Audit of icebreaking services: Internal audit report

April 2019

On this page

• Executive summary
• Introduction
• Audit objective
• Audit scope and approach
• Audit findings
  • Governance
  • Risk management
  • Human resource management
  • Monitoring
• Conclusion
• Appendix A: Lines of enquiry and audit criteria
• Appendix B: Recommendations and management action plans

Executive summary

Audit objective

The objective of the audit was to assess the adequacy and effectiveness of the governance framework, risk management, resource management and monitoring for the delivery of the Icebreaking Services program. The Icebreaking Services program was assessed as a high-risk area in the Departmental Risk-based Audit Plan (2017-2018 to 2019-2020).

Under Canada’s Oceans Act, the Canadian Coast Guard is responsible for the provision of icebreaking and ice management services to support the safe, economical and efficient movement of ships in Canadian waters. The objectives of the Icebreaking Services program are to facilitate the safe and timely movement of maritime traffic through and around ice-covered waters through route assistance, ice routing and information services, harbour breakouts, flood control and ice management, and northern resupply. The Canadian Coast Guard has a fleet of 17 icebreakers that provide Icebreaking Services for south-eastern Canada during winter months from December to June, and in the Arctic during the summer months from June to October.

Audit scope and approach

The audit focused on governance, risk management, resource management and monitoring. The audit was carried out in National Headquarters and included interviews with key Icebreaking Services program personnel in the Canadian Coast Guard Regional Operations Centres in Atlantic and Central and Arctic Regions. The audit did not examine the information management systems used by the Icebreaking Services program, as this was covered in the 2017-2018 Review of Data Quality.

Conclusion

The audit concluded that there are some adequate and effective elements of a governance framework, resource management, risk management and monitoring practices in place to ensure the delivery of the Icebreaking Services program. There are also opportunities for improvement to strengthen senior management strategic and operational oversight of the Icebreaking Services program, to ensure key positions reflect the current work performed, and to develop a human resources strategy so that the program is able to recruit and retain key personnel for the delivery of icebreaking services. In addition, the Icebreaking Services program would benefit from assessing and managing strategic program risks, and updating Icebreaking Services fees to reflect the current operational environment.

Statement of conformance

This audit was conducted in conformance with the International Standards for the Professional Practice of Internal Auditing as supported by the results of the Quality Assurance and Improvement Program of Fisheries and Oceans Canada’s Internal Audit Directorate.

Introduction

The Icebreaking Services program was assessed as high-risk in the Departmental Risk-based Audit Plan (2017-2018 to 2019-2020). Icebreaking is one of the services provided by the Marine Navigation Program along with Aids to Navigation and Waterways Management. An audit of Marine Navigation in the Canadian Arctic was conducted by the Commissioner of the Environment and Sustainable Development in 2014 and evaluations of the Icebreaking Services program and the Marine Navigation program were undertaken by the Evaluation Directorate in 2011 and 2016 respectively. This is the first internal audit conducted on the Icebreaking Services program.

Under Canada’s Oceans Act, the Canadian Coast Guard (CCG) is responsible for the provision of icebreaking and ice management services to support the safe, economical and efficient movement of ships in Canadian waters. The clients of the Icebreaking Services program include domestic and foreign commercial vessels, ferries, ferry terminal operators, fishing vessels, Canadian and foreign government vessels, owners and operators of Canadian marine port and harbour infrastructure, fish processing companies, and the general public. In 2016, the value of Canadian international waterborne trade was $199 billion.

The objectives of the Icebreaking Services program are to facilitate the safe and timely movement of maritime traffic through and around ice-covered waters, to minimize the effect of flooding caused by ice jams on the St. Lawrence River, and to assist in the re-supply of northern communities for which there is no commercial service. The Icebreaking Services program contributes to the achievement of these objectives by carrying out route assistance, ice routing and information services, harbour breakouts, flood control and ice management, and northern resupply. The Canadian Coast Guard has a fleet of 17 icebreakers that provide Icebreaking Services for south-eastern Canada during winter months from December to June, and in the Arctic during the summer months from June to October.

