Audit of Fleet Management - Dedicated Vehicles

1.0 Introduction

1.1 Background

In early 2007, the Internal Audit Directorate became aware that staff may not be in compliance with CFIA's Policy on Permanent Overnight Parking of an Agency Vehicle and its Policy on Taxable Benefit - Personal Use of an Agency Vehicle.  Based on consultations with CFIA's President at that time, it was agreed that an internal audit engagement was warranted.

The CFIA maintains a fleet of some 1500 vehicles, representing the third largest in the federal government.  While many vehicles are considered "pooled" and available to all staff for Agency-related business, a large number of vehicles are dedicated to individual employees and may be parked at the employees' residences overnight, when justified for operational or security reasons.  

All CFIA employees who park an Agency vehicle overnight at their residence, and who undertake trips from their residence to their regular workplace (or vice-versa), must report this use as "personal use" of a government vehicle, resulting in a corresponding taxable benefit. 

Employees who use vehicles to commute to and from their place of work and/or have vehicles parked at their residence overnight are also subject to a Canada Revenue Agency (CRA) mandated "stand-by charge", which is intended to tax the operator of the vehicle for having it at their disposal for personal use.  Beyond the daily commute to and from one's primary workplace, the CFIA/Treasury Board Secretariat policy on fleet vehicle use does not permit personal use of fleet vehicles. In February 2007, the CFIA clarified the requirements with CRA officials of the stand-by charge to CFIA personnel, particularly for instances where personal use of a fleet vehicle is not permitted. 

1.2 Relevant Policies

The CFIA's Policy on Permanent Overnight Parking of an Agency Vehicle requires that a "Permanent Overnight Parking Request" be both completed and authorized prior to consent being given to park an Agency vehicle overnight at an employee's residence on an on-going basis.

CFIA's Policy on Taxable Benefit - Personal Use of an Agency Vehicle, clearly articulates the responsibilities of employees, managers, and the National Fleet and Movable Assets Service Centre (NFMASC):

• all CFIA employees who park an Agency vehicle overnight at their residence, and who make trips from their residence to their primary workplace (or vice-versa) are required to report such use as a personal benefit; and
• all CFIA employees who park Agency vehicles overnight at their residence are required to report a stand-by charge (percentage of the value of the vehicle). The purpose of the stand-by charge is to quantify the assumed availability of the vehicle to the driver for personal use as is common practice in the private sector.

The Treasury Board Policy on Government Vehicles prohibits the use of government vehicles for any personal use other than transit between the employees' primary workplace and their residence (the employee's daily commute).

1.3 Objective

An audit was conducted to assess compliance with applicable policies and directives, and the adequacy of controls over the use of fleet vehicles with particular emphasis on:

• the authorities over the retention of dedicated fleet vehicles at employees homes during non-work hours;
• the reporting for purposes of taxable benefit of the personal use of dedicated vehicles; and
• the use the vehicles in a manner that is non-compliant with or in contravention of the spirit and intent of the policy on taxable benefits.

2.0  Scope

At the request of the President, the Internal Audit Directorate undertook an audit of the operational controls for dedicated fleet vehicles Agency-wide. The audit was conducted for the period covering 2003 - 2008.

3.0  Methodology

The methodology included interviews with senior personnel from the Finance, Administration and Information Technology (FAIT) Branch including those responsible for the management of Agency fleet vehicles at the NFMASC in Calgary.  Fleet vehicle records on file at the NFMASC were reviewed, including approval forms and taxable benefit reporting forms.

4.0  Observations and Recommendations

4.1 Information Management

Criteria

The NFMASC maintains complete files that include approval and reporting forms.  When documentation is known to be absent from the files, the necessary follow-up is undertaken.

Observations

Files at the National Fleet and Movable Assets Service Centre

Both the Policy on Permanent Overnight Parking of an Agency Vehicle and the Policy on Taxable Benefit - Personal Use of an Agency Vehicle, require the NFMASC to be the repository of applicable approval and reporting records.  While operational variations may be the cause, a review of the files for documentation supporting the above policies varied significantly across the Agency.  Also, based on a survey of supervisors of staff having dedicated vehicles, a considerable number of Permanent Overnight Parking Request forms expected to be on file at the NFMASC, were not.     

Recommendations:

1a. The Vice-President of FAIT, with the support of the Vice-Presidents of Science, Operations and Programs, should communicate to all Agency employees, with particular focus on dedicated fleet vehicle operators, supervisors and fleet administrators:

• The requirement for appropriate authorities and reporting documents to be provided to the NFMASC;
• The risks and liabilities associated with these authorities not being completed and provided to the NFMASC; and
• That, going forward, authorities and reporting documents will be monitored more closely and audited to ensure compliance with policies and legislation.

1b. FAIT Branch should undertake a review of the records it has on hand and take appropriate action in instances where documentation is known to be missing or likely expired/inaccurate.  

