Administrative Review — RCMP 125th Anniversary: "C" Division (Québec)

see also: Administrative Review: "A" Division (NCR)

RE - OBJECTIVE 2.1
COMPLIANCE WITH THE LAWS AND POLICIES

The audit report establishes that: “there were no supporting documents for some of the transactions in the sample dealing with the transactions processed in ‘C’ Division, which impeded the completion of all the phases of the audit.”

In the light of this finding, I consulted Stéphane Roussin, who had met with the auditors when they came to Montreal as part of the internal auditing process. Mr. Roussin reviewed the reports that I had recovered from Records Management, and then produced one of his own from which I used some findings to help clarify the issues raised in the audit report. This enabled us to trace another transaction that was missing at the time of the auditors’ visit.

As a result, out of the twelve transactions that I examined from the sample used to produce the audit report, only two could not be supported with back-up documents. With regards to these two sums, Mr. Roussin points out the following in his report: “A sum of $10,477.75 corresponds to the uploading of 16 expense accounts from FARS, the former financial system, to the TEAM system as of January 31, 1998. The hard copies to these expense accounts were filed by employee name and number. Unfortunately, the information available from either the FARS or TEAM system does not show employee names or numbers. In FARS, these expense accounts were filed by batch numbers instead. It therefore becomes very difficult to search through these records, as they and the hard copies were not filed the same way.”

Mr. Roussin also points out that even though a Finance Section employee has reviewed the files still in our possession, “an additional sum of $9,433.56 could not be traced…. This transaction probably deals with an invoice or expense claim.”

The audit report also states that during their visit, auditors “were explained that the supporting documents had been destroyed in accordance with records policy, which provides a two-year retention period for documents dealing with ‘ceremonies and celebrations’. However, still according to the same policy guidelines, these documents should have been kept for six years, since they included financial information, e.g. invoices.”

This situation has been confirmed by the Records Manager.

Unfortunately, some files that included invoices were destroyed for the above-mentioned reasons. This situation clearly appears to be the result of errors that occurred in classifying these files and the information they contained. I consider this, as opposed to the findings made in relation to the samples dealing with the transactions processed at National Headquarters, to be a reasonable explanation. Besides, should it become necessary to further the auditing process, we should be able to show cause through manual parallel accounting.

The audit report quoted that “not all information required to conduct the audit was available” as the main obstacle to meeting its objectives.

In the light of the above, I have recovered from Records Management the administrative records dealing with the RCMP 125th Anniversary. This is a box containing fifty-three volumes of administrative records used by the 125th Anniversary Coordinator to log celebration activities and related expenses submitted from across the province. Despite the fact that some records have been destroyed, these include the bulk of applicable information for bookkeeping purposes in relation to the RCMP 125th Anniversary celebrations in Quebec for 1999.

As for the remaining administrative records, they have been kept by Records Management at Montreal Headquarters, where the project coordinator was posted. These records include, among other things, several invoices and all the cheques that have been submitted as part of these activities.

As mentioned in the audit report, it is recommended: “that management take necessary action pursuant to applicable federal statutes and section 40 of the RCMP Act to further investigate this audit finding.”

RECOMMENDATIONS

Based on my audit of the records dealing with the RCMP 125th Anniversary in consultation with the personnel concerned, it is my opinion that there is no cause for further investigation into this matter.

I agree that all supporting documents should be retained and kept for a reasonable time period. However, it would appear that this lack of compliance is the result of an error rather than malicious intent of any kind. If such were the case, none of the findings of the manual accounting review seem to be pointing in that direction. The Records Manager has already been made aware of the situation and should be consulted so that preventive measures can be taken to prevent such incidents from reoccurring.

Furthermore, it is my opinion that preventive measures should be taken to avoid the recurrence of such deficiencies in the future. Therefore, the overall accounting procedures within the division should be reviewed to ensure that they meet the standards of the Financial Administration Act (FAA) and Policy on Delegation of Authorities of Treasury Board Secretariat (TBS) and the RCMP. Finally, managers across the division should immediately be made aware of these guidelines and reminded about them on a regular basis.

RE OBJECTIVE 2.2
CONTRACTING POLICY

The audit report establishes that: “The contracting policy was not adhered to with respect to all the items reviewed in ‘C’ Division and National Headquarters. Failure to comply with policy increases the risk of improper transactions or transactions for which we do not get our money’s worth.”

Although the audit report does not indicate which transactions failed to comply with policy, I agree with this finding. In fact, this enquiry and Mr. Roussin’s report confirm instances of purchase orders not being completed for the acquisition of goods over $5,000.00 or services over $10,000.00.

