Regional Development Agencies Internal Audit of Values and Ethics

Each RDA had established an organizational code of conduct that included roles and responsibilities relating to values and ethics.

An organization’s code of conduct is one of the most important vehicles that management can use to communicate standards that define acceptable behaviours. The code sets the tone for the organization’s culture and contributes to raising awareness of management’s commitment to integrity in support of the achievement of the organization’s goals. In compliance with the requirements of the PSDPA, each RDA had implemented an organizational code of conduct that aligned with the Values and Ethics Code for the Public Sector. Each RDA’s code of conduct defined expected behaviours and specific duties and obligations for employees and management representatives in relation to the values set out in the Values and Ethics Code for the Public Sector: respect for democracy, respect for people, integrity, stewardship and excellence. The agency codes of conduct also included provisions regarding conflict of interest during employment and post-employment situations.

No specific provisions were in place for the regular review of the organizational code of conduct in the RDAs. Although FedDev Ontario had recently updated its code of conduct, WD and CanNor indicated that such reviews occur on an as-required basis. Although it is not a policy requirement, establishing a review protocol would ensure that the codes of conduct and related instruments are relevant, applicable and reflect current organizational requirements. Once implemented, the protocol would serve as a regular awareness-raising exercise.

In addition to defining duties and obligations in departmental codes of conduct, deputy heads^{Footnote 8} must, in accordance with the Values and Ethics Code for the Public Sector, ensure that employees can obtain appropriate advice within their organization on ethical issues, including possible conflicts of interest. All the RDAs had designated senior officials, such as a senior official for public service values and ethics and a values and ethics champion, to foster a positive culture of values and ethics and to provide support and advice to RDA employees. Moreover, in accordance with the PSDPA, the RDAs had designated a senior officer for disclosures to manage reported internal disclosures.

There is an opportunity to define organizational priorities relating to values and ethics in all 3 RDAs.

In accordance with the Values and Ethics Code for the Public Sector, deputy heads are responsible for fostering a positive culture of values and ethics in their organization.

Expected behaviours that support the achievement of organizational objectives relating to values and ethics are communicated through each RDA’s code of conduct. In addition, the RDAs noted that organizational priorities relating to values and ethics are discussed at the senior management level; however, limited or no audit evidence was available to demonstrate that such discussions occurred. As a result, it was difficult to determine the extent to which the discussions resulted in the identification of priorities relating to values and ethics. Establishing and documenting priorities sets a course to promote and to reinforce a culture based on values and ethics.

Two RDAs had implemented operational plans: a values and ethics action plan to track activities at WD, and a re-engagement strategy outlining activities relating to values and ethics at FedDev Ontario. However, planned activities could not be linked to organizational values and ethics priorities and no performance measures were defined to evaluate whether the planned activities achieved the desired results. The use of performance measures would provide senior management with information to oversee and adjust, as necessary, objectives, plans and processes to ensure that values and ethics priorities are met. It would also contribute to enhancing the oversight role of senior management in support of a culture based on values and ethics.

The 3 RDAs’ business planning processes and operational practices integrate guiding principles for values and ethics.

The RDAs’ role in administering numerous grants and contributions programs poses inherent risks with respect to real, apparent or potential conflict of interest or inappropriate influences. Integrating guiding principles relating to values and ethics into business planning documents and operational practices provides a means to support the application of ethical practices in the decision-making and delivery processes of grants and contributions programs.

Under the Values and Ethics Code for the Public Sector, “organizations are expected to take steps to integrate stated values into their decisions, actions, policies, processes, and systems.” A review of RDA-specific organizational business planning documents, such as integrated business plans and Reports on Plans and Priorities, as well as key operational manuals and guides relating to grants and contributions, found references to guiding principles based on values and ethics. Furthermore, a review of selected grants and contributions project files in each RDA revealed that ethical practices were applied when proposals were being assessed and when funding decisions were being made. These ethical practices included the use of risk management practices and tools to support due diligence; the provision of clear and documented roles and responsibilities for program officers and managers that promote proper segregation of duties; and maintaining sufficient information, analysis and recommendations to support decision-making. Reinforcing the importance of a values-based operating culture through established practices and tools contributes to maintaining the public sector values of integrity, stewardship and respect for democracy.

All 3 RDAs had established a process for reporting and resolving potential conflicts of interest. Two of the RDAs, however, had not implemented the requirement to identify positions at risk for post-employment conflict of interest concerns.

The Treasury Board Policy on Conflict of Interest and Post-Employment provides direction and measures to assist organizations and public servants in effectively dealing with real, apparent or potential conflict of interest situations that may arise during and after employment in the public service. The policy covers 2 types of conflict situations: first, conflict of interest, a situation in which a public servant has private interests that could improperly influence the performance of his or her official duties and responsibilities or in which the public servant uses his or her office for personal gain; second, conflict of duties, a conflict that arises as a result of one or more concurrent or competing official responsibilities.

