Audit report

Pay and benefits

February 1997

Background

The audit of the Pay and Benefits (P&B) function was conducted in accordance with the Agency's 1996/97 Internal Audit Plan. The Human Resources Services Directorate (HRSD) is responsible for this function and provides central pay and benefit services to employees of the Agency through its National Capital Region Operations Team. This Team is composed of a manager, three employees assigned to the P&B function and five employees who deal with other human resources disciplines. A Human Resources Advisor, reporting to the Regional Director, is located in each Region to deal with human resources matters including leave administration management. Human Resources Advisors functionally report to the HRSD at Headquarters.

Objectives

To assess whether the roles and responsibilities for Pay and Benefits (P&B) were defined, communicated and understood.
To assess the efficiency and operational effectiveness with which the NCR Operations Team carries out its responsibilities.
To assess whether the processes and systems for major activities relating to the P&B function were effective and efficient.
To assess whether the NCR Operations Team delivers services that meet user needs.
To determine the extent of compliance with Passport Office and Central Agency prescribed policies and procedures.

Scope

The audit encompasssed the following compensation activities:

Compensation Management Framework;
Administration of Pay;
Administration of Benefits;
Administration of Leave and Extra Duty; and
Provision of Information.

The audit was conducted under the guidelines of the former Treasury Board Review and Internal Audit Policy which was in effect until March 31, 2001.

Conclusion

Based on our review of the compensation administration activities and our transaction testing, we conclude that, generally, transactions are processed efficiently and effectively, and in accordance with the policies and directives of the Passport Office and Central Agency and the applicable collective agreements and/or terms and conditions of employment. We noted that documentation on employees' personal file in support of pay, allowances and benefit transactions processed and recorded in the pay system, is adequate, and overall managers and employees are satisfied with services provided. We did, however, observe that roles and responsibilities need to be clarified, and that in certain areas there are opportunities for improvement. Key recommendations related to these areas are presented below.

An internal client survey, conducted as part of this audit, indicated that Agency staff are pleased with the overall quality of services provided by the Headquarters Pay and Benefits Section, except for some employees in one Region. Interviewees in all Regions offered suggestions regarding provision of information, with the view to further enhance quality of services provided.

Audit results

The following is a brief summary of the key recommendations presented in detail in the Audit Observations, Recommendations and Management Responses Section (4) of this report:

Roles and responsibilities relating to the dissemination of pay and benefits information and to the recording of regional leave information should be clearly defined, communicated and understood.
Monitoring of activities within the Pay and Benefits Section should be improved by implementing performance standards, setting priorities and developing desk procedures.
The audit process related to pay transactions should be strengthened and formalized.
Additional technical support should be acquired to strengthen the Pay and Benefits Section in terms of review and interpretation of directives including the handling of complex pay and benefits cases and issues.
The maintenance of employees personal files should be improved to ensure all required and original documentation is on file.
Terms and conditions of employment stated in the letter of offer to an employee should be complied with and standard clauses included in the letter of offer should not be modified without approval of the Human Resources Services Directorate.
Overpayments to employees should be periodically reconciled between Finance and the Pay and Benefits Section and settlements of overpayments should comply with Treasury Board debt write-off regulations.
Financial reporting on salary activity should provide comprehensive information to responsibility centre managers for monitoring charges to their budget.
Finance should implement an adequate sampling plan to test the accuracy, completeness and validity of pay input transactions. Financial staff conducting this review should have the required training to perform the audits.
The approval of extra duty (overtime) should be in accordance with delegated signing authorities and the process for extra duty pay should be more efficient and cost effective.

Status of action plan

A follow-up audit is currently being carried out on corrective measures included in the audit report.