations.
Recommendation 5.22
Treasury Board should establish a
minimum number of board of
directors meetings which
departmental ministers, or
representatives, are to attend
annually for each Crown
corporation.
*Recommendation numbers refer to the paragraph numbers in this chapter.

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 5. Crown Corporations Governance Survey

APPENDIX A
Page 2 of 2

RECOMMENDATIONS* MANAGEMENT’S OVERALL RESPONSE

Recommendation 5.24 See management’s overall response on previous page.
Treasury Board should ensure
all boards of directors of Crown
corporations report publically on
the mandate and performance of
the organization, on an annual
basis.
Recommendation 5.26
Treasury Board should require
all Crown corporations to have
members of its board of
directors complete a conflict of
interest declaration form
annually.
Recommendation 5.28
Treasury Board should require
Crown corporations to have an
audit committee.
Recommendation 5.30
Treasury Board should ensure
standardized performance
evaluations are completed
annually for Chief Executive
Officers (or equivalent) of
Crown corporations.
Recommendation 5.33
Treasury Board should ensure
evaluations on the effectiveness
of boards of directors for Crown
corporations are completed
periodically. These evaluations
should include documented
performance measures which are
important to each Crown
corporation.
*Recommendation numbers refer to the paragraph numbers in this chapter.

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 5. Crown Corporations Governance Survey

APPENDIX B

GOVERNANCE SURVEY
CROWN CORPORATIONS INCLUDED

DEPARTMENT ORGANIZATION
PEI Agricultural Insurance Corporation
Agriculture and Land
PEI Grain Elevators Corporation
Finance PEI
Atlantic Technology Centre Inc.
100417 PEI Inc.
PEI Infrastructure Inc.
Innovation PEI
FTC Enterprise Ltd.
Island Investment Development Inc.
Economic Growth, Tourism and Culture
PEI Century 2000 Fund
Slemon Park Corporation
PEI Museum and Heritage Foundation
Charlottetown Area Development Corporation
Harbourside Management Services Inc.
Summerside Regional Development Corporation
Tourism PEI
Education and Lifelong Learning PEI Student Financial Assistance Corporation
Environment, Water and Climate Change PEI Advisory Council on the Status of Women
PEI Lotteries Commission
PEI Liquor Control Commission
Finance
PEI Cannabis Management Corporation
PEI Self-Insurance and Risk Management Fund
PEI Employment Development Agency
Fisheries and Communities
PEI Marine Science Organization
Health and Wellness Health PEI
Justice and Public Safety PEI Human Rights Commission
Social Development and Housing PEI Housing Corporation
PEI Crown Building Corporation
PEI Energy Corporation
Transportation, Infrastructure and Energy
PEI Renewable Energy Corporation
Island Waste Management Corporation
Environmental Industrial Services Inc.

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APPENDIX C

GOVERNANCE SURVEY
METHODOLOGY AND SCOPE
We identified 32 Crown corporations to participate in the survey. We requested the listing of
board members from Treasury Board which identified 117 board members, some of who sit on
multiple boards. The survey took respondents approximately one hour to complete.

The questions in the survey were a combination of rating scales, order ranking and multiple
choice. Where necessary, based on the question, there were areas to provide comments. The
options for rating scales were as follows:

• Strongly Disagree
• Disagree
• Neutral/Neither
• Agree
• Strongly Agree

For reporting purposes, responses indicating agree and strongly agree were combined for a total
percentage in agreement. Similarly, answers of disagree and strongly disagree were also
combined. Respondents were directed to choose neutral/neither if that was the appropriate
answer, or if they felt the question did not apply to their board.

Crown corporations included in our survey met the following criteria:

- entities included in the Public Accounts Volume I;

- Crown corporations governed by a board of directors that has policy-setting and decision-
making capabilities to provide insight into their corporate organizations;
- each of the board of directors is accountable for their organization to the Legislature through
a Minister;
- wholly owned or controlled by government, as defined by the Public Sector Accounting
Board (PSAB); and
- government organizations (GO) and government business enterprises (GBE), as their
financial performance impacts the Province’s overall performance.

Crown corporations excluded from our survey met the following criteria:

- Crown corporations within the GBE not governed by a board of directors; and
- board of directors which fulfill an administrative, advisory or tribunal role.

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 5. Crown Corporations Governance Survey

APPENDIX D
Page 1 of 19

BOARD OF DIRECTORS GOVERNANCE SURVEY 2020

The purpose of this survey is to examine public sector governance in Prince Edward Island from the
perspective of current board members and senior management of Crown corporations. This survey will
examine board governance practices currently being utilized in the public sector, explore aspects that
serve to enhance effective governance, as well as identify common challenges for the future.

FREQUENTLY ASKED QUESTIONS

1. Is my Board being evaluated?

This survey is NOT an evaluation of your Board. It has been designed to obtain your opinion
and views on a wide variety of governance issues related to serving on a public sector Board of
Directors.

2. Will the information I provide remain anonymous?

All responses will be amalgamated and reported at the aggregate level only. Neither your
views nor any information about any particular Board will be disclosed.

3. What if a survey question does not apply to my Board’s situation?

Not all questions may apply to your board’s particular situation. Further, there are many
governance challenges specific to some public sector Boards that cannot be dealt with within this
survey. If desired, please do not hesitate to add commentary on such matters in the General
Comments section at the end of the survey. Also, use the General Comments section if you wish
to provide further explanations regarding any question, or feel there is an area that is
relevant that has not been covered in our survey.

4. Can I start the survey and come back to complete it later?

Yes, it is possible to start the survey and complete it at a later time. However, you will need to
complete the hold page in order to save and continue later.

5. How long will it take to complete the survey?

It is estimated that the survey will take approximately 60 minutes to complete.

6. What if I sit on more than one Board?

Each participant is only required to participate in the survey once. Therefore, if you sit on
several boards, please identify which Board you choose to respond for at the beginning of
the survey.

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APPENDIX D
Page 2 of 19

7. What if I have further questions that are not addressed here?

If you have questions or concerns with respect to this survey at any time, please do not hesitate to
contact the Office of the Auditor General.

Office of the Auditor General: Sheri Griffin (902) 368-6968

PLEASE RETURN COMPLETED QUESTIONNAIRE BY:

August 14, 2020

Please indicate which board you are completing the survey for:

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APPENDIX D
Page 3 of 19

SECTION A: ABOUT PUBLIC SECTOR BOARD GOVERNANCE

The following are a series of general statements about public sector board governance. Please indicate
the extent to which you agree or disagree with each statement by selecting the number that most closely
reflects your opinion. If the question is not applicable, please select ‘neutral/neither’.

Disagree
Disagree
Strongly

Strongly
Neutral/
Neither
Agree

Agree
%
1. Our Chairperson ensures the business of the Board is being appropriately
0 2 8 44 46
conducted.
2. Our Chairperson sets a professional business and ethical tone. 0 0 6 40 54
3. In this organization, there are too many external barriers to being an
12 52 22 10 4
effective Board.
4. Public pressure sometimes forces our Board to make decisions we would
28 54 12 4 2
not otherwise make.
5. The public does not adequately understand the mandate of this organization
6 16 32 38 8
and the issues it faces.
6. As a Board member of this organization, I feel pressure from too many
36 46 14 2 2
groups with conflicting views.
7. I believe this Board is carrying out its governance responsibilities effectively. 0 6 4 50 40
8. Our Board has the authority required to govern this organization effectively. 0 6 16 54 24

9. Board members vary in terms of whose interests they feel they must
represent on the Board, and in some cases, Board members are
appointed to represent more than one interest.
Primary Secondary Third
From the list below, please indicate the primary interest that
Interest Interest Interest
you feel you represent on this Board by placing the number “1”
beside the item. Then, if necessary, place a “2” and “3” beside
the next two interests you feel you represent on this Board.
%
A geographic region or specific community. 14 11 9
A political party and/or the Minister. 2 9 3
A particular special interest or stakeholder group. 8 9 12
The organization itself. 18 13 24
The clients/users of the organization’s services. 20 22 21
The employees and staff of the organization. 2 18 12
The citizens and taxpayers of Prince Edward Island as a whole. 36 18 18
Other? For confidentiality purposes, any comments provided by respondents are not disclosed in this
report.

Yes No N/A
%
10. Board members are provided with relevant Acts, regulations and by-laws. 90 6 4

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APPENDIX D
Page 4 of 19

SECTION B: BOARD ROLE, FUNCTIONS & RESPONSIBILITIES

The following is a list of possible responsibilities that the Board of Directors may fulfill. On a scale of 1
to 5 in the first column, please indicate how important you feel each responsibility is for a well-
performing Board of your organization. In the second column, please indicate how effective you feel
your Board currently is in performing each of these responsibilities. If the question is not applicable,
please select ‘3’.

IMPORTANCE EFFECTIVENESS
Board Responsibilities (1 = Completely Unimportant (1=Completely Ineffective
5=Extremely Important) 5=Extremely Effective)
1 2 3 4 5 1 2 3 4 5
% %
1. Setting the strategic direction/priorities for the
0 0 10 28 62 2 4 30 38 26
organization.
2. Setting the significant policies by which the
0 0 8 40 52 4 4 22 38 32
organization operates.
3. Ensuring government’s policies, regulations, and/or
0 4 8 42 46 0 4 20 32 44
directives are implemented.
4. Monitoring achievement of Board’s strategic
0 0 6 44 50 0 12 14 38 36
objectives.
5. Approving all significant business decisions for the
0 2 6 44 48 0 4 18 42 36
organizations.
6. Selecting and retaining the CEO. 4 4 22 20 50 6 6 30 22 36
7. Evaluating the performance of the CEO. 4 2 14 26 54 8 12 28 20 32
8. Bringing an external perspective to the organization’s
0 0 8 54 38 0 6 18 44 32
attention.
9. Ensuring the financial resources of the organization
0 0 4 28 68 0 0 12 48 40
are managed in a prudent manner.
10. Ensuring effective IT systems are in place. 4 14 28 30 24 4 10 46 28 12
11. Ensuring effective internal control mechanisms are in
0 2 2 44 52 2 6 14 42 36
place.
12. Collaborating effectively with external stakeholders
0 0 10 48 42 2 6 22 42 28
and organizations.
13. Advocating on behalf of the organization, as required. 2 0 18 44 36 2 2 32 38 26
14. Ensuring all accountability obligations are met. 0 0 2 32 66 2 2 16 30 50
15. Providing input/advice to the Minister on issues that
0 4 6 44 46 8 4 12 42 34
affect the organizations.
16. Others? (Please specify): For confidentiality purposes, any comments provided by respondents are
not disclosed in this report.

Yes No Unsure
%
17. This Board has a mission statement. 54 8 38

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APPENDIX D
Page 5 of 19

SECTION C: BOARD APPOINTMENTS

The following series of statements discusses the appointment process for public sector Boards of
Directors. If the question is not applicable, please select ‘neutral/neither’.

Disagree

Disagree
Strongly

Strongly
Neutral/
Neither

Agree

Agree
%
1. The current composition of board members brings the necessary
2 16 14 42 26
skills and experience to lead this organization effectively.
2. The length of a Board member’s term of service is appropriate. 2 4 16 62 16
3. New Board members are appropriately oriented to the Board when
6 14 18 40 22
appointed.
4. In appointing members, the government consults with us on
4 20 54 14 8
required qualifications and skills.
5. We have identified the skill sets required on this Board and when
vacancies arise, we provide government a list of preferred skills in 4 18 46 20 12
future members.
6. I feel I have been provided with enough training opportunities to
2 16 26 42 14
help me do the governance job required.
7. I often rely on the expertise (financial, legal, industry, IT, etc.) of
10 16 26 38 10
other board members in making my decisions.
8. New board members are not required to fully participate for the first
16 40 40 4 0
year they are on the Board.
9. Government should provide greater governance training/capacity
0 10 40 44 6
building opportunities for public sector board members.
10. We do not have the resources to provide board member training or
6 30 36 22 6
attendance at industry-specific or governance conferences.
11. Most Board members would not take the time to attend industry-
16 42 36 6 0
specific or governance training/conferences.
12. Some board members have been on this Board for too long. 14 56 26 4 0
13. This Board has had an excessive amount of turnover. 18 44 34 4 0
14. It takes too long to fill vacant Board positions when they arise. 10 32 36 16 6
15. There are members of this Board who are not qualified to be on the
24 46 24 2 4
Board of this organization.
16. Overall, I am satisfied with the current method of appointing new
2 14 26 50 8
members to this Board.
17. Any comments/suggestions with respect to the appointment process for public sector Board members?
For confidentiality purposes, any comments provided by respondents are not disclosed in this report.

18. The following is a list of characteristics that board members may bring to their role. On a scale from
1 to 5 please indicate how important each characteristic is to a well-performing Board for your
organization. In the second column, please indicate the extent to which these characteristics are
represented by the current members on this Board. If the question is not applicable, please select ‘3’.

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APPENDIX D
Page 6 of 19

IMPORTANCE EXTENT
Board Member Characteristics (1 = Completely Unimportant (1=Very Low Extent
5=Extremely Important) 5=High Extent)
1 2 3 4 5 1 2 3 4 5
% %
a) Experience in a related industry or sector 0 6 18
32 44 2 4 34 32 28
b) Knowledge of government and public sector 2 16 12
42 28 2 2 50 30 16
c) Representative of community
0 4 10 50 36 0 8 20 54 18
demographics/diversity
d) Prior Board experience 6 18 28 32 16 2 8 26 44 20
e) Representative of a special interest or
6 18 40 28 8 4 10 52 24 10
stakeholder group
f) Financial expertise (CPA, etc.) 2 24 20 42 12 2 16 36 34 12
g) General business/management expertise 0 8 24 48 20 2 6 22 54 16
h) Legal expertise 4 20 30 30 16 12 22 32 26 8
i) IT expertise 16 22 46 14 2 14 26 42 14 4
j) Known political affiliation 52 20 24 2 2 32 16 44 2 6
k) Leadership skills 2 6 4 40 48 4 2 6 52 36
l) Representative of community values/ethics 0 0 18 46 36 0 4 18 50 28
m) Other? For confidentiality purposes, any comments provided by respondents are not disclosed in this
report.

19. In future appointments, what member skills/characteristics would best enhance your Board’s
functioning? (list up to 3)

For confidentiality purposes, any comments provided by respondents are not disclosed in this report.

20. How long have you been a member of this Board? # of Years: 2.9 (average)

For confidentiality purposes, any comments provided by respondents are not disclosed in this report.

Yes No Unsure
%
21. Did you have other public sector Board experience prior to being
56 38 6
appointed to this Board?
22. After your appointment as Board member, did you receive an orientation? 58 28 14
Somewhat
Useful

Useful

Useful
Very

Not

%
If YES, how useful to you was the orientation provided? 78 22 0

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APPENDIX D
Page 7 of 19

23. Any suggestions for improvement to the orientation process for new Board members?

For confidentiality purposes, any comments provided by respondents are not disclosed in this report.

24. What further training opportunities, if any, do you think should be provided to public sector Board
members?

For confidentiality purposes, any comments provided by respondents are not disclosed in this report.

SECTION D: BOARD INFORMATION FOR DECISION-MAKING

This series of statements asks about the information your Board utilizes in decision-making. If the
question is not applicable, please select ‘neutral/neither’.

Disagree
Disagree
Strongly

Strongly
Neutral/
Neither
Agree

Agree
%
1. Information currently provided to the Board:
a. has an appropriate level of detail. 0 6 6 52 36
b. is a complete and fair representation of all facts. 0 6 6 56 32
c. is received in a timely manner for effective decision-making. 0 12 8 52 28
d. provides historical context to the issues being discussed. 0 12 14 54 20
e. gives future-oriented perspectives to the issues being
2 8 20 52 18
discussed.
f. explains any significant issues, changes or problems which
0 6 14 58 22
affect the organization.
g. monitors performance and progress against plan. 4 16 22 42 16
h. allows the Board to make decisions on the efficient and
0 8 8 58 26
effective use of the organization’s resources.
i. is balanced, presenting both the positive and negative impact of
0 6 16 58 20
a particular decision.
2. Information that I am receiving is sufficient to enable me to
0 4 12 56 28
participate in the decision-making of the Board.
3. The Board assesses its information needs on a regular basis. 0 8 20 54 18
4. The amount of material that needs to be reviewed before Board
2 56 24 16 2
meetings is sometimes overwhelming.
5. Information provided to this Board is understandable without being
0 0 16 68 16
over-simplified.
6. In making decisions, I am provided with several alternative courses
2 12 30 46 10
of action from which to select.
7. I rarely ask for information beyond that provided to the Board. 4 36 30 26 4

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APPENDIX D
Page 8 of 19

Disagree
Disagree
Strongly

Strongly
Neutral/
Neither
Agree

Agree
%
8. Our CEO does a good job of advising the Board about issues or
0 4 26 40 30
challenges being faced by the organization.
9. Senior management provides most information orally at meetings. 4 22 32 30 12
10. Performance information provided to the Board by management is
0 10 20 56 14
relevant and in a form that helps us with decision-making.
11. The Board often refers to the strategic plan in making its decisions. 8 14 34 32 12
12. This Board discusses the goals and mandate of this organization on
4 12 18 46 20
a regular basis.
13. The Minister and/or Department provides the organization with
0 12 36 40 12
appropriate information for this Board to do an adequate job.
14. Our Board receives information from the Minister/Department in a
0 14 46 28 12
timely fashion.
15. I am generally satisfied with the information I receive from the
0 10 44 36 10
Minister/Department with respect to this organization.
16. Decisions sometimes have to be deferred or delayed due to lack of
4 34 36 26 0
information.
17. We often challenge the assumptions and rationale behind the
2 30 44 22 2
recommendations being made by management.
18. We almost always agree with management’s recommendations. 0 12 40 44 4
19. I sometimes feel decisions are pre-made prior to the Board meeting. 16 42 24 12 6
20. On occasion, I have felt that the Board was pressured to make a
14 50 22 14 0
decision too quickly.
21. We sometimes are required to make an immediate decision on
10 40 24 26 0
information that is received at the meeting itself.
22. Board is provided with sufficient financial reporting from
0 2 10 58 30
management.
23. The Board receives regular reports on finances/budgets that are
0 6 8 54 32
clear to me.
24. Financial information provided to the Board allows us to fairly
0 6 14 52 28
assess organizational performance.
25. I sometimes feel that we do not have enough time to discuss
10 60 14 14 2
financial/budget issues.
26. I am satisfied with the information the Board receives on IT-related
0 10 46 36 8
matters.
27. This Board obtains external advice or professional expertise when
0 4 28 58 10
needed.
28. Overall, I am satisfied with the amount of external information
2 4 20 60 14
received by the Board.
29. Overall, this Board is presented with the appropriate information for
0 6 8 60 26
decision making.

