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Home My WebLink AboutFCS-15-170 - 2016 Service Review and Internal Audit Work PlanStaff Report rR finance and Corporate Services Department www.kitchener.ca REPORT TO: Audit Committee DATE OF MEETING: December 14, 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: December 1, 2015 REPORT NO.: FCS -15 -170 SUBJECT: 2016 Service Review and Internal Audit Work Plan RECOMMENDATION: That the 2016 Internal Audit work plan be approved as outlined in report FCS -15 -170 dated December 1, 2015. BACKGROUND: Under the Audit Committee terms of reference it is the Audit Committee's responsibility to provide recommendations for areas of focus and types of audits as well as approve the annual internal audit work plan. In 2012 the Audit Committee approved a process to prioritize all City services for review. The integrated work plan encompasses not only the work of Internal Audit but also that of other staff across the corporation with responsibility for service review work. By planning service review work corporately it ensures that there is no duplication of effort and that work is integrated across departments where required. This report shows the 2016 integrated service review work plan as well as the Internal Audit work plan. Only the Internal Audit work plan requires Audit Committee approval. REPORT: Service Review Goal The Effective and Efficient City Services priority within the City's Strategic Plan (2015 -2018) places a priority on improving the design and delivery of city services, responsible stewardship of public funds and accountability, among other things. The overarching goal of service reviews is to protect the City's assets and interests, which supports these priorities. This includes, but is not limited to, protecting the long term health of the organization, its financial and physical assets, its reputation, its ability to perform critical services and the safety and well- being of employees and citizens. * ** This information is available in accessible formats upon request. * ** Please call 519- 741 -2345 or TTY 1- 866 - 969 -9994 for assistance. 2 -1 The way that staff achieves this goal is through three main categories of review work: 1. Ensuring operations are efficient and effective as possible • Are we doing the right things? • Are we doing things in the right way? • Are we making the best use of our limited resources? 2. Ensuring controls are adequate to protect assets from loss • Have risks been adequately identified and mitigated? • Are there structures and processes in place to prevent or detect loss, theft, fraud? 3. Monitoring compliance with policy, procedures and legislation • Have staff been adequately trained on what is expected of them? • Are staff following the rules to ensure work is accurate, reliable, timely, efficient, effective, safe, and legal? • Are staff putting the corporation at risk in any way through their actions or inactions? This review work is carried out by internal audit, along with staff in the City's various departments, to review both internal and customer facing services using a variety of tools. These may include: • Service delivery reviews • Process mapping, including assessing adequacy of controls • Time studies • Value for money analysis • Organizational structure review • Review of workplace culture • Risk assessments • Policy review • Compliance audits; and • Physical inventory and cash counts The identified risks and opportunities associated with a particular service determine which type, or combination of types, of review is most appropriate for that service. This will also determine who is best equipped to perform the review. Sometimes this will be internal audit and other times it will be staff within the departments. 2016 Internal Audit Work Plan The 2016 internal audit work plan includes service reviews assigned from the prioritized list, as well as controls audits and recurring internal audit activities. Audit Committee is asked to approve the 2016 Internal Audit work plan shown below as per the Audit Committee terms of reference. A description of the types of review is included in Appendix A. If Council priorities are not reflected in this work plan the order of reviews may be discussed and the Audit Committee can give direction to staff. 2-2 Audit Area I Tvpe of Review Community Resource Centres (continued from Comprehensive 2014) Accounting (continued from 2015) Comprehensive Revenue Comprehensive Leqislated Services Follow -up capacity review Capital Account Balances Verification of action plans Hiring Transparency Follow -up controls audit Stores — Tool Crib Controls Physical Inventory Count verification Confidential Investigations As required 2016 Integrated Service Review Work Plan The 2016 integrated service review work plan is included in the chart below for information only. The service reviews from the internal audit work plan above are included in this integrated work plan. Service Type of Review Resource (s) Community Resource Centres Comprehensive Audit, CSD Accounting Comprehensive Audit, FCS Revenue Comprehensive Audit, FCS Legislated Services Follow -up capacity Audit Operations Risk assessment INS Sanitary Sewer Risk assessment INS Facilities Management Risk assessment, process INS Kitchener Utilities Follow -up risk assessment INS IT (Database Administration) Risk assessment FCS IT (Development) Risk assessment FCS HR Job Evaluation Process FCS HR (Recruiting — Phase 3 Process FCS HR (Human Rights) Process, roles FCS For your information, the full list of service reviews (completed, pending and future) has been included in Appendix B. This list was generated through a comprehensive prioritization process in 2012 which ranked all services against one another based on inherent risk, expense budget, and date of last review. The resulting prioritized list is the basis for the service review work plans spanning a 6 year period. This prioritization will be revisited in 2016 to update the risk profiles and consolidate the services into the 47 services which are identified in the departmental business plans to ensure consistency. Reporting All service reviews assigned to Internal Audit will be brought forward through the Audit Committee in audit status reports on a quarterly basis as has been done in the past. All service reviews assigned to other resources will be brought forward through the Audit Committee in an annual summary report in conjunction with Internal Audit's year in review 2 -3 report. The report will contain the status of the reviews and any major findings or recommendations but will be much smaller in scope and detail than the internal audit reports. If further explanation or detail is required by Council this can be provided upon request. Any reports which require a decision by Council will be brought forward to the appropriate committee with a detailed report. For example, if recommendations within the report indicate that a service should be discontinued, changed significantly or additional funding is required then it would be brought forward for Council approval. