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AUDIT OF KEY FINANCIAL PROCESSES YUKON FIELD UNIT FINAL REPORT Prepared by: SAMSON & ASSOCIATES MARCH 2005Parks Canada Agency Audit of Key Financial Processes Yukon Field Unit ©Her Majesty the Queen in Right of Canada, represented by the Chief Executive Officer of Parks Canada, 2006 Cagalogue No. : R60-3/2-11-2007E-PDF ISBN : 978-0-662-73211-22PEAG March 2005 Parks Canada Agency Audit of Key Financial Processes Yukon Field Unit TABLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................................ 4 1. BACKGROUND ............................................................................................................ 8 2. OBJECTIVES AND SCOPE.......................................................................................... 8 3. METHODOLOGY ......................................................................................................... 9 4. STATEMENT OF ASSURANCE................................................................................ 10 5. CONCLUSION............................................................................................................. 10 6. OBSERVATIONS AND RECOMMENDATIONS..................................................... 11 6.1. Management Control Framework (MCF).............................................................. 11 6.2. ...
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AUDIT OF KEY FINANCIAL PROCESSES YUKON FIELD UNIT
FINAL REPORT Prepared by: SAMSON & ASSOCIATES MARCH 2005
Parks Canada Agency
©Her Majesty the Queen in Right of Canada, represented by the Chief Executive Officer of Parks Canada, 2006 Cagalogue No. : R60-3/2-11-2007E-PDF ISBN : 978-0-662-73211-2
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Parks Canada Agency TABLE OF CONTENTS
Audit of Key Financial Processes Yukon Field Unit
EXECUTIVE SUMMARY ................................................................................................ 4 1. BACKGROUND ............................................................................................................ 8 2. OBJECTIVES AND SCOPE..........................................................................................8 3. METHODOLOGY ......................................................................................................... 9 4. STATEMENT OF ASSURANCE................................................................................10 5. CONCLUSION............................................................................................................. 10 6. OBSERVATIONS AND RECOMMENDATIONS..................................................... 11 6.1. Management Control Framework (MCF) .............................................................. 11 6.2. Revenues ................................................................................................................ 13 6.3. Contracting............................................................................................................. 15 6.4. Payments to Suppliers............................................................................................ 16 6.5. Travel ..................................................................................................................... 17 6.6. Acquisition Cards................................................................................................... 19 6.7. Inventory System ................................................................................................... 20 7. MANAGEMENT RESPONSE.................................................................................... 21
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Audit of Key Financial Processes Yukon Field Unit
Parks Canada Agency EXECUTIVE SUMMARY Background Parks Canada Agency (PCA) has a mandate to protect and present nationally significant examples of Canada’s natural and cultural heritage, and to foster public understanding, appreciation and enjoyment in ways that ensure the ecological and commemorative integrity of these places for present and future generations. The Agency is conducting a series of periodic audits of Field Units, Service Centers and the National Office in order to review financial, administrative and management practices. The audit focused on compliance with Treasury Board Secretariat (TBS) and PCA policies and practices. The Yukon Field Unit (YFU) includes seven Protected Heritage Areas (PHA) under its ownership, two national parks (Kluane National Park and Vuntut National Park of Canada) and five national historic sites (Chilkoot Trail National Historic Site, S.S. Klondike National Historic Site, Dawson Historical Complex National Historic Site, S.S. Keno National Historic Site and Dredge No.4 National Historic Site of Canada). The YFU PHA are scattered throughout the Yukon Territory and grouped into three sub-units, located in Whitehorse, Dawson and Haines Junctions. These are managed by three Site Superintendents reporting to the Field Unit Superintendent. Due to the scattered locations of the PHA they require significant time and resources for their operations. As a result of the remote location of the YFU, it receives a low volume of visitors every year. 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 YFU are adequate to ensure compliance to TBS and PCA policies and practices.