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APPENDIX D
Page 9 of 19

30. What improvement would you like to see in pre-meeting There were 68 responses in
information? (check all that apply) total to this question
%
Better identification of important issues 15
More data on issues 9
Better Agenda 4
More concise descriptions of issues 7
More timely delivery of materials 12
Elimination of irrelevant materials 3
No changes needed 47
Other? For confidentiality purposes, any comments provided by
3
respondents are not disclosed in this report.

Yes No Unsure
%
31. Does this Board use other information sources to provide information
to it, independent from the reports it receives from senior
management of the organization?
26 38 36
If YES, please specify: For confidentiality purposes, any comments
provided by respondents are not disclosed in this report.

Yes No Unsure
%
32. Is there any information you would like to receive but are not
currently receiving from senior management of the organization?
8 69 23
If YES, please specify: For confidentiality purposes, any comments
provided by respondents are not disclosed in this report.

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APPENDIX D
Page 10 of 19

SECTION E: AUDIT COMMITTEES

Yes No Unsure
%
1. Does your Board have an audit committee: 24 38 38
Complete the rest of this section ONLY if an Audit Committee exists.
The following questions were answered by the respondents who indicated that their Board has an audit
committee.
# Members:
For confidentiality purposes, any
2. How many members on your Audit Committee (including
comments provided by
Committee Chair)?
respondents are not disclosed in
this report.
# Financial:
For confidentiality purposes, any
3. How many members of your Audit Committee have financial
comments provided by
expertise (CPA, etc.)?
respondents are not disclosed in
this report.

Quarterly
Annually

Per Year

Other
Twice
%
4. How many times per year does your Audit Committee meet? 0 33 67 0
Yes No Unsure
%
5. Audit Committee meetings are sufficient in length to adequately
75 17 8
fulfill its responsibilities.
6. The Audit Committee reports regularly to the Board. 92 8 0
7. An orientation and training is provided to Audit Committee
50 33 17
members.
8. The Audit Committee approves and monitors policies for financial
50 33 17
reporting.
9. The Audit Committee reviews management’s framework for
58 25 17
internal control.
10. The Audit Committee has established a process to receive and
25 33 42
investigate complaints.
11. The Audit Committee meets with the external auditor without
50 25 25
management present.
12. Audit Committee holds management accountable to act on the
83 0 17
recommendations of the audit reports (both external and internal).
13. The Audit Committee conducts a formal evaluation of its
8 50 42
performance in fulfilling its mandate.
14. Time required to fulfill Audit Committee functions is excessive. 0 75 25
15. Any comments/suggestions with respect to your Board’s Audit Committee? For confidentiality
purposes, any comments provided by respondents are not disclosed in this report.

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APPENDIX D
Page 11 of 19

SECTION F: BOARD ORGANIZATION & MEETINGS

This series of statements asks about the organization and operations of your Board. If the question is not
applicable, please select ‘neutral/neither’.

Disagree

Disagree
Strongly

Strongly
Neutral/
Neither

Agree

Agree
%
1. Our Board by-laws are appropriate and are reviewed periodically. 2 6 44 36 12
2. There have been instances where the Board by-laws have not been
6 44 42 6 2
followed.
3. I am satisfied with the governance model, approach, or style that
2 4 20 56 18
this Board has adopted.
4. Our Board regularly reviews and updates its governance
4 14 46 28 8
policies/manual.
5. Our Board develops an annual work plan to ensure all governance
6 12 46 28 8
activities are fulfilled.
6. Our Chairperson does a good job of facilitating the Board meetings. 0 4 16 52 28
7. Our Chairperson is a strong leader, but not overly powerful or
0 6 16 46 32
intrusive.
8. The number of Board meetings held per year is sufficient for this
2 8 12 56 22
Board to be effective.
9. Our meetings are short, efficient and usually end on time. 0 16 18 46 20
10. Ample time is devoted to discussion and consensus building at
0 6 10 62 22
meetings.
11. There are members on this Board who spend less time than is
4 62 24 10 0
required to do an adequate job.
12. The decisions of the Board are excessively influenced by the CEO. 10 52 24 10 4
13. I am satisfied with the amount of time spent discussing
0 8 6 72 14
issues/asking questions, rather than listening to presentations.
14. Some members of the Board are overly focused on operational
8 56 22 12 2
issues rather than strategic ones.
15. Attaining quorum is sometimes an issue for this Board. 22 54 14 6 4
16. All Board members have the opportunity to express their views at
0 0 4 54 42
Board meetings.
17. I am generally satisfied with the advice and recommendations
0 6 12 58 24
received from senior management of the organization.
18. I am confident that management openly shares negative or difficult
0 6 16 54 24
information with the Board.
19. The Board has a process for handling urgent matters between
2 6 18 52 22
meetings.
20. The volume of our agendas forces us to move through items overly
4 68 12 12 4
quickly.

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Page 12 of 19

Disagree

Disagree
Strongly

Strongly
Neutral/
Neither

Agree

Agree
%
21. We convene special meetings so that the Board is actively involved
0 6 36 48 10
in resolving critical issues facing the organization.
22. Our Board almost never meets without management present. 0 4 24 56 16
23. In-camera sessions are a standard agenda item and occur at almost
4 24 16 48 8
all meetings, even if only briefly.
24. Our Chairperson probes silent members for their opinions on key
2 18 36 34 10
issues.
25. Our Chairperson often asks for clarification of positions in order to
0 14 12 56 18
ensure understanding.
26. This Board is often simply ratifying decisions already made by the
8 44 22 20 6
CEO and senior management.
27. I sometimes feel that the Board can’t reverse decisions that were
12 62 16 6 4
pre-made by management prior to the Board meeting.
28. Our Chairperson does a good job of resolving conflict and
0 0 24 54 22
achieving consensus on the Board.
29. In my opinion, the current Board is providing less effective
16 54 16 12 2
governance than I would like.
30. Any comments/suggestions with respect to your Board’s organization/meetings? For confidentiality
purposes, any comments provided by respondents are not disclosed in this report.

SECTION G: BOARD PRACTICES

This section discusses various Board practices that your Board may or may not utilize in fulfilling your
governance role. This includes strategic planning, risk management, financial management practices,
handling conflicts of interest and conducting Board evaluations. If the question is not applicable, please
select ‘neutral/neither’.
Disagree

Disagree
Strongly

Strongly
Neutral/
Neither

Agree

Agree

%
1. The Board is actively involved in setting strategic direction and
2 14 24 48 12
priorities for this organization.
2. I am satisfied with the strategic planning process utilized by this
2 10 28 52 8
Board.
3. This Board does a good job of viewing issues strategically. 2 4 18 60 16
4. Our strategic plan and priorities are revisited throughout the year, as
2 10 36 38 14
necessary.
5. We often debate and deliberate over the organization’s priorities. 2 20 34 38 6

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Page 13 of 19

Disagree

Disagree
Strongly

Strongly
Neutral/
Neither

Agree

Agree
%
6. This Board does a good job of identifying and assessing the risks
2 4 16 64 14
facing the organization.
7. This Board and management share a common view of the
0 6 14 66 14
organization’s priorities.
8. Given that Board members are not technical/industry experts, it is
difficult for the Board to have substantive input into the 8 54 26 10 2
strategic/business plan.
9. The Board generally approves the strategic plan without many
0 24 54 22 0
changes to management’s proposal.
10. Annually the Board identifies specific performance objectives that
4 18 38 30 10
it expects the organization to achieve.
11. Management does a good job of measuring organizational
2 10 24 50 14
performance on a variety of indicators.
12. I am satisfied with the performance of the organization in achieving
2 6 32 50 10
the goals established by this Board.
13. When budgeting, this Board allocates resources based on
0 12 52 32 4
organizational performance.
14. The budgets and financial statements are clear and appropriately
0 0 18 58 24
explained to Board members.
15. There are some Board members who do not have the financial
6 40 38 16 0
competency to adequately review budgets and financial statements.
16. Given that overall public policy and funding are set by government,
there is very little impact that the Board can have on the strategic 2 48 30 20 0
plan.
17. Overall, I am satisfied with the financial planning process. 0 6 18 62 14
18. Our Board is actively involved in the risk management process. 0 6 32 54 8
19. Risk management policies have been documented and approved by
2 12 44 32 10
the Board.
20. Our Board often asks risk-oriented, “what if” questions. 2 8 32 50 8
21. In my opinion, appropriate actions are taken to mitigate identified
0 6 20 66 8
risks.
22. Overall, I feel the Board is doing an adequate job of monitoring
0 8 14 70 8
organizational risks (both internal and external).
23. I am satisfied that all conflicts of interest, as well as related party
0 8 22 58 12
transactions, are disclosed to the Board in a timely manner.
24. I have on occasion felt uncomfortable with how a conflict of
22 44 26 6 2
interest was handled on this Board.
25. I feel comfortable in my understanding of the IT-related issues this
2 10 44 40 4
organization faces.
26. IT plays an important and critical role in achieving our
2 8 58 26 6
organization’s mandate.

74 Report of the Auditor General of Prince Edward Island - 2021

 5. Crown Corporations Governance Survey

APPENDIX D
Page 14 of 19

Disagree

Disagree
Strongly

Strongly
Neutral/
Neither

Agree

Agree
%
27. I am confident that this Board is providing effective oversight and
4 6 14 62 14
monitoring of the organization.
28. I am satisfied with what has been accomplished since I’ve been on
2 10 14 52 22
this Board.
29. This Board has established measures that evaluate the effectiveness
6 24 30 32 8
of the Board as a whole.
30. I believe positive improvements to Board performance would result
4 8 46 36 6
from conducting Board evaluations.
31. Our Board governance practices have been improving and I believe
0 8 38 50 4
will continue to do so.
32. An annual report is prepared by the organization. 0 0 22 56 22
33. Overall, this Board provides sound governance and financial
2 4 10 64 20
oversight.

Board Practices: Strategic Planning Yes No Unsure

%
1. A documented strategic plan exists. 52 24 24
2. The strategic plan is updated annually. 32 40 28
3. We hold an annual Board retreat to discuss strategic issues. 20 58 22
4. Specific time is set aside at Board meetings to deal with strategic
28 50 22
planning issues.
5. Our strategic plan is publicly available on our website. 20 32 48
6. The Minister and/or Department is provided a copy of our strategic
34 26 40
plan.
7. We get feedback from the Minister/Department on a timely basis
20 32 48
regarding our strategic plan.
8. The Minister endorses our strategic plan. 22 26 52
9. Our strategic plan is reviewed and approved by Treasury Board
24 24 52
and/or Executive Council.
10. Our strategic plan is provided to the Legislative Assembly as part of
22 24 54
the budget approval process.

Report of the Auditor General of Prince Edward Island - 2021 75

 5. Crown Corporations Governance Survey

APPENDIX D
Page 15 of 19

Board Practices: Risk Management Yes No Unsure

%
1. A documented risk management process exists. 32 22 46
2. We review risk management issues as part of our strategic planning
38 28 34
process.
3. Risk management issues are regularly included on our Board agenda. 38 38 24
4. Our Board has specified the scope and frequency of the risk reports
26 48 26
we receive from management throughout the year.
5. Internal control policies have been documented and approved by the
48 22 30
Board.
6. IT risks have been identified and assessed. 30 30 40

Quarterly

Annually
Monthly

Only as
Needed
Never

Other
7. How often are risk management reports received from management. 8 10 4 36 24 18
8. How often are IT matters included on the Board’s Agenda? 2 0 0 72 16 10

Board Practices: Financial Management Yes No Unsure

%
1. The Board approves the annual budget. 88 4 8
2. Allocation of resources are linked to the organization’s strategic plan. 56 18 26
3. Financial statements are approved by the Board. 94 2 4
4. The Board is provided with formal explanations from management to
84 0 16
account for significant variances between budget and actual.
5. Our annual report and financial statements are publicly available on our
58 10 32
website.
6. Our annual report provides both financial and non-financial
80 4 16
performance information.
7. An IT strategic plan has been developed. 12 30 58
8. The IT strategic plan has been tied into the organization’s overall
12 30 58
strategic planning document.

Board Practices: Conflicts of Interest Yes No Unsure

%
1. A conflict of interest policy exists for the organization and has been
58 16 26
clearly communicated to all staff.
2. A conflict of interest policy exists for the Board of Directors. 64 6 30
3. I signed a conflict of interest declaration form when I joined this Board. 44 30 26
4. We are required to update and sign the conflict of interest form annually. 20 44 36

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 5. Crown Corporations Governance Survey

APPENDIX D
Page 16 of 19

Board Practices: Evaluations Yes No Unsure

%
1. The Board conducts a formal evaluation of its performance. 16 46 38
2. The Board is evaluated on pre-set criteria. 12 46 42
3. Board evaluations have resulted in changes being made to Board
10 46 44
practices.
4. The Board conducts a formal evaluation of the performance of each of
6 50 44
its Committees.
5. The Board conducts a formal evaluation of the contribution of individual
4 58 38
Board members.
6. The Board provides an assessment of its effectiveness to the Minister. 16 38 46
Annually Other
%
7. How frequently are Board evaluations conducted: 12 88

1. Any comments/suggestions with respect to any of your board’s practices?

For confidentiality purposes, any comments provided by respondents are not disclosed in this report.

2. What Board practice and/or activity do you see as the main challenge going forward for your Board?

For confidentiality purposes, any comments provided by respondents are not disclosed in this report.

SECTION H: BOARD RELATIONSHIP WITH ORGANIZATION

This series of statements discusses various aspects of the Board’s relationship with the organization and
its senior management. If the question is not applicable, please select ‘neutral/neither’.
Disagree

Disagree
Strongly

Strongly
Neutral/
Neither

Agree

Agree
%
1. We have been provided a tour of the organization and met key staff
4 16 20 38 22
members.
2. The Board has an appropriate level of involvement with the
0 6 32 52 10
organization and its staff.
3. The Board has established clear, measurable objectives for the
4 14 34 36 12
CEO’s performance.
4. The accountability relationship of the CEO to the Board is difficult
6 32 44 12 6
as the CEO is appointed directly by government.
5. The Board has the authority to hire and/or fire the CEO. 8 18 58 12 4
6. The Board has a specific process and criteria for recruiting and
10 12 64 14 0
appointing a CEO.

Report of the Auditor General of Prince Edward Island - 2021 77

 5. Crown Corporations Governance Survey

APPENDIX D
Page 17 of 19

Disagree
Disagree
Strongly

Strongly
Neutral/
Neither
Agree

Agree
%
7. Board does a good job of holding management accountable for the
2 8 36 48 6
overall performance of the organization.
8. Our CEO does a good job of implementing the Board’s decisions. 0 2 26 54 18
9. The Board annually conducts performance evaluations of the CEO,
8 12 52 20 8
based on pre-set criteria.
10. All Board members are involved in the CEO’s performance
10 18 48 16 8
evaluation.
11. I sometimes feel that the Chairperson is overly influenced by
16 54 22 4 4
management.
12. This Board becomes too involved in day-to-day management
16 64 20 0 0
decisions.
13. Management is receptive to constructive feedback provided by the
0 2 24 64 10
Board.
14. All Board members are appropriately independent of senior
4 8 24 52 12
management.
15. CEO expenses are reviewed and approved by the Chair (or
4 2 58 30 6
delegated to a Committee/Board member).
16. We have sufficient flexibility to compensate our CEO
8 10 58 20 4
appropriately.
17. The Board reviews and approves all bonus or supplementary
6 8 64 20 2
payments made to the CEO.
18. We often get presentations from senior managers, other than the
0 26 36 30 8
CEO and CFO.
19. I don’t feel it is right for me to second guess the decisions made by
senior management of the organization, who are experienced 20 36 34 8 2
professionals.
20. I can think of an instance where the CEO has not acted in
24 46 30 0 0
accordance with a decision of the Board.
21. I feel most accountable to the employees of this organization for the
4 24 56 14 2
impact of my decisions.
22. The Board has a productive relationship with senior management. 0 4 20 62 14
23. Overall, I am satisfied with the Board’s current relationship with its
2 2 24 48 24
CEO.
Yes No Unsure
%
24. CEO is a member of the Board, with full voting privileges. 16 66 18
Too About Too
Much Right Little
%
25. In my opinion, the authority this Board has allowed the CEO is: 8 92 0

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 5. Crown Corporations Governance Survey

APPENDIX D
Page 18 of 19

SECTION I: BOARD ACCOUNTABILITY

This series of statements asks about your Board’s various accountability relationships, including
government and the public. If the question is not applicable, please select ‘neutral/neither’.

Disagree

Disagree
Strongly

Strongly
Neutral/
Neither

Agree

Agree
%
1. The Board has a clear understanding of its legislative mandate. 0 4 16 64 16
2. The accountability requirements of this Board are clearly
0 8 18 60 14
understood by all Board members.
3. The Board has a clear picture of government’s public policy
0 10 32 48 10
objectives with respect to this organization.
4. The shared authorities between our Board and government lead to
0 24 54 18 4
ambiguities in our role.
5. The vision and strategic direction of this organization are aligned
0 10 44 40 6
with those of government.
6. The Minister and/or Department provides this Board with a
2 14 50 34 0
consistent message about government expectations.
7. Sometimes, the public policy initiatives that the government
expects the Board to undertake are not compatible with our 2 18 64 16 0
operational performance objectives.
8. The Minister/Department often make decisions without adequately
4 28 48 16 4
understanding the impact on our organization.
9. I feel our Board is overly constrained by government legislation
8 46 42 4 0
and/or regulations.
10. This Board is not independent enough of government to make
12 40 34 14 0
effective decisions.
11. This organization has sufficient influence over provincial policy
2 34 36 28 0
decisions that affect us.
12. I am satisfied with how often the Minister meets directly with our
10 14 48 24 4
Board.
13. We have been proactive in trying to assist the Minister/Department
0 4 34 48 14
in understanding our issues and funding needs.
14. Overall, I feel this Board has a very effective relationship with the
2 8 30 50 10
Minister/Department.
15. I feel most accountable to government for the impact of my
4 28 30 34 4
decisions.
16. At the end of the day, government is most responsible and
0 10 34 46 10
accountable for this organization to the citizens of PEI.
17. I believe that government will take action if the Board acts in a
0 10 24 60 6
manner that is inconsistent with its mandate.
18. This Board is accountable for all actions of the organization. 0 6 22 64 8

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 5. Crown Corporations Governance Survey

APPENDIX D
Page 19 of 19

Disagree

Disagree
Strongly

Strongly
Neutral/
Neither

Agree

Agree
%
19. I feel most accountable to the community for the impact of my
0 6 34 36 24
decisions.
20. I feel that this Board does a good job of reporting organizational
2 14 28 48 8
performance publicly.
21. The accountability requirements and reporting obligations to the
0 2 26 68 4
Minister and/or Department are clear.
22. I believe our Board adequately considers the interests of key
0 4 12 68 16
stakeholders in making its decisions.
23. The Board ensures appropriate and understandable accountability
2 6 30 54 8
information is provided to all stakeholders, including the public.
24. Our annual report expressly indicates our goals and reports our
2 8 34 50 6
achievements against those goals.
25. Government does not overly interfere in the affairs of this board
2 4 30 58 6
and organization.
26. Annual reports of our organization receive adequate scrutiny by the
0 10 60 24 6
Legislative Assembly or its committees.
27. I would say the relationship between government and this
0 0 54 42 4
Board/organization is improving.
28. Overall, I feel that this Board adequately fulfills its accountability
0 2 8 72 18
to the Minister.
29. What do you see as the key challenges for this board in dealing with the Department and/or Minister?
For confidentiality purposes, any comments provided by respondents are not disclosed in this report.
30. What changes, if any, would you recommend to improve the relationship between your Board and
government? For confidentiality purposes, any comments provided by respondents are not disclosed
in this report.