To understand the essence of the problem and to be able to take appropriate action for future reference, one must appreciate the context in which “C” Division found itself at the time. The funds committed to the RCMP 125th Anniversary were not handed directly to the RCMP, although everyone will agree that this would have been the ideal thing to do. As quoted in the audit report: “PWGSC chose companies affiliated to Groupaction or its subsidiaries (Gosselin Communications Stratégiques Inc. and Lafleur Communication Marketing) to distribute sponsorships on its behalf and, in some cases, to ensure the coordination and delivery of communication services to the RCMP…”

At the time this decision was made, the “C” Division RCMP125th Anniversary Committee was pressed for time to select activities and allocate the funds intended for the division.

For most of the events held regionally, it was impossible to go to tenders or to proceed according to policy, since the regional activities in which the RCMP got involved were unique events. This was the case for instance with the Dragon Boat race, the Valleyfield boat races or the open houses at St-Jérôme Detachment. The selection criteria for events were based instead on attaining maximum visibility at a cost as reasonable as possible. Some major projects were rejected because they were simply too expensive. Such was the case with the Trois-Rivières Grand Prix.

The coordination of sums received from Lafleur boiled down to completing a reasonable number of projects throughout the province according to entitlements and the availability of funds.

In some cases, Lafleur Communication Marketing hired subcontractors to supply equipment required by the RCMP for events to be held in Quebec. The purchase of tents for our booths, for instance, was made from a subcontractor proposed by Lafleur. Whenever practical, the coordinator saved money on purchases. Such was the case for the purchase of concrete blocks used with the tents, which were purchased from another supplier at a lower cost.

In other cases, “C” Division paid for certain purchases without having control over the procurement process. This was the case for horses and trailers purchased by National Headquarters and that “C” Division paid with the funds it was allocated for the RCMP125th Anniversary.

As stated in the audit report: “No recommendation is being made considering that the RCMP125th Anniversary project was completed in 1999. However, this issue will be the subject of an in-depth review, if required as part of the contracting audit currently in progress.”

RECOMMENDATIONS

Based on the audit report and ensuing recommendations, it is my opinion that preventive measures should be taken to avoid the recurrence of such deficiencies in the future. All managers across the division should immediately be made aware of the guidelines with respect to the bidding, assessment and selection process for contracts, as mentioned in the RCMP125th Anniversary audit report. They should also be reminded about these guidelines on a regular basis. Finally, before the RCMP enters into a contractual agreement with a consultant or an external business, an explicit letter of understanding should first be signed by all parties involved.

RE - OBJECTIVE 2.3
SEGREGATION OF ACCOUNTING FUNCTIONS

The audit report establishes that incompatible functions should have been segregated in both “C” Division and National Headquarters, but actually were not. These functions include the acquisition of goods, acknowledgement of receipt of goods and delivery of services, claims, claim confirmation and payment. However, the report does not indicate the extent to which this finding applies to “C” Division, nor does it identify any deficiencies.

In his report, Mr. Roussin underscores that transactions were made for the most part according to a manual accounting system without being logged in RCMP books. As a result, the procedures of segregation of functions under sections 32, 33 and 34 of the Financial Administration Act (FAA) were actually not followed.

As stated in the audit report: “No recommendation is being made considering that the RCMP125th Anniversary project was completed in 1999. However, this issue will be the subject of an in-depth review, if required as part of the contracting audit currently in progress and the upcoming audit of accounts payable.”

RECOMMENDATIONS

Based on the audit report and ensuing recommendations, even though there is no indication of improper transactions resulting from the failure to segregate accounting functions, it is my opinion that preventive measures should be taken to avoid the recurrence of such deficiencies in the future. Consequently, all accounting activities in the division should be reviewed to ensure that they meet FAA standards. Finally, all managers across the division should immediately be made aware of these guidelines and reminded about them on a regular basis.

RE - OBJECTIVE 2.4
RULES GOVERNING WORK RELATIONS

The audit report establishes that the RCMP 125th Anniversary project coordinators were hired as consultants in “C” Division and National Headquarters. However, according to Canada Customs and Revenue Agency (CCRA) guidelines, the relationship between these consultants and the RCMP was like an employer-employee relationship.

I readily agree that the rules governing work relations should be followed when hiring consultants. This particular case, however, deserves an explanation. The project coordinator for “C” Division was hired on a volunteer basis in November 1997, when planning of provincial activities began in Quebec. However, as the coordinator’s workload became much heavier than what had originally been agreed on, the members of the 125th Anniversary Celebrations Committee adopted, at a meeting held on October 7, 1998, a resolution to have the coordinator paid for his work. All the relevant information regarding this matter can be found in admin. file #180-7-11-14B.

