Audit of Key Financial Processes at the Western Quebec Field Unit
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AUDIT OF KEY FINANCIAL PROCESSES AT THE WESTERN QUEBEC FIELD UNIT FINAL REPORT Prepared By: Spearhead Management Canada Ltd. January 2007 Report tabled and approved by the A&E Committee Parks Canada Agency Audit of Key Financial Processes Western Quebec Field Unit ©Her Majesty the Queen in Right of Canada, represented by the Chief Executive Officer of Parks Canada, 2007 Cagalogue No. : R60-3/2-17-2007 ISBN : 978-0-662-69895-1PARG 2 January 2007 Parks Canada Agency Audit of Key Financial Processes Western Quebec Field Unit TABLE OF CONTENTS SUMMARY ...............................................................................................................................4 1 OVERVIEW.......................................................................................................................8 BACKGROUND ..............................................................................................................................8 OBJECTIVES AND SCOPE............................................................................................................8 METHODOLOGY ...........................................................................................................................9 ASSURANCE STATEMENT........................................................................................................10 CONCLUSION10 2 ...
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| Publié par | Endri |
| Nombre de lectures | 115 |
| Langue | English |
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AUDIT OF KEY FINANCIAL PROCESSES AT THE WESTERN QUEBEC FIELD UNIT
FINAL REPORT Prepared By: Spearhead Management Canada Ltd. January 2007
Report tabled and approved by the A&E Committee
Parks Canada Agency
©Her Majesty the Queen in Right of Canada, represented by the Chief Executive Officer of Parks Canada, 2007 Cagalogue No. : R60-3/2-17-2007
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ISBN : 978-0-662-69895-1
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Audit of Key Financial Processes Western Quebec Field Unit
January 2007
Parks Canada Agency
Audit of Key Financial Processes Western Quebec Field Unit
TABLE OF CONTENTS
SUMMARY ............................................................................................................................... 4 1 OVERVIEW ....................................................................................................................... 8 BACKGROUND..............................................................................................................................8 OBJECTIVES AND SCOPE ............................................................................................................8 METHODOLOGY...........................................................................................................................9 ASSURANCE STATEMENT ........................................................................................................10 CONCLUSION...............................................................................................................................10 2 OBSERVATIONS AND RECOMMENDATIONS ...................................................... 10 2.1 MANAGEMENT CONTROL FRAMEWORK ..................................................................10 2.2 PAYMENTS TO SUPPLIERS ............................................................................................13 2.3 16..........................SD............CQASIUIONTIAR C................................................................ 2.4 TRAVEL EXPENSES .........................................................................................................17 2.5 CONTRACTING ................................................................................................................20 2.6 SE......EREVUN................................................................................2.2.................................. 2.7 82..................................IDOC LAI......GNNCNAFI................................................................ 2.8 INVENTORIES ...................................................................................................................29
Report tabled and approved at the A&E Committee meeting on May 28, 2007
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Audit of Key Financial Processes Western Quebec Field Unit
SUMMARY BACKGROUND The Parks Canada Agency (PCA) is currently conducting a series of cyclical audits of the key financial, administrative and management practices in the field units, service centres and the National office. The audits are based on compliance with the policies and practices of the Treasury Board Secretariat (TBS) and the PCA. The audit of the Western Quebec Field Unit (WQFU) was conducted as part of this cyclical audit program. OBJECTIVES AND SCOPE The objectives of this audit were to ensure that due diligence is being exercised in the key administrative processes at the Western Quebec Field Unit and that the control processes in place are satisfactory and comply with TBS and PCA policies and practices. The exercise included a review of the management control framework (MCF) for financial management as well as the following main financial areas: revenues, contracting, the use of acquisition cards, payments to suppliers, travel expenses, financial coding, inventories and attractive low-dollar items. The audit covered the period from April 1 to September 30, 2006, with visits to the Carillon Canal and Fort Chambly. METHOD The audit method consisted of a review of relevant vouchers, interviews with WQFU staff members and transaction controls in the main financial areas. Visits were made to the WQFU sites from October 16 to 27, 2006. ASSURANCE STATEMENT In our view, the audit work carried out and the evidence collected were sufficient to support the conclusions formulated in this report. CONCLUSION We determined that the WQFU had demonstrated due diligence in applying the management policies for acquisition cards, contracting, payments to suppliers, financial coding, control over its vehicles and in collecting revenue generated by the historic canals and sites. On the other hand, the WQFU needs to strengthen or introduce management processes and procedures to ensure that reliable budget reports are prepared and monitored, to carry out its strategy to maximize, control and collect revenue generated by leases and permits, to follow rules governing travel expenses, to control attractive items and items valued between $1,000 and $10,000, and to ensure the reliability and consistency of information contained in the SAP1and AMS inventory systems for goods valued $10,000 and over. 1The names SAP and STAR are used equally in this report to designate the financial system.