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Parks Canada Agency Audit of Key Financial Processes Yukon Field Unit The scope of this assignment covered the following areas: Management Control Framework (MCF), Revenues, Contracting, Payments to Suppliers, Expenditures for Travel, Acquisition Cards and the Inventory system. The period from April 1, 2004 to February 28, 2005 was covered by this audit. Methodology The audit included a visit to YFU during the period of March 14 to 18, 2005 and comprised the following activities:
¾Interviews with YFU management and personnel responsible for all the areas being reviewed; ¾Review of relevant documentation provided by Parks Canada National Office and YFU, including the YFU Business Plan for 2004-2005, YFU delegated signing authorities chart, policies and guidelines that deal with suppliers, acquisition cards, travel, contracting and revenues, as well as various reports prepared by the financial group of the Field Unit; and ¾On-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 the YFU Superintendent and the Manager of Finance and Administration. 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.
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Audit of Key Financial Processes Yukon Field Unit
Parks Canada Agency Conclusion Overall, we found that the systems and controls in place for the key management processes reviewed provide a good level of assurance and that due diligence is exercised over expenditures and revenue. However, we have noted a few improvements which could be made and have listed below our recommendations for consideration by the Field Unit Superintendent and Manager of Finance and Administration. Recommendation # 1 and # 4 requires immediate attention. Recommendations 1. The FU Superintendent and the Manager of Finance and Administration should consider withdrawing the section 34 spending authority from the Manager of Finance and Administration in order to avoid the risk of fraud related to the lack of segregation of duties since she also hold the section 33 payment authority. 2. The FU Superintendent and the Manager of Finance and Administration should ensure that a documented contingency plan for critical systems with back-up and disaster recovery procedures is prepared. The plan should also be tested annually to ensure the team in place understands its practical operation. 3. The FU Superintendent and the Manager of Finance and Administration should pursue their objective in reviewing the current operating structure to be more efficient and cost effective, specifically regarding the Finance and Administration functions. Consideration should be given to engaging outside professional services in the event that internal resources cannot handle such a task. 4. The Manager of Finance and Administration should require the use of pre-numbered tickets for Dawson City Historical Sites sales and ensure a daily reconciliation is made between the number of tickets sold and revenue collected. These additional detection controls would significantly reduce the risk of fraud without unduly increasing the required level of effort.
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Parks Canada Agency Audit of Key Financial Processes Yukon Field Unit 5. The Manager of Finance and Administration and the Contract and Material Management Officer must ensure that appropriate sole source justification be documented and retained in the contract file. Sole source contracts should only occur when the appropriate criteria are met. 6. The FU Superintendent and the Manager of Finance and Administration should review the list of Amex cardholders and cancel the cards that are not being utilized regularly to avoid potential misusage. 7. The Manager of Finance and Administration should have all airfare purchases made on the Designated Responsibility Centre Travel Card (DRCTC). That way any reimbursement made regarding a ticket purchased would be credited directly to that card since it was the one used for the original purchase. A reconciliation between the airfare claimed and the airfare charged to DRCTC would highlight any irregularities. 8. The FU Superintendent and the Manager of Finance and Administration should review the list of acquisition cardholders and cancel the cards that are not being utilized regularly. Purchasing using the acquisition cards should be done by one or two individuals in each group instead of everyone having their own card. 9. The Manager of Finance and Administration should reinforce the acquisition card policy through communication with all locations, especially to the finance teams handling their payment. Better awareness of the policy should reduce inappropriate purchasing practices. 10. The Manager of Finance and Administration should ensure that assets under $10K, including computers and peripherals, are inventoried periodically (i.e. annually). This will also assist any future needs assessment and identify if assets are being misappropriated.
