HomeMy WebLinkAboutFCS-15-028 - 2014 Year In Review - Audit Status ReportStaff Report
rR finance and Corporate Services Department www.kitchener.ca
REPORT TO: Audit Committee
DATE OF MEETING: March 23, 2015
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: March 1, 2015
REPORT NO.: FCS -15 -028
SUBJECT: 2014 YEAR IN REVIEW — AUDIT STATUS REPORT
RECOMMENDATION:
For information only.
EXECUTIVE SUMMARY:
The intent of this report is to give Audit Committee a full picture of the service review work
completed, in progress and not started in 2014. This encompasses the work of internal audit
and the service review work undertaken within each department.
This report provides a summary of the Internal Audit activities during the 2014 calendar year
compared to the Audit Committee approved work plan. The 2014 internal audit work plan was
approved by the Audit Committee on December 1, 2013 and can be referenced in report FCS-
13 -184. Detailed audit reports relating to each item have been or will be presented to Audit
Committee during past or future quarterly status updates and are thus not included here.
This report also includes a summary of the other service reviews performed within each of the
three departments as part of the Integrated Service Review Work Plan which was presented to
Audit Committee as part of the report referenced above. Staff committed to reporting back to
Audit Committee on an annual basis regarding the status of the plan.
* ** This information is available in accessible formats upon request. * **
Please call 519- 741 -2345 or TTY 1- 866 - 969 -9994 for assistance.
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REPORT:
A significant amount of internal audit and service review work was completed in 2014. All
resources were working at full capacity. However, not all of the approved work plan items were
completed due to two main reasons:
1. The INS department was short staffed for most of the year.
2. Priorities within the departments which took precedence, not related to the work plans,
such as work related to the implementation of recommendations from the Operations
division review.
Internal Audit
100% or 6 of 6 planned 2014 activities were completed and one is still in progress and on track
as planned. One additional review was added to the work plan and completed. There were no
confidential investigations required in 2014.
The following chart shows the status of each of the approved 2014 work plan items as well as
the additional work completed:
Topic
Type of Review
Status
Service Reviews'
Operational and Strategic
Complete
Community Resource Centres
Comprehensive
In progress and on track
Purchasing
Comprehensive
Complete
Integrated Planning
Debrief
Complete
Market
Capacity
Complete
Controft Reviews
Deposits
Controls
Complete
Recurring Internal Audit Activity
Cash counts
Controls
Part of deposits review
Physical Inventory
Count verification
Complete
Ad hoc
Confidential Investigations
Investigation
None
Additional Work Performed
Centre in the Square and Kitchener
Waterloo Symphony
Operational and Strategic
Complete
*Note: a list of review type definitions is included in Appendix A.
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Integrated Service Review Work Plan
The chart below provides the status of the 2014 integrated service review work plan items
assigned to the three departments for completion, including the items assigned to internal audit
and mentioned above.
Topic
Type,ot Review,
Status
klesourdes-
Comments
Community
Comprehensive
In progress and on
CSD, Audit
Included in this
report
Resource
track
Centres
Facilities
Impact analysis /
Not started
INS
Lack of resources
Management
process
Storm Water
Risk assessment
Not started
INS
Lack of resources
Utility
Purchasing
Comprehensive
Complete
FCS, Audit
Human
Process
Phasel — complete
FCS
Phase 1 included in
Resources —
Phase 2 — in progress
this report
Recruiting
Phase 2 to continue
in 2015
Human
Process
Complete
FCS
Included in this
Resources —
report
Vehicles &
Equipment
Contracts
Process
In progress
FCS
To be completed in
2015
Additional work performed:
Topic
Type,of Review,
Status
klesourdes-
Comments
Finance
divisions
Roles /
responsibilities
Complete
FCS
Included in this
report
Summaries of the Human Resources and Finance reviews are included below. These did not
involve Internal Audit and therefore have not been presented through the quarterly audit status
updates.
