Public Accounts Committee — ar 2011

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Newfoundland and Labrador — Committees

REPORT OF THE AUDITOR GENERAL To the House of Assembly On Reviews of Departments and Crown Agencies For the Year Ended 31 March 2011

Office of the Auditor General Newfoundland and Labrador The Auditor General reports to the House of Assembly on signif icant matters which result from the examinations of Government, its departments and agencies of the Crown. The Auditor General is also the independe nt auditor of the Province’s financial statements and the financial statements of many agencies of the Crown and, as such, expresses an opinion as to the fair presentation of their financial statements.

VISION The Office of the Auditor General is an independent Office of the Legislature which, through audit, adds credibility to information provided by Government to the House of Assembly so that the Members of the House of Assembly can hold Government accountable for the prudent use and management of public resources. Head Office Location 15 Dundee Avenue Suite 201 Mount Pearl Newfoundland and Labrador Canada Mailing Address P.O. Box 8700 St.

John’s Newfoundland and Labrador Canada A1B 4J6 Telephone: (709) 729-2695 Fax: (709) 729-5970 Email: oagmail@oag.nl.ca Website: www.gov.nl.ca/ag Regional Office Location 1 Union Street Corner Brook Newfoundland and Labrador Canada

Office of the Auditor General of Newfoundland and Labrador Head Office Auditor General (

A) Regional Office 15 Dundee Ave., Mount Pearl Wayne R. Loveys, CMA 1 Union St., Corner Brook Box 8700 ♦ St. John’s, NL ♦ A1B 4J6 T: 709-729-2700 Box 2006 ♦ Corner Brook, NL ♦ A2H 6J8 T: 709-729-2695 ♦ F: 709-729-5970 T: 709-637-2295 ♦ F: 709-637-2595 Email: oagmail@oag.nl.ca 25 January 2012 The Honourable Ross Wiseman, M.H.A. Speaker House of Assembly Dear Sir: In compliance with the Auditor General Act , I have the honour to submit herewith, for transmission to the House of Assembly, my Report on Reviews of Departments and Crown Agencies for the year ended 31 March 2011. Respectfully submitted, WAYNE R. LOVEYS, CMA Auditor General (

A) Auditor General of Newfoundland and Labrador Table of Contents, January 2012 TABLE OF CONTENTS

Chapter Part Page 1 Reflections of the Auditor General 1 2 Comments on Audits and Additional Examinations Refusal of Access to Required Information  Infrastructure Strategy  Canada-Newfoundland and Labrador Offshore Petroleum Board 2.1 2.2 3 9 Department of Advanced Education and Skills  Temporary Employees 2.3 15 Department of Education  Western School District 2.4 33 Department of Environment and Conservation  Industrial Compliance 2.5 95 Department of Justice  Royal Newfoundland Constabulary - Firearms 2.6 117 Department of Natural Resources  Growing Forward Program 2.7 155  Mineral Incentive Program  Provincial Commodity Boards 2.8 2.9 185 209

Table of Contents, January 2012 Audito r General of Newfoundland and Labrador TABLE OF CONTENTS

Chapter Part Page 2 Service NL  Provincial Lottery Licensing  Workplace Health and Safety Inspections 2.10 2.11 261 289 Department of Tourism, Culture and Recreation  Marble Mountain Development Corporation 2.12 325 Department of Transportation and Works  Building Maintenance  Trans Labrador Highway 2.13 2.14 365 397 3 Audit of the Province’s Financial Statements Reflections of the Auditor General Introduction Financial Condition of the Province Comments on Selected Financial Information Other Matters Expenditures of the Consolidated Revenue Fund Answers to Frequently Asked Questions about the Public Accounts Glossary 3.1 3.2 3.3 3.4 3.5 3.6 3.7 431 435 441 477 487 495 519 525

CHAPTER 1 REFLECTIONS OF THE AUDITOR GENERAL

Auditor General of Newfoundland and Labrador

Chapter 1, January 2012 1 Reflections of the Auditor General The Office of the Auditor General is committed to promoting accountability and encouraging positive change in the stewardship, management and use of public resources. To this end, each year the Office conducts reviews of Government departments and Crown agencies which result in findings and recommendations. Our recommendations are designed to address weaknesses and/or improve processes and, therefore, it is important that Government consider them and take corrective action.

This Report provides findings and recommendati ons resulting from our reviews for the year ended 31 March 2011. The Report covers a variety of matters and is provided to the Members of the House of Assembly for their consideration. Under the Auditor General Act, the Auditor General is required to report at least annually to the House of Assembly on the results of work pe rformed during the year . This work includes reviews of Government departments and Crow n agencies, and the audit of the Province’s financial statements.

Chapter 2 of this Report first provides commentary relating to two instances where we were refused access to information re quired to conduct our work. Thes e two instances related to the Office’s attempt to review information maintained at the departments of Health and Community Services, and Justice in relation to the Province’s infrastructure strategy and our attempt to review the Canada-Newfoundland and Labrador Offshore Petrol eum Board.

Chapter 2 then provides findings and recommendations resulting from our reviews of Government departments and Crown agencies for the year ended 31 Ma rch 2011. There are twel ve items covering a variety of matters, with each item starting with an Executive

Summary. The Executive

Summary is intended to make it easier for readers to qu ickly identify what was reviewed, the work performed, and what was found. As in prior reports, in order to provide a balance to our findings and conclusions, the verbatim response from the auditee is included at the end of each item. The following is a listing of the twelve items. Readers are encouraged to go to each

section of the Report to obtain further details. Temporary Employees (section 2.3) Western School District (section 2.4) Industrial Compliance (section 2.5) Royal Newfoundland Constabulary - Firearms (section 2.6) Growing Forward Program (section 2.7)

Chapter 1, January 2012 Auditor Ge neral of Newfoundland and Labrador Reflections of the Auditor General Mineral Incentive Program (section 2.8) Provincial Commodity Boards (section 2.9) Provincial Lottery Licensing (section 2.10) Workplace Health and Safety Inspections (section 2.11) Marble Mountain Development Corporation (section 2.12) Building Maintenance (section 2.13) Trans Labrador Highway (section 2.14)

Chapter 3 of this Report provides comments rela ting to the audit of the Province’s financial statements (commonly referred to as the Public Accounts) for the year ended 31 March 2011. The

Chapter provides additional information on the financial condition of Government measured by using indicators issued by the Public Sector Accounting Board of the Canadian Institute of Chartered Accountants. The Public Accounts provide an important link in an essential chain of public accountability. They are the principal mean s by which Government reports to the House of Assembly and to all Newfoundlanders and Labradorians on its stewardship of public funds.

Each year the Office reports on the status of the implementation of recommendations made in prior Reports to the House of Assembly on Reviews of Departments and Crown Agencies (Annual Reports). Monitoring commences approximately two years after a Report is published and continues until we are reasonably satisfie d that recommendations have been adequately addressed or are no longer applicable. As was the case last year, deta ils on progress by various Government departments and Crown agencies relating to past recommendations will be made available on the Office’s website at www.ag.gov.nl.ca/ag/priorupdates.htm .

Information resulting from our most recent review will be available by 29 February 2012. I acknowledge the cooperation and assistance my Office has rece ived from officials of the various Government departments and Crown agen cies during the completion of our audits. I also thank my staff for their continued hard work, professionalism and dedication. WAYNE R. LOVEYS, CMA Auditor General (

A) CHAPTER 2 COMMENTS ON AUDITS AND ADDITIONAL EXAMINATIONS

PART 2.1 REFUSAL OF ACCESS TO REQUIRED INFORMATION INFRASTRUCTURE STRATEGY

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.1, January 2012 3 Infrastructure Strategy Commentary In the 2004 Speech from the Throne, Government announced that it “... will develop a comprehensive infrastructure strategy to guide investments in public infrastructure in a m anner that promotes growth.” The 2006 Speech from the Throne further elaborated that “ Existing infrastruc ture, including roads and public buildings, has been eroding throughout Newfoundland and Labrador for decades. Addressing the wide assortment of costly needs responsibly over time requires exper t information an d careful fiscal balancing.

For this reason, My Government initiated a comprehensive infrastructure strategy to evaluate th e needs and identify ways and means of meeting them.” Since 2004, Government has continued to reference its Infrastructure Strategy in Budget documents. In its Budget for the year ended 31 March 2007 Government indicated that its Infrastructure Strategy was valued at $2 billion; while in its Budget for the year ended 31 March 2011 Government indicated that its Infrastructure Strategy was valued at $5 billion.

The $5 billion infrastructure inve stment includes spending directly undertaken by Government departments, as well as funding provided to Crown corporations and agencies, and municipalities, to undertake capital projects. The Province’s infrastructure consists of physical capital as sets instrumental in the provision of public services. It consists of such things as roads, bridges, ferries, aircraft, buildings, vehicles, major software programs and various other categories of tangible capital assets. Such assets are used to provide services to residents and visitors to the Province.

No Formal Infrastructure Strategy When we commenced our review, we reque sted a copy of the “Infrastructure Strategy” that was being referred to in the Speech from the Throne and various Government media releases. We were told by the former Deputy Minister of Transportation and Works that there was no formal, documented infrastructure strategy. The former Deputy Minister was Chair of an Infrastructure Committee established by Government.

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Part 2.1, January 2012 A uditor General of Newfoundland and Labrador Infrastructure Strategy We did find that an Infrastructure Stra tegy working group ha d been struck to undertake a review the Province’s infrastr ucture, and that one of the working group’s primary objectives was to prepar e a strategy to prioritize future infrastructure investments.

While no formal, documented strategy was developed, the working group did prepare a draft report, dated November 2004, which indicated in part that:  the Province’s current approach to infrastructure asset management does not provide decision makers with an appreciation of the significance of the approval of a particular level of funding;  responsibility for the planning, acquisition, and maintenance of infrastructure is not centralized but is spread out among numerous Government departments and Crown agencies;  the planning processes used amongst the various departments and Crown agencies were not consistent;  a planned and dedicated a pproach over the long term, with an increased, and multi-year funding commitment was necessary; and  an appropriate asset management system should involve consideration of the asset value, life cycle costs, long term affordability, risk management and assessment, performance mana gement, operational plans, and integration of technical and financial plans.

While the draft report would not constitu te an infrastructure strategy, work undertaken for the report may have been useful in developing such a strategy. The draft report was never finalized ; however, the working group did highlight the benefit of developing an overall integrated long term strategy for capital investment. Refusal by Departments to Provide Access to Required Information When we determined that there was no formal, documented Infrastructure Strategy, it was decided to determine what processes existed at the departmental level to identify, evalua te and rank potential infrastructure projects.

To make this determination we contacted the five departments which had the largest budgeted expenditures related to infrastructure for the 2010-11 fiscal year, as outlined in informati on provided to us by officials of the Department of Transportation and Work s. These five departments were: Transportation and Works; Health a nd Community Services; Education; Municipal Affairs; and Justice.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.1, January 2012 5 Infrastructure Strategy Officials from our Office met with officials from each of the five departments to obtain a preliminary understanding of the process each department used to identify, analyze and manage infrastruc ture needs. We also discussed the nature and scope of our review and th e type of information that we would require from them. While we did receive some preliminary information, it soon became apparent that we would not be receiving all the information required to complete our review.