The Icebreaking Services program is jointly governed by the Director General of National Strategies and the Director General of Operations, who report respectively to the Deputy Commissioner, Strategy and Ship Building, and the Deputy Commissioner, Operations. The role of National Strategies and Operations personnel in National Headquarters is to provide direction on program delivery in the regions. National Strategies is responsible for the development of policies, standards, procedures, guidelines and reporting on program performance nationally, while Operations is responsible for the coordination of regional program delivery including planning, monitoring and training. All icebreaking activities are coordinated jointly by the Canadian Coast Guard Regional Operations Centres in the Atlantic and Central and Arctic Regions. For 2018-2019, the planned spending for the Icebreaking Services program was $18.9 million. There are presently six full-time equivalent operational positions and one seasonal position that are directly involved in the delivery of the Icebreaking Services program. For 2017-2018, the Icebreaking Services program responded to over 1,000 requests for ice escorts through ice covered waters, maintenance of channels on ice, freeing of beset vessels, ice reconnaissance with vessels and helicopters, commercial harbour and fishing harbour breakouts, and flood control.

Audit objective

The objective of the audit was to assess the adequacy and effectiveness of the governance framework, risk management, resource management and monitoring for the delivery of the Icebreaking Services program.

Audit scope and approach

The audit focused on governance, risk management, resource management and monitoring. The audit was carried out in National Headquarters and included interviews with key Icebreaking Services program personnel in the Canadian Coast Guard Regional Operations Centres in Atlantic and Central and Arctic Regions. The audit did not examine the information management systems used by the Icebreaking Services program, as this was covered in the 2017-2018 Review of Data Quality. See Appendix A for detailed audit criteria.

Audit findings

Governance

Governance speaks to the combination of processes and structures in place to inform, direct, manage, and monitor the activities of the organization toward the achievement of its objectives. The audit examined the following aspects of governance: oversight mechanisms; roles and responsibilities; and information to support decision-making. The audit also examined the governance process in relation to service fees.

There is no joint oversight mechanism for the Icebreaking Services program

We expected that the Icebreaking Services program has implemented an appropriate oversight mechanism for the effective management of Icebreaking Services. The audit found that external oversight committees are in place; this includes CCG Management and Operational Executive Boards, the National and Regional Marine Advisory Board, the National Marine Advisory Board Icebreaking Sub-committee, the Canadian Marine Advisory Committee. However the discussions are at a high level and do not specifically encompass the overall strategic and operational management of Icebreaking Services. Given that the Icebreaking Services program is jointly governed by the Director General of National Strategies on the strategic side and the Director General of Operations on the operational side, we expected that there would be an appropriate mechanism in place to oversee and coordinate these two components of the Icebreaking Services program to ensure its effective management.

The audit found that there is no formal joint oversight body in place with respect to the overall management of the Icebreaking Services program, strategically and operationally. The audit team was informed that in the past, there had been a committee composed of the CCG Director Generals in which strategic and operational issues, including those related to the Icebreaking Services program, were addressed. Currently, discussions on issues affecting the program take place between National Strategies and Operations senior management on an ad hoc basis, and records of decision and action items are not documented for follow up. Without a joint oversight body, issues of key concern for the delivery of the Icebreaking Services program may not be brought forward for decision-making, particularly to the CCG Management Board, the Coast Guard’s senior decision-making body.

Recommendation: The Deputy Commissioner of Operations and the Deputy Commissioner of Strategy and Shipbuilding should ensure there is a joint oversight body in place for the management of the Icebreaking Services program.

Management response:
Management agrees with the recommendation.

The Deputy Commissioner of Operations and the Deputy Commissioner of Strategy and Shipbuilding will establish a formal reporting and oversight structure for the Icebreaking Program which includes:

• The Safe Shipping Executive Committee, co-chaired by Operations and National Strategies, which reports to the Operations Executive Board; and
• The National Management Committee for Icebreaking, a sub-committee under the Safe Shipping Executive Committee.

Roles and responsibilities for a key coordination position have not been developed

We expected that roles and responsibilities for the Icebreaking Services program are clearly defined, consistent, documented and communicated to ensure that employees and management are aware of their responsibilities in achieving program objectives. Lack of clarity may lead to tasks being overlooked, inefficiencies and duplication of effort. The audit examined whether key operational personnel involved in the delivery of the Icebreaking Services program, namely the Manager of Safe Shipping Policies, the National Manager of Icebreaking Operations, the Ice Superintendents, and the Ice Officers, have clear roles and responsibilities.

