Follow-up Audit of Key Financial Processes at the Nunavut Field Unit
Description
FOLLOW UP AUDIT OF KEY FINANCIAL PROCESSES AT THE NUNAVUT FIELD UNIT FINAL REPORT November 2006 Report tabled and approved by the A&E Committee Parks Canada Agency Follow up Audit of key financial processes Nunavut Field Unit ©Her Majesty the Queen in Right of Canada, represented by the Chief Executive Officer of Parks Canada, 2007 Cagalogue No. : R60-3/2-19-2007 ISBN : 978-0-662-69897-5PEAG 2 November 2006 Parks Canada Agency Follow up Audit of key financial processes Nunavut Field Unit TABLE OF CONTENT 1. CONTEXT.............................................................................................................. 4 2. OBJECTIVE AND SCOPE .................................................................................... 4 3. METHODOLOGY ................................................................................................. 4 4. CONCLUSION....................................................................................................... 6 5. OBSERVATIONS AND RECOMMENDATIONS............................................... 7 5.1 MANAGEMENT CONTROL FRAMEWORK..................................................... 9 5.2 REVENUES.......................................................................................................... 11 5.3 CONTRACTING........... ...
Informations
| Publié par | Odwou |
| Nombre de lectures | 29 |
| Langue | English |
Extrait
FOLLOW UP AUDIT OF KEY FINANCIAL PROCESSES AT THE NUNAVUT FIELD UNIT
FINAL REPORT November 2006
Report tabled and approved by the A&E Committee
Follow up Audit of key financial processes Nunavut Field Unit
Parks Canada Agency © Her Majesty the Queen in Right of Canada, represented by the Chief Executive Officer of Parks Canada, 2007 Cagalogue No. : R60-3/2-19-2007 ISBN : 978-0-662-69897-5
PEAG
2
November 2006
Parks Canada Agency
Follow up Audit of key financial processes Nunavut Field Unit
TABLE OF CONTENT 1. CONTEXT .............................................................................................................. 4 2. OBJECTIVE AND SCOPE .................................................................................... 4 3. METHODOLOGY ................................................................................................. 4 4. CONCLUSION....................................................................................................... 6 5. OBSERVATIONS AND RECOMMENDATIONS............................................... 7 5.1 MANAGEMENT CONTROL FRAMEWORK..................................................... 9 5.2 REVENUES.......................................................................................................... 11 5.3 CONTRACTING .................................................................................................. 11 5.4 ACQUISITION CARDS ...................................................................................... 15 5.5 EXPENDITURES FOR TRAVEL ....................................................................... 15 5.6 PAYMENTS TO SUPPLIERS ............................................................................. 16 5.7 INVENTORIES .................................................................................................... 17 Report tabled and approved at the A&E Committee meeting on May 28, 2007
PEAG
3
November 2006
Follow up Audit of key financial processes Nunavut Field Unit
Parks Canada Agency 1. CONTEXT An audit of key financial and administrative processes in the Nunavut Field Unit was conducted in the fall of 2004. In January 2005, the time of approval of the audit and management response, the Agency’s Audit and Evaluation Committee requested a follow up audit. Originally scheduled for the fall of 2005, the follow-up was postponed to the end of the Summer 2006, to allow the field unit more time to implement corrective measures. Meanwhile, the Field Unit was asked to report on actions taken to address issues raised in the 2004 audit findings. Management produced a status document in December 2005. The Performance, Evaluation and Audit Group conducted an on-site follow-up audit in September 2006 to verify the management representation obtained in 2005 and to validate the existence and effectiveness of controls put in place to address original findings. 2. OBJECTIVE AND SCOPE The objective of the follow up audit was to provide senior management with assurance that changes and improvements were made and that controls in place were adequate to mitigate the risk of non-compliance to Treasury Board Secretariat (TBS) and Parks Canada Agency (PCA) policies and practices. For consistency purposes, the scope of the follow up included the same elements as in the audit done in 2004. In other words, we reviewed the management control framework (MCF) over financial management and the following key financial processes: • Revenues • Contracting • Payment to Suppliers • Use of Acquisition Card • Expenditures for Travel • Small value attractive asset, and • Financial Coding The scope covered processes in place and transactions entered mainly between April 1 and August 31, 2006. 3. METHODOLOGY The methodology included the following activities: • Review of the file of the 2004 audit Site visit to Nunavut Field Unit headquarters office in Iqaluit •
PEAG
4
November 2006
Parks Canada Agency Follow up Audit of key financial processes Nunavut Field Unit • Interviews with the Nunavut Finance and Administration Manager and the accounting assistant. (Note: F&A Manager was also acting Field Unit Superintendent at the time of our visit) • Discussions with the Manager of the National Office Centre of expertise for procurement and transfer payments • Examination of a sample of transactions for each key financial process area, where applicable. 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. Si nificant Controls in place are weak. Several major issues were noted that could Im rovements jeopardize the accomplishment of program/operational objectives. Needed Immediate management actions need to be taken to address the control deficiencies noted. Moderate Some controls are in place and functioning. However, major issues were Im rovements noted and need to be addressed. These issues could impact on the Needed achievement or not of program/operational objectives. Minor Many of the controls are functioning as intended. However, some minor Im rovements changes are necessary to make the control environment more effective Needed and efficient. Controlled Controls are functioning as intended and no additional actions are necessary at this time.
