Core Control Audit of the Canadian Transportation Agency
Office of the Comptroller General
Why this is important
The Financial Administration Act, designates deputy heads as accounting officers for their department or agency. As accounting officers, deputy heads are accountable for ensuring that resources are organized to deliver departmental objectives in compliance with government policy and procedures
Core control audits provide deputy heads with assurance regarding the effectiveness of core controls over financial management in their respective organizations. By doing so, core control audits inform deputy heads of their organizations’ level of compliance with requirements contained in selected financial legislation, policies and directives.
About the Canadian Transportation Agency
The Canadian Transportation Agency (CTA) is an independent, quasi-judicial tribunal and economic regulator enabled under the Canada Transportation Act. Its mandate includes
- Economic regulation, to provide approvals, issue licences, permits and certificates of fitness, and make decisions on a wide range of matters involving federal air, rail and marine transportation
- Dispute resolution, to resolve complaints about federal transportation services, rates, fees and charges
- Accessibility, to ensure Canada’s national transportation system is accessible to all persons, particularly those with disabilities
The CTA exercises its powers through its members, who are selected by the Governor-in-Council (GIC) for full-time appointments and the Minister of Transport for temporary appointments. As of March 31, 2014, the CTA had five appointed full-time GIC members and one temporary member.
According to its Departmental Performance Report, the CTA had actual spending of roughly $29 million and 220 full-time equivalents during fiscal year 2013–14.
Core Control Audit Objective and Scope
The objective of this audit was to ensure that core controls over financial managementFootnote 1 within the CTA result in compliance with key requirements contained in the selected financial legislation, policies and directives.
The scope of this audit included financial transactions, records and processes conducted by the CTA. Transactions were selected from fiscal year 2013–14. The audit examined a sample of transactions for each of the selected policies and directives. The Appendix provides a complete list of policies and directives included in the scope of the audit and the overall compliance in the areas tested.
Conformance with Professional Standards
This audit engagement conforms with the Internal Auditing Standards for the Government of Canada, as supported by the results of the quality assurance and improvement program.
Hugo Pagé, CIA, CPA, CA
Acting Assistant Comptroller General
Internal Audit Sector, Office of the Comptroller General of Canada
Audit Findings and Conclusion
Core controls over financial management regarding the transactions tested within the CTA resulted in partial compliance with key requirements contained in four of the thirteen policies, directivesFootnote 2 and corresponding legislation tested, and full compliance in one. The CTA was not in compliance with key requirements contained in the remaining eight policies and directives tested.
Weaknesses were identified in the areas of documentation, approval and timeliness.
Weaknesses were identified in the delegation of financial signing authorities, as the signature specimen cards did not always match the Delegation of Financial Authorities Instrument. In addition, for acquisition cards, documentation was not consistently retained on file to substantiate their issuance, approval and conditions of use. With respect to contracting, documentation such as justification for non-competitive contracts and best-value analysis was not always on file. Additionally, contracting amendments were not always justified.
For government travel, supporting documentation for reimbursements was not always available, and applicable limits for reimbursement were not always justified. Planning documentation did not always reasonably justify the operational need for hospitality expenditures, and supporting documentation to substantiate whether the most economical means to avoid or minimize hospitality costs was not always on file. Furthermore, expenditure initiation and account verification were not always supported by complete documentation.
Appropriate procurement vehicles were not always chosen. For government travel, applicable limits for reimbursement were not always respected. Employee leave was not consistently approved by an individual with the proper delegated authority. For performance agreements and appraisals, documentation was not always signed and dated at the beginning or end of the performance period by all parties concerned.
Contracts and amendments were not consistently approved before the goods and services were received. In addition, approval of employee leave was not always performed in a timely manner.
Pre-approval was not always obtained prior to the expenditure initiation, or timeliness could not be determined. Similarly, account verification was not always performed on a timely basis, or timeliness could not always be confirmed. Furthermore, the payment and settlement was not always conducted on a timely basis.
The Deputy Head of the Canadian Transportation Agency should ensure that
- The Delegation of Financial Signing Authorities Instrument and the specimen signature cards are reviewed and updated annually.
- Proper documentation is retained on file for all acquisition cards to substantiate their issuance, approval and conditions of use. Additionally, the CTA should perform reassessment of employees’ need for an acquisition card, or reassessment of the credit limit amount, on a periodic basis or when responsibilities change.
- Business processes are improved and consistently performed in compliance with the Treasury Board Contracting Policy and that documentation is retained on file.
- Business processes are improved and consistently performed in compliance with the Travel Directive and that documentation is retained on file.
- Documentation supporting hospitality events is retained on file to certify that planning documentation reasonably justifies the operational need for the hospitality expenditures and that the most economical means to avoid or minimize hospitality event costs have been considered in the approval process.
- Employee leave is approved in a timely manner and by an individual who has the proper delegated authority.
- Performance reviews are based on pre-set performance objectives that are completed and documented at the start of the performance period and are signed by all concerned parties.
- Expenditure initiation and commitment control is documented, properly dated and recorded at the value expected to be incurred.
- Account verification is properly dated, supported by complete documentation and completed on a timely basis.
- Payment requisition is completed for the correct amount and on a timely basis.
The Canadian Transportation Agency (Agency) has reviewed the findings and recommendations of the Core Control Audit conducted by the Office of the Comptroller General for the fiscal year 2013-2014. The Agency is of the view that these statements accurately reflect the Agency’s internal control for financial management, contracting, travel & hospitality and human resources.
The Chair and Chief Executive Officer and senior management of the Canadian Transportation Agency take the findings of this report very seriously. As indicated in the following pages, the Agency has already implemented process changes in areas identified for improvement. In addition, follow-up actions have been planned for 2015-2016 and subsequent years to implement and monitor the Report’s recommendations.
The Agency wishes to thank the Office of the Comptroller General for its professional services.
The results of the audit and the management action plan have been discussed with the Deputy Head of the Canadian Transportation Agency and with the Small Departments Audit Committee. The Office of the Comptroller General of Canada will follow-up on the implementation of the management action plan.
Appendix: Policies and Directives Tested
|Policies and Directives Tested||Compliance|
|Directive on Delegation of Financial Authorities for Disbursements||Partially Met|
|Policy on Financial Management Governance||Met|
|Directive on Fleet Management: Light Duty Vehicles||Paritally Met|
|Directive on Acquisition Cards||Not Met|
|Directive on Accountable Advances||Partially Met|
|Policy on Payables at Year-End (PAYE)||Partially Met|
|Contracting Policy||Not Met|
|National Joint Council Travel Directive||Not Met|
|Directive on the Management of Expenditures on Travel, Hospitality and Conferences||Not Met|
|Directive on Leave and Special Working Arrangements||Not Met|
|Directive on Financial Management of Pay Administration||Not Met|
|Directive on Expenditure Initiation and Commitment Control||Not Met|
|Directive on Account Verification||Not Met|
Legend of Compliance ThresholdsFootnote 3
- Greater than or equal to 98% compliance
- Partially Met
- Greater than or equal to 80% and less than 98% compliance
- Not Met
- Less than 80% compliance