Audit report

Regional operations

October 2000

Background

The mandate of the Passport Office is to deliver and ensure the security of the Canadian passport. It may revoke, withhold and recover any Canadian passport.

The Passport Office also acts as an advisor for passports issued outside of Canada, and is responsible for all issues related to Canadian travel documents.

The Passport Office includes four regions: Western, Ontario, Central and Eastern operations. There are 31 points of service: i.e., 28 Passport Offices between St. John's (Newfoundland) and Victoria (British Columbia), and services for certificate of identity, official travel and processing of postal applications.

In 1990, the Passport Office became a Special Operating Agency (SOA), one of the first five such agencies established by the federal government to upgrade services to Canadians. To this effect, the Passport Office endorses sound business practices for provision of services. The Passport Office is still a government agency under the authority of the Department of Foreign Affairs and International Trade.

Because its activities are entirely financed by fees collected for the issuance of passports and other travel documents, the Passport Office has to earn enough revenue to cover its expenses.

As an SOA, the Passport Office has considerable leeway to meet its objectives. In exchange for this autonomy, it must justify its output according to stringent standards.

The Passport Office developed a long-term internal audit plan to help management respond to specific sectors of concerns and to assess its compatibility with the management control framework. This audit is carried out as part of this plan.

Objectives

The audit's objectives were to assess the management framework of the Passport Office, i.e., resource effectiveness and efficiency.

Scope

The audit examined the operational activities of the current period. Data, reports and statistics
covered the financial year 1999-2000 activities.

An audit program was developed based on a risk-management design for the following sectors: finance, data processing, human resources, operation and security. The audit program was used as a point of reference to compare the audited Offices and as a means of standardizing the audit methods. The audit program reflects the service standards described below:

Passport request for a fee
Customer service
Facilities
Document security
Emergency services
Employee competence and qualifications

Audit standards, assurance level and criteria

The audit was carried out in accordance with the requirements of the Internal Auditing Standards
in the government of Canada designed to ensure high level of assurance. It therefore included
such procedures as inspection, observation, inquiry, confirmation, testing, computation, analysis
and discussion as required to achieve the audit objective. The criteria used for the audit were the
following:

to assess the management framework in order to determine resource effectiveness and efficiency;
to examine the passport issuance process in order to reinforce operational effectiveness and efficiency;
to assess the effectiveness of internal audit procedures on revenues;
to assess the effectiveness of internal audit procedures on the maintenance and security of inventory control;
to determine the effectiveness of audits on the security of blank passports during assembling;
to determine the compliance with passport issuance policies and procedures;
to determine the compliance with passport issuance policies and procedures issued by the central agencies;
to assess the quality of customer service;
to assess human resource management.

Audit results

The Passport Office is currently in a period of transition. The way passport applications are processed has been upgraded by adopting the new IRIS system, and the passport assembling process will be centralized in two strategic areas.

Most of the 28 offices have converted their passport application processing system to the new IRIS system. However, several offices are still field-testing IRIS. Different approaches were used to implement this transition, depending on the manager. In some cases, transition was gradual; in other words, applications were processed simultaneously using both MRP and IRIS systems, ending up with IRIS. This option helped ensure operational continuity for the Office and obtain the necessary insurance regarding application processing with IRIS. This gradual approach also provided examiners with on-the-job training opportunities in addition to receiving prior training on IRIS. Managers who encouraged a case-by-case problem-solving approach provided the offices that opted for this method with the ability to understand how IRIS works as well as assess the impact on passport application security and on daily and monthly income reports. In light of this option, management and employee commitment is quite obvious, given the changes the organization is currently undergoing.

For others, however, the transition has not been as smooth, and a more relaxed internal control has been observed in sectors where weaknesses had been identified.

The centralization of passport assembling will soon be carried out in two distribution points. Passport Offices, however, can always assemble a passport to meet the needs of urgent services.

Such changes have an impact on office operations, human resource management, service standards, information technology and passport security.

In most cases, the audited Passport Offices have sound management practices. Managers have the capacity to assess the impact of both current and future changes on operations. Despite such changes that disrupt operations, customers are still treated courteously and professionally, and passports are issued on time. Committees include operations managers to help with the decision-making process and manage the impact of change on the organization.

Service standards are no longer adequate in offices converted to the IRIS system. Currently, established service standards are based on passport application processing using the MRP system. Currently, 80% of passport requests are processed by the new IRIS system. A committee has been appointed to determine the service standards using the IRIS system to process applications; these will be implemented in the offices according to the committee's recommendations.

The policy on blank passports during assembling is not consistently implemented. Furthermore, the policy is unclear, ambiguous and outdated. The following factors should be considered to properly identify the responsibilities of Finance and Administrative Services and Security, Policy and Entitlement Directorate Inventory control is defined as the time when the booklet, which will ultimately become a passport, is delivered by the manufacturer. At this stage, Finance and Administrative Services is responsible for the safekeeping of the organization's assets including the inventory control. The audit reported that the controls regarding receiving and shipping inventory control are established and functioning smoothly.

A committee has been appointed to examine inventory and security of blank passports controls.

Reports on income and inventories should use the information provided in IRIS to facilitate their preparation and increase their reliability. Current development of the Financial Module on income will increase reports' reliability.

Generally speaking, human resources were used efficiently. Staff supervision is conducted according to sound management practices.

Conclusion and recommendation

Based on audit findings, we can conclude that in all material respects, there is effective and efficient use of Passport Office resources. However, improvement should be made in the following areas:

Update security of blank passport policy;
Strengthen financial controls;
Standardize decision making process information;
Develop training plan, update annual appraisal, ensure efficient staffing process;
Strengthen security over waiting area.

Status of action plan

The recommendations are accepted in principle and supported by the following action plans:

Security requirements on blank passports were updated and forwarded to managers;
Financial systems under development will increase the controls over production reports;
All Passport Offices will be equipped with a Q-Matic system for standardization of information used in the decision-making process;
Update administration of Human Resources;
Security of waiting area will be defined.