PEAG
5
November 2006
Parks Canada Agency Follow up Audit of key financial processes Nunavut Field Unit 4. CONCLUSION The Nunavut Field Unit put in place some financial procedures to address the original concerns raised in the 2004 report. Key elements like Revenue, Travel, and Use of Acquisition Cards appear to be now well controlled. And while Management Control Framework, Payment to Suppliers and Inventories require moderate improvements, significant errors were found that require immediate attention with regards to Contracts. Changes need to be made to increase compliance with PCA and TBS policies. The table below shows the rating granted to the elements that were looked at, both in 2004 and 2006. Element Audited Management Control Framework Revenue Contracting Acquisition Cards Travel Payment to Suppliers Inventories
PEAG
Rating 2004 Rating 2006 Minor Im rovements Moderate Im rovements Needed Needed Minor Im rovements Minor Im rovements Needed Needed Moderate Im rovements Significant Improvements Needed Needed Moderate Im rovements Minor Im rovements Needed Needed Mino I rovements Controlled r m Needed Moderate Im rovements Moderate Im rovements Needed Needed Moderate Im rovements Moderate Im rovements Needed Needed
6
November 2006
Parks Canada Agency Follow up Audit of key financial processes Nunavut Field Unit 5. OBSERVATIONS AND RECOMMENDATIONS The table below presents the status summary of the recommendations made in 2004. Follow up work was intended to provide confirmation that processes in place allow for the FU to be compliant with policies and regulations. However, while performing the follow-up work, additional issues were identified. These issues are discussed further in the report. The Comments column will show that no additional work is required for the situations that are compliant. For recommendations still not fully in compliance, a description of required work is provided or reference is made to the related section when new observations were noted. Table 1. 2004 Recommendations and Current Status . 2004 Recommendation Status in 2005 Status in 2006 Comments (self reported) 1. The Superintendent should execute Compliant Sustantially In principle, the finance payment authority over expenditures implemented manager signs only the incurred in the Finance and Administration payment authority (s. 33). cost center. However, during our review, we noted two instances where the finance manager signed for expenses related to his own area. We do consider these cases as exceptions but due diligence is required. (see recommendation # 1) 2. The Superintendent should ensure that a Compliant Fully No additionnal work formal documented agreement between implemented required. PWGSC and NFU be prepared to identify respective roles and responsibilities with regard to computer backup information and safeguarding of backup tapes including offsite storage of daily backups. 3. The Superintendent should ensure that Interim solution Not Segregation of duty needs to the duties related to the deposit of revenue implemented compliant be improved. receipts, reconciliation of the bank account, and the recording of receipts in the Compliant (See section 5.2) financial accounting system be segregated August 2006 between at least two individuals. 4. The Superintendent should ensure that Compliant Compliant No additionnal work the combination on the safe in the Iqualuit required. office is changes on a periodic basis and when a staff member no longer has a need to enter the safe.
PEAG
7
November 2006
Compliant
Compliant
No additionnal work required.
No additionnal work required.
Parks Canada Agency Follow up Audit of key financial processes Nunavut Field Unit 5. The Superintendent should ensure that Partially Partially The next session should NFU managers are provided with training compliant compliant occur in the Spring of 2007. on contracting policies and PCA financial authorities and financial commitment Additional (see section 5.3 ) control to enhance understanding and training session awareness in these areas. planned in January 2006 and August 2006. 6. The Superintendent should ensure the Compliant Manager Finance & administration obtain written direction from NHQ Finance as to the specific role and responsibilities of the Field Unit Acquisition Card co-ordinator. 7. The superintendent should ensure that Compliant training be provided to acquisition cardholders to increase awareness and understanding of PCA and TB policy for Acquisition Card usage. 8. The superintendent should ensure that all Compliant Travel Authorization Form are completed in advance of travel and authorized by NFU managers. 9. The superintendent should ensure that Compliant VTA’s are paid to employees through the payroll system in accordance with PCA directives. 10.I. The Superintendent should ensure that Partial financial commitment be recorded in SAP compliance upon contract initiation. Interim solution Compliance August 2006 10.II. The Superintendent should ensure Compliant that all contracts entered into by NFU managers be documented in the appropriate manner. 10.III. The Superintendent should ensure Interim that account verification procedures measures being performed by NFU finance staff include investigated and agreement of invoice to terms and implemented. conditions of contract documentation Compliant August 2006 10.IV. The Superintendent should ensure Compliant that duplicate payment of $ 5296.50 be January 2006. recovered from the supplier.
