Audit of Key Financial Processes - National Parks Directorate

Parks Canada

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AUDIT OF KEY FINANCIAL PROCESSES National Parks Directorate FINAL REPORT by: Office of Internal Audit and Evaluation MARCH 2008 Parks Canada Agency Audit of Key Financial Processes of the National Parks Directorate Her Majesty the Queen of Canada, represented by the Chief Executive Officer of Parks Canada, 2008 OIAE 2 March 2008 Parks Canada Agency Audit of Key Financial Processes of the National Parks Directorate TABLE OF CONTENTS SUMMARY.................................................................................................................................... 4 1. BACKGROUND.................................................................................................................... 8 2. OBJECTIVES AND SCOPE.................................................................................................. 9 3. METHODOLOGY................................................................................................................. 9 4. STATEMENT OF ASSURANCE........................................................................................ 10 5. CONCLUSIONS................................................................................................................... 10 6. OBSERVATIONS AND RECOMMENDATIONS............................................................. 11 6.1 Management Control Framework (MCF). ...

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• Publié par: Sawyog
• Nombre de lectures: 51
• Langue: English

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AUDIT OF KEY FINANCIAL PROCESSES  National Parks Directorate

  FINAL REPORT     by:  Office of Internal Audit and Evaluation   MARCH 2008

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Parks Canada Agency  

Her Majesty the Queen of Canada, represented by  the Chief Executive Officer of Parks Canada, 2008 

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Audit of Key Financial Processes  of the National Parks Directorate

March 2008

Audit of Key Financial Processes o  f the National Parks Directorate

Parks Canada Agency   TABLE OF CONTENTS   SUMMARY .................................................................................................................................... 4 1. BACKGROUND .................................................................................................................... 8 2.OBJECTIVESANDSCOPE..................................................................................................9 3. METHODOLOGY ................................................................................................................. 9 4.STATEMENTOFASSURANCE........................................................................................10 5. CONCLUSIONS................................................................................................................... 10 6. OBSERVATIONS AND RECOMMENDATIONS............................................................. 11 6.1 Management Control Framework (MCF) ............................................................................. 11 6.2 Hospitality expenses ............................................................................................................. 19 6.3 Contracting............................................................................................................................ 21 6.4 Use of acquisition cards ........................................................................................................ 26 6.5 Expenditures on Travel ......................................................................................................... 30 6.6 Payments to Suppliers........................................................................................................... 35 6.7 Financial Coding................................................................................................................... 39    

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Audit of Key Financial Processes of the  National Parks Directorate

Parks Canada Agency   SUMMARY   The Parks Canada Agency (PCA) conducts cyclical audits of key financial, administrative and management practices in the field units, service centers and various branches at the national office and in the regions. The audits are based on compliance with the policies and practices of the Treasury Board Secretariat (TBS) and the Parks Canada Agency. The audit of the Office of the National Parks Directorate was conducted as part of this cyclical audit program.  The objectives of this audit were to determine whether due diligence was being exercised in the key management processes and to guarantee to senior management that the processes and controls in place at the Parks Canada Agency to limit risks of non- compliance with TBS and PCA policies were satisfactory.  The exercise included a review of the management control framework (MCF) for financial management as well as key processes in the following financial areas: hospitality charges, contracting, use of acquisition cards, travel expenses, payments to suppliers, and financial coding. This audit mainly covered the period from April 1, 2007 to October 31, 2007.  The audit methodology consisted of a review of relevant vouchers, interviews with staff of the Office of the Parks Canada Agency and sampling of transaction controls in the main financial areas. The on-site work was carried out between November 19 and December 14, 2007.  In our view, the audit work carried out and the evidence collected were sufficient to support the conclusions formulated in this audit report.  We determined that with the exception of financial coding, management of the main financial and administrative processes audited needs to be more thorough. The systems and controls in place need to be strengthened to increase the level of compliance with TBS and PCA policies.      