1. HR Recruiting Review
Objective: The first phase of a series of recruiting process reviews was undertaken focused on
recruiting functions that are led and supported by Human Resources (HR), in order to ensure
effective, efficient and legally defensible recruiting processes. The review also considered how
recruiting processes could support the organization to attract, retain, develop and grow a skilled
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workforce, and to clarify and maximize the human resources roles which work alongside
departments. Specific review goals included:
• Establish greater consistency in recruiting practices
• Improve the quality of recruiting practices
• Reduce bottlenecks, delays and cycle -times
• Improve coordination of work
• Better define recruiting roles and responsibilities (HR and hiring managers)
• Ensure recruiting processes are transparent and compliant with corporate policies and
employment legislation
Scope: Review current recruiting functions, processes, roles and responsibilities; identify and
recommend new or revised processes and practices; develop an implementation plan for
approved change recommendations.
Methodology:
• Staff stakeholder input through 8 focus groups and 9 interviews
• Review of recruiting best practices from 9 municipalities
• Documenting current processes, and identifying improvements for 27 recruiting sup -
processes including: job posting, selection /review of applications, interview questions
and ratings template, testing, driving assessments, reference checks, verbal and written
offers, records retention and onboarding
• Developing proposed improvements for effectiveness and efficiency for sub - processes
Key Findings and Recommendations:
The review confirmed staff are satisfied with a number of recruiting practices and /or
improvements that have been made. It also identified over 55 recommendations for further
improvement across the 27 processes toward greater efficiency and effectiveness, including the
following:
• Create and use consistent and comprehensive templates, guides and checklists across
all processes
• Incorporate industry best practice for selection, interviews and reference checks
• Review and optimize functionality of the City's recruiting software system
• Develop and use online application pre- screen questions consistently to streamline the
interview selection process for hiring managers
• Develop standards for police checks for efficiency and to mitigate risk
• Improve employee onboarding practices to assist hiring managers to transition new
employees and ensure legislated training compliance
• Improve Internet and Intranet content for better communication
• Continue current practice of HR Associates being the first point of contact for HR -led
recruiting for easy access to expertise and guidance on recruitment matters
FBI
2. HR Vehicle and Equipment Review
Objective: With increased demand for vehicle and equipment safety programs, legislative
changes in regulation and enforcement related to vehicle and equipment safety, and pending
retirement of the City's Vehicle and Equipment Safety Specialist, these services were reviewed
to ensure alignment with the Corporate Health and Safety strategy, sustainability of services,
client needs are met, and accountability structures are in place for compliance with related
legislation. The review focussed on identifying opportunities to improve the efficiency and
effectiveness of the existing program in achieving these goals.
Scope:
Understand current state, build capacity and support for potential changes and improvements,
identify opportunities for efficiency and enhanced accountability and make recommendations for
change and improvement.
Methodology:
• Process mapping and recommended changes /improvements for 6 vehicle and
equipment safety process streams: procurement, recruitment, training, day -to -day
operations, audit and continuous improvement
• Review of current functions, roles and responsibilities
• Review of 36 reports, policies, procedures, job descriptions and other documentation
• Stakeholder interviews with 29 employees
• Recommendations for restructuring of roles and development of scenarios to support
implementation
Key Findings and Recommendations:
Through the analysis completed, it was identified that replacing the soon -to -be vacant Specialist
position and maintaining the status quo was not viable. Due to organizational growth, regulatory
risk and demand for training and assessment services the resourcing model would inevitably
lead to:
• Inability to meet training demand, which may lead to inability to meet service demands or
safety risks due to lack of fully qualified operators
• Potentially increased costs to the City due to outsourcing of training
• Inability to demonstrate due diligence to regulators such as the Ministry of
Transportation or Ontario Ministry of Labour, leading to financial or reputational risks and
potential sanctions against the City's commercial vehicle operator registration
The key recommendation was to divide the Specialist role into two distinct functions: compliance
and subject matter resource, and training. In addition, administrative support was added in order
to consolidate the tracking and follow -up of corrective actions for compliance into one area
rather than being spread across the corporation. Several organizational reporting models were
considered and it was determined the best fit for these functions was within the Fleet division
where there is similar functions and expertise. Funding for these three positions was
reallocated from existing budgets and vacant positions.
