Recommendation
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AANDC Response
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Action Plan
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Identifying
eligibility
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6.21 Aboriginal
Affairs and Northern Development Canada should review its community
eligibility criteria for the Nutrition North Canada program to base the
criteria on need, and it should assess the eligibility of communities
accordingly. (6.17–6.21)
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Agreed. At
the launch of the Nutrition North Canada program in 2011, a community
was eligible for the Program if it lacked year-round surface transportation
(that is, no permanent road, rail, or marine access), and used the Food Mail
Program, Aboriginal Affairs and Northern Development Canada’s previous
northern transportation subsidy program. Usage levels were determined from an
examination of the Canada Post shipping data from the 2009–10 fiscal
year. Our internal audit and internal evaluation in 2013 recommended
that community eligibility requirements be examined. The Department has been
examining this matter for a year, conducting a detailed review of all
isolated northern communities to better understand the challenges they face
due to isolation in accessing healthy, nutritious foods at affordable prices.
This review will assist the Department in reassessing community eligibility
for maximum program effectiveness.
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The
Department will complete the first phase of a detailed review of all isolated
northern communities to better understand the challenges they face due to
isolation in accessing perishable, nutritious foods in the first half of
2015.
·
Remote
communities in three territories and seven provinces were examined, including
their year-round access to approximately 30 supply centres.
·
A
common template and criteria were developed to allow for comparison of data
collected, such as: community demographics, the number of grocery stores in
each community, amount of time isolated, nature and condition of surface
access when it exists and distance to supply centre by air.
·
Information
will be posted in the summer of 2015 on the Program website to seek feedback on
the assumptions.
·
Recommendations
on community eligibility will be developed.
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Passing
on the subsidy to consumers
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6.29
Aboriginal
Affairs and Northern Development Canada should review the obligations and
requirements in contribution agreements under the Nutrition North Canada
program to clarify that retailers must provide all the information on
eligible items, including current profit margins and profit margins over
time, to determine whether the retailers are passing on the full subsidy
to consumers. (6.23–6.28)
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Agreed.
Aboriginal Affairs and Northern Development Canada is conducting a review of
Nutrition North Canada program requirements for retailers, as set out in
the funding agreements. The contribution agreements will be amended
to specify that they will make available information on current profit
margins and profit margins over time to the Department and to compliance
reviewers so that the Department may verify that the full subsidy is
passed on to consumers.
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A new clause
has been added to all 36 funding agreements with the recipients of the
Program. New agreements go into effect April 1, 2015. The new clause
specifies that recipients must provide all the information on eligible items,
including current profit margins and profit margins over time.
It
is located in Annex 2 “Program, Service, and Activity Delivery Requirements
and Adjustment Factors” and reads as follows: The Recipient will
administer the Nutrition North Canada in accordance with the DIAND’s
Nutrition North Canada Program – National Manual, as amended from time to
time and the Recipient shall provide all available information on the
current profit margins and profit margins over time upon request.
The
Department met with all Northern Retailers on November 26, 2014 to reinforce
the requirements for monitoring and assurance activities – in particular, the
analysis and confirmation of the application of the full subsidy by the use
of data on profit margins. The external auditor compliance reviews will be
available on the program website. Individual meetings with each retailer
began in December 2014 and will be concluded by March 31, 2015.
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6.37
Aboriginal Affairs and Northern Development Canada should
·
clarify
the requirements for conducting compliance reviews by specifying that the
work to determine whether the full subsidy is being fully passed on to
consumers must include an examination of current profit margins and profit
margins over time;
· assess the
compliance reviews to determine that appropriate review work was completed
and that the conclusions in the reports are clear and well supported; and
· in cases
where compliance reviews make recommendations to retailers, formally monitor
the implementation of the recommendations. (6.30--6.36)
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Agreed.
Aboriginal Affairs and Northern Development Canada will amend the Statement
of Work for compliance reviews so that these reviews incorporate an analysis
of retailers’ profit margins. Compliance reviews will report on whether,
based on analysis of the application of the subsidy and the resulting
calculations of profit margins of eligible items, the full subsidy is passed
on to consumers.
The
Department will monitor the work of the compliance reviewer to ensure that
requirements in the Statement of Work are met. This may include reviewing the
compliance reviewer’s working papers.
In
cases where compliance reviews make recommendations to retailers, the
Department will monitor their implementation.
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·
External
auditors undertaking annual compliance reviews are required to obtain evidence
that allows for the examination and analysis of the profit margin to provide
assurance that the full subsidy is being passed on to the consumer.
·
Compliance
reviews will be undertaken on a risk based approach.
·
The
compliance reviews being conducted in 2014-15 were refined to focus on this
issue.
·
The
Department will provide quality assurance by assessing the compliance reviews
to determine that the work was comprehensive and the conclusions in the
reports are clear.
·
The
compliance reviews will include action plans and letters to the Recipient
where required. Finalized reviews and action plan will be posted on the departmental
website and progress will be monitored on an annual
basis.
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Managing the
Program
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6.49 Aboriginal
Affairs and Northern Development Canada should review and update its
performance measurement strategy. The strategy should ensure that performance
indicators allow the Department to manage the Nutrition North Canada program
to meet its objective, collect data to report against the indicators, and
clearly specify responsibilities for data analysis and reporting. (6.39–6.48)
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Agreed.
A performance measurement strategy for the new program was developed and
approved as part of obtaining the Nutrition North Canada program authorities
in 2011. Following an internal evaluation of Nutrition North Canada
in 2013, Aboriginal Affairs and Northern Development Canada reviewed and
updated the Nutrition North Canada performance measurement strategy and
associated indicators in 2014. It was approved and issued
in September 2014.
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·
The
approved Performance
Measurement Strategy was posted to the Program’s website on November 21, 2014.
·
The
Department will review and refine the Performance Measurement Strategy
annually.
·
The
Performance Measurement Strategy on the Program website will be linked to the
Program Results section so that results can be monitored and assessed effectively
by all stakeholders.
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6.55 Aboriginal
Affairs and Northern Development Canada should consider all options in
implementing its cost containment strategy. (6.50–6.54)
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Agreed.
Aboriginal Affairs and Northern Development Canada will continue to apply
cost containment in a manner that supports the program objectives. In the
evaluation of cost containment, the Department will examine all options,
including annual changes to the subsidy rates, with a view to avoiding
unintended price shocks or product shortages. Competitive freight rate
information will be considered in any adjustment to subsidy rates.
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·
On
November 21, 2014, the Department announced that the
Government of Canada and the Nutrition North Canada Advisory Board would be
engaging Northerners, retailers and suppliers on ideas to keep the Program on
a sustainable path.
·
A
phased approach to engage key stakeholders has been developed to: communicate
Program objectives, information and the requirement for Program adjustments
to keep it on a sustainable path; better understand what foods Northerners
want subsidized; and, enable cost-effective, inclusive and continuous
feedback that promotes two-way communication between the Program and
stakeholders. Consultants will assist with this work.
·
The
Department will examine all options for cost-containment in 2015-16, taking
into account stakeholder feedback.
·
Any
program adjustments, including annual changes to the subsidy rates, will be
communicated well in advance, to take into account the sealift and winter
road planning cycle with a view to avoiding unintended price shocks (e.g.,
poultry, processed cheese products) or product shortages.
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