P.E.I. auditor general finds some weaknesses in oversight of COVID-19 programs

The P.E.I. government overall obtained appropriate authorizations for its COVID-19 financial support programs, according to a report released Thursday morning by P.E.I.'s auditor general, but a few weaknesses were found.

Auditor General Darren Noonan released a Phase 1 report of a review of programs the province initiated in response to the pandemic.

The report identified 21 separate programs supporting individuals, businesses and organizations that were feeling the financial impact of the pandemic. The programs had a total budget of $52 million.

"The need to get money into the hands of Islanders and businesses was crucial," Noonan wrote in his report.

"However government is still responsible to ensure proper internal controls exist to monitor the allocation of resources, track expenditures and ensure 'eligibility' requirements are met."

Overall, Noonan concluded the government assured appropriate authorizations for the programs, but his office did identify some weaknesses in oversight and controls, including:

• Funding was sometimes provided even though the applicant did not meet all eligibility criteria, or insufficient documentation was submitted.
• Two programs had errors in payment calculations, one of which had errors for 60 per cent of applications in the sample provided to the AG's office.
• There were no documented agreements with some third parties which distributed funding.
• For most programs there was no documentation available to indicate a quality review had occurred.
• Formal program assessment plans have not been developed for 13 of the 21 programs.
• Treasury Board approval was not obtained when budgets were exceeded for three of the programs.

Funds provided when applicants not eligible

Noonan expressed concern with some of the programs, which in order to provide for the quick release of funds did not require documentation for eligibility up front.

For seven of the 21 programs, applicants simply stated, or attested, that they were eligible on the applications.

Only three of those seven programs had a documented plan to verify after the fact that the people or organizations that received funds were in fact entitled to them. For two of the programs, some of the eligibility criteria was left out of the attestation statement.

The AG's office found that for three of seven programs, information provided by some applicants indicated that they did not meet the required eligibility criteria; but funding was still provided.

The AG found similar problems in programs that did require documentation up front.

In seven programs there were cases where not all the required documentation was submitted, or where costs submitted were not eligible for funding, but the applications were approved and funding was provided.

Third party providers

Most of the programs reviewed were operated entirely by government, but two of the 21 were run in partnership with four separate organizations outside of government.

The partnerships were designed to help identify those most in need of support.

Noonan expressed concern that three of the four third parties did not have a signed agreement with the province. Without a signed agreement there is no requirement for records to be kept by the third party of how funds were spent, or to report back to government.

Without an audit clause in a signed agreement, there is no way for government to ensure funds were spent as intended.

Recommendations

The report included three recommendations:

• The Treasury Board should ensure all departments and Crown corporations understand the Treasury Board policies they must follow, including matters connected to budgeting, financial management, and contracts. This recommendation includes departments and Crown corporations not included in this audit.
• Procedures should be developed to ensure applicants who received money were entitled to it.
• The Treasury Board and executive council should perform its own review of the COVID-19 pandemic programs, so lessons learned can be applied to future emergency programs. 

Work on auditing the programs will continue for a few years, said Noonan, and a followup report on the recommendations in this report will come out next summer.

A statement from the finance minister's office said the report shows the effectiveness of the P.E.I. government's COVID-19 response, and acknowledged there is also room for improvement.

"This government is proud of the balance that was achieved in delivering programs swiftly while maintaining appropriate administrative processes."

Response from Opposition

Hannah Bell, the Official Opposition finance critic, said the government had to act fast in funding COVID-19 response programs, and the flaws highlighted in the auditor general's report aren't alarming. 

"I think one of the first things is to remind ourselves or remind Islanders how important it was to get money out to Islanders, to businesses at the time."

However, the government should still be more responsible with spending, Bell said. 

"I think there's a couple of key recommendations that the auditor general is drawing, and one of them is that even in emergencies or in a time of crisis, we still have to have fiscal responsibility," she said.

The standing committee on public accounts will soon have a hearing with the auditor general to ask specific questions about the overpayments and underpayments, highlighted in the report.

"That'll be the chance to have that deeper dive, and then if we need to from there, the next step would be to ask departments to come in to discuss programs specifically," said Bell, who chairs the committee.

The proposed date of the hearing is Aug. 10, she said. 

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