6.9 Monitoring and auditing activities

The CFI conducts oversight activities to ensure that the institution complies with the guidelines and manages the funds properly. The CFI reserves the right to make the final determination of eligible costs and contributions and to adjust the CFI award accordingly. To avoid a situation where costs and contributions may later be deemed ineligible or incorrectly valued, an institution should contact the CFI early in the process if it foresees a problem in complying with the guidelines for a given project.

6.9.1 Financial trend analysis

The CFI conducts an annual financial trend analysis for each institution with active CFI-funded projects. This analysis informs the CFI’s institutional risk assessment and oversight activities and allows it to better align payments with observed spending trends and its experience with each institution.

The CFI assesses factors such as the average time to finalize and complete projects, frequency of significant project spending delays, along with other risk factors that may influence payment decisions, including delays in obtaining timely financial reports and other requested information.

In the winter of each year, the CFI notifies institutions with concerning trends. In these instances, it may apply measures such as modifying planned instalments, increasing holdback amounts on its payments or increasing the financial reporting frequency on projects.

The CFI refreshes its analysis and reassesses each institution in the fall of each year. This allows it to modify its payment decisions and oversight activities accordingly and lift special measures once concerns have been resolved.

6.9.2 Contribution audits

The CFI conducts audits to ensure that the funding received by an institution for a given project has been used in accordance with the agreed-upon terms and conditions of the award agreement and with applicable policies and guidelines. The CFI reserves the right to audit any CFI-funded project, even when the final instalment for the holdback has been paid.

A risk-based audit approach is used for the selection of projects to be audited. Various risk factors are considered, such as the value of the CFI contribution and the in-kind contributions, the complexity of the project, and the CFI’s experience with both the project and the institution. All projects with a CFI contribution exceeding $10 million are automatically subject to an audit. The risk of a project will determine the scope, timeline, nature and extent of the audit activities. The CFI reviews project risk and assesses the need for audits periodically. The institution will be notified when a project is selected for an audit.

Audit costs are not eligible costs and cannot be reported as such in a CFI-funded project. Within certain guidelines, the CFI will pay for the audit costs out of its administrative budget. However, if an institution has not prepared the required documentation by the dates set by the auditors or has not cooperated with the auditors by providing them with the required information on a timely basis, the CFI may request that the additional costs incurred be paid by the institution.