Audit of Key Financial Processes at the Saskatchewan South Field Unit

Audit of Key Financial Processes at the Saskatchewan South Field Unit

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AUDIT OF KEY FINANCIAL PROCESSES AT THE SASKATCHEWAN SOUTH FIELD UNIT Prepared by: Samson & Associates FINAL REPORT October 2006 Report tabled and approved by the A&E CommitteeParks Canada Agency Audit of Key Financial Processes Saskatchewan South Field Unit ©Her Majesty the Queen in Right of Canada, represented by the Chief Executive Officer of Parks Canada, 2007 Catalogue No.: R60-3/2-12-2007E-PDF ISBN: 978-0-662-45808-12PEAG OCTOBER 2007 Parks Canada Agency Audit of Key Financial Processes Saskatchewan South Field Unit TABLE OF CONTENTS EXECUTIVE SUMMARY..................................................................................................................4 1. BACKGROUND.................................................................................................................. 9 2. OBJECTIVES AND SCOPE............................................................................................... 9 3. METHODOLOGY ............................................................................................................... 9 4. ASSURANCE STATEMENT ............................................................................................ 10 5. CONCLUSION 10 6. OBSERVATIONS AND RECOMMENDATIONS..................................... ...

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AUDIT OF KEY FINANCIAL PROCESSES AT
THE SASKATCHEWAN SOUTH FIELD UNIT









Prepared by:

Samson & Associates



FINAL REPORT



October 2006








Report tabled and approved by the A&E CommitteeParks Canada Agency Audit of Key Financial Processes
Saskatchewan South Field Unit

















































©Her Majesty the Queen in Right of Canada, represented by
the Chief Executive Officer of Parks Canada, 2007

Catalogue No.: R60-3/2-12-2007E-PDF

ISBN: 978-0-662-45808-1
2PEAG OCTOBER 2007 Parks Canada Agency Audit of Key Financial Processes
Saskatchewan South Field Unit

TABLE OF CONTENTS




EXECUTIVE SUMMARY..................................................................................................................4
1. BACKGROUND.................................................................................................................. 9
2. OBJECTIVES AND SCOPE............................................................................................... 9
3. METHODOLOGY ............................................................................................................... 9
4. ASSURANCE STATEMENT ............................................................................................ 10
5. CONCLUSION 10
6. OBSERVATIONS AND RECOMMENDATIONS.............................................................. 11
6.1. Management Control Framework................................................................................ 11
6.2. Revenues..................................................................................................................... 12
6.3. Contracting .................................................................................................................. 15
6.4. Acquisition Cards......................................................................................................... 17
6.5. Travel........................................................................................................................... 18
6.6. Financial Coding.......................................................................................................... 19
6.7. Payments to Suppliers................................................................................................. 20
6.8. Stores Inventory and Safeguard of High Risk Valuable Small Items .......................... 22








Rapport présenté et approuvé par le comité de vérification et évaluation lors de la réunion
du 26 mars 2007
3PEAG OCTOBER 2007 Parks Canada Agency Audit of Key Financial Processes
Saskatchewan South Field Unit

EXECUTIVE SUMMARY
Background
Parks Canada Agency (PCA) conducts cyclical audits of field units, service centres and
the national office to review key financial, administrative and management practices. The
audits focus is on compliance with Treasury Board Secretariat (TBS) and PCA policies
and practices. The audit of the Saskatchewan South Field Unit (SSFU) was conducted as
part of this cyclical audit program.

The SSFU includes the Grasslands National Park, the historic sites of Motherwell, Fort
Walsh, Batoche and Fort Battleford. There is also a small administrative office in
Saskatoon. Administrative and financial management of the SSFU is partially located at
the different sites, with the main finance function being in Val Marie, Saskatchewan
where the Grasslands National Park is located.

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 SSFU are adequate to mitigate the risk of non-compliance to
Treasury Board Secretariat (TBS) and PCA policies and practices.

The scope of the audit covered the following areas: Revenues, Contracting, Use of
Acquisition Cards, Expenditures for Travel, Financial Coding, Payments to Suppliers and
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, 2006 and July 31, 2006, except for contracting which included the latter months
of fiscal year 2005-2006.

