HomeMy WebLinkAboutAudit Agenda - 2022-12-19Audit Committee
Agenda
Monday, December 19, 2022, 4:00 p.m. - 5:00 p.m.
Council Chambers - Hybrid
City of Kitchener
200 King Street W, Kitchener, ON N2G 4G7
People interested in participating in this meeting can register online using the delegation registration
form at www.kitchener.ca/delegation or via email at deleaation(a)kitchener.ca. Please refer to the
delegation section on the agenda below for registration in-person and electronic participation
deadlines. Written comments received will be circulated prior to the meeting and will form part of the
public record.
The meeting live -stream and archived videos are available at www.kitchener.ca/watchnow
*Accessible formats and communication supports are available upon request. If you require
assistance to take part in a city meeting or event, please call 519-741-2345 or TTY 1-866-969-9994.*
Chair: Mayor B. Vrbanovic
Pages
1. Commencement
2. Disclosure of Pecuniary Interest and the General Nature Thereof
Members of Council and members of the City's local boards/committees are
required to file a written statement when they have a conflict of interest. If a
conflict is declared please visit www.kitchener.ca/conflict to submit your written
form.
3. Delegations
Pursuant to Council's Procedural By-law, delegations are permitted to address
the Committee for a maximum of five (5) minutes. All Delegations where
possible are encouraged to register prior to the start of the meeting. For
Delegates who are attending in-person, registration is permitted up to the start
of the meeting. Delegates who are interested in attending virtually must register
by 2:00 p.m. on December 19, 2022, in order to participate electronically.
3.1 Item 4.1 - Matthew Betik, KPMG
4. Discussion Items
4.1 External Audit Planning Report for Fiscal Year 20 m 3
2022, FIN -2022-520
4.2 4th Quarter 2022 Audit Status Report, CAO- 20 m 27
2022-500
4.3 2023 Internal Audit Work Plan, CAO -2022-494 20 m 63
5. Adjournment
Mariah Blake
Committee Administrator
Page 2 of 71
Staff Report
J
IKgc.;i' r� R
Financial Services Department www.kitchener.ca
REPORT TO: Audit Committee
DATE OF MEETING: December 19, 2022
SUBMITTED BY: Greg Demacio, Manager, Financial Reporting and Analysis, 519-741-
2200 ext. 7895
PREPARED BY: Greg Demacio, Manager, Financial Reporting and Analysis, 519-741-
2200 ext. 7895
WARD(S) INVOLVED: All
DATE OF REPORT: December 9, 2022
REPORT NO.: FIN -2022-520
SUBJECT: External Audit Planning Report for Fiscal Year 2022
RECOMMENDATION:
That the Audit Planning Report for the year ended December 31, 2022 prepared by KPMG,
attached as Appendix A to report FIN -2022-520 be approved.
REPORT HIGHLIGHTS:
The purpose of this report is to approve the 2022 audit plan, prepared by the City's external
auditors (KPMG).
The approach being proposed is consistent with previous years.
This report supports the delivery of core services.
BACKGROUND:
Item 3 (e) of the Audit Committee Terms of Reference states that one of the responsibilities of
the audit committee is to "approve external audit plans". It is important to have open
communication between the external auditor and the Audit Committee to ensure that both groups
are kept up to date on changes in the organization, changes in the accounting/regulatory
environment and their related risks.
In KPMG's proposal to serve as the External Auditor, they committed to meeting with the Audit
Committee twice annually. This is the first of those meetings for the 2022 fiscal year. A second
meeting will be held once their audit is complete to present results and offer an opportunity for
questions.
REPORT:
KPMG will present their Audit Planning Report which is attached as "The Corporation of the City
of Kitchener Audit Planning Report for the year ended December 31, 2022".
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
Page 3 of 71
FINANCIAL IMPLICATIONS:
None.
COMMUNITY ENGAGEMENT:
INFORM — This report has been posted to the City's website with the agenda in advance of the
council / committee meeting. It will provide the public with information to assist them in
understanding the scope of the external audit to take place in the spring of 2023. The City's
consolidated financial statements for the year ended December 31, 2022, will be the subject of
this audit.
The 2022 audited consolidated financial statements, once completed and approved, will be
posted on the City website and notice will be provided to all residents through a widely distributed
newspaper in accordance with Section 295 (1) of the Municipal Act, 2001.
