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HomeMy WebLinkAboutCS 53-07 REPORT TO EXECUTIVE COMMITTEE Report Number: CS 53-07 Date: November 12, 2007 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: 2008 - 2010 Internal Audit Work Plan Recommendation: That Report CS 53-07 from the Director, Corporate Services & Treasurer re~larding the 2008 - 2010 Internal Audit Work Plan be approved. Executive Summary: This report details the 2008 - 2010 Internal Audit Work Plan which provides a summary and brief description of the Internal Audit projects to be undertaken for the next three years. Financial Implications: There are no financial implications associated with this report. Sustainability Implications: There am no sustainability implications associated with this report. Background: Purpose of an Internal Audit Work Plan The purpose of a formal Internal Audit Work Plan is to provide a disciplined approach to the identification of potential audiit projects. Formal planning has several benefits. It focuses scarce resources on priority or high-risk areas. It provides the basis for involvement of senior management in the audit process. It ensures that all business units (and associated risks) are considered for audit attention. It serves as a standard against which to measure the performance of the Internal Audit function. Repod CS 59-07 November 12, 2007 Subject: 2008 - 2010 Internal Audit Work Plan Page 2 65 Furthermore, establishing a risk-based Internal Audit Work Plan to prioritize audits is considered a "best practice" within the audit profession and is specifically referred to in the standards promoted by the Institute of Internal Auditors. A multi-year plan is also recommended to ensure sufficient internal audit coverage. 2008 - 2010 Internal Audit Work Plan A risk assessment methodology, which included input from the Chief Administrative Officer and Director, Corporate Services and Treasurer, was used in selecting areas of the City for inclusion in the 2008 - 2010 Internal Audit Work Plan. Areas selected have a risk rating of either high or above average risk. Specifically, the Work Plan includes: - 2 high risk areas; and - 12 above average risk areas. Attachment 1 is a summary and brief description of the audit projects to be undertaken over the next three years. The scope and specific objectives of these projects will be determined during the planning stages of each audit. Areas excluded from the Work Plan due to lower risk ratings are listed in Attachment 2. In addition, add hoc and urgent requests may arise from meetings of the Executive Committee and senior City staff. The Work Plan provides for approximately 10 percent of available internal audit staff time to meet these requests. Although the Work Plan is a multi-year plan, the risk assessment and Work Plan will be updated annually as risks and management priorities may change. In the event that audit projects are completed earlier than expected, projects planned for 2009 will be moved forward to 2008. The audits are to be completed by the Manager, Internal Audit and Control with the assistance of an Audit Analyst. Risk Assessment Process It is not possible to audit all of the City's operations during a twelve-month period. Determining which areas to audit and allocating audit resources to those areas is fundamental to an effective audit process. In order to assess the relative importance of potential audit entities and to objectively develop the Internal Audit Work Plan, the Manager, Internal Audit & Control conducted a risk assessment of the City's departments and programs in 2007. The purpose of the risk assessment exercise is to ensure that all areas of the City are evaluated from an audit risk perspective using uniform criteria and also to prioritize potential audit projects. The risk assessment process begins by applying the following risk factors against each audit unit. Report CS 53-07 NovembE!r 12, 2007 Subject: 2008 - 2010 Internal Audit Work Plan Page 3 66 Financial Impact (expenditures, revenues) - Liquidity of Assets - Potential for Liabilities (penalties, litigation) - Political Exposure/Adverse Publicity - Complexity - Last Audited - Audit Requests (from CAO, senior management) In considering the risk assessment, thl9 risk factors were not evaluated equally as certain of them were viewed to be of more significance than others. Consequently, the process involved the determination of a specific weighting to each of the factors. The results of Internal Audit's City-Wide risk assessment are documented in Attachment 3. Attachments: 1. 