Audit of Key Financial Processes at the Central Ontario Field Unit
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Audit of Key Financial Processes at the Central Ontario Field Unit

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AUDIT OF KEY FINANCIAL PROCESSES AT THE CENTRAL ONTARIO FIELD UNIT FINAL REPORT Prepared by: Spearhead Limited MAY 2006 Report tabled and approved by the A&E CommitteeParks Canada Agency Audit of Key Financial Processes Central Ontario Field Unit Her Majesty the Queen in Right of Canada, represented by the Chief Executive Officer of Parks Canada, 2007 Cagalogue No. : R60-3/2-8-2006 ISBN : 0-662-49361-3PEAG 2 May 2006 Parks Canada Agency Audit of Key Financial Processes Central Ontario Field Unit TABLE OF CONTENTS EXECUTIVE SUMMARY ...................................................................................4 1. BACKGROUND ...........................................................................................7 2. OBJECTIVES AND SCOPE.........................................................................7 3. METHODOLOGY.........................................................................................8 4. ASSURANCE STATEMENT........................................................................9 5. CONCLUSION.............................................................................................9 6. OBSERVATIONS AND RECOMMENDATIONS ........................................10 6.1. Management Control Framework.................................... ...

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              AUDIT OF KEY FINANCIAL PROCESSES  AT THE  CENTRAL ONTARIO FIELD UNIT         FINAL REPORT   Prepared by: Spearhead Limited          MAY 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. : R60-3/2-8-2006  ISBN : 0-662-49361-3
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Audit of Key Financial Processes Central Ontario Field Unit  
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Parks Canada Agency   
 Audit of Key Financial Processes  Central Ontario Field Unit   
 TABLE OF CONTENTS  
 EXECUTIVE SUMMARY ................................................................................... 4  1.  BACKGROUND ........................................................................................... 7  2.  OBJECTIVES AND SCOPE.........................................................................7  3.  METHODOLOGY......................................................................................... 8  4.  ASSURANCE STATEMENT ........................................................................9  5.  CONCLUSION ............................................................................................. 9  6.  OBSERVATIONS AND RECOMMENDATIONS ........................................10  6.1.  Management Control Framework ............................................................. 10  6.2.  Revenues ................................................................................................. 11  6.3.  Contracting............................................................................................... 13  6.4.  Acquisition Cards ..................................................................................... 14  6.5.  Travel ....................................................................................................... 16  6.6.  Financial Coding ...................................................................................... 17  6.7.  Payments to Suppliers ............................................................................. 17  6.8.  Stores Inventory and Safeguard of High Risk Valuable Small Items........18  
 
Report tabled and approved at the A&E Committee meeting on March 26, 2007
 
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Parks Canada Agency Audit of Key Financial Processes  Central Ontario Field Unit   EXECUTIVE  SUMMARY     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 Secretariat (TBS) and PCA policies and practices. The audit of the Central Ontario Field Unit was conducted as part of this cyclical audit program.   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 processes and controls in place in the Central Ontario Field Unit are adequate to mitigate the risk of non-compliance to TBS and PCA policies and practices. The scope of this engagement included the review of the management control framework (MCF) over financial management and the following key financial process areas: Revenues; Contracting; Use of Acquisition Cards; Expenditures for Travel; Financial coding; Payments to Suppliers and High risk valuable small items. The period from April 1, 2005 to January 31, 2006 was covered in this audit. The Central Ontario Field Unit and the Ontario Service Centre were visited. Audit work focuses on processes and transactions at the Ontario Service Centre and the Central Ontario Field Unit and included the review of relevant documentation, interviews with key personnel, and transaction testing in key financial process areas.   In our opinion, sufficient audit work has been performed and the necessary evidence has been gathered to support the conclusions contained in this report.   In general, we found that due diligence is being exercised in key management processes in the Central Ontario Field Unit and that systems and controls in place are adequate to minimize the risk of non compliance to TBS and PCA policies and procedures. We have identified areas to strengthen processes and controls to further mitigate the risk of non-compliance and to improve systems and practices.           