Under the policy, deputy heads have a responsibility to ensure that procedures are in place in their organization for public servants to file a report of all situations, assets, liabilities or interests that might give rise to a real, apparent or potential conflict of interest with respect to their official duties. All 3 RDAs had established procedures for employees to declare and report situations of conflict of interest. These procedures are made available to all employees, mainly through each agency’s code of conduct, and are posted on their intranet site. A review of selected conflict of interest declaration forms in each RDA confirmed that cases of conflict of interest were reported and managed by the designated senior official for conflict of interest, as required under the policy.

With regard to the management of post-employment conflict of interest situations, the Policy on Conflict of Interest and Post-Employment stipulates that deputy heads are responsible for reviewing their operations and organizational structure to designate positions that may be at risk for post-employment conflict of interest concerns. Although FedDev Ontario had designated positions at risk for post-employment conflict of interest concerns, CanNor and WD did not comply with the policy requirement. Designating such positions provides a preventative mechanism that can increase managers’ and employees’ awareness of the post-employment requirements.

A procedure for managing investigations into disclosures of wrongdoing was in place in all 3 RDAs; however, the PSDPA requirements relating to the protection of the identity of persons and the confidentiality of information were not defined.

The PSDPA establishes a procedure for the disclosure of wrongdoings in the public sector. This procedure allows public sector employees to bring, in confidence and without fear of reprisal, any serious breach of the code of conduct to the attention of their immediate supervisor, their senior officer for disclosure or the Public Sector Integrity Commissioner.

Under the PSDPA, each deputy head must designate a senior officer to be responsible for receiving and dealing with disclosures of wrongdoings made by public servants employed in the organization for which the deputy head is responsible. Each of the 3 RDAs had designated senior officers for disclosure, and their duties were documented in the RDA’s code of conduct.

The PSDPA also requires each deputy head to establish internal procedures to manage disclosures made by public servants. The procedures are to include provisions to ensure the protection of the identity of persons involved in the disclosure process, as well as the confidentiality of information collected in relation to disclosures. The 3 RDAs had identified internal procedures to manage reported disclosures of wrongdoing as part of the duties and powers of the senior officer for disclosure; however, the procedures did not include provisions detailing how the identity of persons involved in the disclosure would be protected and how the confidentiality of information collected would be maintained.

Although no internal allegations of wrongdoing were reported in the RDAs during the 2015 to 2016 fiscal year, documenting investigative procedures that comply with the PSDPA provisions would help ensure that privacy and confidentiality requirements are respected should allegations be brought forward and would contribute to enhancing employee confidence in the process.

Fear of reprisal was identified in all 3 RDAs.

The 2015 report commissioned by the Office of the Public Sector Integrity Commissioner of Canada^{Footnote 9} noted that fear of reprisal for reporting wrongdoing is a concern in the federal public sector.

The 2014 Public Service Employee Survey (PSES) included specific questions relating to ethics in the workplace. An item of relevance to all RDAs, as well as to the general public service, related to fear of reprisal. According to the 2014 PSES results, only 45% of all public service employees believed that they could initiate a formal recourse process (a grievance, a complaint, or an appeal, for example) without fear of reprisal. With respect to the RDAs, only 29% of FedDev Ontario employees,^{Footnote 10} 40% of CanNor employees^{Footnote 11} and 54% of WD^{Footnote 12} employees felt that they could initiate a formal recourse process without fear of reprisal.

In response to the 2014 PSES results, FedDev Ontario implemented a theme-based action plan to address areas of concern. The employee growth and empowerment theme, which focused on encouraging employees to raise opinions, issues and concerns to management, included initiatives to create opportunities for employees to provide input and advice without fear of reprisal. At WD, activities to address the issue of fear of reprisal were limited to information sessions on internal and external recourse methods, which were offered at 2 regional offices. Both FedDev Ontario and WD indicated that they are awaiting the results of the upcoming 2017 PSES to determine the effectiveness of the activities they implemented. CanNor did not undertake any activities to address fear of reprisal; they indicated that they focused on other issues identified in the PSES. Employees may be more inclined to share ethical concerns about organizational activities or to report allegations of wrongdoing if they believe there would be no reprisals, retaliation or repercussions for doing so.

Recommendations: values and ethics governance

1. The RDAs should further strengthen governance-related activities to support a culture based on values and ethics:
   1. 1.1 

       

      CanNor, FedDev Ontario and WD should identify organizational values and ethics priorities and measure progress toward their achievement.
   2. 1.2 

       

      CanNor and WD should identify positions that may be at risk for post-employment conflict of interest concerns in accordance with the Treasury Board Policy on Conflict of Interest and Post-Employment.
   3. 1.3 

       

      CanNor, FedDev Ontario and WD should adjust their internal investigation procedures to include Public Servants Disclosure Protection Act (PSDPA) requirements relating to the protection of the identity of individuals involved in the disclosure process and the confidentiality of information collected.
2. CanNor and WD should consider the need to further assess the fear of reprisal in their organizations and establish an action plan, if deemed appropriate.