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Audit of Key Financial Processes Yukon Field Unit
Parks Canada Agency 1. BACKGROUND Parks Canada Agency (PCA) has a mandate to protect and present nationally significant examples of Canada’s natural and cultural heritage, and to foster public understanding, appreciation and enjoyment in ways that ensure the ecological and commemorative integrity of these places for present and future generations. PCA is conducting a series of cyclical audits of key financial, administrative and management practices for Field Units, Service Centers and the National Office. Field Units are groupings of national parks, national historic sites and national marine conservation areas that are usually in proximity of one another, allowing them to share management and administrative resources. The Agency has thirty- two Field Units. PCA has four service centers, located in Halifax, Quebec City, Cornwall/Ottawa and Winnipeg, with smaller branches in Calgary and Vancouver, which support the organization in a variety of professional and technical disciplines. As part of its annual audit plan, the audit of the Yukon Field Unit (YFU) was performed in March 2005. The audit focused on compliance with Treasury Board Secretariat (TBS) and PCA policies and practices. 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 YFU are adequate to ensure compliance to TBS and PCA policies and practices. The scope of this assignment covered the following areas:
9Management Control Framework (MCF), 9Revenues, 9C ,gnitcartno 9Payments to Suppliers,
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Parks Canada Agency Audit of Key Financial Processes Yukon Field Unit 9Expenditures for Travel, 9Acquisition Cards, and 9Inventory system. The period from April 2004 to February 2005 was covered by this audit. 3. METHODOLOGY The audit included a visit to YFU during the period of March 14 to 18, 2005 and comprised the following activities:
¾interviews with YFU management and personnel responsible for all the areas being reviewed; ¾review of relevant documentation provided by Parks Canada National Office and YFU, including the YFU Business Plan for 2004-2005, YFU delegated signing authorities chart, policies and guidelines that deal with suppliers, acquisition cards, travel, contracting and revenues, as well as various reports prepared by the financial group of the Field Unit; and ¾on-site examination of a sample of transactions in each of the key areas covered by the assignment.
The Yukon Field Unit (YFU) includes seven Protected Heritage Areas (PHA) under its ownership, two national parks (Kluane National Park and Vuntut National Park of Canada) and five national historic sites (Chilkoot Trail National Historic Site, S.S. Klondike National Historic Site, Dawson Historical Complex National Historic Site, S.S. Keno National Historic Site and Dredge No.4 National Historic Site of Canada). The YFU PHA are scattered throughout the Yukon Territory and grouped into three sub-units, located in Whitehorse, Dawson and Haines Junctions. These are managed by three Site Superintendents reporting to the Field Unit Superintendent. Due to the scattered locations of the PHA they require significant time and resources for their operations. As a result of the remote location of the YFU, it receives a low volume of visitors every year.
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Parks Canada Agency Audit of Key Financial Processes Yukon Field Unit At the conclusion of the fieldwork, a debriefing of our preliminary observations was made to the YFU Superintendent and the Manager of Finance and Administration. 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 Improvements that could jeopardize the accomplishment of Needed program/operational objectives. Immediate management actions need to be taken to address the control deficiencies noted. Moderate Some controls are in place and functioning. However, major Improvements issues were noted and need to be addressed. These issues Needed could impact on the achievement or not of program/operational objectives. 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. Controlled Controls are functioning as intended and no additional actions are necessary at this time.
4. 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. 5. CONCLUSION Overall, we found that the systems and controls in place for the key management processes reviewed provide a very good level of assurance and that due diligence is exercised over expenditures and revenue. However, we have noted a few improvements which could be made and have outlined in section 6 our observations and recommendations for consideration by the Field Unit Superintendent and Manager of Finance and Administration.
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Parks Canada Agency Audit of Key Financial Processes Yukon Field Unit 6. OBSERVATIONS AND RECOMMENDATIONS 6.1. Management Control Framework (MCF)
Moderate Some controls are in place and functioning. However, major Improvements issues were noted and need to be addressed. These issues Needed could impact on the achievement or not of program/operational objectives. Observations Our audit of the MCF over financial management covers four areas: planning, guidelines/policies/procedures, staffing and security. The YFU prepares a five year business plan that includes an annual operating plan with a detailed budget. The financial components of these plans are prepared by the Manager of Finance and Administration and reviewed by the management team composed of the Field Unit Superintendent, the three Site Superintendents and the other managers. The results are compared to the budget on a monthly basis and reviewed at the management team meetings. The YFU practices are consistent with TBS and PCA policies and guidelines. The Manager of Finance and Administration, the teams in the various locations and the Contract and Material Management Officer are aware of the policies and guidelines and have them documented in each of the sub-unit offices for reference. Our audit revealed only minor weaknesses in the application of these policies and guidelines, however a few inconsistencies were noted in the revenue and travel sections of this report. Generally, finance policies and practices training is provided every 2-3 years to all staff and specific training is addressed when needed formally and informally. The YFU has had a history of low permanent staff turnover and the finance team has not changed in the past few years. Roles and responsibilities of the staff are clearly defined and performance reviews are performed regularly. Some job descriptions on file are older but almost half of them have now been classified according to the National standards following an initiative that is being completed by a National Committee. When reviewing
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