Audit of CIHR’s Commercialization Programs

June 2014

Table of Contents

• Executive Summary
  • Introduction
  • The Canadian Institutes of Health Research
  • Commercialization Programs
  • Risk Addressed by the Audit
  • Objective
  • Scope
  • Overall Audit Opinion
  • Statement of Conformance
  • Summary of Strengths
  • Summary of Improvement Opportunities
• Detailed Report
  • Methodology and Criteria
  • Observations, Recommendations, and Management Action Plan
• Appendix
  • Audit Criteria and Conclusions

Executive Summary

Introduction

The Internal Audit of CIHR's commercialization programs is part of the 2013-14 Risk-Based Annual Internal Audit Plan which has been approved by the Canadian Institutes of Health Research's (CIHR) Governing Council (GC).

The Canadian Institutes of Health Research

The Canadian Institutes of Health Research is the Government of Canada's agency responsible for funding health research in Canada. CIHR was created in June 2000 under the authority of the CIHR Act and reports to Parliament through the Minister of Health. CIHR's mandate is to "excel, according to internationally accepted standards of scientific excellence, in the creation of new knowledge and its translation into improved health for Canadians, more effective health services and products and a strengthened Canadian health-care system." CIHR comprises 13 "virtual" institutes – each headed by a Scientific Director, who is assisted by an Institute Advisory Board – which bring together all partners in the research process – the people who fund research, those who carry it out, and those who use its results – to share ideas and focus on what Canadians need: good health and the means to prevent and fight disease. Each Institute supports a broad spectrum of research in its topic areas and, in consultation with its stakeholders, sets priorities for research in those areas. CIHR funds over 14,000 researchers and trainees in universities, teaching hospitals, and other health organizations and research centres in Canada and abroad.

Commercialization programs

CIHR's Commercialization and Innovation Strategy was launched in 2005, with the goal of providing a coherent framework for transforming health research into action, improve the quality of life and stimulate the economic development through discovery and innovation. The Strategy was the result of consultations with members of Governing Council, CIHR's 13 Scientific Directors, partners and stakeholders, who identified both the challenges arising from gaps in the commercialization and innovation pipeline, as well as the opportunities presented from health research

The Strategy is comprised of four primary directions – Research, Talent, Capital and Linkages. The focus is primarily on the early stages in the commercialization and innovation pipeline, where CIHR-funded efforts can directly lead to the development of new products and technologies that will improve the health of Canadians, strengthen the health system, and contribute to the growth of Canada's economy. Commercialization and innovation refer to the knowledge translation processes by which research is translated through knowledge, expertise and skilled people between the science base and its user communities contributing to the economic competitiveness, effectiveness of public services and policy, and quality of life of Canadians. This can be the component of knowledge translation that is focused on bringing new products, tools, or services to a state of use in the private, not-for-profit, or public sectors and can extend beyond simply bringing intellectual property (IP) to the marketplace for profit (e.g. cost savings in the health system, humanitarian licensing)

CIHR offered a suite of commercialization programs that encouraged the capacity of universities and teaching hospitals to interact with partners responsible for delivering the benefits of health research. It offered programs (Table 1) to support seed funding for pre-competitive research development of projects deemed to possess commercial potential, and provided opportunities for entrepreneurial training and support for technology transfer process elements and infrastructure.

As the Government of Canada's agency for health research, CIHR works with all partners in a concerted effort to move research more effectively through the marketplace to caretakers and ultimately patients that will benefit from innovations and discoveries. Through its focus on commercialization, CIHR is playing a central role in encouraging innovation that will result in solutions to the health problems that concern Canadians most as well as contribute to economic growth, investment and high-quality jobs.

All initiatives are driven by peer review, scientific excellence, high ethical standards, public and private partnerships, accountability, and, most importantly, the health of Canadians. The Institutes are integral to these activities and they, along with external partners, will continue to provide advice on and, as appropriate, co-fund existing or planned commercialization and innovation activities.

