HomeMy WebLinkAboutCS 40-08
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REPORT TO
EXECUTIVE COMMITTEE
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Report Number: CS 40-08
Date: October 14, 2008
From:
Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject:
Internal Controls Review - Clerks Division, Animal Services Section
Recommendation:
That Report CS 40-08 of the Director, Corporate Services & Treasurer regarding the
results of the Internal Controls Review - Clerks Division, Animal Services Section be
received for information.
Executive Summary: The 2006 - 2008 Internal Audit Work Plan included a review
of the Clerk's Division, Animal Services Section. Attached is a copy of Internal Audit's
final report, including an Executive Summary, which provides the results of the review.
Clerks Division management's response, in the form of an action plan, together with the
report recommendations, can be found in Appendix 1 of Internal Audit's report.
Financial Implications: There are no financial implications associated with this
report.
Sustainability Implications: There are no sustainability implications associated with
this report.
Background: In early 2006, the position of Manager, Internal Audit & Control was
filled. With the creation of this new position, the City is able to have a dedicated
Internal Audit function to evaluate the adequacy and effectiveness of internal controls
across the City.
On October 3, 2006 the Committee approved the Internal Audit Charter which is an
important document in the foundation of an Internal Audit function. The Charter sets
out the mission, objective and scope, accountability, authority, responsibilities and
standards of practice of the Internal Audit activity. According to the Charter, the Internal
Audit Work Plan is to be submitted to the Committee for its review and audit results are
to be reported to senior management and the Committee.
On November 12, 2007 the Executive Committee reviewed and approved the 2008 -
2010 Internal Audit Work Plan. The plan provided a summary and brief description of
Report CS 40-08
October 14, 2008
Subject:
Internal Controls Review - Clerks Division,
Animal Services Section
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the audits to be undertaken for the next three years. An updated 2009 - 2011 Work
Plan will be presented to the Executive Committee in the fall of 2008.
A report on Internal Audit's results to date was also received for information at the
November 12, 2007 Executive Committee meeting. This report summarized the
Internal Audit Results since the position of Manager, Internal Audit & Control was
created and filled. During this period a number of investigations and audits were
completed, which included a cash receipts and revenues review of the Pickering
Recreation Complex.
The 2006 - 2008 Internal Audit Work Plan included a review of the Clerk's Division,
Animal Services Section. The review has been completed and the final report is
attached for your information. Clerks Division management are in general agreement
with the review observations and conclusions. Their response, in the form of an action
plan, together with the report recommendations, can be found in Appendix 1 of Internal
Audit's report.
Internal Audit is currently performing a revenue controls review of the Clerks Division,
the results of which will be reported to senior management and the Executive
Committee. Once this review is completed, Internal Audit will commence its audit of the
Operations Centre in accordance with the 2008-2010 Work Plan.
Attachments:
1. Internal Controls Review - Clerks Division, Animal Services Section
Prepared By:
Approved/Endorsed By:
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~mes Halsall
Manager, Internal Audit & Control
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Gillis A. Paterson
Director, Corporate Services & Treasurer
Copy: Chief Administrative Officer
Recommended for the consideration
of Pickering Cit Council ,\
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CITY OF PICKERING
Clerks Division
Animal Services Section
Internal Controls Review
Final Report
Internal Audit
Corporate Services Department
June 2008
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# L. TO REPORT #..tL4 ,) - o:{
TABLE OF CONTENTS
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EXECUTIVE SUMMARY
BACKGROUND
SCOPE AND OBJECTIVES
REVIEW RESULTS
1.0 Policy and Procedures
2.0 Revenue Completeness
3.0 Animal Services Shelter
3.1 Segregation of Duties
3.2 Numerical Continuity of Receipts
3.3 Physical Security at the Shelter
4.0 Animals Licences (New & Renewals)
4.1 Proof of Sterilization
5.0 External Animal Licence Sales
5.1 Written Confirmation of Agreements
5.2 Issuance and Reconciliation of Tag Numbers
6.0 PetSmart Adoptions
6.1 Pick-up of Cash Receipts
7.0 Tags and Forms Inventory
7.1 Tags Record Keeping
7.2 Physical Security of the Inventory at the Civic Centre
8.0 Employee Time & Attendance Management
8.1 Supervisory Approval of T&A Information
8.2 Advising the Timekeeper of Employee Absences
9.0 Budget Control
9.1 Monitoring of Revenues and Expenditures
10.0 Final Comments
APPENDIX 1 - REVIEW RECOMMENDATIONS AND MANAGEMENT
ACTION PLAN
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EXECUTIVE SUMMARY
The Clerks Division, Animal Services Section was created in January 2006 to
provide animal related services to the residents of Pickering. The objective of
Internal Audit's review was to assess whether the controls established by
management were adequately designed with respect to Animal Services
revenues and expenditures, employee time and attendance, monitoring of
budgets and inventory of animal licence tags.