2008 - 2010 Internal Audit Work Plan 2. Areas Not Included in the Internal Audit Work Plan 3. 2007 City-Wide Risk Analysis Prepared By: Approved I Endorsed By: ~7~ ~ames Halsall Manager, Internal Audit & Control ,~ Gillis A. Paterson Director, Corporate Services & Treasurer JH:vw Attachments Copy: Chief Administrative Officer Recommended for the consideration of Pickering City Colfficil ---------..". .--" tt_L TO REPORT#~-l>1 2008 - 2010 Internal Audit Work Plan (Attachment 1) 67 2008 INTERNAL AUDITS Operations & Emerqencv Services Department Operations Centre (Roads and Parks) . The audit will examine the adequacy of administrative and financial controls regarding the purchasing and inventory of roads and parks supplies, materials and equipment (over $1 million of materials is purchased annually). Cash handling procedures for services such as curb cutting and park permits will also be reviewed. The objective of this review is to ensure that these assets are properly protected and that the risk of loss is minimized. Operations Centre (Fleet Operations) . The audit will examine the adequacy of administrative and financial controls regarding the purchasing and inventory of garage supplies, parts and equipment. Processes and controls pertaining to the repair and maintenance of city owned vehicles will also be reviewed. Arenas (Recreation Complex and Don Beer) - The audit will assist management in determining the adequacy and effectiveness of cash handling and related revenue controls at the City's arenas (Recreation Complex and Don Beer) and, if necessary, make recommendations to improve controls. Pickering Village Museum. The audit will assist management in determining the effectiveness of cash handling and expenditure controls at the museum and, if necessary, make recommendations to improve controls. Museum expenditures are budgeted at over $400,000 with expected revenues of $141 ,000. Corporate Services Department Information Technology (IT) . As part of the annual financial statement audit, the external auditor reviews the City's computer processing environment and makes recommendations to senior management where controls need to be enhanced. Past audit recommendations have been made in the areas of logical access rights, Business Continuity and Disaster Recovery planning, IT documentation and change management procedures. The objective of this review will be to determine the status of IT management's actions in response to the external auditor's earlier recommendations. 2008 - 2010 Internal Audit Work Plan 68 (Attachment 1) 2009 INTERNAL AUDITS Operations & Emerqencv Services DHPartment Dunbarton Pool - The audit will assi:3t management in determining the adequacy and effectiveness of cash handling and related revenue controls at the Dunbarton Pool and, if necessary, make recommendations to improve controls. In 2007, over $130,000 in cash receipts are expected to be collected at the facility., Property Engineering - This section is responsible for implementing a si.gnificant portion of the City's capital budget (over $5 million). The audit will evaluate the management of capital projects and administration of construction contracts. Processes for controlling project costs, change orders, contract amendments, progress certificates and the release of Letters of Credit and holdbacks will be reviewed. Planninq & Development Department Planning Section - Over $170,000 ,in planning application fees (Zonin9 By-law amendments, Official Plan amendments, Site Plan Approvals, etc.) are budgeted. The audit will assist management in determining the adequacy and effectiveness of cash handling and related revenue controls regarding these planning application fees and, if necessary, m8lke recommendations to improve controls. Corporate Services Department Finance & Taxation - This section is responsible for the processing and managing of tax billings ($120 million annually), collections and tax adjustments. This audit will examine administrative and financial controls over the accuracy and completeness of tax billings, approval of refunds and the effectiveness of cash handling procedures. Supply & Services (City-Wide and Library) - The processes and controls for procuring goods and services will be reviewed to determine whether procedures are consistent, comply with the purchasing bylaw and policies and procedures, and promote fair and open competition. This review will address processes and procedures from the identifying the need for goods and services through selection of the vendor. 