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Internal Audit and Evaluation Documents

Final Report
November 2006

Prepared by:
PARAGON Review and Consulting Inc.

Report tabled and approved by the A&E Committee

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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 Northern New Brunswick Field Unit (NNBFU) 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 at the NNBFU are adequate to ensure 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; Payments to Suppliers; High Risk Valuable Small Items; and, Financial Coding. The period from April 1, 2006 to September 30, 2006 was covered in this audit.

The audit methodology included a review of relevant background documentation, interviews with NNBFU personnel and transaction testing in key financial process areas. The NNBFU was visited during the period October 23, to October 27, 2006.

In our opinion, sufficient audit work has been performed and the necessary evidence has been gathered to support the conclusions contained in this report.

Overall, we found that due diligence is being exercised in the management processes at the NNBFU over Revenue, Contracting, Use of Acquisition Cards, Payments to Suppliers, Expenditures for Travel, and Financial Coding and that processes and controls in place for these areas are adequate to mitigate the risk of non-compliance to TBS and PCA policies. For Safeguarding of High Risk Valuable Small Items we found that the due diligence exercised in management processes over this area should be strengthened and that processes and controls in place for this area is weak in mitigating the risk of non-compliance to TBS and PCA policies.

Audit Reporting Rating Summary:

Ref

Management Process

Rating

6.1

Management Control Framework

Blue – Minor Improvements Needed

6.2

Revenue

Blue – Minor Improvements Needed

6.3

Contracting

Blue – Minor Improvements Needed

6.4

Acquisition Cards

Blue – Minor Improvements Needed

6.5

Travel Expenditures

Yellow - Moderate Improvements Needed

6.6

Payments to Suppliers

Yellow - Moderate Improvements Needed

6.7

Safeguarding of High Risk Valuable Small Items

Orange – Significant Improvements Needed

6.8

Financial Coding

Green – Controlled

We have identified opportunities to strengthen processes and controls in the key financial process areas examined to increase the level of compliance to TBS and PCA policies. We have outlined below our recommendations for consideration by the NNBFU Superintendent and Manager, Finance and Administration:

  1. The Field Unit Superintendent should ensure that controls are in place to ensure that the Finance and Administration Manager doesn't exercise the section 34 authority and the section 33 authority on the same transaction to respect a proper segregation of duties.

  2. Back up tapes should be safely stored at the offsite storage location and action should be taken to improve the security of the server room and its contents.

  3. Segregation of duties related to the deposit of funds, recording of receipts and reconciliation of revenue recorded to deposited amounts should be segregated.

  4. Monitoring on contracting activities should be performed to strengthen compliance, reduce related budgetary risks, and enhance value for money on funds spent.

  5. The Field Unit Superintendent should require authorized NNBFU staff to initiate contracts with a value of $1000 or less using Local Purchase Order Authorization Forms for goods and Professional Service Contracts for services.

  6. The roles and responsibilities of the acquisition card coordinator should be documented and strengthened to include the monitoring of the use of the cards through review of the Bank of Montreal reports, which are available online.

  7. An Acknowledgement of Responsibilities and Obligations Form, is signed by both the staff member and the Responsibility Centre Manager upon the issuance of an acquisition card to a staff member.

  8. Acquisition card procedures should be developed and monitoring activities should be strengthened to minimize the risk of:

    • Purchases being made using another individuals card;
    • Cardholders not providing supporting invoice documentation; and,
    • Ineligible purchases.

  9. All travel should be authorized prior to departure and all travel claims should include supporting justification documents before payment is released.

  10. Travel claims of the Field Unit Superintendent should be signed S.34 by the Director General Eastern Canada.

  11. Financial commitments should be entered into SAP1 and contract terms should be appropriately documented upon contract initiation.

  12. As a best practice, the NNBFU should consider doing a physical count to update its inventory lists in order to have accurate information to input into the new system when implemented.

1 The names SAP and STAR are used equally in this report to designate the financial system.


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