The Supervisor, Animal Services has made progress in writing and
implementing financial and operational procedures for the newly created Animal
Services Section. Internal Audit reviewed several of these procedures and our
comments have been incorporated in the procedures where Clerks Division
management was in agreement. The City Clerk is in the process of reviewing
these procedures which are expected to be finalized and distributed to staff in
July 2008.
Clerk's Division management have implemented a number of controls to reduce
the risks inherent with collecting revenues; however, controls at the animal
shelter could be improved to compensate for the poor segregation of duties. In
particular, the animal shelter's weekly Revenue Reports and supporting
documentation should be independently reviewed and the numerical continuity
of the manual receipts periodically checked. In addition, our review
recommended that Animal Services revenues recorded in the general ledger be
reconciled on a monthly basis with the related services provided.
Prior to 2008, a contractor sold dog and cat licences door-to-door on behalf of
the City. Licences are also sold at several veterinarian clinics. Our review
noted some good control practices regarding the remittances of cash receipts
from these external parties. Controls in this area could be enhanced by
implementing written agreements between the City and the veterinarian clinics
to ensure responsibilities and expectations are clearly communicated. Also, the
tag numbers given to external parties should be reconciled to the licences
submitted and the tags returned at the end of the year. This would provide
assurance that cash remittances from the sale of licences are complete.
The review found that the controls over the tracking and safeguarding of dog
and cat licence tags need to be strengthened to ensure all tags are accounted
for. In particular, perpetual inventory records should be maintained to track the
movement of tags which can be used to determine the quantity of tags that
should be on hand at any time. Physical counts of the tags should also be
completed periodically and reconciled to the perpetual records. The review also
noted that the physical security of the tags kept at the Civic Centre could be
improved to properly safeguard them from loss or theft.
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The control designs over employee time and attendance were satisfactory.
However, the Supervisor, Animal Services did not always review and approve
the time and attendance reports for Animal Services staff prior to their
submission to Payroll. In all cases, the reports were approved by the City Clerk
or Deputy Clerk. Also, procedures for advising the Division's timekeeper of
employee absences or approved leaves in writing were not consistently
followed.
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Animal Services Section's actual revenues and expenditures in 2007 were
within its budget. Although these year-end financial results are positive, Clerks
Division procedures for monitoring the budget could be more formalized. In
particular, any errors or budget variances - potential or actual - that are
indentified during management's review should be recorded, as well as their
causes and follow-up or corrective actions taken.
Lastly, Internal Audit concluded that controls are adequate over expenditures to
provide management with reasonable assurance. that Animal Services
expenditures are authorized, well supported and comply with policies and
procedures.
Clerks Division management are in general agreement with the review
observations and conclusions. Their response, in the form of an action plan,
together with the report recommendations, can be found in Appendix I of the
report.
In closing, I would like to thank Clerks Division management and staff for their
cooperation and patience during the review.
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(:6ames Halsall
Manager, Internal Audit & Control
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BACKGROUND
The 2006 - 2008 Internal Audit Work Plan included a review of the Clerk's
Division, Animal SeNices Section.
Pound-keeper and animal control seNices were provided by the Town of Whitby
for the municipalities of Ajax, Pickering and Whitby on a cost share basis. This
agreement was terminated on January 1, 2006 and the Clerks Division, Animal
SeNices Section was created to provide animal related seNices to the residents
of Pickering.
The primary objective of the Animal Services Section is to provide the
community with the highest level of animal care achievable in the most cost
effective manner. This new service is responsible for reuniting lost pets back
with their families, yearly cat and dog licensing, pet adoption and fostering,
enforcing the City's animal related by-laws and educating the public on the
importance of being a responsible pet owner.
All functions of the Animal SeNices Section are handled in house with the
exception of shelter seNices. An agreement for these seNices was arranged
with the Municipality of Clarington; however, it was on a temporary basis and
ended on June 3, 2007. The City has since signed an agreement with Country
Kennels located at 15 Reesor Road, Toronto, to provide animal shelter and care
seNices until December 31,2011.
In 2007, total expenditures for the Animal SeNices Section were budgeted at
over $300,000 and total revenues were budgeted at $110,000. The section is
comprised of four staff; a supeNisor, two full time employees and one temporary
employee.
