Audit of Travel, hospitality, and conference expenses

Executive Summary

Canadian Grain Commission employees and commissioners travel frequently for various reasons. Travel and conference expenses for the 2014-2015 fiscal year totaled nearly $2,000,000. A small amount of hospitality expenses are also incurred annually, totaling approximately $19,000 in 2014-2015.

For the Government of Canada, travel, hospitality and conference expenditures pose a high risk of loss of reputation or public confidence. The objective of this audit was to provide assurance to Canadian Grain Commission management, stakeholders, and the Canadian public that effective controls are in place for travel, hospitality and conference expenses. The audit included travel expenses incurred by selected travelers from April 1, 2014 to June 30, 2015. The selected employees included the Commissioners, executive level employees, and a sample of other frequent travelers. The expenses of the Chief Audit Executive were audited by an external audit firm, PricewaterhouseCoopers, in order to achieve independence.

Conclusion

The audit concluded that controls related to travel, conference, and hospitality were effective. Procedures and guidance for management pre-authorization, review and approval of expenses are in place and are monitored by the Finance Division. The Canadian Grain Commission adheres to Treasury Board of Canada Secretariat requirements for proactively disclosing specified expenses.

There were no issues identified during the audit and therefore no recommendations are provided in this report.

Statement of Assurance

In the professional judgment of the Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the accuracy of the opinion provided and contained in this report. The opinion is based on a comparison of the conditions as they existed at the time, as described in the Audit Scope, against pre-established audit criteria. The opinion is applicable only to the activity examined. This audit engagement was planned and conducted in accordance with the Government of Canada’s internal auditing standards.

Although the Chief Audit Executive did not examine the audit procedures completed by PricewaterhouseCoopers, the Canadian Grain Commission is satisfied that PricewaterhouseCoopers exercised sufficient internal oversight to ensure that the audit of the Chief Audit Executive’s expenses was planned and conducted in accordance with internal auditing standards.

Introduction

Authority for Audit

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 a systematic, disciplined approach to assess and improve the effectiveness of risk management, control and governance processes.

As a result of our ongoing risk assessment, Audit and Evaluation Services introduced the Audit of Travel, Hospitality, and Conference Expenses to the Chief Commissioner and Chief Operating Officer in July, 2015 as an addition to the 2015-2016 audit plan. The Departmental Audit Committee recommended approval of the addition in September, 2015.

Background

The Canadian Grain Commission has multiple processes in place for both the pre-authorization of travel, hospitality and conference activities and the subsequent review and approval of the expenses incurred. In keeping with the requirements and the spirit of the Treasury Board of Canada Secretariat Directive on Travel, Hospitality, Conference and Event Expenditures, the Canadian Grain Commission also promotes the minimization of these types of expenditures where possible (for instance, video- and teleconferencing are available instead of travelling for face-to-face meetings with other Canadian Grain Commission employees). Nevertheless, travel, hospitality and conference expenditures continue to pose a high risk of loss of reputation or public confidence, for both the Canadian Grain Commission and the Government of Canada.

The geographical dispersion of terminal elevators and other Canadian Grain Commission work locations makes a certain amount of travel unavoidable. As well, the Canadian Grain Commission’s headquarters location outside of the National Capital Region results in frequent trips to Ottawa for various meetings. With the Canadian Grain Commission’s role in supporting market access for Canadian grain, as well its prominent grain research activities, international travel is required. In addition, Canadian Grain Commission employees attend training and conferences for ongoing professional development which require travel to locations both within North America and overseas. Approximately 88% of Canadian Grain Commission’s employees submitted at least one travel expense claim during the 2014-2015 fiscal year and the first quarter of 2015-2016 related to grain inspection, grain research, meetings, training, conferences, or other events.