In particular, the Department of Health and Community Services, and the Department of Justice expresse d significant concer n with providing the requested information. We were in formed by officials at the departments that the Department of Justice would be assessing our request on behalf of all departments we had contacted, to determ ine whether we should be provided with the information requested.

On 5 July 2011, the Deputy Minister of Health and Community Services informed us that: “With respect to your inquiry regarding what documentation is availabl e for repairs and renovati ons, capital equipment and major infrastructure projects, th ere would be various documentation available for each cate gory as prepared durin g the annual budget process and which can vary from year to year depending on the Budget Guidelines provided by the Department of Finance, any direction from Cabinet and/or Treasury Board, and any other document ation that is necessary to support budget requests.

As to your questions related to what was specifically provided to members of TB [Treasury Board] and/or Cabinet, it is the Department’s position that this entire body of info rmation ultimately informs Cabinet deliberations and decision making as part of the budget process and, as I previously indicated to you, the disclosure of this information would reveal Cabinet confidences which is pr otected from disclosure under

section 18 of the Access to Information and Protection of Privacy Act.” On 30 September 2011, the Deputy Minister of Justice informed us that “… it is the Department's position that all documentation either obtained or generated by Departmental officials, supporting assessments and rankings of proposed infrastructure projects whether forwarded to Budget Division/Cabinet Secretariat or not, ulti mately informs Cabinet deliberations and decision making as part of the budget process. As a result, this information cannot be released under

section 18 of the Access to Information Act and Protection of Privacy Act as it would reveal the substance of deliberations of Cabinet.” At this point it became clear that it was not worthwhile proceeding with any further requests to the departments.

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Part 2.1, January 2012 A uditor General of Newfoundland and Labrador Infrastructure Strategy My view is that I am entitled to unrestricted access to the information required to conduct my work. The requirement to provide my Office with unrestricted access comes from

section 17 of the Auditor General Act which states that, “Except as provided by another Act that expressly refers to this section, every department of governm ent, every agency of the Crown and every Crown controlled corporation shal l furnish the auditor general with information regarding its power, duties, activities, organization, financial transactions and methods of business as the auditor general requires, and the auditor general shall be given access to all books, accounts, financial records, reports, electronic data pro cessing records, explanations, files and all other papers, things or property belonging to or in use by the department, agency of the Crown or Crown controlled corporation and necessary to the performance of the duties of the auditor general under this Act.” Under

section 19 of the Auditor General Act , there are only two types of information in the Access to Information and Protection of Privacy Act which a public body shall not provide access to the Auditor General – matters where the disclosure would reveal the substance of deliberations of Cabinet (defined as including a committee of Cabinet), or matters where disclosure could reasonably be expected to be harmful to law enforcement. In this case, the departments claimed that all of the information available related to our request was being restricted as it would reveal the substance of deliberations of Cabinet.

Section 18 of the Access to Information and Protection of Privacy Act states that: “The head of a public body shall re fuse to disclose to an applicant information that would reveal the subs tance of deliberations of Cabinet, including advice, recommendations, policy considerations or draft legislation or regulations submitted or prepared for submission to the Cabinet.” I interpret the “substance of deliberati ons of Cabinet” as referring to such things as: individual documents, or pa rts thereof, if the disclosure of information contained in the documents would likely permit my Office to draw accurate inferences about the substance of Cabinet deliberations; audio and / or video recordings of Cabinet meetings; notes made during the course of Cabinet meetings; and interviews with persons present at Cabinet meetings regarding the exact details of events and discussions that occurred during the meetings.

In my opinion, the departments’ inte rpretation of

section 18 of the Access to Information and Protection of Privacy Act is a much broader

interpretation of the Act than has been seen in recent memory. It is highly doubtful whether “... all documentation either obtained or generated by Departmental officials, supporting assessments and rankings of proposed infrastr ucture projects

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.1, January 2012 7 Infrastructure Strategy whether forwarded to Budget Divisi on/Cabinet Secretariat or not ...” would reveal the substance of deliberations of Cabinet. The position taken by the departments is of significant concern, not only for this particular review, but for the preced ent setting nature of the refusal. Furthermore, in my opinion the position is not in keeping with the purposes of the Access to Information and Pr otection of Privacy Act, as outlined in

section 3(1), which states that: “...the purposes of this Act are to make public bodies more accountable to the public and to protect personal privacy….”. Given that access to the information required to conduct my work was not provided, my recourse under

section 12 of the Auditor General Act is to report the denial of access to the House of Assembly. S ection 12 provides that “The auditor general shall as he or she considers necessary but at least annually report to the Hous e of Assembly on…(

b) whether, in carrying out the work of the office, the auditor general received all the information including reports and explanations the auditor general required.” I further note that:  The position taken on this request is inconsistent with previous decisions that Government has made. Since we have been provided with similar information for audits conducted in past years, it is surprising that we are now being advised that a ll of the information bei ng requested is subject to restriction under

section 18 of Access to Information and Protection of Privacy Act.  The Province’s Information and Privacy Commissioner has issued reports related to other situations brought to that Office’s attention where

section 18 of the Access to Information and Pr otection of Privacy Act was used as the basis for Government’s refusal to provide requested information. The Information and Privacy Commissioner has found that the exemption claimed by Government may not apply or may be too broad. To determine whether information can be exempted under

section 18 of the Access to Information and Protection of Privacy Act, the Province’s Information and Privacy Commissioner applies the following test, adopted from one set out by the N ova Scotia Court of Appeal in O’Connor v. Nova Scotia, 2001 NSCA 132: “…Is it likely that the disclosure of the information would permit the reader to draw accurate inferences about Cabine t deliberations? If the question is answered in the affirmative, then the information is protected by the Cabinet confidentiality exemption …”.

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Part 2.1, January 2012 A uditor General of Newfoundland and Labrador Infrastructure Strategy

PART 2.2 REFUSAL OF ACCESS TO REQUIRED INFORMATION CANADA-NEWFOUNDLAND AND LABRADOR OFFSHORE PETROLEUM BOARD

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.2, January 2012 9 Canada-Newfoundland and Labrador Offshore Petroleum Board Commentary The Canada-Newfoundland and Labra dor Offshore Petroleum Board (C- NLOPB) was created in 1985 to administ er the relevant provisions of the Canada-Newfoundland Atlantic Accord Implementation Acts as enacted by the Parliament of Canada and the Legislature of Newfoundland and Labrador. The C-NLOPB is comprised of 7 members, 3 of whom are appointed by the Federal Government and 3 of whom are appointed by the Provincial Government. The Chairman is jointly appointed by both the Federal and Provincial Governments.

The C-NL OPB is funded equally by both Governments. The Provincial contribu tion for the year ended 31 March 2011 was approximately $7.7 million, and contributions since 1985 totalled approximately $78.9 million. On 21 January 2008, the former Auditor General notified the Chairman and Chief Executive Officer of the C-NLOPB that he was plan ning a review of the operations of the C-NLOPB. The review was to include all of the following four functional areas of th e C-NLOPB - safety, environmental, resource management and industrial benefits.

In the four years since January 2008, several attempts were made by the former Auditor General (to 31 July 2011) and me (since 1 August 2011) to conduct the planned review. This has been a lengthy and often frustrating process, with varying responses by C-NL OPB officials to our attempts.

The following are highlights of the actions taken and correspondence exchanged since 21 January 2008, rela ting to our attempts to conduct the intended review:  On 30 January 2008, the former Auditor General was advised by the Chairman and Chief Executive Officer of the C-NLOPB that the intended review could not be cond ucted as the C-NLOPB was not a Crown agency for purposes of the Auditor General Act.  On 8 February 2008, the former Auditor General replied to the Chairman and Chief Executive Officer that he rejected the position held by the C-NLOPB, indicating that in his view the C-NLOPB was within the jurisdiction of the Auditor General Act , and requested that the C- NLOPB reconsider its position and a llow the review to proceed as intended.

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Part 2.2, January 2012 A uditor General of Newfoundland and Labrador Canada-Newfoundland and Labrador Offshore Petroleum Board  On 14 February 2008, the former Auditor General was advised by the Chairman and Chief Executive Officer that any audit should be conducted jointly by the Auditors General of the Province and the Government of Canada.  On 26 February 2008, the former A uditor General issued a special report to the House of Assembly i ndicating that, as a result of the restricted access, he could not comp lete the planned review, and that regardless of whether a joint review could be arranged with the Auditor General of Canada, it still remained that the C-NLOPB had not provided the access required under the Act.  At a meeting held on 10 June 2008, the Chairman and Chief Executive Officer indicated that we would be “invited” to conduct a review.  On 19 January 2009, the Office commenced its review of the C- NLOPB; however, it soon became a pparent that C-NLOPB officials would not be willing to provide access to the information required to complete the review.  In March 2009, we requested assistance from the Department of Natural Resources in obtaining the required information; however, Department officials informed us that, on the advice of legal counsel, they would not be able to provide such assistance, and suggested we again attempt to obtain the information from the C-NLOPB.  On 6 October 2009, we provided a list of required information to the C- NLOPB.

C-NLOPB officials indicated that given the privileged nature of much of the information required, they would have to request and obtain consent from the offshore operators.  On 15 December 2009, we were pr ovided with copies of operator responses, wherein five of the six operators i ndicated they would not consent to providing access to the Auditor General.  On 11 December 2009, we contacted o fficials at the Department of Natural Resources to advise of the operator responses and to ascertain whether the Department would provi de any assistance regarding our request for information.

However, the Department again confirmed that, based on legal advice, they would not provide the requested assistance.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.2, January 2012 11 Canada-Newfoundland and Labrador Offshore Petroleum Board  On 3 December 2010, the then Auditor General of Canada wrote the Chairman and Chief Executive Officer to advise that a joint audit with our Office was being planned, to be led by the Commissioner of the Environment and Sustainable Developmen t.

It was anticipated that the Commissioner would focus on e nvironmental and emergency preparedness activities as well as governance, and that our Office would primarily focus on the other functional areas of the C-NLOPB.  On 6 July 2011, the Chairman and Chief Executive Officer wrote the former Auditor General requesting confirmation that any privileged information provided would not be di sclosed in any wa y in reports by the Auditor General.  On 18 August 2011, I met with the Chairman and Chief Executive Officer to discuss our Office’s past attempts to audit the C-NLOPB.

At the meeting, I indicated that while I would be very cognizant of the confidential and privileged nature of the information, I could not provide absolute assurance that the information would not, under any circumstances, be used in a report.  In September 2011, the Chairman and Chief Executive Officer wrote the operators indicating that the C-NLOPB was of the view that the audits proposed by the Auditors General of Canada and Newfoundland and Labrador were for the administ ration of the Atlantic Accord Implementation Acts and were in the public interest, and that access to the required information would be provided.

However, it was also indicated that the C-NLOPB had in terpreted undertakings from the Auditors General of Canada and Newfoundland and Labrador to mean that privileged information would not be disclosed in their respective reports.  On 13 September 2011, I wrote the Chairman and Chief Executive Officer, again indicating that while I would be very cognizant of the confidential and privileged nature of the information, I could not provide absolute assurance that the information would not, under any circumstances, be used in a report.  On 28 September 2011, I wrote the Chairman and Chief Executive Officer to confirm my intention to conduct a concurrent audit of the C- NLOPB with the Office of the Auditor General of Canada, to request confirmation of free and full access to the information contained in a list attached to the letter by 7 Oct ober 2011, and to request that the information listed be provided as soon as possible, but no later than 21 October 2011.

