Audit of Key Financial Processes at the Cape Breton Field Unit
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AUDIT OF KEY FINANCIAL PROCESSES AT THE CAPE BRETON FIELD UNIT FINAL REPORT Prepared by: Deloitte & Touche LLP NOVEMBER 2006 Report tabled and approved by the A&E Committee Parks Canada Agency Audit of key financial processes Cape Breton Field Unit Her Majesty the Queen in Right of Canada, represented by the Chief Executive Officer of Parks Canada, 2007 Cagalogue No. : R60-3/2-18-2007 ISBN : 978-0-662-69896-8 PEAG 2 November 2006 Parks Canada Agency Audit of key financial processes Cape Breton Field Unit TABLE OF CONTENTS EXECUTIVE SUMMARY.......................................................................................................4 1 OVERVIEW.......................................................................................................................8 1.1 Background ........................................................................................................................... 8 1.2 Methodology ......................................................................................................................... 9 1.3 Assurance Statement ............................................................................................................. 9 1.4 Conclusion............................................................................................................................. 9 2 OBSERVATIONS AND RECOMMENDATIONS .................. ...
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| Publié par | Niveg |
| Nombre de lectures | 48 |
| Langue | English |
Extrait
AUDIT OF KEY FINANCIAL PROCESSES AT THE CAPE BRETON FIELD UNIT FINAL REPORT
Prepared by: Deloitte & Touche LLP NOVEMBER 2006 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. : R60-3/2-18-2007 ISBN : 978-0-662-69896-8
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Audit of key financial processes Cape Breton Field Unit
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Parks Canada Agency Audit of key financial processes Cape Breton Field Unit
TABLE OF CONTENTS
EXECUTIVE SUMMARY.......................................................................................................4 1 OVERVIEW .......................................................................................................................8 1.1 Background ........................................................................................................................... 8 1.2 Methodology ......................................................................................................................... 9 1.3 Assurance Statement ............................................................................................................. 9 1.4 .9..................................................................................................ncCo................ulisno.......... 2 OBSERVATIONS AND RECOMMENDATIONS ......................................................11 2.1 Management Control Framework........................................................................................ 11 2.2 Payments to Suppliers ......................................................................................................... 13 2.3 Acquisition Cards ................................................................................................................ 16 2.4 Travel Expenditures............................................................................................................. 18 2.5 acting..Contr........................................................................................................................02 2.6 ....................................2.2Revenue.......................................................................................... 2.7 Financial Coding ................................................................................................................. 28 2.8 Small Value Assets.............................................................................................................. 29 Appendix 1 Site Descriptions.....................................................................................................31 Appendix 2 Revenue ProcessDescriptions By Site.................................................................... 32 Report tabled and approved at the A&E Committee meeting on May 28, 2007
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E X E C U T I V E S U M M A R Y
Audit of key financial processes Cape Breton Field Unit
BACKGROUND Parks Canada Agency (PCA) is conducting a series of cyclical audits of Field Units, service centres and the national office to review key financial, administrative and management practices. The audits focus on compliance with Treasury Board of Canada Secretariat (TBS) and PCA policies and practices. The audit of the Cape Breton Field Unit was conducted as part of this cyclical audit program.
OBJECTIVES AND SCOPE The objective of this audit was to confirm that due diligence was being exercised in key management processes at the Cape Breton Field Unit, and that the processes and controls in place were adequate to ensure compliance with TBS and PCA policies and practices. The scope of this engagement covered the following key financial process areas: revenue, contracting, acquisition cards, payment to suppliers, travel expenditures, financial coding and small value assets. The audit covered the period from April 1, 2006 to September 30, 2006.
METHODOLOGY The audit methodology included a review of relevant background documentation, interviews with Field Unit personnel and transaction testing in the key financial process areas. The Cape Breton Field Unit was visited during the periods of October 16 to 18, 2006 (Fortress of Louisbourg), October 19, 2006 (Alexander Graham Bell Museum), and October 20 to 24, 2006 (Highlands National Park and Golf Course).
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 Overall, the Cape Breton Field Unit has financial procedures in place that ensure accountability of financial transactions. However, due diligence could be strengthened with the definition and implementation of new procedures and controls related to revenue, contracting, acquisition cards, payments to suppliers, travel expenditures, financial coding and small value assets to ensure consistent compliance with TBS and PCA policies.
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Audit of key financial processes Cape Breton Field Unit
AUDIT REPORTING RATING SUMMARY * Ref Management Process Rating 2.1 Management Control Framework Blue Minor Improvements Required 2.2 Payments to Suppliers Yellow Moderate Improvements Required 2.3 Acquisition Cards Blue Minor Improvements Required 2.4 Travel Expenditures Blue Minor Improvements Required 2.5 Contracting Yellow Moderate Improvements Required 2.6 Revenue Orange - Significant Improvements Required 2.7 Financial Coding Green Controlled 2.8 Small Value Assets Green Controlled
RECOMMENDATIONSCape Breton Field Unit
Management and Control Framework 1. The Field Unit Superintendent should implement monthly meetings with the management team in order to assess the overall performance against the budget and to identify any potential issues. Regular meetings will allow a more open and efficient flow of information between the management team and senior Finance staff. 2. The Field Unit Superintendent should establish clear roles and responsibilities for all positions within the Finance and Administration function.