2008 - 2010 Internal Audit Work Plan "" .. -- ..- - (Attachment 1) 69 2010 INTERNAL AUDITS Operations & Emerqencv Services Department Community Centres/Seniors Activity Centre - The audit will assist management in determining the effectiveness of cash handling and related revenue controls at the City's community centres and Seniors Activity Centre and, if necessary, make recommendations to improve controls. Fire Prevention and Suppression - The audit will examine the adequacy of administrative and financial controls over expenditures, revenues and inventories. Total expenditures for Fire Services Division are budgeted at over $10 million while total revenues are expected to be over $250,000. The audit scope will also include an assessment of the fire inspection prevention program. Planninq & Development Department Building Services - The audit will include a review of the administrative, financial and operational procedures with respect to the issuance, collection and reporting of building permit fees ($650,000 budgeted) and the carrying out of inspections. The process for collecting and reporting development charges will also be reviewed. Development Control - This section is responsible for implementing the City's development related capital budget (over $1.5 million budgeted). The audit will evaluate the management of capital projects and administration of construction contracts. Processes for controlling project costs, change orders, contract amendments, progress certificates and the release of Letters of Credit and hold backs will be reviewed. Corporate Services Department Payroll (City-Wide and Library) - Payroll represents the single largest cost (approximately $25 million annually) for the City. The audit will determine whether proper controls are in place to ensure (1) wages and salaries paid are accurate and authorized (2) payroll cheques are not issued to fictitious or terminated employees (3) employees are only paid for hours worked and (4) changes to employee master files are complete, accurate and properly authorized. '~(l\rUMFf\'. ,_~ REPORT ~i..0?' Ii) Areas Not Includled in the Internal Audi'tW~rk Plan-'-' 70 (At~achment 2) The areas listed below are excluded from the Work Plan due to a lower risk rating. Low Risk Administration Department - Administrative Services Corporate Services Department - Print/Mailroom Corporate Services Department - Records Management Operations & Emergency Services - Administration Operations & Emergency Services - Culture & Recreation Administration Operations & Emergency Services - Sustainable Pickering Planning & Development - Heritage Pickering Moderate Risk City Council & Support Administration Department - CustomE~r Care Centre Administration Department - Employment Services & Administration Administration Department - Safety & Employee Development Administration Department - Offiice of Sustainability Administration Department - Le~lal Services Corporate Services Department - Clerk Administration Corporate Services Department - Accounting Services Operations & Emergency Services - Emergency Operation Control Centre Operations & Emergency Services - Storm Water Management Operations & Emergency Services - Environmental Services Operations & Emergency Services - Civic Complex Planning & Development - Administration, Information & Support Services Planning & Development - Committee of Adjustment The areas listed below are excluded from the Work Plan because they have had recent Internal Audit coverage (last 20 months). Pickering Recreation Complex/Progmms (completed) Animal Services Section (fieldwork stage) Clerks Division (planning stage) 1 PROGRAMICA TEGORY 2007 EXPEND Rating 2007 City-Wide Risk Analysis 2007 REVENUE Rating 2007 CAPITAL Rating LIQUIDITY POTENT ASSETS L1AB LAST MGMT COMPLEX SENSITIVITY AUDITED REQUEST (Attachment 3) TOTAL SCORE RISK LEVEL Relative Weights of Factors 15 20 5 5 10 10 15 5 15 100 City Council & Support Administration Department Administrative Services Customer Care Centre Employment Services & Adm. Safety & Employee Development Office of Sustainability Legal Services Total Corporate