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Part 2.2, January 2012 A uditor General of Newfoundland and Labrador Canada-Newfoundland and Labrador Offshore Petroleum Board  On 30 September 2011, the Chairman and Chief Executive Officer responded to my 28 September 2011 le tter and indicated that the C- NLOPB may not be able to provi de full access to privileged information.

However, the Board indicated: “We will request Operator’s consent to provide you with their privileged information, but we cannot ensure, in the absence of y our assurance not to release this information, that they will agree to do so.”  On 24 October 2011, I wrote the Chairman and Chief Executive Officer indicating that “As neither the requested confirmation of free and full access, nor the information containe d in the listing, ha ve been provided as of 21 October 2011, I consider this to be denial of access to the information required to conduct my audit work, and will prepare a report on this matter for submission to the House of Assembly.” As indicated above, and as reflected by these highli ghts of actions taken and correspondence exchanged since 21 January 2008, this has been a lengthy and often frustrating process.

I cannot accept the C-NLOPB’s condition that they will provide unrestricted access to what they deem to be privileged information, only if I agree not to report any findings related to that info rmation. My concern with accepting such a condition is heightened, given the extent of information identified by the C-NLOPB in the past as being priv ileged, and the significance of that information to any potential findings identi fied in a review of the four main functional areas – safety, environmental, resource management and industrial benefits. I have therefore decided not to pro ceed with the planned review.

In my opinion, had I proceeded under the C-NLOPB’s condition, any attempt to report on findings in the safety or ot her functional areas would have been challenged by the C-NLOPB on the grounds that the findings were somehow supported by privileged information. The inability to complete the planned re view is regrettable, as the C-NLOPB will not be held accountable in the sa me manner as other entities within the jurisdiction of the Auditor General Act operating in the Province, i.e. through an audit by the Provincial Auditor General.

With respect to the issue of access to privileged information, the C-NLOPB advised that it had obtained legal opinions indicating that access to privileged information could not be provided to my Office. I do note however, that when the C-NLOPB was under the assumption that I would not report anything considered to be privileged, the Chairman and Chief Executive

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.2, January 2012 13 Canada-Newfoundland and Labrador Offshore Petroleum Board Officer had indicated, in a letter to the ope rators in September 2011, that the audits proposed by the Auditors Gene ral of Canada and Newfoundland and Labrador were for the administration of the Accord Acts and were in the public interest, and that access to the required information would be provided.

The reference to the administration of the Accord Acts relates to the sections contained in both the Fede ral and Provincial Atlantic Accord legislation which provide that privileged information shall not be disclosed without the written consent of the person who provided it “except for” the purposes of the administration or enforcement of that Act. After I clarified the Office’s position on reporting, the C-NLOPB agai n denied access to the required information. My view is that I am entitled to unrestricted access to the information required to conduct a revi ew of the C-NLOPB.

The requirement to provide my Office with unrestricted access comes from

section 17 of the Auditor General Act which states that, “Except as provided by another Act that expressly refers to this section, every department of government, every agency of the Crown and every Crown controlled corporation shall furnish the auditor general with information regar ding its power, duties, activities, organization, financial transactions and methods of business as the auditor general requires, and the auditor general shall be given access to all books, accounts, financial records, reports, electronic data processing records, explanations, files and all other papers, things or pr operty belonging to or in use by the department, agency of the Crown or Crown controlled corporation and necessary to the performance of th e duties of the auditor general under this Act.” I note that there are many types of information under the Province’s Access to Information and Protection of Privacy Act which public bodies may not or shall not disclose to various applican ts, one of which is information the disclosure of which would be harmful to the interests of third parties, including information that is supplied, implicitly or explicitly, in confidence.

However, under

Section 19 of the Auditor General Act , there are only two types of information in the Access to Information and Protection of Privacy Act which a public body shal l not provide access to the Auditor General - matters where disclosure would reveal the substance of deliberations of Cabinet, or matters where disclosure could reasonably be expected to be harmful to law enforcement.

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Part 2.2, January 2012 A uditor General of Newfoundland and Labrador Canada-Newfoundland and Labrador Offshore Petroleum Board Given that access to the information re quired to conduct the review of the C- NLOPB was not provided, my rec ourse under

section 12 of the Auditor General Act is to report the denial of acces s to the House of Assembly.

Section 12 provides that “The auditor general shall as he or she considers necessary but at least annually report to the House of Assembly on…(

b) whether, in carrying out the work of the office, the auditor general received all the information incl uding reports and explanati ons the auditor general required;…” At the time this report item was prepared, the Commissioner of the Environment and Sustainable Developm ent of the Office of the Auditor General of Canada was proceeding with an audit of the C-NLOPB.

PART 2.3 DEPARTMENT OF ADV ANCED EDUCATION AND SKILLS TEMPORARY EMPLOYEES

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.3, January 2012 15 Temporary Employees Executive

Summary The mission of the former Department of Human Resources, Labour and Employment (the Department) was to “…enhance supports and services to individuals to increase their participation in th e labour market and to employers to ensure they have the human resources required to compete and contribute to a prosperous future for the province.” Prior to the restructuring of Government in late October 2011, the former Department had 796 employees. Of these, 602 were permanent employees and 194 were temporary. The total gross expenditure of the Department for the year ended 31 March 2011 was $482.2 million, of which $46.0 million was allocated to salaries.

Section 13 of the Public Service Commission Act (the Act) provides that “Recommendations for appointments to and promotions within the public service shall be based on merit principles and made by the commission through competitive written examination or by other processes of personnel selection designated to es tablish the merit of candi dates that the commission considers are in the best inte rests of the public service.” Merit principles require that candidates be assessed with fairness and equity so that the job will be awarded to the candidate most suitable for the position.

These principles are the primary means to avoi d any form of bias or influence over such appointments and promotions. The Public Service Commission (PSC) is responsible for the recruitment and selection process of positions that fall under their jurisdiction as per the Act. The departments are responsible for th e initiation of temporary hires and assignments, which can be done without the application of a competitive process, as per the Personnel Administration Procedures Manual.

Under the General Service Collective Agreement between the Province and the Newfoundland and Labrador Asso ciation of Public and Private Employees, a permanent employee is defined as “…a person who has completed his or her probationary period and is employed on a full-time basis to hold office without reference to any specified date of termination of service.”, while a temporary employee is defined as “…a person who is employed for a specific period for the purpose of performing certain specified work and who may be laid off at the e nd of such period or on completion of such work.” A similar definition of temporary employee is outlined in the Act.

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Part 2.3, January 2012 A uditor General of Newfoundland and Labrador Temporary Employees While the Act does not apply to temporary employment situations, the PSC does have a policy on the length of time a temporary employee that was hired without a competition can be employed before a competition must be held, and the length of time an existing empl oyee can be temporarily assigned to another position, through temporary placement or promotion, before a competition must be held.

If departments do not assign an ex isting public service employee to a position, the permanent head of the depa rtment has the authority to hire an employee external to Government to fill a position on a temporary basis. In such cases, the employee can only be employed in a bargaining unit position for periods up to 13 weeks before a competition must be held, and for management and non-bargaining positions for periods not to exceed six months before a competition must be held.

In cases where departments do assign an existing public service employee to a position, PSC policy provides the same periods as outlined for temporary employment, i.e. the employee can only be assigned to a bargaining unit position for periods up to 13 weeks before a competition must be held, a nd for management and non-bargaining positions for periods not to exceed six months before a competition must be held. In the case of management or non-bargaining positions, an extension can be authorized by the PSC.

Our review of temporary employees at the former Department of Human Resources, Labour and Employment dur ing the period 31 March 2010 to 26 October 2011 indicated that the Depa rtment was not complying with PSC policy in that temporary hires and temporary assignments exceeded the maximum period without a competition being held.

Of the 62 temporary employee files reviewed, we found that:  42 were hired as a temporary employ ee (temporary hires), including 3 summer student positions and 3 contractual employees, i.e. without a job competition; and  20 were hired through a temporary appointment, i.e. with a job competition. In 41 of the 42 files reviewed, where no job competition was held upon initial employment, the Department could not demonstrate on what basis individuals were initially selected for temporary employment or assi gnment, or whether the merit principles were followed.

This brings into question whether the merit principles were being considered by the Department when temporarily employing or assigning individuals to positions within the Department, including whether the most suitable candidates were selected for the positions and whether there was any form of bias or influence over such employment or assignments.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.3, January 2012 17 Temporary Employees Of the 42 temporary employee files re viewed, where no job competition was held upon initial employment, we found the following:  For 32 (76.2%) of the 42 temporary employment files where the individual was initially hired in a bargaining unit position, the Department did not conduct a competition before the maximum 13 week period ended. All 32 received an extension by the Department, without a job competition, ranging from seven weeks to 11 years beyond the maximum 13 weeks.

Fo r example, an individual was hired by the Department in November 2000, was granted extensions to that position as well as to other temporary assignments, and had breaks in service totalling approxima tely three years over the course of their 11 years of employment. At the time of our review, this individual was still em ployed with the Department and had not yet participated in a job competition.

Of these 32, there were 17 instan ces where the same employee was temporarily assigned to another pos ition within the Department (15 bargaining unit and 2 management or non-bargaining unit), and all these temporary assignments we re extended by the Department beyond the 13 week or six month pe riod, without a competition being held. The length of extensions ranged from approximately four months to five years for the 15 bargaining unit positions, and ranged from approximately six months to two years for the two management or non-bargaining unit positions.

For example, one employee was hired with the Department in January 2009, and was temporarily assigned five times to bargaini ng unit positions before being successful in a job competition in January 2011.  For 3 (7.1%) of the 42 temporary em ployment files, the individual was initially employed as a contr actual employee. For two of the three individuals, they were later assigned to a temporary position, and the Department did not conduct a competition before the maximum 13 week or six month period ended.

Both were extended by the Department, without competition, for an additional 12 month period beyond the initial assignment.  For 7 (16.7%) of the 42 temporary employment files, there were no issues with the temporary hire or assignment terms.

18 Annual Report,

Part 2.3, January 2012 A uditor General of Newfoundland and Labrador Temporary Employees As indicated by PSC officials, the PSC monitors bi-weekly payroll reports to assess compliance with its staffing policies. In cases where prescribed deadlines for temporary hires or tempor ary assignments are approaching, the PSC notifies departments of the approaching deadlines (either 13 weeks or six months, depending on the nature of the position) through the Strategic Human Resource Management Division, indica ting that the positions should be addressed in a timely manner, i.e. to advertise the position.

While our current review was limited to the former Department of Human Resources, Labour and Employment, officials at the PSC indicated that, based on the results of their monitoring activi ties, and on complaints received, this issue is prevalent in other departments as well, i.e. situations where individuals are temporarily employed or assigned within the public service without a job competition being held within the specified time periods.