PREVIOUS REPORTS/AUTHORITIES:
• Municipal Act, 2001
APPROVED BY: Jonathan Lautenbach, Chief Financial Officer, Financial Services
ATTACHMENTS:
• Appendix A — The Corporation of the City of Kitchener Audit Planning Report for the
year ended December 31, 2022
Page 4 of 71
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Staff Repod
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KK� R
Chief Administrator's Office www. kitchen er.ca
REPORT TO: Audit Committee
DATE OF MEETING: December 19, 2022
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 9, 2022
REPORT NO.: CAO -2022-500
SUBJECT: 4th Quarter 2022 Audit Status Report
RECOMMENDATION:
That report CAO -2022-500, regarding the 4t" Quarter 2022 Audit Status Report, be
received for information.
REPORT HIGHLIGHTS:
• The purpose of this report is to provide information regarding recent audits.
• There are three audits included in this report as noted in the table below.
• Results of the audits were positive, with no fraud detected. However, opportunities for
improvement have been identified.
• There are no financial implications.
• Community engagement included this report posted to the city's website with the
agenda in advance of the council / committee meeting.
• This report supports the delivery of core services.
EXECUTIVE SUMMARY:
The following report provides a summary of the Internal Audit assurance and consulting
services completed during the period of October to December 2022. The table below shows
the audits contained in this report.
Assurance work is in progress on the following topics:
• Parking and Mileage Reimbursement compliance
• Technology Field Assets physical inventory
• Inventory audit status update
• Underground Locate Service organizational structure and capacity analysis
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
Page 27 of 71
Consulting work is in progress on the following reviews:
• Training Documentation - process review
The physical inventory count verification found six variances, which resulted in a $5,621.94
write-up. Total adjustments for the year were $576,333 write-down, driven by large write
downs in road salt and brine due to measurement errors and inconsistent reporting of usage.
Overall, excluding the known issues with salt and brine, the physical inventory process is in
control and no concerns were identified.
The Market Alcohol controls review found that while current staff are tracking alcohol
inventory at the event level, there are still control gaps that would allow theft of alcohol by
staff or vendors and theft of cash by staff. Implementing an ongoing inventory tracking
sheet with supporting checks and balances will alleviate these risks.
Staff and Council were asked to reflect on the City's response to the pandemic and provide
input on what worked well, what were the challenges, and what could be improved going
forward. Responses are summarized in this report. Management will work to evaluate and
prioritize recommendations for improvement.
BACKGROUND:
The overarching goal of internal audit is to protect the City's assets and interests. 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.
Internal Audit provides assurance and consulting services in accordance with the
International Standards for the Professional Practice of Internal Auditing (Standards)", IIA
2012. These services are independent, objective activity designed to add value and
improve an organization's operations. It helps an organization accomplish its objectives by
bringing a systematic, disciplined approach to evaluate and improve the effectiveness of
risk management, control, and governance processes.
Assurance services provide an objective assessment of evidence to provide an independent
opinion or conclusions regarding an entity, operation, function, process, system, or other
subject matter.
Consulting services are advisory in nature and are generally performed at the specific
request of an engagement client. When performing consulting services, the internal auditor
should maintain objectivity and not assume management responsibility.
Audit topics are selected independently by the Internal Auditor and approved by Audit
Committee on an annual basis. Audit results are brought back to Audit Committee in reports
such as this on a quarterly basis as completed.
Page 28 of 71
REPORT:
1. Physical Inventory — Count Verification
Completed: October 29, 2022
Overview
The Procurement -Stores section of the Financial Operations division is responsible for the
receipt, storage, and disbursement of a variety of physical inventory used in City
operations. This inventory is stored within the Stores warehouse within the Kitchener
Operations Facility (KOF), as well as some larger items being stored outside in the yard.
(e.g., large pipe, catch basins, aggregates, salt)
Stores staff perform an annual inventory of all parts and materials to ensure that financial
records match the amounts on hand. Internal audit then counts a sample of parts to provide
assurance that staff counts are accurate. This is a standard audit activity.
In addition, staff make adjustments to inventory balances within SAP throughout the year
and during the physical inventory count to restore the financial balance to equal the quantity
on hand. An analysis of the total adjustments for the year is also included below.
Definitions
Controllable stock - stock which the Stores staff have direct control over with regards to
purchases and usage. Located within the warehouse.
