Ministry of Forests Annual Report 1994/95


Ministry of Forests Annual Report 1994/95 Table of Contents

Audit of Small Business Forest Enterprise Program's (SBFEP) Compliance and Non-Compliance with Soil Conservation, Regeneration and Free Growing Standards for the Fiscal Year 1995

Chief Forester's Report

Section 37 of the Silviculture Practices Regulation 42/94 requires that regional managers report to the chief forester on the Small Business Forest Enterprise Program's (SBFEP) compliance with soil conservation, regeneration and free growing standards in approved pre-harvest silviculture prescriptions (“PHSPs”). On the basis of the information supplied to him, the chief forester must prepare an annual audited statement documenting the extent of compliance, and include it in the ministry's annual report.

Before district and regional managers could report on the level of SBFEP compliance with soil conservation, regeneration and free growing requirements (as defined in Note 4 of Notes to Support Ministry Compliance Reporting), it was necessary to ensure that the ministry's database supporting SBFEP included all the information to be audited. Reaching that stage took until December 17, 1995, at which time the firm of KPMG Peat Marwick Thorne, Chartered Accountants (“KPMG”) was engaged, on behalf of the chief forester, to audit the ministry's Statement of SBFEP compliance and non-compliance with soil conservation, regeneration and free growing standards for the year ended March 31, 1995 (“the Statement”), and report to him by March 31, 1996.

The new information systems that the ministry uses (Forest Tenure Administration System, 1992, and Integrated Silviculture Information System, 1994) are undergoing updates to improve systems functioning and to meet legislated requirements. The knowledge and training required by staff to stay current in the use of these systems has been difficult to maintain due to the influx of new staff and ongoing modifications.

KPMG found that the database supporting SBFEP compliance reports was, in fact, incomplete and contained inaccurate data. They concluded in their audit report that, in their opinion, the ministry's Statement does not present fairly the SBFEP compliance and non-compliance with soil conservation, regeneration and free growing requirements (as defined in Note 4 of Notes to Support Ministry Compliance Reporting). As a result, the Statement has not been presented here.

The ministry is improving the accuracy and completeness of information contained in its information systems. To achieve this, the ministry is devoting resources toward data correction, and embarking on a program to train staff in the areas of data entry, verification and documentation. These actions are required to ensure data integrity for ministry business requirements, including future compliance reporting.

Larry Pedersen
Chief Forester


Auditors' Report

Larry Pedersen
Chief Forester
Ministry of Forests
Province of British Columbia

We have audited the Ministry of Forests' Statement of Small Business Forest Enterprise Program (“SBFEP”) compliance and non-compliance with soil conservation, regeneration and free growing standards for the year ended March 31, 1995 (“the Statement”). The Statement was prepared in accordance with the criteria set out in Note 4 of the Notes to Support Ministry Compliance Reporting (“the Notes”). This information was the responsibility of the Ministry of Forests. Our responsibility is to express an opinion on the accuracy of the Statement based on our audit.

Except as described in (1) below, we conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance that the Statement is free of material error. Such an audit includes examining, on a test basis, evidence supporting the information in the Statement, and where applicable, the significant assumptions made by management, as well as evaluating the overall presentation of the information.

  1. We were not engaged, due to seasonal constraints, to carry out a field assessment of the accuracy of the records maintained by the Ministry of Forests with respect to compliance and non-compliance of the SBFEP silviculture practices. Accordingly, we were not able to determine whether any adjustments to the Statement might be necessary had we carried out such a field assessment.

  2. Our audit revealed deficiencies in internal controls over the collection of appropriate data and over the input of data to the Integrated Silviculture Information System (“ISIS”) which have an impact on the completeness and accuracy of ISIS data used to generate the ministry's Statement.

    Completeness of Information on ISIS

    We identified a population of 783 records on the Forest Tenure Administration System (“FTAS”) which were listed as SBFEP funded but had no matching forest file identification number in ISIS (see Note 3 of the Notes). We examined a sample of 98 of these FTAS records to determine if any of the records were incorrectly excluded from ISIS, or on ISIS but not identified by the ministry's compliance reporting logic. We found that 10 of these records were incorrectly excluded from ISIS or not identified by the ministry's compliance reporting logic, which exceeded the acceptable level of errors for this test.

    Accuracy of Soil Conservation Data

    We examined a sample of 339 soil conservation records from the ministry's Statement. 288 of these records were shown in the Statement as being in compliance with the criteria set out in Note 4 of the Notes and 51 records were shown as being in non-compliance. The results of our examination are reported in the table below. The level of errors exceeded the acceptable level of errors for this test.

Status per Ministry's
Statement
Sample
size
Number of
records
correctly
classified
Number of
records
classified as
being in
compliance
found to be in
non-compliance
Number of
records
classified as
being in
compliance
found to have
insufficent
information to
determine
compliance
Number of
records which
were not due
to be reported
on in fiscal
1995

Compliance
Non-compliance
288
51
134
31
14
not applicable
96
not applicable
44
20

Accuracy of Regeneration Delay Data

We examined a sample of 322 regeneration records from the ministry's Statement. 252 of these records were shown in the Statement as being in compliance with the criteria set out in Note 4 of the Notes and 70 records were shown as being in non-compliance. The results of our examination are reported in the table below. The level of errors exceeded the acceptable level of errors for this test.

