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Audit Report on Travel and Hospitality
Audit observations and areas for improvement
A&CS observations and areas for improvement relate to monitoring, measuring and reporting on the processing of claims.
Monitoring, measuring and reporting on the processing of claims
A random sample of 25 claim items was reviewed in detail against the pre-determined audit attributes. The audit attributes and the nature of an error are defined as follows:
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The documentation attribute tested whether supporting documentation to justify an expense was on file (e.g., receipts or declarations, supporting evidence for foreign exchange rates, or business purpose).
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The accuracy attribute tested such things as appropriate cut-off between fiscal years, general ledger classification, claiming all expenses, and mathematical correctness of the claim.
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The policy attribute tested whether claims were in accordance with OSFI's T&H policy correct foreign exchange, meal and/or incidental rates, complete Hospitality Policy Section 4 information, number of meals claimed while on travel status.
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The sign-off attribute tested whether appropriate section 34 or section 4 sign-off was provided and whether the appropriate management level had approved the expense.
Of the 25 claim items audited, 9 observations were raised.
| Testing Period | No. of Claim Items audited | No. of Claim Items where observations were noted | Attributes Tested - Number of observations | |||
|---|---|---|---|---|---|---|
| Documentation | Accuracy | Policy | Sign-off | |||
| Travel | 21 | 7 | 4 | 3 | 0 | 0 |
| Hospitality | 4 | 2 | 0 | 1 | 1 | 0 |
| Total | 4 | 2 | 0 | 1 | 1 | 0 |
Of the $115,960 in total travel expenses, 'travel - air and ground transportation' expenses accounted for $58,090 (50%) while 'travel - other' expenses (e.g.: hotels, meals, etc.) accounted for $57,870 (50%). Except for two items, the observations were made in the 'travel - other' accounts.
The observations made concerning matters of documentation and accuracy were attributed to attaching to a claim supporting explanation or rationale for the expense or ensuring expense receipts are correctly entered in the claim form. It was not a question of the amount or purpose of the expenses but rather the completeness of the supporting documentation. Two (2) claim items were related to overpayment of claim expenses, which were subsequently reimbursed, representing a nominal amount ($41) of the total sample amount of $120,251.
Total hospitality expenses for the audit period were $4,291. The observations made on hospitality claims were not related to the legitimacy of the amounts claimed but rather to the completeness of the Section 4 information and a posting of the claim to a wrong general ledger account.
In discussions with RC Administrators who prepare a high volume of T&H claims, confidence was expressed with regards to the accuracy, completeness and policy compliance of claims. When specific guidance is needed, RC Administrators refer to the TBS policy or ask the FCAC Manager Administrative Services and/or OSFI Finance for clarification.
FCAC is considering additional process steps to provide for e-mail notification of claim adjustments of $10 or more in either direction, and e-mail notification of the direct deposit of claimed amounts.
Recommendation
To achieve high quality processing of claims, FCAC, with OSFI Finance, need to track and assess the completeness and accuracy of claims item errors by RC group and by error type. Such tracking is important in assessing the nature and scope of claim processing errors and in determining what support and training is required for effective application of T&H policy.
Meetings should be arranged with FCAC staff to review their practices for preparing travel and hospitality claims, with emphasis on supporting documentation, and to identify steps required to reduce errors in completing claims.
Management's Comments
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Deputy Commissioner and Administrative Manager to meet with key staff/managers in April 2005 to review the observations raised in this audit, emphasize the areas that need improvement and present management's action plan and expectations for improvement. A meeting with the administrative assistants, responsible for the processing of claims, is scheduled for April 28, 2005.
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FCAC reviewed its processes to include, as part of the documentation, a mandatory detailed itinerary and/or schedule related to business trips, which is now being implemented.
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From May 1, 2005 to October 31, 2005, the Administrative Manager or a delegated representative will review all travel and hospitality claim files before sending them for payment to ensure that all the areas of improvement have been implemented.
- Progress reports on the management's action plan will be tabled by the Senior Corporate Officer at the Audit Committee on June 28, 2005 and November 15, 2005.
Other
Certain tools/aids were developed in the course of conducting the audit. These have been given to the FCAC Manager Administrative Services and to OSFI Finance to assist them in establishing effective management and reporting on the processing of T&H claims. The tools / aids are travel and hospitality claim process maps (appendices to this report) with supporting control assessments.
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