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: This report supports the achievement of the city's strategic vision through the delivery of core service. FINANCIAL IMPLICATIONS: There are no financial implications related to this report. COMMUNITY ENGAGEMENT: Members of the community have been informed of this report through the posting of this report on the internet on December 9, 2015. ACKNOWLEDGED BY: Dan Chapman, Deputy CAO, Finance and Corporate Services 2 -4 APPENDIX A: TYPES OF REVIEWS Type of Review Definition 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 are following all rules, regulations and policies associated with the service. Comprehensive An all- encompassing review of the division or service including things like process review, organization structure review, controls, compliance, risk assessment, service delivery, customer satisfaction, value- for - money, capacity, benchmarking and any other analysis required. Controls An analysis and test of control points within a process to ensure that fraudulent activity can be eliminated or mitigated. Cost analysis A detailed analysis of direct and overhead costs of a service and analysis of charge out rates if applicable. Customer satisfaction A review of customer satisfaction with a service and where improvements could be made. 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. Process An analysis of how a process is done and where efficiency & effectiveness improvements could be made, including consideration of all stakeholders related to the process. 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. Value for money A comparison of the fully burdened cost of providing a service (including all direct costs plus overhead) compared to the cost of obtaining the service from a 3rd party. 2 -5 APPENDIX B — PRIORITIZED LIST OF SERVICE REVIEWS The following table shows all of the service areas within the City of Kitchener in the ranked order from the original prioritization exercise which was done in 2012. • The status column indicates whether a service review has been conducted for that service, or whether there is one in progress or planned for the future. • The year completed column indicates the year that the service review was or will be completed. • The follow -up column indicates the year that a follow up review was or will be completed. Future service reviews are listed in the order they will be completed based on relative priority, subject to available resources. Legend: CAO = Chief Administrator's Office CSD = Community Services FCS = Finance and Corporate Services INS = Infrastructure Services Service Department Status Year Completed Follow -up Communications & Marketing CAO Complete 2006 2010 Human Resources FCS Complete 2008 2010 Stores FCS Complete 2008 2010 Legal FCS Complete 2010 2013 HR - Hiring Transparency FCS Complete 2011 2016 Transportation Planning INS Complete 2011 Legislated Services FCS Complete 2012 2016 Kitchener Utilities Dispatch INS Complete 2012 CSD Administration CSD Complete 2012 Emergency Program Corporate Complete 2013 Kitchener Utilities - appliance service, administration, rental water heaters, water meter shop, gas appliance financing INS Complete 2013 2016 By -law Enforcement CSD Complete 2013 Operations INS Complete 2013 2016 Aud & Arenas CSD Complete 2013 IT Projects & Planning FCS Complete 2013 Elections FCS Complete 2013 2015 Market CAO Complete 2014 HR - Recruiting part 1 FCS Complete 2014 Finance roles FCS Complete 2014 Centre in the Square / Kitchener Waterloo Symphony Other Complete 2014 HR - Vehicles & Equipment FCS Complete 2014 2 -6 Purchasing FCS Complete 2014 Integrated Planning CAO Complete 2014 Community Resource Centres CSD In progress 2015 Kitchener Utilities - gas distribution, gas supply & transportation, gas meter & utilization, direct purchase INS Complete 2015 2016 Office of the Mayor & Council CAO Complete 2015 Accounting FCS In progress 2015 Information Technology FCS In progress 2015 Facilities Management INS Future 2016 Storm water Utility INS Future Parking Enterprise INS Future Sanitary Sewer Utility - Operations INS Future 2016 Program & Resource Services CSD Future Corporate Contact Centre CAO Future Development Engineering INS Future Building CSD Future Sports fields, trails, parks and sites INS Future Environmental services INS Future Investment income FCS Future Engineering Admin (Gas & Water) INS Future Cemeteries CSD Future Business Systems Support (SAP) FCS Future Direct Detect CSD Future Fleet INS Future Revenue FCS Future 2016 Engineering Admin (Gas & Water) INS Future Tier 1 /2 Grants CSD Future INS Support Systems / Business Systems INS Future Asset Management INS Future Athletics CSD Future Economic Development CAO Future Special Events CAO Future Welcome Centre CAO Future Engineering Design / Approvals INS Future Financial Planning FCS Future Small Business Centre CAO Future Gapping Corporate Future Volunteer Resources CSD Future Print shop CAO Future 2005 2010 Aquatics CSD Future 2 -7 Golf CSD Future Fire CSD Future Planning CSD Future Crossing Guards CSD Future Engineering Construction INS Future Engineering Infrastructure Asset Planning INS Future Downtown CAO Future Arts & Culture CSD Future 2 -8 N,,0C m , Jr 06 �= U (Q Q (MD � U) L L W ^` N 0 ti LO U) U H 2 -9 No 1N,, 06° 0 4- O C� O m O O U O L. 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