GENERAL COMMENTS

While this survey has covered a wide-range of issues that influence the governance of public sector
Boards, there may be areas we may have missed that you consider important. Any further comments or
specific issues you would like to share with us or bring to our attention would be most appreciated.

For confidentiality purposes, any comments provided by respondents are not disclosed in this report.

80 Report of the Auditor General of Prince Edward Island - 2021

 6. REPORT IN ACCORDANCE WITH
CLIMATE LEADERSHIP ACT
6.1 The Climate Leadership Act (the Act) became official on April 1,
2019. The purpose of the Act is to charge a levy on carbon for purchasers
and consumers of fuel, in an effort to reduce greenhouse gas emissions. In
return, the Province has committed to return incremental revenue from the
carbon levy back to Islanders in the form of rebates, credits, rate
reductions or fee reductions. The Minister of Finance is responsible for
the administration of this Act.

6.2 The Act stipulates that there will be a levy on fuel at rates as listed
in the Act. The levy will generally be collected by registered agents and
remitted to the Government on a regular basis. There are special rules
around items such as mixtures and blends of fuels and rebranded fuel. The
Act does provide certain exemptions and provides details on offences and
penalties that may be issued.

6.3 In accordance with Section 2(3) of the Act, the Auditor General is
responsible for reporting annually to the Legislative Assembly on the
amount of the levy collected under the Act, and the amounts returned to
consumers, businesses and municipalities. This is the first year of
reporting under the Act and it covers the period of April 1, 2019 to March
31, 2020.

6.4 For the period of April 1, 2019 to March 31, 2020, a total of
$13,081,837 was collected by the Province as carbon levy revenue under
the Act. This balance was returned to Islanders through the following
initiatives: reduction in gasoline tax rates, free drivers’ licenses, reductions
in motor vehicle registration costs and a reduction in transit fees. These
initiatives totaled $18,018,442 over this period, broken down as follows:

Reduction in gasoline tax $10,992,245

Driver’s license and voluntary ID fees (100% subsidy) 4,573,486
Registration of motor vehicles (various subsidies)* 2,362,327
Transit fees (10% subsidy) 90,384
$18,018,442

* Majority of subsidies provided relate to fossil fuel powered vehicles at 20% of motor vehicle
registration fees. Other subsidies were provided at 50% of registration fees for non-plug-in hybrid
vehicles and 100% of registration fees for electric or plug-in hybrid electric vehicles.

Report of the Auditor General of Prince Edward Island - 2021 81

 6. Report in Accordance with Climate Leadership Act

6.5 The total returned to Islanders during the period of April 1, 2019 to
March 31, 2020 was $4,936,605 higher than the carbon levy collected.
The excess spending constitutes a net loss for the Province.

6.6 It should be noted that additional initiative spending, not included

above, took place prior to the Act coming into effect. In anticipation of
the carbon levy being implemented on April 1, 2019, Government
introduced several initiatives with an earlier effective date. The most
significant initiatives were gasoline tax rate reductions, free drivers’
licenses and motor vehicle registration subsidies. The early
implementation of these initiatives commenced on December 29, 2018,
and resulted in the reduction in revenues to the Province totalling
approximately $4 million up to March 31, 2019. The breakdown of
foregone revenues due to the early implementation of initiatives is as
follows:

• Gasoline tax revenues $2.1 Million

• Driver’s license fees $1.3 Million
• Motor vehicle registration fees $0.6 Million

6.7 Various initiatives including free drivers’ licenses and registration

fee reductions for fossil fuel-powered motor vehicles, are no longer in
place effective January 1, 2020. A new five year Prince Edward Island
Active Transportation Fund replaced these initiatives. Projects under this
fund will begin in the 2021 fiscal year, and will help build new walking
and bike paths, install paved shoulders, and better connect existing
walking and cycling trails, to grow PEI’s active transportation network.

82 Report of the Auditor General of Prince Edward Island - 2021

 7. REPORT IN ACCORDANCE WITH
GOVERNMENT ADVERTISING STANDARDS ACT
7.1 The Government Advertising Standards Act (the Act) sets out
standards that all government advertising must meet. When requested
under the Act, the Auditor General is responsible for examining certain
government advertisements, to determine whether the legislated standards
have been met, and that advertisements are not partisan in nature.

7.2 Under Section 5(1), a head of a government office may request the
Auditor General to examine a specific advertising item not yet made
public, to determine whether the item will meet the standards set out in the
Act.

7.3 A Member of the Legislative Assembly may also make a written

complaint to the Auditor General under Section 6(1), that the specified
advertisement identified in the complaint does not meet the standards set
out in the Act.

7.4 In accordance with Section 9(1) of the Act, the Auditor General is
required to report annually to the Speaker of the Legislative Assembly
about any matter that is considered appropriate to report under this Act.

7.5 One request was received during the year, dated September 24,
2020, under Section 5(1) of the Act. The proposed advertising item was
determined to meet the advertising standards established in the
Government Advertising Standards Act.

Report of the Auditor General of Prince Edward Island - 2021 83

 8. UPDATE ON COVID-19 SPECIAL EXAMINATION
CHAPTER SUMMARY

8.1 On April 10, 2020, the Honorable Dennis King requested the
Auditor General, under Section 14(d) of the Audit Act, to undertake a
special assignment to examine Government’s COVID-19 pandemic
response. In particular, the Auditor General was requested to complete a
financial examination of the Provincial Government’s COVID-19
programming and supports, and the special warrants associated with
COVID-19 for the period commencing March 13, 2020.

8.2 In the request from Executive Council, we were asked to report

back by August 1, 2021. As we obtained a better understanding of the
various funding periods of the COVID-19 programs, we presented a 3-
phased approach to reporting to Executive Council. The phases consist of
the following:

• Phase 1: Includes programs paid using the Emergency Contingency

Fund with application deadlines up to and including August 31, 2020.
We plan to report on Phase 1 in June 2021. We will complete follow-
up on this Phase approximately one year after reporting, rather than
our typical 3 year cycle.
• Phase 2: Includes loan programs, as well as the remaining programs
from the Emergency Contingency Fund, with application deadlines
after August 31, 2020; and
• Phase 3: Programs established using the COVID-19 Response and
Recovery Contingency fund of $65 million.

Phase 2 and Phase 3 both include ongoing programs and programs not yet
established. Expected reporting timelines for Phase 2 and Phase 3 have
not yet been established.

8.3 The objective of Phase 1 of our audit is to determine whether the

Province of PEI:

• obtained appropriate authorizations for financial support programs

initiated in response to COVID-19; and
• maintained appropriate oversight and controls over disbursements
made under these programs.

84 Report of the Auditor General of Prince Edward Island - 2021

 8. Update on COVID-19 Special Examination

8.4 Our Office is currently in the examination phase of Phase 1. The

programs within this phase are funded from the COVID-19 Emergency
Contingency Fund, which was authorized by Treasury Board on March 16,
2020. Extensions to the fund were authorized on April 8, 2020 and
April 22, 2020.

8.5 Exclusions from the scope of our audit include deferral programs,
programs paid through existing departmental budgets, rather than through
the COVID-19 Emergency Contingency Fund, and extensions of existing
programs, such as employment programs.

8.6 Testing of Phase 1 includes samples from 21 programs with total

budgets amounting to $52.8 million. Exhibit 8.1 outlines the budgeted
expenditures broken down by the appropriate Department or Crown
corporation.

EXHIBIT 8.1
BUDGETED EXPENDITURES BY DEPARTMENT OR CROWN
PHASE 1

Department of Transportation,
Infrastructure and Energy ($1.9M -
3.6%)
Department of Social Development
and Housing ($2.6M - 4.9%)

Department of Education and

Lifelong Learning ($4.4M - 8.3%)

Department of Agriculture and

Land ($5.1M - 9.7%)

Innovation PEI ($12.0M - 22.7%)

Department of Economic Growth,

Tourism and Culture ($26.7M -
50.6%)

* Included in our Phase I work, but not included in the above chart, due to the limited dollar
amount, is $100,000 in expenditures for the Department of Finance

Report of the Auditor General of Prince Edward Island - 2021 85

PREVIOUS RECOMMENDATIONS
 9. FOLLOW-UP ON PERFORMANCE AUDITS
2017 AND 2018
CHAPTER SUMMARY

Why it’s important

Our performance audits and examinations include recommendations to

improve the management of Government programs and protect the
interests of taxpayers. It is important that MLAs and Islanders receive a
regular update on the progress Government is making in implementing our
recommendations.

What we found

The 2017 and 2018 annual reports of the Auditor General included 60
recommendations from 6 performance audits and examinations.

At October 31, 2020:

• 77 percent of 2017 recommendations were implemented; and

• 50 percent of 2018 recommendations were implemented.

Management of the audited department, Crown corporation or agency has

had a number of years to implement these recommendations. Action has
been taken on some of the outstanding recommendations, but they are not
fully implemented. Management have advised that some of the delays are
due to staff shortages, the implementation of IT systems and COVID-19
restrictions affecting departments’ functions.

BACKGROUND

9.1 Every year, we make recommendations specific to each of the

performance audits and examinations conducted by our Office. The
recommendations made in each audit report 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.

Report of the Auditor General of Prince Edward Island - 2021 89

 9. Follow-up on Performance Audits 2017 and 2018

9.2 We report on the implementation of recommendations three years

after the audit was initially reported. We follow up again on any
outstanding recommendations for one additional year.

9.3 This year, we are providing information on the status of

implementation of recommendations made in our 2017 and 2018 annual
reports. We requested management to indicate whether the
recommendations were complete, or not complete, as of October 31, 2020.
For each recommendation that management reported as complete, we
requested details on the action taken, and we conducted follow-up work to
determine if the recommendation was implemented. We did not do any
follow-up work on any recommendations reported by management as not
complete.

9.4 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.

9.5 The following section provides information on the results of our

work. Appendix A and Appendix B list all recommendations from
performance audits and examinations included in our 2017 and 2018
annual reports, and the status of implementation as of October 31, 2020.
Further details on our objective, scope, and conclusion are included in
Appendix C of this chapter.

9.6 Appendix D lists all recommendations reported by management as

not complete. We have not conducted any work and provide no assurance
on these management responses. We encourage readers of this report to
refer to Appendix D, because management has provided a detailed update
on the status of implementation of outstanding recommendations. In many
cases, management has indicated that significant work has been
undertaken, and the outstanding recommendation(s) are close to being
implemented.

OBSERVATIONS

IMPLEMENTATION 9.7 For several years we have been reporting, based on limited
RATES assurance, the status of implementation of recommendations included in
previous annual reports. Exhibit 9.1 shows the implementation rates of

90 Report of the Auditor General of Prince Edward Island - 2021

 9. Follow-up on Performance Audits 2017 and 2018

our 2012 to 2018 recommendations. These rates are based on the

information in our annual report at the time our follow-up work was
completed. We will follow up on outstanding 2018 recommendations
again next year.

EXHIBIT 9.1
PERFORMANCE AUDITS AND EXAMINATIONS
IMPLEMENTATION OF RECOMMENDATIONS
ANNUAL REPORT YEARS

100%
93%
90% 87%

80% 76%
77%
70%
64%
60%
50% 50%
40%
30% 33%

20%
10%
0%
2012 2013 2014 2015 2016 2017 2018*
*2018 to be updated in 2022

2017 ANNUAL 9.8 Exhibit 9.2 shows the overall rate of implementation of
REPORT recommendations for each audit included in our 2017 Annual Report.

EXHIBIT 9.2
STATUS OF IMPLEMENTATION OF RECOMMENDATIONS*
BASED ON LIMITED ASSURANCE
2017 ANNUAL REPORT

Implemented
Audit Total Outstanding
# Percent
Climate Change 8 1 7 88%
Office of the Public Trustee 12 3 9 75%
Seniors Housing Program 10 3 7 70%
Total* 30 7 23 77%
*As of October 31, 2020

Report of the Auditor General of Prince Edward Island - 2021 91

 9. Follow-up on Performance Audits 2017 and 2018

9.9 This is the second year that we have followed up on the

recommendations reported in our 2017 Annual Report. Overall, we
concluded that 77 percent of these recommendations were implemented, in
comparison to only 43 percent from last year. The paragraphs that follow
provide additional information on the outstanding recommendations.

Climate Change

What our original audit examined

9.10 The Department of Communities, Land and Environment (now the

Department of Environment, Energy, and Climate Action) is responsible
for administering the Environmental Protection Act. The purpose of the
Environmental Protection Act is to manage, protect, and enhance the
environment.

9.11 In 2015, the Office of the Auditor General of Canada, and all
provincial legislative offices, agreed to work together on a collaborative
audit initiative regarding climate change. In the spring of 2016, all
partners agreed to work together to determine the extent to which federal,
provincial, and territorial goverments in Canada are meeting their
commitments to reduce greenhouse gas emissions, and to adapt to climate
change risks. Each participating office issued a separate report based on
the work conducted within their respective jurisdiction. A collaborative
audit report was issued as well, which incorporated the issues identified by
all participating offices.

9.12 The objectives of our audit were to determine whether the

Government of Prince Edward Island:

• had made progress towards commitments to reduce greenhouse gas

emissisions; and
• had taken action to adapt to climate change risks.

Status of recommendations

9.13 As a result of our audit, we made eight recommendations.

Management indicated that seven recommendations were complete. Based
on our work, we agreed that seven recommendations were complete as of
October 31, 2020.

92 Report of the Auditor General of Prince Edward Island - 2021

 9. Follow-up on Performance Audits 2017 and 2018

Status Date Implemented Outstanding Total

October 31, 2020 7 1 8

9.14 The outstanding recommendation relates to the preparation of a

province-wide risk assessment for adaptation to climate change that
identifies, analyzes and prioritizes the key risks.

9.15 Because this recommendation is still outstanding, there is a risk

that resources for adaptation may not be directed to the most significant
climate change risks. This could leave Islanders potentially vulnerable
and subject to higher financial costs to address the negative effects of
climate change. Management has provided a detailed update on the status
of the implementation of the province wide risk assessment in
Appendix D.

Office of the Public Trustee

What our original audit examined

9.16 The Public Trustee is responsible to protect the financial interests

of some of Prince Edward Island’s most vulnerable residents. The Office
of the Public Trustee responds to the needs of those who are deemed
medically incapable of making their own financial decisions, or where
required by order of the court. At the time of our audit, the Public Trustee
was responsible for approximately 300 clients.

9.17 The objectives of our audit were to determine whether the Public
Trustee Office:

• had adequate processes to safeguard and administer client assets held

in trust; and
• publicly reported on its performance.

Status of recommendations

9.18 Our original audit included 12 recommendations. Management

indicated that all 12 recommendations were complete. Based on our work,
we concluded 9 recommendations were implemented.

Report of the Auditor General of Prince Edward Island - 2021 93

 9. Follow-up on Performance Audits 2017 and 2018

Status Date Implemented Outstanding Total

October 31, 2020 9 3 12

9.19 The outstanding recommendations relate to:

• the lack of documentation of key summary information for each client;

• accounting system not fully implemented to facilitate accurate
reporting; and
• the lack of performance reporting.

9.20 Based on the work we conducted, we noted the Public Trustee

Office has made progress towards implementing these outstanding
recommendations. The Public Trustee Office is currently in the process of
implementing a system to aid in compiling key summary information for
each client and to facilitate accurate reporting. All new clients since
August 10, 2020 are processed in the new system. Ongoing data entry
continues for existing Public Trustee clients. The Public Trustee has also
drafted an annual report, and indicated that they intend to publish this
report annually.

9.21 Until these recommendations are fully implemented, the risks they
were intended to address remain:

• inability to generate accurate, timely reports of client assets and

liabilities; and
• lack of transparency and accountabilty in public reporting.

Seniors Housing Program

What our original audit examined

9.22 The Seniors Housing Program was established to provide

quality housing to low income seniors who are unable to maintain their
existing homes, and are unable to obtain suitable housing through their
own resources. At the time of our audit, the province owned 1,117
seniors housing units located in 32 communities across the province.

94 Report of the Auditor General of Prince Edward Island - 2021

 9. Follow-up on Performance Audits 2017 and 2018

9.23 The objectives of our audit were to determine whether the Housing
Services Division:

• developed a long-term plan for seniors housing to address the housing

needs of Island seniors;
• performed assessments on applicants and selected new tenants in
compliance with policy; and
• maintained an accurate, up-to-date listing of applicants waiting for
placement.

Status of recommendations

9.24 Our original audit included 10 recommendations. Management

indicated that all ten recommendations were complete. Based on our
work, we have determined that seven recommendations were complete.

Status Date Implemented Outstanding Total

October 31, 2020 7 3 10

9.25 The outstanding recommendations relate to:

• ensuring housing officers comply with policy in assessing applicants;

• implementing a quality control review process for assessments; and
• reporting publicly on the performance of its low income Seniors
Housing Program.

9.26 Because these recommendations have not been implemented, the

following risks remain:

• assessments used to place applicants for housing may have inaccurate

and incomplete information, which could impact housing placement
decisions; and
• lack of performance measurement and accountability.

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 9. Follow-up on Performance Audits 2017 and 2018

2018 ANNUAL 9.27 This is the first year we have assessed the implementation of our
REPORT 2018 recommendations. Overall, we concluded that 50 percent of these
recommendations were implemented. Exhibit 9.3 provides a breakdown
of the results.