Floor -to -sheet audit — randomly selecting parts in the warehouse, counting them, and
comparing the quantity to what is in the financial system (SAP).
Sheet -to -floor audit — pre -selecting parts based on unit value or total value, counting
them, and comparing the quantity to what is in SAP. This includes both warehouse and
outdoor inventory.
Shrinkage rate — the percentage of total inventory purchases that are written -down or lost
due to factors such as theft, error, fraud, or damage.
Uncontrollable stock - stock which is located in the KOF yard which are not under direct
supervision by the Stores division.
Write-down - the quantity on hand was less than what was recorded in SAP and therefore
the financial records were decreased to match the physical quantity. Usually occurs when
inventory is used without updating SAP.
Write-up — the quantity on hand was more than what was recorded in SAP and therefore
the financial records were increased to match the physical quantity. Usually occurs due to
keying errors when setting up or relieving inventory, or when the wrong unit of measure
was used (e.g., number of cartons counted instead of individual parts).
Page 29 of 71
Audit Process and Findings
Standard floor -to -sheet and sheet -to -floor audits were done to confirm the physical
quantity of parts on hand compared to what staff had counted. The audit covered 22% of
the total value of inventory. The sheet -to -floor audits covered the top 25 unit values and
top 25 total values. The floor -to -sheet audits consisted of 20 random shelf locations.
Six variances, which equates to 9% of the sample, were found through this verification
process which resulted in a $5,621.94 write-up. This is considered a very low value of
variances found through the audit process and is consistent with prior years. It represents
0.2% of total inventory on hand.
Total Adjustments
In addition to reporting on the variances found through the audit process during the
physical inventory, the total adjustments for the year are also reported below. These
numbers include the adjustments made by staff during the physical inventory and the
$5,621 write-up driven by the internal audit verification, as well as all other adjustments
made throughout the year.
The purpose of this analysis is to identify any material groups or part numbers that have
large or unusual adjustments to ensure the root cause has been identified and actions put
in place to eliminate or reduce adjustments in the future.
(Note that positive numbers represent write-ups and negative numbers represent write-
downs.
Year
2020
2021
2022
Controllable stock write-up
$63,216
$15,762
$83,469
Uncontrollable stock write-
up (down)
$4,051
($201,117)
($659,803)
Total write-up (down)
$65,803
($141,271)
($576,333)
In 2022 the total adjustments for the year (Nov. 15/21 to Nov. 14/22) were $576,333 write-
down. This is a larger than usual write-down. Usually the total adjustments are a write-
down between $50,000 - $200,000 related to adjustments to aggregates in the yard. 2020
was an anomaly due to the aggregates not being adjusted and written off at all.
The 2022 total write-down represents 3.6% of the total inventory purchases for the year of
$16 million. Industry standards indicate that up to 2.5% is an acceptable shrinkage rate.
The ending inventory balance was $3,329,771.
Controllable Stock Adjustments
Of the 2022 adjustments, $83,469 write-up was from controllable stock. In 2022 the write-
up was attributable to multiple material groups and there was not a large write-up in any
specific part number. Write-ups are most often due to errors in issuing out stock, such as
using the wrong unit of measure causing too much inventory to be relieved. Several parts
had their unit of measure switched from imperial to metric measurements this year which
could be driving this higher than usual number of errors made. The write-up adjustment
then restores the inventory value to the correct amount.
Page 30 of 71
As noted earlier this year, Stores is in the process of implementing regular cycle counts
which see each high moving part number counted at least three times per year, including
the full physical inventory. This will allow variances to be identified earlier and investigated
to determine root cause of the error, allowing real-time corrections to be made and
eliminating the need to write parts up or down.
Uncontrollable Stock Adjustments
The remaining $659,803 of write-down is related to stock which is outside in the KOF yard
which are not under direct supervision by Stores staff. It is impractical to have dedicated
staff monitoring the outdoor inventory on a 24/7 basis and therefore there is a reliance on
staff to inform Stores when they take inventory from the yard. However, this often does not
happen.
The recent aggregates review has resulted in a few low -dollar value aggregates that are
used by one operating area only to be removed from inventory and charged directly to the
operating area when purchased, which creates many efficiencies in the process and
reduces the need for the year end write off/variances for these particular aggregates.
