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Home My WebLink About2011-03-05AUDIT COMMITTEE MINUTES MARCH 5, 2012 CITY OF KITCHENER The Audit Committee met this date commencing at 1:00 p.m. Present: Mayor C. Zehr - Chair Councillors S. Davey, Y. Fernandes, K. Galloway, J. Gazzola, B. Ioannidis, P. Singh, F. Etherington, D. Glenn-Graham, and B. Vrbanovic. Staff: D. Chapman, Deputy CAO/Finance & Corporate Svcs P. Houston, CAO/Infrastructure Svcs M. Seiling, Acting Deputy CAO/Community services L. Johnston, Director, Communications/Marketing L. MacDonald, Director, Legal Services T. Turner, Manager, Employee Strategies C. Tasker, Internal Auditor R. Gosse Director, Legislated Services & City Clerk J. Billett, Committee Administrator 2011 YEAR IN REVIEW – AUDIT STATUS REPORT 1. The Committee considered Finance and Corporate Services Department report FCS-12-025 dated February 14, 2012 which provides a summary of activities undertaken by the Internal Auditor during the 2011 calendar year in comparison to the Audit Committee’s approved work plan. Councillor D. Glenn-Graham questioned if the Internal Auditor has ever reviewed Council expenses. Ms. Tasker advised she had not but if directed, could do so. Mayor C. Zehr noted that the Committee’s 2012 work plan had already been approved and suggested that any additions should be considered in the context of the approved work plan. He asked that Ms. Tasker bring back a report to the next Audit Committee meeting on how this request could be accommodated, either within the 2012 work plan or in years 2013-2014. ST 1QUARTER AUDIT STATUS REPORT 2. The Committee considered Finance and Corporate Services Department report FCS-12-024 dated February 13, 2012, providing a summary of the Internal Audit activities completed during the period of December 2011 to March 2012. Ms. C. Tasker presented the findings of audits conducted for the Legislated Services Division, Infrastructure Stimulus Funding (ISF) projects and Hiring Transparency. Councillor D. Glenn-Graham questioned if development of a Divisional strategy for Legislated Services is currently in progress and if the Committee would see the results when completed. Mr. R. Gosse advised that development of a Divisional Strategy has not yet begun but staff have considered an approach. He pointed out that he is currently participating in development of a Departmental strategy that is looking at themes across the varied and unique divisions. He stated that he hopes to take what is learned from the Departmental process and apply it to the Divisional strategy which also encompasses varied and unique sections. Mr. Gosse anticipated a start to the Divisional strategy within the next two months, with completion of the strategy to follow within approximately 6 months time. Councillor J. Gazzola questioned the reasons outside agencies chose not to provide comments relative to the Licensing section. Ms. Tasker advised that those asked for comment are not persons coming in to apply for a license in general but rather were 5 agencies that work directly with Licensing staff and she did not know their reasons for choosing not to participate. Mr. R. Gosse added that external feedback is received through comment cards available at the front counter for those coming into the office for licenses or any other reasons and a significant number is received each year. All comments received are reviewed to gage how well staff is doing in respect to customer service and any need for improvement is addressed. In response to Councillor Gazzola, Ms. Tasker advised that if desired she could review the comment cards. Councillor Gazzola requested clarification of the ratio of Managers to reporting staff for the Division. Ms. C. Tasker stated that in her opinion the ratio is not top heavy given the distinct nature of work among the sections, expressing the view it was not possible to have one manager for all sections because each have distinct functions. Mr. Gosse confirmed that the 3 business units are distinct from one another with duties not easily interchangeable as all require a different knowledge base and skills set. He noted that at one AUDIT COMMITTEE MINUTES MARCH 5, 2012 - 2 - CITY OF KITCHENER ST 1QUARTER AUDIT STATUS REPORT (CONT’D) 2. time the Office of the City Clerk (OCC) was managed by a Deputy Clerk and 2 supervisory positions, and when the Deputy Clerk left the City, the Deputy Clerk position was eliminated and the office is now co-managed by 2 supervisory positions. Mr. Gosse advised that it is intended in the near term to revert back to one manager and eliminate the 2 supervisory positions. Mr. D. Chapman confirmed that there is opportunity in the short term to look at reducing 2 supervisory positions to one. Councillor S. Davey questioned if the decrease in 2 frontline FTEs is permanent. Ms. Tasker confirmed they are, advising that in OCC when the Province took over birth registrations the position responsible for this function was made redundant; and in Licensing, the section was able to reduce by one staff at time of transfer of an employee to another Division because of telephone responsibilities having been assumed by the Corporate Contact Centre leaving room for reassignment of tasks. Ms. Tasker added that at the time of a recent retirement in OCC one frontline position became vacant and a decision was made to leave it vacant to determine if frontline staffing could be reduced by one more; however, with the impending maternity leaves that position is now being filled as there is a need for continuity. Ms. Tasker further confirmed that reductions in staffing were achieved through internal management and not as directed by Council. Councillor B. Ioannidis inquired if a rating system is used so that a comparison can be made in the follow-up audit as to what progress, if any, has been made. Ms. Tasker advised that a rating system is not used but rather the follow-up audit will be based on the number of recommendations completed, in progress