For example, one temporary employee file that was reviewed showed that an employee was working with Government for 21 years before they were appointed to a position through a job competition. Only a portion of the 21 years was spent working with the Department, the majority of it, approximately 20 years, occurred wh en the employee was employed with another department. Background Introduction The Department of Advanced Education and Skills was created on 28 October 2011. Its purpose is to “… focus on supplying highly educated graduates and skilled workers for a fast-growing economy.

This department incorporates most of the old Department of Human Resources, Labour and Employment, and the Advanced Studies component of the Department of Education. The new department also hous es the new Workforce Development Secretariat.” Prior to the restructuring of Govern ment in late October 2011, the former Department of Human Resources, Labour and Employment (the Department) had 796 employees. Of these, 602 were permanent employees and 194 were temporary (including 47 contractua l employees, 19 committee members, and 8 students).

Approximately 51% of th ese employees are located in regional offices throughout the Province, while the remaining 49% are in the St. John’s area.

The Department stated in its Annual Report for the year ended 31 March 2011 that its mission was to “… enhance supports and services to individuals to increase their participation in th e labour market and to employers to ensure they have the human resources required to compete and contribute to a prosperous future for the province. ” The total gross expenditure of the Department fo r the year ended 31 March 2011 was $482.2 million, of which $46.0 million was allocated to salaries.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.3, January 2012 19 Temporary Employees Figure 1 illustrates the Department’s organizational structure with four regions and 25 offices throughout the Province. Figure 1 Former Human Resources, Labour and Employment Offices by Region As at 31 March 2011 Source: Department of Advanced Education and Skills

20 Annual Report,

Part 2.3, January 2012 A uditor General of Newfoundland and Labrador Temporary Employees Public Service Commission

Section 5 of the Public Service Commission Act (the Act) provides for the establishment of the Newfoundland and Labrador Public Service Commission (the PSC); a three member commissi on appointed by the Lieutenant- Governor in Council. The vision of the PSC is “ Public Service Excellence through merit, fairness and respect.” The Act requires that the PSC set the st andards and procedures for the recruitment and selecti on of candidates for appointment and promotion within the public service.

Section 13 of the Act also provides that “Recommendations for appointments to and promotions within the public service shall be based on merit principles and made by the commission through competitive written examination or by other processes of personnel selection designated to es tablish the merit of candi dates that the commission considers are in the best interests of the public service.” Merit principles require that candidates be assessed with fairness and equity so that the job will be awarded to the candidate mo st suitable for the position.

Merit principles are the primary means to avoi d any form of bias or influence over such appointments and promotions. The PSC is responsible for the recruitm ent and selection pr ocess of positions that fall under their jurisdiction as per the Act. The departments are responsible for the initia tion of temporary hires and assignments, which can be done without the application of a competitive process, as per the Personnel Administration Procedures Manual.

PSC staffing policies The Staffing Policy Manual established by the PSC outlines the policies and procedures which departments, Crown corporations and agencies that fall under the jurisdiction of the Act should follow throughout the staffing process. These policies help the PSC ensure adherence to the merit principles in the appointment and promotion of employees throughout the public service. Adherence to merit principles would normally be achieved through a job competition.

A job competition incl udes a selection board which accepts applications, screens candidates, co nducts interviews, assesses and ranks candidates, checks references, and pr epares a recommendation report for the deputy minister, or chief executive officer.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.3, January 2012 21 Temporary Employees The Staffing Policy Manual states that, “… all vacancies will be advertised, unless other PSC policies apply”. Furthermore, vacancies are defined as “ … an opening that:  the Employer wishes to fill; and  is in excess of 13 weeks duration; and  for which there is no employee eligible for recall.” As a result of this defin ition, positions less than 13 weeks are not required to be advertised. This policy aligns with the definition of vacancies provided in

Article 5 of the General Service Collective Agreement, “... an opening in a permanent, seasonal, or temporary position which is in excess of thir teen (13) weeks duration, and in respect of which there is no employee eligible for recall .” This Agreement governs the majority of bargaining unit positions in the public service. Positions with the public service are classified as either:  bargaining unit positions - meaning th ey are covered by a collective agreement; or  management or non-bargaining unit positions – meaning they are not covered by a collective agreement.

Positions with the public service that fall under the jurisdiction of the PSC, are advertised as either internal or external. Any member of the public can apply for an external position; however, to be eligible to apply for an internal position, a person must currently work for a department, Crown corporation or agency, or be on lay off status fr om one of these organizations. In addition, the PSC accepts unsolicited resumes on a daily basis.

They are kept on file for up to six months and can be used to fill any position, on a temporary basis, for up to 13 weeks for bargaining unit positions and up to six months for management or non-bargai ning unit positions. Eligibility lists may also be used for temporary employment opportunities.

Under the General Service Collective Agreement between the Province and the Newfoundland and Labrador Asso ciation of Public and Private Employees, a permanent employee is defined as “…a person who has completed his or her probationary period and is employed on a full-time basis to hold office without reference to any specified date of termination of service”, while a temporary employee is defined as “…a person who is employed for a specific period for the purpose of performing certain specified work and who may be laid off at the e nd of such period or on completion of such work.” A similar definition of temporary employee is outlined in the Act.

22 Annual Report,

Part 2.3, January 2012 A uditor General of Newfoundland and Labrador Temporary Employees There are three types of temporary employment. They are as follows. Temporary hires While the Act does not apply to temporary employment situations, the PSC does have a policy on the length of time a temporary employee that was hired without a competition can be employed before a competition must be held, and the length of time an existing empl oyee can be temporarily assigned to another position, through temporary placement or promotion, before a competition must be held.

If departments do not assign an ex isting public service employee to a position, the permanent head of the depa rtment has the authority to hire an employee external to Government to fill a position on a temporary basis. In such cases, the employee can only be employed in a bargaining unit position for periods up to 13 weeks before a competition must be held, and for management and non-bargaining positions for periods not to exceed six months before a competition must be hel d. PSC officials indicated that this type of position is commonly referred to as a temporary hire.

Temporary assignments A temporary assignment is defined in the Staffing Policy Manual as a temporary placement or promotion of an employee in the absence of a job competition. In cases where departments do as sign an existing public service employee to a position, PSC policy provide s the same periods as outlined for temporary employment, i.e. the em ployee can only be assigned to a bargaining unit position for periods up to 13 weeks before a competition must be held, and for management and non-barg aining positions for periods not to exceed six months before a competiti on must be held.

In the case of management or non-bargaining positions, an extension can be authorized by the PSC. Officials at the PSC indicated that th e PSC is not in a position to extend bargaining unit positions beyond the 13 week period as it is in contravention of the PSC policy and the respective collective agreement. Temporary appointments A temporary appointment is defined in the Staffing Policy Manual as a temporary promotion of a permanent employee or hiring of a temporary employee through a job competition.

The reason for the difference is related to the duration of the period of promotion which is expected to be in excess of 13 weeks for bargaining unit positions, or six months for management or non- bargaining unit positions. These appointments apply to internal or external applicants for positions that have been advertised.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.3, January 2012 23 Temporary Employees PSC monitoring of temporary hires and assignments As indicated by PSC officials, the PSC, through its Strategic Staffing Division, monitors bi-weekly payroll reports, specifically looking for any new hires, or changes in employment wh ich may signify a temporary hire or assignment. The goal is to assess compliance with its staffing policies for these temporary employment situations. While temporary employment is not defined within the Staffi ng Policy Manual or in the Act, the PSC monitors these employment arrangements to promote its vision.

In cases where prescribed deadlines for temporary hires or temporary assignments are approaching, the PSC notifies departments of the approaching deadlines (either 13 week s or six months, depending on the nature of the position) through the Strategic Human Resource Management Division, indicating that the positions should be addressed in a timely manner, i.e. to advertise the position.

In addition, a letter may be written to the deputy minister (or equivalent) to inform them of evidence of non-compliance with the Act or with PSC policies as it relates to outstanding staffing actions and to request a plan of action for these items. Audit Objectives and Scope Audit objectives The objectives of our review were to determine whether:  policies were followed by the Department with respect to temporary employment and temporary assignment; and  merit principles were followed in temporary employment and temporary assignment situations within the Department.

Audit scope We performed a review of temporary employees who were employed at the Department during the period of 31 March 2010 to 26 October 2011. We selected a sample of 62 temporary em ployee files to determine whether PSC policy was followed. We also reviewed the subsequent job competition files related to the hiring of temporary employees to determine whether the merit principles were applied in the assessment of these employees before they were hired. We held discussions with staff at the Depa rtment, the PSC and the Strategic Human Resources Manageme nt Division for the social sector located in Service NL.

Our review was completed in December 2011.

24 Annual Report,

Part 2.3, January 2012 A uditor General of Newfoundland and Labrador Temporary Employees Detailed Observations This report provides detailed audit findings and recommendations with regard to the hiring of temporary employ ees and the temporary assignment of employees. Overview Situations arise in the public servic e where positions need to be filled on a temporary basis. To initiate this action, a department will fill out a request for staffing action form (RSA). This outlines the details of the position, such as title, duration, classification, reason for v acancy, etc.

An RSA is signed off by the divisional director, recommended by the assistant deputy minister and approved by the deputy minister. In many cases, the department has identified a potential candidate for the position on a temporary basis. With regards to the Department, the RSA is then forwarded to the Strategic Human Resources Management Division for the social sector located in Service NL (the HR Division) for re view and approval.

The HR Division prepares a letter to the new employee to inform them of the details of their temporary employment, or assignments, including the position title, start and end dates, salary and related pay s cale, and their supervisor. If the Department indicates on the RSA that it is expecting to fill the temporary position through a job competition, the HR Division will forward the RSA to the PSC for further recruitment action. The PSC is required by policy to advertise all positions with the public service that fall under their jurisdiction.

We selected 62 temporary employee files within the Department to review to determine whether they were in comp liance with PSC hiring and promotion policies. We identified the following issues: A. Temporary Hires and Assignments B. Assessment of Temporary Employees Details are as follows:

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.3, January 2012 25 Temporary Employees A. Temporary Hires and Assignments Overview Temporary employment in any form is in tended to be a short term measure to give the department, Crown corporati on or agency time to advertise the position. In the case of temporary a ssignment (of a current employee) or temporary hire to a bargaining unit position, the position should not be for more than 13 weeks, as per PSC polic y. In the case of management or non- bargaining unit positions, the assignment or employment should not be for more than six months.

Manner of initial employment Of the 62 temporary employee files reviewed, we found that:  42 were hired as a temporary employ ee (temporary hires), including 3 summer student positions and 3 contractual employees, i.e. without a job competition; and  20 were hired through a temporary appointment, i.e. with a job competition.

Non compliance with PSC policy for temporary hires and assignments Of the 42 temporary employee files re viewed, where no job competition was held upon initial employment, we found that:  For 32 (76.2%) of the 42 temporary employment files where the individual was initially hired in a bargaining unit position, the Department did not conduct a competition before the maximum 13 week period ended. All 32 received an extension by the Department, without a job competition, ranging from seven weeks to 11 years beyond the maximum 13 weeks.

Details on the 32 files at the time of our review are as follows:  13 (40.6%) of the 32 indi viduals had not yet participated in a competition. The hire dates for these 13 individuals ranged from June 2011 back to November 2000. For example, an individual was hired by the Department in November 2000, was granted extensions to that position as well as to other temporary assignments, and had breaks in se rvice totalling approximately three years over the course of th eir 11 years of employment.