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SCOPE AND OBJECTIVES
The objectives of this review were to determine whether controls were
adequately designed to provide reasonable assurance that:
licence, impoundment, adoption, service and other fees were properly
charged and collected;
cash receipts (including cheques, debit and credit card transactions) were
recorded, promptly deposited and safeguarded from loss or theft;
revenues were accurately summarized and recorded on Revenue Reports;
employee attendance, leave and overtime policies and procedures were
being complied with;
budgets were regularly monitored and significant variances identified and
investigated;
expenditures were authorized, well supported and complied with policies
and procedures; and
cat and dog licence tags inventory was adequately safeguarded against
loss or theft.
The final objective was to identify opportunities to improve financial controls,
processes and efficiencies.
A risk based approach was used to perform the review and the methodology
included interviews with relevant staff, site visits, reviews of documents and
reports, performing walkthroughs, evaluation of management control practices
and any other procedures deemed appropriate.
The scope of the review was limited to evaluating the adequacy of the design of
internal controls established by management of the Clerks Division. Detailed
testing of the effectiveness of the controls was not performed as this level of
assurance was not required by the City's senior management. The review
examined the controls that operated during the period January 1, 2007 to
December 31, 2007. Internal Audit staff completed their fieldwork and issued
the draft report in March 2008 and management's action plan was received in
June 2008.
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REVIEW RESULTS
1.0 POLICY AND PROCEDURES
The SupeNisor, Animal SeNices has made progress in writing and
implementing financial and operational procedures for the newly created Animal
Services Section. These procedures were either already implemented or were
in the process of being written during our review and covered such areas as:
payments at the animal shelter;
security measures at the animal shelter;
money handling at PetS mart;
licencing of dogs and cats;
handling payments on the road; and
after hours response.
Policies and procedures are an important part of the control environment and
help ensure that risks are adequately managed and control objectives are
achieved. Internal Audit reviewed the above procedures and provided its
comments to the SupeNisor, Animal SeNices. Our comments have been
incorporated in the procedures where Clerks Division management was in
agreement.
The City Clerk is in the process of reviewing the Animal Service procedures;
however, the City is revising its standards and formats for policies and
procedures. Once this is completed, the City Clerk needs to formally approve
(e.g., signed off and dated) the procedures and distribute them to staff.
2.0 REVENUE COMPLETENESS
Annual revenues for the Animal Services Section are budgeted at over
$100,000 and include dog and cat licence fees, adoption fees, impoundment
fees, owner surrender fees and fines. Most of the revenues budgeted (over
85%) are from the sale of dog and cat licences.
Good internal control requires that a system be in place to reconcile revenues
received with related services provided. Although the SupeNisor, Animal
SeNices provided monthly reports on the section's revenues and activities, the
revenues recorded in the general ledger were not reconciled to the related
seNices provided (licences issued/renewed, animals adopted, impounded and
surrendered, etc.)
Reconciling revenues received with the related seNices provided on a monthly
basis would provide management with greater assurance that all revenues are
received and properly recorded. Ideally, the individual completing the
reconciliation should be someone whose duties are segregated from producing
the monthly activity reports.
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3.0 ANIMAL SERVICES SHELTER
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In July 2007, the City entered into an agreement with Country Kennels to
provide animal shelter and care services until December 31, 2011. The facility
used for the animal shelter is shared between the City and Country Kennels.
Animal Services staff collects approximately $1,000 each month in fees (12
transactions a month) at the shelter.
Cash receipts are an organization's most liquid assets and therefore subject to
the greatest risk of misuse. Strong controls for handling these assets are
necessary to ensure proper recording of revenues and timely deposit of funds.
To help achieve these control objectives, Clerks Division management have
implemented the following controls at the animal shelter;
acceptable payment methods are by cheque, debit or credit card (no bank
notes or coin accepted);
manual receipts are used to record all payments received;
a Revenue Report is completed to summarize and record the revenues
collected;
regular balancing of the week's activities to the cheques received and debit
and credit card transactions processed; and
installation of a safe to secure animal licence tags, receipts and animal
licence applications.
These controls help reduce the risks inherent with collecting revenues; however,
controls could be stronger in the areas of segregation of duties, monitoring of
refunds and ensuring the numerical continuity of receipts.
3.1 Segregation of Duties
Segregation of duties is one of the key concepts of internal control and is the
most difficult and sometimes most costly one to achieve. It involves the
separation of the functions of authorization, asset custody, record keeping and
reconciliation, and is used to ensure that errors or irregularities are prevented or
detected on a timely basis. In those instances where duties cannot be fully
segregated, management is required to establish mitigating or compensating
controls.
