Administrative Review — RCMP 125: "A" Division (NCR)

see also: Administrative Review: "C" Division

ISSUE:

To conduct an administrative review of the RCMP 125 audit report and in particular focus on the Internal Audit’s findings and ascertain the causative nature of the RCMP’s inability to provide supporting documentation for the random number of transactions chosen during the course of their audit.

BACKGROUND

Internal Audit Branch had submitted their audit report in December 2002.

Objectives of the Audit

Working within this scope, the objectives of the audit were to provide assurance that:

1. PWGSC sponsorship funds, as agreed, were received, through Lafleur/Gosselin, for activities related to the RCMP’s 125th anniversary;

2. Expenses related to PWGSC’s sponsorship of the RCMP’s 125th anniversary were compliant with applicable sponsorship agreements, policies, procedures and regulations including those in the Financial Administration Act (FAA0, the Contracting Policy and the Policy on Delegation of Authorities of Treasury Board Secretariat (TBS) and of the RCMP; and,

3. PWGSC sponsorship funds and related expenses for the RCMP’s 125th anniversay were properly and accurately recorded for financial purposes.

Results of the Audit

... However, given that some information required to complete our audit was not available for review, we are unable to provide reasonable assurance that the above objectives 2 and 3 were achieved."

Mr Paul GAUVIN, D/Commr Corporate Management and Comptrollership in a letter to the Commanding Officer "A" Division on March 17, 2003 titled Administrative Review - RCMP 125 stated, " ...Internal Audit does not have the authority to conduct an investigation under Section 40 of the RCMP Act or the relevant federal statues. Accordingly, the involvement of the Internal Audit Branch to further investigate the absence of supporting financial documentation in support of the activities of the RCMP 125th Anniversary is not considered appropriate."

Subsequent to the above correspondence the writer received on April 23, 2003 correspondence dated March 7, 2003 addressed to Commanding Officer "A" Division from Vern WHITE, C/Supt and Director General, Employee & Management Relations. C/Supt WHITE makes a recommendation "To conduct a further review increasing the number of audited items to a level where a decision can be made with respect to determining if the incurred expenses were dealt with in accordance with sponsorship policies, procedures and regulations." He also comments "...(T)the results of a further review will provide us with sufficient information to decide whether there is a systemic issue involving the tracking of the expense items, or whether there was an intentional act or omission of such activity to cause a failure in the system and possible requirement for follow-up."

INVESTIGATION:

"C" Division completed their review, as recommended in the RCMP 125th Anniversary Internal Audit Report.

"A" Division review focused on the following items which represented transactions for which supporting documentation was not found during the Audit.

• table taken from RCMP 125th Anniversary - Audit of PWGSC Sponsorships Audit Finding #10

Subsequent to the release of the Audit Report in December 2002, documentation received by Audit Branch in February 2003 regarding the Musical Ride Expenses satisfied the reconciliation of those expenses.

Inquiries revealed that:

• in February 1998 the RCMP were making a transition from the FARS [Financial Accounting and Reporting System] accounting system to TEAM [Total Expenditures and Asset Management] accounting system on a progressive basis. The two accounting systems [FARS and TEAM] were running in parallel for a time. Since TEAM was going to be the primary system, accounting records were batched and uploaded into TEAM, at least once a week;
• The former clerk at Public Affairs has assured me that as she received invoices, she verified that the services and/or goods were received and signed s 34FAA based on the recommendations from Dr Beahen. These invoices were copied, the copy filed and the original forwarded for payment to FSS;
• The invoices processed by FSS were filed under FARS or TEAM. The difficulty at this late date is to have someone attempt to locate these invoices if they have not been destroyed;
• Journal Vouchers [JV’s] represent a reallocation of already processed transactions either from a collator code and/or line object to a more appropriate collator code and/or line object. A JV can be a collection of multiple expenses that are reassigned from one collator to another or from previous line objects. Most of the journal vouchers in question were processed in TEAM as they have a batch number.
• As contained in the Internal Audit correspondence, explanation provided by the Regional Manager of Accounting Services refer to the fact that "…many journal voucher entries were destroyed or misplaced of the split of Headquarters (HQ) functions / responsibilities from Central Region and the physical move of four (4) budget analysts out of the Pickering Building."
• The current clerk at Public Affairs was able to locate a later version of the Quicken spreadsheet representing most of the expenses processed. During the audit, the auditors attempted to reconcile the transactions from an earlier Quicken version without much success. The transactions identified on the spreadsheet and the corresponding invoice copies did not contain any notations as to the date of posting to FARS/TEAM according to Internal Audit. The former clerk informed that she did not conduct any reconciliation between Quicken and/or FARS or TEAM.

CONCLUSION

The events analysed and discussed took place during a period when there was a transition between accounting systems as well as the reorganization of accounting offices and budget personnel. It is during this period that the Journal Voucher binders were inadvertently lost. As a result I do not believe those events are indicative of a systemic problem rather they reveal problems stemming from the transition process. One way to have managed the transition would have been to require monthly reconciliations. Training of personnel, tracking, and retention of information during times of transition between systems could have prevented the anomaly.

In my opinion, the incapacity of finding the JVs does not constitute an inability to justify particular expense(s), only the inability to prove the internal transfer of accounting information through the JV process. I suggest that the expenses have been filed accordingly when they were processed and not when they were JV’d. I had stated that from my standpoint, perhaps it would have been more appropriate to choose actual expenditures rather than reallocation of those expenses during the audit process. Internal Audit informed me that they were unsuccessful in reconciling all the expenditures entered on the Public Affairs Quicken spreadsheet with those processed on TEAM. The former clerk failed to reconcile her Quicken spreadsheet with the official TEAM expenditures. As I indicated earlier, to revisit this matter as A/Commr White suggested would require considerable effort to locate and verify that the expenses were dealt with in accordance with sponsorship policies, procedures, and regulations. As there are no specific allegations I do not believe that there exists any indication that there was an intentional act or omission, and certainly nothing which requires a s 40 of the RCMP Act investigation.