Information in the NFMASC Fleet Vehicle Database

The NFMASC maintains the fleet vehicle database.  This database represents the single, consolidated source of information on fleet vehicles including tombstone data, the operator and the status of the vehicle (pooled or dedicated).  The fleet vehicle database served as the basis for a survey of vehicle use conducted by the Internal Audit Directorate.  Of the 150 vehicles included in our survey, approximately 25% were inaccurately presented in the fleet database.  Errors included CFIA fleet number, incorrect vehicle operator, incorrect license plate number, and incorrect vehicle status (pooled vs. dedicated).

Recommendations:

2. The NFMASC, with the support of Branches, should review and update information in the fleet vehicle database, and establish procedures to ensure its ongoing accuracy and currency.

4.2 Oversight of Dedicated Vehicles

Criteria

The NFMASC has a framework for ongoing monitoring of compliance with policies and procedures for dedicated fleet vehicles.

Observations

Monitoring and Audit of Dedicated Fleet Vehicles by the NFMASC

Both the Policy on Permanent Overnight Parking of an Agency Vehicle and the Policy on Taxable Benefit - Personal Use of an Agency Vehicle require the NFMASC to undertake periodic reviews and audits to ensure that the provisions of the policy are met.  This role has historically not been fulfilled. While additional resources for the NFMASC may need to be considered in order to undertake ongoing monitoring and audit of the CFIA fleet, an alternative, less costly option may be to establish suitable criteria that are reviewed against such things as personal mileage reimbursements, permanent overnight parking requests and taxable benefit reporting.  

Recommendations:

3a. The Executive Director, Assets and Security Management Directorate should review the mandate of the NFMASC, confirm its role in the oversight and monitoring of compliance with fleet-related policies, and establish the appropriate management framework, resource requirements and implementation plan.

3b. The Executive Director, Assets and Security Management Directorate should initiate a complete review, including resubmission/re-authorization of all authorities for dedicated fleet vehicles, beginning in those regions considered higher risk.

Oversight of compliance with fleet vehicles policies at the district and regional levels

In interviews, auditors were informed that vehicles were being used in a non-compliant manner (e.g. non-reported personal use) or against the spirit and intent of the Policy on Taxable Benefit (e.g. unwarranted trip interruptions under the pretext of legitimate government business to avoid personal mileage charges).  The audit evidence suggests that, in some instances, supervisory inaction may be contributing to these behaviours. Improved locally-engaged oversight is required to better ensure:

• The completion and submission of required approval and reporting forms to the NFMASC; and
• Use of vehicles in compliant manner, including no personal use (beyond commuting) and no non-approved passengers in the vehicles.

Recommendations:

4a. The Vice-Presidents of Operations, Programs and Science should identify a position at the regional or district level to oversee fleet vehicles and report non-compliance to the appropriate Area ED and the NFMASC. 

4b. The Vice-President of FAIT in collaboration with the Vice-Presidents of Operations, Programs, and Science should clarify with vehicle supervisors, their responsibilities for ensuring compliance with applicable policies, including CFIA's Values and the associated risks and liabilities of not doing so.

4c. The Vice-President of FAIT should ensure that appropriate management information is provided to governance committees to provide effective oversight, and that this information is summarized at an appropriate level for senior management to ensure compliance with policies and legislation.

5.0  Action Plan

Recommendation 1a

The Vice-President of FAIT, with the support of the Vice-Presidents of Science, Operations and Programs, should communicate to all Agency employees, with particular focus on dedicated fleet vehicle operators, supervisors and fleet administrators:

• The requirement for appropriate authorities and reporting documents to be provided to the NFMASC;
• The risks and liabilities associated with these authorities not being completed and provided to the NFMASC; and
• That, going forward, authorities and reporting documents will be monitored more closely and audited to ensure compliance with policies and legislation.

Actions	Responsible Persons	Implementation Date
FAIT Branch will develop a comprehensive CFIA Fleet Management Policy by July 2008 outlining authorities, accountabilities, roles and responsibilities risk/liabilities, and corporate oversight for the management of the Agency's fleet.	VP-FAIT Branch	Completed *
VP's of Operations, Programs & Policy, and Science Branches to conduct a review to determine the ongoing need for overnight parking by articulating the efficiency gains of having fleet vehicles available to staff for overnight parking in situations where it is deemed advantageous and appropriate.  Note:  Other Federal Fleet Organizations do not have a specific Policy on Overnight Parking.  Some organizations allow overnight parking, but generally on a very limited basis	VP's of Operations, Programs and Policy, and Science Branches	Completed *

Recommendation 1b

FAIT Branch should undertake a review of the records it has on hand and take appropriate action in instances where documentation is known to be missing or likely expired/inaccurate.  

Actions	Responsible Persons	Implementation Date
Should the branches conclude that there is a continued need for overnight parking, which by extension includes personal use and taxable benefit reporting, new Directives on Overnight Parking and Automobile Taxable Benefits will be developed resulting in:
a complete update of all overnight parking documentation on an annual basis.	VP's of Operations, Programs and Policy, and Science Branches	Completed*
more stringent approvals (i.e. AL4) on a national basis.	VP's of Operations, Programs and Policy, and Science Branches	Completed*
proposed employee Taxable Benefit estimates referenced on Overnight Parking Approval.	VP's of Operations, Programs and Policy, and Science Branches	March 31, 2009
strengthened reporting and accountabilities.	VP's of Operations, Programs and Policy, and Science Branches	Completed*

Recommendation 2

The NFMASC, with the support of Branches, should review and update information in the fleet vehicle database, and establish procedures to ensure its ongoing accuracy and currency.