For the remaining aggregates, work is planned to install signage, provide training, and
instructions for staff to better estimate the quantities they are taking based on equipment
volume (i.e. one load of x material = y tonnes). This way staff can more easily account for
material used on the workorder. This will also reduce the number of write-downs related
to aggregates when this is implemented. It is currently delayed due to resourcing
constraints.
The majority of this year's write-down can be traced to two specific parts:
1) Geomelt Brine - $120K write-down. During the physical inventory it was
found that this item has not ever been physically counted in the past and the
amount submitted for usage is an estimate only. This adjustment brings the
value in line with the actual quantity on hand and is made up of several years
of variances. A decision has been made to remove geomelt from inventory
entirely and expense it directly when purchased.
2) Road salt - $504K write-down. In the past the ending inventory balance of
salt has been estimated by measuring the size of the pile and calculating a
rough estimate of the volume of the cone shape. Any variance between this
estimate and the quantity recorded in SAP was charged out directly to the
winter maintenance budget (instead of being written down). Variances are
attributed to communication challenges between INS (Roads and Traffic) and
Stores, specific to usage timing and quantities.
It was recently discovered that for the past several years there has been a flaw
in the calculation method and the ending balances have not been realistic in
relation to the maximum capacity of the salt dome. A reconciliation was done
when the quantity was low and able to be weighed and measured. This has
resulted in the one-time extra -large write-down of $504K this year which will hit
the winter maintenance budget and show as a budget variance.
Page 31 of 71
In future, staff are working to develop more accurate ways of measuring the
salt volume to avoid large write-offs. This includes ensuring that the SAP
volume is never higher than the maximum capacity of the salt dome.
It was also discovered that for the past few years that salt variances found
during the physical inventory were charged directly to the winter maintenance
budget rather than being included in the inventory write-downs. It was
recommended by the City's external auditors that these adjustments be
treated as write-downs in the future for consistency with other parts. In the end
the amount still gets charged to the winter maintenance budget, however, it
will now get captured in the inventory adjustments reported through internal
audit.
The remaining write-down in uncontrollable stock of $35,803 can be attributed to multiple
other part numbers.
Conclusion
Overall, excluding the known issues with salt and brine, the physical inventory process is
in control and no concerns were identified. The adjustments to controllable stock are small
write-ups. Uncontrollable stock adjustments are typical and are expected given the current
uncontrolled environment. Improvements to measurement techniques and the
implementation of cycle counts will help reduce the amount of inventory adjustments.
2. Market — Alcohol Control
Completed: September 21, 2022
Background
In 2013 an audit of the Market's inventory control for alcohol was done. At that time, it was
found that there were no controls in place to ensure that all alcohol that was purchased on
behalf of the Market, for programs such as cooking classes and events, were accounted
for. There was no oversight of expenses or physical control of product, making the
process vulnerable to theft from both the public and staff. Recommendations were made
at the time to implement a tracking sheet and reconciliation process.
Market alcohol control is now part of the list of rotating controls and compliance audits,
and it is now time to perform a check of controls. This is particularly important given the
turnover in staff to ensure controls are still in place.
Audit Objective
The overall goal of this audit is to review and confirm adequate controls are in place to
ensure that alcohol purchases for the Market are used for their intended purpose and not
taken by staff or customers.
Note that this audit is driven by the goal of ensuring adequate controls are in place
regardless of the staff performing the work and does not reflect on the trustworthiness of
individual employees.
Page 32 of 71
Scope and Methodology
The following activities were completed as part of this review:
• Documentation of the end-to-end process in a swim lane diagram
• Tour of Market kitchen and storage areas
• Physical inventory count
• Identification of existing or missing control points to ensure inventory records are
correct
Findings
Due to turnover in staff the recommended tracking process from 2013 was not being used.
New staff have created an event tracking process, however, there were still several control
gaps including lack of physical control of the inventory and lack of reconciliation of
purchases and cash by management.
Staff did indicate that work was in progress to build a locked area for the inventory, and
they would like to also implement a point-of-sale system to handle sales at events. This
would provide better control over receipts and allow for easy reconciliation of cash.
Recommendations
In addition to the improvements in progress, several recommendations were made. These
included detailed instructions on how to:
• Confirm, track, and reconcile incoming purchases of alcohol.
• Event day tracking and reconciliation of opening balances, uses during the event,
closing balance, and sales/deposits.
