Loading...
HomeMy WebLinkAbout2012-09-17AUDIT COMMITTEE MINUTES SEPTEMBER 17, 2012 CITY OF KITCHENER The Audit Committee met this date commencing at 2:00 p. m. Present: Mayor C. Zehr -Chair Councillors S. Davey, F. Etherington, Y. Fernandes, K. Galloway, J. Gazzola, D. Glen- Graham, B. loannidis, Z. Janecki, P. Singh and B. Vrbanovic. Staff: J. Willmer, Chief Administrative Officer M. May, Deputy CAO/Community Services J. Witmer, Acting Deputy CAO/Infrastructure Services B. Johnson, Acting Deputy CAO/Finance & Corporate Services L. Gordon, Director, Supply Services C. Tasker, Internal Auditor J. Billett, Committee Administrator 1. 3~d QUARTER AUDIT STATUS REPORT The Committee considered Finance and Corporate Services Department report FCS-12-149 dated August 21, 2012 which provides a summary of the Internal Auditor's activities completed during the period of June 2012 to August 2012. Ms. C. Tasker presented the findings of a follow-up audit for the Purchasing Card Program and a capacity review of the Community Services Department Administration. Ms. C. Tasker responded to questions regarding the Purchasing Card Program, advising that a process is in place to track employee credit card usage, including consistent auditing of credit card statements and disciplinary measures for repeat offenders. Minor infractions have been found for such things as failing to retain a receipt of a purchase, having a purchase statement signed off by personnel not on the protocol list and split purchases to avoid accelerated steps in the Purchasing By-law. Cards primarily have a $3,000 limit per transaction with a monthly limit of $15,000 with statements signed off by authorized senior management based on a protocol list; and the protocol list requires updating as personnel changes occur. It was noted that this type of audit is typically conducted in an organization as the program presents risk if not handled properly and the intent is to ensure the City is running a best practice program. Ms. Tasker advised that the checks and balances lie in the need to have purchases signed off by an authorized senior management position, as well as, in review of the documentation by Financial Services staff when entering the data into the City's SAP program. Ms. B. Johnson added that there are also built-in restrictions in the credit cards themselves and financial statements are reviewed monthly, both of which act as additional controls over the program. Ms. C. Tasker agreed to provide Council with the list of 21 recommendations and explanations of how these were addressed relative to the Purchasing Card Program. In regard to the capacity review for Community Services Department Administration, Ms. Tasker clarified that initially it was thought that the vacant CLASS System Specialist role could wait to be filled pending the outcome of this review; however, it was found to be a critical role as it is the only position handling maintenance of the CLASS System and therefore had to be filled before start of the review. Ms. Tasker responded to questions, advising that the roles of the positions reviewed closely match the job descriptions with a few new duties added on in some cases. She explained that while there is no excess capacity at this time, with several pending retirements there is thought to be opportunity over time to combine roles to free up approximately 7 to 10 weeks of capacity. A question was raised as to whether or not the time freed could be used to fast track the CLASS system for Neighbourhood Associations and Ms. Tasker advised that it would largely depend on how roles are restructured but could be discussed with the Manager. Ms. Tasker also advised that as the CLASS System Specialist role is critical, staff will be investigating opportunity to obtain Help Desk support from Information Technology and/or train existing program users to assist with maintenance of the program in the absence of the incumbent. SERVICE REVIEW PRIORITIZATION FRAMEWORK The Committee considered Finance and Corporate Services Department report FCS-12-151 dated August 23, 2012, regarding a Service Review Prioritization Framework. The purpose of the framework is to consider all services at once and use several objective weighted factors to AUDIT COMMITTEE MINUTES SEPTEMBER 17, 2012 - 8 - CITY OF KITCHENER 2. SERVICE REVIEW PRIORITIZATION FRAMEWORK - (CONT'D prioritize each service relative to each other. The prioritized list will provide the basis for the order services are selected for review and be overlaid on staff capacity and availability to determine long range and annual work plans. Ms. Tasker advised that the Audit Committee is being asked to consider the factors and weights suggested for the service review