HomeMy WebLinkAboutCS 52-07
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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
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Gillis A. Paterson
Director, Corporate Services & Treasurer
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Copy: Chief Administrative Officer
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