Payments to Suppliers 3. The Field Unit Superintendent should ensure that all invoices are date stamped when received at the site. This procedure provides the Finance staff with superior information so that the timeliness of processing can be monitored. 4. The Field Unit Superintendent should ensure that increased training relating to supplier payments takes place and that the benefits of following standard PCA and TBS procedures are stressed, especially the use of Purchase Orders (POs) and Local Purchase Order Authority (LPOAs). This should include detailing the beneficial impact on the control environment at the sites as well as the additional financial reporting capabilities
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Audit of key financial processes Cape Breton Field Unit
that are provided to Parks Canada when the proper procedures are followed. LPOAs should be signed by an individual with S.32 authorization, and a copy of each LPOA should be forwarded to the Finance group. Upon receipt of the invoice, the terms and prices should be matched to the LPOA. 5. The Field Unit Superintendent should ensure that funds are committed in the financial system for all significant transactions. Accurate financial commitment information improves the quality of financial reporting and consequently improves the manager’s ability to make decisions. Potentially, the S.32 managers could enter estimated commitments in the financial system in order to improve the relevance of the financial reporting.
Acquisition Cards 6. Superintendent should ensure that only individuals who requireThe Field Unit acquisition cards possess them. In order to reduce exposure, card usage should be reviewed semi-annually to determine if limits are excessively high or if individuals no longer require cards.
Travel Expenditures 7. The Field Unit Superintendent should ensure that all travel is properly approved by the appropriate signing authority prior to the departure date of the employee. 8. The Field Unit Superintendent should ensure that the finance clerks review travel expenditures using statistical sampling methods in order to improve the overall efficiency of the process. 9. The Field Unit Superintendent should encourage the use of Receiver General (RG) cheques when time permits the payment to be issued through regular cheque runs. The use of RG cheques, which ensure proper authorization, reconciliation and validity of expenses, should be stressed as well as the positive impact on the overall control environment.
Contracting 10. The Field Unit Superintendent should ensure that personnel understand and adhere to TBS procurement policies and procedures. Training sessions would be an effective means of educating the staff regarding appropriate practices and would provide an opportunity to bring issues to light. Furthermore, the Field Unit Superintendent should take actions to address staff who consistently, do not adhere to policy.
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Audit of key financial processes Cape Breton Field Unit
Revenue GE N E R A LRE C O M M E N D A T I O N S(A P P L I C A B L E T O A L L S I T E S)11. The Field Unit Superintendent should ensure adequate segregation of duties with respect to revenue is in place. 12. The Field Unit Superintendent should ensure that all attendants are issued unique usernames and stress the importance of maintaining the confidentiality of passwords. Furthermore, each attendant should be advised to lock or log-off their terminal when they are no longer using it.
R T H E T O S P E C I F I CE C O M M E N D A T I O N S F O R T R E S S L O U I S B O U R G13. The Field Unit Superintendent should ensure that POS system is only used to track valid sales and receivables. Furthermore, the Field Unit Superintendent should advise the revenue clerks that all manually adjusting entries should be adequately documented and should receive additional scrutiny during their review procedures. 14. The Field Unit Superintendent should investigate the root cause of processing errors within the POS system. The revenue reports that are produced from the POS system are the basis for all control within the revenue cycle. Accordingly, it is imperative that the system accurately records revenue transactions and produces complete revenue reports.
R P E C I F I C SE C O M M E N D A T I O N S B H C O T15. The Superintendent should ensure that revenue is being recorded in a timely manner in order to improve the pertinence of the data in the financial system. The timely recording of revenue will also have a positive impact on the overall control environment by reducing the number of errors and improving the staff’s ability to reconcile differences. 16. The Superintendent should ensure that the CBFU is receiving the appropriate amount of realty revenue in accordance with the agreements. This can be achieved by ensuring that all future agreements include provisions that entitle PCA to request an audited revenue schedule.