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 Audit of Key Financial Processes  Central Ontario Field Unit  
 RATING Minor improvements needed Minor improvements needed Minor improvements needed Minor improvements needed Controlled Controlled Minor improvements needed Significant improvements needed
Parks Canada Agency   The following table illustrates the rating summary used by Parks Canada. Our observations and recommendations have been made in accordance with the Audit Reporting Rating System.     FINANCIAL PROCESS  Management control framework Revenues Contracting Acquisition cards Travel Financial Coding Payment to Suppliers Stores Inventory & Safeguard of High risk valuable small items    We have made the following recommendations to Parks Canada:    1. The Field Unit Superintendent should ensure that a risk assessment is conducted of the key financial processes within the field unit and a contingency plan is developed.  2. The Field Unit Superintendent should ensure that revenue work processes are documented for Bethune Memorial House and Georgian Bay Islands.  3. The Field Unit Superintendent should ensure that within the Trent-Severn Waterway copies of the issued permits are forwarded to the Finance Section with the cashbook and that they be utilized to verify the reported revenue.  4. The Field Unit Superintendent should ensure that the supporting documentation for current fiscal year contracts be forwarded to the procurement staff within the Ontario Service Centre.  5. The Field Unit Superintendent should ensure that purchase registers are signed by the delegated signing authority.
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 Audit of Key Financial Processes  Central Ontario Field Unit  
6. The Field Unit Superintendent should ensure that purchase registers are submitted in a timely manner. 7. The Field Unit Superintendent should ensure that all payment invoices have a copy of the local purchase order or contract/agreement attached. 8. The Field Unit Superintendent should establish what should be included in the general inventory and ensure that items purchased are inventoried appropriately and that the inventory accurately reflects the holdings of these assets and their location.       
Parks Canada Agency             
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 Audit of Key Financial Processes  Central Ontario Field Unit  
Parks Canada Agency   1. BACKGROUND   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. Field units are groupings 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 audit of the Central Ontario Field Unit was conducted as part of this cyclical audit program.  The Central Ontario Field Unit consists of three protected heritage areas, the Trent-Severn Waterway National Historic Site, Bethune Memorial House National Historic Site and Georgian Bay Islands National Park and 31 National Historic Sites administered by others. The Field Unit manages 4,692 ha of land and 132,498 ha of water are under the jurisdiction of the Trent-Severn Waterway.  The Field Unit employs 137 indeterminate full time, 76 indeterminate seasonal, 21 term and 109 student employees and has an annual budget of $14,208,165.00 and annual revenue of $2,377,411.00.  The Field Unit is supported administratively by the Ontario Service Centre in Cornwall and Bethune Memorial House and Georgian Bay Islands submit their documents directly to this unit for processing. The Field Unit is staffed with a finance section consisting of two financial officers, two clerks and a seasonal employee. This section provides functional guidance to the field unit and completes the document processing for the Trent-Severn Waterway.      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 processes and controls in place at the Central Ontario Field Unit are adequate to mitigate the risk of non-compliance to Treasury Board Secretariat (TBS) and Parks Canada Agency (PCA) policies and practices.  The scope of the audit included the review of the management control framework (MCF) over financial management and the following key financial process areas:  o Revenues; o Contracting;
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Parks Canada Agency Audit of Key Financial Processes  Central Ontario Field Unit  o Use of Acquisition Cards; o Expenditures for Travel; o Financial Coding; o Payments to Suppliers; and, o Stores Inventory and Safeguarding of High Risk Valuable Small Items.  The scope of the audit covered processes in place and transactions entered into between April 1, 2005 and January 31, 2006.   3. METHODOLOGY   The methodology used in the conduct of this audit included visits to the Ontario Service Centre, Central Ontario Field Unit, Trent-Severn Waterway, Bethune Memorial House and the Georgian Bay Islands and comprised of the following activities.  - Interviews with management and personnel involved in financial management.  - Review of relevant documentation including the Sustainable Business Plan 2006/07 – 2010/11, Organization Charts, delegated Signing Authorities Chart, TBS and PCA policies that deal with the key financial reports prepared by the Financial Advisor.  - Examination of sample transactions of each of the key financial processes being audited.  Upon completion of the fieldwork, a debriefing of our preliminary observations was provided to management.               