EXHIBIT 9.3
STATUS OF IMPLEMENTATION OF RECOMMENDATIONS*
BASED ON LIMITED ASSURANCE
2018 ANNUAL REPORT

Implemented
Audit Total Outstanding
# Percent

Social Assistance Program 11 6 5 45%

Medication Controls: Institutional Pharmacy
15 9 6 40%
Program
Office of the Public Guardian 4 0 4 100%
Total* 30 15 15 50%
*As of October 31, 2020

Social Assistance Program

What our original audit examined

9.28 Social Assistance, as defined by the Social Assistance Act, includes

both financial assistance and social services. The Social Assistance
Program provides financial support for basic necessities like food, shelter,
clothing, household, and personal requirements for an individual, or
family in need. The amount of financial support depends on factors such
as income, family size, ages of family members and whether the home is
rented or owned.

9.29 The objectives of our audit were to determine whether:

• the Department assessed, authorized, and provided benefits in

accordance with regulations and policy;
• case plans were completed and updated for social assistance recipients
in accordance with policy; and
• social assistance rates and financial resource exemptions were
submitted annually to Executive Council for review and approval.

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 9. Follow-up on Performance Audits 2017 and 2018

In addition, we examined the Department’s processes for measuring and

reporting on the achievement of program objectives.

Status of recommendations

9.30 Our original audit included 11 recommendations. Management

indicated that eight recommendations were complete. Based on our work,
we have determined that five recommendations were complete.

Status Date Implemented Outstanding Total

October 31, 2020 5 6 11

9.31 The outstanding recommendations relate to:

• reporting on the administration of the Social Assistance Program to the

Legislative Assembly, including program goals and results achieved;
• providing information annually to Executive Council to support the
review of social assistance rates and exemptions;
• completing annual reviews of recipients eligibility and needs in
accordance with Social Assistance Act Regulations;
• conducting and documenting home visits in accordance with program
policy;
• advising all applicants in writing of the decision regarding social
assistance, amounts approved and the right to appeal; and
• updating case plans for recipients of social assistance in accordance
with policy.

9.32 Management of the Social Assistance Program indicated that they

implemented a new Home Visit Policy effective November 3, 2020. At
the same time, a new policy was implemented requiring staff to advise all
applicants in writing regarding:

• assistance decisions;
• amounts approved; and
• right to appeal.

We will examine the implementation of these policies in our next round of

follow-up work.

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 9. Follow-up on Performance Audits 2017 and 2018

9.33 Because these recommendations have not been implemented, the

following risks remain:

• limited assessment and accountability, on whether the Program is

meetings its objectives and assisting those in need;
• changing needs may not be identified and benefits may be provided to
ineligible recipients;
• inadequate information may be provided to applicants on decisions,
and applicants may not have sufficient information to exercise their
right to appeal; and
• recipient needs may not be met and required services may not be
provided.

Medication Controls: Institutional Pharmacy Program

What our original audit examined

9.34 The Institutional Pharmacy Program provides pharmacy services to

provincially-owned long-term care facilities. All residents in government
operated long-term care homes are automatically eligible under the
program, and receive full coverage for any medications approved on the
PEI Pharmacare Formulary. At the time of our audit, this was 1 of 13
subsidized pharmacare programs administered by the Provincial
Pharmacy.

9.35 The objective of our audit was to determine whether medication

for residents of provincially-owned long-term care facilities was
adequately controlled.

9.36 Subsequent to our original audit, Health PEI has been developing a
planned, phased in approach, transitioning the service delivery model of
medications for long-term care residents from the Provincial Pharmacy to
a unit dose packager at the Queen Elizabeth Hospital (QEH). All long-
term care facilities, with the exception of Sherwood Home, now receive
specific medication strips packaged by an automated unit dose packager at
the QEH.

9.37 Per management, aside from the specific medication strips which
facilitate tracing, there is a limited quantity of non-patient specific
controlled substances on site at long-term care facilities. Management

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 9. Follow-up on Performance Audits 2017 and 2018

also advised that access to all narcotic and controlled substances at these
facilities is limited to those with keys.

9.38 The transition to the service delivery model described above,

results in most narcotics and controlled substances being stocked and
dispensed from the QEH pharmacy. We did not audit or evaluate the
operations of the QEH pharmacy.

9.39 Although inventory held at the Provincial Pharmacy has been

greatly reduced, the recommendations are still relevant to the inventory for
the operations that remain. Management advised that all narcotics held at
the Provincial Pharmacy are locked in a vault and will no longer be held in
inventory as of March 2021.

Status of recommendations

9.40 Our original audit included 15 recommendations. Management

indicated that 10 recommendations were complete. Based on our work,
we have determined that six recommendations were complete.

Status Date Implemented Outstanding Total

October 31, 2020 6 9 15

9.41 The outstanding recommendations relate to:

• developing policies and procedures to strengthen medication controls,

and improve coordination of the Institutional Pharmacy Program;
• conducting monthly inventory counts of narcotics and controlled drugs
at the Provincial Pharmacy;
• improving controls over dispensing and oversight of ward stock
narcotics;
• documenting a policy on the transportation of medications from the
Provincial Pharmacy;
• establishing a policy on conducting comprehensive medication
reviews for residents of provincially-owned long-term care facilities;
• counting controlled drugs at long-term care facilities;
• implementing policies and procedures to maintain a clear trail of
accountability for all narcotics and controlled drugs;

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 9. Follow-up on Performance Audits 2017 and 2018

• ensuring all unused, discontinued, and expired narcotics and controlled

drugs are returned to the Provincial Pharmacy; and
• documenting procedures for disposal of medications consistent with
federal regulatory requirements.

9.42 Because these recommendations have not been implemented, the

following risks remain:

• expectations regarding the control of medications and the coordination

of the program may not be clearly communicated to staff;
• potential for the diversion of controlled drugs, other than narcotics,
going unidentified at long-term care facilities; and
• potential for delays in the identification of diverted narcotics and
controlled drugs kept at the Provincial Pharmacy.

Office of the Public Guardian

What our original audit examined

9.43 The Office of the Public Guardian responds to the needs of those
deemed medically incapable of making their own personal care decisions
when there are no trusted family or friends available or willing to assume
responsibility. The Public Guardian is responsible to act in the best
interests of guardian clients, and represents some of Prince Edward
Island’s most vulnerable residents.

9.44 The objective of our audit was to determine whether the Office of
the Public Guardian had a well-defined process to support the rationale,
documentation, and approval of care decisions, where a care decision was
defined as a significant health care decision, or a change in a client’s
residence and/or care provider.

Status of recommendations

9.45 Our original audit included 4 recommendations. Management

indicated that all 4 recommendations were completed. Based on our work,
we concluded that all 4 recommendations were implemented.

9.46 We would like to thank the Office of the Public Guardian for
implementing 100% of our recommendations.

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 9. Follow-up on Performance Audits 2017 and 2018

APPENDIX A
Page 1 of 3

2017 ANNUAL REPORT

PERFORMANCE AUDITS AND EXAMINATIONS
RECOMMENDATIONS

Status of
Implementation
Audit Para. Recommendation
as at
Oct 31, 2020
Climate Change
Department of 2.43 The Department of Communities, Land and Environment
Environment, should coordinate provincial strategy development and Complete
Energy and implementation related to climate change.
Climate Action 2.44 The Department of Communities, Land and Environment
(formerly should develop a climate change strategy including both
Communities, mitigation and adaptation which focuses on the key risks and
Land, and vulnerabilities of the province. The strategy should include at
Environment) a minimum
Complete
• objectives;
• planned actions;
• timeframe;
• roles and responsibilities; and
• public reporting requirements.
2.45 Executive Council should approve provincial climate change
Complete
strategies.
2.46 The Department of Communities, Land and Environment
should provide annual public reports on progress made to Complete
mitigate and adapt to climate change.
2.66 Executive Council should establish clearly defined provincial
targets for the reduction of greenhouse gas emissions. These Complete
targets should be publicly communicated.
2.67 The Department of Communities, Land and Environment should
ensure documented implementation plans are completed for all
key mitigation actions. This would include at a minimum:
• assignment of responsibility; Complete
• timelines for each action;
• financial and other resources required; and
• performance measures.
2.76 The Department of Communities, Land and Environment
should prepare a province-wide risk assessment for adaptation
Not Complete
to climate change. This assessment should identify, analyze
and prioritize key risks.
2.77 The Department of Communities, Land and Environment should
ensure documented implementation plans are completed for all
key adaptation actions. This would include at a minimum:
• assignment of responsibility; Complete
• timelines for each action;
• financial and other resources required; and
• performance measures.

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 9. Follow-up on Performance Audits 2017 and 2018

APPENDIX A
Page 2 of 3

2017 ANNUAL REPORT

PERFORMANCE AUDITS AND EXAMINATIONS
RECOMMENDATIONS

Status of
Implementation
Audit Para. Recommendation
as at
Oct 31, 2020
Office of the Public Trustee
Department of 3.25 The Public Trustee Office should document and regularly
Complete
Justice and Public update key summary information on each client.
Safety 3.26 The Public Trustee Office should record the revenues and
Complete
expenses for each client.
3.27 The Public Trustee Office should provide adequate oversight
Complete
for all clients.
3.32 The Public Trustee Office should act in a timely manner to
establish a complete listing and take control of assets and Not Complete
liabilities for each client.
3.33 The Public Trustee Office should reconcile auction proceeds
to the inventory of significant assets and maintain appropriate Complete
documentation.
3.40 The Public Trustee Office should develop and implement
adequate internal controls to safeguard and maintain client’s
financial assets. This, at a minimum, should include
• appropriate segregation of duties;
Complete
• review and approval of documentation to support
disbursements; and
• timely preparation and review of monthly bank
reconciliations.
3.43 The Public Trustee should obtain regular summary reports to
Complete
facilitate oversight of client accounts.
3.47 The Public Trustee Office should maintain organized client
files containing all relevant documentation to support Complete
transactions.
3.57 The Public Trustee Office should take action to implement an
accounting system that facilitates timely, accurate information Not Complete
for management decision making and reporting.
3.67 The Public Trustee Office should establish documented
policies and procedures to guide staff in conducting the work
of the Office. At a minimum, these should include
• administration of client files; Complete
• financial controls;
• managing client investments; and
• contacting known heirs.
3.71 The Office of the Public Trustee should establish documented
Complete
performance measures.

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APPENDIX A
Page 3 of 3

2017 ANNUAL REPORT

PERFORMANCE AUDITS AND EXAMINATIONS
RECOMMENDATIONS

Status of
Implementation
Audit Para. Recommendation
as at
Oct 31, 2020
Office of the Public Trustee (cont’d)
Department of 3.72 The Public Trustee Office should annually report to the public
Justice and Public on its performance. Not Complete
Safety
Seniors Housing Program
Department of 4.28 The Housing Services Division should prepare a long-term
Social plan to address the current and expected future demand for Complete
Development and low income seniors housing.
Housing 4.40 The Housing Services Division should establish a process for
(formerly Family housing officers to verify income, assets, and housing costs at Complete
and Human the time of application.
Services) 4.41 The Housing Services Division should ensure that housing
Not Complete
officers comply with policy in assessing applicants.
4.42 The Housing Services Division should implement a quality
Not Complete
control review process for assessments.
4.52 The Housing Services Division should develop a process to
ensure accurate, relevant wait list information is available for Complete
the Seniors Housing Program on a timely basis.
4.70 The Housing Services Division should ensure placements are
made based on program policy. Exceptions to policy should Complete
be documented and authorized by senior management.
4.71 The Housing Services Division should ensure sufficient
Complete
documentation is maintained to support placement decisions.
4.72 The Housing Services Division should provide guidance to
Complete
housing officers regarding challenging applicants.
4.75 The Housing Services Division should establish performance
indicators as a basis to measure and report on program Complete
performance.
4.76 The Housing Services Division should report publicly on the
performance of its low income Seniors Housing Program. Not Complete

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 9. Follow-up on Performance Audits 2017 and 2018

APPENDIX B
Page 1 of 3

2018 ANNUAL REPORT

PERFORMANCE AUDITS AND EXAMINATIONS
RECOMMENDATIONS

Status of
Implementation
Audit Para. Recommendation
as at
Oct 31, 2020
Social Assistance Program
Department of 2.22 The Department of Family and Human Services should
Social establish performance indicators and targets to measure and
Complete
Development and monitor its progress in achieving the objectives of the Social
Housing Assistance Program.
(formerly Family 2.23 The Department of Family and Human Services should
and Human annually report to the Legislative Assembly on the
Not Complete
Services) administration of the Social Assistance Program including
program goals and results.
2.37 The Department of Family and Human Services should
annually provide information to Executive Council to support
Not Complete
its review of social assistance rates and exemptions from
financial resources.
2.38 The Department of Family and Human Services should ensure
that changes in social assistance rates are approved by Complete
Executive Council prior to implementation.
2.45 The Department of Family and Human Services should
complete annual reviews in accordance with the Social Not Complete
Assistance Act Regulations.
2.48 The Department of Family and Human Services should
conduct and document home visits in accordance with Not Complete
Program policy.
2.54 The Department of Family and Human Services should record
Complete
all applications in the case management system.
2.55 The Department of Family and Human Services should
inform all applicants in writing its decision regarding social
Not Complete
assistance, the reason(s) for the decision, any amounts
approved, and the right to appeal.
2.62 The Department of Family and Human Services should
maintain the internal review function of its Audit Services Complete
Section.
2.65 Management of the Social Programs Division should ensure
social assistance payments are authorized in accordance with Complete
Treasury Board Policy.
2.75 The Department of Family and Human Services should
complete and update case plans for recipients of social Not Complete
assistance in accordance with policy.

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 9. Follow-up on Performance Audits 2017 and 2018

APPENDIX B
Page 2 of 3

2018 ANNUAL REPORT

PERFORMANCE AUDITS AND EXAMINATIONS
RECOMMENDATIONS

Status of
Implementation
Audit Para. Recommendation
as at
Oct 31, 2020
Medication Controls: Institutional Pharmacy Program
Health PEI 3.20 Health PEI should develop policies and procedures to
strengthen medication controls and improve coordination for
Not Complete
management and delivery of the Institution Pharmacy
Program.
3.32 The Provincial Pharmacy should conduct and adequately
document monthly inventory counts of narcotics and Not Complete
controlled drugs.
3.33 The Provincial Pharmacy should investigate all inventory
discrepancies of narcotics and controlled drugs. All
discrepancies should be supported with documentation, Complete
reviewed, and signed off by management. Any unexplained
variances should be reported.
3.34 The Provincial Pharmacy should enforce individual electronic
Complete
login protocols.
3.49 Health PEI should improve controls over dispensing and
oversight of ward stock narcotics for provincially-owned Not Complete
long-term care facilities.
3.50 Provincial Pharmacy staff should have access to essential
information to evaluate the appropriateness of initial
Complete
prescriptions and refill requests prior to dispensing
medication.
3.55 Health PEI should document a policy on the transportation of
medications from the Provincial Pharmacy to the Not Complete
provincially-owned long-term care facilities.
3.60 Health PEI should establish a policy on conducting
comprehensive medication reviews for residents of Not Complete
provincially-owned long-term care facilities.
3.73 Provincially-owned long-term care facilities should ensure
that inventory records for narcotics include the actual amount
Complete
of each drug counted in addition to verification that the count
was completed.
3.74 Provincially-owned long-term care facilities should ensure
controlled drugs are recorded and regularly counted.
Not Complete
Discrepancies should be investigated and unexplained
shortages should be reported.
3.83 Health PEI should implement policies and procedures to
require the Provincial Pharmacy and the long-term care
Not Complete
facilities to maintain a clear trail of accountability for all
narcotics and controlled drugs.

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 9. Follow-up on Performance Audits 2017 and 2018

APPENDIX B
Page 3 of 3

2018 ANNUAL REPORT

PERFORMANCE AUDITS AND EXAMINATIONS
RECOMMENDATIONS

Status of
Implementation
Audit Para. Recommendation
as at
Oct 31, 2020
Medication Controls: Institutional Pharmacy Program (cont’d)
3.84 Provincially-owned long-term care facilities should return all
unused, discontinued, and expired narcotics and controlled Not Complete
drugs to the Provincial Pharmacy.
3.90 Health PEI should develop documented procedures for the
disposal of medications consistent with federal regulatory Not Complete
requirements.
3.91 Documentation supporting the disposal of narcotics and
controlled drugs should be maintained by the Provincial Complete
Pharmacy in accordance with federal regulatory requirements.
3.92 Unserviceable narcotics and controlled drugs should either be
de-natured and disposed of by the Provincial Pharmacy or
Complete
destroyed by a licensed third party in accordance with Health
Canada requirements.
Office of the Public Guardian
Department of 4.17 The Office of the Public Guardian should clearly and
Justice and Public consistently communicate its roles and responsibilities to care Complete
Safety providers.
4.18 The Office of the Public Guardian should define the types of
significant care decisions that must be approved by the Public
Complete
Guardian and formally communicate this information to care
providers.
4.22 The Office of the Public Guardian should document and
implement policies to guide staff in managing key risks and Complete
responsibilities.
4.33 The Office of the Public Guardian should document the
Complete
authorization and rationale for significant care decisions.

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 9. Follow-up on Performance Audits 2017 and 2018

APPENDIX C
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 2017
and 2018 Annual Reports. 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 completed, do not intend to complete, or action no longer
required, to determine if government’s assessment was free from material
misstatement. We did not perform any procedures, and provide no
assurance on recommendations reported by management as not complete.

SCOPE AND The scope of our work included only recommendations from performance
APPROACH audits and examinations included in the 2017 and 2018 annual reports.
We provide limited assurance on those recommendations assessed by
management as complete as at October 31, 2020.

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 9. Follow-up on Performance Audits 2017 and 2018

APPENDIX C
Page 2 of 2

Recommendations made to departments, Crown corporations, and

agencies pursuant to our financial audit work are followed up annually as
part of our financial audit process and are not discussed in this chapter.

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, and are less extensive than 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 as at October 31, 2020:

• 77 percent of 2017 recommendations were implemented; and

• 50 percent of 2018 recommendations were implemented.

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 February 22, 2021, in Charlottetown, Prince Edward Island.

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 9. Follow-up on Performance Audits 2017 and 2018

APPENDIX D
Page 1 of 4

RECOMMENDATIONS REPORTED BY MANAGEMENT

AS NOT COMPLETE AT OCTOBER 31, 2020
2017 AND 2018 AUDITS

We requested a written assessment from management on whether recommendations from our

2017 and 2018 performance audits and examinations were complete or not complete as at
October 31, 2020. This appendix lists all recommendations reported by management as not
complete. We have not conducted any work and provide no assurance on these management
responses. They are presented for information purposes only.

