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Responses and actions taken to address the recommendations of the Special Examination Report of the Fall 2018 reports of the Auditor General of Canada
| Table 1: The attached table provides an update to CMHC’s action plans and response to the Auditor General Recommendations from its Fall 2018 Special Examination. All action plans have been completed. | |||
|---|---|---|---|
| Report Ref. No. | OAG Recommendation | Departmental (CMHC) Response | Status of Action Plans |
| Para 25 | The Canada Mortgage and Housing Corporation should continue to engage with its Minister to ensure that directors appointed to the Board have the critical and desirable competencies as provided in the Board’s competency matrix. | Agreed. The Canada Mortgage and Housing Corporation will continue to offer advice and support to the Minister on Board appointments by identifying competency and experience gaps and by working to ensure that future Board appointments address outstanding needs. The new Governor in Council appointment process guides appointments to the Corporation’s Board of Directors. The process is standardized across all government and Crown corporations, and allows for limited involvement from the organization. The selection approach is designed to identify qualified and diverse candidates. A selection committee, of which the Chair of the Board is the Corporation’s only representative, provides a list of recommended candidates to the Minister, who then recommends appointments to the Governor in Council. In December 2017, a number of appointments were announced to the Corporation’s Board, which will enhance the breadth and depth of knowledge on the Board. | Completed When Board vacancies arise the Minister is provided with the Notice of Opportunity along with a Board competency matrix. As part of the Board appointment process, CMHC proactively offer advice and support to the Minister in the selection of Board members. The Charter for the Board’s Corporate Governance and Nominating Committee has been updated and approved to require the annual review of the Board competency matrix. This annual Board review process has been enhanced to include a review of Board competencies to ensure they continue to be relevant and that any gaps are addressed through training and/or external consultants as required. Based on this review CMHC recommends appropriate training to Board members as needed. The Board learning menu is updated quarterly which includes courses which are directly relevant to the Board members’ role and duties. This ensures that the Board is aware of, and has access to, all available internal and external learning opportunities. On an annual basis, a list of suggested deep-dive topics is prepared and presented to the Board and Committees. These are then incorporated into upcoming board meetings. |
| Para 26 | The Canada Mortgage and Housing Corporation should ensure that the Board of Directors seek additional training or external expertise in areas where gaps in competencies and knowledge are identified, particularly in IT, where a significant transformation is taking place and a significant part of the operations is being outsourced to a service provider. | Agreed. The Canada Mortgage and Housing Corporation will continue to provide new Board members with relevant training information. All members have been provided with suggestions of appropriate courses designed to enhance competencies with respect to fulfilling their responsibilities on specific Board committees. The Corporation will further enhance its existing Board training menu and regularly identify suggested seminars and courses related to specific functional areas, hot topics, corporate priorities, and activities. | Completed When Board vacancies arise the Minister is provided with the Notice of Opportunity along with a Board competency matrix. As part of the Board appointment process, CMHC proactively offer advice and support to the Minister in the selection of Board members. The Charter for the Board’s Corporate Governance and Nominating Committee has been updated and approved to require the annual review of the Board competency matrix. This annual Board review process has been enhanced to include a review of Board competencies to ensure they continue to be relevant and that any gaps are addressed through training and/or external consultants as required. Based on this review CMHC recommends appropriate training to Board members as needed. The Board learning menu is updated quarterly which includes courses which are directly relevant to the Board members’ role and duties. This ensures that the Board is aware of, and has access to, all available internal and external learning opportunities. On an annual basis, a list of suggested deep-dive topics is prepared and presented to the Board and Committees. These are then incorporated into upcoming board meetings. |