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Audit of Key Financial Pro  cesses of the National Parks Directorate

Parks Canada Agency   Audit Report Rating Summary  Ref. Management Process Rating  6.1 Management Control Framework YELLOW -- Moderate Improvements Needed   6.2 Hospitality expenses YELLOW -- Moderate Improvements Needed   6.3 Contracting YELLOW -- Moderate Improvements Needed   6.4 Use of Acquisition Cards YELLOW -- Moderate Improvements Needed   6.5 Expenditures on Travel ORANGE -- Significant Improvements Needed    6.6 Payments to Suppliers  YELLOW -- Moderate Improvements Needed  6.7 Financial Coding  GREEN -- Controlled   Below is our list of recommendations to the Director General, National Parks:  Management Control Framework  1- The Director General, National Parks 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 Director General, National Parks must ensure that the annual business plan is available in both official languages.  3- The Director General, National Parks must ensure that discrepancies identified in the course of processing financial operations are followed up.  4- The Director General, National Parks must ensure that specimen signatures are up to date and reviewed at least once a year.

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Audit of Key Financial Processes of the  National Parks Directorate

Parks Canada Agency    Hospitality expenses 5- The Director General, National Parks must ensure that the hospitality claim form is turned in, fully completed and authorized under s. 34 of theFinancial Administration Act(FAA) for each hospitality activity that is organized.  Contracting  6- The Director General, National Parks must ensure that: -  all contract files are complete -  documents are signed by a duly authorized person -  contracts and amendments are signed by all parties concerned -  are established where required and attached to the file.specifications  7- The Director General, National Parks must ensure that the awarding of non- competitive contracts is justified and documented.  8- The Director General, National Parks must ensure that the Real Property Branch is consulted prior to leasing commercial space.   Use of acquisition cards  9- The Director General, National Parks must ensure that the following points are monitored on a regular basis: -  the number of acquisition cards in circulation -  credit limits in terms of the volume of transactions -  proper use of acquisition cards.  Expenditures on Travel  12- The Director General, National Parks must ensure that: -  travellers use Travel AcXess system to purchase their plane and train tickets where possible -  that all trips on government business be authorized prior to the travellers departure -  that all documents supporting the travel claim be attached to the claim form

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Parks Canada Agency Audit of Key Financial Pro  cesses of the  National Parks Directorate  -  the travel policy is observed at all times and that written clarifications are sent to staff where required.  13- The Director General, National Parks must ensure that decisions that have an impact on travel expenses comply with TBS and PCA policies.  14- The Director General, National Parks must ensure that: -  decisions made are analyzed and properly documented -  the various resource persons are consulted prior to establishing assignment agreements  assignment agreements are clear and understood by both parties prior to - signing -  assignment are under a valid agreement.all employees on  Payments to Suppliers  15- The Director General, National Parks must ensure that: -  invoices are dated upon receipt -  invoices have the appropriate S.34 FAA authorization -  funds are committed in a timely manner.  16- The Director General, National Parks must ensure that the various policies in effect are applied appropriately: -  contracts and agreements - procurement of IT equipment  -  insurance.  19- The Director General, National Parks must ensure that decisions to reimburse expenses for people working at home are documented properly.  We also present two recommendations address to the Executive Director, Finance :  10- The Finance Executive Director must ensure that the roles and responsibilities of the acquisition card coordinator are clearly defined and documented.  11- The Executive Director, Finance, should look into the possibility of decentralizing the acquisition card coordinator function to each of the national office directorates to make the process consistent throughout the Agency.

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Audit of Key Financial Processes of the  National Parks Directorate

Parks Canada Agency    1. BACKGROUND  The Parks Canada Agency (PCA) conducts cyclical audits of key financial, administrative and management practices in the field units, service centers and various branches at the national office and in the regions. Field units are groupings of national parks, national historic sites and national marine conservation areas that are usually in proximity to one another. Their proximity allows them to share management and administrative resources. The service centres support the organization in a variety of professional and technical disciplines.  The audit of the National Parks Directorate was conducted as part of the program of cyclical audits of key financial processes by Parks Canadas Internal Audit and Evaluation Office.  The National Parks Directorate has five branches:  -  Operations -  Cooperative Programs Branch (now disbanded) -  Legislation and Policy -  Parks Establishment -  Ecological Integrity Branch  The Ecological Integrity Branch is divided into three groups: ecosystems science, ecosystems management and ecosystems protection.  Most National Parks Directorate employees work at the National Office in Gatineau. Some, however, work in the field and are deployed across the country. This is the case for employees reporting to Parks Establishment, who need to have a presence in the field when required to complete program activities. The annual operating budget for the National Parks Directorate is approximately $11.1 million.      