framework which will be used by staff in ranking services. Councillor J. Gazzola questioned if the Internal Auditor at any time works with the External Auditor. Ms. Tasker advised that on occasion she is requested to assist the External Auditor with mapping out certain processes; however, the External Auditor's focus of work is quite different. Councillor Gazzola questioned what is considered to be the 5 highest risk services in the Corporation. Ms. Tasker advised that the intent of the service review framework is to determine a ranking of services, based on a series of 16 questions and the factors as weighted to achieve a total risk score. Ms. Tasker provided further clarification as to how the example calculation was derived using the factors and weighting as suggested by staff. Councillor Y. Fernandes raised concerns in not knowing the questions to be applied in the scoring process and Ms. Tasker agreed to provide same to all members of Council. Mayor C. Zehr requested clarification that the questions posed would be fact based, not subjective, as related to the areas of study. Ms. Tasker advised that all questions are to be objective and services will be ranked in the order of how they score. Councillor S. Davey questioned if projections of future staffing costs would be taken into account and Ms. Tasker advised that this is not included but is something that could be added if desired. Councillor Davey expressed the view that future staffing projections should be included as staff costs are one of the largest budget risk factors to the Corporation. Councillor Davey questioned if reviews would take into consideration impact of new technologies and Ms. Tasker advised that this would be dependent on the type of service under review. Mayor Zehr clarified that what was being asked today is to consider weighting of the factors for the service review framework and the purpose of establishing the framework is to determine the order of priority for service reviews to be conducted by staff. He stated that the framework in and of itself does not tie into the budgeting process nor will it show staffing overages / underages but this may be an outcome of the service reviews to be conducted. The Committee entered into discussions concerning the factors and weightings, and most expressed the view that a higher weighting should be placed on the factors of "Known risk" and "Expense budget" and that the proposed factor of "Funding Source" was not particularly relevant and should not be included. On motion by Councillor B. loannidis the staff recommendation in report FCS-12-151 was brought forward for consideration, as modified to provide that the factor of "Funding Source" not be included in the service review framework and the remaining three factors be weighted at 60%, 30% and 10% respectively. A motion by Councillor Y. Fernandes to amend the main motion was brought forward to provide that the factor of "Funding Source" be included in the service review framework at a weighting of 5%, which was voted on and Lost. The following motion was Carried Unanimously. On motion by Councillor B. loannidis - itwas resolved: "That staff be directed to develop a long range service review work plan based on the service review prioritization as outlined in Finance and Corporate Services Department report FCS-12-151, for approval at the December 3, 2012 Audit Committee meeting; and further, AUDIT COMMITTEE MINUTES SEPTEMBER 17, 2012 - 9 - CITY OF KITCHENER 2. SERVICE REVIEW PRIORITIZATION FRAMEWORK - (CONT'D) That 'Funding Source' not be included in the factors to be applied against services for purposes of the service review prioritization framework and the following three remaining factors be weighted as follows: FACTOR PERCENTAGE EXPLANATION/RATIONALE WEIGHT Known Risks 60°k The main factor in this framework should be the amount of risk that a service has. This can be calculated using the corporate risk scale and a standard set of questions which will be asked of management in each service area. This ensures that priority is not placed on low or no-risk services and that there is adequate oversight and review of high risk activities. Expense Budget 30°k The amount of budget expended on the service should also be a fairly heavily weighted factor. This ensures that those services which have the most significant impact to the "bottom line" receive more priority. Date of Last Review 10°k By looking at the date of the last review it ensures that we are not repeating reviews which were done recently. It has less weight though because there may be some services which are high-risk which warrant more frequent reviews." ADJOURNMENT This meeting adjourned at 3:20 p. m. J. Billett, AMCT Committee Administrator