Actions	Responsible Persons	Implementation Date
The National Fleet and Moveable Assets Service Centre (NFMASC) will conduct an immediate and subsequent annual exercise where all fleet information is reviewed by respective Directors (Regional & Lab) to certify that the information is correct.	Director of National Fleet and Moveable Assets Service Centre	Completed *

Recommendation 3a

The Executive Director, Assets and Security Management Directorate should review the mandate of the NFMASC, confirm its role in the oversight and monitoring of compliance with fleet-related policies, and establish the appropriate management framework, resource requirements and implementation plan.

Actions	Responsible Persons	Implementation Date
ASMD is introducing a Material Management Framework (MMF) to reconfirm the mandate and associated management responsibilities of fleet and moveable assets. The MMF will include the development of fleet compliance instruments, authorities, guidelines, processes, best practices and principles to allow the Agency to effectively and efficiently manage its fleet in accordance with operational requirements and program objectives.	Executive Director of Assets and Security Management Directorate	December 31, 2009

Recommendation 3b

The Executive Director, Assets and Security Management Directorate should initiate a complete review, including resubmission/re-authorization of all authorities for dedicated fleet vehicles, beginning in those regions considered higher risk.

Actions	Responsible Persons	Implementation Date
VP Operations Branch will contact the Regional Director, BC Mainland/Interior and explain the terms and conditions of the Policy on Permanent Overnight Parking of an Agency Vehicle and the Policy on Taxable Benefit- Personal Use of an Agency Vehicle and request for a review, resubmission/re-authorization of all authorities for dedicated fleet vehicles in its region to satisfy the issues raised by the allegation of non-compliance.	VP of Operations Branch	Completed*
ASMD will conduct a full review on an annual basis requesting all three branches to resubmit and re-authorize all dedicated fleet vehicles.	Executive Director of Assets and Security Management Directorate	Completed*

Recommendation 4a

The Vice-Presidents of Operations, Programs and Science should identify a position at the regional or district level to oversee fleet vehicles and report non-compliance to the appropriate Area ED and the NFMASC.

Actions	Responsible Persons	Implementation Date
In order to implement the audit recommendations, FAIT  Branch specifically recommends that:
the Vice-President of Operations Branch designate respective Manager/Planning and Resources Officer at the Regional level to formally oversee fleet vehicle assignment and report to the NFMASC on compliance. In the case of EIS and Area Office fleet, this responsibility should reside with the Area Director of Management Services.	VP of Operations Branch	March 31, 2009
the Vice President of Science Branch designate respective Heads of Management Services in the four Area Laboratory Networks to formally oversee fleet vehicle assignment and report to the NFMASC on compliance.	VP of Science Branch	March 31, 2009
the Vice President of Programs & Policy Branch name an individual within each Area Program Network to formally oversee fleet vehicle assignment and report to the NFMASC on compliance.	VP of Programs and Policy Branch	March 31, 2009
Roles, responsibilities and reporting requirements outlined above will be clearly articulated in a CFIA Directive or Guide on Fleet Management.

Recommendation 4b

The Vice-President of FAIT in collaboration with the Vice-Presidents of Operations, Programs, and Science should clarify with vehicle supervisors, their responsibilities for ensuring compliance with applicable policies, including CFIA's Values and the associated risks and liabilities of not doing so.

Actions	Responsible Persons	Implementation Date
Should the practice of overnight parking be deemed an ongoing operational requirement, the NFMASC will, with the assistance of the VP's from Operations, Programs & Policy, and Science Branches, issue an internal communiqué clarifying Branch responsibilities and accountabilities in accordance the new CFIA Fleet Policy and updated CFIA Directives on Overnight Parking and Automobile Taxable Benefit.	Director of National Fleet and Moveable Assets Service Centre	March 31, 2009

Recommendation 4c

The Vice-President of FAIT should ensure that appropriate management information is provided to governance committees to provide effective oversight, and that this information is summarized at an appropriate level for senior management to ensure compliance with policies and legislation.

Actions	Responsible Persons	Implementation Date
Should the practice of overnight parking be deemed an ongoing operational requirement, the NFMASC will provide quarterly reporting on the number of employees with Overnight Parking Requests and the number of employees reporting Taxable Benefit as well as the percentage of business kilometres (kms) versus personal kms. The Agency will also pilot a wireless fleet tracking System using Global Positioning Satellite (GPS) commencing in 2008/09 that is capable of providing detailed fleet reporting for oversight purposes such as use outside of business hours, inactive vehicles and automatic odometer readings reporting.	Director of National Fleet and Moveable Assets Service Centre	Completed*

* Management Assertion