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HomeMy WebLinkAboutCAO-09-043 - Community Centres Audit Report J db KITCHENER Chief Administrator's Office REPORT TO: DATE OF MEETING: SUBMITTED BY: PREPARED BY: WARD(S) INVOLVED: DATE OF REPORT: REPORT NO.: SUBJECT: Mayor Carl Zehr, Chair and members of the Audit Committee September 21, 2009 Loretta Alonzo, Performance Measurement and Internal Auditor Loretta Alonzo, Performance Measurement and Internal Auditor All September 14, 2009 CAO-09-043 COMMUNITY CENTRES AUDIT REPORT RECOMMENDATION: That Chief Administrator's Office report CAO-09-043 be received for information. BACKGROUND: In response to requests for assistance from staff and following discussions with the General Manager, Community Services and The Chief Administrative Officer, the Internal Auditor conducted an administrative audit of all City of Kitchener Community Centres during the period from May to August 2009. REPORT: The following summary contains the highlights of the Auditor's report: Audit Objectives: · Assess the integrity and effectiveness of cash controls · Random audit of 2008-2009 Neighbourhood Association transactions · Random audit of rental and miscellaneous revenue transactions · Assess the accuracy of revenue reporting · Evaluate the effectiveness of manual reporting systems · Identify options for technology to replace manual processes Scope of audit: · Centres audited: · Breithaupt · Centreville-Chicopee · Chandler-Mowat · Country Hills · Doon Pioneer Park · Downtown · Forest Heights · Mill-Courtland · Rockway · Stanley Park · Victoria Hills (completed in Spring of 2009) · Processes audited: · Program registration processes (City of Kitchener and Neighbourhood Association) · Revenue tracking and reporting · Cash handling, storage, security · Bank deposits · Payment receipts · Random audit of 2008-2009 Neighbourhood Association transactions · Random audit of 2008-2009 City of Kitchener transactions · General administrative processes · Facility rental transactions and contracts · Verification of cash, credit card and debit card transactions and reporting ** Note: Senior's Day Programs, Meal Programs and Aquatics were not included in this review. ** Note: While the scope of this review did not include analysis or opinion regarding the relationship between the City of Kitchener and Neighbourhood Associations, many of the findings and recommendations within this report may necessitate a full review of the affiliate agreements between the parties. In the context of customer service and technology it may be necessary to renegotiate these agreements which would involve reports to, and direction from, Council. Methodoloav: The following research and analysis was undertaken for this review: · Interviews with 23 community centre staff · Financial statements - 2008 · Rental contracts · CLASS system reports · Daily revenue summaries · Deposit slip system reports · Daily transaction reports · Debit card slips · Visa, MasterCard, American Express slips · Payment receipt records · Cheque records · Neighbourhood Association registration forms · Neighbourhood Association cash transfers · Cash handling and bank deposit policies and procedures · Program attendance records · Safe combination procedures · Key control procedures · Petty cash records · Mass registration processes · Revenue reporting integrity · Miscellaneous revenue (pop, candy, food vending) · Point-of-sale reports, reconciliations Financial Reports 2008: Income Statement *Note: Does not include any Neighbourhood Association transactions Community Centre Revenue Expenses Net Profit (Loss) Breithaupt 244,488.17 206,146.80 38,341.37 Centrevi Ile-Ch icopee 26,686.51 161,430.74 (134,744.23) Chandler-Mowat 18,097.47 180,334.81 (162,237.34) Country Hills 46,167.87 242,940.43 (196,772.56) Doon Pioneer Park 39,145.03 196,436.42 (157,291.39) Downtown 93,877.10 516,861.93 ( 422,984.83) Forest Heights 36,829.86 270,880.72 (234,050.86) Mill-Courtland 5,039.79 130,525.38 (125,485.59) Rockway 87,152.59 343,782.12 (256,629.53) Stanley Park 21,644.15 242,575.54 (220,931.39) Victoria Hills 32,459.62 311 ,639. 1 6 (279,179.54) TOTAL $651,588.16 $2,803,554.05 (2,151 ,965.89) 2008 Miscellaneous Revenue (copies, vending machines, etc.) Community Centre I Index Number I Amount Centreville 621235 $1,616.33 Chandler-Mowat 621200 $361 .38 Country Hills 621215 $2,861.75 Doon Pioneer Park 621230 $4,461 .22 Downtown 621110 $577.09 Forest Heights 621240 $2,036.35 Mill Courtland 621220 $4,275.97 Rockway Centre 621100 $12,006.52 Stanley Park 621250 $3,001.70 Victoria Hills 621205 $1,973.10 TOTAL I $33,171.41 Auditor's Recommendations: 1. Research and evaluate available technology solutions (point-of-sale, CLASS, spreadsheets, etc); determine the optimum level of computerization for City and NAs and implement a system to handle, at minimum, program registrations and payments and daily administrative processes in the centres 2. Controls should be established to ensure all transactions can be verified. NA manual registration forms and payment receipt books should be numerically controlled, issued and recorded in sequence. They should be verified at least monthly by management. Transferring cash from City to NA should be verified and signed off by both parties and NAs should use their program attendance records to validate the payments collected and transferred to them by City staff 3. All staff should be using computers to access email and the intranet. At minimum, until such time as software solutions have been implemented, spreadsheets should be used to track daily registration and payment transactions instead of pen and paper forms 4. The City's relationship with Neighbourhood Associations should be reviewed to determine the