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HomeMy WebLinkAboutCS 52-07 CiuJ 0# REPORT TO EXECUTIVE COMMITTEE Report Number: CS 52-07 Date: Novembl9r 12, 2007 From: Gillis A. Paterson Director, Corporate Se,rvices & Treasurer Subject: Summary of Internal Audit Hesults to Date Recommendation: That Report CS 52-07 of the Director, Corporate Services & Treasurer regarding summary of internal audit results to date be received for information. Executive Summary: This report summarizes the Internal Audit results over the past 21 months since the position ojr Manager, Internal Audit & Control was created and filled. During this period several investigations and audits were completed and the results reported to senior management. In general, management's actions in response to Internal Audit's recommendations are either fully or partially (in progress) completed. Financial Implications: There are no financial implications associated with this report. Sustainability Implications: with this report. There are no sustainability implications associated Background: In early 2006, the position of Manager, Internal Audit & Control was filled. With the creation of this new position, the City is now able to have a dedicated internal audit function to evaluate the adequacy and effectiveness of internal controls across the City. The Manager, Internal Audit & Control, with the assistance of the Audit Analyst, has completed a number of investigations and audits. A summary of the audit results to date is provided for your information. An audit of the Clerk's Division, Animal Services Section is also currently underway. In addition, the Manager, Internal Audit & Control continues to provide advice and assistance to the departments, including Corporate Services, in developing policies and procedures and implementing Internal Audit recommendations. Report CS 52-07 November 12,2007 Subject: Summary of Internal Audit Results to Date Page 2 61 Summary Internal Audit Results To Date East Shore Community Centre - Seniors' Activity Centre Theft On March 7, 2006, a theft at the Seniors' Activity Centre was reported to City staff. The purpose of Internal Audit's investigation was to determine, if possible, how the theft occurred and to make recommendations to improve the physical security at the Seniors' Activity Centre and mitigate the risk of future losses. Since there was no forced entry or video surveillance cameras, Internal Audit was unable to determine who the thief was or how the individua/(s) gained access to the Seniors' Centre office. Internal Audit made several recommendations to improve the security at the Seniors' Centre and East Shore Community Centre which were implemented by City management. Actions taken included reviewing security responsibilities and procedures with the South Pickering Seniors Club executive and facility security staff, changing the exterior and interior locks and alarm codes and restricting the number of keys issued to the executive members of the South Pickering Seniors Club. Break-In and Theft - Wellness Centre Spa, Pickerinq Recreation Complex On the evening of Wednesday, April 19, 2006, a break-in and theft occurred at the Wellness Centre Spa, which is located on the upper level of the Pickering Recreation Complex. The purpose of Internal Audit's investigation was to review the facts and, if necessary, make recommendations to improve the physical security at the facility and the Wellness Centre Spa. Durham Regional Police also conducted its own investigation and a suspect was subsequently charged for the break-in and theft. As a result of the Internal Audit's investigation, City management increased the signage of video surveillance at the facility to deter future break-ins, reinforced security responsibilities and procedures with all facility staff and arranged for a safe to be used by Wellness Centre Spa staff to safeguard any cash. Petty Cash and Chanqe Floats City-Wide Audit In late 2005 and early 2006, Corporate Services Department's Audit Analyst performed a city-wide audit of petty cash and change floats. Facilities visited included the Pickering Recreation Complex, Don Beer Arena, Dunbarton Indoor Pool, East Shore Community Centre, Pickering Village Museum and the Pickering Public Library (all branches). The primary objective of the audit was to verify the accuracy of the records pertaining to petty cash and change floats and to ensure these funds were adequately safeguarded. During the audit, a number of observations were also made regarding the collection and handling of cash. Report CS 52-07 November 12, 2007 Subject: 62 Summary of Internal Audit Hesults to Date Page 3 Internal audit identified a number of minor discrepancies between petty cash and change float records and actual cash. To ensure that funds are maintained at their issued and authorized amount at all times, the audit recommended that management staff verify the funds on a quarterly basis. Several other recommendations were also made to improve the accountability and physical security of the various funds. City management has since implemented these recommendations. During the audit, several control weaknesses were identified regarding the Pickering Public Library's cash collection and handling procedures. Library management has addressed many of Internal Audit's concerns at the Central Library by installing a cash register and safe, reducing the number of cash floats, depositing cash receipts intact and increasing the frequency of the bank deposits. Pickerinq Recreation Complex Cash Receipts and Revenues Audit In August 2007, Internal Audit completed its audit of the Pickering Recreation Complex. City management is in full agreement with the report recommendations and is in the process of implementing their action plan. In January 2009, Internal Audit will be following up on the status of management's action plan. The audit focused on assessing the controls at the Recreation Complex related to the receiving, handling, safeguarding and depositing of cash receipts and related recording of revenues. This is a high risk area as annual revenues from the facility exceed $3.5 million, and involve many programs and a large number of staff. To reduce the risks inherent with cash handling, City management has implemented a number of important controls at the Rec:reation Complex. These controls addressed many of the key cash handling risks; however, the audit identified several additional opportunities where controls needed to be strengthened. In particular, segregation of duties could be improved in the areas of cash handling and accounts receivable. Strong separation of duties greatly reduces the risk of errors or fraud going undetected. If duties cannot be fully segregated, management needs to establish adequate mitigating or compensating controls to reduce the risks. To ensure that proper cash handling procedures are performed, the audit recommended that regular supervisory spot check procedures be performed. Written procedures were also recommended in the areas of cash handling, collection and write off of accounts receivable, processing of refunds and customer account adjustments. A variety of documents are kE~pt at the Pickering Recreation Complex, which are financial in nature or contain personal information. Although management have taken steps to protect this information, controls could be stronger in this area. In particular, the audit recommended that a document retention schedule be developed and that proper control of keys to desks and filing cabinets be exercised by staff at all times. Report CS 52-07 November 12, 2007 Subject: Summary of Internal Audit Results to Date Page 4 6 3 In closing, the investigations and audits performed by Internal Audit to date have provided senior management with important information on the adequacy and effectiveness of the City's internal controls. This in turn has enabled senior management to take corrective action(s) where necessary. Attachments: None Prepared By: Approved I Endorsed By: ~17~ ames Halsall Manager, Internal Audit & Control ~_..,... ~_,~~~;V~'-"h Gillis A. Paterson Director, Corporate Services & Treasurer JH/vw Copy: Chief Administrative Officer //