The audit included a visit to the SSFU during the period of August 21 to 28, 2006 and
included the following activities:

Interviews with the SSFU management and personnel, at all sites, who are
responsible for all the areas being reviewed;
Review of relevant documentation provided by Parks Canada National Office and
the SSFU, including the SSFU Business Plan for fiscal year 2005-2006, the SSFU
delegated signing authorities chart, policies and guidelines concerning the
management control framework, revenues, contracting, payments to suppliers,
acquisition cards, travel expenses and financial coding; and
An on-site examination of a sample of transactions in each of the key areas
covered by the assignment.

4PEAG October 2006 Parks Canada Agency Audit of Key Financial Processes
Saskatchewan South Field Unit
At the conclusion of the fieldwork, a debriefing of our preliminary observations was
made to SSFU’s Chief Financial Authority (CFA) and the Superintendent of the field
unit.

Statement of Assurance
In our opinion, sufficient audit work has been performed and the necessary evidence has
been gathered to support the conclusions contained in this report. Our observations and
recommendations have been made in accordance with the Audit Reporting Rating System
used by Parks Canada.

Conclusion
Overall, we found that due diligence is being exercised in the management processes and
that systems and controls in place to monitor revenues, contracting, payments to
suppliers, acquisition cards, travel expense, and financial coding are adequate. However,
we have identified areas where improvements should be made.

The following table illustrates the rating summary for the SSFU.


FINANCIAL PROCESS RATING

Management Control BLUE Many of the controls are functioning as intended.
Framework However, some minor changes are necessary to make
the control environment more effective and efficient.
Revenues BLUE Many of the controls are functioning as intended.
However, some minor changes are necessary to make ent more effective and efficient.
Contracting YELLOW Some controls are in place and functioning. However,
major issues were noted and need to be addressed.
These issues could impact on the achievement or not
of program/operational objectives.
Acquisition Cards BLUE Many of the controls are functioning as intended.
However, some minor changes are necessary to make
the control environment more effective and efficient.
Travel BLUE Many of the controls are functioning as intended.
However, some minor changes are necessary to make ent more effective and efficient.
Financial Coding GREEN Many of the controls are functioning as intended.
However, some minor changes are necessary to make
the control environment more effective and efficient.
5PEAG October 2006 Parks Canada Agency Audit of Key Financial Processes
Saskatchewan South Field Unit
Payment to Suppliers YELLOW Some controls are in place and functioning. However,
major issues were noted and need to be addressed.
These issues could impact on the achievement or not
of program/operational objectives.
Stores Inventory & Safeguard Some controls are in place and functioning. However, YELLOW
of High Risk Valuable Small major issues were noted and need to be addressed.
Items These issues could impact on the achievement or not
of program/operational objectives.

We have made the following recommendations to the Field Unit Superintendent:

Revenues

Recommendation # 1: We recommend that the Motherwell site keep its safe locked at
all times. In addition, in order to maintain better control over the items in the safe, we
recommend that they consider reducing the number of persons who have access to the
safe.

Recommendation # 2: We recommend that all sites ensure that bank deposits are made
at least once a week as per PCA Policy, unless the cash on hand is very small.

Recommendation # 3: We recommend that Fort Walsh include a copy of the cash
register tape with the cash report sent to Grasslands.

Recommendation # 4: We recommend that the cash balancing sheet be signed by the
person verifying its accuracy in Fort Walsh.

Recommendation # 5: Any discrepancies between the cash tape and the sales or cash
reports should be investigated and that an explanation be provided on the sales report.



Contracting

Recommendation # 6: We recommend that the SSFU consider providing concentrated
training to one individual with respect to contracting and procurement. This person’s job
description would need to include the responsibility for these functions.

Recommendation # 7: All contracts should be sent to Finance in a timely manner. This
should be prior to the goods or services being delivered. This will ensure that Finance can
properly enter the commitment in SAP and the material management system and also
ensure that the contract respects PCA policy.

6PEAG October 2006 Parks Canada Agency Audit of Key Financial Processes
Saskatchewan South Field Unit
Recommendation # 8: All contracting files should include the documentation of any
quotes received or requested or an adequate sole source justification.


Acquisition Cards

Recommendation # 9: We recommend that no vehicle operating costs be made with the
acquisition cards. Closer supervision may be required in cases of non-compliance.


