Audit of Key Financial Processes of the Ontario Service Centre - Cornwall

Parks Canada

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AUDIT OF KEY FINANCIAL PROCESSES ONTARIO SERVICE CENTRE - CORNWALL FINAL REPORT Prepared by: SAMSON & ASSOCIATES MARCH 2006 Report tabled and approved by the A&E CommitteeParks Canada Agency Audit of Key Financial Processes Ontario Service Centre © Her Majesty the Queen in Right of Canada, represented by the Chief Executive Officer of Parks Canada, 2006 Catalogue No. : R60-3/2-5-2006 ISBN : 0-662-49358-32PEAG March 206 Parks Canada Agency Audit of Key Financial Processes Ontario Service Centre TABLE OF CONTENTS EXECUTIVE SUMMARY .......................................................................................... 4 1. BACKGROUND .................................................................................................. 9 2. OBJECTIVES AND SCOPE ............................................................................ 10 3. METHODOLOGY ............................................................................................10 4. STATEMENT OF ASSURANCE ..................................................................... 11 5. CONCLUSION ..................................................................................................11 6. OBSERVATIONS AND RECOMMENDATIONS ........................................ 12 6.1. Management Control Framework .................... ...

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• Publié par: Rozis
• Nombre de lectures: 25
• Langue: English

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AUDIT OF KEY FINANCIAL PROCESSES ONTARIO SERVICE CENTRE - CORNWALL       FINAL REPORT

Prepared by: SAMSON & ASSOCIATES   MARCH 2006                           Report tabled and approved by the A&E Committee

Parks Canada Agency  

Audit of Key Financial Processes Ontario Service Centre

                                                                                  © Her Majesty the Queen in Right of Canada,  represented by the Chief Executive Officer of Parks Canada, 2006   Catalogue No. : R60-3/2-5-2006   ISBN : 0-662-49358-3

PEAG 2

 

 March 2006

Parks Canada Agency  

 Audit of Key Financial Processes  Ontario Service Centre

 

TABLE OF CONTENTS   EXECUTIVE SUMMARY .......................................................................................... 4 1.   BACKGROUND .................................................................................................. 9 2. OBJECTIVES AND SCOPE ............................................................................ 10 3. METHODOLOGY ............................................................................................ 10 4. STATEMENT OF ASSURANCE ..................................................................... 11 5. CONCLUSION .................................................................................................. 11 6. OBSERVATIONS AND RECOMMENDATIONS ........................................ 12 6.1. Management Control Framework ............................................................. 12 6.2. Revenues ...................................................................................................... 13 6.3. Contracting .................................................................................................. 14 6.4. Payments to Suppliers ................................................................................ 15 6.5. Travel ........................................................................................................... 16 6.6. Acquisition Cards ........................................................................................ 17 6.7. Financial Coding ......................................................................................... 18 6.8. Inventory of Small Valuable Items ............................................................ 20

 

      Report tabled and approved at the A&E Committee meeting on March 26, 2007

PEAG 3  March 2006

 Audit of Key Financial Processes  Ontario Service Centre

Parks Canada Agency     EXECUTIVE SUMMARY Background Parks Canada Agency (PCA) has a mandate to protect and present nationally significant examples of Canada’s natural and cultural heritage, and to foster public understanding, appreciation and enjoyment in ways that ensure the ecological and commemorative integrity of these places for present and future generations.   The Agency is conducting a series of cyclical audits of Field Units, Service Centers and the National Office in order to review key financial, administrative and management practices. The audit focused on compliance with Treasury Board Secretariat (TBS) and PCA policies and practices. The audit of the Ontario Service Centre (OSC) was conducted as part of these cyclical audits. OSC includes offices in Cornwall and Ottawa and provides centralized, specialized and administrative services to four Field Units located in Ontario. Administrative and Financial management of OSC is located in Cornwall, Ontario where our audit was performed. Objectives and Scope

The objectives of this audit were to confirm whether due diligence is being exercised in key management processes and to provide assurance to senior management that the processes and controls in place at OSC are adequate to ensure compliance with TBS and PCA policies and practices.   The scope of this assignment covered the following areas: Management Control Framework (MCF), Revenues, Contracting, Payments to Suppliers, Expenditures for Travel, Acquisition Cards, Financial Coding and the safeguarding of high-risk valuable small items. The scope of the audit covered processes implemented by the OSC and transactions from April 1, 2005 to January 31, 2006.   Methodology   The audit included a visit to OSC during the period of February 20 to 24, 2006 and included the following activities: • Interviews with OSC management and personnel who are responsible for all the areas being reviewed; • Review of relevant documentation provided by Parks Canada National Office and OSC, including the OSC Business Plan for 2005-2006, the OSC delegated signing authorities chart, policies and guidelines concerning the management control framework, revenues, contracting, payments to suppliers, acquisition cards, travel expenses and financial coding; and • An on-site examination of a sample of transactions in each of the key areas covered by the assignment. PEAG 4  March 2006

Parks Canada Agency  

 Audit of Key Financial Processes  Ontario Service Centre

  At the conclusion of the fieldwork, a debriefing of our preliminary observations was made to the OSC’s finance and administration team. However, the OSC Director and the OSCTS Manager were unable to attend the meeting.

