HomeMy WebLinkAboutFCS-17-010 - 3rd Quarter Audit Status ReportStaff Report
rR finance and Corporate Services Department www.kitchener.ca
REPORT TO: Audit Committee
DATE OF MEETING: September 25, 2017
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: September 18, 2017
REPORT NO.: FCS -17-010
SUBJECT: 3rd Quarter 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 activities completed
during the period of July 2017 to September 2017. The chart below shows the audits
contained in this report.
Revenue division
Comprehensive audit
The following items are currently in progress and will be brought forward at a future
audit committee meeting:
• By-law Enforcement — Property Standards, process / capacity review
• Fire Administration, process / capacity review
• Winter Maintenance, comprehensive audit
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
1-1
REPORT:
Revenue Division — Comprehensive Audit
Complete: September 8, 2017
Background Information:
Context
In April 2016 SAP Customer Relationship and Billing (CR&B) was launched to handle
tax and utility billings, replacing the CIS system. Revenue division staff experienced a
high degree of stress and additional workload leading up to, during, and following the
system installation. This audit was started in September of 2016 amidst a large amount
of change for the staff involved. The timing presented an opportunity to review the
division with an eye for changes that needed to be made in processes and structure to
support the new system.
Objective
The goal of this review was to examine how the Revenue division performs its functions,
both in terms of the processes themselves as well as the supporting structure, and
determine if there are improvements which could be made to make the most of their
strengths and mitigate their weaknesses. The primary focus was on organizational
structure, roles and responsibilities and workload.
Methodology
The following activities were performed as part of this review:
• Literature review of relevant internal and external documents including 2016
Employee Culture Survey results and action plans, and stakeholder input
gathered for the FCS Service Strategy, among other documents
• Consultation with staff and internal stakeholders
• Risk assessment
• Benchmarking related to organizational structure and processing volumes
• Organizational structure review with a specific focus on-
o streams of work, roles and responsibilities
o management structure and balance between supervisors
• Workload / capacity assessment with a focus on-
o SAP workflow and balance between roles related to the recent SAP
system implementation
o Identifying temporary and long-term solutions to address workload
imbalances
• Consultant -led Lean review including:
o Current state value stream mapping to identify sources of waste, problem
statements and root causes
o Future state value stream mapping to identify and quantify potential
solutions
o Implementation planning
1-2
o Kaizen event to implement four of the identified solutions
• Assessment of alignment with FCS Service Strategy
This project excluded:
• Financial analysis
• Controls testing
Findings:
Employee Input
Overall the team feels their greatest strengths are their team work and willingness to
help each out coupled with a desire and dedication to providing excellent customer
service. They are a team of dedicated, hardworking, and knowledgeable staff.
Several areas for improvement were identified by staff, many of which related to the
new SAP tax and utility billing system. They voiced stress and frustration with the many
unresolved defects in the new system and a need for more training and communication
about the new system. Workload had increased for most staff due to tasks being more
complex in SAP and spanning several roles instead of residing with one person. Most
staff felt that things will improve over time as they become more familiar with the system
and defects are fixed.
Staff input also identified several possible improvements to the organizational structure
to better group like roles, provide back-up capabilities, and increase capacity in specific
areas.
Stakeholder Input
42 internal stakeholders including management, front line staff and Council, were
interviewed to gain their perspectives on strengths and areas for improvement.
Stakeholders concurred that the Revenue team excels in their knowledge and expertise,
problem -solving and accuracy.
Although there were some examples of strong working relationships, generally
stakeholders felt Revenue could improve their internal partnerships. It was felt by many
that the division needs to devote more effort towards being a bigger part of the
corporate team and being more flexible in their approach.
Stakeholders were also asked about specific processes where they interact with
Revenue. There were several specific suggestions for improvement which were later
incorporated into the process review analysis.
Risk Assessment
Following the stakeholder consultation all risks were consolidated into a risk register.
Revenue management met to assess the likelihood and impact of each of 54 risks using
the corporate risk scale.