Internal Audit reviewed the cash handling responsibilities at the animal shelter
and observed that the same staff performed the following incompatible duties:
collected payments;
completed the Revenue Report;
balanced the cash receipts (cheques, debit and credit card transactions) to
the weekly activities; and
prepared the bank deposit.
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Based on current staffing levels, it would not be practical to segregate the
incompatible duties at the animal shelter. Management's decision to only
accept cheques, debit or credit cards (no bank notes or coin accepted) mitigates
this poor segregation of duties to a certain extent. An independent review of the
animal shelter's Revenue Report and supporting documentation should also be
implemented. A "second set of eyes" would reduce the risk of errors, omissions
or irregularities regarding the collection and recording of revenues.
In addition, refund procedures require that a cheque requisition be completed by
the Supervisor, Animal Services and approved by the City Clerk or Deputy
Clerk. However, staff collecting payments at the animal shelter could also
potentially issue refunds by debit or credit card without management's approval.
An independent review of the animal shelter's Revenue Reports and supporting
documentation would detect the issuance of any unauthorized or inappropriate
refunds.
3.2 Numerical Continuity of Receipts
The animal shelter uses pre-numbered manual receipts to record all payments
collected and a copy of the receipt is provided to the payer. Control in this area
would be enhanced by (1) retaining any voided receipts and (2) periodically
verifying the numerical continuity of the receipts (issued and blank) by a person
independent of the payment collection process. This control would enable
management to detect any gaps in the numerical continuity of the forms and
thereby reduce the risk of misappropriation.
3.3 Physical Security at the Animal Shelter
A small office at the animal shelter is designated for Animal Services staff use.
The doors to the office are not locked when City staff are offsite increasing the
risk of unauthorized access. Due to the building's configuration, the doors
. cannot be locked without denying the owner of Country Kennels access to the
rest of the facility. Management has addressed this risk by having no cash
(bank notes and currency) on site and installing a safe to secure any items of
value (animal licence tags, receipts and animal licence application forms).
Internal Audit visited the animal shelter in early January 2008 and observed that
a working supply of receipts (blank) and licence application forms were kept in a
file folder on top of a desk in the Animal Services office. An issued licence with
copies of receipts attached was kept in another file folder on the desk. These
documents were not locked up when staff were off-site.
Not properly securing these documents increases the risk of their loss, theft or
misuse. Animal Services staff had arranged for a safe to be installed, but had
not yet implemented its use. When this was brought to City Clerk's attention,
corrective action was taken immediately.
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4.0 ANIMAL LICENCES (NEW & RENEWALS)
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The annual dog and cat licence fees are as follows:
Sterilized $20
Unsterilized $40
Microchip - Sterilized $15
Microchip - Unsterilized $35
In 2007, Animal SeNices Section collected over $95,000 from the sale of dog
arid cat licences. With respect to licence renewals, letters were sent out in late
2006 and early 2007, which created a large volume of payments to process. In
most cases, the payments were received in the mail. The scope of this review
did not include the Clerks Division mail opening procedures; however, these
procedures will be reviewed in the upcoming revenue audit of the Clerks
Division.
4.1 Proof of Sterilization
Although proof of sterilization must be provided to qualify for the discount, this
requirement was not enforced. In most cases, owners indicated their cat and/or
dog was sterilized when completing their 2007 licence application forms. As
noted above, there is a significant reduction in the licence fee (50%) if an animal
is sterilized.
Without requiring proof of sterilization, there is a risk that owners may falsely
claim that their animal is sterilized to pay the lower fee. It is recommended that
this requirement be enforced on a go forward basis for the sale of all new
licences and renewals.
5.0 EXTERNAL ANIMAL LICENCE SALES
Dog and cat licences are available for sale at the Civic Centre, veterinarian
clinics and the animal shelter. Prior to 2008, a contractor also sold licences
door-to-door on behalf of the City. Licence sales (gross) from the door-to-door
contractor and veterinarian clinics totaled over $50,000 during the year.
Our review noted some good control practices regarding external sales of
animal licences. For example, the SupeNisor, Animal SeNices reviewed the
door-to-door contractor's remittances of cash receipts to ensure the correct
amount was submitted. Remittances from the veterinarian clinics were also
reviewed by the supeNisor for accuracy. Areas where controls could be
strengthened are noted in 5.1 and 5.2.
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5.1 Written Confirmation of Agreements
Although a letter was sent to veterinarian clinics in 2007 advising them of any
new licensing processes and procedures, there were no written agreements
between the City and the clinics regarding the sale or renewal of animal
licences. Written confirmation of the agreements makes good business sense
and reduces the risk of disputes which may occur regarding responsibilities or
terms of the agreement.