At the time of our review, this indi vidual was still employed with the Department and had not yet participated in a job competition.

26 Annual Report,

Part 2.3, January 2012 A uditor General of Newfoundland and Labrador Temporary Employees  19 (59.4%) of the 32 individuals have been successful in a competition since the initial empl oyment; however, the length of time between their initial employme nt to their appointment to a position via a job competition ranged from 20 weeks to two years and four months. For ex ample, an individual was hired with the Department in August 2008, and was not appointed to a position through a job competition until January 2011.

Of these 32, there were 17 instan ces where the same employee was temporarily assigned to another pos ition within the Department (15 bargaining unit and 2 management or non-bargaining unit), and all these temporary assignments we re extended by the Department beyond the 13 week or six month pe riod, without a competition being held. The length of extensions ranged from approximately four months to five years for the 15 bargaining unit positions, and ranged from approximately six months to two years for the two management or non-bargaining unit positions.

For example, one employee was hired with the Department in January 2009, and was temporarily assigned five times to bargaini ng unit positions before being successful in a job competition in January 2011.  For 3 (7.1%) of the 42 temporary em ployment files, the individual was initially employed as a contract ual employee. For two of these three individuals, we found that:  One of these individuals was la ter temporarily assigned to a management position, and received an extension by the Department, but the Department did not conduct a competition before the maximum six month pe riod ended.

This individual had been a contractual employee for a period of 21 months prior to the temporary assignment, was assigned for a period of seven months and extended for an additional 12 months, without a competition.  One of these individuals was la ter temporarily assigned to a bargaining unit position, and rece ived an extension by the Department, but the Department did not conduct a competition before the maximum 13 week period ended.

This individual had been a contractual employee for a period of 11 months prior to the temporary assignment, was assigned the position for over five months, and extended for an additional 12 months, without a competition.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.3, January 2012 27 Temporary Employees  For 7 (16.7%) of the 42 temporary employment files, there were no issues with the temporary hire or assignment terms. Temporary assignments extended without PSC approval Of the 20 employees who were hire d through a temporary appointment, through a job competition, we found issues with three files as follows:  Three employees were subsequently a ssigned to a temporary bargaining unit position and the Department did not conduct a competition before the maximum 13 week period ended.

A ll three employees received an extension to the temporary assignmen t, ranging from 11 to 23 months. For example, an employee was temporarily assigned to another bargaining unit position for tw o months, and received two extensions to the same position for 12 months each, each without a competition being held. The Department was not in compliance with the PSC hiring and promotion policies in that temporary employment and temporary assignments exceeded the maximum period without a competition being held.

Temporary employments without a comp etition process allow for operational flexibility in the case of urgent needs and were designed to allow the department to fill a position on a temporary basis while giving them time to post the position and fill it through a job competition. Temporary employments are also used for true temporary, short-term employment opportunities. As a result, if temporary employments in bargaining unit positions are extended beyond 13 weeks, or six months in the case of management or non- bargaining unit positions, it is unfair to the public and to other employees in the public service.

When these positions are advertised internally, the public does not have an opportunity to appl y for the position, and the person temporarily employed has the advantage of being able to apply for this position. Also, other internal employees would be at a disadvantage as an employee temporarily in the position has acquired on-the-job experience which could provide an advantage in the job competition.

Furthermore, the employee in a temporary position can appl y for other internal positions while they are employed, and continue to be eligible for internal positions for a period of up to two years after they are terminated.

28 Annual Report,

Part 2.3, January 2012 A uditor General of Newfoundland and Labrador Temporary Employees Findings not unique to the Department While our current review was limited to the former Department of Human Resources, Labour and Employment, officials at the PSC indicated that, based on the results of their monitoring activi ties, and on complaints received, this issue is prevalent in other departments as well, i.e. situations where individuals are temporarily employed or assigned within the public service without a job competition being held within the specified time periods.

There were some situations where an employee remained in a temporary employment position for years without a job competition being held. For example, one temporary employee file that was reviewed showed that an employee was working with Government for 21 years before they were appointed to a position through a job competition. Only a portion of the 21 years was spent working with the Department, the majority of it, approximately 20 years, occurred wh en the employee was employed with another department. B.

Assessment of Temporary Employees Overview In order to ensure merit principles ar e applied, we woul d expect that any person hired to work with the public service would enter the work force through a competitive process. Nevertheless, temporary employment in any form is intended to be a short term measure to give the department, Crown corporation or agency time to adver tise the position. A competitive process would ensure the merit principles are followed, and the minimum requirements for the position in terms of education a nd experience have been met.

Documentation For any temporary employment or tem porary assignment situation, we would expect to find documentation in the file to support th e decision and to demonstrate that the merit principles were followed. This documentation should include a copy of the resume, a candidate evaluation sheet, reference check, and recommendation from the ch air of the selection board to the deputy minister or equivalent at th e department, Crown corporation or agency. Where an employee is not successful, we would expect to see a letter to the candidate to this effect.

In th e absence of a competition, we would still expect to find documentation in the file to support the hiring decision. As part of our review of the 42 te mporary employment files where no job competition was held upon initial employ ment, we looked for some evidence that each employee was assessed to ensu re they met the qualifications for the position for which they were hired, or to which they were assigned.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.3, January 2012 29 Temporary Employees Lack of assessment of new hires In 41 of the 42 files reviewed, the Depa rtment could not demonstrate on what basis individuals were initially sele cted for temporary employment or assignment, or whether the merit principl es were followed.

This brings into question whether the merit principles were being considered by the Department when temporarily employing or assigning individuals to positions within the Department, including whethe r the most suitable candidates were selected for the positions and whet her there was any form of bias or influence over such employment or assignments. As a result, the underlying foundation for hiring to and promotion within the public service was not fulfilled.

Recommendations The Department should:  follow Public Service Commission policy with respect to temporary employment and temporary assignment; and  document the process used in temporary employment and temporary assignment to demonstrate whether the merit principles were followed. Department’s Response The Department of Advanced Educati on and Skills (AES) has reviewed the findings of the 2011 Auditor General’s report on temporary employees within the former Department of Human Resources, Labour and Employment (HRLE).

While the Department genera lly agrees with the recommendations outlined, the report serves to illustrate the very challenging environment various departments are facing in relati on to the recruitment and retention of staff. Spurred by an aging demographic, HRLE experienced very high turnover of staff in recent years. For example, with a full staff complement of 796 employees, HRLE in 2008/09 submitted to the Public Service Commission (PSC) 198 requests to initiate competitions, representing some 25% of the full staff complement of th e department.

Similarly, in 2009/10 there were 193 requests (24%); in 2010/11 there were 166 requests (21%); and to date in 2011 there have been 95 requests (12%). In total over the past four years, the department has submitted requests for competitions for in excess of 80% of its total staff comp lement, and since April, 2008 more than 500 competitions have been completed.

30 Annual Report,

Part 2.3, January 2012 A uditor General of Newfoundland and Labrador Temporary Employees While departments have been faced with these challenges, it appears the PSC has been similarly impacted by the in creased demands for competitions. As part of its efforts to address demands to enable departments to more readily address the need to additional competi tions, approximately six years ago the PSC started providing departments with the ability to trai n and utilize their own Selection Committee Chairs.

Unde r this arrangement, departments can utilize in-house staff to take on the ro les of both the Selection Committee Chair and the Technical Expert for each competition. However, while this can allow departments to more quickly proceed with staffing actions, it requires twice the time co mmitment of existing departmental resources to complete these competitions. Given the level of recruitment activity , it appears the PSC has also been challenged to monitor departmental activity and to provide notice to departments when positions have been filled without competition for longer periods than their policy allows.

HRLE has received such notices on an irregular basis. Despite the high demand on existing re sources to undertake competitions for the large number of vacant positions or temporarily filled positions, HRLE has made progress over the past few years. For example, the number of requested competitions has dropped since 2008/09, indicating a somewhat lower staff turnover rate. In add ition, the time to fill positions which have been posted for competitions has dec lined from an average of approximately 15 weeks in 2010/11 to less than 11 weeks to date in 2011/12.

Of particular concern to HRLE has been the high turnover in recent years of Client Service Officers (CSOs). These positions, which number over 300, are responsible for the delivery of the Income Support Program, the Career Employment and Youth Services Program, and NL Support Benefits and Measures to more than 40,000 clients. Of the 62 temporary positions reviewed by the Auditor General, nearly half (28) relate to CSO positions.

The department has acknowledged that there are major issues with the recruitment and retention of CSOs in particular, and is developing in cooperation with the PSC and NAPE, an innovative approach to undertaking large scale recruitment activity on a regul ar (once or twice per year) basis. The intention is to develop a pool of qualified candidates that can be accessed as vacancies become available. In addition, the department has developed and implemented a comprehensive six week training program for new CSOs, to ensure they have all the tools required to successfully undertake their new positions.

This will enhance their job performance and satisfaction, which will improve staff retention rates while providing service benefits for clients.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.3, January 2012 31 Temporary Employees In terms of some of the Auditor General’s specific findings in relation to the application of the merit principle and the time lag between initial employment and the successful completion of a comp etition, the department offers the following illustrations:  Application of the merit principle to certain employment situations (temporary hires and temporary assi gnments).

Despite the Auditor General’s inability to verify the ap plication of the merit principle in these instances, the department confirms that it fully endorses the merit principle and seeks its application to the extent possible given that temporary hires and temporary assignments do not require competition. For temporary hires, the department will as a rule examine the resume of the potential incumbent to ensure an appropriate match of skills to j ob requirements and may also contact references for validation.

In the ca se of temporary assignments, these are frequently based on the direct observation of employees on the job and are generally also supported by the input and ad vice of the person’s superiors.

Often, a te mporary assignmen t involves the temporary promotion of a pers on who is well established and experienced in a position to a vacant , more senior, position within the same general scope of work activities.  Of the 13 positions noted by the Auditor General as not yet filled through competition, the department has completed competitions for four of these positions since the A uditor General’s cut off of October 26, 2011.  Person employed for 21 years before participating in a competition. This person was employed as a casual part time employee in another department for some 20 years.

Th e person did not be gin employment with HRLE as a temporary hire un til 2009, and within a period of less than 10 months had successfully competed for a position and through competition attained a temporary appointment within the department.  Person employed over the course of 11 years, with various breaks in employment, and not yet participated in a competition. This person is employed on a half-time basis as an aide to an employee who requires supports due to a physical disability.

There is no specific classification for the role of aide, so a variety of temporary Clerk I positions have been utilized over the years. It was HRLE’s position over the years that the special arrangement betw een these two employees would not be well served by submitting the aide position for competition.

32 Annual Report,

Part 2.3, January 2012 A uditor General of Newfoundland and Labrador Temporary Employees In

summary, the department has faced inordinate challenges in recruitment and retention over the pas t several years. While substantial progress has been made in dealing with these i ssues, the department acknowledges that there have been instances where it has been difficult to achieve full compliance with PSC policies. The de partment will strive to address these challenges to achieve compliance on a go forward basis. The department will also endeavour to maintain improved records to demonstrate its application of merit principles for temporary hires and assignments.