1-3
The top risks related to:
• Risk of knowledge loss, as several employees will be eligible for retirement in
the coming years
• Lack of back-ups or documented procedures for several one -of roles
• Processes and organizational structure may not support the new SAP system
and need to be reviewed
• Some resistance to change within the division
Lean Process Review
The goal of this phase of the review was to employ Lean management techniques in
order to optimize current resources to address workload and workflow imbalances. An
external consultant with skills in Lean management facilitated this work. The objectives
included identification and implementation of tangible process improvements in order to
decrease non -value added time, decrease customer wait times and improve accuracy
rates. The outcomes of this part of the review were then used to help determine
capacity, and as input into the organizational structure analysis.
This Lean review included all three revenue streams: property taxes, utilities, and
miscellaneous billings. The processes were separated into five macro steps: customer
set-up, billing, payments, collections and deposit of funds.
This phase of the review followed typical Lean management review steps including:
• Pre -work and Planning
• Data Collection
• Current State Value Stream Mapping
• Future State Value Stream Mapping
• Kaizen Events
• Debrief
During the current state value stream mapping workshop, staff were asked to classify
each process step as either value -add, non -value -add or necessary -non -value -add
based on these definitions:
• Value -add = work that your customer requires you to perform; the customer must
be willing to pay for it (or it adds value to them) AND the activity transforms the
product or service in some way AND the process is done right the first time (i.e.,
no rework)
• Non -value -add = customers don't want it and we don't want to be doing it (i.e.,
waste)
• Necessary -non -value -add = non -value -add but it must be done in today's
environment in order to best serve the customer (e.g., legislated requirements)
The effort required to perform each process was also captured. Any process steps
identified as non -value -add were further analyzed to define the problem and analyze the
root cause. 14 problem statements were identified.
FSI
All of the problem statements further analyzed to brainstorm possible solutions and
improvements. All potential solutions were then prioritized based on ease of
implementation and total impact (qualitative and quantitative). Those with high impact
were identified for implementation. Total estimated time savings if all high impact
solutions were implemented equated to 366 days savings or approximately 1.5 FTE
worth of additional capacity spread across several roles. These included actions such
as improving property data set-up accuracy, decreasing customer wait time related to
the top three categories of long duration calls, and reducing investigation time on billing
anomalies, to name a few.
Four of the problem statements and associated actions were chosen to be implemented
immediately during a 3 -day Kaizen event, which was facilitated by the consultant.
Kaizen means "change for the better" and is simply dedicated time to implement
improvements. Management is responsible for taking the lead on facilitating additional
Kaizen events to ensure the remaining actions are implemented in a timely fashion, as
per the agreed upon implementation plan.
The following four objectives were chosen for the Kaizen event:
1. Reduce customer wait time for pre -authorized payment calls to CSR's
2. Improve pre -authorized payment data accuracy
3. Improve data accuracy from banks for mortgages
4. Improve consistency and productivity in billing adjustments
Although not all actions were completed during the Kaizen event, the following
achievements were realized by the team:
Pre -Authorized Payments
• Standardized business rule regarding processing times and process steps
• Documented decision trees and frequently asked questions based on the
business rule for CSR's so that calls about pre -authorized payments can be
answered quickly and without needing to transfer to other staff
• Redrafted forms and return envelopes to eliminate free form account number
field and require a void cheque or bank form in order to avoid inaccurate or
missing customer account number information
Banking
• Documented required format / information for banks with mortgage / pre -
authorized tax to ensure data is sent to staff in the correct format
• Documented improved standard process flow for mortgage / pre -authorized tax
payments
Bill Re -calculations for Utilities
• Detailed review and documentation of process which will assist in cross -training
to mitigate the risk of this one -of role
1-5
Staff have created a 10-30-60-90 day implementation plan to complete the remaining
actions for all four Kaizens.
Organizational Structure
One of the deliverables in this review was to analyze the current organizational structure
and capacity in light of the new SAP system implementation and other factors, to
determine if changes are required. Various pieces of information were gathered on this
subject including a capacity analysis, staff and stakeholder input, benchmarking with 6
other cities of similar size and / or responsibility for utility billings, and historical
organizational structures in this division. The project team then facilitated a workshop
with Revenue management and then the DCAO, FCS to review the data, explore
alternatives, and make a decision on the organizational structure going forward.
