Audit of Travel

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Audit of Travel Western Economic Diversification Canada Audit Evaluation & Ethics Branch November 2007 Audit of Travel Acknowledgement The Audit, Evaluation and Ethics Team would like to thank all WD employees in the Regions and Head Office who develop and implement Travel program and who were called upon to provide various types of information in a timely manner to assist us with this audit. 2Western Economic Diversification Canada Final Report - November 2007 Audit of Travel AUDIT OF TRAVEL TABLE OF CONTENTS Page Executive Summary 4 1.0 INTRODUCTION 6 1.1 Background1.2 Objectives1.3 Scope and Methodology 6 2.0 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 8 2.1 GOVERNANCE 8 2.1.1 Accountability2.1.2 Monitoring and Reporting 9 2.1.3 Awareness and Training 11 2.1.4 Public Service Values 12 2.2 INTERNAL CONTROLS TO ENSURE COMPLIANCE 13 2.2.1 Pre-authorization of Travel – Section 32 Financial Administration Act (FAA) 13 2.2.2 Authorization and Documentation 14 2.2.3 Travel Planning2.2.4 Proactive Disclosure 15 2.3 RISK MANAGEMENT 16 Annex A: Summary of Travel Policy Compliance (Findings) 17 3Western Economic Diversification Canada Final Report - November 2007 Audit of Travel Executive Summary Western Economic Diversification Canada (WD) management is responsible to ensure that travel activities are adequately managed with sound management practices and ...

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• Publié par: Arze
• Nombre de lectures: 30
• Langue: English

Extrait

 

            Audit of Travel   Western Economic Diversification Canada   Audit Evaluation & Ethics Branch November 2007

Audit of Travel

Acknowledgement   The Audit, Evaluation and Ethics Team would like to thank all WD employees in the Regions and Head Office who develop and implement Travel program and who were called upon to provide various types of information in a timely manner to assist us with this audit.

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Audit of Travel AUDIT OF TRAVEL TABLE OF CONTENTS          Page Executive Summary  4     1.0 INTRODUCTION  6 1.1 Background 6 1.2 Objectives 6 1.3 Scope and Methodology 6     2.0 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS  8     2.1 GOVERNANCE 8 2.1.1 Accountability 8 2.1.2 Monitoring and Reporting 9 2.1.3 Awareness and Training 11 2.1.4 Public Service Values 12     2.2 INTERNAL CONTROLS TO ENSURE COMPLIANCE 13 2.2.1 Pre-authorization of Travel – Section 32 Financial Administration Act (FAA) 13 2.2.2 Authorization and Documentation 14 2.2.3 Travel Planning 14 2.2.4 Proactive Disclosure 15     2.3 RISK MANAGEMENT 16     Annex A: Summary of Travel Policy Compliance (Findings)  17                               Western Economic Diversification Canada 3 Final Report November 2007 -

Audit of Travel

Executive Summary   Western Economic Diversification Canada (WD) management is responsible to ensure that travel activities are adequately managed with sound management practices and operational controls in place. In light of increased public scrutiny regarding responsible spending, the Audit of Travel was identified in the 2007-08 Risk-Based Audit Plan. The field work for the audit was done during October 2007 with regional site visits, staff interviews and documentation review. Relocation travel was excluded from the scope of this audit.     The objectives of the audit were:   • To assess the adequacy of the management control framework to administer travel and to mitigate risk; • To determine the extent of compliance with relevant policies and procedures; and   To identify opportunities for improvement, as appropriate. •   Each of these objectives is discussed in detail in the Findings, Conclusions and Recommendations section of this report. The audit team conducted several briefings with management to provide information and to obtain feedback on findings. It is important to acknowledge the achievements the department has made in the travel administration area such as the use of blanket travel authority and savings from the use of vouchers to upgrade airfares.   The audit was conducted in accordance with Internal Auditing Standards for the Government of Canada. The audit assessed the management control procedures for travel and procedures for authorizing travel, issuing travel advances where necessary, ensuring that travel claims are processed in a timely manner, certifying travel claims, and issuance of reimbursements or collection of overpayments. The audit examined, on a test basis, evidence supporting the amounts paid for travel using multiple lines of inquiry, which included risk based statistical sample of travel claims, interviews with staff traveling as well as staff involved in the payment and approval of travel claims posted on the departmental financial information system from April 1, 2006 to August 31, 2007.   Based on the criteria used, and with few exceptions noted in this report, there is reasonable assurance that WD is conforming to the Treasury Board Secretariat Travel Directive in all material respects.      Summary of Findings and Conclusions     The Management Control Framework for travel expenditures for the most part is in place and is being administered with due regard to Treasury Board Secretariat (TBS) National Joint Council Travel Directive. WD has an up to date Delegation Authority Chart in place for travel approvals. However, the audit found that monitoring, training, and awareness need to be strengthened.   Western Economic Diversification Canada Final Report - November 2007