Status per Ministry's
Statement
Sample
size
Number of
records
correctly
classified
Number of
records
classified as
being in
compliance
found to be in
non-compliance
Number of
records
classified as
being in
compliance
found to have
insufficent
information to
determine
compliance
Number of
records which
were not due
to be reported
on in fiscal
1995

Compliance
Non-compliance
252
70
156
60
26
not applicable
36
not applicable
34
10

Completeness of the ministry's Statement prepared from ISIS

A total of 19% (64 of 339 records) of the Soil Conservation records sampled and 14% (44 of 322 records) of the Regeneration records sampled were not due to be reported on in the current fiscal year, but were included in the Statement as a result of errors in the data fields in ISIS for silviculture handover date and harvest start date. Due to the level of errors in the silviculture handover date and the harvest start date fields in ISIS, we were unable to satisfy ourselves that all records which should have been reported on in the 1995 fiscal year have been included in the Statement. As a result, we were unable to determine the magnitude of the adjustments required to the Statement in respect of records which have incorrect silviculture handover date or harvest start date fields in ISIS.

In our opinion, due to the impact of the errors described in (2) above, the Statement did not present fairly the SBFEP compliance and non-compliance with soil conservation, regeneration and free growing standards for the year ended March 31, 1995 in accordance with the criteria set out in Note 4 of the Notes.

Chartered Accountants
Vancouver, Canada
February 14, 1996


Notes to Support Ministry Compliance Reporting

The following notes describe the legislation and the basis for recording whether an area is in compliance with silviculture practices.

1. Responsibility to Reforest and Report

a) For reforestation, the Crown is responsible for basic silviculture on areas harvested under the Small Business Forest Enterprise Program (SBFEP) as defined in the Forest Act. The Forest Act and the Silviculture Practices Regulation 42/94 require the ministry to carry out activities in accordance with the standards specified in approved pre-harvest silviculture prescriptions (PHSPs).

Until a free growing stand is established, districts must carry out basic silviculture activities required by the silviculture prescription and regulation. Failure to achieve these obligations or to report on achievements within the specified time, does not diminish the requirement to achieve a free growing status for an area.

b) For reporting, Silviculture Practices Regulation 42/94 requires that district managers must keep accurate records of silviculture operations, and submit reports to the chief forester, via regional managers, stating the extent of compliance with silviculture practices (soil conservation, regeneration and free growing) standards in approved pre-harvest silviculture prescriptions. Furthermore, the regulation requires the chief forester to prepare an annual audited statement stating the extent of compliance during the 1995 fiscal year (April 1, 1994 to March 31, 1995). The requirement for an annual audited statement of compliance is in effect only for the 1995 fiscal year.

2. Pre-Harvest Silviculture Prescriptions

The content within a PHSP is specified by the legislation, but the form is not. A PHSP is deemed to exist if an approved document conveys silviculture information as specified by the Forest Act, Silviculture Regulation 147/88 and Silviculture Practices Regulation 42/94.

A PHSP states standards and time limits for achieving regeneration and free growing status, and the maximum proportion of the area that can be affected by site degradation.

The Forest Act (Consolidated December 5, 1994), Section 129.11, also gave district managers the ability to exempt areas from requiring a PHSP where basic silviculture is not required, for example for roads and minor harvest or salvage areas.

3. Ministry Information Systems

The ministry's integrated information systems are used to manage corporate data and to report silviculture compliance information. The two main systems are the Forest Tenure Administration System (FTAS, implemented in 1992) and the Integrated Silviculture Information System (ISIS, implemented in 1994). ISIS is used to schedule silviculture treatments, facilitate project management, and report on achievements.

Prior to FTAS and ISIS, the ministry used other information systems from which data was transferred to the new systems. Data from silviculture prescriptions, surveys and treatment activities is recorded and maintained on FTAS and ISIS by district staff.

FTAS dates are used with ISIS prescription standards to determine when districts are required to complete basic silviculture obligations and report on their achievements.

In general, in accordance with the Forest Act (Consolidated December 5, 1994), Section 129.11, ISIS excludes areas that were logged but do not require basic silviculture, such as roads, minor harvest areas related to forest health activities, minor harvesting related to stand improvement activities, and small volume cash sales for salvage of timber.

4. Determination of Compliance

a) A unit is in compliance with soil conservation, regeneration or free growing standards as specified in a PHSP, if the following criteria are met:

A unit is defined as the cutblock area for soil conservation, and the treatment unit or standard unit area for regeneration and free growing assessments.

A unit is not in compliance with reporting requirements if the PHSP standards or survey data is not entered, or is entered incorrectly, on ISIS.

b) For soil conservation compliance, there are significant dates that define which standards are required by legislation to be measured and reported on:

c) The ministry did not assess whether compliance was achieved and recorded by the obligation due date, because data entered during system implementation used the data entry date, not the actual PHSP approval or survey completion date. As a result, a unit was deemed to be in compliance if all obligations were met prior to December 17, 1995.


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