• Periodic inventory counts
Conclusion
While current staff are tracking alcohol inventory at the event level, there are still control
gaps that would allow theft of alcohol by staff or vendors and theft of cash by staff.
Implementing an ongoing inventory tracking sheet with supporting checks and balances
will alleviate these risks.
A status report will be completed 1 year from the date of this report to ensure
recommendations have been implemented and controls are adequate.
3. Pandemic After -Action Review
Completed: July 5, 2022 (Statistics updated November 2, 2022)
Overview
An after -action review is an opportunity to identify and strengthen successful processes
and note lessons that need to be applied in emergency management plans and future
emergency responses. A successful after -action review is intended to contribute to a more
robust emergency management program by providing evidence for potential
improvements, better resource allocation, and building furthering connections with partner
agencies.
Page 33 of 71
A formal after -action review template was provided by the Province of Ontario for all
municipalities to complete. The City of Kitchener has completed the template and shared
the recommendations with staff and the Region of Waterloo. This is a summary of the
content of that document.
Definitions
CEMC — Community Emergency Management Coordinator; staff responsible for the City's
emergency management program
CLT — Corporate Leadership Team, consisting of the CAO and department heads,
responsible for non -pandemic business decisions
EOCMT — emergency operations centre management team
EOC — emergency operations centre which includes the EOCMT and sections responsible
for communications, planning, finance, operations, and logistics
IMS — Incident Management System; a standardized methodology and approach to
managing and responding to any size incident, emergency, or pandemic
PPE — personal protective equipment
Incident Type: Infectious Disease
The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global
pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory
syndrome coronavirus 2 (SARS-CoV-2).
Events:
The City of Kitchener's response to the COVID-19 Pandemic commenced in January 2020
by asking all City of Kitchener Departments/Divisions to update their respective Divisional
Action Plans through the Business Continuity process. A review and updated inventory of
our Personal Protective Equipment (e.g., N95 masks, sterile gloves, and gowns) was also
initiated by the Kitchener Fire Department staff. Surveillance began to capture information
regarding the spread of the virus on a global scale and regular updates were provided to
the EOCMT through weekly situational reports.
On March 6th 2020, the City of Kitchener activated their Emergency Operations Centre
Management Team (EOCMT) to ready the municipality for the response to the evolving
Pandemic.
On March 17th 2020, the Province of Ontario declared a Provincial Health Emergency and
on Wednesday, March 25th 2020, The Region of Waterloo, the City of Kitchener and all six
of the other local municipalities declared local Emergencies as well. The Federal
Government of Canada did not declare a Federal emergency and concentrated on
providing Public Health guidance, financial assistance to Canadian citizens and
businesses through various financial relief initiatives.
Page 34 of 71
The EOCMT Planning Section lead the recovery planning. Throughout the response and
recovery phases of this pandemic, the City of Kitchener's EOCMT and supporting staff
worked closely with the other local municipalities and the Region of Waterloo. The Region
of Waterloo initiated their Regional Pandemic Control Group on March 11 th 2020.
To help in the response and recovery efforts of this emergency, the pillars of emergency
management were leveraged - Mitigation, Preparedness, Response and Recovery. These
pillars were integrated into our EOCMT throughout the past two years and can be
considered from the perspective of the emergency management continuum diagram below
(Public Safety Canada). Since the introduction of vaccines in December 2020, City staff
and community partners have responded and moved in and out of the response and
recovery phases, under several different provincial frameworks, several times due to new
Variants of Concerns (VOC) such as the Delta and Omicron.
Emergency Management Continuum,
Taking advice from local Public Health at various points in time, the City implemented
multiple safety measures to protect staff and the public including the following:
• Ability to work from home when required by the Province for some roles
• Physical distancing of 2 metres in all locations and equipment
• Directional arrows / restrictions on flow of movement and other signage
• Limiting access to certain City facilities throughout the pandemic
• Cancelling public facing programs at various points in the pandemic
• PPE including masking, goggles / eye protection, and plexi -glass barriers
• Daily active screening for staff, contractors, and within private residences
• Public screening, contact tracing, and masking when required by the province
• Vaccination policy and rapid antigen testing program
• Limited capacity when required by the province
• More frequent and deep cleaning of facilities, vehicles, and shared equipment
Page 35 of 71
• COVID Safety Training and Safety Talks
• Case and Contact Management
• Workplace Safety and Insurance Board/Ministry of Labour Occupational Illness
Reporting
• Improved facility ventilation
The province entered the final exit step in their "Roadmap to Reopen" on March 1, 2022,
which lifts the majority of public health restrictions. On March 25, 2022, the City of
Kitchener and local area municipalities rescinded their emergency declarations. However,
the City retained all health and safety measures for staff until May 28, 2022.