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Audit of Travel

The extent of departmental compliance with the TBS Travel Directive is generally high with the exception of minor administrative practices that need improvement to ensure full compliance with TBS Travel Directive. Those areas include documentation in support of travel expenses, monitoring of FAA section 34 verification and mandatory publication of travel expenses for senior officials in all cases of travel.   Summary of Key Recommendations     The recommendations identified below, assessed by the auditors will improve the administration and the compliance level with the TBS and WD Travel Policies.   • WD should establish a consistent sampling methodology based on risk and materiality for active monitoring of travel expense claims and should provide a standard checklist to personnel responsible for the verification of travel claims pursuant to Section 34 of the FAA. • WD should monitor transactions sampled and the results of the verification in order to consistently address ongoing issues related to approvals, claim verification (Section 34 of the FAA) and supporting documentation. • WD should provide formal training on travel, reinforcing individual accountabilities in the process related to claims accuracy and supporting documentation. • WD should regularly monitor the existing quality assurance review process to ensure that it continues to capture all travel expenses incurred by senior officials and that those expenses are publicly disclosed.

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Audit of Travel

  1.0 INTRODUCTION   1.1 Background The Department of Western Economic Diversification (WD) depends on travel to facilitate the operations of its business activities. WD spent approximately $2.8 million on employee travel during the audit period of April 1, 2006 to August 31, 2007.   Government travel is subject to ongoing interest by the public and media. Internal and external stakeholders are looking for assurance that public money is well spent. It is important for WD to demonstrate scrutiny and vigilant oversight over these types of expenditures, which are indications of prudence and probity in the management of public funds.   In order to provide more transparency pertaining to travel expenditures, he Prime Minister announced a new policy in 2003 requiring mandatory disclosure of travel expenses for selected government officials. WD has complied with this policy by posting the travel expenditures incurred by the Deputy Minister and Assistant Deputy Ministers on the Department’s internet site. The information on the internet site is updated every three months.   The rules and principles governing travel are outlined in the Treasury Board Secretariat (TBS) Travel Directive and the WD Travel Policy and are available to all staff via WD’s intranet. These documents are in place to ensure fair treatment of employees required to travel on government business and to provide for the reimbursement of reasonable expenses such as transportation, accommodations, meals and incidentals.   The Audit, Evaluation and Ethics Branch, in consultation with WD management, viewed travel expenditures to be of relatively high risk due to public scrutiny around it, therefore an audit of these expenditures was included in WD’s 2007-2008 Audit Plan.   1.2 Objectives The objectives of the audit were:   • To assess the adequacy of the management control framework to administer travel and to mitigate risk; • To determine the extent of compliance with relevant policies and procedures; and • To identify opportunities for improvement, as appropriate.   1.3 Scope and Methodology The audit was conducted in accordance with Internal Auditing Standards for the Government of Canada. Those standards require that the audit be planned and performed to obtain reasonable assurance that the travel expenditures are made following the governing authorities. The methodology included analyzing various documents, file

