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Annual Report

Presentation to Audit

Committee November 26, 2015 Office of the Auditor General
Committee
November 26, 2015
Office of the Auditor General
OAG Annual Report: Audits
OAG Annual Report: Audits
  • AUDIT OF 3-1-1 CONTACT CENTRE

  • AUDIT OF ACCOUNTS PAYABLE

  • AUDIT OF INFRASTRUCTURE SERVICES DEPARTMENT

    • ADMINISTRATION

    • TECHNICAL

  • AUDIT OF IT

    • RISK MANAGEMENT

    • IT SECURITY INCIDENT HANDLING AND RESPONSE

  • AUDIT OF THE MACKENZIE KING BRIDGE

  • RESURFACING

    • AUDIT OF SPECIES AT RISK

    • AUDIT OF WINTER OPERATIONS CAPACITY PLANNING AND PERFORMANCE MEASUREMENT

    OAG ANNUAL REPORT: AUDIT OF 3-1-1 CONTACT CENTRE
    OAG ANNUAL REPORT: AUDIT OF 3-1-1
    CONTACT CENTRE
    • 3-1-1 agents are courteous, knowledgeable and service-oriented clients are generally satisfied with the service

    • Opportunities to better support the 3-1-1 agents by improving the information in the knowledge base that they rely upon

    • Scheduling of agents could be improved

    • New scheduling system could be better used to eliminate unnecessary manual activities

    • 3-1-1 service standard is lowest of other municipalities

    • This standard not approved by Council

    • Semi-annual performance report is misleading

    • Wait times are longer than might be expected

    Potential savings

    • Recommendations to automate a number of processes could create efficiencies for 3-1-1 operations

    Management agreed with all 34 recommendations

    OAG ANNUAL REPORT: AUDIT OF ACCOUNTS PAYABLE
    OAG ANNUAL REPORT: AUDIT OF ACCOUNTS
    PAYABLE
    • Controls over the accounts payable process are adequate,

    • Sample invoices: 20% were paid late and 5% missed discount totaling a potential savings loss of $603,437

    • Application controls within MarkView and SAP are operating effectively

    • Increase use of application controls

    • Systems can be configured to search for duplicate payments

    OAG ANNUAL REPORT: AUDIT OF ACCOUNTS PAYABLE
    OAG ANNUAL REPORT: AUDIT OF ACCOUNTS
    PAYABLE

    Potential Savings

    • Use receipt date rather than the invoice date to increase discounts taken

    • Tracking and sharing penalties paid for late payments would allow the City to be aware of money that is being lost as a

    result of inefficient/ineffective internal processes

    • Further opportunities to leverage existing technology to prevent duplicate payments

    • Opportunities for potential savings through enhanced analytics/monitoring tools

    Management agreed with all 7 recommendations

    OAG ANNUAL REPORT: AUDIT OF INFRASTRUCTURE SERVICES DEPARTMENT – ADMINISTRATIVE MANAGEMENT
    OAG ANNUAL REPORT: AUDIT OF
    INFRASTRUCTURE SERVICES DEPARTMENT –
    ADMINISTRATIVE MANAGEMENT
    • No budget management for capital expenditures planned for the year

    • Could assist cash-flow management and improve over-sight and control of projects

    • Current process of quarterly reviews of the operating budget status could be improved by monthly reviews

    OAG ANNUAL REPORT: AUDIT OF INFRASTRUCTURE SERVICES DEPARTMENT - ADMINISTRATIVE MANAGEMENT
    OAG ANNUAL REPORT: AUDIT OF
    INFRASTRUCTURE SERVICES DEPARTMENT -
    ADMINISTRATIVE MANAGEMENT
    • Overtime, sick leave and vacation were generally found to be well managed

    • Opportunity to automate some paper forms

    • Minor issues found with ISD’s training processes

    Management agreed with all 9 recommendations

    OAG ANNUAL REPORT: AUDIT OF INFRASTRUCTURE SERVICES DEPARTMENT – TECHNICAL MANAGEMENT
    OAG ANNUAL REPORT: AUDIT OF
    INFRASTRUCTURE SERVICES DEPARTMENT –
    TECHNICAL MANAGEMENT
    • Project management and inspection processes in place