| Para 27 | The Board of Directors should play a more active role in setting the Canada Mortgage and Housing Corporation’s strategic direction and monitoring performance in the area of assisted housing. | Agreed. The Canada Mortgage and Housing Corporation will assist the Board in fulfilling its responsibilities related to oversight and monitoring of performance with respect to the effective implementation and application of assisted housing policies, programs, and initiatives, including the National Housing Strategy. It will do this through its newly formed Assisted Housing Committee and through the new, qualified Board members appointed by the Minister in late 2017. The Corporation will provide regular related updates to the committee, including both reports to the federal government and a quarterly Assisted Housing Business Supplement that was introduced in the third quarter of 2017. The Corporation will also provide regular updates on activities for First Nations housing, including its support of initiatives being led by the Department of Indigenous Services Canada. | Completed The Housing and Capital Projects Committee (a new Board Committee which replaced the Affordable Housing Committee) is responsible to assist the Board in fulfilling its oversight responsibilities with respect to the management of major projects; communication, and reporting responsibilities with respect to the National Housing Strategy and effective implementation and application of affordable housing policies, programs, and initiatives. The Committee is provided with quarterly updates on relevant matters, including copies of status reports provided to the federal government, performance reports and First Nations housing activities. |
| Para 28 | The Board of Directors should ensure that it receives regular and comprehensive information on all aspects of the Corporation’s mandate as well as on all significant initiatives under way. | Agreed. The Canada Mortgage and Housing Corporation will continue to assist the Board with its corporate governance responsibilities by ensuring that it receives comprehensive, relevant progress reports, including opportunities and issues, on key initiatives and other significant activities, on a regular basis. The Corporation will also continue to ensure that the Board is satisfied with the information provided to do its work. | Completed Comprehensive and relevant reporting on key initiatives such as transformation initiatives and IT outsourcing activities, and other significant activities is provided to the Board regularly. A new oversight Board committee has been established (Housing and Capital Projects Committee). This new Committee replaces the Affordable Housing Committee. This Committee oversees NHS and capital spending including all Technology and Business Transformation projects, Future of Work projects and any other projects with an expected cost in excess of $10M. The Committee met for the first time on May 22 2019 and provided additional direction on the information it requires to provide appropriate oversight. At the May 2019 board meeting the Board of Directors approved the Housing and Capital Projects Committee mandate. Management provides the Committee with information on the affordable housing initiatives / (NHS) and on the company’s significant initiatives underway. Similar reporting will continue to be presented at each meeting. Significant risks related to large projects will also continue to be reported to CMHC’s Risk Committee. |
| Para 34 | The Canada Mortgage and Housing Corporation should enhance its assessment and documentation with respect to the capital it requires to cover all material risks, including its reputational and strategic risks. | Agreed. The Canada Mortgage and Housing Corporation will continue to enhance its Own Risk and Solvency Assessment documentation to include its assessment of capital requirements for reputational and strategic risks. This work will be completed for inclusion in its 2018 Own Risk and Solvency Assessment report, which will be finalised by the end of the fourth quarter of 2018. | Completed. The Chief Risk Officer (CRO) sector developed processes and procedures to assess reputational and strategic risks and embedded this process in the annual Own Risk and Solvency Assessment (ORSA) exercise. As part of the process, the Chief Risk Officer sector, in consultation with appropriate business lines, develops scenarios that could directly impact CMHC’s reputational and strategic risks. Scenarios are selected based on severity. For each of the selected scenarios, the Chief Risk Officer sector, with the help of relevant stakeholders and the economic capital tools, quantifies the loss exposure and respectively assesses capital requirements. The risk assessment of the scenarios and the capital requirements for reputational and strategic risks have been included in CMHC’s Own Risk and Solvency Assessment report which was approved by the Board. |