Rec. # Recommendation Management Response

Climate Change
2.76 The Department of Communities, Land and As part of the Climate Change Action Plan 2018-
Environment should prepare a province-wide risk 2023, the Province committed to “assess future
assessment for adaptation to climate change. This climate impacts upon sectors and stakeholders to
assessment should identify, analyze and prioritize help prioritize efforts to adapt to climate change”.
key risks.
In 2019, the Department successfully secured
funding support from Natural Resources Canada for
a province-wide risk assessment. Later in the year,
the Department issued a request for proposals to
complete the risk assessment. The work was
awarded in March 2020. The province-wide risk
assessment will identify, analyze, and prioritize key
risks. A risk assessment framework has been
drafted and consultations with stakeholders were
conducted. Plans for consultation were modified
from in-person sessions to virtual, due to COVID-
19. Indigenous communities have also been
engaged in information sharing. Efforts to estimate
risk of identified climate hazards is currently
underway.

Risk estimation for all climate hazards will be

completed over the next few months, along with the
compilation of the risk library, expert interviews,
and additional rounds of stakeholder engagement
and generation of the final deliverables. The risk
assessment is expected to be completed by June
2021.

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 9. Follow-up on Performance Audits 2017 and 2018

APPENDIX D
Page 2 of 4

RECOMMENDATIONS REPORTED BY MANAGEMENT

AS NOT COMPLETE AT OCTOBER 31, 2020
2017 AND 2018 AUDITS
We provide no assurance on management responses (for information only)

Rec. # Recommendation Management Response

Social Assistance Program
2.37 The Department of Family and Human Services SDH is developing a formal process and summary
should annually provide information to Executive document to facilitate an annual review of all social
Council to support its review of social assistance assistance rates and exemptions and this will be
rates and exemptions from financial resources. brought forward to Executive Council by December
2020. In subsequent years, the annual rate review
will be brought to executive council in September
of each year.
2.45 The Department of Family and Human Services Data on the completion of annual reviews is
should complete annual reviews in accordance monitored monthly by managers and supervisors
with the Social Assistance Act Regulations. and corrective actions are identified and
implemented to ensure compliance.
A new worker caseload management report on
Business Objects was designed to facilitate annual
review monitoring and compliance. A process to
complete annual reviews by mailing out forms for
clients in community care and trustees was
designed and implemented. Ongoing monitoring
and follow ups are being done to ensure
compliance.
2.75 The Department of Family and Human Services Social Programs has developed a collaborative case
should complete and update case plans for management certificate program with UPEI to
recipients of social assistance in accordance with equip Social Supports Coordinators with case
policy. planning skills to improve case plans for Social
Assistance recipients. Social Supports Coordinators
have undergone or are currently undergoing
training.

Social Supports Coordinators have also been

trained on Motivational Interviewing skills which
facilitate their ongoing clients’ case management.

Case plans compliance is monitored monthly by

managers and supervisors. Supervisors support
Social Support Coordinators in embedding the
skills acquired in the Case Management Training
and in improving the quality of the case plan
content.

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 9. Follow-up on Performance Audits 2017 and 2018

APPENDIX D
Page 3 of 4

RECOMMENDATIONS REPORTED BY MANAGEMENT

AS NOT COMPLETE AT OCTOBER 31, 2020
2017 AND 2018 AUDITS
We provide no assurance on management responses (for information only)

Rec. # Recommendation Management Response

Medication Controls: Institutional Pharmacy Program
3.20 Health PEI should develop policies and HPEI has been developing a planned, phased in
procedures to strengthen medication controls and approach, transitioning the service delivery model
improve coordination for management and of medications for LTC residents from Provincial
delivery of the Institutional Pharmacy Program. Pharmacy (PP) - (Sullivan Bldg) to a unit dose
packager from the Queen Elizabeth Hospital. All
LTC Homes, with the exception of Sherwood
Home, now receive patient specific medication
strips packaged by an automated unit dose packager
(PEH, BGH, SSM and WWM were the last to
transition in Oct/Nov 2019 and Feb/Mar 2020).
This dispensing process has improved coordination
and control of medications. Sherwood Home
resident “beds” are not yet built in the Cerner
System. This is required for medication to be
packaged by the unit dose packager. An additional
Automated Unit Dose Packager has been purchased
and there are now 2 packagers at the QEH.
Provincial Pharmacy staff were scheduled to
relocate from the Sullivan Building, but the
pandemic has delayed this move.
3.49 Health PEI should improve controls over New pharmacy management team is in the process
dispensing and oversight of ward stock narcotics of collaborating with LTC nursing leadership to
for provincially-owned long-term care facilities. review current processes and develop written
policies/procedures. Education and training will be
a priority for both pharmacy and nursing teams.
3.55 Health PEI should document a policy on the A policy has yet to be drafted. As an interim step a
transportation of medications from the Provincial triplicate form has been implemented. Drugs are
Pharmacy to the provincially-owned long-term double-checked and signed off prior to being sent to
care facilities. LTC Homes in secured totes. At LTC Homes, the
form is signed confirming receipt of listed contents.
Medications are currently transported by the courier
contracted for government mail and lab specimen
deliveries.

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 9. Follow-up on Performance Audits 2017 and 2018

APPENDIX D
Page 4 of 4

RECOMMENDATIONS REPORTED BY MANAGEMENT

AS NOT COMPLETE AT OCTOBER 31, 2020
2017 AND 2018 AUDITS
We provide no assurance on management responses (for information only)

Rec. # Recommendation Management Response

Medication Controls: Institutional Pharmacy Program (cont’d)
3.60 Health PEI should establish a policy on Medication reviews are conducted annually, at
conducting comprehensive medication reviews minimum. Currently this is a collaborative
for residents of provincially-owned long-term process involving physicians, nurse practitioners,
care facilities. registered nurses and pharmacists. Staffing is an
issue for both nursing and pharmacy. The
management plan will include a request for
additional resources to support this
recommendation. In 2019, Health PEI entered
into a partnership with the Canadian Foundation
for Healthcare Improvement to promote
appropriate utilization of anti-psychotic
medications (AUA). A key component of this
initiative was regular and enhanced medication
reviews inclusive of key care team stakeholders,
including the resident, family, pharmacist, nurse
and prescriber. While the minimum standard is
being met, additional resources will allow for
enhancements to the medication review process.
3.83 Health PEI should implement policies and The following procedures are in place to ensure
procedures to require the Provincial Pharmacy accountability: receipt of narcotics is double
and the long-term care facilities to maintain a checked and the recording of new inventory is
clear trail of accountability for all narcotics and witnessed at the LTC Home, triplicate forms
controlled drugs. from pharmacy detail the delivery of narcotic and
controlled substances and a follow up action is
prompted if confirmation of receipt is not
received in pharmacy. All doses of narcotics and
controlled drugs administered to LTC residents
are charted. All unused/expired medications are
to be returned to Pharmacy. Additional work to
be done on accountability and security.

112 Report of the Auditor General of Prince Edward Island - 2021

 10. FOLLOW-UP WITH TREASURY BOARD
CHAPTER SUMMARY

10.1 Every year, our Office makes recommendations specific to each of

the performance audits and examinations conducted, which are intended to
address the findings and issues identified. We report on the
implementation of recommendations three years after the audit was
initially reported, and follow-up again on any outstanding
recommendations for one additional year.

10.2 It was noted by Treasury Board, in Treasury Board Minute

#665/18 dated March 6, 2019, that while some recommendations had been
implemented, there were a significant number remaining to be addressed.
As a result, Treasury Board directed departments and reporting entities to
provide a quarterly update to Treasury Board on the status of
implementation of recommendations of the Auditor General, commencing
June 30, 2019.

10.3 On October 13, 2020, we requested copies of all quarterly updates

provided to Treasury Board by departments and reporting entities, to
determine if these reports were being submitted in accordance with the
direction from Treasury Board.

10.4 Exhibit 10.1 outlines the departments and reporting entities

responsible for performance audits included in our 2017 and 2018 annual
reports, and whether or not they provided quarterly updates to Treasury
Board, as requested. Although Treasury Board has obtained reporting on
the status of implementation of recommendations included in our annual
reports from 2013 to 2020, we have only included those from our 2017
and 2018 annual reports which are part of our current year follow-up
report (see Chapter 9). We have not examined the quarterly updates
provided to Treasury Board, and provide no assurance on these responses.

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 10. Follow-up with Treasury Board

EXHIBIT 10.1
QUARTERLY UPDATES BY DEPARTMENTS
AND REPORTING ENTITIES
AS AT SEPTEMBER 30, 2020

Entity* Year June 30, Sept 30, Dec 31, Mar 31, June 30, Sept 30,
2019 2019 2019 2020 2020 2020
Department of
Environment, Energy and
Climate Action
Climate Change 2017 No Yes No No No Yes
Department of Justice and
Public Safety
Office of the Public Trustee 2017 Yes Yes No No No Yes
Office of the Public
2018 No No No No No Yes
Guardian
Department of Social
Development and Housing
Seniors Housing Program 2017 No Yes No No No Yes
Social Assistance Program 2018 No Yes No No No Yes
Health PEI
Medication Controls:
Institutional Pharmacy 2018 No No No No No No
Program
*Reflects current entity responsible

10.5 Our Office met with the Secretary to Treasury Board in September
2020, in regard to the lack of quarterly updates provided. We were
informed that processes have been established to ensure reporting, on a go
forward basis, will be provided to Treasury Board quarterly.

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FINANCIAL AUDITS
 11. INTRODUCTION TO FINANCIAL AUDITS
11.1 Government is responsible for the management and control of
public resources. Financial statements provide information to describe
changes in a government's financial position and its revenues and
expenses for a fiscal period. Information contained in the annual financial
statements is used by Members of the Legislative Assembly and the public
to hold government accountable for its use and control of public resources.

11.2 Management is responsible for the preparation and fair

presentation of financial statements with oversight from those charged
with governance. Management is also responsible to establish internal
controls necessary to enable the preparation and fair presentation of
financial statements. Users of financial statements need to know that the
information in the financial statements is reliable, in order to make
economic decisions based on what is prepared and presented by
management.

11.3 The work of an independent auditor provides assurance that the

financial statements are fairly presented. Using Canadian Auditing
Standards, the auditor:

• identifies and assesses the risks of material misstatement;

• obtains an understanding of internal controls;
• examines evidence supporting the amounts and disclosures in the
financial statements;
• objectively assesses the accounting principles used, the estimates
made, and other management assertions reflected in the financial
statements; and
• evaluates the overall presentation, structure and content of the
financial statements.

11.4 Canadian Auditing Standards require the auditor to obtain a high

level of assurance to determine whether the financial information is free
from material misstatement. The auditor obtains sufficient appropriate
audit evidence to express an opinion in an independent auditor’s report.

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 11. Introduction to Financial Audits

11.5 The Audit Act requires the Auditor General to perform financial
audits of the Province’s consolidated financial statements. We also
perform the annual financial statement audit for the following entities:

• Health PEI
• PEI Advisory Council on the Status of Women
• PEI Agricultural Insurance Corporation
• PEI Public Sector Pension Plan
• PEI Crown Building Corporation
• PEI Grain Elevators Corporation
• PEI Lotteries Commission
• PEI Self-Insurance and Risk Management Fund
• PEI Teachers’ Pension Plan
• Pension Plan for Members of the Legislative Assembly
• Public Trustee
• Supreme Court of PEI Trust Accounts

11.6 The Audit Act requires the Auditor General to bring to the attention
of the Legislative Assembly any matter identified during an audit which in
his/her opinion should be brought to its attention.

11.7 The Office has reporting responsibilities under the Climate

Leadership Act and the Government Advertising Standards Act. These
responsibilities are reported in Chapters 6 and 7.

11.8 The COVID-19 pandemic affected the operations of our Office as

well as the provincial organizations we audit. On March 16, 2020, the
Province declared a state of public health emergency with government
operations moving to essential services only. As most staff were required
to work from home, challenges were encountered in the audit process, for
example, in communicating with organizations and obtaining documents
for audit. Additional audit procedures were also required to assess the
impact of the pandemic on the financial statements of these organizations.

11.9 An amendment was made to the Financial Administration Act to

allow a one-time extension for tabling of the Province’s 2019-20
consolidated financial statements, from October 31, 2020 to January 31,
2021.

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 11. Introduction to Financial Audits

11.10 In the chapters that follow, we provide summary financial

highlights and comments on indicators of financial condition for the
Province. We also report on observations and recommendations resulting
from our audits of:

• the Province’s consolidated financial statements;

• the financial statements of government organizations, government
business enterprises and trust funds; and
• the processing and recording of appropriations and special warrants.

Report of the Auditor General of Prince Edward Island - 2021 119

 12. INDICATORS OF FINANCIAL CONDITION

CHAPTER SUMMARY

Why it’s important

The condition of the Province’s finances is important. It affects all

residents of the Province through the levels of taxation, government
spending, services provided, and the provincial economy. This chapter
presents information to assist legislators, the public, and other users to
better understand the financial condition of the Province.

What we found

• The Province reported a surplus of $22 million in 2019-20. This was a

significant difference from the originally budgeted surplus of $1.8
million, and subsequently projected deficit of $3.7 million.

• As at March 31, 2020, the net debt of the Province totalled $2.2
billion. This represents an increase of $81.5 million during the year.

• Net debt to gross domestic product declined in 2020, and has

continued to decline over the last 5 years.

• Net debt per capita increased for the first time in a number of years
and was $13,814 per person, as at March 31, 2020.

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 12. Indicators of Financial Condition

BACKGROUND

12.1 Several resources are used in assessing the financial condition of a

province. The Public Sector Accounting Board’s Statement of
Recommended Practice suggests a number of indicators to assist in
assessing a government’s financial condition. These indicators help
provide insight into a government’s ability to maintain its programs and
services, the flexibility it has to respond to economic changes, and its
vulnerability to external sources of funding. We discuss a number of these
indicators in this chapter.

12.2 Consolidated financial statements are helpful to provide an

overview of the financial condition of a province at its year-end, compared
to the budget and prior period. However, financial statements do not
provide a complete perspective on how a province is performing in
relation to the overall economic and fiscal environments. To assist users
in understanding the financial condition of the Province, we provide
information on a number of indicators of financial condition.

12.3 This current update provides financial information and indicators

for the last five fiscal periods. The most recent estimates of nominal gross
domestic product (GDP) and population were used in the determination of
various indicators. Consistent with other jurisdictions, nominal GDP is
presented on a calendar year basis.

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 12. Indicators of Financial Condition

SUMMARY FINANCIAL INFORMATION

FINANCIAL 12.4 Exhibit 12.1 summarizes the Province’s financial position and
HIGHLIGHTS operating results for the last five years.

EXHIBIT 12.1
SUMMARY FINANCIAL INFORMATION
YEAR ENDED MARCH 31
($ Millions)

2016 2017 2018 2019 2020

Financial Assets $1,068.8 $1,096.2 $1,114.6 $1,119.1 $1,365.1
Liabilities 3,251.2 3,271.2 3,243.5 3,242.6 3,570.1
Net Debt (2,182.4) (2,175.0) (2,128.9) (2,123.5) (2,205.0)
Non-Financial Assets 1,028.2 1,029.2 1,067.1 1,111.5 1,197.5
Accumulated Deficit ($1,154.2) ($1,145.8) ($1,061.8) ($1,012.0) ($1,007.5)

Revenues $1,758.7 $1,837.4 $1,987.1 $2,078.7 $2,187.6

Expenses 1,771.8 1,838.7 1,912.5 2,021.7 2,165.6
Annual Surplus
(Deficit) $ (13.1) $ (1.3) $ 74.6 $ 57.0 $ 22.0
Nominal Gross
Domestic Product* $ 6,088 $ 6,376 $ 6,790 $ 7,033 $ 7,523
Source: Derived from the Province’s 2019-20 Public Accounts Volume I with restatements as
identified in Public Accounts
*Statistics Canada, published November 9, 2020

Net Debt 12.5 An important and widely accepted measure of the financial
condition of government is net debt. Net debt is the difference between
liabilities and financial assets. It provides a measure of the amount of
future revenue that will be required to pay for past operations.

12.6 Net debt increased during the year by $81.5 million and was $2.2
billion as at March 31, 2020. The reason for the increase in the net debt
was mainly due to an increase in investment in tangible capital assets of
$80.7 million.

12.7 Net debt sits at its highest level following consistent reductions
from fiscal years 2016 to 2019.

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 12. Indicators of Financial Condition

Financial 12.8 Financial assets increased by $246 million since March 31, 2019.
Assets and The main reason for this increase was due to a $170 million cash reserve
Liabilities that was established in March 2020 to prepare for the impact of additional
spending due to the COVID-19 pandemic.

12.9 Exhibit 12.1 also shows that total liabilities have increased by
approximately $327.5 million since March 31, 2019. The main reason for
the increase was the result of an increase in short-term loans payable of
$309.4 million, as the Province secured additional funding in anticipation
of additional spending related to the pandemic.

12.10 As at March 31, 2020, the Province had outstanding short-term

loans, loans payable, and debentures totalling approximately $3.1 billion.
These borrowings are partially offset by sinking fund assets of $292.7
million.

Annual Surplus / 12.11 The annual surplus/deficit indicates the extent to which a
Deficit government spends more or less than what is generated in revenue in a
particular year. It indicates whether a government is living within its
means.

12.12 For the year ended March 31, 2020, the Province had a surplus of
$22 million, the third consecutive surplus. This surplus was significantly
greater than the original budgeted surplus of $1.8 million, and the
subsequently forecasted deficit of $3.7 million, based on preliminary
results in the spring of 2020.

12.13 The COVID-19 pandemic had a limited impact on the financial

results for the 2019-20 fiscal period. The majority of the financial impact
related to the pandemic will be reflected in the 2020-21 fiscal year. The
Province is estimating a deficit of $172.7 million for 2020-21.

12.14 Revenues increased by $108.9 million from prior period. The

increase was mainly due to additional federal revenues of $73.9 million
and higher tax revenues of $25.3 million.

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 12. Indicators of Financial Condition

12.15 The increase in federal revenues was due largely to increases in:
Canada Health Transfers, infrastructure program funding and crop
insurance payouts. The increase in tax revenues was created from a
growing economy, resulting in higher personal income and sales tax
revenues, as well as a new revenue stream from a carbon levy
implemented on April 1, 2019. These increases were partially offset by a
decrease in corporate income tax which resulted from significant loss
carrybacks applied to previous years. These loss carrybacks were driven
by new tax incentives available to certain business sectors.

