Follow-up Audit of Key Financial Processes at the Northern Ontario Field Unit

Parks Canada

Description

FOLLOW-UP AUDIT OF KEY FINANCIAL PROCESSES AT THE NORTHERN ONTARIO FIELD UNIT FINAL REPORT APRIL 2008 Parks Canada Agency Audit of Key Financial Processes Northern Ontario Field Unit ©Her Majesty the Queen of Canada, represented by the Chief Executive Officer of Parks Canada, 2007 Catalogue No. : R60-3/2-19-2008 ISBN : 978-0-662-69897-5OIAE 2 April 2008 Parks Canada Agency Audit of Key Financial Processes Northern Ontario Field Unit TABLE OF CONTENTS SUMMARY........................................................................................................................ 4 1. CONTEXT..................................................................................................................9 2. OBJECTIVES AND SCOPE...................................................................................... 9 3. METHODOLOGY.....................................................................................................9 4. STATEMENT OF ASSURANCE............................................................................10 5. CONCLUSION.........................................................................................................10 6. OBSERVATIONS AND RECOMMENDATIONS............................................. 11 6.1 Management Control Framework........................... ...

Informations

• Publié par: Onsa
• Nombre de lectures: 28
• Langue: English

Extrait

     

       FOLLOW-UP AUDIT OF KEY FINANCIAL PROCESSES AT THE NORTHERN ONTARIO FIELD UNIT 

   FINAL REPORT       APRIL 2008       

Parks Canada Agency 

                                            ©Her Majesty the Queen of Canada, represented by  the Chief Executive Officer of Parks Canada, 2007 Catalogue No. : R60-3/2-19-2008 ISBN : 978-0-662-69897-5

OIAE

2

Audit of Key Financial Processes Northern Ontario Field Unit

April 2008

Audit of Key Financial Processes  Northern Ontario Field Unit

TABLE OF CONTENTS

Parks Canada Agency      SUMMARY ........................................................................................................................ 4 1.CONTEXT..................................................................................................................9 2.OBJECTIVESANDSCOPE......................................................................................9 3. METHODOLOGY ..................................................................................................... 9 4.STATEMENTOFASSURANCE............................................................................10 5. CONCLUSION......................................................................................................... 10 6. OBSERVATIONS AND RECOMMENDATIONS............................................. 11 6.1 Management Control Framework ......................................................................... 21 6.2 Payments to Suppliers........................................................................................... 26 6.3 Acquisition Cards.................................................................................................. 30 6.4 Travel Expenses .................................................................................................... 33 6.5 Contracting............................................................................................................ 36 6.6 Revenue................................................................................................................. 37 6.7 Financial Coding................................................................................................... 40       

OIAE

3

April 2008

Audit of Key Financial Processes  Northern Ontario Field Unit

Parks Canada Agency   SUMMA RY  The Internal Audit and Evaluation Office (IAEO), at the request of the Audit and Evaluation Committee, conducted a follow-up audit of the Northern Ontario Field Units (NOFU) key financial processes.  The purpose of the follow-up audit was to confirm to senior management that the changes and improvements recommended by management in their response to the recommendations made in the 2006 report had been implemented and that controls were in place to reduce the risk of non-compliance with the policies and practices of the Treasury Board Secretariat (TBS) and the Parks Canada Agency (PCA).  The exercise included a review of the management control framework (MCF) for financial management as well as key processes in the following financial areas: payments to suppliers, use of acquisition cards, travel expenses, contracting, revenue and financial coding. This audit mainly covered the period from April 1, 2007 to January 31, 2008.  The audit methodology consisted of a review of relevant vouchers, interviews with staff of the Northern Ontario Field Unit and sampling of transaction controls in the main financial areas. The on-site work was carried out in February and March 2008.  In our view, the audit work carried out and the evidence collected were sufficient to support the conclusions formulated in this audit report.  The work established that the Northern Ontario Field Unit had improved a number of financial processes to correct problems identified in the 2006 audit. Key processes such as revenues and contracting are now better controlled. However, the other processes  travel expenses, financial coding, payments to suppliers and the use of acquisition cards  still need to be improved, and the management control framework needs to be strengthened to ensure compliance with PCA and TBS policies. 