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Audit of Travel

review, and meeting with staff travelling as well as staff involved in the payment and approval of travel claims.   Procedures, guidelines and practices as well as the monitoring and reporting mechanisms in place, were examined. In addition, a representative sample of travel claims, posted on WD’s financial information system for the period of April 1, 2006 to August 31, 2007, was examined for data completeness, reasonableness, accuracy, and compliance with TBS and WD policies and directives.   The audit was carried out in three phases, namely: Planning, Conducting and Reporting. A summary of activities for each of the phases is outlined below.   Planning Phase   • Reviewed applicable departmental and central agency policies and guidelines; • Determined audit scope and methodology; • Developed a detailed audit program; • Developed and obtained approval for the audit Terms of Reference; and • Developed a detailed Audit Work Plan.   Conduct Phase     Determined whether WD policies were consistent with Central Agency policies; • • Identified and validated key audit program related issues with departmental stakeholders (departmental and regional travel coordinators, RCMs and financial officers); • Reviewed travel claim reports created from the financial system database to identify a mix of high risk, high-dollar transactions, frequent travellers (within Canada and internationally) and senior officials to select a random sample of travel claims; • Assessed travel expenditure transactions in order to determine the completeness, reasonableness, accuracy, and validity of data; • Identified and validated initial observations through assessments of documents with finance staff; • Examined practices, documents and data in all regional offices; • Debriefed relevant stakeholders; • Completed audit working papers; • Identified opportunities to improve travel expense administration and monitoring practices; and • Summarized the findings.   Reporting Phase   • Produced a Draft Audit Report for stakeholder comments and feedback; • Debriefed key stakeholders on the Draft Audit Report;

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Audit of Travel

• Finalized the Audit Report;   • Presented the findings and management response to the Departmental Audit Committee;   • Obtained Deputy Minister approval; • Translated the Audit Report;   • Submitted the Audit Report to the Office of the Comptroller General; and • Posted the translated Audit Report on the internet.   This audit did not include travel related to relocation costs.   Lines of Enquiry and Criteria   Lines of enquiry and audit criteria used to assess the adequacy of the management controls, compliance and risk to support travel is provided with each item assessed and results summarized in Annex A at the end of the report.   Audit results have been captured in Section 2 of this report in accordance with the following:   • The effectiveness of the management control framework including risk mitigation; and • Compliance with TBS and WD policies.     2.0 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS      A summary of policy compliance and findings is included in Annex A.   2.1 GOVERNANCE      Effective governance ensures the departmental management control framework governing the administration of travel expenditures is effectively structured and operates efficiently. WD’s   Management Control Framework for travel expenditures for the most part is in place and is being administered with due regard to Treasury Board Secretariat (TBS) and National Joint Council Travel Directive. WD has an up to date Delegation Authority Chart in place for travel approvals. However, the audit found that monitoring, training, and awareness need to be strengthened.   2.1.1 Accountability   Criterion: The accountability framework (structure, policies, and roles) is clearly and adequately defined, and is implemented accordingly.   The department has supplemented TBS travel policy and directives with its own to include WD values and clarify certain travel policy interpretations on meals, weekend Western Economic Diversification Canada Final Report November 2007 -

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Audit of Travel

travel and advance authority. These directives are available to staff on the intranet and include links to the TBS policy and directives. Some regions have developed their own procedural documents, such as a “How To” Travel Guide developed by the BC region in 2007. Accountabilities, roles and responsibilities of the Departmental Travel Coordinator, Regional Travel Coordinators, travellers and the Responsibility Centre Managers (RCMs) are clearly identified and properly established. The audit found:     Collectively, travel policies and guidelines meet TBS policy standards; • • Roles and responsibilities have been identified from senior management through to the traveller; • Signing authority delegation is up to date; and • Blanket or Standing Travel Authorities are used.   An accountability framework for the administration of travel expenditures was implemented as follows:   • The Departmental Travel Coordinator is responsible for ongoing management of the travel program which includes: liaising with Travel AcXess Voyage on department-wide issues as required; monitoring and reporting on the travel program; ensuring compliance to the travel policy; and maintaining communications with the Regional Travel Coordinators. • The Regional Travel Coordinator is responsible for travel advice, interpretations, monitoring and reporting on travel in the Region • RCMs are responsible for authorizing and approving travel in accordance with Sections 32 and 34 of the Financial Administration Act, and monitoring travel expenses for their respective Responsibility Centres. • Travellers are responsible for obtaining pre-authorization for travel, booking the trip in a cost-effective manner, submitting their travel expense claim to the RCM on a timely basis using WD Travel Policy and TBS Travel Directive.   We have concluded that the WD travel Management Framework is consistent with the TBS Travel Directive. No recommendation required .     2.1.2 Monitoring and Reporting       Criterion: An adequate monitoring and verification system is in place to identify and communicate operational problems and issues, and subsequent reporting to management is conducted in a clear, comprehensive, consistent and timely manner     Quality and timely information enables management to perform its oversight role. Presently, regional finance managers issue monthly operating spending reports (including travel costs) to Responsibility Centre Managers to monitor their budget. In addition, regional finance managers track the overall regional travel costs to better manage travel budgets. However, monitoring and reporting mechanism related to compliance aspects can be strengthened as indicated below.   Western Economic Diversification Canada Final Report - November 2007