    • Those processes not consistently applied

    • Areas requiring further attention

      • Project schedules

      • Budget control

      • Communications

      • Quality assurance

      • Project reviews

  • Issues identified in previous audits

    • Responsibility for redesign costs

    • Recovery of change orders due to errors

    • Exercising of contract liquidated damages

    • Project oversight and others

  • OAG ANNUAL REPORT: AUDIT OF INFRASTRUCTURE SERVICES DEPARTMENT – TECHNICAL MANAGEMENT
    OAG ANNUAL REPORT: AUDIT OF
    INFRASTRUCTURE SERVICES DEPARTMENT –
    TECHNICAL MANAGEMENT
    • Potential Savings

      • Modify procedures and/or the contract terms requiring a reduction of 10% on the rates will deliver a saving of $350,000 annually

      • Using more in-house construction inspectors

    Management agreed with all 8 recommendations

    OAG ANNUAL REPORT: AUDIT OF IT RISK MANAGEMENT
    OAG ANNUAL REPORT: AUDIT OF IT RISK
    MANAGEMENT
    • IT-related risk is significant

    • Low maturity level of most City departments for IT Risk Management due to Governance and Leadership issues

    • Comprehensive Governance component of an Information Technology Risk Management (ITRM) Framework not developed

    • Some components of an effective ITRM Framework embedded in the ERM

    • Potential vulnerability of the IT risks could have significant impacts on the City’s business lines

    OAG ANNUAL REPORT: AUDIT OF IT RISK MANAGEMENT
    OAG ANNUAL REPORT: AUDIT OF IT RISK
    MANAGEMENT
    • Little flexibility for required adjustments to the ITS infrastructure budget and/or other departmental budgets for high priority

    • Decentralized approach used to fund IT projects and absence of a City-wide priority ranking system impacts the effectiveness of CITMT’s authority relative to its mandate

    • Decisions made regarding IT investments/expenditures may not be aligned with overall corporate priorities and/or risk management objectives

    • The reporting structure to and from the CIO is not consistent with best practises

    OAG ANNUAL REPORT: AUDIT OF IT RISK MANAGEMENT
    OAG ANNUAL REPORT: AUDIT OF IT RISK
    MANAGEMENT
    • IT issues and priorities that are critical to City-wide objectives do not necessarily rise to the top

    • In some business units, people who have little or no technical

    training are being tasked, under the ERM Framework, with the

    identification of risks and/or related mitigation strategies

    • The process of identifying IT risks is first impeded by the absence of a full inventory of the IT universe across the City (applications, business owners, networks, interdependencies, etc.)

    • No complete risk register that is developed with input from trained and qualified IT professionals

    OAG ANNUAL REPORT: AUDIT OF IT RISK MANAGEMENT
    OAG ANNUAL REPORT: AUDIT OF IT RISK
    MANAGEMENT

    Potential Savings

    • Overall efficiencies and improved direction, advice and reporting of IT activities on a City-wide basis will lead to economies of scale and better decision making for IM/IT related decisions

    • Improved identification, assessment and mitigation initiatives will protect the City against potential system failures or security breaches, including cyber-attacks, which could interfere with business activities

    • Necessary changes to upgrade/replace the City’s infrastructure and to adequately increase the City’s IT security protection will require significant investment in coming years.

    Management agreed with all 8 recommendations

    OAG ANNUAL REPORT: AUDIT OF THE MACKENZIE KING BRIDGE RESURFACING
    OAG ANNUAL REPORT: AUDIT OF THE
    MACKENZIE KING BRIDGE RESURFACING
    • Part of the OC Transpo Transitway

    • Also part of the NAC parking garage, leakage a chronic problem

    • These factors affected conditions of pavement

    • City had to mill and repave portions of the bridge annually

    • 2004 study of options concluded that most economical solution:

