3.0 Audit Results
3.1 Travel
From April 1 to June 30, 2014, there were 2,597 travel transactions for a total cost of $550K. Table 2 presents a summary of the results for the 90 travel transactions that were reviewed.
| Key Requirements Tested | Result | Percentage | |
|---|---|---|---|
| Current form was utilized | 47/90 | 52% | 100% |
| Previous form was utilized | 43/90 | 48% | |
| Section 32 (commitment of funds) | 13/90 | 14% | |
| Approval obtained in advance | 85/90 | 94% | |
| Expenditures in compliance with the directive | 90/90 | 100% | |
| Expenditures calculated correctly | 90/90 | 100% | |
| Expenditures appropriately supported with documentation | 90/90 | 100% | |
| Expenditures approved by the appropriate manager | 90/90 | 100% | |
| Travel processed within five working days | 29/90 | 32% | |
Source: Analysis from files reviewed by the audit team
Effective April 1, 2014, updated travel forms were implemented to collect the additional information required by the new requirements. While a travel form was used in all instances, it was noted that only 52% of the travel forms reviewed were the updated version. Many staff were still using the previous version of the travel form which was still accessible. The issue is that the previous version of the travel form did not capture key information such as the category of travel or a more detailed breakdown of travel expenditures. Recording this information is one of the new requirements in support of strengthened reporting. During fieldwork, the audit team raised this issue with management and the former version of the travel form was immediately removed from VAC’s intranet.
Commitment of funds is the process of earmarking money to ensure that it is unavailable for use for other transactions. This is a key control in budget management to protect against overspending. The audit team noted that only 14% of the files reviewed identified a commitment of funds upon submission of the form. Three reasons were identified for the low result. First, budgets were not finalized until later in the year. As a result, for transactions that occurred early in April, staff were unable to create commitments. This is a temporary challenge that exists every year. Second, prior to April 1, 2014, travel under $1,000 was not required to be committed and some staff were not aware of this change. Third, there were some organizational changes around the time of the audit and some staff were new to the responsibility of managing the commitments and submitting travel forms for their work unit. In all cases, if the commitment was not identified upon submission, finance staff would follow-up to confirm the commitment before the travel expenditures were processed. This follow-up created extra work. It also educated staff on the requirements for commitments and is expected to result in improved results.
It was noted, that in five cases, final approval was obtained after the travel occurred. In these cases, the form was submitted only a few days before the travel started and final approval was obtained within a week of submission. The audit team determined that, given the circumstances of each case, final approval after the fact was understandable. Additionally, the audit team confirmed that all expenses were fully compliant.
The Treasury Board Directive on Travel, Hospitality, Conference and Event Expenditures permits departments to use blanket travel authorities for staff who travel frequently. Blanket travel authorities allow travel to occur without additional approval if the travel is continuous or repetitive in nature. Blanket travel authorities are approved by management at the start of the year and are set up for each individual traveler who requires them. Once a blanket travel authority is in place a separate travel authority is no longer required for each trip. This expedites staff’s ability to travel when necessary and reduces the administrative burden. For instance, at VAC blanket authorities allow staff such as Case Managers to respond quickly to Veterans requests for meetings.
At VAC, an internal target of five working days had been established to process travel expenditures. This target, although not a requirement under the travel directive, was tested by the audit team as part of the assessment of the process. It was identified that 32% of travel transactions reviewed were processed within five working days and the remaining were generally processed within ten working days. Three primary causes of the delays were identified. First, many staff were submitting the previous version of the travel form. As a result, finance staff were required to verify the manual calculations which required more time to process the form. Second, most forms did not identify any commitment of the funds. As a result, finance staff were required to confirm that funds had been committed which created delays in finalizing the payment. Third, some staff were not set-up for direct deposit which is now a requirement of the Government of Canada. As a result, finance staff had to follow-up with staff and wait for direct deposit to be set-up before the payment could be processed. All three issues were being addressed by finance so no recommendation was required.
Recommendation 1
It is recommended that the Director General, Finance Division, take corrective measures to ensure the committing of funds are actioned in accordance with governing authorities (Essential).