Services Department Finance & Taxation 872.916 462,593 246,592 612,195 107,537 746,965 262,200 2,438,082 3 2 2 3 2 3 2 22,000 500 22,500 o 70,000 o o o o + Total taxes receivable Accounting Services Payroll Supply & Services Information & Technlogy Clerk Administration Print/Mailroom Records Management By-Law Enforcement Animal Services Total 2,176,243 307,291 1,072,383 493,478 376,123 80,151 624,924 338,942 5,469,535 4 2,674,915 120,000,000 5 o o o o 466,360 2,000 4 5 5 4 2 2 73,700 100 o o 3 2 25,000 493,360 3 2 926,001 110,000 123,784,716 Operations & Emerqency Services Department Operations & Em. Services Admin Emergency Operation Control Centre Fire Supression Fire Prevention Property Engineering Operations Centre - Roads & Parks Operations Centre - Fleet Operations Environmental Services Storm Water Management Sustainable Pickering Sub Total (a) 356,036 163,067 10,317,467 1,926,557 8,466,582 811,253 134,500 22,175,462 2 2 5 5 4 5 3 2 o o 105,000 262,692 15,000 76,350 446,600 14,000 o 2 2 2 35,000 471,436 919,642 2 42,000 4,922,700 65,000 o o 460,000 50,000 6,046,136 o o o o o o o o o o o 2 o o o o 2 2 5 o 2 1 3 5 5 5 5 5 5 3 3 5 3 5 3 3 3 3 3 3 5 5 5 5 3 3 5 5 5 3 3 5 5 3 3 5 5 3 3 3 5 5 5 3 3 3 3 5 5 3 3 5 5 3 5 3 3 5 5 3 5 3 3 3 o 5 5 5 5 5 5 o o o o o o 5 o 5 5 5 3 3 5 5 o 5 5 5 o o o 5 5 5 5 5 5 5 5 5 5 5 5 o o o o 5 5 5 o o o 33 19 31 40 31 36 31 69 33 55 75 56 30 19 16 69 55 19 44 68 66 67 78 58 27 33 20 M L M M M M M A M A A A M L L A A '-J L M l W A' A A H A M ~', Mh L 1--) ~ w ~ V -.J 2007 City-Wide Risk Analysis (Attachment 3) 2007 2007 2007 LIQUIDITY POTENT LAST MGMT TOTAL RISK PROGRAM/CA TEGORY EXPEND Rating REVENUE Rating CAPITAL Rating ASSETS L1AB COMPLEX SENSITIVITY AUDITED REQUEST SCORE LEVEL Relative Weights of Factors 15 20 5 5 10 10 15 5 15 100 Operations & Emerqency Services Department Culture & Rec. Admin 982,824 3 0 0 1 1 1 1 5 0 22 -.J L Programs 2,054,244 4 1,647,032 4 5,000 1 5 3 3 5 1 0 62 tv A Recreation Complex 3,755,768 4 2,180,492 4 420,660 2 5 5 3 5 1 0 67 A Community Centres/Seniors Centre 854,689 3 153,600 2 211,500 2 3 3 1 3 3 5 57 A Junbarton Pool 329,644 2 131,971 2 89,000 '1 3 5 1 3 3 5 57 A Jon Beer Arena 979,051 3 967,500 3 163,000 2 5 5 1 3 3 5 67 A lAuseum 435,427 2 141.330 ~ 116,500 2 3 3 1 3 3 5 54 A "- Civic Complex 431,366 2 3,000 1 262,000 2 1 3 1 1 5 0 29 M Sub Total (b) 9,823,013 5,224,925 1,267,660 Total Op & Em Services 31,998,475 6,144,567 7,313,796 ~!anninq & Develooment Deoartment \dm, Information & Support Services 840,383 3 69,000 1 1 1 1 1 1 5 0 27 M ~Ianning 1,898,891 4 768,192 3 1 5 3 5 5 5 5 81 H 3uilding Services 954,799 3 650,000 3 - 1 5 5 3 5 5 0 63 A Jevelopment Control 533,901 3 101,500 2 1,641,400 4 3 3 5 3 5 0 54 A ~ommittee of Adjustment 9,630 1 0 0 1 3 1 3 5 0 26 M -1eritage Pickering 6,550 1 0 0 1 1 1 1 5 0 16 L Total 4,244,154 1,588,692 1,641,400 jbrary 4,374,057 4 321,607 2 186,750 2 3 3 3 3 3 0 49 M City Total 49,397,219 131,862,082 9,705,306 Score Risk Levels 0-25 L low 26-50 M moderate 51-75 A above avera,le 76-100 H high Cilq 0# REPORT TO EXECUTIVE COMMITTEE Report Number: CS 30-07 Date: November 12 , 2007 73 From: Gillis A. Paterson Director, Corporate Services & Treasurer Subject: Council Compensation Policy Recommendation: 1. That Report CS 30-07 of the Director, Corporate Services & Treasurer be received; 2. That the Council Compensation Policy, included as Attachment #1 to this report be approved and By-law No. 5992/02, as amended, be repealed; and, 3. That the appropriate officials of the City of Pickering be authorized to take the necessary actions to give effect thereto. Executive Summary: At the February 8, 9 and 19th Council Strategy Session, the Council Compensation Policy was reviewed and direction received by staff to update and/or change certain items of the policy. Further formatting changes were required in accordance with the City standards for Council approved policies and procedures. The draft policy was further circulated in May and October for comments from members of Council. Financial Implications: All financial implications for 2007 were in accordance with the 2007 Current and Capital budget as approved on April 2,2007. Sustainability Implications: This report and recommendation for policy revisions are relevant to the social lens of sustainability by addressing municipal compliance with legistlative requirements for an open, accountable government.