Treasury Evaluation Program Framework

Purpose of Document

This document describes the objectives and process of the Treasury Evaluation Program (TEP) of the Department of Finance.

TEP Role and Objectives

The TEP provides assessments of frameworks and programs in the domain of federal treasury management. Given the nature of these activities, the results of policy decisions and changes in practices are only realized over an extended period of time. An ex-post evaluation process that looks back over a multi-year period is thus useful and appropriate.

The findings of evaluations serve two principal objectives. First, they provide an assessment of past policy and operational decisions, relative to their objectives and the evolving standards and practices of other comparable entities. The results inform future policy direction and the enhancement of program effectiveness and efficiency. Secondly, evaluations support good governance by providing decision-making information for management and public transparency and accountability on outcomes. Reviews are contracted out to expert third parties to ensure objectivity and give added credibility to the advice received. The results of evaluations, together with a Departmental response, are posted on the website and shared with interested parties, thereby providing a means to assess the past and future actions of government.

Program Scope

The scope of the TEP springs from its origins in the early 1990’s as an accountability mechanism for debt management in an era of growing federal debt. Over the succeeding years, the program’s ambit was expanded to cover a range of issues that fall under the Minister’s statutory responsibility for the government’s treasury activities, including the management of wholesale and retail market debt, the investment of domestic cash balances and the international reserves portfolio, and the borrowing framework used by government-backed entities.

Evaluation Plan

The TEP targets two evaluations on an annual basis, as part of a medium term evaluation plan that covers key areas of treasury management. The evaluation timing and frequency is determined in view of the materiality of the values or risks associated with the subjects, and whether or not there has been a significant change in policy or practice in recent years. See Annex for a list of TEP evaluations from 1990 to 2005.

Evaluation types fall into two broad categories:

1. Frameworks: assessments of policy frameworks within which activities are managed, e.g. debt strategy, reserves management and governance.
2. Programs: examinations of program activities or specific initiatives undertaken in support of the broader policy framework, e.g. domestic and foreign borrowing programs, investment and risk management practices and retail debt.

Governance

From a governance perspective, the scope of the program calls for the maintenance of oversight committees that are well versed in its technical subject matter, as subsidiary elements within the overall Departmental Internal Audit and Evaluation framework.

TEP Steering Committee

The TEP process is overseen by a Steering Committee, chaired by the Senior Associate Deputy Minister of Finance. Other members are the Assistant Deputy Minister, Financial Sector Policy Branch, the Deputy Governor of the Bank of Canada responsible for financial markets and fiscal agency work, and an Assistant Comptroller General. The Director of the Department’s Internal Audit and Evaluation Division attends as an observer.

The Steering Committee functions as a coordinating body and an advisory group to the Internal Audit and Evaluation Committee of the Department of Finance. As such, it is responsible for determining the medium term evaluation plan for assessments and approving the terms of reference for evaluations, receiving the final reports and approving the associated Departmental responses. The Steering Committee meets on a semi-annual basis.

Working Group

The General Director, Financial Sector Policy Branch, chairs the Working Group, which manages the evaluation process on an ongoing basis. This group includes representation from the Financial Markets Division of the Department and the Bank of Canada, the Office of the Comptroller General and the Department’s Internal Audit and Evaluation Division.

The Working Group recommends areas for review and develops terms of reference for Steering Committee approval. The Working Group is responsible for reviewing reports prepared by the external evaluator for factual accuracy and submitting the report to the Steering Committee. The Working Group meets on an as needed basis.

Evaluators

Evaluations are undertaken by independent third parties, selected through a public bidding process using MERX, or with the assistance of an external consultant. A consultant, hired as an advisor to the General Director, Financial Sector Policy Branch, manages the co-ordinating of contracting with evaluators and the submission of their draft and final reports.

TEP Process

The evaluation process begins with the review and updating of the medium-term evaluation plan by the Working Group. The evaluation plan is sent to the Steering Committee for approval and later to the Departmental Audit and Evaluation Committee. The Working Group also prepares Terms of Reference for the two subjects for evaluation in the coming year, which are also submitted to the Steering Committee for approval. The Terms of Reference are used as the basis for the selection of qualified evaluators through a competitive process.

Evaluations are finalized by going through a process of review and commentary by Working Group officials. At that juncture, a formal Departmental response to the evaluation is drafted by the Working Group and submitted to the Steering Committee for approval. Once it has been approved at that stage, the response is reviewed and approved by the Internal Audit and Evaluation Committee of the Department. The report and response are then posted on the Department’s website and sent for information purposes to the Standing Committee on Public Accounts and the Auditor General.

The release of the evaluation and the response give priority to providing timely information to the public on the activities of the government. However, a comprehensive response to issues raised in the evaluation may require further analysis or consultations by the Department and decisions by the Minister of Finance. The response issued with the release of the evaluation would indicate this, if it were the case.

Annex