Audit of the Eastern Regional Office

2.0 Introduction

Authority for Audit

2.1 The mission of the Internal Audit function of Audit and Evaluation Services is to provide independent and objective assurance services designed to add value and improve the Canadian Grain Commission’s operations. Internal Audit helps the Canadian Grain Commission accomplish its objectives by bringing a systematic, disciplined approach to assess and improve the effectiveness of risk management, control and governance processes.

2.2 The audit of the Eastern Regional Office was included in the 2013-2016 Audit and Evaluation Services Risk-Based Audit Plan that was approved by the Commission following a recommendation by the Departmental Audit Committee in November 2013. The audit was planned in order to provide assurance to the Chief Commissioner on the controls over a number of critical functions that are carried out at the Eastern Regional Office. Several new processes have recently been implemented following legislative and organization-wide changes. The audit provided an opportunity to assess the status and effectiveness of these new processes.

Background

2.3 The Eastern Regional Office in Montréal is one of two Canadian Grain Commission regional offices operating within the Industry Services (IS) division. Following a recent re-organization of the Industry Services division, the regional office now provides management and administration for Montreal, Thunder Bay, Churchill, Chatham, Baie-Comeau, Port-Cartier, and Quebec City service centres. There are analytical labs at the regional office in Montréal and Thunder Bay service centre that perform a variety of grain sample testing services for the Eastern region.

2.4 The Canadian Grain Commission’s IS Industry Service regional offices carry out inspection activities, weighing oversight, and administrative functions such as billing. A large number of regional office procedures are documented, executed, and monitored through Industry Services’ Quality Management System. The billing process is described in the Canadian Grain Commission’s Billing Instructions Manual which incorporates Canadian Grain Commission’s new user fee codes and schedules that came into effect on August 1, 2013.

Audit Objectives

The objectives of this audit were:

2.5 To assess the adequacy and effectiveness of internal controls related to the performance of services and invoicing of revised user fees;

2.6 To assess the adequacy and effectiveness of internal controls related to the administration of overtime in the Eastern region;

2.7 To determine whether management controls and risk management are in place to enable effective and efficient operations in achieving organizational objectives; and

2.8 To assess the adequacy and effectiveness of internal controls over data security, including electronic and pre-printed documents. The criteria for assessment related to the specific objectives and sub-objectives of the audit are contained in Appendix A – Audit Criteria.

Audit Scope

The scope of the audit included:

2.9 Review and assessment of the design effectiveness of those controls relating to invoicing, overtime, overall management and data security.

2.10 Tests of operating effectiveness for selected controls where appropriate from the period of August 1, 2013 up to and including the date of the on-site examination (week of January 13, 2014), with certain transactions included up to and including February 27, 2014.

2.11 Review of judgmentally selected financial data from the period of April 1, 2013 to October 31, 2013 with certain transactions included up to and including February 27, 2014.

2.12 The audit excluded the operations of the Eastern Region Service Centres but did include all Eastern region activities that are administered (processed) by the Eastern Regional Office in Montreal. Therefore, some samples for testing were selected from service centre locations because the documentation resides in Montreal.

2.13 The audit also excluded analytical procedures within the Montreal and Thunder Bay labs, although day-to-day management of the Montreal lab was included.

2.14 In addition to the above noted objectives and scope, Audit and Evaluation Services performed procedures on behalf of the Finance division relating to the requirements of the Policy on Internal Control, specifically testing of Internal Controls over Financial Reporting. Audit and Evaluation Services also coordinated audit activities with the Industry Services Quality Management System audit simultaneously taking place in Montreal. The work performed for all three of the projects was used as a basis for the information and conclusions found in this report.

Approach and Methodology

2.15 The audit methodology used by Audit and Evaluation Services is based on guidance provided by the Institute of Internal Auditors and the Office of the Comptroller General of Canada. The standards for internal audit are articulated in the Institute of Internal Auditor’s International Professional Practices Framework and the Treasury Board Secretariat’s Policy on Internal Audit.

2.16 The audit focused on reviewing the operations of the Eastern regional office and was conducted from January to March, 2014. It, included an onsite visit to the regional office in Montréal the week of January 13, 2014. Procedures performed during the examination phase included:

  • Interviews of the regional management team and other selected employees to obtain an understanding of the processes and procedures in place at Eastern regional office.
  • Observation of employees conducting their daily responsibilities both at the Eastern regional office and one of Canadian Grain Commission’s terminal offices.
  • Review and inspection of documentation and other relevant information to support the audit objectives noted above.
  • Assessment of design effectiveness of controls currently in place as well as current operational processes to address gaps or deficiencies noted, where applicable.

2.17 At the conclusion of the examination phase, recommendations for management were developed in areas where opportunities for control improvements were identified. Recommendations in this report have been categorized to reflect their potential impact on the regional office. The criteria established for determining the impact is outlined in Appendix B. The impact is indicated following the text of each recommendation.