PART 2.4 DEPARTMENT OF EDUCATION WESTERN SCHOOL DISTRICT

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 33 Western School District Executive

Summary The Western School District (the District) is responsib le for the delivery of primary, elementary, intermediate and secondary educational services to approximately 12,500 students in 71 schools. For the 2009-10 school year the District had 1,458 teachers, and 770 admi nistrative and support staff, with annual salary and employee benefits costs of approximately $132.1 million. For the fiscal year ended 30 June 2010, the District had total expenditures of $156.8 million.

Our review identified significant issues relating to the District’s human resource practices, includi ng in relation to recruitment, compensation, and monitoring and control of l eave and overtime. There were also instances of non-compliance with the Public Tender Act . Furthermore, we found weaknesses in the management and c ontrol of expenditu res relating to employee travel, cell phones and the District ’s vehicle fleet. Issues were also identified with the monitoring and control of capital assets.

In particular: Human Resources We identified the following issues with regard to recruitment, compensation and monitoring and control of leave and overtime: Recruitment  None of the 11 competition files reviewed had complete documentation on the competition process, includ ing 2 files which did not contain adequate documentation to support why the Distri ct had rehired retired teachers instead of other candidates.  In 7 of 24 personnel files reviewed, there was no documentation present to indicate that a competition had been held when the individual had been appointed to the non-teaching position.  3 teaching positions were filled for the 2009-10 school year without a job competition although the District was aware of the vacancies prior to 1 August of the particular year.  2 teaching positions were filled without any documentation in the competition file to indicate that a competition had been conducted for the 2010-11 school year.

Although District staff indicated the vacancies occurred after 1 August, there wa s no documentation in the file to support this.

34 Annual Report,

Part 2.4, January 2012 A uditor General of Newfoundland and Labrador Western School District  In 7 instances, the District crea ted and filled positions without the required Treasury Board classificati on approval being requested. In 4 other instances, the District filled positions that had not been classified until after employees had been appointed to the positions. Time periods ranged from 1.5 to 51 months after the position was created and filled.

Compensation  In 2 instances, there was no documen tation that the required approval of the Director of Education or the Board of Directors of the Western School District (the Board) was obtained for upscale hiring.  The District did not follow the direc tion of the Departme nt of Education in compensating a former Assistant Director of Finance when the school districts were reduced from 11 to 5 di stricts.

As a result, the employee was overpaid $97,308 for the period September 2004 to December 2010.  In 2 instances, employee salaries we re adjusted retroactively after the positions were classified by Treasury Board but the change was incorrectly applied before the effective date resulting in an overpayment of $10,590.  In 6 instances, employees were not provided salary increases or step progressions for periods from 11 to 23 months after the employees were entitled to the increase.  In 1 instance, a salary differential was not correctly applied resulting in an underpayment of $3,740 up to 31 March 2011.  In 2 instances, pay increases for apprentice electricians were not correctly calculated resulting in an overpayment of $6,094.

Leave and Overtime  Employee leave was not always recorded accurately. The leave database was not accurate and, as a result, leave balances had to be determined manually when required. Furthermor e, leave carry forward balances were not always calculated in accord ance with Government policies and collective agreements.  Overtime was not always adequately controlled. Overtime reports were not always completed and approved as required and some staff were permitted to track the accumulation and use of their own overtime.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 35 Western School District Expenditures We identified the following issues with regard to District expenditures: Public Tender Act Our review of 34 purchases greater than $10,000 and 21 purchases under $10,000 identified the following:  The District did not comply with the Public Tender Act in that required public tenders were not called for 5 purchases totalling $444,658 including 3 regular bus contracts, 1 special needs bus contract and a recycling contract.  The District did not comply with the Public Tender Act in 2 instances where the required Form B was not completed for expenditures the District determined were sole s ource purchases.

Therefore, the Government Purchasing Agency was not notified as required and consequently the House of Assembly was not informed. These instances included garbage collection totalling approximately $50,000 per year and the purchase of an annual software license with support totalling approximately $14,700 per year.  There was insufficient information on file for 7 of 13 contractors who were required to provide the inform ation as part of their contracts. Examples included letters of good st anding from the Workplace Health, Safety and Compensation Commission and proof of insurance.

Travel  One senior executive did not submit travel claims but had all travel expenses directly billed to the Dist rict and paid by purchase orders. Our review indicated that this employee routinely charged meals to the hotel invoice and as a result, District sta ff could not readily determine whether expenses were within the proper per di em rates. In certain instances, the hotel invoices indicated that meals were provided to two or more people; however, there was no evidence that meals were provided for a legitimate business purpose.

Cell Phones Our review of cell phones indicated th at the District was not adequately monitoring the cost and usage of cell phones. We identified the following issues:

36 Annual Report,

Part 2.4, January 2012 A uditor General of Newfoundland and Labrador Western School District  The District maintained a list of individuals who were assigned cell phones; however, the listing was not up-to-date and did not include all information such as cell phone plan information, serial number of phone and issue date.  4 cell phones were either not used or not used enough to warrant the purchased plans which cost $1,256 for a total of 62 minutes.  A senior executive was provided with two cell phones.

One of these cell phones (a Blackberry) was provided in January 2010 in order for the executive to access business e-mail and calls while on vacation. The cost during the vacation period was $518; however, since that time the phone had not been used. Until the plan was cancelled in May 2011, the cost to the District was $798 for 14 months for which there was no usage.  Employees were not always requested, as required by the District’s cell phone policy, to reimburse the Dist rict for persona l cell phone usage included on bills.

One maintenance employee incurred costs totalling $178 above the monthly plan during a vacation to the United States in November 2010, without any documentation of a review or reimbursement for personal costs. Another maintenance employee incurred costs totalling $256 for the period from 15 August to 14 September 2010 with 1,522 minutes a bove the monthly plan of 600 minutes, without any documentation of a review or reimbursement for personal costs.

A manager incurred costs totalling approximately $350 for the period from August to October 2010 with 1,922 minutes above the monthly plan of 1,200 minutes, without any documentation of a review or reimbursement for personal costs. Other Our review also identified the following:  The District paid a municipal tax bi ll two weeks after the discount date resulting in an additional $750 expense.  In November 2010, the District was billed and paid $500 plus HST for a rented telephone company router th at was left at the school by the company when the school, where it was located, was closed.

As a result of our inquiries in February 2011, the router was located at the District office in Corner Brook. District sta ff indicated they were not aware that the District had been charged for the missing router. In May 2011, the District received a refund for returning the router in March 2011.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 37 Western School District  One snow clearing contractor was overpaid by $2,674 due to HST being paid in addition to the HST already included in the contract price.  A review of one school’s expenditu res by an external consultant identified the following issues a nd inappropriate e xpenditures over six fiscal years:  11 instances of liquor purchases totalling approximately $700 for school functions;  9 instances totalling $4,200 for purchases without any invoices;  $760 for gift certificates, donations and memberships for staff;  $400 for payments to the Principal’s son to perform routine tasks at the school;  Personal cell phone costs paid from September 2005 to June 2009 for the Principal; and  1 TV, 3 VCRs, 3 DVD players, 1 di gital camera, 1 desk, 1 laptop computer, 1 artificial Ficus tree, 1 storage cube, 2 LCD HDTVs and a wicker chair set were purchased but could not be located at the school.

The cost of these items totalled approximately $3,500. Capital Assets Our review indicated that the Distri ct was not adequately monitoring and safeguarding its capital assets.

We identified the following issues:  The District had not documented the procedures for the control of capital assets including proper recognition for financ ial statement purposes, safeguarding, and write-downs.  Except for computers and smart board s, physical identification methods, such as tagging, were not used to identify furniture and equipment as District property.  There was no capital asset ledger maintained for furniture and equipment.  There was no physical examination of capital assets to verify the existence of all furniture and equipment.

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Part 2.4, January 2012 A uditor General of Newfoundland and Labrador Western School District  The District could not readily identify what land was included in the land cost of $2.0 million reported on its 2010 financial statements.

As a result, the District could not readil y identify what land it specifically owned, what land was in excess of the District’s needs, and whether any excess land should be disposed of.  A review of the District’s Janua ry 2011 listing of insured buildings identified 9 buildings which had b een sold and one leased building (Board office) at a total replacement cost of $74.1 million that were still included on the listing.

As the buildings were still included on the insurance listing it would be assume d that a portion of the insurance premiums paid by Government on behalf of the District related to these buildings.  A leased building owned by the District was not included on the District’s building asset listing and fi nancial statements. The listing also included buildings the District did not own. Furthermore, in regards to the leas ed building, the lease agreement with the current tenant had expired in August 2004 and no new agreement had been in place since that time.

The District received rent revenue of $5,000 per month for the leased space wh ich was identified at a Property and Finance Committee meeting as being below market value. In addition, the District was not collecti ng HST on the annual lease rent of $60,000. Since September 2004, the Distri ct had not invoiced, collected and remitted approximately $52,500 in HST. Vehicle Expenses Our review identified issues with how the District monitors and controls vehicle usage and expenses.

We identified the following: District-owned Vehicles  The District did not formally monito r each vehicle’s operating cost and kilometres driven to determine if ut ilization issues were present that required follow-up.  Mileage log books were not always co mpleted as required. For example, one of the 3 log books reviewed was not completed for the period July 2009 to December 2010 and another log book was not completed for the period September 2010 to December 2010 . None of the log books were signed as reviewed by the employees’ supervisor.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 39 Western School District  Operating costs for each vehicle we re not accurately recorded in the financial records. For example, e xpenditures were attributed to two vehicles in the 2010 fiscal year even though the vehicles had been sold in 2006 and 2008 respectively. In addition, for the period 1 July 2009 to 31 December 2010 expenditures for two service vehicles were charged to one vehicle account in error.

Without the accurate recording of vehicle expenses, the District cannot adequate ly monitor its vehicles costs and usage.  Two service vehicles and one bus were s o l d i n p r e v ious years but the vehicles were not removed from the District’s financial records. Personal Vehicles  Cost and usage of personal vehicles was not evaluated. For example, for the 2009 and 2010 calendar years, two maintenance employees used their personal vehicles for work purposes for 69,858 kilometres and 75,728 kilometres respectively.

The District reimbursed these 2 employees approximately $20,000 each for the fiscal year 2010; however, it did not perform an assessment to determine whether it would be more feasible to purchase or lease maintenance vehicles. Fuel Credit Cards  The District did not always adequa tely review fuel credit cards and transactions to ensure the reason ableness and legitimacy of fuel purchases. For example, one fuel credit card slip for $100 in July 2010 identified the transaction as “cash back”; however, there was no notation on the slip or statement to indicate any follow-up as to its appropriateness.

In July 2010, the Di strict removed two buses from the vehicle fleet; however, as of January 2011 the associated fuel credit cards had not been cancelled.  Vehicle number or license plate number and employee signature were not always recorded on fuel card receipts as required by District policy.

40 Annual Report,

Part 2.4, January 2012 A uditor General of Newfoundland and Labrador Western School District Background Overview The Western School District (the District) was established in September 2004 after school districts in the Province were reorganized from 11 to 5 school districts. The Dist rict is responsible for the de livery of primary, elementary, intermediate and secondary educationa l services as prescribed by the Department of Education, primarily through the Schools Act, 1997.