12.16 Expenses increased by $143.9 million from prior year. The

increase resulted mostly from additional expenses in the Ministry of
Health and Wellness of $37.4 million, the Department of Transportation,
Infrastructure and Energy of $33.0 million and the Ministry of Social
Development and Housing of $26.3 million.

12.17 The increase in expenses for the Ministry of Health and Wellness
were largely due to compensation costs, which increased by nearly 5% at
Health PEI. The increase in expenses for the Department of
Transportation, Infrastructure and Energy was related to additional
infrastructure program grants received from the Government of Canada,
resulting in an increase in work associated with infrastructure projects.
The increase in expenses for the Ministry of Social Development and
Housing resulted from additional housing program grants and rent
supplement expenses, plus additional grants issued related to the
AccessAbility Supports Program.

Budget to Actual 12.18 Exhibit 12.2 provides a summary breakdown of the change in the
Province’s annual surplus from the amount originally budgeted to the
actual surplus realized.

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 12. Indicators of Financial Condition

EXHIBIT 12.2
CHANGE IN ANNUAL SURPLUS
BUDGET TO ACTUAL
YEAR ENDED MARCH 31, 2020
($ Millions)

Revenues Expenses Surplus

2019-20 Budget $2,221.4 $2,219.6 $1.8

Increase (decrease) in:

Revenues
Tax revenue (14.2) - (14.2)
Government of Canada transfers (31.0) - (31.0)
Other income 10.3 - 10.3
Other provincial revenue 1.1 - 1.1
Expenses
Finance - (15.8) 15.8
Social Development and Housing - 19.9 (19.9)
Transportation, Infrastructure & Energy - (51.9) 51.9
Other program expenses - (0.9) 0.9
Interest and Amortization - (5.3) 5.3
Total Change (33.8) (54.0) 20.2

2019-20 Actual $2,187.6 $2,165.6 $22.0

Source: Derived from the Province’s consolidated financial statements 2019-20

Revenues 12.19 Overall, revenues were $33.8 million lower than the amount
originally budgeted. Lower tax revenues and Government of Canada
transfers were the main reasons why the actual revenues did not meet the
budgeted expectations for the year ended March 31, 2020.

12.20 Tax revenues were $14.2 million lower than the amount originally
budgeted. The majority of the reduction was attributable to lower than
expected corporate and personal tax revenues that were partially offset by
higher than expected sales tax revenues.

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 12. Indicators of Financial Condition

12.21 Corporate tax revenues were $20.5 million lower than budgeted
mainly due to income tax loss carrybacks that had not been anticipated.
We were advised that a significant portion of the loss carrybacks were the
result of a new accelerated investment incentive that allowed companies in
certain sectors to write-off capital assets faster for tax purposes. Personal
tax revenues were $9.8 million lower than budgeted; however, they did
increase by $21.8 million from prior year. Sales taxes were $18.4 million
higher than budgeted. The rise in sales tax can be attributed to stronger
economic conditions than originally projected.

12.22 Provincial tax revenues totalled $1.1 billion for the year ended
March 31, 2020. Exhibit 12.3 shows the source of provincial tax
revenues for the year.

EXHIBIT 12.3
PROVINCIAL TAX REVENUES BY SOURCE
YEAR ENDED MARCH 31, 2020

Health Tax Other

Gasoline Tax 4.7% 4.1%
2.8% Personal Income
Tax
Corporate 38.6%
Income Tax
6.1%

Property Tax
12.1%

Sales Tax
31.6%

Source: Derived from the Province’s consolidated financial statements 2019-20

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 12. Indicators of Financial Condition

12.23 Exhibit 12.4 shows the total for the four largest sources of
provincial tax revenues from 2016 to 2020. Personal, sales, and property
tax revenues have continued their upward trend, while corporate income
tax revenue had a sharp decline, due to the significant loss carrybacks filed
during the period.

EXHIBIT 12.4
TOTAL TAX REVENUES
YEAR ENDED MARCH 31
($ Millions)

$410.0

$360.0

$310.0

$260.0

$210.0

$160.0

$110.0

$60.0
2016 2017 2018 2019 2020
Personal Income Tax Sales Tax
Property Tax Corporate Income Tax

2016 2017 2018 2019 2020

Personal Income Tax $348.5 $349.9 $381.4 $388.1 $409.9

Sales Tax $244.9 $235.0 $300.8 $311.6 $334.9

Property Tax $111.8 $114.6 $118.7 $123.1 $128.4

Corporate Income Tax $73.2 $79.9 $98.1 $93.6 $65.1

Source: Derived from the Province’s consolidated financial statements

12.24 Revenue from the Government of Canada totaled $847.2 million

for the year ended March 31, 2020. This represents a decrease of $31.0
million from the amount budgeted. The main reason for the overall
decrease from budget is due to the Investing in Canada Plan program. The
funding for this program was down $53.7 million from the amount
originally budgeted, due mainly to various delays in the progress of

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 12. Indicators of Financial Condition

infrastructure projects, which had a direct impact on the amount of federal

funding received.

12.25 Other income was $10.3 million higher than budgeted. The main
reasons were: Workers Compensation Board of Prince Edward Island
provided Health PEI with an unbudgeted surplus distribution of $4.2
million, and an additional $3.1 million was received by Health PEI from
hospital foundations for capital purchases, in excess of amounts originally
budgeted.

Expenses 12.26 Expenses were $54.0 million lower than budgeted in 2019-20. The
following are the areas where significant variances from budget were
identified:

• Expenses were $15.8 million lower than budgeted for the Department
of Finance. This was due mainly to $6.0 million in salary accruals
budgeted in 19-20, however incurred in the previous fiscal period, and
an AgriRecovery initiative payment of $6.1 million that was reflected
in the expenses of the Department of Agriculture and Land, but
budgeted by the Department of Finance;
• Expenses were $19.9 million greater than budgeted in the Department
of Social Development and Housing. $8.6 million was related to a
higher than expected program uptake and increased costs per case
related to the disability support program known as AccessAbility
Supports, and additional PEI Housing Corporation program costs of
$5.1 million over budget; and
• Expenses were $51.9 million lower than budgeted for the Department
of Transportation, Infrastructure and Energy, due to various delays in
the progress of infrastructure projects.

FINANCIAL INDICATORS

12.27 Consistent with prior years, we continue to provide information on

a number of selected indicators of financial condition. We provide
indicators that help assess the Province's sustainability, flexibility, and
vulnerability.

SUSTAINABILITY 12.28 Sustainability is an important indicator to include in an assessment

of financial condition because it shows the extent to which programs and
services can be maintained, and existing creditor, employee, and other

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 12. Indicators of Financial Condition

obligations can be met, without increasing the debt or tax burden.

Sustainability is a significant consideration because of its potential impact
on current and future generations.

Net Debt to 12.29 Net debt to GDP provides a measure of the financial demands
GDP placed on the economy by the Province’s spending and taxation policies.
A decreasing ratio indicates net debt is growing at a rate slower than the
growth in the economy. The Province’s net debt to GDP ratio has
declined since 2016 as shown in Exhibit 12.5.

EXHIBIT 12.5
NET DEBT TO GDP
YEAR ENDED MARCH 31

37%

35%

33%

31%

29%
2016 2017 2018 2019 2020

2016 2017 2018 2019 2020

Net Debt to GDP 35.8% 34.1% 31.4% 30.2% 29.3%
Source: Derived from the Province’s consolidated financial statements and GDP data from
Statistics Canada, published November 9, 2020

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 12. Indicators of Financial Condition

12.30 Exhibit 12.6 compares the Province’s net debt to GDP with the
other Canadian provinces. As at March 31, 2020, PEI’s net debt to GDP
ratio was lower than six other provinces, and higher than British
Columbia, Alberta, and Saskatchewan.

EXHIBIT 12.6
NET DEBT TO GDP CANADIAN PROVINCES
MARCH 31, 2020

45%
40.8%
39.6%
40% 37.2%
36.4%
34.2%
35% 32.7%

29.3%
30%

25%

20%
14.7% 14.8%
15%
11.4%

10%

5%

0%
BC AB SK MB ON QC NS NB PE NL
Source: Net debt derived from each province’s consolidated financial statements as at March 31,
2020 and GDP data from Statistics Canada, published November 9, 2020

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 12. Indicators of Financial Condition
Net Debt per 12.31 Net debt per capita is the amount of net debt attributable to each
Capita resident of the Province. The Province’s net debt per capita increased by
$311 from the previous year. This indicates that net debt is growing at a
rate faster than the growth in population.

12.32 Exhibit 12.7 shows that the Province’s net debt per capita had
been decreasing steadily from 2016 until 2019, however, it had a slight
increase in 2020.

EXHIBIT 12.7
NET DEBT PER CAPITA
YEAR ENDED MARCH 31

$15,000

$14,500

$14,000

$13,500

$13,000
2016 2017 2018 2019 2020

2016 2017 2018 2019 2020

Net Debt per Capita $14,850 $14,461 $13,879 $13,503 $13,814
Source: Derived from the Province’s consolidated financial statements and population data from
Statistics Canada, published September 29, 2020

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 12. Indicators of Financial Condition

12.33 A comparison of PEI’s net debt per capita to the other Canadian
provinces is provided in Exhibit 12.8. PEI’s net debt per capita ratio is
more favorable than most provinces, other than British Columbia, Alberta,
and Saskatchewan.

EXHIBIT 12.8
NET DEBT PER CAPITA CANADIAN PROVINCES
MARCH 31, 2020

$30,000
27,648

23,981
$25,000

19,979
$20,000 18,285 17,815
15,564
13,814
$15,000

10,426
8,810 9,078
$10,000

$5,000

$0
BC AB SK MB ON QC NS NB PE NL
Source: Net debt derived from each province’s consolidated financial statements at March 31,
2020 and population data from Statistics Canada, published September 29, 2020

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 12. Indicators of Financial Condition

Net Debt to 12.34 Exhibit 12.9 depicts the ratio of net debt to total revenues. This
Total Revenues ratio is a measure of the future revenue that will be required to pay for past
transactions. The Province’s ratio has decreased significantly from 2016
to 2020, which is a positive trend.

EXHIBIT 12.9
NET DEBT TO TOTAL REVENUES
YEAR ENDED MARCH 31

125%

120%

115%

110%

105%

100%
2016 2017 2018 2019 2020

2016 2017 2018 2019 2020

Net Debt to Total 124.1% 118.4% 107.1% 102.2% 100.8%
Revenues
Source: Derived from the Province’s consolidated financial statements

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 12. Indicators of Financial Condition

Expenses to GDP 12.35 During 2019-20, government expenses increased by $143.9 million
from the prior period. Comparing expenses to GDP provides the trend of
government spending over time, in relation to the growth in the economy.
An increasing ratio indicates government spending is growing at a rate
faster than the growth in the economy. Expenses as a percentage of GDP
have remained relatively consistent since 2016. Exhibit 12.10 shows
Government expenses to GDP on a comparative basis.

EXHIBIT 12.10
EXPENSES TO GDP
YEAR ENDED MARCH 31

31%

30%

29%

28%

27%
2016 2017 2018 2019 2020

2016 2017 2018 2019 2020

Expenses to GDP 29.1% 28.8% 28.2% 28.7% 28.8%
Source: Derived from the Province’s consolidated financial statements and GDP data from
Statistics Canada, published November 9, 2020

FLEXIBILITY 12.36 Flexibility is the degree to which a government can increase its
financial resources to respond to rising commitments, by either incurring
debt or raising additional revenue. A government meets the test of
flexibility when it can respond to changing economic conditions, such as a
recession or higher interest rates, without making substantial changes to
the way it operates.

12.37 Flexibility provides insight into the management of financial

resources. A government that increases its current borrowings reduces its
future flexibility to respond to adverse economic circumstances.
Similarly, increasing taxation or fees reduces a government’s ability to do

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 12. Indicators of Financial Condition

so in the future, as citizens and businesses approach a limit to the amount

that they can, or are willing, to bear.

Interest Bite and 12.38 One measure of a government’s flexibility is the interest bite. This
InterestCosts
Interest Charges
to Total is the amount of annual interest charge as a percentage of total revenues
Revenues and is shown in Exhibit 12.11. This indicator illustrates the extent to
which past borrowing decisions constrain a government’s ability to
provide programs and services in the future. The interest charges to total
revenues ratio has continued to decline.

EXHIBIT 12.11
INTEREST CHARGES TO TOTAL REVENUES
YEAR ENDED MARCH 31

8.0%

7.0%

6.0%

5.0%
2016 2017 2018 2019 2020

2016 2017 2018 2019 2020

Interest Charges to 7.4% 6.8% 6.3% 6.1% 5.8%
Total Revenues
Source: Derived from the Province’s consolidated financial statements

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 12. Indicators of Financial Condition

12.39 Exhibit 12.12 displays total interest charges of the Province over
the past five years. Interest charges totalled $125.8 million during 2019-
20. This means the first $125.8 million of revenue must be used to pay
interest charges, and is not available for government programs and
services. Interest charges have remained relatively flat for the past few
years, in an environment where interest rates are now at extremely low
levels.

EXHIBIT 12.12
INTEREST CHARGES
YEAR ENDED MARCH 31
($ Millions)

$131
$130
$129
$128
$127
$126
$125
$124
$123
2016 2017 2018 2019 2020

2016 2017 2018 2019 2020

Interest Charges $129.8 $125.4 $125.5 $125.9 $125.8
Source: Derived from the Province’s consolidated financial statements

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 12. Indicators of Financial Condition

Own Source 12.40 Own source revenues, as a percentage of GDP, indicates the extent
Revenues to GDP to which a government is taking money out of the local economy through
taxation, fees, and/or other charges. Exhibit 12.13 indicates the
percentage has declined compared to prior year and is lower than it was in
2016.

EXHIBIT 12.13
OWN SOURCE REVENUES TO GDP
YEAR ENDED MARCH 31

20%

19%

18%

17%

16%
2016 2017 2018 2019 2020

2016 2017 2018 2019 2020

Own Source 18.3% 17.9% 18.7% 18.6% 17.8%
Revenues to GDP
Source: Derived from the Province’s consolidated financial statements and GDP data from
Statistics Canada, published November 9, 2020

VULNERABILITY 12.41 Vulnerability is the degree to which a government depends on

sources of funding outside its control or influence. It provides insight into
the risks to the province that could affect its ability to meet existing
service commitments to the public, and financial commitments to
creditors, employees, and others.

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 12. Indicators of Financial Condition

Federal 12.42 As indicated in Exhibit 12.14, federal revenues as a percentage of

Revenues to total revenues have increased over the past couple of years. An increasing
Total Revenues ratio indicates more vulnerability. In 2019-20, the Federal Government
provided 38.7 percent of the Province’s total revenues, an increase from
37.2 percent in the prior year and 36.7 percent in 2016.

EXHIBIT 12.14
FEDERAL REVENUES TO TOTAL REVENUES
YEAR ENDED MARCH 31
($ Millions)

39%

38%

37%

36%

35%
2016 2017 2018 2019 2020

2016 2017 2018 2019 2020

Provincial Revenues $1,113.8 $1,141.5 $1,268.5 $1,305.4 $1,340.4
Federal Revenues 644.9 695.9 718.6 773.3 847.2
Total Revenues $1,758.7 $1,837.4 $1,987.1 $2,078.7 $2,187.6
Federal Revenues as
Percent of Total 36.7% 37.9% 36.2% 37.2% 38.7%
Source: Derived from the Province’s consolidated financial statements

138 Report of the Auditor General of Prince Edward Island - 2021

 12. Indicators of Financial Condition

GLOSSARY

Annual surplus or deficit is the difference between a government’s revenues

and expenses. This measure shows the extent to which revenues raised in the
year were sufficient to cover expenses in that year.

Total liabilities is the amount owed by government. Government’s liabilities

include outstanding debentures and other amounts payable.

Financial assets are cash and other assets which could provide resources to
pay liabilities or finance future operations.

Net debt is the difference between the government’s total liabilities and its
financial assets.

Government borrowings is the total amount of short-term loans, long-term

loans payable, and debentures.

Non-financial assets are tangible capital assets such as buildings, roads, and
equipment, as well as prepaid expenses and inventories. The book value of
tangible capital assets increases as they are acquired, and is reduced over a
period of time through amortization. These assets do not normally provide
resources to discharge liabilities.

Accumulated deficit is the sum of all surpluses, deficits, and other

comprehensive gains (losses) incurred over the years.

Other comprehensive gain (loss) includes revenue, expenses, gains, and

losses that have yet to be realized and are recognized in accumulated deficit,
but excluded from annual surplus or deficit.

Interest charged on borrowings is the amount required to service the debt,

and must be taken from revenues before any expenditure can be made on
government programs and services.

Gross domestic product (GDP) is a measure of the value of all goods and
services produced in a jurisdiction in a given period. The province’s GDP is
measured and reported by Statistics Canada.

Nominal gross domestic product is gross domestic product that has not
been adjusted for inflation.

Report of the Auditor General of Prince Edward Island - 2021 139

 13. AUDIT OF THE CONSOLIDATED
FINANCIAL STATEMENTS

CHAPTER SUMMARY

Why it’s important

The consolidated financial statements consolidate the accounts of the

Operating Fund with those of the agencies, boards, and Crown
corporations owned or controlled by Government. These consolidated
financial statements provide the most complete information about the
financial position and operating results of the Province.

What we found

• The 2019-20 consolidated financial statements fairly present the

Province’s financial results. An unqualified audit opinion was issued
on January 8, 2021.

• The 2019-20 consolidated financial statements were issued

approximately two and half months later than in recent years, due
mainly to the Province’s response to the COVID-19 pandemic.

• Some transactions were not recorded in accordance with Canadian

Public Sector Accounting Standards.

• Additional improvements to the presentation of the consolidated

financial statements including budgets, note disclosures and schedules
are recommended.

• Signed agreement was not in place for a significant funding

arrangement.

BACKGROUND

13.1 The Financial Administration Act requires the Comptroller to

annually prepare the Province’s Public Accounts. Volume I of the Public

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 13. Audit of the Consolidated Financial Statements

Accounts contains the Province’s audited consolidated financial

statements. All information and decisions related to these statements are
the responsibility of Government. The Public Accounts also include
Volume II, which contains the unaudited Operating Fund financial
statements and details of revenues and expenses of the Operating Fund,
and Volume III, which includes the audited financial statements of
agencies, boards, Crown corporations, and funds.

