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Home My WebLink AboutCAO-20-002 - 2nd Quarter Audit Status ReportREPORT TO:Audit Committee DATE OF MEETING:June 22, 2020 SUBMITTED BY:Corina Tasker, Internal Auditor, (519)741-2200, ext. 7361 PREPARED BY:Corina Tasker, Internal Auditor, (519)741-2200, ext. 7361 WARD (S) INVOLVED:All DATE OF REPORT:June 2, 2020 REPORT NO.:CAO-20-002 SUBJECT:2ndQuarter Audit Status Report ___________________________________________________________________________ RECOMMENDATION: No recommendation required. The following information is being provided as an update and assurance on internal audit matters, in accordance with the Audit Committee Terms of Reference. BACKGROUND: The following report provides a summary of the Internal Audit assurance services completed during the period of January to March2020.Due to COVID-19 and re-deployment of internal audit stafffrom March to June, audit activity was temporarily paused. As t plans are implemented and regular business resumes, audit activity will also resume.A summary of resulting changes to the 2020 internal audit work plan are includedin this report.The table below shows the auditcontained in this report, which was completed prior to March.In addition, one confidential investigation was completed. Division / TopicScope ProcurementStatus report Assurance work is in progress on the following audits: Overtime and On-call Pay Consulting work is in progress on the following reviews: Development Services process improvement facilitation for the site plan process ***This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994for assistance. 6 - 1 REPORT: 2020 Work Plan Adjustments Due to COVID-19 and the re-deployment of internal audit staff to assist with pandemic response and recovery planning, the 2020 internal audit plan hadbeen paused, and a number of planned activities have been impacted. The following adjustmentshave been made to the 2020 work plan. Postponethe Facility Rentals audit until 2021 or beyond since it relies on collecting real time data related to facility booking staff effort. Since community centres and facility rentals are closed at this time itis not possible to continue with this review at this time. Addcontrols audits of any new processes which have emerged as a result of COVID- 19 that involve the safeguarding of assets of any kind.A survey will be sent to all divisions to collect information on processes to include in this scope. Remove rental waterheater review. This review is still taking place butis being led by the manager of the area, with support from service improvement staff. The review is intended to critically examine current processes and be a catalyst for process improvements, rather than a value for money audit. Therefore,internal audit services are not required at this time. All other audits will continue as planned in the second half of 2020. 1.ProcurementStatus Report Date of original audit: November 3, 2014 Completed: March 3, 2020 Overview: The objective of the original audit was toexamine the services provided, processes, resourcing and culture within the Purchasing section of the Supply Services division (Stores was out of scope). The review assessed the positive aspects which should continue, as well as possible areas to improve efficiency and effectiveness, mitigate risks, and improve the culture of the division. The analysis found that the Purchasing section staff are knowledgeable and possess a great deal of purchasing expertise. The purchasing processes are seen to be open, fair and transparent and are applied consistently. There are multiple levels of controls in place to protect the City from fraud and theft. Any non-compliance whichwas found was isolated, small dollars and did not represent a fraud risk to the corporation. There were many small improvements suggested by either staff or customers to help improve the efficiency or effectiveness of their processes. There were threemain themes, however, 6 - 2 which were critical for the section to address in order to be successful, provide value, and avoid losing talented staff. The top three themes were: 1.The lack of a divisional mandate and goals 2.The negative culture within the section 3.The lack of business partner focus Audit Objective: All services which have undergone an audit in the past are subject to a status update, not sooner than one year following the original audit. The purpose of status updates are to hold staff accountable for addressing the audit findings and to identify any areas that have not seen significant progress. Status Definitions: Complete = the recommendation has been fully implemented. In progress= implementation has begun. Not started= No work has begun yet but will in the future. Not required= the recommendation either does not require any action, or it is no longer relevant and no work will be done to implement it. Recommendation Status: StatusNumber of recommendations Number of original recommendations57 Number of recommendations complete48 Number of recommendations in progress4 Number of recommendations not started1 Number of recommendations not required4 Most of the recommendations have been completed. There are four recommendations which are no longer relevant given the long time which has elapsed since the original audit. Only one recommendation has not been started yet which related to creating a checklist for users to assist with creating the recommendations in staff reports for Council. Work was done immediately following the original audit to create a compelling vision statement, establish team focus and improve employee culture within the division,all of which resulted in a number of positive outcomes for the team.However, as a result of turnover within employee culture has deteriorated.The most recent employee culture survey results were not positive. A new management team has recently been established within the division and there has also been turnover at a staff level primarily through attrition.In light of these changes, an opportunity exists to place renewed focus on aligning around a shared vision and building a strong team culture. 6 - 3 Other work was done to update the Purchasing By-law and to improve clarity around purchasing processes. Process improvements are ongoing. Conclusion: Nofurther follow-up is required for this audit, although this topic will remain on the list for periodic compliance testing. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: livery of core service. FINANCIAL IMPLICATIONS: There are no financial implications related to this report. COMMUNITY ENGAGEMENT: INFORM council / committee meeting. ACKNOWLEDGED BY: Dan Chapman, CAO 6 - 4 June 22, 2020 Second Quarter Audit Committee 6 - 5 002 - 20 - CAO 2ND QUARTER AUDIT STATUS REPORT 6 - 6 19, the following revisions to the - Revised Work Plan Postpone Facility Rentals reviewAdd controls audits of new processesRemove Rental Water Heater review Due to COVIDwork plan have been made:••• 6 - 7 ll Pay Ca - Summary Procurement status updateDevelopment Services ReviewOvertime and On n progress: Completed:I 6 - 8 Procurement Develop division mandate and goalsImprove employee cultureImprove business partner approach ––– Open, fair, transparent procurement processesSound controls and no evidence of fraudKnowledgeable staffRecommendations to Original Objective:To assess Procurement division (excluding Stores) services, processes, resources and culture.Findings / Recommendations:•••• 6 - 9 Number of recommendations 48414 revisit mandate, improving culture, : Council report writing checklist for users Status of Recommendations In progress: strategic spend analysis, exploring purchasing strategies Not started Status CompleteIn progressNot startedNot required 6 - 10 aw l - Benefits up required. - Updated the Purchasing ByImproved clarity around purchasing processesProcess improvements are ongoing o further follow •••NCompliance topics will be periodically tested. 6 - 11