As stated in the audit report: “No recommendation is being made considering that the RCMP125th Anniversary project was completed in 1999. However, this issue will be the subject of an in-depth review, if required as part of the contracting audit currently in progress.”

RECOMMENDATIONS

Based on the audit report and ensuing recommendations, it is my opinion that an accountability framework should be defined to ensure compliance with CCRA regulations for future events in which volunteer work is to be considered as part of a human resource or financial coordination framework. To do so, it is strongly suggested that all consultants hired by the RCMP to perform such duties be required to work jointly with the procurement/services officer. The latter should be able to assist the consultant to ensure that adequate levels of knowledge in matters of procedures and compliance are met. Since procedural knowledge is essential, I should point out that qualified resources in matters of procedures are available both within the organization and the government overall. I also suggest that all managers across the division should immediately be made aware of these guidelines and that action be taken to remind them on a regular basis of this compliance requirement.

RE - OBJECTIVE 3.1
RCMP ACCOUNTING SYSTEM

With respect to this objective, the audit report establishes that: “All the transactions made in “C” Division in relation to the RCMP 125th Anniversary have been entered in a manual accounting system rather than the RCMP system.”

As mentioned in 2.3, this finding is accurate. However, the RCMP automated system was later used to account for most of the earnings and expenses. Mr. Roussin underscored in his report that the initial use of a manual accounting system is regarded as the most important shortcoming, which caused a number of discrepancies that have been examined in this report.

The audit report also establishes that: “All deposits and payments were made into/from a separate account that was opened by “C” Division specifically for the purposes of the RCMP 125th Anniversary. The division did not use the Receiver General’s account and did not obtain approval for a departmental account as required under TBS policy.”

Although the coordinator seems to have acted in good faith by maintaining a detailed manual accounting system and by opening a separate bank account to log all the transactions in a system parallel to the RCMP’s, this procedure is contrary to TBS policy. The decision to open a separate bank account was linked to the fact that the sums intended for the RCMP 125th Anniversary were handed to the RCMP by a private company, Lafleur Communications Marketing. Consequently, it did not seem appropriate at the time to bring these sums into the government accounting system.

The audit report further establishes that: “As for the sponsorships received by National Headquarters, all receipts and expenses linked to the initial $200,000.00 instalment were processed directly by Gosselin. Gosselin received the sponsorships and later paid the expenses upon receipt of invoices from the RCMP. The RCMP did not keep any proof of these receipts and expenses. However, the remaining sum ($800,000.00) and related expenses were processed by the RCMP and recorded in the accounting system of the RCMP.”

This finding seems to apply to National Headquarters only. The research I have conducted shows that “C” Division received a total of $650,000.00 in instalments and that no invoice was submitted to Gosselin. The latter and Lafleur assumed management and control over their own funding.

Last, the audit report establishes that: “Without supporting documents, it is impossible to give a reasonable assurance as to the validity and accuracy of the expenditures related to the project.”

The RCMP 125th Anniversary admin. files I have obtained from Records management include a great deal of relevant manual bookkeeping information in relation to the activities that were held throughout “C” Division in 1999. In some cases, the files only contain copies of invoices, as the original invoices were kept on file at the detachment or section level. Invoices dealing with several events can be found in the files that I have obtained, whereas other files have been destroyed as mentioned in 2.1.

Detachments in every region have also generated separate files in which all correspondence and invoices for payment have been kept. Upon checking with Records Management in Quebec City to obtain the RCMP 125th Anniversary files for this district, I was informed that the master file had been sent to Ottawa to be archived. Since Mr. Roussin’s report shows that the missing transactions required to complete the audit report belonged to the automated system, no further research was made to obtain the archived files. This also applies to the other regional files.

As stated in the audit report: “No recommendation is being made considering that the RCMP125th Anniversary project was completed in 1999. It should be noted that there is no indication to the effect that the RCMP accounting system is not being used for other RCMP projects currently in progress, nor that files are being kept in an inappropriate manner. However, this issue will be the subject of an in-depth review, if required as part of the contracting audit currently in progress and the upcoming audit of accounts payable.”

RECOMMENDATIONS

Based on the audit report and ensuing recommendations, it is my opinion that preventive measures should be taken to avoid the recurrence of such deficiencies in the future. Therefore, the overall accounting procedures within the division should be reviewed to ensure that they meet the standards of the Financial Administration Act (FAA) and Policy on Delegation of Authorities of Treasury Board Secretariat (TBS) and the RCMP. Finally, managers across the division should immediately be made aware of these guidelines and reminded about them on a regular basis.