The City Solicitor recommends that a simple letter be written confirming the
agreement between the City and the veterinarian clinics that could be sent each
year when the licence tags are issued. All terms of the agreement should be
clearly stated in the letter, such as when proceeds from the sale or renewal of
animal licences are to be remitted to the City.
5.2 Issuance and Reconciliation of Tag Numbers
Upon payment of the animal licence fee, the owner is provided with a tag which
is to be securely fixed on the animal to which it is issued at all times. The tags
are pre-numbered and the tag number is written on the licence application form
for tracking purposes.
The Supervisor, Animal Services kept a record of the tag numbers given to the
door-to-door contractor and veterinarian clinics; however, only the door-to-door
contractor was required to sign for the tags upon receipt. Also, Animal Services
staff were not required to sign for tags transferred to the animal shelter or
PetSmart. As a result, accountability for the tags was not clearly established.
Commencing in 2008, procedures now require City staff and veterinarian clinics
staff to sign for all tags received or transferred.
To ensure good internal control, the tag numbers given to external parties
should also be reconciled to the licences submitted and tags returned at the end
of the year. This control was not performed by Animal Services staff, in part due
to the large number of tags given to the door-to-door contractor.
In its place, a report was produced in 2007 from the Amanda application which
identified any licencing gaps from the prior year (i.e., tag numbers with no
information recorded in the system). The Supervisor, Animal Services reviewed
this report and investigated any gaps to determine the reason(s) for them.
However, the documentation was not retained to verify that this review was
performed and that all tags had been accounted for.
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6.0 PETSMART ADOPTIONS
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In late 2007, Animal Services partnered with PetSmart to reduce the number of
homeless pets. At no cost to the City, PetSmart provides retail space at its store
in Pickering where cats can be placed for adoption. This partnership has been
very successful as it has increased the visibility of the cats available for
adoption. In October alone, a total of 12 cats were adopted at PetSmart and
$980 was collected in adoption fees for the City.
A number of recommendations were made during our review to improve
procedures related to the handling of PetSmart cash receipts as noted below.
6.1 Pick-up of Cash Receipts
PetSmart staff collect the adoption fees on behalf of the City. The cash
collected from each adoption is placed in a sealed envelope and is kept in the
store safe until the cash receipts are picked up by Animal Services staff. A more
secure alternative to picking up the cash receipts would be for PetSmart to
directly remit a cheque to the City.
According to the Supervisor, Animal Services, PetSmart's adoption partnership
processes are standardized across all its stores and any changes would require
the approval of its head office. If remitting a cheque to the City is not possible,
Clerks Division management needs to ensure procedures for handling PetS mart
cash receipts are adequate.
Internal Audit reviewed the written procedures for handling PetSmart cash
receipts and made some suggestions to improve them. For example, a record
should be made of the number of envelopes picked up, expected cash receipts
and the date the funds were picked up. This record should be signed off by a
PetS mart employee and Animal Services staff to acknowledge the transfer of
funds. Although Animal Services staff opened each sealed envelope in the
presence of a Financial Services cashier, a record should also be made of the
amount of cash counted, which is then verified and signed off by the cashier.
The Supervisor, Animal Services has incorporated Internal Audit's
recommendations into the PetSmart money handling procedures which were
implemented in March 2008.
7.0 TAGS AND FORMS INVENTORY
In 2007, the Animal Services Section purchased a total of 5,000 animal licence
tags for the year. The tags supply, manual receipts (blank) and animal licence
application forms are kept at the Civic Centre. The review found that controls
over the tracking and safeguarding of animal licence tags need to be
strengthened to ensure that all tags are accounted for as noted in 7.1.
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7.1 Tags Record Keeping
Strong internal control requires that perpetual inventory records be maintained
for the tags. Also, the City's Financial Control Policy (27.02) requires that
accurate records of inventory be kept. Perpetual inventory is a method for
tracking and knowing the quantity of tags that should be on hand at any time by
tracking their movement (e.g., receipt, transfers, issues and returns). Physical
counts of the tags should also be completed periodically and reconciled to the
perpetual records.
Although the Supervisor, Animal Services recorded the tags given to the door-
to-door contractor and veterinarian clinics, a perpetual inventory system was not
maintained. Physical counts of the tags were also not performed. As a result,
management could not determine or provide Internal Audit with the amount of
tags that should be on hand or fully account for all tags received, transferred,
issued and returned in 2007.
7.2 Physical Security of the Inventory at the Civic Centre
A small working supply of tags, licence applications and manual receipts (blank)
was kept at the Clerk Division's front counter. After business hours, the working
supply was locked up in a three drawer cabinet. However, the key to this
cabinet was placed in another cabinet, which was not locked after business
hours. As a result, access to the working supply was not effectively restricted.