13.2 The Financial Administration Act requires the Minister of Finance

to annually table the Public Accounts in the Legislative Assembly.
Volume I of the Public Accounts for the year ended March 31, 2020, was
tabled on January 15, 2021. Volumes II and III were tabled on January
26, 2021 and January 29, 2021 respectively.

OBJECTIVES AND SCOPE

13.3 The Audit Act requires the Auditor General to annually audit the
Province’s consolidated financial statements and provide an independent
auditor’s report stating whether the statements are fairly presented.

13.4 Under Section 17 of the Act, the Auditor General is not required to
audit or report on the accounts of any agency of Government where
another auditor has been designated to audit its accounts. As part of the
audit of the consolidated financial statements, the Auditor General
reviews, as necessary, audit work performed by the external auditors of
those government entities.

13.5 In the following sections, we provide information on our

independent audit opinion on the Province’s consolidated financial
statements for the fiscal year ended March 31, 2020. We also include
observations and recommendations arising from our work, and provide
information to address other reporting requirements under the Audit Act.

AUDIT OPINION

13.6 Our audit was conducted in accordance with Canadian Auditing

Standards. On January 8, 2021, the Auditor General issued an unqualified
audit opinion on the Province’s consolidated financial statements. The
independent audit opinion stated the Province’s consolidated financial

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 13. Audit of the Consolidated Financial Statements

statements for the year ended March 31, 2020, were fairly presented in
accordance with Canadian Public Sector Accounting Standards.

OBSERVATIONS AND RECOMMENDATIONS

13.7 The consolidated financial statements are the responsibility of

Government and are prepared by the Comptroller. Our audit involves
performing procedures to obtain sufficient and appropriate audit evidence
to provide a basis for the audit opinion.

13.8 As part of the audit process, we evaluate the financial statements

and the information supporting the amounts and note disclosures. We
identify any audit adjustments required and provide those adjustments to
management. We request that all adjustments be posted to the financial
statements. We also identify issues requiring improvements in the areas of
internal controls and financial reporting. The following paragraphs
provide details on some of the more significant recommendations resulting
from our audit.

TIMELY 13.9 For financial statements to be useful to readers they must be

REPORTING relevant. One of the elements of relevancy is the timeliness of reporting.
As a result of COVID-19, the Government of Prince Edward Island moved
to an essential services model during a time when year-end preparations
would typically have been underway for the consolidated financial
statements. This situation had a significant impact on the Province’s
ability to meet annual audit readiness requirements.

13.10 The draft consolidated financial statements, and most working

papers, were provided for audit approximately three months later than
normal, compared to previous years. A number of significant government
organizations, that are a part of the provincial reporting entity, were also
considerably late in providing accurate financial statements to the
Comptroller. These organizations included: PEI Liquor Control
Commission, PEI Cannabis Management Corporation, Innovation PEI,
PEI Housing Corporation and PEI Agricultural Insurance Corporation.

13.11 Due to COVID-19, the annual statutory deadline for the

completion of the consolidated financial statements was moved from
October 31, 2020 to January 31, 2021. The consolidated financial
statements were issued on January 15, 2021. While the later statutory

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 13. Audit of the Consolidated Financial Statements

deadline was met, Prince Edward Island was one of only a few provinces
that required an extension to the deadline. We encourage Government to
practice emergency preparedness in order to limit operational and
reporting delays that result from events such as COVID-19.

Recommendation

13.12 The Province needs to limit delays related to timely reporting

of the consolidated financial statements when dealing with unforeseen
events, such as a pandemic.

PUBLIC SECTOR 13.13 During our audit of the consolidated financial statements for the
ACCOUNTING year ended March 31, 2020, we noted that some financial statement
STANDARDS transactions were not recorded in accordance with Canadian Public Sector
Accounting Standards (PSAS). These transactions were discussed with
staff of the Comptroller’s Office and recommendations for correction were
provided to the Comptroller. In some cases, corrections were made. The
uncorrected transactions did not affect our audit opinion on the
consolidated financial statements, as the cumulative effect was not
considered material.

Accrual Basis of 13.14 PSAS requires that items recognized in government financial
Accounting statements be accounted for in accordance with the accrual basis of
accounting. The accrual basis of accounting recognizes the effects of
transactions in the period in which they occur, regardless of whether there
has been a receipt or payment of cash.

13.15 We recommended audit adjustments to increase expenses and

liabilities at year-end for two grant programs which were recorded on the
cash basis, rather than the accrual basis. Additional expenses for these
programs should have been reflected in the 2020 fiscal year, as related
grants were authorized and all eligibility criteria met. An adjustment of
$4.1 million was recommended to record amounts owing related to the
Municipal Capital Expenditures Grant Program. This adjustment was
recorded in the consolidated financial statements. Another adjustment of
$1.7 million was recommended to record a liability for a COVID-19 relief
program related to emergency income relief for self-employed individuals;
however, the Comptroller’s Office did not record this adjustment.

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 13. Audit of the Consolidated Financial Statements

Future Changes to 13.16 The Canadian Public Sector Accounting Board issued new or
Accounting amended standards for the public sector that become effective April 1,
Standards 2022. These standards relate to financial statement presentation, foreign
currency translation, portfolio investments, asset retirement obligations
and financial instruments. The new standard related to asset retirement
obligations has the potential to significantly impact the future financial
results of the Province. We encourage the Comptroller’s Office to be
proactive in preparing for these changes.

Recommendations

13.17 The Comptroller’s Office should ensure transactions are

recorded in accordance with Public Sector Accounting Standards in
the preparation of the consolidated financial statements.

13.18 The Comptroller’s Office should be proactive in preparing for

the upcoming changes to accounting standards, with an effective date
of April 1, 2022.

FINANCIAL 13.19 The consolidated financial statements contain a number of note

STATEMENT disclosures and schedules which are an integral part of the consolidated
NOTES AND financial statements. These notes and schedules provide information to
SCHEDULES clarify and explain items in the consolidated financial statements. For this
information to be useful it must be complete, accurate, clear, and
understandable for users.

Prior Year 13.20 There were issues raised in the prior year that were not addressed,
Recommendations including:

• A schedule of contractual obligations provided for audit was

incomplete and contained errors. We identified and recommended
changes of approximately $41 million to the schedule.
• There are a number of required disclosures not included in the
presentation of supplementary financial information for government
business enterprises.
• The cost of roads and bridges in the tangible capital assets schedule
includes significant assets totaling $626.6 million which are fully
amortized. These assets should be reviewed to determine if they
require removal from the tangible capital asset schedule.

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 13. Audit of the Consolidated Financial Statements

These issues were brought to the attention of the Comptroller’s Office.

Recommended changes were made to the contractual obligations schedule.
No changes were made for the other issues identified. Improvements are
recommended, and repetitive issues should be addressed.

Recommendation

13.21 The Comptroller’s Office should review the note disclosures

and schedules in the consolidated financial statements to ensure the
information included is complete, accurate and clearly presented.

ABSENCE OF 13.22 The Government of Province Edward Island has been providing an
SIGNED annual, non-repayable debt service grant, to the University of Prince
FUNDING Edward Island to finance construction costs associated with the
AGREEMENT Sustainable Design Engineering Program. This funding arrangement
began in 2016-17, and will be in place for a 20 year term. The maximum
total funding over the term is approximately $20 million. During our
audit, we noted that a signed agreement is not in place for this funding
arrangement.

13.23 A signed funding agreement is important, as it outlines the agreed

upon terms for both parties, and can also offer protection in the event that
either party fails to meet the terms of the agreement. A signed funding
agreement also provides proof that the arrangement has been properly
authorized.

Recommendation

13.24 Signed agreements should be in place for all funding

arrangements.

BUDGET 13.25 Canadian Public Sector Accounting Standards require original

PRESENTATION budget information to be presented in the Province’s consolidated
financial statements. The standards also require that budgeted information
be presented on the same basis that actual results are presented. This
provides more accountability by Government, as it allows users to
compare the actual results to the planned results for the fiscal year.
Information on detailed budgets of government business enterprises also
helps to hold Government accountable for their planned spending.

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 13. Audit of the Consolidated Financial Statements

General 13.26 During our audit, we identified amounts that were included in the
Government budget of General Government, under the Department of Finance, but the
Budget actual results were not reflected as expenses of General Government. This
contributed to the General Government and Department of Finance being
significantly under budget in the 2020 fiscal year.

13.27 The General Government budget for the 2020 fiscal year included
approximately $6 million for salary negotiation expenditures that had been
accrued and recorded in the 2019 fiscal period. The budget for salary
negotiations was not prepared on the same basis of accounting as the
actual expenditures.

13.28 There was a payment of $6.1 million to cover the costs of the
AgriRecovery initiative on behalf of Prince Edward Island Agricultural
Insurance Corporation (AIC). The costs for this initiative were
appropriately recorded as part of AIC expenditures, however, the budgeted
amount was reflected in General Government. We recommended a budget
reclassification to the Comptroller’s Office, but the reclassification was
not made.

Prior Year 13.29 For several years, we noted the Province’s budget document, the
Recommendations Estimates of Revenue and Expenditures, is not presented on the same basis
as its consolidated financial statements. A separate reconciliation was
necessary in the schedules to the consolidated financial statements. The
original budgeted revenues and expenses were increased by $20.4 million
to present them on a comparative basis with the actual financial results.

13.30 The Province’s original budget document does not present the
budgeted revenues and expenses of some consolidated entities on a line by
line basis. To provide the comparison of budget to actual in the
consolidated financial statements, the original budget was reallocated.

Recommendation

13.31 Budgeted amounts should be presented on the same basis as

the actual results in the consolidated financial statements.

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 13. Audit of the Consolidated Financial Statements

13.32 The operating budgets for government business enterprises are

presented on a net basis in the Estimates of Revenue and Expenditures,
and the details of each entity’s revenues and expenses are not disclosed to
the Legislature nor are they publicly available. This is significant because
government business enterprises generated revenues of $216.0 million and
incurred expenses of $144.5 million for the year ended March 31, 2020.
Government business enterprises also controlled $726.6 million in total
assets at year end.

13.33 For several years, we have recommended that more information on

the operating budgets of government business enterprises be provided to
Members of the Legislative Assembly. We were advised that Government
is considering this recommendation.

13.34 Detailed budget information of government business enterprises

would enhance accountability and transparency. It would also assist
Members of the Legislative Assembly and the public to assess and debate
the budgets of these entities.

OTHER REPORTING REQUIREMENTS

DEBTS 13.35 Section 16 of the Audit Act requires the Auditor General to report
CANCELLED, the total amount of any claims, obligations, debts, or monies due to the
DISCHARGED, Province that have been discharged, cancelled, and/or released under
WRITTEN OFF Section 26 of the Financial Administration Act. For the year ended
March 31, 2020, the amounts cancelled or discharged under Section 26 (1)
are detailed in Exhibit 13.1. Also included are amounts written off under
Section 26.1(1).

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 13. Audit of the Consolidated Financial Statements

EXHIBIT 13.1
AMOUNTS CANCELLED, DISCHARGED OR WRITTEN OFF
YEAR ENDED MARCH 31, 2020

Cancellations Write-offs
Section 26(1) Section 26.1(1)
PEI Agricultural Insurance Corporation $ 28,450 $ -
PEI Grain Elevators Corporation 7,545 16,749
Real Property Tax Act 1,406,550 -
Student Financial Assistance Corporation 1,500,664 -
Total $2,943,209 $16,749
Source: Orders-in-Council April 1, 2019 - March 31, 2020.

SURPLUS 13.36 Section 16 of the Audit Act also requires the Auditor General to
(DEFICIT) include information in the Annual Report on surpluses/deficits of
AGENCIES, agencies, boards, and Crown corporations. Exhibit 13.2 includes the
BOARDS, AND surplus or deficit of each entity for the year ended March 31, 2020.
CROWN
CORPORATIONS

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 13. Audit of the Consolidated Financial Statements

EXHIBIT 13.2
SURPLUS (DEFICIT)
AGENCIES, BOARDS, AND CROWN CORPORATIONS
YEAR ENDED MARCH 31, 2020

Annual
Surplus (Deficit)
$
Charlottetown Area Development Corporation* 861,224
Finance PEI 210,076
French Language School Board 17,844
Health PEI (31,009)
Innovation PEI 303,942
Island Investment Development Inc. 24,139,827
Island Waste Management Corporation (269,579)
PEI Advisory Council on the Status of Women (1,082)
PEI Agricultural Insurance Corporation*** 11,696,978
PEI Cannabis Management Corporation** 653,401
PEI Crown Building Corporation -
PEI Energy Corporation 8,700,554
PEI Grain Elevators Corporation (July 31, 2019) (177,281)
PEI Housing Corporation *** (175,600)
PEI Human Rights Commission 38,452
PEI Liquor Control Commission** 22,468,919
PEI Lotteries Commission** 14,757,337
PEI Marine Science Organization 48,026
PEI Museum and Heritage Foundation 15,194
PEI Regulatory and Appeals Commission 7,047
PEI Self-Insurance and Risk Management Fund 2,137,294
PEI Student Financial Assistance Corporation 307,726
PEI 2014 Inc. (5,684)
Public Schools Branch 1,091
Summerside Regional Development Corporation (54,123)
Tourism PEI -
Source: The Province’s Volume III Public Accounts March 31, 2020
*Includes the provincial portion only
**Surplus distributed to operating fund
***Based on draft financial statements

Report of the Auditor General of Prince Edward Island - 2021 149

 14. ISSUES NOTED IN OTHER FINANCIAL AUDITS

CHAPTER SUMMARY

Why it’s important

Our management letters are provided to management and those charged

with governance to assist them in fulfilling their responsibilities. The
reported issues and recommendations identify opportunities to strengthen
internal controls, and improve management and accounting processes.

What we found

We issued management letters for the majority of financial statement

audits that we conducted. Issues identified during our audits and reported
to management can be summarized into three main areas: accounting
concerns, compliance issues, and internal control weaknesses.

The majority of issues identified are recurring issues that have been raised
in previous management letters.

BACKGROUND

14.1 Our Office conducts independent audits and examinations that

provide objective information, advice, and assurance to the Legislative
Assembly. A significant portion of our work relates to financial audits.

14.2 It is important to note that an audit is not designed to express an

opinion on the adequacy or effectiveness of the system of internal controls
established by management. It cannot be relied upon to detect all internal
control weaknesses, defalcations, irregularities, and/or other areas which
may be of interest to management.

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 14. Issues Noted in Other Financial Audits

14.3 Our financial audits are conducted in accordance with Canadian

Auditing Standards and include such tests and other procedures we
consider necessary in the circumstances. These standards require the
auditor to communicate to management, and those charged with
governance, any significant issues or matters identified during an audit.

14.4 At the completion of an audit, any issues identified as significant

are communicated through a management letter. This management letter
provides recommendations for improvements in various areas, such as the
entity’s system of internal controls, proper accounting for transactions,
adequate disclosures, compliance with policies and agreements, or any
other matter the auditor concludes should be brought to the attention of
management and those charged with governance. Our audits may also
identify matters of a less significant nature, which are verbally
communicated to management.

14.5 Prior to finalizing a management letter, we discuss each finding

and recommendation with management. We also request a written
response to our management letters. A copy of each management letter is
provided to the Secretary to Treasury Board and to the Office of the
Comptroller.

SCOPE

14.6 In this chapter, we provide summary comments on significant

issues noted in the management letters arising from the financial statement
audits conducted by our Office. This does not include findings and
recommendations related to our audit of the Province’s consolidated
financial statements, which are discussed in a separate chapter. This
chapter also excludes the management letters, if any, related to the
financial statement audits of entities included in the Province’s
consolidated financial statements that are audited by external auditors. It
also excludes management letter issues noted from the audit of the Public
Trustee, as they are covered in Chapter 9.

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 14. Issues Noted in Other Financial Audits

SUMMARY OBSERVATIONS

14.7 For the majority of the financial statement audits conducted, we

issued management letters. The main issues identified and detailed in our
management letters can be categorized into accounting concerns,
compliance issues, and internal control weaknesses. Following is a
description of each category of issues identified in the financial statement
audits. In some cases, the issues have been noted for a number of years in
our management letters.

Accounting 14.8 Financial statements are prepared in accordance with accounting

Concerns standards. An objective of these standards is to enable users of the
financial statements to understand the information and for the information
to be fairly presented. The majority of accounting concerns identified
related to how certain transactions were recorded, the adequacy of
supporting documentation, and the accuracy of information provided for
audit.

14.9 Consistent with prior years, some Health PEI physician contracts
have not been updated and signed. The Prince Edward Island Housing
Corporation did not maintain adequate documentation in a number of
tenant files. The Prince Edward Island Grain Elevators Corporation did
not document all decisions made at meetings of its board of directors.

Compliance Issues 14.10 Governments have objectives and establish regulations, policies,
and procedures to clearly communicate expectations. We noted a number
of compliance issues during our financial statement audits. These issues
related to compliance with legislation, Treasury Board policies,
agreements, and specific entity policies.

14.11 Similar to prior years, there is non-compliance with certain policies

and legislation. Health PEI did not comply with Treasury Board policies
for appropriation transfers or signing authorities. The Prince Edward
Island Grain Elevators Corporation did not follow Treasury Board policies
for capital projects management. The Prince Edward Island Lotteries
Commission did not comply with its bylaws regarding the management of
surplus funds.

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 14. Issues Noted in Other Financial Audits

Internal Controls 14.12 Internal controls help to ensure transactions are appropriately
recorded and authorized. They also help to ensure business processes are
operating as intended. Weaknesses in internal controls can expose an
entity to business and financial risks. Internal control issues identified
included non-existent or ineffective internal review processes,
unauthorized transactions, timeliness of reporting, limited tracking of
inventory and asset disposals, and the need to update existing policies and
procedures.

14.13 An internal control issue that continues for the three significant
pension funds administered by Government, is the absence of a formal
policy and procedure manual. These funds include the Prince Edward
Island Public Sector Pension Plan (formerly the Prince Edward Island
Civil Service Superannuation Fund), the Prince Edward Island Teachers’
Pension Plan (formerly the Prince Edward Island Teachers’
Superannuation Fund), and the Pension Plan for Members of the
Legislative Assembly.

14.14 Internal control issues were also identified relating to the

timeliness of reporting. The Prince Edward Island Housing Corporation is
required to submit audited financial reports to the Canada Mortgage and
Housing Corporation (CMHC) in order to receive funding in a timely
manner. The Corporation is behind on the submission of these reports
resulting in significant funding being withheld by CMHC. Also, the
Prince Edward Island Teachers’ Pension Plan was over five years behind
in releasing its annual reports. Subsequent to the issuance of our
management letter, annual reports up to the 2017-2018 fiscal year are now
available on the plan’s website.