Termination of this current emergency does not preclude the chances of new variants of
concern emerging, and thus reverting our municipality back into a pandemic response and
possible new emergency declaration. It does, however, signal our ability to move towards
the concept of a "new normal".
This after -action review was the final step prior to demobilizing the current EOC structure.
Impacts:
As of November 2, 2022 the Region of Waterloo has seen 52,596 cases of COVID-19,
which equates to roughly 8% of the population contracting the virus. These numbers are
underestimated, however, due to a change in testing and reporting protocols. There have
been 484 deaths in the Region due to the virus.
Currently the active Regional caseload sits at 345 people, with 63 patients in hospital, 7 of
which are in Intensive Care Units.
In addition to citizen health, the pandemic has also had negative effects on businesses
and employees in certain sectors throughout the Region due to multiple lock -downs during
the peaks of various waves and stringent mandates such as masking and vaccination
policies. Unemployment rates spiked early in the pandemic but have since leveled off.
Il ioin-UNy Uineirnlpioyment: IKiitcheneir Wateirlloo
Cambridge
14
1..1
1..0
8
6
4
l
11
Page 36 of 71
Source: Statistics Canada Labour Force Data
https://www150. statcan.gc. ca/t1/tbl1/en/cv. action ?pid= 1410038001
Reflections:
Staff and Council were asked to reflect on the City's response to the pandemic and
provide input on what worked well, what were the challenges, and what could be improved
going forward. Responses were summarized and reviewed by the Internal Auditor, CEMC
and two alternate CEMC's. A sample of those reflections is included below.
Strengths:
Activation and Notification Process
• Very quick mobilization of EOCMT and sections prior to the WHO declaration
Organizational Structure
• Utilizing the IMS structure which staff were familiar with from previous training was
comforting and provided a solid foundation for decision making
• It also ensured key areas were covered off (continuity of operations, future planning
and monitoring of provincial directives/regulations, logistics and HR directives,
health and safety, and ensuring we had financial support and monitoring)
Decision Making
• Strong leadership and direction coming from EOCMT
• Collaborative decision making and communication across the region to bring a
consistent approach to citizens across local municipalities
• Advocacy of our political leaders to the province to have key areas altered to help
expedite our response and support of local businesses and citizens
Facility
• Willingness and ability to allow office workers to work from home and have flexible
hours
• Virtual meetings with Council and CLT allowed regular business and decision
making to continue
Situational Awareness and Information Sharing
• Information flow between sections and EOCMT (up and down) was effective
• Staff bulletins were well received by those staff with email access (concise with
links to further detailed information)
• Having Communication staff sit on each section and EOCMT helped with
streamlining internal and external messaging
• Townhalls were an efficient and appreciated method of reaching staff and allowing
real time questions to be answered directly by leadership
Public Alerting and Orders
• Communication to the public to educate them on how we are keeping our staff safe
and continuing to deliver service to them
Planning
Page 37 of 71
• Recovery documents set a solid foundation for guidance and phased recovery
• Good partnerships with local and regional groups. Waterloo Regional CEMCs
worked well together as did the regional CAOs
Continuity of Operations
• Collaboration within and across teams to set up new processes in a timely way
• "Fast, not perfect" mentality allowed for rapid change to get the business running
again in a safe manner; staff excelled at problem solving
Resource & Financial Management
• Very fast response by TIS staff to get staff set up to work from home (Teams,
laptops, VPN, Sharepoint)
• Funding supports and resources from other levels of government (Safe Restart)
Health and Safety
• Quick implementation of new procedures, policies, and PPE to keep staff safe in
the field
• Minimal transmission in the workplace
Challenges:
Organizational Structure
• Lack of focus and clear delineation of which tasks fell to each EOC section;
sometimes there was duplication of work or transfer of issues between sections
• IMS hierarchy structure had challenges related to sharing decisions made by other
sections and cascading the information quickly across sections
Decision Making
• Periods of ambiguity around masking were tough for staff when customers were
polarized and staff had no ability to enforce
• Due to the length of the pandemic, working within the IMS structure for decision
making started to blur the lines between what is an operational decision and what is
a pandemic decision.