If practical, the key to the cabinet should be assigned to an individual who is
personally responsible for it and any spare keys adequately secured. This
individual's backup may also require their own key to the cabinet. Keys should
not be left or hidden in unsecured desk drawers, cabinets, etc. overnight.
The main supply of animal tags and licence application forms was kept in a
cabinet outside the Supervisor, Animal Services' office. This cabinet was not
locked during or after business hours, increasing the risk of loss, theft or misuse
of the tags and/or forms. This was contrary to the City's Financial Control Policy
(27.01) which requires that City inventories be physically secured. In particular,
access to the animal tags needs to be restricted to properly safeguard them.
8.0 EMPLOYEE TIME AND ATTENDANCE MANAGEMENT
Employee time and attendance (T&A) information is recorded by the Clerks
Division timekeeper in the E-Time system for each pay period. The hours
recorded for Animal Services staff are based on their work schedule approved
by management. The Supervisor, Animal Services is responsible for advising
the timekeeper of any changes to an employee's work schedule and of any
employee absences.
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The review found that procedures for approving T&A reports and advising the
timekeeper of employee absences in writing were not consistently applied.
8.1 Supervisory Approval of T&A Information
A key control to ensure that employee T&A reports and related supporting
documentation is correct is for management to review and approve this
information. This control should be performed by the individual, normally the
immediate supervisor, most knowledgeable of the time worked and absences of
the employees involved.
At the end of each pay period, the Clerks Division timekeeper prints a T&A
report for the Animal Services Section. This report is to be reviewed and
approved by the Supervisor, Animal Services and the City Clerk. In 2007, only 6
out of the 12, or 50%, of the employee T&A reports sampled were approved by
the supervisor. Three out of the twenty-four, or 13%, of the Overtime
Authorization Reports sampled were also not initialed by the supervisor. In all
these cases, the reports were approved by the City Clerk or Deputy Clerk.
In situations where the Supervisor, Animal Services is not present to approve
employee T&A or Overtime Authorization reports by the payroll due date, it is
recommended that the timekeeper return a copy of the report(s) to the
supervisor for her review and signature. Any corrections necessary can be
coordinated with the timekeeper and made in the next pay period.
8.2 Advising the Timekeeper of Employee Absences
It is a good practice to advise timekeepers in writing of all approved employee
leave requests and any other absences. This provides greater assurance that
employee T&A reports accurately reflect time worked, leave taken and any other
absences. This documentation also provides evidence of management's
approval of any leave requests before the leave was taken.
According to the employee T&A reports, the Supervisor, Animal Services was
sick for a total of three days in 2007. These absences were not reported to the
timekeeper in writing. The supervisor had also taken several leave days
(vacation or time-in-lieu) between August and early November 2007. Although
the T&A reports reflected these approved leaves, the timekeeper was not
advised of them in writing. Written notification (leave form or e-mail) should be
provided to the timekeeper in all cases of employee absences.
9.0 BUDGET CONTROL
Animal Services Section's actual revenues and expenditures in 2007 were
within its budget. Although these year-end financial results are positive, Clerks
Division procedures for monitoring the budget could be more formalized as
noted in 9.1.
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9.1 Monitoring of Revenues and Expenditures
Management's review of financial data or reports is an important control to
ensure any errors or budget variances - potential or actual - are identified,
investigated and corrective action taken where necessary.
Both the City Clerk and Supervisor, Animal Services said they reviewed the
Animal Services revenues and expenditures recorded in the general ledger
(detail and/or summary level) and compared them to the budget on a regular
basis. However, there was insufficient documentation to verify the frequency
and extent of their reviews.
The documentation could be improved by printing and retaining the reports from
the general ledger and recording the results of management's review (what
concerns, errors and budget variances - potential or actual - were identified,
their causes, follow-up or corrective action(s) taken, etc.).
10.0 FINAL COMMENTS
In closing, Clerks Division management are in general agreement with the
review observations and conclusions. Their response, in the form of an action
plan, together with the report recommendations, can be found in Appendix I of
the report.