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Parks Canada Agency Audit of Key Financial Processes  Central Ontario Field Unit  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 issues Improvements were noted and need to be addressed. These issues could impact on Needed the achievement or not of program/operational objectives. Minor Many of the controls are functioning as intended. However, some Improvements minor changes are necessary to make the control environment Needed more effective and efficient. Controlled Controls are functioning as intended and no additional actions are necessary at this time.
   The audit team would like to thank the personnel in the Central Ontario Field Unit and the Ontario Service Centre for their understanding and much appreciated cooperation.    4. 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.    5. CONCLUSION  In general, the audit team found that due diligence is being exercised in key management processes in the Central Ontario Field Unit and that systems and controls in place are adequate to minimize the risk of non-compliance to TBS and PCA policies and procedures.  We have identified some areas where management practices and compliance should be strengthened. The observations and recommendations that follow address these areas.  
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Parks Canada Agency    6. OBSERVATIONS AND RECOMMENDATIONS  6.1. Management Control Framework    NMeinedore dI mprovements HMoanwye voefr , thseomcoe ntrmoilns ora rec hfunngcetis onairne g naesc einstsearnyd etdo.  a make the control environment more effective and efficient.   Observations  Planning and Budgeting  The Central Ontario Field Unit follows the departmental business cycle and produces a 5-year sustainable business plan, which is updated on an annual basis. The management team has reviewed the activities and highlighted the difficulty of ensuring sustainability over the long term with current levels of investment. Budget allocations are monitored and adjusted, as the field unit must depend on its revenue generated to implement its planned activities.   Training  “Key Financial and Administration Practices” on-line training wasmade mandatory and has been completed by all managers within the field unit. Seasonal staffs are provided with training in the financial duties of their positions and the Ontario Service Centre conducts training seminars for field unit personnel.   Controlling and Monitoring Practices   The primary responsibility for controlling and monitoring expenditures rests with the field unit personnel who have the authority to confirm and certify entitlements pursuant to section 34 of the Financial Administrative Act. They are responsible for the correctness of the payment requested and for the account verification procedures performed.  The field unit financial staff review all payments made within the Trent Severn Waterway before forwarding them to the Ontario Service Centre where they, with the payment requests received directly from Bethune Memorial House and Georgian Bay Islands, are subjected to a complete review before being processed for payment.
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Parks Canada Agency Audit of Key Financial Processes  Central Ontario Field Unit   Payments that do not meet the requirements of the relevant policies and guidelines are brought to the attention of management for clarification and rectification.   Risk Management  Our discussions with the financial staff revealed that there had not been a risk assessment conducted of the key financial processes within the field unit and a contingency plan has not been developed.  The contingency plan would cover such issues as temporary relocation of offices, identification of essential services to be maintained by the field unit, the replacement of damaged equipment and temporary reallocation of personnel in case of uncontrollable circumstances.   Recommendations  1. The Field Unit Superintendent should ensure that a risk assessment is conducted of the key financial processes within the field unit and a contingency plan is developed.  Management response  Agree : Parks Canada's national office will develop policy and guidelines for identifying risks and preparing business continuity plans by the end of June 2007. Following issuing of the national direction the field unit will identify its critical risks and contingency plans for its financial and administrative systems by July 2007.     6.2. Revenues   NMeiendoer dI mprovements HMoawnye voefr , thseo mcoe ntmroilnso ra rec hfaunngcetsi onairne g naesc eisnstaernyd etdo.  make the control environment more effective and efficient.   The $2,316.946.00 in revenue that has been collected during the current fiscal year originated from sources as diverse as annual land lease payments to customer administered drop boxes. Procedures and documentation are not consistent within the Central Ontario Field Unit in that they have been designed to reflect both the amount
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