OIAE

4

April 2008

Parks Canada Agency Audit of Key Financial Processes  Northern Ontario Field Unit The table below provides a comparison of the ratings assigned to the processes audited in 2006 and 2008.  Process Audited 2006 Rating 2008 Rating F M r a a n m a e g w e o m r e k ntControl Minor improve  ments needediifintnaciS ne  mevor ded ments  e Payments to Suppliers Moderate im   i nificantrovements Si  m rovements needed  needed  Acquisitio C rds Si nificant  t i  m rovements n a  nificanim rovements Si needed needed T avel M  r inor improvements neededModerate improvements needed Contracting  Moderate improvementsModerate improvements needed  needed  R  evenue Si nificant im rovements Moderate im rovements needed needed Financial Coding  Minor improv  ements needed  Controlled  Below is our list of recommendations to the NOFU Superintendent:  1- The NOFU Superintendent must ensure that repetitive tasks in the organizations key positions are documented in a way that facilitates the intake of new employees and preserves the organizations corporate memory.  2- The NOFU Superintendent must ensure that managers evaluate their employees annually.  3- The NOFU Superintendent must ensure that:  -  up to date and reviewed at least once aspecimen signature cards are year -  employees with signing authority have successfully completed the F&A101 course and that a list is maintained The NOFU Superintendent must ensure that the STAR financial system is used appropriately for budget planning and that parallel systems are eliminated. The NOFU Superintendent must ensure that a communication strategy is developed, that meetings are held on a regular basis and that minutes be made available to staff. The NOFU Superintendent must ensure that financial information is available to all staff and that financial reports are sent to managers on a regular basis.

 4-  5 -  6-  

OIAE

5

April 2008

Parks Canada Agency Audit of Key Financial Processes  Northern Ontario Field Unit 7- The NOFU Superintendent must ensure that system backup tapes are stored offsite in a secure location.  8- The NOFU Superintendent must ensure that a unique identification number is assigned to each IT item and that a database is developed to track these items.  9- The NOFU Superintendent must ensure that theDirective on the management of inventories of items worth between $1,000 and $10,000, as well as the directive on high-risk small items worth less than $1,000,are fully complied with.  10- The NOFU Superintendent must ensure that a documented procedure is developed and introduced to strengthen the procurement process within the field unit and that the process is made consistent.  11- The NOFU Superintendent must ensure that expenditures are committed properly in the STAR financial system before making the expenditure.  12- The NOFU Superintendent must ensure that goods received are recorded by the purchaser and entered into the STAR financial system.  13- The NOFU Superintendent must ensure that:  -  invoices are dated upon receipt -  the purchase order matches the amount invoiced -  invoices have the appropriate s. 34 FAA authorization -  all supporting documentation required is attached to the invoice that is to be paid The NOFU Superintendent must ensure that theAgency hospitality policy is observed at all times and that the hospitality claim form has been completed properly. The NOFU Superintendent must ensure that: -  employees who sign DBA cheques are authorized to do so under their delegation of authorities -  the TBSPolicy on Departmental Bank Accounts observed at all is times -  all payments issued by DBA cheque have supporting documentation attached -  the use of DBA cheques should be kept to a minimum The NOFU Superintendent must ensure that the roles and responsibilities of the acquisition card coordinator are clearly defined and documented.

 14 -  15-  

 16 - 

OIAE

6

April 2008

Parks Canada Agency Audit of Key Financial Processes  Northern Ontario Field Unit 17- The NOFU Superintendent must ensure that the policy on the use of acquisition cards is complied with at all times and that all supporting documentation is appended to the monthly statement.  18- The NOFU Superintendent must ensure that non-compliance with the policy on the use of acquisition cards is followed up and that concrete action is taken to reduce the number of inappropriate transactions.  19- The NOFU Superintendent must consider the possibility of cancelling the Visa cards.  20- The NOFU Superintendent must ensure that all trips on government business be authorized prior to the travellers departure.  21- The NOFU Superintendent must ensure that the use of DBA cheques for travel advances occurs only in emergencies and that such uses are authorized. Alternative approaches should be considered.  22- The NOFU Superintendent must ensure that:  -  travellers use Travel AcXess to purchase their plane and train tickets where possible -  all documents supporting the travel claim be attached to the claim form -  the travel policy is observed at all times, and written clarifications are sent to staff where required -  travel claims are checked appropriately by the manager with authority under s. 34 FAA to prevent errors The NOFU Superintendent must ensure that contract registers containing all information about active contracts are established for each location. The NOFU Superintendent must ensure that: -  the awarding of non-competitive contracts is justified and properly documented -  contracts are awarded prior to the start of work -  documents are signed by a duly authorized person -  that specifications be established where required and attached to the file The NOFU Superintendent must ensure that follow-up action is taken with the entities concerned to ensure that the agreements in place are observed and that the amounts owing are collected.

 23-  24-  

 25- 

OIAE

7

April 2008

Parks Canada Agency Audit of Key Financial Processes  Northern Ontario Field Unit 26- The NOFU Superintendent must ensure that summary reports of revenue at Pukaskwa National Park are made consistent, simplified and prepared for fixed periods to facilitate the reconciling process.  27- The NOFU Superintendent must look into the possibility of modifying the POS system at Pukaskwa National Park to make it possible to identify season permit holders.  28- The NOFU Superintendent must ensure that:  -  accounts receivable are entered in STAR -  accounts receivable are monitored on a regular basis -  statements of account are sent monthly to the client if payment has not been made The NOFU Superintendent must ensure that managers follow the chart of accounts closely and that hospitality activities are coded properly.