Recommendation # 10: We recommend that the SSFU pay all acquisition cards in a
timely manner. Finance should closely monitor the timeliness of supplier payments.

Recommendation # 11: We recommend that Finance ensure that all support documents
are included and attached to the credit card statements before payment.


Travel

Recommendation # 12: The SSFU should implement a control to ensure that the
Government of Canada Travel Policies are being respected. This would include ensuring
accommodation follows Treasury Boards approved suppliers and the government rate is
obtained. In addition, Finance should ensure that the per diems are consistent with the
times of departure and return.

Recommendation # 13: No accommodation charges should be approved for employees
for a stay in the community in which they are working.


Payments to Suppliers

Recommendation # 14: We recommend that the SSFU adopt procedures that require that
purchase orders be prepared prior to the goods or services being received.

Recommendation # 15: We recommend that the SSFU require invoices to be received
for services obtained from all suppliers including First Nations.

Recommendation # 16: We recommend that all invoices be date stamped upon receipt.
dation # 17: We recommend that the receiving reports in the purchase files
be signed by the responsible manager.





7PEAG October 2006 Parks Canada Agency Audit of Key Financial Processes
Saskatchewan South Field Unit
Stores Inventory and Safeguard of High Risk Valuable Small Items

Recommendation # 18: As best practice, the SSFU should consider doing a physical
count to update its inventory lists in order to have accurate information to input in the
system when implemented.
8PEAG October 2006 Parks Canada Agency Audit of Key Financial Processes
Saskatchewan South Field Unit
1. BACKGROUND
Parks Canada Agency (PCA) conducts 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 Saskatchewan South Field Unit (SSFU) was conducted as part of these
cyclical audits. The SSFU includes the Grasslands National Park, the historic sites of
Motherwell, Fort Walsh, Batoche and Fort Battleford. There is also a small
administrative office in Saskatoon. Administrative and financial management of the
SSFU is partially located at the different sites, with the main finance function being in
Val Marie, Saskatchewan where the Grasslands National Park is located.

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 SSFU are adequate to mitigate the risk of non-compliance to
Treasury Board Secretariat (TBS) and 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:

Revenues;
Contracting;
Use of Acquisition Cards;
Expenditures for Travel;
Financial Coding;
Payments to Suppliers; and,
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, 2006 and July 31, 2006, except for contracting which included the latter months
of fiscal year 2005-2006.

3. METHODOLOGY
The audit included a visit to the SSFU during the period of August 21 to 28, 2006 and
included the following activities:

interviews with the SSFU management and personnel, at all sites, who are
responsible for all the areas being reviewed;
9PEAG October 2006 Parks Canada Agency Audit of Key Financial Processes
Saskatchewan South Field Unit
review of relevant documentation provided by Parks Canada National Office and
the SSFU, including the SSFU Business Plan for 2005-2006, the SSFU delegated
signing authorities chart, policies and guidelines concerning the management
control framework, revenues, contracting, payments to suppliers, acquisition
cards, travel expenses and financial coding; and
an on-site examination of a sample of transactions in each of the key areas
covered by the assignment.

At the conclusion of the fieldwork, a debriefing of our preliminary observations was
made to SSFU’s Chief Financial Authority (CFA) and the Superintendent of the field
unit.

Our observations and recommendations have been made in accordance with the Audit
Reporting Rating System described below:

Audit reporting rating system
Controls are not functioning or are nonexistent. Immediate
RED Unsatisfactory management actions need to be taken to correct the situation.
ORANGE Controls in place are weak. Several major issues were noted that Significant
could jeopardize the accomplishment of program/operational Improvements objectives. Immediate management actions need to be taken to
Needed address the control deficiencies noted.
YELLOW Moderate Some controls are in place and functioning. However, major issues
Improvements were noted and need to be addressed. These issues could impact
Needed on the achievement or not of program/operational objectives.
BLUE 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.
GREEN Controls are functioning as intended and no additional actions are Controlled
necessary at this time.

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
Overall, we found that due diligence is being exercised with respect to the management
processes and that systems and controls are in place to monitor revenues, contracting,
payments to suppliers, acquisition cards, travel expense, and financial coding are
adequate. However, we have identified areas where improvements should be made.
These improvements are summarized below through our recommendations.

10PEAG October 2006