A number of key issues and opportunities related to the current organizational structure
were itemized and explored. Issues or pressures on the structure include:
• Population growth driving demand for service
• Current call wait times exceed customer service industry benchmarks (*note that
benchmarks include all industries and not just municipalities)
• Workload is not spread evenly amongst staff
• `One -of' roles are difficult to backfill and a challenge when there is turnover
• In some functions, supervisors are performing front line work that would better fit
with staff, however there is no capacity to delegate these tasks to staff
Opportunities that were identified and considered include:
• Create or recombine functions for better oversight and service continuity
• Delegate more tasks from supervisor to staff
• Combine and cross train some roles
• Create or combine sections/roles for greater oversight and service continuity
The preferred organizational structure will be rolled out to staff later this year. This new
structure will provide a more logical grouping of like roles, a better distribution of tasks,
and mitigation of one -of roles. The new structure will not change the core complement.
Recommendations:
A total of 13 recommendations were developed in this review. One of the
recommendations focuses on implementing the Lean action plan which includes an
additional 23 activities related to process improvements including understanding and
documenting processes to ensure efficiency.
A few of the recommendations relate to creating a focus on the FCS department
mandate, vision and focus areas, with an emphasis on partnering with other divisions to
resolve specific process related issues and collaborate to develop solutions.
Other recommendations refer to ensuring accountability and communication around
implementing the process improvements identified in the Lean review, as well as
recognition for staff who embrace the continuous improvement mindset and culture.
1-6
Conclusion:
This review looked critically at a variety of Revenue processes, and the resulting
recommendations are focused on enhancing effectiveness and efficiency, reducing
waste and increasing capacity. The Lean action plan strives to add more value from the
customer's perspective while eliminating non -value added tasks. The organizational
structure changes will better align roles and responsibilities and allow for more effective
coverage of absences. Overall the changes will position the division to meet future
challenges such as population growth and new service trends such as e -services.
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:
INFORM — This report has been posted to the City's website with the agenda in
advance of the council / committee meeting.
ACKNOWLEDGED BY: Michael Goldrup, Interim Deputy CAO, Finance and Corporate
Services
1-7
4-)
L
O
NW
•L
• L
v 1
^>
W
L
V_
'>
C6
�
00
�--I
L-
O
M
N
Q
H
0
a
H
ccO
a
W
G'
�1
.2
-�-j
DAN
V)
^/
W
L
V
i
• V)
C6
�
M
V
�
a--+
V
a--)
4�
E
4-j
O
O
�
CL
�
O
�
O
cn
Q.
�
I
4—j
J
4-j
�
G
to
to
'
E
E
4�
O
�
i
V
0
A
A
-
LU
soon=
LM
to
Om
0i
E4�
�
DC
COu
moo=
�1
.2
-�-j
^/
W
V
i
• V)
C6
�
V
�
V
V)
4�
E
V
O
O
�
�
V
�
O
4—j
�
G
to
to
'
a4—j
V
�
�
LL.
A
A
1-12
buo
O
O
O to
s auo
. -N
.— •— v to
0L -0 4-1 bo O
U 4� = cn cc
Ln N E -0
�
°' N °' •°
4j E -i--'
.i N w N
+-j Q E
a� ca O
N 0)
O O oc
0 N M 4 Lri (.6
1-13
Q
0
U
Al
X
W
_(A
O
O
U
O
Q)
�
C
O
U
O
CL
0
�
O
0
•>
1
CL
U
U
O
.—
a -J
U
(1)
_0
Zj
U
O
._
>
0
O
L
>
+_+
O
E
O
O
X
W
•
1-15
U
O
�
C
O
O
U
>
ate-+
U
U
.—
a -J
U
(1)
_0
Zj
O
0
O
>
+_+
O
O
E
•L
00)4-0
O
4-j
cn
ca
.W
7-j
E
O
O
i
..
0
(D
O
E
I
O
• _
4�
Q
•
1-15
(A c
a"1
MO
i
E +J
+-1
O
s + 4�
N .V
C� >
O
X
ca :�
N a--1 V
LL
4-1
buo. _ E +-1
O N
a� 4-J
•-
}, N >
-Q' _0
C:4) 4-1E
4-1 • - N +-1 to V c
4-' ca 4) =3 . — b.0
C� ; ' -I--J
b-0
� O � V � O
E > +-1
m m E`J -I--1 to E to N O 4-jS • -
C0 4) c N to
.� V L
oc V oc m 0 V a
c
C�
J
L
O
(-6
to
V)
.v
O
V)
—
L
4-)
(1)
c
V
O
�
�
iz
U
-
(-6
to
Jc:
.v
O
4-j
Q
L
4-)
(1)
c
-0
O
iz
U
-
J
J
Q
1-17
LL
C
cc C-
V buo 4-,
O `• O
. buo- 4-J bD
4-' O
O N .— V
ca _0 O
t�Aa) >,
taA i 0L
-0 N J
N 4-1 4�
4-1 >
E 4-1
O bD
O
E -0
_0
4-1 to
p 4- �O .O
4-1 >
4-1 4-1 4-1
4-J E 4-J
-0 buo buo L L-
a- c p ai p
> > O p a -a
O 0L C- 4-J
oc 0 -cry V V 0 O .�
1-20
1-21
..