Management Response:
Management agrees, and will monitor and review these commitments for a six month period (October through March) as the staff continues to adapt to the recent changes. Upon the conclusion of the additional monitoring period, the DG Finance will take steps to address any issues or gaps that continue to exist with regards to commitment of funds as required (e.g., training, management direction).
3.2 Hospitality
From April 1 to June 30, 2014, there were 16 hospitality transactions (entire population) for a total cost of $3,706. Table 3 presents a summary of the review results.
| Key Requirements Tested | Result | Percentage |
|---|---|---|
| Current form was utilized | 16/16 | 100% |
| Section 32 (commitment of funds) | 14/16 | 88% Footnote 1 |
| Approval obtained in advance | 16/16 | 100% |
| Expenditures in compliance with the directive | 16/16 | 100% |
| Expenditures calculated correctly | 16/16 | 100% |
| Expenditures appropriately supported with documentation | 16/16 | 100% |
| Expenditures approved by the appropriate manager | 16/16 | 100% |
Source: Analysis from files reviewed by the audit team
3.3 Conferences
From April 1 to June 30, 2014, there were 6 conferences (entire population) that VAC staff attended with conference fees totaling $2,771. Table 4 presents a summary of the review results.
| Key Requirements Tested | Result | Percentage |
|---|---|---|
| Current form was utilized | 6/6 | 100% |
| Section 32 (commitment of funds) | N/A Footnote 2 | N/A |
| Approval obtained in advance | 6/6 | 100% |
| Expenditures in compliance with the directive | 6/6 | 100% |
| Expenditures calculated correctly | 6/6 | 100% |
| Expenditures appropriately supported with documentation | 6/6 | 100% |
| Expenditures approved by the appropriate manager | 6/6 | 100% |
Source: Analysis from files reviewed by the audit team
3.4 Events
From April 1 to June 30, 2014, there were 15 events (entire population). One of these events was the 70th Anniversary of D-Day and the Battle of Normandy costing $1.3M. The remaining 14 events cost a total of $296K. Table 5 presents a summary of review results.
| Key Requirements Tested | Result | Percentage |
|---|---|---|
| Current form was utilized | 15/15 | 100% |
| Approval obtained in advance | 14/15 | 93% |
| Expenditures in compliance with the directive | 15/15 | 100% |
| Expenditures calculated correctly | 15/15 | 100% |
| Expenditures appropriately supported with documentation | 15/15 | 100% |
| Expenditures approved by the appropriate manager | 15/15 | 100% |
Source: Analysis from files reviewed by the audit team
Effective April 1, 2014, as per the TB Directive, events over $5,000 require the Deputy Minister’s approval and the Minister’s approval is required for events over $25,000. At VAC, an additional step was added requiring all events over $5,000 to also be approved by the Chief Financial Officer. An analysis of turn-around times for approval was completed. It was identified that events were generally submitted 12 working days before the event date and approval was normally obtained within 9 days of submission. In one case, final approval was obtained one day after the event occurred. In this case, the event was organized on short notice and documented support from key senior managers was obtained in advance of the event. The audit team determined that, given the circumstances, final approval after the fact was understandable.
3.5 Proactive Disclosure
Across government, senior managers at the Assistant Deputy Minister level and above, as well as the Minister and his staff, are required to publicly disclose all of their travel and hospitality expenses. At VAC as of June 1, 2014, there were 19 individuals subject to this requirement.
The team reviewed travel and hospitality transactions for the 19 individuals for the most recent period of proactive disclosure (April 1, 2014 to June 1, 2014). During the period, 27 transactions were reported for a total cost of $50,064. It was also determined that travel and hospitality were correctly reported with one omission noted. During this period a series of taxis charges totally $110 were not reported. The cause of the omission resulted from timing, as the charge was processed in early June. This was raised during fieldwork and a correction was made to VAC’s public disclosure.
3.6 Audit Opinion
The audit team observed that VAC was mostly compliant with the requirements of the TB Directive on Travel, Hospitality, Conference and Event Expenditures. Overall, the audit team determined the results to be "Generally Acceptable".
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