      • Annual pavement repairs for 30 years

      • Mill and repave the entire surface every 15 years

      • Replace the waterproofing and asphalt every 30 years

      • By 2007 staff worked to find a different approach

    OAG ANNUAL REPORT: AUDIT OF THE MACKENZIE KING BRIDGE RESURFACING
    OAG ANNUAL REPORT: AUDIT OF THE
    MACKENZIE KING BRIDGE RESURFACING
    • Staff decided to remove the waterproofing and asphalt, and repave using a new product

    • Total cost of removing the waterproofing for the entire length of the bridge and repaving was $625,000 in 2008

    • In 2009 asphalt had to be removed and repaved using conventional waterproofing and asphalt at a cost of $718,000

    • A portion of the cost of the 2008 and 2009 repaving contracts (a total of $1,243,000) could have been avoided if the City had continued with the program of milling and repaving only those sections of the bridge pavement requiring repair in accordance with the recommendations of the 2004 report

    • The decision to repave using a new product was made without proper design and testing, and without following alternative evaluation methods that were formalized in the guidelines for structure renewal

    • There were 38 findings

    Management agreed with all 11 recommendations

    OAG ANNUAL REPORT: AUDIT OF SPECIES AT RISK
    OAG ANNUAL REPORT: AUDIT OF SPECIES AT
    RISK
    • Good understanding of the requirements to comply with the regulation

    • Protocols and official documents to guide City operations

    • Operational improvements are required

      • Mitigation measures by Public Works department are not specific enough for maintenance activities

      • For major infrastructure projects, there is no protocol to review the environmental and legislative contexts before starting the work on-site.

  • Up-to-date list of species at risk in the Ottawa area, but it is not available to all staff members having to deal with such species

  • Improvements to the communication process are required

  • Management agreed with all 8 recommendations

  • OAG ANNUAL REPORT: AUDIT OF WINTER OPERATIONS CAPACITY PLANNING AND PERFORMANCE MEASUREMENT

    OAG ANNUAL REPORT: AUDIT OF WINTER OPERATIONS – CAPACITY PLANNING AND PERFORMANCE MEASUREMENT  City Council
    • City Council approved Maintenance Quality Standards (MQS) in May of 2003

    • MQS are higher than Provincial Minimum Maintenance Standards

    • MQS not been reviewed or assessed for financial impact since they

    were set

    • City has a high ratio of owned to contracted equipment

    • The City has not conducted a full analysis to determine the optimum mix of internal and external services to achieve the highest level of economy and efficiency for these services

    • There is a risk that City staff are spending time on tasks that are available at lower cost and therefore is paying more than necessary for winter control services

    OAG ANNUAL REPORT: AUDIT OF WINTER OPERATIONS CAPACITY PLANNING AND PERFORMANCE MEASUREMENT

    OAG ANNUAL REPORT: AUDIT OF WINTER OPERATIONS – CAPACITY PLANNING AND PERFORMANCE MEASUREMENT  Potential Savings
    • Potential Savings

    • The demand for these miscellaneous activities has not been quantified to clearly demonstrate the need and legitimacy

    • High likelihood that these activities could be reduced to lower costs

    • City could conduct a review to ensure the City has the optimal mix of internal and contracted services for Winter Operations

    • Review of and changes to current MQS to bring them in line

    with provincial standards

    • Better controls over receipt and use of materials

    Management agreed with all 20 recommendations

    OAG ANNUAL REPORT: COMMON THEMES FROM AUDITS
    OAG ANNUAL REPORT: COMMON THEMES FROM
    AUDITS
    • Lack of financial analysis used in decision-making

    • Full efficiencies are not realized or evaluated when new technology implemented

    OAG Annual Report
    OAG Annual Report

    Reporting going forward:

    • Report annually on audit reports completed

    during the year

    • Follow-up audits will be presented as they are

    completed

    • Fraud and Waste Hotline report will be presented annually

    Acknowledgement
    Acknowledgement

    We wish to express our appreciation for the continued cooperation and assistance afforded the audit teams by

    the City Manager, management and staff.

    Staff of the Office of the Auditor General

    Suzanne Bertrand Sonia Brennan Alina Chimet

    Ken Hughes

    Ed Miner Janet Onyango

    Louise Proulx Lise Renaud Margaret Sue

    Questions
    Questions

    Thank you