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Audit of Key Financial Pro  cesses of the National Parks Directorate

Parks Canada Agency   2. OBJECTIVES AND SCOPE  The objectives of this audit were to confirm whether due diligence is being exercised in key management processes within the National Parks Directorate and to provide assurance to senior management that the processes and controls in place are adequate to ensure compliance with TBS and PCA policies and practices. The audit comprised the review of the management control framework (MCF) as applied to financial management and the following key financial process areas :  ƒ  expenditures on hospitality; ƒ  ctiactronng; ƒ  use of acquisition cards; ƒ  expenditures on travel; ƒ  payments to suppliers; and; ƒ  financial coding.  For the most part, the audit covered transactions entered in the financial system (STAR) between April 1, 2007, and October 31, 2007.  3. METHODOLOGY  The audit methodology included the following activities :  •  interviews with National Parks Directorate management and staff responsible for key financial process areas. •  interviews with Canadian Heritage (PCH) finance staff, who are responsible for most financial operations processing for the National Parks Directorate. •  examination of relevant documentation, in particular the organization chart, the PCA delegated signing authorities chart, policies governing key financial process areas, the business plan and a sampling of the budgets and financial reports prepared by the Manager, Corporate Services; and; •  for each of the key financial process areas,examination of a sampling of transactions as required.  The transactions were sampled using sorted data from STAR and based on the level of risk associated with transactions relating to the areas covered in the audit. Also, proportional sampling was applied to travel expenditures to ensure fair, representative coverage of expenditures. The on-site work was carried out between November 19 and December 14, 2007.

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Parks Canada Agency    After the fieldwork was complete, the Manager, Operational Services was debriefed about our preliminary observations.  Our observations and recommendations have been made in accordance with the Audit Reporting Rating System described below: 

Audit Reporting Rating System  Unsatisfactory Controls are not functioning or are nonexistent. Immediate RED management actions need to be taken to correct the situation. ORANGESeveral major issues were noted that in place are weak. Significant Controls improvements could jeopardize the accomplishment of program/operational needed objectives. Immediate management actions need to be taken to address the control deficiencies noted. derate are  in place and functioning. However, major YELLOW nade i ndetoe o b M addressed.Theseu o s c s t i n c o  r s s e l dlu S o mo  e ntsmproveme sierwessudtenoe needed impact  on the achievement of program/operational objectives. BLUEManyof controla r m t e l k o t   s e r h a a t s ehcnoinonasgfuetincH.dvewot,nrieedne M tnemevorpmi roni s  needed som ir e on m m i e n n o t r   m c o h re a  n e g ff e e s cti a v r e e   an n d e  c e e ff s ici r e y n  t. to env GREENControlled Controlsfunctioning as intended and no additional actions are are necessary at this time.

  4. STATEMENT OF ASSURANCE  In our opinion, sufficient audit work has been performed and the necessary evidence has been gathered to support the conclusions contained in this report.  5. CONCLUSIONS  We established that with the exception of the financial coding, management of the main financial and administrative processes audited need to be more thorough. The systems and controls in place need to be strengthened to increase the level of compliance with TBS and PCA policies.   

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Audit of Key Financial Processes of the  National Parks Directorate

Parks Canada Agency    6. OBSERVATIONS AND RECOMMENDATIONS  YELLOW  controls are in place and functioning. However, majorModerate Some improvements issues were noted and need to be addressed. These issues could needed impact on the achievement of program/operational objectives.   6.1  Management Control Framework (MCF)  To determine whether the management control framework is sufficient to ensure compliance with financial policies, we used the following audit criteria :  C1- Information essential for achieving operational objectives is identified, collected, processed and quickly transmitted to those concerned. C2- Staff roles and responsibilities, specifically those relating to control, are clearly identified, documented and circulated. C3- Business and operational plans are prepared in cooperation with the parties concerned and set adequate budget parameters and needs in terms of human and material resources and security. C4- The control environment in place facilitates sound, effective management. C5- The control activities exercised ensure early detection of anomalies and permit timely application of corrective measures. C6- The control activities exercised ensure proper management of finance staff. C7- The finance group has sufficient competent staff to achieve operational objectives. C8- Operations-related risks are formally assessed on a regular basis.   6.1.1 Organizational Structure  Roles and Responsibilities  The National Parks Directorate is responsible for providing national leadership and support to the achievement of the Agencys mandate in the following areas:  -  Ensure that there is coherence and consistency in the planning of national parks, national marine conservation areas and the Canadian Heritage Rivers System.

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