O
=3
C
O
O
�
O
QW
N
.V
-
N
V
4-,
Q
Q
• i
4-'
V
Q
W
QQZ
N
4�
E
bz
O
4-
C:4
-j
0
taA
4-1 LE
V
4
C6
Q
Q
c
u
E
E
Oj
ca
4-j
_J
00
' —
E
L
•-
X
Q
•-
i
V
4-1
O
V
•
to
�
>
a -J
4�
O
t�=
-
�
E
4-1
W
1-21
E0
1-22
1-23
W
-i--j
O
cn
V
O
�
4
O
V
cn
i
�
ca
bn-
ca
O
O
Ln
O
cn
U
1-23
1-24
Al
•
0)
E
N
-I--1
_0•—
E
a)+
-j
-0
+-j
0
ca
c6
E
V
>
O
4-1
O
u
C:
V
V
cc
buo
buo
C:
C:
bD
cn
cn
• —
c�
c�
i
4�
4�
O
V
V
4�
4�
0
0
4�
0L
O
V
V)
Ln
W
a)
V
N
0-0
We.]
W,
R
1-25
•
buo
P1
•
•
�00
'i'
u
•
•
•
•
1-26
1-27
UN
L
cn
O
_=3
O
V)
a --j
E
E
O
a --a
w
E
+j_0V
w
in
0
to
V
CSA
A
�
.�
p
V
O
E
cu
N
.>
0OE
O
O
4-0
C6
Q[
• �
Ln
O
V
V
�
s
�
4�
O
VR-�
m
V 1
N
C3
.
�O
V
Q
-
V
V
O
O
O
E
E
DC
I
Q
I
I
I
0-
0
.
ate-+
E
U
O
0
.
ca
0
c
ro
O
CL
i�
.
a
O
y—
i
O
m
u
u
oc
CD
U
O
CL
O
c
O
E
O
0
c
ca
.
1-29
�
�
O
ca
�
�
U
Q
o
4-j
�
o
Q
..
cn
i
+�
�
�
U
0-
0
.
ate-+
E
U
O
0
.
ca
0
c
ro
O
CL
i�
.
a
O
y—
i
O
m
u
u
oc
CD
U
O
CL
O
c
O
E
O
0
c
ca
.
1-29
�
�
O
�
�
U
Q
o
4-j
�
o
0-
0
.
ate-+
E
U
O
0
.
ca
0
c
ro
O
CL
i�
.
a
O
y—
i
O
m
u
u
oc
CD
U
O
CL
O
c
O
E
O
0
c
ca
.
1-29
U
1-30
1-31
Ln
O
L
�
O
cn
Lf
CO
C6
U
E
(1)
U4-,
cn
U
M
C=c/j
t�:
o
O
p
Ln
+.,
CSA
+�
O
U
r6U
cn
%
U
O
`�
`�
Ln
X
E2`~
O
(1)
ca
Q
CSA
E
O
0
LnE
L-O
E
p
U
O
U
.—
Ln
ca
ca
ca
O
>
ca
+�
ca
4-jt�A
cn
O
U
cn
U
0
U
vi
CL
.
.
.
.
1-31
1-32
1-33
O
cn O
buo L—
C: ca
N41
ca � .O
C:
cc
O co (73 • u 4-1 �
4-1
E a�
�, O E .�
4-1
E C:O
0 0
i sV
L- u
ca 0L -0�
E •- V
:� � a--' -0
p V V•- V E
L -0 O a)
Co C � 0 i
0 O �0 0
p
E V V O
4� O 2!
EE V -0 E
0
O a) — L 0)E U C: E
ago
ca V ca O w oC
mr-I
l I I I
0
1-34
WA
1-35