| Para 39 | The Canada Mortgage and Housing Corporation should define additional ad hoc stress tests to further explore its main vulnerabilities, better understand its risk profile in the event of extreme crisis, and ensure that management actions could be deployed to respond proactively to such extreme scenarios. | Agreed. The Canada Mortgage and Housing Corporation will continue the work that is already underway to enhance its stress testing capabilities to support additional ad hoc stress tests. As part of this work, the Corporation will continue to strengthen its documentation with respect to management actions and readiness plans to proactively respond to extreme scenarios. This work will be completed by the end of the fourth quarter of 2018. | Completed In consultation with various business lines, the Chief Risk Officer sector develops ad hoc stress testing scenarios (e.g., Reputational, Operational). For the selected scenarios, the Chief Risk Officer assesses and documents plausibility and impact (strategic, financial and reputational) on the various business lines and overall mandate. For each scenario, the Chief Risk Officer assesses and documents the respective management actions and playbooks. A Readiness Crisis Plan, containing scenarios (ad hoc stress tests), management actions and playbooks, were presented to the Board. A process to update the readiness plan on a periodic basis was developed, and includes processes in corporate risk policy documentation (Enterprise Risk Management framework or Operational Risk policy). |
| Para 60 | The Canada Mortgage and Housing Corporation should manage its transformation initiatives in an integrated way, have a project management team to oversee overall transformation project and change management activities, and report to the Board on the overall state of transformation initiatives. | Agreed. The Canada Mortgage and Housing Corporation will leverage its existing enterprise portfolio management and organizational change management functions, both of which reside in a newly formed Strategy and Organizational Excellence Division, to provide project and change management oversight and facilitate reporting to senior management and the Board on the transformation projects, as identified by the Corporation’s Executive Committee. The new Strategy and Organizational Excellence Division will act as a conduit for all applicable business transformation offices (for example, the IT Transformation Office) to facilitate comprehensive transformation reporting. | Completed. In consultation with the Office of the CIO, the Corporate Strategy Development division (CSD) (formerly the Strategy and Organizational Excellence Division) defined an enterprise-wide project performance reporting standard in support of an integrated project management approach and oversight, including change management indicators for the new Housing and Capital Board committees and for CMHC management committees. CSD also implemented the portfolio and project management policy guidelines and standards, including project reporting standards, and projects are reported on a quarterly basis using these standards, guidance and processes. The policy, guidance and processes are available to all employees on CMHC’s internal website for ease of use and reference. CSD is the conduit for transformation projects oversight and integrates this oversight by reviewing dashboards, consulting transformation project leads and providing integrated reporting to corporate governance committees, including the Board of Directors. This ensures integrated oversight which takes place quarterly with corporate governance committees and the Housing and Capital Board Committee. |
| Para 62 | The Canada Mortgage and Housing Corporation should clearly define objectives, outcomes, performance measures, and expected benefits for each of its transformation projects and regularly report on its achievements. | Agreed. The Canada Mortgage and Housing Corporation will include critical and high-complexity transformation projects as part of its initiative prioritization and assessment process, commencing in the first quarter of 2018. This process documents project objectives and expected outcomes for all major business projects. It also requires the development and approval of a full business case, including the identification of the anticipated project value and benefits. As these projects progress, project value realization will be regularly reported to senior management and the Board, as appropriate. | Completed In consultation with the Office of the Chief Information officer (CIO), the Corporate Strategy Development division (CSD) developed enterprise benefits realization methodology and supporting benefits reports for high-complexity projects, including transformation projects, as identified by CMHC’s project complexity assessment tool. CSD also developed benefit realization guidance and process to support the completion of business cases. The business case template includes detailed guidance on setting clear project outcomes and benefits, including measureable benefits for high-complexity projects. To further support business case rigour, a business case proponent’s guide is available to all employees and supports the end user in completing the business case. CSD reviews business cases prior to their submission to corporate governance committees to ensure that the project outcomes, benefits, costs are defined and governance has the information to approve or reject the proposed high-complexity project. Monitoring of benefits is in place and integrated benefits reporting for the portfolio of projects to corporate governance has started. In support of developing effective performance measures, training on performance measurement (PuMP training) has been delivered enterprise wide to resources involved with performance measurement related activities. |