PEAG
8
Compliant Compliant Partially compliant
Partially compliant Compliant Not compliant
No additionnal work required. No additionnal work required. (See section 5.3)
(See section 5.3) We have some reservation on the finance capability to maintain control over documentation due to turnover of staff in the group (see section 5.3) The write-off will be done at the end of this fiscal year when NFU will close its books. (See section 5.6)
November 2006
Parks Canada Agency Follow up Audit of key financial processes Nunavut Field Unit 10.V. The Superintendent should ensure Partial Partially Since the original audit in that training on financial authorities be compliance compliant 2004, formal training given to all NFU managers to increase sessions have been scheduled understanding of the policy and its Further training but keep being postponed. application. currently (See section 5.3) underway. Additional training sessions planned January 2006 and August 2006. 11. The Superintendent should ensure that Compliant Partially (See section 5.7) high-risk valuable small items be identified, January 2006 compliant issued an asset identification number, and tracked.
Sections 5.1 to 5.7 present new issues that were raised during the course of the follow up as well as new recommendations that need to be addressed. 5.1 MANAGEMENT CONTROL FRAMEWORK YELLOW Moderate Some controls are in place and functioning. However, Improvements major issues were noted and need to be addressed. These Needed issues could impact on the achievement or not of program/operational objectives. Planning and budgetary control The Field Unit has introduced several measures to improve control and enable the finance manager to better fulfill his role as “challenger with regard to the Nunavut field unit managers’ budgets and projects. Amongst measures taken, progress reports on current expenditures were created. Field Unit managers receive reports on a regular basis (usually monthly) from the finance manager showing current status of their budget with suggestions to ensure tighter budgetary control and avoid year-end surprises. The report also exists for the FU’s overall level. A Project Accountabilities Information Sheet was also introduced. Managers use it to describe the project they would like to undertake, expected results, potential risks and associated costs. Managers sign the document and are expected to implement projects as planned. Training There has been no official training related to finance since the initial audit in 2004. (See section 5.3)
PEAG
9
November 2006
Parks Canada Agency Follow up Audit of key financial processes Nunavut Field Unit Controls and follow-up of management practices Consistent with the recommendation to improve control, new stamps are now used and help to better identify the signatures, dates and financial coding. However, we found that the stamp used for payment authority under section 33 was accessible to people other than the person in charge and was used inappropriately in a few cases (e.g. when authority was given by the Winnipeg office). Recommendation : 1. The addition of a signature or initials with the section 33 seal would clarify the use made of the stamp. Management response Agree: The Finance Manager has unique S.33 stamp which is then initialled upon EAA release. The documentation of the process is completed and on file. The segregation of duties remains an issue due to the staff shortage in the financial area. At the time of the follow up, a position was vacant although was to be filled in the weeks following the audit. The current financial officer will also vacate her position and will need to be replaced. The field unit’s management is aware of the situation, and controls have been implemented to reduce the associated risks. Despite these controls, some errors or anomalies were detected and corrected by the financial staff but others were not. Staff shortages have lead to delays in processing transactions adding to the existing pressure. We found that errors are easily overlooked when many payments are made within a short period of time. This situation will likely be exacerbated in the short-term due to the staffing changes noted above and the need to train new employees. The financial officer started documenting various activities and processes related to finance operations. These binders were not completed at the time of the follow up. The upcoming staff change will postpone the completion of these documents to an undetermined date. Recommendations : 2. The FUS should ensure a proper segregation of duty exists with regards to finance activities. Management response Agree: The segregation of duties is now established. The Finance Manager reconciles deposits against the Parks Manager’s revenue reports. The Finance Assistant enters the information in SAP and physically deposits
PEAG
10
November 2006
Parks Canada Agency Follow up Audit of key financial processes Nunavut Field Unit the cash to the bank. The Finance Manager subsequently clears the bank account. 3. The FUS should ensure that processes are documented and kept up-to-date. Management response Agree: The Finance processes are documented since fall 2006. 5.2 REVENUES BLUE 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. We are aware that the Nunavut field unit’s resources are limited. However, the segregation of duties at the time of the follow up was not adequate. To avoid the risks related to an incomplete recording of revenues, we recommend that the person receiving the revenues from the various sites validate the deposit and make the reconciliation, and that another employee make the deposit and record it in the books. This new procedure was shared with the staff in place and was to be implemented immediately. Our sampling enabled us to examine several transactions related to staff housing. We found that the payment made corresponds with that indicated on the electronic status reports received from PWGSC. However, there was no sign of verification, stamp or signature confirming an agreement with the amount charged. Recommendation: 4. Ensure that a verification of the amounts charged and the original agreement is performed and that a record of the work done appears on the documents. Management response Agree: The Finance Assistant would verify any invoice with terms of the agreement before the data entry in SAP. A confirmation of the work completion will be insert with the invoice prior to the payment release. 5.3 CONTRACTING
ORANGE Améliorations Les contrôles en place sont faibles. Plusieurs problèmes importantes importants ont été constatés qui pourraient nuire à requises l’atteinte des objectifs du programme ou des objectifs opérationnels. Des mesures de gestion immédiates s’imposent pour corriger les lacunes constatées en matière de contrôle.
PEAG
11
November 2006
© 2010-2024 YouScribe