1 -5
3. Finance Roles and Resnonsibilities Review
Objective: This review was undertaken to identify and resolve lack of clarity for some functions
across the City's four finance divisions (Accounting, Financial Planning, Revenue and Supply
Services), which provide a number of important services to internal divisions and the public. A
number of factors had led to some unclear roles including restructuring of financial statements
and tangible capital assets functions, consolidation of a business systems support function
which transitioned to Revenue from Accounting, new staff in various roles, and creation of a
Deputy Treasurer role.
Scope: Identify major areas of lack of clarity or conflict in roles; identify any areas where
communication, support and cooperation could be improved to support role clarity; and
recommend best fit of functions within the existing divisions.
Methodology:
• Review of previous staff input including employee culture survey results, input
sessions to develop the Finance and Corporate Services business plan, and other
organizational assessments
• Interviews and focus groups with staff stakeholders in the Finance divisions
• Identify key areas of overlap, establish evaluative criteria to assess best fit for areas
of overlap /confusion between divisions
• Develop recommendations to address lack of clarity
• Identifying non - organization structure issues and make recommendations to address
e.g., cooperation, communication, information - sharing
• Review of 1 -3 external approaches e.g. other municipalities
Key Findings and Recommendations:
A cross - functional workgroup identified 45 functions where clarity could be improved. By
defining the core purpose for each division and through a consensus - building approach staff
aligned functions where they best fit. A large proportion of functions were recommended to be
owned through collaboration of two or more divisions. To support this collaboration and to
ensure sustainability of the recommended alignment, recommendations were made to enhance
communication, collaboration and decision - making between divisions including: identifying
desired behaviours, instill accountability for desired behaviours, and enhancing the focus on
relationships and respect in support of the People Plan.
CONCLUSION:
Many service improvements have been made during 2014 as a result of the work carried out
under the Integrated Service Review Work plan by Internal Audit and department staff. While
many of the planned reviews were completed or started, lack of resources continue to be a
barrier to accomplishing the entire work plan. Work continues to support a culture of continuous
improvement and contributes to more efficient and effective services.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
Work falls within the Efficient and Effective Government plan foundation area of the Strategic
Plan. The goal of Internal Audit work and service reviews is to protect the City's interests and
assets through
1 -6
• ensuring compliance with policy, procedures and legislation
• ensuring adequate controls are in place to protect our assets
• ensuring our operations are as efficient and effective as possible
This helps support the financial goal of long term financial stability and fiscal accountability to
our taxpayers.
FINANCIAL IMPLICATIONS:
There are no financial implications related to this report.
COMMUNITY ENGAGEMENT:
Members of the community have been informed of the results of this audit status report through
the posting of this report on the internet on March 18, 2015.
ACKNOWLEDGED BY: Dan Chapman, Deputy CAO, Finance and Corporate Services
1 -7
Appendix A — Review Type Definitions
Capacity
A review of the actual transaction or work volume, the average time to
complete each transaction and the estimated required resourcing compared
to the actual resourcing.
Compliance
A test to determine if staff is following all rules, regulations and policies
associated with the service.
Comprehensive
An all- encompassing review of the division or service including things like
process and functional analysis, organization structure review, controls,
compliance, risk assessment, service delivery, customer satisfaction, value for
money, capacity, benchmarking and any other analysis required.
Controls
A review of the adequacy of control points in a process to protect assets from
fraud or theft.
Debrief
A review of the outcomes of a project or event following the completion of the
project or event, in comparison to the original goals and objectives.
Follow up
An additional review of any type, not sooner than 1 year after the original
review in order to assess the impact of the original recommendations and
proactively identify any new / emerging risks.
Impact
A review to determine all of the up- stream and down - stream touch points,
assessment
information flows and dependencies in a process.
Operational and
A comprehensive review of the strategy and operations of a unit to determine
Strategic
if the operating model is in alignment with the strategic goals.
Process
An analysis of what is done in delivering a particular service and where
effectiveness could be improved.
Risk assessment
An identification of all of the possible risks that could affect a service including
rating the probability and impact of the risk using the corporate risk matrix.
Role clarification
Clarification, documentation, and communication of roles and responsibilities
of similar roles to ensure there is no overlap in duties.
Service delivery
A review to determine the optimal method of delivering a service including
exploring options of contracting out or not delivering the service at all.
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