The audit found that for the Manager of Safe Shipping Policies, the Ice Superintendents and the Ice Officers, roles and responsibilities in relation to the Icebreaking Services program are clearly defined, documented and communicated through work descriptions, standard operating procedures and the Canadian Coast Guard Concept of Operations, thus ensuring clarity in carrying out the Icebreaking Services program. The audit team was informed, however, that for the National Manager of Icebreaking Operations, a newly created position, roles and responsibilities have not yet been developed. The creation of this key position, with defined roles and responsibilities, was recommended by a 2016 Departmental evaluation of the Marine Navigation Program, to serve as the Operations point of contact with National Strategies to provide much needed central coordination and support to the regions and stakeholders on operational issues related to Icebreaking Services. The lack of clear roles and responsibilities for this key position may negatively impact the efficient delivery of the Icebreaking Services program. The audit team was told that roles and responsibilities are in the process of being developed.

Recommendation: The Deputy Commissioner of Operations and the Deputy Commissioner of Strategy and Shipbuilding should ensure that roles and responsibilities for the National Manager of Icebreaking Operations are developed.

Management response:
Management agrees with the recommendation.

The Deputy Commissioner of Operations and the Deputy Commissioner of Strategy and Shipbuilding will develop a work description for the National Manager of Icebreaking Operations.

Information to support decision-making is sufficient and timely

We expected that Icebreaking Services program management would receive sufficient and timely information to support decision-making in relation to key issues affecting the program. This includes both internal and external information which is crucial in carrying out the Icebreaking Services program. The audit examined the mechanisms in place for reporting to management, as well as the frequency and type of information reported.

The audit found that National Strategies and Operations managers are satisfied that they receive sufficient and timely information for decision-making through daily regional ice calls, and bi-weekly meetings of the National Strategies and Operations Sector managers and Ice Superintendents. In addition, managers indicated that due to the operational nature of the Icebreaking Services program, when significant issues occur, they are raised with senior management as they happen, enabling timely decision-making.

Icebreaking Services fees have not been updated

We expected that there would be a formal approach to determine and update Icebreaking Services fees to ensure appropriate cost recovery. The audit examined whether results from consultations, research and analysis are considered and incorporated into Icebreaking Services fees, whether key stakeholders are consulted in changes to Icebreaking Services fees, and whether monitoring of legislative changes that affect Icebreaking Services fees occurs in a regular and timely manner to ensure the Department has the resources necessary to efficiently and effectively fulfill its icebreaking activities and in accordance with regulations.

The audit found that Icebreaking Services fees have not been updated since they were first implemented in 1998, while the demand for services and costs have continued to increase. The Canadian Coast Guard has conducted research and analysis to determine the appropriate level for Icebreaking Services fees, including developing a costing methodology to identify direct and indirect costs associated with Icebreaking Services and conducting studies on how changes to fees would impact industry. In addition, a project plan has been developed for the Icebreaking Services fee renewal process which includes a Marine Fees proposal with supporting analysis, engagement of internal and federal stakeholders, regional communication material, a marine fee management process and a client consultation plan. To date, all steps except for client consultation have been performed and refreshed over the years. According to the Service Fees Act, the responsible authority must consult interested persons and organizations on the fee proposal. It is important that Icebreaking Services fees are renewed because the Department continues to be responsible for the service fee recovery shortfall while the demand for icebreaking services and costs to run the Icebreaking Services program continue to increase each year. This shortfall has resulted in the Department subsidizing a greater portion of icebreaking services relative to users, a cost which is shouldered ultimately by Canadian taxpayers.

In addition, with the recent creation of the Service Fees Act, departments will be required to increase designated government services fees charged for products, regulatory processes, authorizations, permits or licenses, facilities, and for services that result in direct benefits to the person or organization paying the fee, by the Consumer Price Index as of Fiscal Year 2018-2019. The audit team was told that CCG will be proceeding with a two-phased approach to modernize its Marine Services fees. The first phase will begin in Fiscal Year 2018-2019, with an inflation adjustment for Marine Services fees in April 2019 followed by an increase in Icebreaking Services fees by December 2019. The second phase will consist of a larger increase following stakeholder consultation scheduled to take place in early 2020.

Recommendation: The Deputy Commissioner of Strategy and Shipbuilding should adjust Icebreaking Services fees to be compliant with legislation and better reflect the cost of services.

Management response:
Management agrees with the recommendation.

The Deputy Commissioner of Strategy and Shipbuilding has updated Icebreaking Services Fees to be in compliant with the Service Fees Act; fees will be adjusted based on inflation starting December 2019.

The Deputy Commissioner of Strategy and Shipbuilding will be ready to consult with clients and implement any additional changes should a decision be made to amend the fee structure.