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Parks Canada Agency Summary of Audit Report Evaluation Reference Management process 2.1 fMraamnaegweomrkent control 2.2 Supplier payments 2.3 Acquisition cards 2.4 Travel expenses 2.5 Contracting out 2.6 Revenues it A) historic canals and s es lea B) ses and permits C) accounts receivable 2.7 Financial coding 2.8 Inventories
Coding ORANGE YELLOW BLUE ORANGE YELLOW YELLOW ORANGE ORANGE BLUE ORANGE
Audit of Key Financial Processes Western Quebec Field Unit
Significant improvements needed Moderate improvements needed Minor improvements needed Significant improvements needed Moderate improvements needed Moderate improvements needed Significant improvements needed Significant improvements needed Minor improvements needed Significant improvements required
RECOMMENDATIONS MANAGEMENT CONTROL FRAMEWORK 1. The WQFU Superintendent should ensure that stringent practices are established for the preparation of budget forecasts based on the use of financial reports generated by the PCA’s SAP financial system, and that employees are informed of these, with a view to preparing reliable budget forecasts. 2. The WQFU Superintendent should ensure that a discussion of the WQFU budget status is placed on the management committee’s agenda. 3. Superintendent should ensure that financial practices and procedures areThe WQFU documented and kept up to date in order to facilitate the training of new employees to help them carry out their tasks more effectively, and to help new staff adjust to the transition. 4. should ensure that a risk assessment of the Field Unit’s keyThe WQFU Superintendent financial processes is carried out and that a contingency plan is developed.
Payments to Suppliers 5. The WQFU Superintendent should ensure that mechanisms are in place to guarantee proper control over payments.
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Parks Canada Agency 6. The WQFU Superintendent should ensure that the person who certifies payment requisitions under section 33 of the FAA signs the report of authorized payments or initials the section 33 seal stamped on every invoice paid. 7. The WQFU Superintendent should ensure that signing authorities for administration and finance are updated to reflect the new organizational structure of the WQFU and the delegated authorities. 8. should ensure that the segregation of financial andThe WQFU Superintendent administrative duties is clearly defined and is consistent with PCA practices and policies. 9. should ensure that expenditures for hospitality are supportedThe WQFU Superintendent by an authorization form and a list of participants as required by thePCA Hospitality Policy. Acquisition Cards 10. steps are taken to check that no accountsThe WQFU Superintendent should ensure that are paid twice. 11. should review the need for petty cash and the amountsThe WQFU Superintendent involved because many of the petty cash holders also have an acquisition card. Travel Expenses 12. that an internal procedure for processing travelThe WQFU Superintendent should ensure expenses is updated. 13. The WQFU Superintendent should implement measures to ensure that: • in advance by the appropriate authority, as stated in section 34travel is authorized of the FAA • the place of work is defined in order to provide better control over expenses • travel claims include all required supporting documents. (for example, receipts for all lunches claimed at the workplace and boarding passes) 14. The WQFU Superintendent should try to evaluate and incorporate certain costs related to travel expenses into the strategic planning so that they can be identified ahead of time to optimize expenditure control. 15. The WQFU Superintendent should ensure that appropriate verifications are made before payment is authorized.
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Parks Canada Agency Contracting 16. The WQFU Superintendent should arrange for training on contracting and purchase orders for all WQFU managers and appropriate administrative staff, in order to improve compliance with the regulations governing these processes. 17. The WQFU Superintendent should ensure that all supporting documentation required for contracting are obtained and kept in the central file by the officer responsible for contracting and asset management. 18. The WQFU Superintendent should ensure that contracts with “Friends of the WQFU comply with themanagement guidelines for cooperating associations. Revenues 19. The WQFU Superintendent should look into the possibility of a separate cash drawer for each employee. 20. The WQFU Superintendent should finalize the strategy for maximizing revenue generated by leases and permits, and establish a reasonable schedule for its implementation. 21. The WQFU Superintendent should work with those in charge of the SAP system in order to be able to issue and control accounts receivable through the system. 22. The WQFU Superintendent should determine whether manual invoices in the accounts receivable binder and invoices not paid in the SAP system still represent valid accounts receivable, and make the accounting adjustments required to update the accounts receivable in this system. Inventories 23. Superintendent should establish a strategy for maintaining and updatingThe WQFU inventories of items worth over $10,000 in the SAP system. 24. The WQFU Superintendent should ensure that the AMS accurately represents the assets under her responsibility. 25. As a best practice, the WQFU Superintendent should consider updating the inventory of high-risk valuable small items in order to include this information in the database when the new system becomes operational.
