Everything in good order???

[oneoff]

Audit of licensing and compliance




1.0 Executive summary

Authority for audit

1.1 The mission of the Internal Audit function of Audit and Evaluation Services is to provide independent and objective assurance services designed to add value and improve the Canadian Grain Commission's operations. Internal Audit helps the Canadian Grain Commission accomplish its objectives by bringing a systematic, disciplined approach to assess and improve the effectiveness of risk management, control and governance processes.

1.2 The audit of Licensing and Compliance was included in the 2011-2012 Audit and Evaluation Services risk-based Audit Plan that was approved by the Commission following a recommendation by the Departmental Audit Committee in May 2011.

1.3 The audit was conducted from November 2011 to January 2012 and consisted of interviews with Licensing and Compliance staff and management, as well as examination of protocols and procedures, licensing and security worksheets and documents, and other licensing and compliance records.

Background

1.4 A substantial part of the Canadian Grain Commission's Producer Protection Program Activity is carried out by the Licensing, Audit and Compliance Units of Corporate Services. The objectives for this program are achieved through licensing elevators and grain dealers, collecting security from licensees, monitoring licensees' liabilities to producers, and investigating complaints. In accordance with the Canada Grain Act, generally, subject to exceptions set out in the Canada Grain Act or exemptions that may be made by the Commission, anyone who deals in or handles grain grown in western Canada must be licensed by the Canadian Grain Commission.

1.5 Licensing is considered a Canadian Grain Commission mission critical function and because of its high inherent risk, has been of interest to Executive Management and Commissioners. Compliance has been included in this audit as a complementary function, which is closely integrated with the activities of the Licensing Unit, while the Licensee Audit function has been specifically excluded from the internal audit scope.

Audit objectives

The objectives of this audit were:

1.6 To assess the quality of controls over the processing of licence applications, collection of licence fees, monitoring of licensee reporting requirements and processing of licence renewals.

1.7 To assess the controls over the calculation, management and monitoring, and realization of security posted by Canadian Grain Commission licensees.

1.8 To assess the efficiency and effectiveness of handling of complaints and inquiries related to licensing.

1.9 To determine the quality of controls in place to license, or grant exemptions to, all elevators and grain dealers as required by the Canada Grain Act.

Conclusion

1.10 Licensing and Compliance are mission critical functions for the achievement of the Canadian Grain Commission's mandate. In recent years, procedures in the area have been documented and monitoring increased. This audit determined that controls in place are of a high quality overall, key processes are now well-documented, solid monitoring is undertaken of security requirements, and producer complaints are handled appropriately. We also noted that, although unlicensed operations continue to exist, considerable efforts in recent years have successfully improved the classification and licensing of numerous operations previously functioning outside of the Canada Grain Act.

1.11 The following report contains recommendations to improve certain administrative procedures and financial controls as well the controls over industry compliance, the most notable of which are:
•Further pursuing compliance with the Canada Grain Act by exercising the authorities granted by the Canada Grain Act to investigate and/or sanction operations that are in contravention (reference: 3.39);
•Determine whether the insurance requirement is necessary as part of the Canadian Grain Commission's producer protection mandate and, if so, obtain updated insurance policies for each required licensee in order to monitor the insured value (references: 3.21, 3.22);
•Document procedures and criteria for making key decisions in the licensing process (reference: 3.6);
•Improve financial controls over the collection and recording of licence fees (references: 3.13, 3.14).

Management has established appropriate action plans for each recommendation. Additional details on the results of the audit are contained in this report.

Statement of assurance

1.12 In the professional judgment of the Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the accuracy of the opinion provided and contained in this report. The opinion is based on a comparison of the conditions as they existed at the time, as described in the Audit Scope, against pre-established audit criteria. The opinion is applicable only to the entity examined. This audit engagement was planned and conducted to be in accordance with the Internal Auditing Standards for the Government of Canada.

Summary of recommendations and management action plans

1.13 The following is a summary of recommendations contained in this report with Management's action plans to address the topics identified:
Summary of high impact recommendations and management action plans


High impact



Reference

Recommendations

Management action plans



3.39

We recommend that the Canadian Grain Commission further pursue compliance with the Canada Grain Act by exercising the authorities granted by the Canada Grain Act to investigate and/or sanction operations that are in contravention. This would further the Canadian Grain Commission's commitment to producer protection by demonstrating the consequences of failing to obtain a licence (or exemption) under the Canada Grain Act.

In 2005, a Licensing Compliance Review was undertaken and many companies cooperated and became licensed.



As mentioned in this Report, the Commission developed a protocol regarding the approach to unlicensed grain operations. A review is now underway as described in the protocol.



Through consultations regarding potential legislative changes, the Canadian Grain Commission has received recommendations to consider introducing changes to make use of administrative penalties, such as the "Administrative Monetary Penalties Act" (or AMPs), in order to help promote compliance with the Canada Grain Act.