Figure 1 Western School District Headquarters Corner Brook Source: Western School District The District’s geographical boundary range s from Harbour Deep in the East to Francois in the south to Norman Bay in southern Labrador. Figure 2 provides a map of the District.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 41 Western School District Figure 2 Western School District Geographical Boundary The District’s head office is locate d in Corner Brook with the District operating 71 schools with a student population of 12,489 for the 2009-10 school year. The District had 1,458 teachers and 770 administrative and support staff with annual salary and empl oyee benefits costs of approximately $132.1 million. For the fiscal year ende d 30 June 2010, the District had total expenditures of $156.8 million.

Financial position Figure 3 summarizes the financial position of the District for the fiscal years 2009 through 2011. As at 30 June 2011, th e District reported an accumulated operating deficit (net of reserve funds) of $24 million (which includes $23.8 million provision for severance pay) and $97.5 million in investment in capital assets.

42 Annual Report,

Part 2.4, January 2012 A uditor General of Newfoundland and Labrador Western School District Figure 3 Western School District Financial Position Fiscal Years 2009 through 2011 ($000’

s) Financial Information 2009 2010 2011 Operations Current Assets $17,680 $17,968 $17,831 Current Liabilities (17,436) (18,311) (17,951) Severance Pay (21,376) (22,642) (23,835) Other (53) (53)

(53) Accumulated Operating Deficit (net of Reserve Account) ($21,185) ($23,038) ($24,008) Capital Capital Assets $52,805 $82,543 $99,150 Long-term Debt (1,680) (1,327) (1,381) Long-term Debt (Current) (361) (353)

(360) Other 53 53 53 Investment in Capital Assets $50,817 $80,916 $97,462 Source: Audited Financial Statements Operating results Figure 4 provides details of the District’s revenues and expenditures for fiscal years 2009 through to 2011. As Figure 4 shows, the Provincial government provided operating grants of $147.2 million, $150.0 million and $154.8 million for 2009, 2010 and 2011 respectively.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 43 Western School District Figure 4 Western School District Revenue and Expenditures Fiscal Years 2009 through 2011 ($000’s) 2009 2010 2011 Revenue Provincial Grants $147,204 $149,982 $154,785 Ancillary Services 106 111 102 Miscellaneous 153 103 176 Total Revenue 147,463 150,196 155,063 Expenditures Instructional 121,552 124,654 127,671 Operations and Maintenance 14,694 14,583 15,487 Administration 7,025 9,044 9,172 Pupil Transportation 8,130 8,400 8,710 Miscellaneous 74 58 112 Ancillary Services 41 46 35 Total Expenditures 151,516 156,785 161,187 Excess of Expenditures over Revenues (4,053) (6,589) (6,124) Transfer from capital account 3,405 4,736 5,153 Net decrease in equity $ (648) $ (1,853) $

(971) Source: Audited Financial Statements Audit Objectives and Scope Audit objectives The objectives of our review were to determine whether:  compensation and recruitment practices were in accordance with Government and District policy;  purchases of goods and services were properly approved and monitored and complied with the Public Tender Act and Regulations; and  capital assets were properly monitored and controlled.

44 Annual Report,

Part 2.4, January 2012 A uditor General of Newfoundland and Labrador Western School District Audit scope Our review was completed in March 2011 and covered the period 1 July 2009 to 31 December 2010. Our review include d an examination of the District’s financial information and file documentation, and interviews with staff. Detailed Observations This report provides detailed audit findings and recommendations in the following sections: 1. Compensation and Recruitment Practices 2. Monitoring of Expenditures 3. Tendering of Goods and Services 4. Buildings, Furniture and Equipment 5. Vehicles 1.

Compensation and Recruitment Practices Overview During the 2010 fiscal year, the District employed 2,228 staff (1,458 teaching staff and 770 administrative and support staff) on a full or part-time basis. For the fiscal year 2010, the Distri ct spent $132.1 million on salary and employee benefits. In reviewing the District’s compensation and recruitment practices we identified issues in the following areas: A. Job Competitions/Classifications B. Employee Compensation C. Employee Leave D. Employee Overtime Details are as follows:

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 45 Western School District 1A. Job Competitions/Classifications Introduction The District carries out job compe titions for bargaining unit positions, non- bargaining positions and senior executive positions. Job competitions range from temporary part-time to permanent full-time positions. Competition documentation not adequate Our review of 35 files (11 job competi tions and 24 personnel files) and client competition summaries identified issues with incomplete or no documentation to support the competition process and instances where job competitions were not held.

Specifically:  None of the 11 competition files had complete documentation on the process as follows:  5 of 6 files did not have documenta tion of a rating system/matrix for the candidates interviewed. As a result, the District could not demonstrate that the most suitable applicant was selected;  10 of 11 files did not have docu mentation of communication to unsuccessful applicants on file; and  4 of 11 files did not have copies of resumes on file.

The Public Service Commission recommends a competition file contain such documentation as job advertisemen t, applications/resumes, screening worksheet, interview questions, appli cant assessment matrix, letters to successful and unsuccessful candidates, references, and selection referral.  In 2 of 11 competition files, documentation was not adequate to support why the District had rehired retired t eachers instead of other candidates. In one instance District staff in formed us that the other qualified candidate had withdrawn; however, this was not documented in the file.

In the second instance, although Distri ct staff indicated that the non- retired candidate did not meet the required qualifications, there was insufficient documentation on file to explain this decision.  In 7 of 24 personnel files reviewed, there was no documentation present to indicate that a competition had been held for non- teaching positions when the individual had been appoi nted to the position. Government policy requires competitions for posi tions filled longer than 13 weeks for bargaining unit positions and for longer than six months for management and non-bargaining unit positions.

46 Annual Report,

Part 2.4, January 2012 A uditor General of Newfoundland and Labrador Western School District  3 teaching positions, identified through review of competition summaries, in one junior high school were first temporarily filled in November 2008 without a job co mpetition as permitted under the collective agreement as the positions became vacant after 1 August.

However, the positions continued to be filled for the 2009-10 school year without a job competition although the District was aware of the vacancies prior to 1 August of the particular year.  2 teaching positions, identified through review of competition summaries were filled without any documentation in the competition file to indicate that a competition had been cond ucted for the 2010-11 school year. Although District staff indicated the vacancies occurred after 1 August, there was no documentation in the file to support this.

Positions not classified It is the responsibility of a permanen t head to establish and maintain an effective organizational structure consistent with approved classified positions, and to maintain copies of related organizational charts and position descriptions. Our review identified that not all positions were classified as follows.  The District created and filled seven positions without the required Treasury Board classification and approval being requested.

These positions were Bus Transportation Foreman, Manager of Custodian Services, Accountant, Accountant Assistant, Project Coordinator, Internal Auditor, and International Education Coordinator.  The District filled four positions that were not classified until 1.5 to 51 months after the position was created. These were Manager of Facilities and Maintenance (1.5 months), Manager of School District Transportation (29 months), Comptrol ler (51 months), and Purchasing Manager (33 months). 1B.

Employee Compensation Introduction Depending upon an employees’ classifica tion, compensation is governed by the collective agreement for unionized employees (NAPE and CUPE) and/or Government’s personnel policies a nd procedures. Our review of compensation identified errors in the a pplication of Government policies and the requirements of collective agreements as follows.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 47 Western School District Upscale hiring not approved Two employees were hired and placed on a step higher than step 1 of the particular pay scale without the required documented approval of the Director of Education or the Board. In one instance an employee was placed on Step 25 when hired on 2 February 2006 as IT Manager and in the second instance an employee was placed on Step 12 wh en hired on 19 February 2007 as International Education C oordinator. In neither instance was the required documented approval of the Director of Education nor th e Board provided.

For Government departments, Govern ment policy permits upscale hiring where a job competition has yielded only one qualified candidate or no other candidate is willing to accept the position at a lower rate. Red circling of employee incorrectly applied In August 2004, the Minister of Educatio n provided directi on to the District regarding options to deal with red circ ling for Assistant Directors of Finance when the number of school districts wa s reduced from 11 to 5 districts.

The Minister directed the District to apply one of the fo llowing options as applicable:  if the individual was within 4 years of normal retire ment, the salary would be red-circled at the level currently approved by the Department of Education, until the person reached normal retirement at which time the person would retire or accept the salary applicable to the new position; or  if the individual was not within 4 years of normal retirement, the salary currently approved by the Department of Education would be adjusted downward to the scale of the new position over a 5 year period.

However, the District red-circled the Assistant Director of Finance incorrectly on step 33 of their scale when the empl oyee was not within 4 years of normal retirement (age 65). This resulted in salary overpayments of $97,308 for the period September 2004 to December 2010 for the employee . This also resulted in pension overpayment fo r this employee commencing January 2011. Incorrect pay increases Employee salary increases were not always calculated correctly as follows:  Two employees were paid retroactively to the date of hire rather than the date directed by Treasury Board in the position classification.

As a result, the District overpaid these employees approximately $10,590 ($9,690 Comptroller - 27 months and $900 Purchasing Manager - 8 months).

48 Annual Report,

Part 2.4, January 2012 A uditor General of Newfoundland and Labrador Western School District  Six employees were not given salary increases or step progressions until 11 to 23 months after the employees we re entitled to the increase. One of these employee’s step progression entitlement was not identified by District staff until we informed them at the time of our review in January 2011.

This employee was underpaid $1,763 at that time.  One employee occupied the position of Bus Depot Supervisor since 7 December 2009 but was not paid 5% more than subordinate staff as a salary differential as required by G overnment policy. As a result, the employee was underpaid approximately $3,740 up to 31 March 2011.  In two instances, pay increases fo r apprentice electricians were not correctly calculated.

In each case the increase was based on the employees’ anniversary with the Distri ct rather than completion of the regular apprenticeship examination as per the NAPE collective agreement and Government policy. Furthermore, in one of these instances increases were given based on the NAPE collective agreement although the employee was not part of this agreement and therefore Government policy should have been applied. One NAPE employee was underpaid $1,670 and the CUPE employee was overpaid $7,764.

As well, there was no documentation on file from the Department of Education for either employee on completing the first year of apprenticeship and for one employee on completing the third year of apprenticeship. 1C. Employee Leave Introduction As at 30 June 2010, the District reported $795,076 in accrued annual and paid leave for its employees, excluding teach ers and executive. Management are required to comply with Government’s paid leave policy while bargaining unit employees are required to comply with leave articles in the collective agreements.

Leave was not always recorded accurately Employee leave was recorded in a database which was required to be updated regularly from monthly atte ndance reports and leave requests received from various divisions. However, our review of the database identified a number of issues as follows:  The leave database was inaccurate; therefore, the District had to determine leave balances manually when employees resigned or retired to ensure they received the leave to which they were entitled.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 49 Western School District  The attendance reports were not always submitted monthly as required. For example, the Bus Depot and Main tenance divisions were 4 months behind in submitting their support to the Human Resources Division.  Employee leave was not always recorded accurately and in compliance with Government policy.