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Audit of Key Financial Processes Western Quebec Field Unit
OVERVIEW CONTEXT The Parks Canada Agency (PCA) is conducting a series of cyclical audits of key financial, administrative and management practices for all field units, service centres and the national office. The Agency has 32 field units and four service centres. Field units are groupings of national parks, national historic sites and national marine conservation areas that are usually in proximity to one another. This proximity allows them to share management and administrative resources. The field units provide the PCA with support in various professional and technical areas. The service centre directors and field unit superintendents must ensure that TBS and PCA policies and guidelines are observed. On behalf of the Performance, Evaluation and Audit Group, Spearhead Management Canada Ltd., as part of this program of cyclical audits, conducted an audit at the offices of the Western Quebec Field Unit (WQFU) in Chambly. The WQFU is responsible for 17 historic sites, including five national historic canals in Quebec. It manages assets whose replacement cost is valued at $823 million. The WQFU also has some responsibilities with respect to management of the national historic sites commemoration program, which has over 181 designations, including 82 sites, thus representing 10% of all designations in Canada. The 17 sites are spread over an area of 110,000 km² and attract over 1.4 million visitors each year. The WQFU has an A-Base budget of $9.3 million for operations and expenditures. Its revenue objectives are $739,000 per year. The WQFU staff in terms of full-time equivalents represents 140 positions. The 240 employees of the WQFU are either indeterminate (20%), seasonal (20%), term (20%) or students (31%). OBJECTIVES AND SCOPE The audit objectives were to ensure that due diligence is being carried out in the key administrative processes of the Western Quebec Field Unit and that the processes and controls in place are satisfactory and consistent with TBS and PCA policies and practices. The exercise therefore included a review of the management control framework (MCF) and of the following key financial areas: ♦ revenues ♦ contracting ♦ use of acquisition cards ♦ payments to suppliers ♦ travel expenses
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Parks Canada Agency ♦ financial coding ♦ inventories The audit of transactions covered the period from April 1 to September 30, 2006. METHODOLOGY The methodology consisted of a visit to the WQFU, a visit to the Fort Chambly National Historic Site, a visit to the Carillon Canal and the following procedures: ♦ documents: the 2003-08 WQFU business plan, thea review of relevant organization chart, PCA financial resources management principles, the list of delegated PCA signing authorities, TBS and PCA policies on the key financial areas mentioned above and the financial reports prepared by the WQFU finance and administration manager ♦ interviews with members of management and staff responsible for key financial processes at the WQFU ♦ an analysis of the processes and procedures used for financial management of activities related to the financial areas covered by the audit ♦ sample of transactions in each financial area (this was not aa review of the scientific sampling) Once the audit work was completed, a meeting was held to present and discuss any deficiencies observed in the course of the audit and the expected recommendations. The Field Unit Superintendent and the finance and administration officer attended this meeting. Our observations and recommendations were made based on the audit report evaluation system shown below: Audit reporting rating system Controls are not function onexistent. Imme REDtiuait shtea stncUtreroc ot nekat eb ctorisfanyo .g in aor nrea tcoisnn ee dotdiate management Controls in place are weak. Several major issues were noted that ORANGE accom isSignificant he Improvements Needed coobjueldc tjievoesp.a Irdmizmee tdiate manapglemhemnet nat cotif opnrso gnreaedm /too pbeer attaikoenna lt o address the control deficiencies noted. lace a YELLOWerode atMp ni era s. ngniioctun fnd nestvomemIrptrol conSomedardsees.dT ehes and need to be eussew sn erdetoweHor,veaj m iors uess id ulco Needed have an impact on the achievement or not of program/operational objectives. Man BLUEd y ots NeederpvomeneiMon rmInor e mi somver,oHewde .etdn sni angniioctun frea slortnoc eht fneceare ges chan ehtm ka yotssrarovienl rontcoe tnemn more effective and efficient. GREEN Controlled Controlsare functioning as intended and no additional actions are necessary at this time.