• Decision making was not linear — made decisions to advance and then retreated;
hard to track where we landed with each decision given the pace of changes
Facility
• Current configurations of workstations in some areas did not allow for 2 metres
physical distancing, requiring staff to alternate days in the office
• Having no access to washrooms for front-line outside staff was an issue
• Staff having to take lunch breaks outside gave the impression to the public that staff
were not working / being lazy, leading to complaints from the public
Staffing
• HR was severely understaffed considering the bulk of the policies, procedures and
health tracking fell to them, yet no additional resources were added
• Workload for Communications staff was a challenge, particularly the late Friday
afternoon announcements from the province
Page 38 of 71
• Public Health not able to provide interpretation on regulations; require internal
support or external counsel for this topic
Situational Awareness and Information Sharing
• Regional partners not able to meet our pace for coordinated communications; often
waiting on others before sending out
• Information overload — too much communicated at once and changes frequently;
difficult to remember what the current procedure is
• Different messaging for the public vs. staff was a challenge (i.e., when mandates
differed)
• Getting information to staff not on email or in the office was challenging
Public Alerting and Orders
• Public / media didn't understand that we received information from the Province at
the same time as they did and expected immediate response
• Volume of information coming from regulatory bodies, often late Friday afternoons,
with conflicting or unclear direction; forced to react to decisions outside of our
control
• Provincial directives / regulations were confusing and hard to decipher
Continuity of Operations
• Didn't have much time to respond or perfect process changes
• Volume of pandemic work was overwhelming, meaning other core work was put on
pause; some areas continued with corporate projects and expected support from
those with pandemic responsibilities which was unrealistic
• Payment options for the public fell short — citizens could access services online but
had to come in person to pay or send a cheque
• Disconnect in what the City's role was early on — save money or continue providing
service, e.g.,determining grass cutting was not a critical service, releasing all staff,
and then being told it was now a critical service
• Many staff taking on dual roles trying to manage the pandemic and perform their
regular work; culture and some work suffered as a result
Resources Management
• Putting people on and off leave due to shut -downs was time consuming and
challenging
• Moving from double or quad vehicle occupancy to single occupancy put a strain on
resources and was bad optics as more vehicles on the job site
• Dispatch radios did not work outside of Kitchener so dispatchers could not work
from home; took about 1 year to get the ability for dispatch staff to take calls from
home.
Health and Safety
• Staff didn't want to enter private residences (change gas meters, water meters,
service calls)
Page 39 of 71
• Excessive workload and condensed timelines has led to burnout and making it
difficult to find a work -life balance
• Extreme stress for some in leadership roles who were guiding staff with little
knowledge or training themselves; stress related to the pandemic; stress related to
increased workload
Recommendations:
There were many ideas for improvement provided by staff and management during this
review to address the challenges noted above. While all of the ideas for improvement will
be considered and evaluated, several key actions are recommended and are being
reviewed by senior management. These fall into two categories:
1. Preparedness actions which should be taken now to prepare for the next large
scale emergency or pandemic; and
2. Response and recovery actions which should be implemented during the next
emergency.
The actions will be reviewed and prioritized by the City in order to mitigate risk and
improve the overall emergency management program.
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
Capital Budget — The recommendation has no impact on the Capital Budget.
Operating Budget — The recommendation has no impact on the Operating Budget.
COMMUNITY ENGAGEMENT:
INFORM — This report has been posted to the City's website with the agenda in advance of
the council / committee meeting.
PREVIOUS REPORTS/AUTHORITIES:
• CAO -2022-008: 2022 Internal Audit Work Plan
APPROVED BY: Dan Chapman, CAO
ATTACHMENTS: none
Page 40 of 71
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Staff Repod
1
KK� R
Chief Administrator's Office www. kitchen er.ca
REPORT TO: Audit Committee
DATE OF MEETING: December 19, 2022
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 8, 2022
REPORT NO.: CAO -2022-494
SUBJECT: 2023 Internal Audit Work Plan
RECOMMENDATION:
That the 2023 Internal Audit work plan be approved as outlined in report CAO -2022-
494.