 29-                       

OIAE

8

April 2008

Audit of Key Financial Processes  Northern Ontario Field Unit

Parks Canada Agency   1. CONT  EXT  The audit cycle includes a systematic follow-up of managements response six months after final approval of the report by the Audit and Evaluation Committee. This type of follow-up requires that the managers responsible confirm progress made with respect to the initial recommendations made. However, the audit committee may request a more formal follow-up in order to obtain greater assurance that the actions put forward in response to the recommendations are implemented.  This follow-up audit was requested by the Agencys Audit and Evaluation Committee when the audit report was approved in March 2007.  The follow-up was scheduled for spring 2008. In the meantime, the Field Unit was asked to implement measures to address the problems identified in the 2006 audit.  The Internal Audit and Evaluation Office (IAEO) conducted a follow-up audit of the main financial processes used at the Northern Ontario Field Unit (NOFU).   2. OBJECTIVES AND SCOPE  The purpose of the follow-up audit was to confirm to senior management that the changes and improvements recommended by management in their response to the recommendations made in the 2006 report had been implemented and that controls were in place to reduce the risk of non-compliance with the policies and practices of the Treasury Board Secretariat (TBS) and the Parks Canada Agency (PCA).  For consistency, the follow-up audit covers the same processes as the 2006 audit. In other words, we reviewed the management control framework (MCF) for the following key financial processes:  -  payments to suppliers - use of acquisition cards  -  travel expenses -  contracting  revenue - -  financial coding   We reviewed the processes and operations between April 1, 2007, and January 31, 2008.   3. METHODOLOGY  The methodology included the following activities:

OIAE

9

April 2008

Parks Canada Agency Audit of Key Financial Processes  Northern Ontario Field Unit 

-a review of the 2006 audit -  the three NOFU administrative offices in Thunder Bay,a visit to Pukaskwa and Sault Ste. Marie between March 3 and 7, 2008 -  the Ontario Service Centre in Cornwall in February 2008a visit to -  interviews with various NOFU Finance and Administration managers and staff members -  discussions with finance employees at the service centre who process payments to suppliers and manage contracts -  examination of a sampling of operations for each of the key financial processes, as required  Our observations and recommendations have been made in accordance with the Audit Reporting Rating System described below.   Audit Reporting Rating System  snUtcafsitaory Controls are not functioning or are nonexistent. Immediate RED management actions need to be taken to correct the situation. ORANGEtnacifingiSControls in place are weak. Several major issues were improvements noted that could jeopardize the accomplishment of needed program/operational objectives. Immediate management actions need to be taken to address the control deficiencies noted. YELLOWModerateSome controls are in place and functioning. However, improvements issues were noted and need to be addressed. Thesemajor needed issues could impact on the achievement of program/operational objectives. BLUE Minor Many of the controls are functioning as intended. improvements However, some minor changes are necessary to make the needed control environment more effective and efficient. GREEN Controlled Controls are functioning as intended and no additional actions are necessary at this time.   4. STATEMENT OF ASSURANCE  In our view, the audit work carried out and the evidence collected were sufficient to support the conclusions formulated in this audit report.   5. CONCLUSION  The audit established that the Northern Ontario Field Unit had improved a number of financial processes to correct problems identified in the 2006 audit. Key processes such as revenues and contracting are now better controlled. However, the other processes  travel expenses, financial coding, payments to suppliers and the use of acquisition cards 

OIAE

10

April 2008

Parks Canada Agency Audit of Key Financial Processes  Northern Ontario Field Unit need to be improved, and the management control framework needs to be strengthened to ensure compliance with PCA and TBS policies.  The table below provides a comparison of the ratings assigned to the processes audited in 2006 and 2008.   Process Audited 2006 Rating 2008 Rating  r improvvements F M ra an m a e g w e o m r e k n  tControl  neededMino ementstniiinifacS een  mor ded ayments p  im rovementsSi nificant P to Sup liers Moderate im  rovements  needed  needed  Acquisition Cards Significant i  mprovements Significant i  mprovements needed needed  Travel Minor improve  ments needed rovementsModerate im needed Contracting  rovementsModerate im im Moderate rovements needed  needed  Re  venue  improvements ModerateSignificant improvements needed needed Financial Codi g C  n ontrolled Minor improvements needed   6. OBSERVATIONS AND RECOMMENDATIONS  The table below summarizes the status of the recommendations that had been made in 2006. For the follow-up audit, transactions were selected to check the existing processes and ensure that they were in compliance with policies and regulations. However, the review of these transactions identified discrepancies that once again led to new recommendations.  For those situations that were deemed to be in compliance, we indicate in theComments  column that no additional action is required. For those recommendations that the NOFU is still not in compliance with, we provide a description of the corrective action required and refer back to the relevant section. The new recommendations in each of the following sections cover both the 2006 follow-up and new observations.        

OIAE

11

April 2008