For example:  One employee was charged for two sick days in error when one day was for work injury and the ot her was for being on workers’ compensation.  One new employee with the District had 18 years with Government but only received 25 paid leave days instead of the required 30 days.  One employee’s leave balance was understa ted by eight days in October 2010.  One employee was not eligible for sick leave days but in October 2009 was paid for two sick days.  One employee informed Human Res ources staff in April 2009 that their sick leave balance was ove rstated by 180 days but it was not corrected until July 2010.  Two employees hired in 2007 were accruing 24 sick days for 3 years even though they were only eligible for 12 days.

This was not corrected by Human Resources staff until June 2010.  One employee’s leave balance wa s understated by three days in 2010 due to an employee having to work on days for which leave had been previously requested.  The District was not enforcing or monitoring non-teac hers’ leave carry forward balance restrictions as per collective agreements or Government’s paid leave policy for non-teaching staff. For example:  One union employee retired in April 2010 and was paid for 137 leave days.

However, if the carry forward limits of 30 days had been applied in accordance with the collective agreement, this employee would be eligible for a maximum of 55 days because they retired before year end. Ther e was no approval on file for any exemptions.

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Part 2.4, January 2012 A uditor General of Newfoundland and Labrador Western School District  There were approximately 34 union employees as of 30 June 2010 who had a carry forward balance hi gher than their eligible annual leave days ranging from 1.5 to 57 days without approval.  The Human Resources Information System database did not flag which non-union staff did not take the required 10 days each fiscal year. The collective agreements only permit the carry forward of an employee’s eligible annual leave days up to maximum of 25 days unless an employee is grandfathered into the agreement.

In these cases 30 days may be carried over to the subseque nt year. Exceptions to the carry forward limit may be granted in circ umstances such as extended sick leave or work commitments. Govern ment’s paid leave policy requires non-union staff use a minimu m of 10 days each fiscal year or they will lose the difference unless there is approval due to extenuating circumstances. 1D. Employee Overtime The District paid $172,320 (170 employees) and $168,414 (154 employees) in overtime for the 2010 fiscal year and six months ending 31 December 2010 respectively.

The highest four employ ees were paid for over 200 hours in overtime each for a total of $41,623 (1,290 hours) for the 2010 fiscal year. One of these employees was paid $15,864 (538.5 hours) for the six-month period ending 31 December 2010. To monitor overtime the District requires each employee to complete overtime reports providing details of what the overtime relates to and to have their supervisor approve and submit the report to payroll with their bi-weekly time sheet. We found the following issues with overtime.

Documentation deficient The District did not document the a pproval of overtime prior to overtime being worked and did not have a policy on banking overtime. Time sheets for the central office staff and two of th e three zones were not signed by the supervisor for the pay period ending 22 January 2011. In addition, the bi- weekly time sheet summaries submitted by the three zones and central office were not standardized: none of th e summaries recorded the employee’s current pay scale and only two of the summaries recorded the employee’s job position.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 51 Western School District Required overtime reports not completed Overtime reports providing details on ove rtime were not always completed and approved as required. For exampl e, one employee was paid for 347.5 hours and 538.5 hours for the fiscal year 2010 and the six-month period ending 31 December 2010 respectively w ithout any overtime reports being completed. Another employee was paid for 440 hours and 130 hours for the fiscal year 2010 and the six-month period ending 31 December 2010 respectively without any overtime reports being completed.

All this overtime was reported on the time sheets and submitted to payroll for payment. Overtime documentation and review Our review identified issues with th e documentation of overtime resulting in errors in the amounts paid to employees. For example, one employee was hired temporarily for a maternity leave replacement and was allowed to bank overtime and track it; however, there were 10 hours not paid for or taken during the term of employment as a result of poor record keeping and monitoring of overtime.

Another empl oyee was hired as a part-time school secretary but sometimes worked more hou rs than a full-time position. As per the collective agreement, this employ ee should have been paid for overtime for hours beyond 35 hours per week. We determined that for the fiscal year 2009, this employee had 5 hours in overtime that were recorded and paid as regular time resulting in an underpayment of $46. In addition, another employee recorded and tracked their own overtime and was paid for the 96.5 hours in ba nked overtime on 1 October 2010 when they resigned.

However, our review identif ied that one of th e 20 bi-weekly time sheets was missing for the period 14 September 2009 to 1 October 2010 and, as a result, 31.5 hours of the 96.5 hours paid had no documentation that the overtime was actually incurred. In addition, the employee used 7 hours of the 96.5 hours in January 2010; however, this was not deducted from the accumulated overtime and as a result, the employee was overpaid 7 hours on resignation.

Recommendations The District should:  conduct and document job competitions for all job postings;  have all job positions classified by Treasury Board Secretariat;  calculate employee compensation accurately; and  monitor and record employee leav e and overtime in accordance with Government policy and collective agreements.

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Part 2.4, January 2012 A uditor General of Newfoundland and Labrador Western School District 2. Monitoring of Expenditures Overview The District spent approximately $19.8 million on goods and services during the 2010 fiscal year and $8.5 million for the period 1 July 2010 through to 31 December 2010. From our review of expenditures we identified issues in the following areas: A. Travel B. Cell Phones C. Other Details are as follows: 2A. Travel Introduction The District spent approximately $1.3 million in travel expenses during the 2010 fiscal year and $782,000 from July 2010 to December 2010.

The District is required to follow Governme nt’s travel rules and employees were required to complete a District travel claim to support the travel expenses. Our review of the District’s travel policies and 425 travel claims for 31 employees and six Board members identified the following issues. Travel claims not used by senior employee From July 2009 to December 2010, a senior executive’s travel expenses totalled $31,035; however, no travel claims were submitted and approved to support this expense.

The employ ee’s travel expe nses such as accommodations, rental cars and airfare were directly billed to the District and paid by purchase orders. Furthermore, meals were charged directly to the hotel bills and as a result, District st aff could not readily determine whether proper per diem rates were claimed.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 53 Western School District In addition, there was not always ade quate documentation to support charges for meeting expenses or business calls charged to the hotel bills. For example, where meals were charged for more than one person, there was no evidence that meals were provided for a legitimate business purpose. In instances where long-distan ce telephone calls were ch arged to the hotel bill, there was not always documentation to support whether the telephone calls were business-related or personal and with in Government’s travel rules limits for personal long-distance calls.

Inappropriate claims Our review identified various errors in travel claims and inappropriate claims for meals. For example:  one employee claimed $18 for dinner, even though the meal was paid for by another employee and claimed;  one employee claimed $10 for a meal while on a statutory holiday and therefore, not working; and  three employees claimed six meals totalling $91; however, the time of departure or return noted on the travel claim indicated that the meals should not have been claimed.

Trip advances not followed-up As at 31 December 2010, the District was owed approximately $29,000 related to travel advances paid to employees and for hotel, airfare and car rental expenses paid directly by the Di strict on behalf of employees while travelling on Department of Education or District business. The Department of Education was to reimburse the empl oyee, who in turn was to reimburse the District.

Our review of these a dvance payments to employees identified the following:  At 31 December 2010, the District had an outstanding balance beginning in December 2009 of $3,532 for trips for one employee while on Department of Education business; however, the funds had already been paid to the employee by the Department and approximately half was confirmed reimbursed to the District. Posting errors resulted in the reimbursement of $1,525 being expensed rather than being applied to the advance.

At the time of our review, Di strict staff indicated that they did not know which trips if any were outstanding for the remaining $2,007 for this employee. However, we were informed subsequent to our field work that a review of this empl oyee’s account had been performed and the employee did not have any outstanding trip advances.

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Part 2.4, January 2012 A uditor General of Newfoundland and Labrador Western School District  Eight employees with nine trip advances were reimbursed $6,127 directly from the Department of Education as early as three weeks after travel for some claims but the employees did not reimburse the District for up to nine months and only after a request from staff.

Specifically, the District was reimbursed within two months for six advances, within five months for one advance and between eight and nine months for two advances.  Although Government policy requires employees to submit a travel claim and reimburse for trip advances with in 30 days, the District’s accounting department had extended this requi rement to 120 days. However, the District policy had not been updated and we identified 11 employees that were provided trip advances totalling $10,325 from 2006 to November 2010 and did not reimburse the District or submit a travel claim within 30 days.

Specifically, 3 of the 11 were reimbursed within the 120 days and 8 were after this time period. No policy to support payments In January 2010, the District paid three janitorial staff $250 each for use of their vehicles during the fiscal year 2009. Although this has been a practice in the Northern Zone for certain positi ons, there was no Boar d policy to cover such payments. 2B. Cell Phones Introduction From July 2009 to December 2010, the District spent approximately $72,600 on cell phone communications.

The Di strict had 53 cell phones for its executive, administrative and support, program, maintenance and transportation staff. The District has a cell phone policy in place; however, our review identified the following issues with the use of cell phones. Cell phone listing not up- to-date and complete The District maintains a listing of in dividuals with cell phones; however, the inventory of cell phones was not up to date and did not include information such as cell phone plan information, se rial number of phone and issue date.

For example, a spare phone and the transfer of one cell phone to another employee when one employee was on si ck leave since July 2009 were not recorded. In addition, we identified th ree instances where the District could not provide documentation that phones were returned immediately as required by District policy when employees resigned or were on extended leave.

Auditor General of Newfoundland and Labrador Annual Report,

Part 2.4, January 2012 55 Western School District Inadequate plan review follow-up Although the District analyzed its ce ll phone services in March 2010 (49 phones at that time) to determine if cell phone plans purchased were being utilized, exceeded or whether shared service plans were more optimal, identified changes were not all implem ented. For example, our review of a sample of 15 cell phones iden tified four cell phones that were either not used or not used enough to warrant the pur chased plan costing approximately $1,256 for a total usage of 62 minutes.

One phone was used 29 minutes in one month during an 18 month period, anot her phone was used 22 minutes over 11 months, another phone was used 6 minutes over 6 months and a fourth phone was only used 5 minutes over 8 months.

Review of cell phone bills not documented The District did not always document the review of bills for personal calls or request that employees reimburse the District for personal cell phone usage as required by the District’s cell phone policy as follows:  One maintenance employee incurred costs totalling $178 above the monthly plan during a vacation to th e United States in November 2010 without any documentation of a review or reimbursement for personal costs.  One maintenance employee incurred costs totalling $256 for the period from 15 August to 14 September 2010 with 1,522 minutes above the monthly plan of 600 minutes without any documentation of a review or reimbursement for personal costs.  One manager incurred costs totallin g approximately $350 for the period from August to October 2010 with 1,922 minutes above the monthly plan of 1,200 minutes without any documentation of a review or reimbursement for personal costs.

Cell phone costs for one executive The District provided a senior ex ecutive with two cell phones costing approximately $1,095 per year in plan co sts. Our review of the first cell phone usage identified approximately $2,591 in usage charges above the plan charges for the fiscal year 2010. The reason for most of the additional usage charges costs was costs totalling $1,094 for roamer charges and usage while the employee was on vacation in the United States in August 2009.

In October 2009, a roamer package tota lling $565 ($113 per month) covering 5 months was purchased; however, there were no roamer charges for this period.

56 Annual Report,

Part 2.4, January 2

Document details

Collection	Newfoundland and Labrador — Committees
Citation	business_electronicdocuments_ar2011
Type	committee
Volume / chapter	business_electronicdocuments_ar2011.pdf
Language	en
Format	json
Source	PROVINCIAL
Identifier	123714b83b6e749c772ae2ed7fb5a11f6465615a

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