Risk addressed by the audit

This audit addresses the risk that CIHR's commercialization programs are not meeting their objectives and management is not monitoring these programs or modifying them if required. These risks are related to the Treasury Board Secretariat's Management Accountability Framework (MAF) elements of Policy and Programs – "Departmental research and analytic capacity is developed and sustained to assure high quality policy options, program design and advice to ministers" – Stewardship – "The departmental control regime (assets, money, people, services, etc.) is integrated and effective, and its underlying principles are clear to all staff" – and Results and Performance – "Relevant information on results is gathered and used to make departmental decisions, and public reporting is balanced, transparent, and easy to understand."

Objective

The objective of the audit is to ensure that CIHR's commercialization programs are accurately described in the program design information, have effective performance indicators that are monitored by management, and that they comply with the major components of the Treasury Board Policy on Transfer Payments.

Scope

The audit only considered commercialization programs with funds paid out in FY2011/12 where CIHR is the lead administrator, and reviewed the following programs:^{Footnote 2}

Overall audit opinion

The audit has concluded that there are moderate issues with CIHR's commercialization programs; however exposure is limited because either the likelihood or the impact of the risk is not high. Risks are partially mitigated as a majority of programs are in the process of sun setting and lessons learned will be used to design and structure future programs.

Statement of conformance

In my professional judgement as Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the accuracy of the opinion provided in this report. The audit of commercialization was conducted in accordance with the Federal Government's Policy on Internal Audit and related professional standards. It conforms to the Internal Auditing Standards for the Government of Canada, as supported by the results of a quality assurance and improvement program.

Summary of strengths

Through the course of the audit, the following positive aspects concerning CIHR's commercialization programs were observed:

• Statements of the objectives and expected outcomes in the commercialization Funding Opportunity detail documents clearly focus on one or more of the key dimensions of CIHR's Commercialization Strategy (Research, Talent, Capital and Linkages).
• Definition of requirements for applications and the basis for evaluating and awarding funding are clearly defined in the Funding Opportunity detail documents, and consistently presented in the commercialization programs reviewed.
• General requirements for performance measurement and reporting by recipients of funding under commercialization programs are developed and applied according to the Funding Opportunity detail documents.

Summary of improvement opportunities

The following aspects of CIHR's commercialization programs require management's attention:

• For the programs covered by the audit, there was no standardized and documented process to review and approve the design of new programs, or monitor existing programs.
• Design documents for the commercialization programs are not formalized, lack clearly-stated objectives and do not discuss inter-relationships between programs.
• Key risks that could prevent programs from achieving their objectives are not formally defined and documented.
• The suite of commercialization programs lacks a performance measurement and reporting framework.

Internal Audit thanks management and staff for their assistance and cooperation throughout the audit.

David Peckham
Chief Audit Executive
Canadian Institutes of Health Research

Management agrees with the conclusions of this audit.

Jane E. Aubin
Chief Scientific Officer/Vice-President, Research and Knowledge Translation

Detailed Report

Methodology and criteria

The internal audit of CIHR's commercialization programs was conducted in accordance with the Federal Government Policy on Internal Audit. The principal audit techniques used included:

• interviews with management and staff at the Canadian Institutes of Health Research; and,
• examination of relevant documentation, policies, and reports.

Controls were assessed as adequate if they were sufficient to minimize the risks that threaten the achievement of objectives.

Detailed criteria and conclusions are contained in the Appendix to this report.

The audit was conducted between February 2013 and April 2013.

Observations, recommendations, and management action plan

The following are audit observations, recommendations, and management action plans to address the weaknesses identified during the audit.

Appendix

Audit criteria and conclusions

The audit uses the following definitions to make its assessment of the internal control framework.

The overall conclusion considers the cumulative risk exposure related to the audit observations in the context of the above criteria.

Overall conclusion

The audit has concluded that there are moderate issues related to CIHR's commercialization programs, but exposure is limited because either the likelihood or the impact of the risk is not high.

Date modified:

2014-11-04