Summary of medium impact recommendations and management action plans


Medium impact



Reference

Recommendations

Management action plans



3.6

We recommend that management document formal procedures/criteria for making key decisions in the licensing process, including, for example: licence classification, form authorization, and security calculation (initial and renewal). In some cases this may simply involve consolidating disparate sources of information and Commission decisions into documents that can be understood and easily referenced by Licensing staff.

Agree with recommendations. The Licensing Team will develop internal procedure documents that explain the decision making processes; target date for completion of protocols is December 31, 2012.



3.13

We recommend that a formal reconciliation process (for instance, semi-annual) with Finance be implemented to ensure accuracy and completeness of financial information in both Units' records.

Licensing will work with Finance to develop this process by December 31, 2012.



3.21

We recommend that Licensing obtain updated insurance policies for each required licensee and monitor the insured value of grain against producer liabilities (for primary elevators) or stocks in store (terminal/transfer elevators) to assess sufficiency of insurance at all times.

Management plans to review the insurance requirement and bring forward the audit recommendation and the insurance review findings to the Commission with recommendation for future action by September 30, 2012.



3.22

We recommend that Management, in consultation with the Commission and Legal Counsel, make a final determination whether the insurance requirement is necessary as part of the Canadian Grain Commission's producer protection mandate. If not required, Licensing should remove reference to it on the application material. With either determination, consideration should be given to making appropriate reference to the insurance requirement in future directions from the Commission.

A policy review will be undertaken for decision by the Commission by September 30, 2012.



3.35

We recommend that: a) All complaints and inquiries handled by the Compliance Unit be recorded in the Licensing Bonding Financial database on a timely basis. b) More significant, recurring complaints or issues be highlighted at the weekly meetings, even if they were resolved as of the time of the meeting.

Agree with recommendations. Since the audit, these have been implemented.

Summary of low impact recommendations and management action plans


Low impact



Reference

Recommendations

Management action plans



3.7

We recommend that management enhance its internal quality management system by implementing a monitoring and review function. The monitoring activities should be designed such that they do not create an undue burden on staff to carry out but still support overall compliance.

Agree with recommendation. Licensing is exploring how they will monitor whether they are adhering to the various Protocols and whether they are still relevant. This will be complete by March 31, 2013.



3.14

We recommend that the fee book be enhanced so that fees invoiced (receivable), and fee payments received can be verified in one centralized location. Management should periodically review the fee book to ensure it is complete and accurate.

Licensing will work with the Canadian Grain Commission's Finance department to review the current process, to be completed by December 31, 2012.



3.29

We recommend that management: a) Implement a periodic (e.g. annual or semi-annual) review of the documentation currently secured by the Canadian Grain Commission. This would involve ensuring all security documents are current, the files are complete, and the value of the security instruments match the values recorded in the Licensing Bonding Financial database for each licensee. b) Schedule a consultation with the Canadian Grain Commission Security Officer to determine if files and security documents are properly secured.

a) Agree with recommendation to review security in the vault and will do so on an annual basis commencing by March 31, 2013. b) Agree with recommendation. Consultation will be scheduled for Fall 2012.





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Date Modified:2012-09-25
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[oneoff]

And if the CGC (aka. Government of Canada) is in charge of this program of their own creation; just how come they aren't able to pay out 100%. Do you think for one minute that full taxes are not due; and when not paid remain a debt owed
See below from the Canadian Grains Commission website. Somebody screwed up; and these messes drag on and on. Where's the interest too?


QUOTE Making a payment claim

When you have not been paid for grain that you have delivered to a licensed primary elevator, process elevator or grain dealer you are able to make a payment claim.
1.Contact the Canadian Grain Commission by telephone or email immediately.
2.Submit copies of grain receipts, elevator receipts or cash purchase tickets to the Canadian Grain Commission by fax or mail. These are the only documents recognized by the Canadian Grain Commission for claims against a company’s security.
Note: You may also submit copies of your purchase contract or scale ticket, although these documents are not recognized for claims purposes. If you do not have any of the recognized documents, contact the Canadian Grain Commission to discuss your options.
3.The Canadian Grain Commission will send you a payment claim form.
4.Complete the payment claim form. Include your current mailing address, telephone number and email address. Include copies of your supporting documents if you have not already submitted them to the Canadian Grain Commission.
5.Send your completed form and any supporting documents by fax or mail to the Canadian Grain Commission.

The Canadian Grain Commission carefully reviews all submitted claims. Payments to eligible producers are based on the amount of security posted by the company compared to the total monetary amount of eligible claims received. The posted security may be less than the total of eligible claims. This means that even if your claim is eligible, you may not receive 100% compensation. The Canadian Grain Commission makes every effort to compensate producers for the full amount they are owed based on their eligible claims.

Coverage period

You are only covered by a licensed company’s security for 90 days from the date you delivered your grain or 30 days from the date you received a cash purchase ticket. The shorter of the two time periods applies. For example, this means that:
•If you submit your receipt and you receive a cash purchase ticket on the 15th day after you delivered your grain, you are covered for 30 days. You are not covered for the 76 days left in the 90-day period because 30 days is the shorter time period.
•If you submit your receipt and you receive a cash purchase ticket on the 75th day after you delivered your grain, you are covered for the 16 days left in the 90-day period. You are not covered for 30 days because the remaining 16 days are the shorter time period.