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CITY OF PICKERING
Clerks Division
Animal Services Section
Internal Controls Review
Appendix 1
INTERNAL AUDIT RECOMMENDATIONS AND MANAGEMENT ACTION
PLAN
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Clerks Division
Internal Audit Recommendations and Management Action Plan
Recommendations Action Planned or Taken Assigned To Target Date
1.0 Policy and Procedures
Once the City has revised its standards and Compile listing of all policies and Supervisor, Completed
formats for policies and procedures, the City procedures for approval by City Clerk. Animal
Clerk finalize and approve (e.g., sign and Servicesl
date) the Animal Services written Coordinator,
procedures. Records and
Elections
Complete draft of policies and forward Supervisor, June 15/08
to Records and Elections Coordinator Animal
for formatting. Services
Submit on a weekly basis, draft Coordinator, ONGOI NG
formatted policies for approval by City Records and
Clerk. Elections
Finalization and sign off of policies. Coordinator, June 30108
Records and
Electionsl
City Clerk
Distribution and staff sign off of Coordinator, July 15/08
policies. Records and
Electionsl
Supervisor,
Animal
Services
Animal Services Section Revenues and Expenditures Internal Control Review
C()
Clerks Division
Internal Audit Recommendations and Management Action Plan
Recommendations Action Planned or Taken Assigned To Target Date
2.0 Revenue Completeness
The City Clerk require staff to perform a Due to the time lag between recording
monthly reconciliation of Animal Services payments in the G/L and entering
revenues received with related services animal licences in the AMANDA
provided. database, reconciling animal services
revenues to related services cannot
Ideally, the individual completing the be easily done on a monthly basis.
reconciliation should be someone whose
duties are segregated from producing the Instead, the reconciliations will be Supervisor, June 30 and
monthly activity reports. performed twice a year at which time Animal Dec 31
greater priority/resources will be given Services/
to ensuring the data entry of animal City Clerk
licences in the AMANDA database is
current. The reconciliations are to be
submitted to the City Clerk for
approval.
Implementation of the new animal
management software should also
improve the timeliness of the data
entry of licences and renewals.
Animal Services Section Revenues and Expenditures Internal Control Review
~
Clerks Division
Internal Audit Recommendations and Management Action Plan
Recommendations Action Planned or Taken Assigned To Target Date
3.0 Animal Services Shelter
3.1 Segregation of Duties
The City Clerk or Deputy Clerk;
(a) perform an independent review of the Reviews to be completed and Deputy Clerk Completed
animal shelter's Revenue Reports and verified/signed off by the Deputy
supporting documentation; and Clerk.
(b) ensure that this control is included in Draft procedure in conjunction with Refer to 1.0 Refer to 1.0
the written procedures for the animal Item 1.0.
shelter.
3.2 Numerical Continuity of Receipts
The City Clerk:
(a) require that the numerical continuity of Quarterly audit of the receipts to be Coordinator, June 30/08
receipts at the animal shelter be completed by the Records and Records and
verified periodically by a person Elections Coordinator, and submitted Elections
independent of the payment collection to City Clerk.
process; and
(b) ensure that this control is included in Draft procedure in conjunction with Refer to 1.0 Refer to 1.0
the written procedures for the animal Item 1.0.
shelter.
Animal Services Section Revenues and Expenditures Internal Control Review
C)
Clerks Division
Internal Audit Recommendations and Management Action Plan
Recommendations Action Planned or Taken Assigned To Target Date
4.0 Animal Licences (New & Renewals)
4.1 Proof of Sterilization
The City Clerk:
(a) direct staff to require proof of Include in policy and procedure Supervisor, June 30/08
sterilization from pet owners to qualify documentation and send out via email Animal
for the discount for all new animal to staff. Staff will be directed to ask Services
licences or renewals; and for proof of sterilization from pet
owners to receive the discount. When
proof is not provided, the pet owner
will be required to confirm that their
pet is sterilized.
(b) ensure that this requirement is included Draft procedure in conjunction with Coordinator, June 30/08
in the written procedures for licencing Item 1.0. Records and
of dogs and cats. Elections
5.0 External Animal Licence Sales
5.1 Written Confirmation of Agreements
The City Clerk prepare a simple letter Draft and send out letter, including Supervisor, Completed
confirming the agreement between the City review of the letter by the City Animal
and the veterinarian clinics that is provided to Solicitor. Services
the clinics when the tags are issued. All
terms of the agreement should be clearly
stated in the letter.
Animal Services Section Revenues and Expenditures Internal Control Review
--'>
Clerks Division
Internal Audit Recommendations and Management Action Plan
Recommendations Action Planned or Taken Assigned To Target Date
5.2 Issuance and Reconciliation of Tag
Numbers
The City Clerk:
(a) require that staff reconcile the tags Reconciliations to be completed and Supervisor, December 31
given to veterinarian clinics to the signed off by the City Clerk at the end Animal
licences submitted and tags returned; of each calendar year when unsold Services/City
and tags are returned to the City Clerk
(b) ensure that this control is included in Draft procedure in conjunction with Supervisor, June 30/08
the written procedures for licencing Item 1.0. Animal
dogs and cats. Services/
Coordinator,
Records and
Elections
6.0 PetS mart Adoptions
6.1 Pick-up of Cash Receipts
If directly remitting a cheque to the City is not Email to be sent out by Supervisor, Supervisor, Completed
possible, the City Clerk ensure that staff have Animal Services on procedure to be Animal
implemented the PetSmart money handling followed. Procedures were Services
procedures. implemented in March 2008.