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Audit of Travel

Spending Authority - Section 34 Financial Administration Act (FAA)   An important element in the effective administration of travel requires management oversight that monitoring processes are sufficient to ensure that travel expenses comply with the rules of entitlement and financial controls are adequate to protect against both financial loss and non-compliance. This audit focused on the monitoring and control practices related to Sections 33 and 34 of the FAA and the Treasury Board Secretariat Policy on Account Verification.   To obtain reimbursement for travel expenses incurred for business travel, a WD employee prepares a travel claim, along with all supporting documents (receipts), and submit this documentation to their respective RCM for approval. Once the RCM has reviewed the travel claim and signed it for Section 34 of the FAA to certify the expenditures, the travel claim is subsequently forwarded to Finance for further processing and verification prior to issuing a payment.   The TBS Policy on Account Verification states that:   (1) the primary responsibility for verifying individual accounts rests with the officer who has the authority to confirm and certify entitlements pursuant to FAA Section 34; and (2) persons with this authority are responsible for the validity of the payment requested and the account verification procedures performed.   The level of due diligence applied by RCMs in validating travel expenses was inconsistent throughout the Department. From our interviews with administrative assistants, travellers, and RCMs, the auditors learned that some RCMs do a thorough review of each travel claim prior to signing Section 34, while others have delegated the review and challenge function to an administrative assistant where the RCM does little or no review prior to signing off on the travel expense claim. Sometimes, this review and challenge function is left to Finance Officers performing FAA Section 33 Verification.   The audit observed that there was an absence of a departmental standard or guideline for managers with Section 34 signing authority and for administrative assistants delegated with the responsibility for verifying the accuracy and completeness of the travel expense claims.   While cases of non-compliance from our testing were very low, there were instances where information and support documentation were missing. Some examples of missing documents included travel itineraries and boarding passes that included upgrades reflecting meals provided on board, trip agenda that indicated meals paid by the meeting organizer, and missing receipts to substantiate expenses with no declaration made in their absence.      

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Audit of Travel

Payment Authority - Section 33 Financial Administration Act (FAA)   According to the TBS Policy on Account Verification:   (1) responsibility for the system of account verification and related financial controls rests ultimately with those officers who are delegated with payment authority pursuant to FAA Section 33; and (2) Finance Officers with payment authority pursuant to FAA Section 33 must provide assurance of the adequacy of the Section 34 account verification and be in a position to state that the process is in place and is being properly followed.   All regional finance groups monitor travel expenses pursuant to Section 33 of the FAA although no consistent standard is in place for regional monitoring. For example, some regions audit 100% of the travel claims, some regions do random/risk based claim audits and in some regions, a quick review of any extraordinary items may suffice.   The audit observed that all regional finance groups inform travellers or RCMs of non- compliance with travel policies and correct errors. However, it is not a common practice to track error rates or error types to identify travel practices that need improvement.   The audit concluded that monitoring practices and controls are present to detect non- compliance with travel policies. However, the effectiveness of the Account Verification audit process is reduced, as there is no standardized or consistent approach to capture lessons learned from the audits performed by Finance. Implementation of standardized statistical sampling based on risk assessment would reduce the volume of processing low- risk transactions by targeting the high-risk travel expense claims, thereby improving the cost-effectiveness of travel administration.   Recommendations   1. WD should establish a consistent sampling methodology based on risk and materiality for active monitoring of travel expense claims and should provide a standard checklist to personnel responsible for the verification of travel claims pursuant to Section 34 of the FAA.   2. WD should monitor transactions sampled and the results of the verification in order to consistently address ongoing issues related to approvals, claim verification (Section 34 of the FAA) and supporting documentation.   2.1.3 Awareness and Training   Criterion: Awareness and training pertaining to the travel reimbursement process, and the provision of travel, is consistent and sufficient to ensure that all parties involved are fully aware of their roles and responsibilities.  

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