level of administrative support we are prepared to offer and at what cost, as well as the requirement of the City to support NA registration processes. City staff job profiles should be reviewed if staff are performing accounting functions such as payroll, accounts payable etc. for the NAs and these duties are not reflected in the position descriptions 5. Develop an online registration process, either through CLASS, the City's web site, or other means to provide optimum service to the community. The system should also provide electronic payment options. As an interim measure, centres should be equipped with the ability to accept debit and credit card payments. This would necessitate agreements with the NAs to cover the costs of service and accounting procedures to transfer funds from the City to the NAs 6. Develop standardized templates, forms and procedures (even while still operating manually) across all centres to record program registrations, payments, miscellaneous revenue etc. Centres that have well-developed manual systems should be used as the model for these standards 7. Research the cost of implementing point-of-sale terminals in all centres 8. Centres should be equipped with debit/credit processing terminals to facilitate payments from customers. The NAs should be prepared to share the costs of such an implementation and new accounting processes would be required to handle inter- organization transactions (See Recommendation #5) 9. Bank deposits should be made in compliance with the existing policy which states: "The deposit must be prepared weekly or when the total on hand reaches $500 (whichever comes first). This includes cheques, cash and amounts from debit and credit cards (non- cash items). If possible, the deposit slip should be prepared by two people where large amounts of cash are involved. For deposits with non-cash items such as cheques, VISA or debit cards, one person preparing the deposit slip is sufficient." 10. Centre staff should request that all bank deposits be picked up by security staff for delivery to the bank 11. Proper retention of accounting records should be reviewed with staff in compliance with regulatory requirements. 12. NA volunteers should be required to pick up their deposits at least weekly and should be notified in writing of this requirement 13. Facility rental contracts should always be prepared in CLASS and the contracts must be fully completed and signed by the customer in order to be valid 14. CLASS system should be installed at all community centres (Mowat-Chandler, Mill- Courtland) 15. All facility keys should be stored in a locked cabinet or drawer with access given to only one or two staff 16. Cash drawers used during business hours should be more closely monitored and when cash amounts exceed $200.00, funds should be placed in the safe 17. Increased review of registration and payment transactions, and oversight by management will reduce opportunities for theft and identify issues early should they arise 18. The physical location of the safes should be examined and if necessary the safes should be relocated to allow staff to access them more easily 19. Provide training for supervisors and managers in optimal administration procedures i.e.) How to verify their revenue reports and reconcile cash reports 20. Internal audit should be scheduled every two years at request of General Manager, Community Services to ensure continuity of improvements CONCLUSION: The community centres are not intended to operate as enterprises within the Corporation and therefore, there is no expectation or requirement that they are profitable or self-supporting. This audit does not present any opinions or recommendations on the financial viability or feasibility of operating the community centres. The centres provide a high level of customer service to a diverse community and it is the auditor's opinion that they effectively deliver a wide variety of programs and services in conjunction with the Neighbourhood Associations. Each centre has developed its own unique means of reaching out to the communities they serve by delivering programs and services that are relevant to their customers. The majority of staff are long-term City employees with extensive knowledge about their unique communities and the functions performed at each centre. In most situations, City staff have excellent relationships with the NAs and conversely, the NAs enjoy numerous benefits from their association with the City of Kitchener. In reviewing the key issues facing the centres, it is clear that the overall lack of technology has begun to impact the level and quality of service we strive to deliver to the community. Centre processes mirror NA operations, whose outdated processes have not kept pace with the technologies used in other areas of the Corporation and it appears that the community's growth has exceeded the capacity of some centres to deliver programs in high demand. Of some concern is the lack of clear parameters defining the City's role in supporting the NAs and to what extent the NAs should be reliant on the City's resources to perform their administrative duties? It would be beneficial to both parties to review the guidelines for the relationship and clarify roles and responsibilities. In summary, the community centres will require assistance through technology and administrative systems if they are to continue to meet their mandate now and into the future. City staff are in the process of reviewing the audit report and will respond to the recommendations in late November 2009. Their response will be presented to the Audit Committee in the first quarter of 2010. FINANCIAL IMPLICATIONS: None ACKNOWLEDGED BY: Pauline Houston, General Manager of Community Services