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
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A
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A
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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.