Animal Services Section Revenues and Expenditures Internal Control Review
,. "
I '-.J
Clerks Division
Internal Audit Recommendations and Management Action Plan
Recommendations Action Planned or Taken Assigned To Target Date
7.0 Ta~s and Forms Inventory
7.1 Tags Record Keeping
The City Clerk:
(a) require that the Supervisor, Animal Inventory form to be developed for Supervisor, Completed
Services maintain perpetual inventory recording tags. Animal
records of tags. Physical counts Services
should also be completed periodically
and reconciled to the perpetual Physical counts to be completed on a Coordinator, June 30/08
records; and quarterly basis by the Records and Records and
Elections Coordinator, and signed off Elections
(b) ensure that this control is included in by the City Clerk.
written procedures for the tracking and
safeguarding of animal tags.
Animal Services Section Revenues and Expenditures Internal Control Review
( ,
'-N
Clerks Division
Internal Audit Recommendations and Management Action Plan
Recommendations Action Planned or Taken Assigned To Target Date
7.2 Physical Security of the Inventory at the
Civic Centre
The City Clerk:
(a) ensure that staff are not leaving or Key to be kept in the Deputy Clerk's Clerk, Completed
hiding keys in unsecured desk drawers, office which is locked each evening. Administration
cabinets, etc. overnight. If practical,
the key to the cabinet where the Backup key to be given to City Clerk Supervisor, Completed
working supply is kept overnight should for inclusion with the Master set. Animal
be assigned to an individual (and Services
possibly a second key to their backup)
who is personally responsible for it;
(b) require that access to the main supply Tags are kept in the office of the Deputy Clerk Completed
of tags be restricted (e.g., cabinet Deputy Clerk which is locked each
locked) during and after business; and evening.
(c) ensure that physical access controls Draft procedure in conjunction with Supervisor, June 30108
are included in written procedures for Item 1.0. Animal
the tracking and safeguarding of animal Servicesl
tags. Coordinator,
Records and
Elections
Animal Services Section Revenues and Expenditures Internal Control Review
...(:;>.
Clerks Division
Internal Audit Recommendations and Management Action Plan
Recommendations Action Planned or Taken Assigned To Target Date
8.0 Employee Time and Attendance (T&A)
-- Management
8.1 Supervisory Approval of T&A Information
The City Clerk ensure that the Supervisor, Meeting to be held with Committee Supervisor, Completed
Animal Services reviews and approves all Coordinator to review approval Animal
T&A and Overtime Authorization reports for process to be followed. Services/
the section. Deputy Clerk
In situations where the Supervisor, Animal City Clerk to only sign off on sheets Supervisor, Completed
Services is not present to approve the T&A that are signed by the Supervisor, Animal
or Overtime Authorization reports by the Animal Services. Services/
payroll due date, the timekeeper should Committee
return a copy of the report(s) to the Coordinator
supervisor for her review and signature. Any
corrections necessary can be coordinated
with the timekeeper and made in the next
pay period.
8.2 Advising the Timekeeper of Employee
Absences
The City Clerk ensure that the timekeeper is Emails to be sent to the timekeeper by Mg mt. staff Completed
advised in writing of all approved employee designated supervisor.
leave requests and any other absences.
Draft procedure in conjunction with Coordinator, June 30/08
Item 1.0. Records and
Elections
Animal Services Section Revenues and Expenditures Internal Control Review
0,
Clerks Division
Internal Audit Recommendations and Management Action Plan
Recommendations Action Planned or Taken Assigned To Target Date
9.0 Budget Control
9.1 Monitoring of Revenues and Expenditures
The City Clerk formalize management's Legal Services Assistant to print out Legal Services Completed
review of revenues and expenditures G/L reports on a monthly basis for Assistant
recorded in the general ledger. review by Supervisor, Animal
Services, formal sign off and
Specifically, the general ledger reports (detail comments as necessary and forward
and/or summary level) should be printed and to City Clerk.
retained and management's review better Committee June 15/08
documented (what concerns, errors and Review stamp to be ordered for Coordinator
budget variances - potential or actual - were official documentation.
identified, their causes, follow-up or
corrective action(s) taken, etc.).
Animal Services Section Revenues and Expenditures Internal Control Review
0,