REPORT HIGHLIGHTS:
• The purpose of this report is to outline the proposed assurance and consulting activities
to be conducted by the Internal Auditor in 2023.
• The work plan consists of six assurance audits, two status updates, one consulting
engagement.
• There are no financial implications.
• Community engagement included this report posted to the city's website with the
agenda in advance of the council / committee meeting.
• This report supports the delivery of core services.
BACKGROUND:
Internal Audit Goal
The overarching goal of internal audit is to protect the City's assets and interests. 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.
Internal Audit Services
To fulfill the above goal, the internal auditor provides two types of service in accordance
with the Institute of Internal Auditors definitions:
Assurance services — which involve the internal auditor's objective assessment of
evidence to provide an independent opinion or conclusions regarding an entity,
operation, function, process, system, or other subject matter; and
Page 63 of 71
Staff Report
1
KK� R
Chief Administrator's Office www.kitchener.ca
Consulting services — which are advisory in nature and are generally performed at
the specific request of an engagement client. When performing consulting services,
the internal auditor should maintain objectivity and not assume management
responsibility.
Internal Audit Work plan
The assurance services included on the internal audit work plan outlined in this report
consists of topics that have been independently selected by the internal auditor. These
topics fall broadly into one of three categories:
1) Physical assets — such as physical inventory counts
2) Financial resources — such as expense audits
3) Policy compliance — such as hiring transparency
This annual plan consists of compliance and controls audits, confidential investigations, and
any other independent analysis as required. Standard assurance audit topics which are
common to most organizations or other municipalities are included in a recurring 6 -year
plan. Other assurance topics are added as required related to emerging risks, tips, or other
audit findings.
The internal auditor will also provide consulting services related to process reviews,
capacity analysis, organizational structure analysis, risk assessments and value for money
analysis as the need arises. These services are provided to aid staff in continuous
improvement in the design and delivery of City services. These types of reviews are
requested by divisional management, or by Council through discussions with the CAO.
Audit reports on each work plan item will be presented to Audit Committee as completed.
REPORT:
2023 Internal Audit Work Plan
Audit Committee is asked to approve the 2023 Internal Audit work plan shown below as
per the Audit Committee terms of reference.
Assurance Services:
Carried over from 2022
Audit Topic
Type of Audit
Parking and Mileage Claims
Compliance
Technology Field Assets
Physical Inventor
Underground Locates
Organizational structure / capacity analysis
Page 64 of 71
Staff Report
1
KK� R
Chief Administrator's Office www.kitchener.ca
New for 2023
Audit Topic
Type of Audit
Accounting
Controls
Petty Cash
Controls
Physical Inventory
Count verification
Hiring Transparency and Nepotism
Status update and compliance testing
Market —Alcohol Inventory
Status update
Confidential Investigations
As required
Consulting Services:
Topic Type of Analysis
INS Training Documentation Process Review
Definitions
Capacity Analysis — An analysis of current and future demand for service compared to
resourcing capacity.
Compliance audit - A test to determine if staff is following all rules, regulations and
policies associated with the service.
Confidential Investigations — Investigating staff or public complaints about any alleged
staff misconduct including, but not limited to, fraud, theft, or inappropriate behaviour.
Controls audit - An analysis and test of control points within a process to ensure that
fraudulent activity can be eliminated or mitigated.
Count Verification — Sampling physical inventory counts to verify the accuracy of staff
physical inventory counts.
Organizational Structure — Analyzing organizational structure options to best support
business objectives.
Process review — A review of process steps using Lean methodologies to eliminate waste
and improve the process efficiency and effectiveness.
Status update — A check-in on the status of recommendations and benefits achieved from
previous audits or reviews.
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
Capital Budget — The recommendation has no impact on the Capital Budget.
Page 65 of 71
Staff Report
1
KK� R
Chief Administrator's Office www.kitchener.ca
Operating Budget — The recommendation has no impact on the Operating Budget.
COMMUNITY ENGAGEMENT:
INFORM — This report has been posted to the City's website with the agenda in advance of
the council / committee meeting.
PREVIOUS REPORTS/AUTHORITIES:
There are no previous reports / authorities related to this matter.
APPROVED BY: Dan Chapman, CAO
ATTACHMENTS: none
Page 66 of 71
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