Date Modified: 2009-05-11


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[TOM4CWB]

Oneoff,

Because Ralph Goodale and Paul Martin (the finance minister that required this change) were UNFAIR irresponsible politicians when they gutted the Canada Grain Act in 1995 when they made these changes to the Canada Grain Act.

I worked for MONTHS then... and years after...against this irresponsible change... the Compas recomendations also tell of this problem and that it should be changed.

I think the bonding system should be like the bank CDIC insurance. $100K per institution.

[oneoff]

There are some sincere and concerned persons at the CGC who have not been made to look good by the recent developments in the licenced and bonded grain trade. That doesn't even delve into the unbonded and unlicenced sectors of agricultural grain marketing and consumption.

And the payment failure and other problems shouldn't be pinned to any one culprit.

It is an evolved system of contracting and payment schedules that have allowed a payment schedule completely detached from living up to farmers end of the tranaction.

The CGC suggestions for changes might center on getting a substancial down payment upon delivery....say %80%. There may well be a change to shifting off any "insurance" or "bonding" to be under the control of someone else.

What I know for sure is that the current CGC payout has not been done in a timely manner. The CGC audit of Newco is now being looking at in full detail by the company(s) that are on the hook for about $3 million. The bond was not sufficient to cover the claims and the Government of Canada (though its agency Canadian Grains Council) failed to protect those who dealt with what they held up as a licenced and bonded company.

Were this a different agency of the Federal Government; the laws of the land would have people put in jail for non-payment of their debts. There would be interest charges assessed and fines imposed. An example would have been made to prevent reoccurences and restore trust in the system.

In this case; something is horribly wrong. There is no sign of one red cent, and just maybe a bond isn't meant to be cashed in by any company not in receivership; and continuing on as though someone else should look after their business plan which fianally caught up with their folly.

The real question is how the repercussions of one firms non-payment; can bring down other businesses which rely on what they are owed.

And the snowball can continue to grow.

[sumdumguy]

Was Newco a feedmill? As far as I know feedmills do not even need to license and bond. How unfair is that! Correct me if I am wrong.

[oneoff]

Whatever they were , or are, they were also strongly into the business of buying grain and reselling to other brokers, feedlots, feed mills and hog operations. No one could have devised a more direct stealing of farmers grain.

They took grain and they couldn't/didn't/wouldn't and won't(you take your pick) pay for what was obtained by binding written contracts.

As someone else said; they should be hiding under some moss somewhere. Or else be selling off personal assets and their other holdings and everything else of value, and make good for what isn't going to get paid.

If farmer's losses aren't covered , maybe the least the Government of Canada should do is allow an income tax deduction for the gift or charitable donations that were "given" to those who legally stole their production.

as

[oneoff]

Whatever they were , or are, they were also strongly into the business of buying grain and reselling to other brokers, feedlots, feed mills and hog operations. No one could have devised a more direct stealing of farmers grain.

They took grain and they couldn't/didn't/wouldn't and won't(you take your pick) pay for what was obtained by binding written contracts.

As someone else said; they should be hiding under some moss somewhere. Or else be selling off personal assets and their other holdings and everything else of value, and make good for what isn't going to get paid.

If farmer's losses aren't covered , maybe the least the Government of Canada should do is allow an income tax deduction for the gift or charitable donations that were "given" to those who legally stole their production. After all it was the Canadian Grains Council that failed to manage the bonding stisfactorily.

as

[oneoff]

Whatever they were , or are, they were also strongly into the business of buying grain and reselling to other brokers, feedlots, feed mills and hog operations. No one could have devised a more direct stealing of farmers grain.

They took grain and they couldn't/didn't/wouldn't and won't(you take your pick) pay for what was obtained by binding written contracts.

As someone else said; they should be hiding under some moss somewhere. Or else be selling off personal assets and their other holdings and everything else of value, and make good for what isn't going to get paid.

If farmer's losses aren't covered , maybe the least the Government of Canada should do is allow an income tax deduction for the gift or charitable donations that were "given" to those who legally stole their production. After all it was the Canadian Grains Council that failed to manage the bonding stisfactorily.

as

[oneoff]

I think if you can't pay for something, or don't have the financing in order; then you certainly shouldn't be allowed to acquire other people's production by theft.

[ColevilleH2S]

Feed mills don't need a bond. I found that out about
a decade ago with a sale to a local hog barn. I finally
got paid, but it was not without a lot of extra effort
on my part.

I learned that the squeaky wheel gets the grease, so
squeek loudly and often if you are owed money from
these losers. Or as Oneoff more accurately calls
them "thieves".

[sumdumguy]

The sad thing is that the thieves go broke and
just start up again under a new name with a new
company and farmers and seed plants start
dealing with them again as though nothing
happened.

Its not only feedmills. I learned the hard way
about agency agreements. As soon as you sign
an agency agreement with someone, they collect
on your behalf and there you have it. Money
gone and you can do sweet pizz all.