or not started to determine how the Division has improved, where efficiencies have been gained and what remains outstanding. Ms. Tasker advised that a response from the Director is due within 3 months to indicate steps to be taken to act on the audit recommendations and a follow-up audit will be conducted in approximately 1 ½ years time. In regard to the issue of billing errors relative to the ISF Projects audit, Mayor C. Zehr questioned if the problem of errors relates to interim billings only, wherein the total project costs still came in at what was originally budgeted. Ms. Tasker confirmed this was the case. Councillor Y. Fernandes referred to the concerns raised in the audit in regard to paying consultants to administer contracts yet there are still billing errors and questioned if this is unique to the ISF projects or a common occurrence. Ms. Tasker advised that the City regularly retains consultants to administer contracts and in the case of ISF projects, it is believed that the complexity of these projects led to more errors than normal occurring. She added that staff were asked if project administration could be done internally and while it could, it would mean less projects would be completed in a year as it would take away time from doing the actual work. Councillor Fernandes questioned who becomes responsible to pay over-expenditures if the costs estimates are too low. Ms. Tasker advised that there is a process in place to obtain Council approval for any over-expenditure at a set percentage over the budgeted amount. Mr. D. Chapman clarified that the billing referred to is not from the City to other parties and is not about recovering costs; rather in this context it refers to billing by the contractor to the City for the work they are doing. He noted that the project consultant certifies claims before they are sent to the City and the City’s Project Manager further scrutinizes the billing for errors, and at the end of the project reconciliation is made of all payments. Mr. Chapman advised that this audit stems more from a frustration in the number of errors seen related to ISF projects. Councillor Fernandes questioned if the City was able to reconcile the differences and Ms. Tasker confirmed they had. Ms. P. Houston further clarified that in order to receive the ISF funding the City was required to use a project consultant. Councillor F. Etherington requested clarification as to how the “employment of relatives” policy is handled if revisions to the policy create a problem of conflict between existing familial employees that did not previously exist, questioning if there is provision for grandfathering. Mr. D. Chapman advised that when changes are implemented there is some provision for grandfathering and where an issue arises there is protocol in place to manage such situations. Councillor Etherington questioned that if the City wanted to hire a person related to an existing AUDIT COMMITTEE MINUTES MARCH 5, 2012 - 3 - CITY OF KITCHENER ST 1QUARTER AUDIT STATUS REPORT (CONT’D) 2. employee because they were the best candidate, does the policy make allowance for such situations. Ms. P. Houston advised that the City did have such a situation and is the position to which the protocol relates. She stated that the position was a difficult one to obtain appropriate recruits for and the hire was approved by Council. Mayor C. Zehr added that this particular situation has ceased to exist. Councillor Fernandes questioned if changes will be made in the recruiting process wherein there will no longer be only one person interviewing. Ms. Tasker confirmed that through training it is proposed that all persons responsible for hiring be made aware that 2 or more are required to be involved, not only in the interview process, but in the screening of applications as well. Mr. Chapman added that these issues will be addressed as part of the training and staff will need objective criteria and a scoring mechanism on which to base hiring decisions. He added that staff will have to be able to explain why a person was not hired in addition to documenting support of a hiring and this should serve to improve objectivity of the hiring process. Councillor Fernandes questioned how amendments to the “employee related” policy are effected. Mr. D. Chapman advised that policy changes are approved by Council and in this case, staff will review the findings of the audit and report back on all of the recommended changes to the policy for Council’s consideration and approval. Councillor Fernandes inquired if once wording of the policy has been changed if more situations of conflict between employee relationships would arise. Ms. Tasker advised that the audit sample was based on employees living at the same address which does not allow determination of what the relationship is within the household. She expressed the view that changing the wording will not change the audit results. Ms. Tasker further noted that the intent of the changes proposed is to avoid situations where an employee would supervise or be supervised by a relative or be in position of influence over a relative. She suggested that once reference to “Departments” and “Divisions” is removed there is likely to be less instances of conflict situations. Ms. Tasker responded to further questions confirming that Kitchener fared favourably in comparison to other cities that were examined in respect to familial relationships; and job applications for the City do include a question asking an applicant to disclose any familial relationship to existing employees. On motion by Councillor B. Ioannidis - it was resolved: “That staff be directed to bring forward any proposed changes to Human Resources Policy II-110 (Employment of Relatives of Staff Members and Elected Officials), resulting from review of the audit recommendations outlined in Finance and Corporate Services Department report FCS-12-025.” ADJOURNMENT 3. This meeting adjourned at 2:30 p.m. J. Billett, AMCT Committee Administrator