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.   Conclusion Overall, we found that due diligence is being exercised in the management processes and that systems and controls in place to monitor the management control framework, revenues, payments to suppliers and travel expenses are adequate. However, we have identified areas where improvements should be made to the systems and controls in place to monitor contracting, acquisition cards, financial coding and the inventory of small valuable items. These improvements are summarized below through our recommendations.   AUDIT REPORTING RATING SUMMARY Ref Management Process Rating

   

PEAG

 

 

 

 

5  

 

 

 

 March 2006

Parks Canada Agency Audit of Key Financial Processes  Ontario Service Centre

Summary of Recommendations   Management Control Framework:   Recommendation # 1:   We recommend that a general Accounting and Financial Policies manual be developed by the OSC Finance Department. This manual should replace all individual procedures and policies manuals currently being used by the different sections of the Finance department.   Recommendation # 2:   The Service Centre Director should ensure that a risk assessment is conducted of the key financial processes within the field unit and a contingency plan is developed.     Revenues:   Recommendation # 3:   The Service Centre Director should ensure adequate segregation of duties with respect to the collection, deposit, reconciliation and recording of revenues to mitigate the risk of misappropriation.     Contracts:   Recommendation # 4: We recommend that a statement of work or purchase request be completed by the responsible departmental manager for all purchases or contracts entered into. In order to ensure completeness of the contract files, we also recommend that a standard file content list be developed and implemented by the Material Management and Contract Department (MMCD) to ensure completeness of the required contract information and that the contracting procedures have been respected. This file content list would be completed at the end of each contract and would be part of the contract file closing process.   Recommendation # 5: We recommend that MMCD be advised in advance of all anticipated changes or modifications to a contract. Department managers should be reminded of this requirement in order to ensure that future contract modifications will be made in accordance with normal contracting policies.   Payments to Suppliers:   No recommendations     PEAG 6  March 2006

Parks Canada Agency  

 Audit of Key Financial Processes  Ontario Service Centre

Expenditures for Travel:   Recommendation # 6: We recommend that a written task description be established for the employee responsible for overall supervision of the travel cards. This description should provide a clear definition of the role, responsibility and on-going tasks to be performed by the employee responsible for the monitoring of the travel cards.   Acquisition Cards:   Recommendation # 7: We recommend that all expenses claimed by the OSC’s employees through their expense reports be properly supported. When monitoring the expense reports submitted by the employees, the Finance department should ensure that all expenses claimed are supported by original invoices and receipts detailing the nature of the expense paid. Follow-up actions should be taken by the department to locate any missing documentation. Also, department managers responsible for the approval of the expense reports should be reminded of the objectives of such a review.   Recommendation # 8: We recommend that a review of the list of acquisition cardholders be performed on a regular basis. Any card not regularly used for PCA purposes or which is not used for a certain length of time (i.e. one year) should be cancelled to avoid potential misuse or loss.   Financial Coding:   Recommendation # 9: We recommend that the financial coding and classification of the expenses recorded in the general ledger be checked. Since, the financial coding system has recently been modified by PCA, we recommend that additional checking be done to this information by the accounting clerks when recording expenses.     Recommendation # 10: We recommend that department managers be well informed as to the importance of the financial coding of information. A logbook should be maintained to record errors discovered and corrected. This logbook could also help in identifying patterns in the errors made and facilitate further monitoring of the financial coding.     Inventory:   Recommendation # 11: We recommend that an inventory count of the small valuable items be performed by the OSC’s Finance department. We also recommend that an inventory list of these items be established. This list should be updated on a regular basis to reflect all purchases of valuable items.       PEAG 7  March 2006

Parks Canada Agency  

 Audit of Key Financial Processes  Ontario Service Centre

Recommendation # 12: We recommend that the purchase of small valuable items with acquisition cards be clearly identified on the expense reports summarizing the purchases made with these cards. This should facilitate the identification, financial coding and recording of these items for inventory purposes.  