Risk assessment

Strategic risks to the Icebreaking Services program are not being assessed and managed

Identifying risks to the Icebreaking Services program helps to ensure controls are appropriately based on those risks and allows management to determine an appropriate plan of action. We expected that there would be a formal and effective risk management system to identify, analyze and manage risks related to the Icebreaking Services program. The audit examined whether a formal risk management process for the Icebreaking Services program has been established, involves the appropriate levels of management, and includes analysis and management of risks relative to their effect on the delivery of the Icebreaking Services program.

The audit found that at the operational level, the Icebreaking Services program assesses and manages daily operational risks through the daily regional ice calls and bi-weekly meetings referred to above, which enable risks to be raised with senior management as they happen and responded to in a timely manner.

The audit also found, however, that at the strategic level, risks are not being assessed and managed. Although a formal risk management process and documented risk assessment have been established for high-level strategic risks related to the overall Marine Navigation Program, under which the Icebreaking Services program resides, this risk assessment process does not set out strategic risks related specifically to the Icebreaking Services program. As well, appropriate levels of management have not been involved in risk management for the program; several members of senior management indicated that they were not involved in the risk management process for the Icebreaking Services program. In addition, because roles and responsibilities related to risk management have not been defined between National Strategies and Operations, no formal risk management activities are taking place for the Icebreaking Services program. The audit team was told that the CCG is in the process of reviewing its Concept of Operations, which articulates its organizational structure, activities, and internal and external interactions, to clarify roles for the delivery of the Icebreaking Services program, including those related to risk assessment.

Recommendation: The Deputy Commissioner of Strategy and Shipbuilding, in consultation with the Deputy Commissioner of Operations, should ensure that strategic level risks related to the Icebreaking Services program are assessed and managed.

Management response:
Management agrees with the recommendations.

The Deputy Commissioner of Strategy and Shipbuilding, in consultation with the Deputy Commissioner of Operations, will:

• Leverage existing committees to inform and involve senior management in the review of Icebreaking Service strategic risks; and
• Develop an Icebreaking Service Risk Management Strategy that will define/clarify roles and responsibilities between National Strategies and Operations in regards to Icebreaking strategic-level risk management.

Human resource management

The Icebreaking services program is facing challenges with the recruitment and retention of key personnel

Human resource planning is central to a healthy organization that attracts and retains competent, committed and engaged employees. A sound human resource plan can help efforts to secure the right people, build a supportive work environment and develop capacity to ensure the organization meets its objectives. We expected that the Icebreaking Services program has sufficient human resources to support the delivery of icebreaking services, and that human resource planning is aligned with strategic and business planning.

The audit found that presently there is no human resource plan in place to identify current and future requirements for the Icebreaking Services program to meet short- and long-term operational goals. The last Coast Guard Integrated Business and Human Resources Plan was completed in 2014 for the years 2014-17. Without proper human resource planning that is aligned to business needs, the Icebreaking Services program workforce may not be aligned to its operational requirements.

In addition, the CCG has not reviewed the Icebreaking Services program’s human resource requirements to ensure that it is able to deliver on program objectives since 2012 when the Coast Guard was reorganized from five regions to three. As part of this reorganization, the number of positions within the Icebreaking Services program was reduced and the existing work was redistributed amongst remaining staff. The Ice Office in St. John’s, Newfoundland, operates seasonally during the winter months with one Ice Superintendent, one Ice Officer and one seasonal Ice Officer. The Montreal Ice Office in the Central and Arctic region operates year round, twenty-four hours a day, with one Ice Superintendent and two Ice Officers. The audit team was told that these positions require daily interaction with industry, and the longer hours and higher stress levels associated with the increased workload have resulted in high turnover of personnel.

In addition, the audit found that there are challenges associated with differing classification levels of key positions. Specifically, Ice Superintendents in the Icebreaking Services program are classified at a lower level than their counterparts in other Marine Navigation Programs although responsibilities are very similar. As well, Ice Officers in the Central and Arctic region are classified at a higher level than their counterparts in the Atlantic, whose lower classification may not reflect the work that they are required to perform. This has contributed to challenges in recruiting and retaining Ice Superintendents and Ice Officers across regions.

Recommendation: The Deputy Commissioner of Operations and the Deputy Commissioner of Strategy and Shipbuilding should:

• Develop a human resource plan to ensure the Icebreaking Services program has the resources to meet its requirements; and
• Review and update the Ice Superintendent and Ice Officer job descriptions to reflect the current work performed and ensure that CCG prioritizes these positions for reclassification.

Management response:
Management agrees with the recommendations.

