Management action plan, core control audit of the Transportation Safety Board of Canada, March 2013 - Transportation Safety Board of Canada

The Transportation Safety Board of Canada (TSB)’s opinion of the audit report

The TSB has reviewed the findings and the recommendations of the OCG audit. The TSB generally agrees with the findings and recommendations. However, we believe that the OCG priority rating of the recommendations are somewhat overstated as they do not take into consideration the actual risks associated with each finding. The TSB has undertaken a detailed review of the individual audit findings and does not believe that these represent significant deficiencies in the TSB’s internal controls. Nevertheless, the audit noted areas where the department could improve its recordkeeping and adjust its internal controls. The TSB has already taken corrective action in most areas and expects to complete the remaining changes shortly. An ongoing challenge will be balancing the need to document evidence of detailed policy compliance against the limited human resources capacity of a small department. However, the TSB will continue to strive to operate an effective financial control environment based upon sound risk management practices.

Audit entity sign off on the management action plan

Wendy A. Tadros
Chair
Transportation Safety Board of Canada

The original version was signed by Wendy A. Tadros on 27 March 2013

Management action plan


OCG recommendations	OCG priorities	TSB planned actions	Responsibilities (position title responsible for the actions)	TSB Timelines (actual planned dates of implementation)
1. TSB should ensure that a signed acknowledgement of acquisition card responsibilities including acquisition card restrictions and modifications to acquisition card limits are retained on file.	HIGH	The findings of missing cardholder agreements and documentation of increases to card limits generally date back to cards issued in 2007. Documentation retention practices in recent years are far better. Finance has reviewed all current acquisition cards and ensured that cardholder agreements and authorized limits are on file within the Finance and Administration Division.	Manager, Finance and Administration	Completed January 2013
2. TSB should ensure that accountable advances are reconciled monthly and that evidence of the reconciliation is retained on file.	MEDIUM	Due the relatively low dollar value of petty cash funds and the frequency of their replenishment, the TSB has not required monthly reconciliations by petty cash administrators given the low risk of loss. The TSB agrees to modify its petty-cash replenishment form to detail that the Responsibility Centre Manager’s sign-off confirms that a reconciliation has been performed by them. The TSB will also review its procedures to ensure that they incorporate an adequate level of controls commensurate with the risk involved.	Manager, Finance and Administration	March 2013
3. TSB should develop business processes and retain documentation on file to ensure that: Bid selection method and evaluation criteria are clearly outlined in the bid solicitation document for competitive contracts before the request for proposal is issued; The evaluation of proposals and contractor selection are conducted in accordance with the pre-established criteria as stated in the request for proposal to demonstrate that the evaluation was conducted in an open, fair and transparent manner; The bid evaluation is documented on file, along with an evaluation report; Contract evaluations are signed by a minimum of two clearly identified evaluators; Contract amendments are justified and signed before the original contracts expire.	HIGH	The TSB does have business processes in place to ensure that bid selection methods and evaluation criteria are well defined for competitive contracts. The TSB agrees that in the single instance noted the bid solicitation document was unclear. The lessons learned from that procurement were discussed with the responsibility center manager and the procurement officer. The TSB’s evaluations are currently well defined and conducted as per pre-defined evaluation criteria. The audit faulted the TSB for not verifying the security clearances of all bidders when the security clearance was a mandatory criterion. The oversight was that the TSB should have identified security clearances as a condition of contract award and not a mandatory criterion. This change in practice has been put in place. The TSB has processes in place to ensure individual bid evaluations are documented on file. However, the TSB did not have the practice of preparing a summary evaluation of all bidders where the identification of the successful bidder was clear (e.g. only one compliant bidder, or few evaluation criteria). TSB procurement personnel now include summary evaluation reports in all their competitive contract files where a request for proposal was issued. The individual bid evaluations have always been signed by the evaluators. The TSB agrees that summary evaluation reports should be signed by a minimum of two evaluators. The procurement officer will ensure their signature is obtained on the summary evaluation report. The TSB has a process to track contracts to ensure that amendments are signed prior to the expiration of the original contract. However there are circumstances where the TSB and the supplier are not able to reach an agreement on an amendment prior to the expiration of the contract (e.g. disagreements with the performance of the supplier). The TSB agrees with the recommendation of improving the documentation of the justification for contract amendments. The Request for Amendment form has already been modified so as to include a new mandatory field: "Justification for Amendment".	Manager, Finance and Administration	Completed October 2012 Completed April 2012 Completed April 2012 Completed April 2012 Completed April 2012
4. TSB should ensure that justification for the post-authorization of travel is documented on file.	LOW	The TSB agrees with the recommendation. The nature of the department’s mandate requires that TSB investigators deploy to transportation occurrence sites on an urgent basis at any time of day. Responsibility centre managers and their administrative officers will be reminded of the need to include documentation with the travel claim of the justification for post-authorization of travel.	Manager, Finance and Administration	Completed October 2012
5. TSB should ensure that account verification of hospitality events is performed by a delegated authority who did not attend the event.	HIGH	The TB Directive on the Management of Expenditures on Travel, Hospitality and Conferences recognizes that the Deputy Head or a delegated authority may approve hospitality even when the individual approving is in attendance. The majority of the transactions noted were approved by the Chief Operating Officer who has been delegated the same authorities as the Chair of the TSB. In the future, the TSB will ensure that the CFO co-signs account verification for events attended and approved by either the Chair or the Chief Operating Officer.	DG Corporate Services	Completed January 2013
6. TSB should ensure that the security assessments and reliability level are defined and determined as conditions of employment for casual employees.	HIGH	The audit observation relates to the fact that in 2010-11, letters of offer for casual employees did not specify that a security clearance was a condition of employment. However, in practice, security clearances were obtained for casual employees. During 2011-12, the templates of letters of offer were modified and the letters of offer for casual employment now refer to the security clearance as a condition of employment. As such, the HR Advisor ensures the candidate’s security clearance is valid prior to forwarding the letter of offer to the sub-delegated manager for signature.	Manager HR	Completed October 2012
7. TSB should ensure that proper departure procedures are followed and are documented.	MEDIUM	The TSB has established and documented departure procedures. The audit finding relates to the fact that the departure form was not used for casual employees as they are not provided corporate assets (e.g. cell phone, Blackberry). The TSB now requires that the responsibility center managers of all casual employees complete the departure form.	Manager, Finance and Administration	Completed April 2012
8. TSB should ensure that proper documentation is retained on file to demonstrate that payment and settlement is accomplished before the payment is released and verifies the correctness of the payment requested.	HIGH	The TSB agrees with the finding. The audit noted instances where the section 33 signature was dated after the payment release date. These findings only relate to transactions approved by one employee, who acted in the absence of another employee. The employee reviewed the transactions and then exercised the on-line authorization but was inattentive in signing and dating the paperwork. This employee has been informed of the importance of accurately documenting approvals. The TSB will develop step-by-step instructions for exercising section 33 to ensure complete documentation.	Manager, Finance and Administration	Completed October 2012
9. TSB should ensure that expenditure initiation is performed by an individual with the delegated authority to do so before expenses are incurred and that documentation is retained on file, particularly in the area of payroll administration.	HIGH	The TSB has controls in place to ensure that expenditure initiation is performed by an employee with the delegated authority and prior to the expense being incurred. This recommendation covers certain findings noted above and appropriate corrective action is detailed above. For payroll administration, the audit observation relates to providing documented evidence of the pre-approval. The TSB will review opportunities to improve the documented evidence of pre-approval of expenses by the delegated authority and implement changes where appropriate.	Manager Finance and Administration Manager, Human Resources	March 2013