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8  

 

 

 

 March 2006

Parks Canada Agency  

 Audit of Key Financial Processes  Ontario Service Centre

  1. BACKGROUND   Parks Canada Agency (PCA) is conducting a series of cyclical audits of key financial, administrative and management practices for Field Units, Service Centers and the National Office. The service centres support the organization in a variety of professional and technical disciplines. Directors of the service centres and field units (FU’s) are responsible for ensuring that the policies, directives and guidelines issued by the Treasury Board Secretariat (TBS) and PCA are followed. PCA has four service centers located in Halifax, Quebec City, Cornwall/Ottawa and Winnipeg, with smaller branches in Calgary and Vancouver, which support the organization in a variety of professional and technical disciplines.   The Ontario Service Centre (OSC) is a network of professional, technical and corporate expertise working together with clients/partners to protect and present Parks Canada’s natural and cultural resources by providing leadership, advice and quality service delivery in a timely and cost-effective manner. The Ontario Service Centre Transaction Centre (OSCTC) employees are primarily located in two cities, Cornwall and Ottawa. The Ottawa component provides mainly cultural resource management national service delivery  while the Cornwall OSCTC location offers a variety of services to its Ontario clients including the primary business services such as financial management; business planning; transaction processing, translation, contracts, realty and general administration. The OSCTC provides direct service delivery to four Ontario based FU’s regrouping sixteen operational Sites and national cultural resource services across the Ontario Parks Canada program. This relationship between the OSCTC and FU’s is unique in the Agency as all other Canadian FU’s are self-sufficient and have Section 33 authority at each FU. Annually, the OSCTC processes between 40,000 to 45,000 transactions. To achieve these duties, it manages a $40,000 operational budget and its workforce is composed of nineteen (19) staff out of which eight (8) staff are involved in financial activities and the remaining eleven (11) staff are involved in administration, translation and library services. As part of its annual audit plan, the audit of Ontario Service Centre (OSC) was performed in February 2006. The audit focused on compliance with Treasury Board Secretariat (TBS) and PCA policies and practices.

PEAG 9  March 2006

Parks Canada Agency  

 Audit of Key Financial Processes  Ontario Service Centre

  2. OBJECTIVES AND SCOPE     The objectives of this audit were to confirm whether due diligence is being exercised in key management processes and to provide assurance to senior management that the processes and controls in place at OSC are adequate to ensure compliance to TBS and PCA policies and practices. The scope of this assignment covered the following areas: • Management Control Framework (MCF), • Revenues, • Contracting, • Payments to Suppliers, • Expenditures for Travel, • Acquisition Cards, • Financial Coding, and • Inventory system.   The scope of the audit covered processes implemented by OSC and transactions from April 1, 2005 to January 31, 2006.   3. METHODOLOGY     The audit included a visit to OSC during the period of February 20 to 24, 2006 and included the following activities: • Interviews with OSC management and personnel who are responsible for all the areas being reviewed; • Review of relevant documentation provided by Parks Canada National   Office and OSC, including the OSC Business Plan for 2005-2006, OSC delegated signing authorities chart, policies and guidelines concerning the management control framework, revenues, contracting, payments to suppliers, acquisition cards, travel expenses, financial coding, and inventory in addition to various financial reports prepared by the Manager, Finance and Administration; and, • An on-site examination of a sample of transactions in each of the key areas covered by the assignment.   At the conclusion of the fieldwork, a debriefing of our preliminary observations was made to the OSC’s finance and administration team. However, the OSC Director and the OSCTS Manager were unable to attend to the meeting.

PEAG 10  March 2006

Parks Canada Agency  

 Audit of Key Financial Processes  Ontario Service Centre

  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 management actions need to be taken to correct the situation. Significant Controls in place are weak. Several major issues were noted that Improvements could jeopardize the accomplishment of program/operational Needed objectives. Immediate management actions need to be taken to address the control deficiencies noted. Moderate Some controls are in place and functioning. However, major Improvements issues were noted and need to be addressed. These issues could Needed impact on the achievement or not of program/operational objectives. Minor Many of the controls are functioning as intended. However, Improvements some minor changes are necessary to make the control Needed environment more effective and efficient. Controlled Controls are functioning as intended and no additional actions 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.    CONCLUSION   Overall, we found that due diligence is being exercised in the management processes and that systems and controls in place to monitor the management control framework, revenues, payments to suppliers and travel expenses are adequate. However, we have identified areas where improvements should be made to the systems and controls in place to monitor contracting, acquisition cards, financial coding and the inventory of small valuable items. These improvements are described in the following section.

PEAG 11  March 2006