Follow-up 14.15 We acknowledge that, in some instances, management is working

to address the noted issues and some progress is being made. However,
sufficient work had not been completed at the time of our audits to warrant
removal of the issues from our management letters.

14.16 In each subsequent financial audit, we follow up on the

implementation of the recommendations included in our management
letters. We encourage the auditees to implement these recommendations.

Report of the Auditor General of Prince Edward Island - 2021 153

 15. APPROPRIATIONS AND SPECIAL WARRANTS

CHAPTER SUMMARY

Why it’s important

Government’s annual spending authority is approved by Members of the

Legislative Assembly through an appropriation act. Our work provides
assurance that special warrants, transfers, and sequestrations comply with
applicable legislation and Treasury Board Policy.

What we found

• Special warrants provided an additional $28.6 million in authorized

spending for current expenditures and an additional $28.5 million for
capital expenditures. A capital special warrant of $10.2 million was
offset by a $10.2 million sequestration from capital expenditures.

• An additional capital special warrant of approximately $6.8 million is

required and in the process of being authorized.

• Consistent with prior years, expenditures were incurred for the year
ended March 31, 2020 without special warrants being authorized, as
required by the Financial Administration Act.

BACKGROUND

15.1 The Appropriation Act (Current Expenditures) 2019 authorized

$2.067 billion in current expenditures for the fiscal year ended March 31,
2020. The Appropriation Act (Capital Expenditures) 2019 authorized
capital spending of $156.6 million for the fiscal year ended March 31,
2020.

15.2 Authorization for a department/entity to exceed the initial amount

set by an appropriation requires the issuance of a special warrant or
transferring a previously appropriated amount.

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 15. Appropriations and Special Warrants

15.3 Special warrants are used when the Legislative Assembly is not in
session and funds are needed for operations in addition to amounts that
were included in the Appropriation Act. Unlike appropriation acts, which
require the approval of the Legislative Assembly, special warrants must be
approved by the Lieutenant Governor in Council through an Order-in-
Council.

15.4 We examined the processes for recording current and capital

appropriations for the fiscal year ended March 31, 2020. We also
examined the approvals, processing, and recording of special warrants,
appropriation transfers, and sequestrations made during the fiscal year.
This chapter provides comments and recommendations resulting from our
audit work. In addition to the information provided in this chapter, readers
should also consider the Province’s consolidated financial statements and
our independent auditor’s report on those consolidated financial
statements.

OBSERVATIONS AND RECOMMENDATION

SPECIAL 15.5 Appendix A of this chapter provides a comparison of current and

WARRANTS capital appropriations to actual expenditures.

15.6 For the year ended March 31, 2020, special warrants in the amount
of $28.6 million were issued for current expenditures, and special warrants
in the amount of $28.5 million were issued for capital expenditures.
Exhibit 15.1 provides a summary of these special warrants. The Audit Act
requires the Auditor General to list in detail, appropriations made by
special warrant, and the purpose of such appropriations. This information
is included in Appendix B of this chapter.

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 15. Appropriations and Special Warrants

EXHIBIT 15.1
SUMMARY OF SPECIAL WARRANTS
MARCH 31, 2020

Department/Entity Special Warrant

Current:
Education and Lifelong Learning $ 1,530,000
Environment, Water and Climate Change 4,312,000
General Government 54,000
Justice and Public Safety 2,562,000
Social Development and Housing 19,251,800
Tourism PEI 872,700
Total Current 28,582,500
Capital:
Environment, Water and Climate Change 114,300
Health and Wellness 10,244,600
Tourism PEI 152,000
Transportation, Infrastructure and Energy 18,038,000
Total Capital 28,548,900
Total Special Warrants $57,131,400
Source: Orders-in-Council

15.7 Special warrants were partially offset by $3.6 million in additional

revenue and a $10.2 million sequestration. The sequestration was required
to transfer Health PEI’s capital appropriation for the construction of
mental health facilities to the Department of Health and Wellness,
including the transfer of responsibility for the project.

15.8 There is a need for an additional capital special warrant in the

amount of approximately $6.8 million to cover a capital lease expenditure
incurred by the Department of Transportation, Infrastructure and Energy.
This capital special warrant is outstanding and is expected to receive
authorization subsequent to the tabling of our annual report.

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 15. Appropriations and Special Warrants

15.9 The total authorized special warrants, and special warrants net of
revenue and sequestrations, for each of the last five years are presented in
Exhibit 15.2.

EXHIBIT 15.2
SPECIAL WARRANTS
YEAR ENDED MARCH 31
($ Millions)

$60.0

$50.0

$40.0

$30.0

$20.0

$10.0

$0.0
2016 2017 2018 2019 2020
Authorized Special Warrants
Special Warrants Net of Revenue and Sequestrations

2016 2017 2018 2019 2020

Authorized Special Warrants $44.9 $54.5 $41.9 $37.7 $57.1
Revenue and Sequestrations (7.2) (13.2) (6.1) (22.9) (13.8)
Special Warrants Net of
Revenue and Sequestrations $37.7 $41.3 $35.8 $14.8 $43.3
Source: Orders-in-Council

Delay in Issuing 15.10 The Financial Administration Act prohibits expenditures from
Special Warrants being incurred unless provided for by an appropriation. When it is
expected that an appropriation will be exceeded, a special warrant should
be obtained prior to the expenditure being incurred.

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 15. Appropriations and Special Warrants

15.11 Consistent with prior years, our audit identified instances where
special warrants were not authorized prior to the expenditure being
incurred. There were seven late special warrants required to cover
overspending for the March 31, 2020 fiscal year. Six of the late special
warrants totalled $8.7 million, and were authorized by Executive Council
on February 9, 2021, over ten months after year-end. The other late
special warrant of approximately $6.8 million, for the Department of
Transportation, Infrastructure and Energy, is expected to be authorized in
March of 2021, nearly twelve months after the 2020 fiscal year.

Recommendation

15.12 In accordance with the Financial Administration Act, special

warrants should be obtained prior to expenditures being incurred.

15.13 We have discussed our findings and recommendation with the

Treasury Board Secretariat.

158 Report of the Auditor General of Prince Edward Island - 2021

 15. Appropriations and Special Warrants
APPENDIX A / PAGE 1 OF 2
CURRENT APPROPRIATIONS
UNDER/
APPROPRIATION (OVER)
ACT SPECIAL GOVERNMENT TOTAL EXPENDITURES EXPENDITURES
2019 WARRANTS TRANSFERS SEQUESTRATIONS REORGANIZATION APPROPRIATIONS 2020 2020
CURRENT

AGRICULTURE AND LAND $ 36,977,100 $ - $ 505,700 $ - $ - $ 37,482,800 $ 33,685,800 $ 3,797,000

AUDITOR GENERAL 2,264,400 - 68,400 - - 2,332,800 2,082,082 250,718
ECONOMIC GROWTH, TOURISM AND 8,418,700 - 119,600 - - 8,538,300 6,925,652 1,612,648
CULTURE
EDUCATION AND LIFELONG LEARNING 418,826,600 1,530,000 - - - 420,356,600 420,356,383 217
EMPLOYEE BENEFITS 60,081,800 - - - - 60,081,800 59,826,610 255,190
EMPLOYMENT DEVELOPMENT AGENCY 5,643,500 - 10,000 - - 5,653,500 5,314,259 339,241

ENVIRONMENT, WATER AND CLIMATE 33,884,600 4,312,000 183,000 - - 38,379,600 37,169,875 1,209,725
CHANGE
EXECUTIVE COUNCIL 9,409,000 - 214,600 - - 9,623,600 8,511,086 1,112,514
FINANCE 54,829,500 - 917,300 - - 55,746,800 51,778,094 3,968,706
FISHERIES AND COMMUNITIES 39,243,600 - 183,100 - - 39,426,700 38,870,750 555,950

GENERAL GOVERNMENT 21,881,700 54,000 (5,638,000) - - 16,297,700 16,297,104 596

HEALTH AND WELLNESS 35,491,100 - 175,300 - - 35,666,400 34,646,459 1,019,941
HEALTH PEI 714,693,000 - - - - 714,693,000 711,370,219 3,322,781

INNOVATION PEI 43,739,400 - 102,100 - - 43,841,500 43,268,725 572,775

INTERMINISTERIAL WOMEN’S 661,200 - 4,700 - - 665,900 664,388 1,512
SECRETARIAT
ISLAND REGULATORY AND APPEALS 1,400,300 - - - - 1,400,300 1,400,300 -
COMMISSION
JUSTICE AND PUBLIC SAFETY 59,842,000 2,562,000 710,000 - - 63,114,000 63,113,332 668
LEGISLATIVE ASSEMBLY 8,629,200 - 26,000 - - 8,655,200 7,618,511 1,036,689
PEI PUBLIC SERVICE COMMISSION 7,942,500 - 176,600 - - 8,119,100 7,967,217 151,883
SOCIAL DEVELOPMENT AND HOUSING 133,327,400 19,251,800 727,300 - - 153,306,500 153,306,424 76
TOURISM PEI 21,203,500 872,700 184,200 - - 22,260,400 22,253,345 7,055
TRANSPORTATION, INFRASTRUCTURE 220,736,700 - 1,330,100 - - 222,066,800 169,033,198 53,033,602
AND ENERGY
INTEREST CHARGES ON DEBT 128,018,200 - - - - 128,018,200 124,587,043 3,431,157

TOTAL CURRENT $2,067,145,000 $28,582,500 $ - $ - $ - $2,095,727,500 $2,020,046,856 $75,680,644

Expenditures are presented in accordance with the classifications in the Appropriation Acts 2019 and approved special warrants for the 2019-20 fiscal year. This format differs from the Province’s Operating Fund financial statements.

Report of the Auditor General of Prince Edward Island - 2021 159

 15. Appropriations and Special Warrants
APPENDIX A / PAGE 2 OF 2
CAPITAL APPROPRIATIONS
UNDER/
APPROPRIATION (OVER)
ACT SPECIAL GOVERNMENT TOTAL EXPENDITURES EXPENDITURES
2019 WARRANTS TRANSFERS SEQUESTRATIONS REORGANIZATION APPROPRIATIONS 2020 2020
CAPITAL

AGRICULTURE AND FISHERIES $ 50,000 $ - $ - $ - $ ( 50,000) $ - $ - $ -

AGRICULTURE AND LAND - - - - 30,000 30,000 26,913 3,087
COMMUNITIES, LAND AND 623,000 - - - (623,000) - - -
ENVIRONMENT
ECONOMIC GROWTH, TOURISM AND - - - - 150,000 150,000 137,009 12,991
CULTURE
EDUCATION AND LIFELONG LEARNING - - - - 25,012,000 25,012,000 18,491,856 6,520,144
EDUCATION, EARLY LEARNING AND 25,162,000 - - - (25,162,000) - - -
CULTURE
ENVIRONMENT, WATER AND CLIMATE - 114,300 - - 623,000 737,300 691,844 45,456
CHANGE
FAMILY AND HUMAN SERVICES 12,502,800 - - - (12,502,800) - - -

FINANCE 12,434,400 - - - - 12,434,400 10,871,891 1,562,509

FISHERIES AND COMMUNITIES - - - - 20,000 20,000 19,528 472
HEALTH PEI 30,915,300 - - (10,244,600) - 20,670,700 19,311,920 1,358,780

HEALTH AND WELLNESS - 10,244,600 - - - 10,244,600 3,306,652 6,937,948

JUSTICE AND PUBLIC SAFETY 1,880,000 - - - - 1,880,000 1,148,554 731,446

SOCIAL DEVELOPMENT AND HOUSING - - - - 12,502,800 12,502,800 8,716,370 3,786,430

TOURISM PEI 750,000 152,000 - - - 902,000 855,051 46,949

TRANSPORTATION, INFRASTRUCTURE 72,250,000 18,038,000 - - - 90,288,000 97,044,280 (6,756,280)

AND ENERGY

TOTAL CAPITAL $ 156,567,500 $28,548,900 $ - $(10,244,600) $ - $ 174,871,800 $ 160,621,868 $14,249,932

GRAND TOTAL $2,223,712,500 $57,131,400 $ - $(10,244,600) $ - $2,270,599,300 $2,180,668,724 $89,930,576

Expenditures are presented in accordance with the classifications in the Appropriation Acts 2019 and approved special warrants for the 2019-20 fiscal year. This format differs from the Province’s Operating Fund financial statements.

160 Report of the Auditor General of Prince Edward Island - 2021

 15. Appropriations and Special Warrants
APPENDIX B
PAGE 1 OF 5
ORDER-IN-
COUNCIL SPECIAL WARRANTS FOR CURRENT EXPENDITURES 2020 FISCAL YEAR

EDUCATION AND LIFELONG LEARNING

EC2021-88 POST SECONDARY AND CONTINUING EDUCATION

Grants $ 1,480,000
Professional Services 50,000

Total Department of Education and Lifelong Learning $ 1,530,000

To provide annual funding to support the construction of the UPEI student residence on campus and
the development of a Shared Apprenticeship Management System.

ENVIRONMENT, WATER AND CLIMATE CHANGE

EC2020-186 CLIMATE CHANGE SECRETARIAT

Grants $ 500,000

ENVIRONMENT

Equipment 100,000
Grants - Alternative Land Use Services 30,600
Grants - Carbon Pricing Rebates 2,722,400
Grants - Water and Air Monitoring 20,000

FORESTS, FISH AND WILDLIFE

Grants - Fish and Wildlife 689,000

Grants - Watershed Grants 250,000

Total Department of Environment, Water and Climate Change $ 4,312,000

To fund increased costs associated with carbon relief subsidies and new or expanded program
initiatives, partially offset by federal revenue of $667,300.

Report of the Auditor General of Prince Edward Island - 2021 161

 15. Appropriations and Special Warrants
APPENDIX B
PAGE 2 OF 5
ORDER-IN-
COUNCIL SPECIAL WARRANTS FOR CURRENT EXPENDITURES 2020 FISCAL YEAR

GENERAL GOVERNMENT

EC2021-89 CONTINGENCY FUND AND SALARY NEGOTIATIONS

Grants and Salaries $ 54,000

To fund support for COVID-19 Program spending that was required prior to year-end.

JUSTICE AND PUBLIC SAFETY

EC2021-90 PUBLIC SAFETY AND POLICING

Grants - Disaster Assistance Claims $ 2,562,000

To fund the Provincial Disaster Financial Assistance Program, fully offset by federal revenue.

SOCIAL DEVELOPMENT AND HOUSING

EC2020-156 CHILD AND FAMILY SERVICES

Grants - Supports for Children $ 221,600

Salaries 396,400
Travel and Training 37,500

HOUSING SERVICES

Grants 2,033,800
Professional Services 68,100

SOCIAL PROGRAMS

Grants - AccessAbility Supports 8,579,200

Grants - Child Care Subsidy 2,143,200
Grants - School Age Autism 65,000
Grants - Social Assistance Benefits 1,376,000
Materials, Supplies and Services 122,400
Professional Services 71,400
Travel and Training 50,200 $15,164,800

To fund additional program expenditures under Housing Grants, Child Care Subsidy, AccessAbility
Support Program and Social Assistance Program.

162 Report of the Auditor General of Prince Edward Island - 2021

 15. Appropriations and Special Warrants
APPENDIX B
PAGE 3 OF 5
ORDER-IN-
COUNCIL SPECIAL WARRANTS FOR CURRENT EXPENDITURES 2020 FISCAL YEAR

EC2021-91 HOUSING SERVICES

Grants 3,848,900

SOCIAL PROGRAMS

Grants - AccessAbility Supports 238,100 4,087,000

To fund additional program expenditures, including the Affordable Housing Development Program,
mobile rental vouchers, Community Needs Assessment and Home Renovations Program.

Total Department of Social Development and Housing $19,251,800

TOURISM PEI

EC2020-187 STRATEGIC INITIATIVES

Grants $ 650,000
Professional Services 157,700

TOURISM MARKETING COMMUNICATIONS

Materials, Supplies and Services 65,000

Total Tourism PEI $ 872,700

To fund enhanced marketing and product development for the Province, partially offset by revenue of
$267,700 from the Mark Arendz Provincial Ski Park and the Atlantic Canada Opportunities Agency.

TOTAL SPECIAL WARRANTS FOR CURRENT EXPENDITURES $28,582,500

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 15. Appropriations and Special Warrants
APPENDIX B
PAGE 4 OF 5
ORDER-IN-
COUNCIL SPECIAL WARRANTS FOR CAPITAL EXPENDITURES 2020 FISCAL YEAR

ENVIRONMENT, WATER AND CLIMATE CHANGE

EC2020-4 CAPITAL PURCHASES

Forest Fire Vehicles $ 20,000

Laboratory Equipment 57,300
Vehicle Purchases - Light Fleet 37,000

Total Department of Environment, Water and Climate Change $ 114,300

To fund the purchase of equipment and vehicles.

HEALTH AND WELLNESS

EC2020-151 CAPITAL IMPROVEMENTS

Mental Health Facilities $10,244,600

To fund construction for the mental health and addictions facilities, fully offset by funds sequestered
from Health PEI.

TOURISM PEI

EC2020-188 CAPITAL IMPROVEMENTS

Confederation Trail $ 85,000

To fund further development of the Confederation Trail, fully offset by revenue of $85,000 received
from Trans Canada Trail.

EC2021-92 CAPITAL IMPROVEMENTS

Golf Courses 67,000

To fund the purchase of golf carts, fully offset by revenue.

Total Tourism PEI $ 152,000

164 Report of the Auditor General of Prince Edward Island - 2021

 15. Appropriations and Special Warrants
APPENDIX B
PAGE 5 OF 5
ORDER-IN-
COUNCIL SPECIAL WARRANTS FOR CAPITAL EXPENDITURES 2020 FISCAL YEAR

TRANSPORTATION, INFRASTRUCTURE AND ENERGY

EC2019-711 CAPITAL IMPROVEMENTS - HIGHWAYS

Bridges $ 450,000
National and Collector Highways 15,690,000
Provincial Paving 1,500,000 $17,640,000

To fund additional costs for highway construction and bridges.

EC2021-93 CAPITAL IMPROVEMENTS

Buildings 398,000

To fund year-end holdback adjustments relating to the Queens County Highway Maintenance Depot.

Total Department of Transportation, Infrastructure and Energy $18,038,000

TOTAL SPECIAL WARRANTS FOR CAPITAL EXPENDITURES $28,548,900

TOTAL SPECIAL WARRANTS ISSUED FOR THE 2020 FISCAL YEAR $57,131,400

Report of the Auditor General of Prince Edward Island - 2021 165

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