The Deputy Commissioner of Operations and the Deputy Commissioner of Strategy and Shipbuilding will:

• Develop a strategic human resources plan that aligns Icebreaking Services tasks to core and any emerging Coast Guard priorities; and
• Develop Ice Superintendent and Ice Officer work descriptions that match the tasks, roles and responsibilities of the job.

Monitoring

Performance measurement is important because it contributes to ensuring there is adequate and relevant information to support senior management in monitoring results, making informed decisions, taking appropriate actions and reporting on the effectiveness of the Icebreaking Services program. We expected that there is an adequate Performance Information Profile that supports the effective monitoring of the Icebreaking Services program. To assess this, the audit examined whether an adequate Performance Information Profile is in place, whether performance measures are reviewed and updated, and whether performance results are reported to the appropriate authority levels.

A performance information profile is in place for the Icebreaking Services program

The audit found that a Performance Information Profile is in place for the Icebreaking Services program. As per the Policy on Results, which came into effect on of July 1^st 2016, Departments are responsible for establishing, implementing and maintaining Performance Information Profiles for the Programs in their Program Inventory. Icebreaking Services program complied with the Treasury Board requirement. During the audit conduct phase CCG initiated the review of its Performance Information Profile indicators for the 2019-2020 fiscal year to ensure they remained relevant.

Levels of Service for the Icebreaking Services program do not reflect the current operating environment

The audit found that the indicator used to measure the Icebreaking Services program’s performance in meeting industry’s needs is response time, which is based on standards set out in the 2010 Coast Guard Levels of Service. However, this indicator is not reflective of the current Coast Guard operating environment, where demands have increased while capacity has decreased. The audit team was told that the need for icebreaking services has changed over the past decade, due to increased marine traffic, requests by industry for earlier opening and later closing of corridors, and changing ice migration patterns. This has meant that the Icebreaking Services program has been unable to meet its Levels of Services.

The Service Fees Act stipulates that if performance standards in relation to fees paid have not been met, a portion of those fees must be remitted to any affected person who paid the fee. This speaks further to the importance of ensuring that Levels of Service reflect the current operating environment. In addition, if the Levels of Service do not reflect the current operational environment and the Coast Guard is unable to meet the response times it has committed to, it limits the Coast Guard’s ability to increase service fees and may result in the Department being obligated to reimburse the user for missed performance standards.

Recommendation: The Deputy Commissioner of Strategy and Shipbuilding, in consultation with the Deputy Commissioner of Operations, should review and update the Icebreaking Services program Levels of Service to ensure they are aligned with the current operational environment.

Management response:
Management agrees with the recommendation.

The Deputy Commissioner of Strategy and Shipbuilding, in consultation with the Deputy Commissioner of Operations, will:

• Present a plan to update Levels of Services for the Icebreaking Program to the Operations Executive Board for approval; and
• Update Levels of Service, which takes into account consultations with Icebreaking Service users.

Conclusion

The audit concluded that there are some adequate and effective elements of a governance framework, resource management, risk management and monitoring practices in place to ensure the delivery of the Icebreaking Services program. There are also opportunities for improvement to strengthen senior management strategic and operational oversight of the Icebreaking Services program, to ensure key positions reflect the current work performed, and to develop a human resources strategy so that the program is able to recruit and retain key personnel for the delivery of icebreaking services. In addition, the Icebreaking Services program would benefit from assessing and managing strategic program risks, and updating Icebreaking Services fees to reflect the current operational environment.

Appendix A: Lines of enquiry and audit criteria

Audit criteria

Line of enquiry 1 – Governance

Criterion 1.1: Appropriate oversight mechanisms are in place for the effective management of the Icebreaking Services program.

Criterion 1.2: The roles, responsibilities and accountabilities are defined, consistent, documented, and communicated.

Criterion 1.3: Management receives sufficient and timely information to support decision-making.

Criterion 1.4: The Icebreaking Services program has a formal approach to determine Icebreaking Services fees.

Line of Enquiry 2 – Risk management

Criterion 2.1: A formal and effective risk management system is in place to identify, analyze and manage risk and involves appropriate levels of management.

Line of Enquiry 3 – Resource management

Criterion 3.1: The Icebreaking Services program sufficient human resources to meet its goals and objectives.

Line of Enquiry 4 – Monitoring

Criterion 4.1: The performance measurement strategy in place is adequate and supports the effective management of the Icebreaking Services program.

Appendix B: Recommendations and management responses