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Parks Canada Agency ASSURANCE STATEMENT 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 We found that due diligence is being exercised by the WQFU with respect to the management processes for acquisition cards, contracting, payments to suppliers, financial coding, control over its vehicles and in the collection of revenue generated by the historic canals and sites. However, the WQFU needs to strengthen or implement management processes and procedures to properly monitor and control the preparation of reliable budget reports, to properly implement its strategy to maximize, control and collect revenue generated by leases and permits, to observe the rules governing travel expenses, to control attractive items and those valued between $1,000 and $10,000, and to ensure the reliability and consistency of information contained in the SAP and AMS inventory systems for assets worth $10,000 or more. We will present our observations and recommendations in the next section, where applicable, concerning the MCF that governs financial management and the main financial areas reviewed. OBSERVATIONS AND RECOMMENDATIONS
2.1 MANAGEMENT CONTROL FRAMEWORK Controls in place are weak. Several major issues were noted that ORANGEodt ek n eatto beed ns nctioifgnSiImt anicnemevorpedeeN stj oeapdrcuodlaccompliize the emid .mIviseejtcnt agememanaate argorp fo tnemhsobl naioateropm/ address the control deficiencies noted. Current Practices and Observations Planning and Budgeting There is a process for preparing and updating the 5-year sustainable business plan (2003-08). All of the managers and the finance and administration officer (FAO) contribute to the development of the WQFU objectives and ensure that they are consistent with the national PCA objectives. The management committee, which consists of the director and main managers, meets regularly, and the minutes are made available to employees on the Intranet. On the other hand, the fact that the 17 historic sites and canals are scattered over such an immense area rarely enables all the managers to meet. The work sessions are therefore generally held at the WQFU office and the minutes for the topics discussed are prepared and kept by the director’s administrative assistant. The planning also requires preparing 17 corporate plans, which represent more than one quarter of the 50 corporate plans prepared
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Goods and services $6,410,070 Salaries and wages $6,549,950 Advertising $5,000 Park contributions $8,150 Total $12,973,170
Parks Canada Agency for the whole of the PCA. Each corporate plan identifies the issues, priority management measures and the implementation costs for each of these measures. All of this planning can be found in the business plan, and it is used in preparing the budget forecasts. The WQFU budget for 2006-07 consists of the following, broken down into 84 cost centres: Observations Managers received a budget report from the SAP financial system in August, but not all of them submitted the budget forecasts requested. Another budget report was prepared in October and the FU Superintendent and the FAO had begun to hold meetings with the managers to prepare reliable budget forecasts. Currently, the managers rely more on a parallel system (i.e. Excel files) and not the reports from the SAP financial system, to monitor their budgets. There is a lack of confidence in the usefulness and reliability of the reports generated by the SAP system and the earlier budget forecasts. For 2005-06, the WQFU projected a deficit of approximately $300,000, but at the end of the year it had a surplus of over $300,000. The fact that the national review had not yet been completed on time explains much of this discrepancy. For this reason, the managers did not consider it useful to analyze any discrepancies so early in the year. The use of two separate systems creates information gaps and reduces the ability of the WQFU to forecast future expenditures properly. It also reduces the ability of management at the PCA to rely on information in the SAP system, because it does not accurately represent the financial position of the WQFU. The WQFU’s financial position appears to be shaky, because a negative discrepancy is expected by the FAO for 2006-07. This deficit would be largely attributable to the cost of reclassifying employees, to increases in the cost of materials and services to maintain the WQFU assets. Efforts are needed to train and convince managers to work with the SAP financial system reports. Without this coordination, the ability of the WQFU to generate reliable budget reports that are useful to PCA national management is reduced. Training The WQFU did not have a plan to provide financial management training to its managers. While they did take the F&A 101 course, they are not using the SAP system to track their budgets. As mentioned previously, they prefer to use a parallel system that they maintain independently of the SAP system. The managers would benefit from training to make them more familiar with contracting rules (see section 2.5). There is no training plan for finance employees. The longest-serving employees have not taken the course for many years and no courses were scheduled for the new employee hired in June 2006. Furthermore, there are few or no written procedures to facilitate the work of new employees. Each employee, working together with the supervisor, should identify his or her training requirements.
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