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1 O V E R V I E W
Audit of key financial processes Cape Breton Field Unit
1.1 BACKGROUND Parks Canada Agency (PCA) is conducting a series of cyclical audits of key financial, administrative and management practices for all field units, services centres and the national office. There are 32 field units and four service centres in the PCA. Field Units are groups 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. It is the responsibility of the Service Centre Directors and the Field Unit Superintendents to ensure that the policies, directives and guidelines issued by the Treasury Board of Canada Secretariat (TBS) and PCA are followed. Deloitte & Touche LLP (Deloitte) conducted the audit of the Cape Breton Field Unit (CBFU) as part of this cyclical audit program. The CBFU is responsible for the Fortress of Louisbourg, the Alexander Graham Bell Museum, and Cape Breton Highlands NP and the Highlands Links Golf Course, Marconi NHS, Canso Islands NHS, St Peter’s Canal and a number of plaqued monuments. See Appendix 1 for a description of the site and history. Objectives and Scope The objective of this audit was to confirm that due diligence was being exercised in key management processes at the CBFU, and that the processes and controls in place were adequate to ensure compliance with TBS and PCA policies and practices. To achieve this objective, the audit reviewed the management control framework in place covering the following key financial process areas: ♦ Revenue; ♦ Contracting; ♦ Acquisition Cards; ♦ Payments to Suppliers; ♦ Travel Expenditures; ♦ Financial Coding; and ♦ Small Value Assets Transactions that occurred during the period from April 1, 2006, to September 30, 2006 were examined.
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Audit of key financial processes Cape Breton Field Unit
1.2 METHODOLOGY The methodology used in conducting this audit included a visit to the CBFU and the execution of the following activities: ♦ relevant documentation including: CBFU Sustainable Business Plan,Review of PCA Financial Resource Management Principles, PCA Delegated Signing Authorities Chart, TBS and PCA policies dealing with the above key financial process areas, and financial reports prepared by the Field Unit Manager, Finance and Administration; ♦ Interviews with the CBFU management and personnel responsible for the key financial process areas; and ♦ Examination of a sample of transactions in each of the key financial process areas. Upon completion of the interview process, a debriefing of our preliminary observations was held with the Acting Superintendent of the Cape Breton Field Unit. Our observations and recommendations have been made in accordance with the Audit Reporting Rating System described below: Controls are not functioning or RED sfactoryUnsatiitca tnemegn ketae btod eeettnxesin noa ermanaate medi. Im ons n to correct the situation. ORANGESignificant 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. YELLOWin place and functioning. However, major issues controls are Moderate Some Improvements were noted and need to be addressed. These issues could impact on Needed the achievement or not of program/operational objectives. BLUEMinor Many of the controls are functioning as intended. However, some Improvements minor changes are necessary to make the control environment more Needed effective and efficient. GREENControlled Controls are functioning as intended and no additional actions are necessary at this time.
1.3 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.
1.4 CONCLUSION Overall, the Cape Breton Field Unit has financial procedures in place that ensure accountability of financial transactions; however, due diligence could be strengthened with PEAG
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Audit of key financial processes Cape Breton Field Unit
the definition and implementation of new procedures and controls related to revenue, contracting, acquisition cards, payments to suppliers, travel expenditures and financial coding to ensure consistent compliance to TBS and PCA policies.
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Audit of key financial processes Cape Breton Field Unit
2 N D A E C O M M E N D A T I O N S RO B S E R V A T I O N S
2.1 MANAGEMENT CONTROL FRAMEWORK BLUEMinor Many of the controls are functioning as intended. However, some minor Improvements changes are necessary to make the control environment more effective and efficient. Needed
CU R R E N TPR A C T I C E SThe Field Unit employs PCA policies for financial management. The Parks Canada financial signing authorities chart is implemented at the Field Unit. Most of the training given to new employees relating to internal controls is done on an informal basis. Existing employees stay current with policies and procedures by updates from the national office and by reviewing the relevant intranet sites. The finance clerks who are responsible for recording transactions in the financial system are all very experienced and have been adequately trained with SAP. Relevant PCA directives, policies, and emails regarding internal control procedures are available on the intranet. Changes to these policies are generally communicated to staff employees via e-mail. Site Managers tend to rely on the services and expertise of the Manager - Finance and Administration. Formal finance and administration training has not been provided to the teams in approximately two years. The management team meets on an impromptu basis during the operating season and monthly during the off-season in order to address the budget as well as any other pending issues. Issues pertaining to Finance or control procedures are brought to light as they occur. “Free Balance Reports are regularly distributed to the management team. The report is generated in SAP and provides financial details of each internal order (project activity) by responsible manager, indicating the budget amount for a specific project, expenditure amounts incurred to date and the free balance remaining in the budget. The management committee at each site within the Field Unit meets on a regular basis to discuss performance against objectives, operational issues, updates and activities. The Cape Breton Field Unit identifies key issues, mitigating practices and strategies even though no formal risk assessment is performed. The budget is developed with the business plan. At the beginning of the year, managers identify their operational and capital investment needs for the year. The Superintendent challenges managers and makes the final decision on the amounts allocated to the various sections. The Manager - Finance and Administration, has a coordinating role in the budget planning exercise and has a challenge function. Managers are held accountable for achieving planned results with their budgets; variances are challenged.
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