Report on the Audit of the Agreement with Prostitution Alternatives Counseling & Education Society

Audit Report

AUDIT REPORT

Prostitution Alternatives Counseling & Education Society
Vancouver, B.C.
Journey Women: Scouting New Paths Project
Agreement No.: 3110-P4
For the Period: March 1, 2002 to December 31, 2003

We have audited the amounts claimed by the Prostitution Alternatives Counseling & Education Society (PACE) relative to the above agreement for the period March 1, 2002, to December 31, 2003, to determine the degree of compliance with the financial terms and conditions of the agreement. The preparation of the claims, and compliance with the provisions of the agreement, are the responsibility of the recipient. Our responsibility is to express an opinion on the claim and on the compliance based on our audit and terms of reference.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the claims are free of material misstatement and that the recipient has adhered to the financial terms and conditions of the agreement. An audit includes examining, on a test basis, evidence supporting the amounts claimed and compliance with the financial terms and conditions of the agreement. An audit also includes assessing the accounting principles used and the reasonableness of significant estimates, if any, made by the recipient, as well of evaluating the overall presentation of the claims.

In our opinion,

a) the audited amounts of $ 233,575 for the period March 1, 2002, to March 31, 2003, and $ 129,015 for the period April 1, 2003, to December 31, 2003, presents fairly, subject to the qualification as detailed in Comment 2 of Schedule 2, in all material respects, the project costs in accordance with generally accepted accounting principles; and

b) the recipient has complied, in all material respects, with the financial terms and conditions, objectives and activities of the agreement.

Supporting information and related comments are provided in Schedules 1 and 2.

The recipient agreed with the audited amount and provided the information detailed in Comment 8 of Schedule 2.

VANCOUVER, B.C

Schedule 1 - Statement of Recorded and Audited Amounts for the Period March 1, 2002 to December 31, 2003

Schedule 1A - Summary of Recorded and Audited Amounts for the Period March 1, 2002 to March 31, 2003

Schedule 1B - Summary of Recorded and Audited Amounts for the Period April 1, 2003 to December 31, 2003

Schedule 2 - Explanation of Audit, Audit Qualifications and Comments

for the Period March 1, 2002 to December 31, 2003

1. Audit Adjustments

Audit Qualifications

2. _____'s Wages and Benefits

The approved budget under the contribution agreement allows $35,100 for each of _____ wages and _____ wages, for each of the years ended March 31, 2003, and March 31, 2004.

For the year ended March 31, 2003, the Audited Wages and Benefits includes $31,325 for the _____, $ 38,655 for the _____, and $ 10,385 for the _____. The _____'s time sheets did not specify hours worked on the project, and thus we were not able to confirm the accuracy of the wages charged to the project. The _____ has stated that during the period July 1, 2002, to September 30, 2002, she was involved in project specific planning, implementation and human resources issues.

Since we were unable to determine if the _____'s salary is an eligible project expense, and were unable to specifically confirm the individual's activities in relation to the project, we have included the _____'s wages of $ 10,385 in the Audited Amounts, subject to Departmental approval.

It is recommended that, in the future, time sheets for non-project dedicated employees detail the time spent on projects. It is further recommended that the recipient obtain permission in writing from Justice Canada when claiming wages for non-project dedicated staff.

Audit Comments

3. Claimed Amounts differ from Recorded Amounts

The recipient reallocated expenditures recorded in the books and records to match the cost categories in the approved budget on the quarterly claims. The recipient was unable to reconcile the books and records to the claims for the audit, therefore our audit was based on the recorded amounts rather than the claimed amounts. The Reallocated Amounts in Schedule 1A reflect the changes that were required to revise the recorded cost categories to the approved budget cost categories.

It is recommended that, in the future, the recipient organize cost categories in their books and records to parallel the cost categories in the approved budget. In addition, it is recommended that complete documentation be maintained for reallocations from the books and records to the claims.

4. Authorized Amounts

The authorized amounts represent the maximum approved project expenditures that can be funded by Justice Canada under the contribution agreement for the period March 1, 2002, to March 31, 2004. For information purposes, the prorated amount for the audit period of March 1, 2002, to December 31, 2003, is $365,704.

5. Contract Administration Expenses

The approved budget allows for Contract Administration expenses of 10% of the total authorized project amount. For the year ended March 31, 2003, the Audited Amount of $23,420 is 10% of the authorized amount. For the period April 1, 2003, the recipient has not recorded Contract Administration expenses.

6. Financial Management and Budgeting

The recipient receives funding from several sources and operates several programs. We noted that the recipient's staff is, to some extent, unclear as to how to allocate expenditures to the various programs in the books of account. Further, the recipient does not fully identify the rationale for allocating administrative expenses to the various programs. The recipient should establish a rationale for allocating administrative expenses which is reasonable and equitable. While the books of account are corrected at year end, and periodically throughout the year, to better reflect the actual costs of the programs, the lack of integrity of the books at certain times causes budgeting and cash flow problems in the programs. The recipient agreed with the above comment and indicated that budgeting and cash flow problems in the program were reportedly also the result of untimely receipt of funds from the Department.

We recommend that the recipient employ a qualified bookkeeper, on a part time basis, to provide bookkeeping training to staff and to ensure that the books of account are correct and complete throughout the year. We also recommend that the Board of Directors perform budget variance, on a monthly basis, for each program.

7. Project activity reports

The contribution agreement required the recipient to submit quarterly activity reports and an interim evaluation report during the period under audit. At the recipient's offices we were not able to confirm whether the recipient complied with this requirement since the reports were prepared and submitted by several staff members, and copies of the reports were not readily available. We were able to confirm with Department officials, however, that the reports were received on a timely basis in compliance with the contribution agreement.

It is recommended that, in the future, that the Agency Coordinator control the submission of activity reports, and that copies of the reports, as well as proof of the submission date, are retained in one location in the recipient's offices.

8. Auditee Comments

The recipient's representative stated that the Board of Directors and staff will work with the Department to improve financial management of the program.