Travel, conference and hospitality expenses are disclosed publicly on the Canadian Grain Commission’s web site. Total travel and conference expenses for the 2014-2015 fiscal year were approximately $1,986,000, about 3.3% of Canadian Grain Commission’s annual budget. Hospitality expenses are limited to a relatively small number of occurrences; disclosed hospitality expenditures for the 2014-15 fiscal year were approximately $19,000.

Objective

The objective of the audit was to provide assurance to Canadian Grain Commission management, stakeholders, and the Canadian public that effective controls are in place for travel, hospitality and conference expenses.

Scope

The audit involved examination of the travel, hospitality, and conference expenses for selected individuals, including:

  • The Chief Commissioner, Assistant Chief Commissioner, and Commissioner (collectively, “the commissioners”);
  • Members of the Executive Management Committee and other EX-level employees;
  • A sample of other frequent travelers, based on total value of travel reimbursements for the audit period.

The audit period included expenditures made from April 1, 2014 to June 30, 2015.

The scope was limited for one audit criterion, as we were not able to conclude on all aspects of criterion 1.1 (Appendix) due to a lack of available information.

To achieve independence, the expenses of the Chief Audit Executive were excluded from the Audit and Evaluation Services audit work. The Chief Commissioner engaged Canadian Grain Commission’s external auditor, PricewaterhouseCoopers, to examine the Chief Audit Executive’s expenses based on Audit and Evaluation Services’ audit program. Results of the PricewaterhouseCoopers review were presented to the Acting Chief Commissioner and are incorporated into this report.

Approach and Methodology

The audit methodology used by Audit and Evaluation Services is based on guidance provided by the Institute of Internal Auditors (IIA) and the Office of the Comptroller General of Canada, including the International Professional Practices Framework and the Treasury Board Secretariat’s Policy on Internal Audit.

The audit focused on travel, hospitality, and conference expenses incurred during the 2014-2015 fiscal year and the first quarter of the 2015-2016 fiscal year. The audit fieldwork was conducted from September to December, 2015. Procedures performed during the examination phase included, but were not limited to, interviews, walkthroughs, reviews of supporting documentation, and analysis of financial data.

The audit criteria (Appendix) were based on Audit and Evaluation Services’ risk assessment process (including fraud risk assessment) after review of relevant Treasury Board Secretariat instruments, Canadian Grain Commission policies and procedures, and discussion with Canadian Grain Commission management. Observations and potential findings were discussed with Canadian Grain Commission management throughout the audit.

Observations

Objective: To provide assurance to Canadian Grain Commission management, stakeholders, and the Canadian public that effective controls are in place for travel, hospitality and conference expenses.

Travel and Conference Expenses

All travel expense files (including conferences) for twenty-three Canadian Grain Commission travellers were reviewed against the audit criteria. Accounting Operations’ (Finance division) procedures and controls related to the processing of expense claims were also examined. Audit and Evaluation Services found that Accounting Operations conducts a thorough review of high-risk expense claims as well as spot checks of other claims and also provides sufficient guidance for administrative assistants to prepare complete documentation. A small number of minor discrepancies were identified through Audit and Evaluation Services’ review; however, these were determined to be the result of individual errors and not evidence of systemic control weaknesses.

Overall, approvals for travel and conference attendance were appropriate and complete, and justification for travel was provided to the Chief Operating Officer and the Executive Management Committee. As described in the scope, one aspect of criterion 1.1 could not be concluded. The Government-wide travel and expense management system does not provide the information required to assess whether travellers booked airfare as far in advance as possible and choose the lowest airfare.

Hospitality Expenses

Canadian Grain Commission’s hospitality expenses are minimal. Each item was reviewed for the time period specified and no significant issues were noted. Accounting Operations ensures that hospitality claims are in compliance with applicable policies and directives.

Proactive Disclosure

Overall, Canadian Grain Commission’s public disclosures of hospitality expenses, Chief Commissioner and Chief Operating Officer travel expenses, and annual public servant and non-public servant travel expenses are complete and accurate, with only minor discrepancies identified.

Chief Audit Executive Expense Review

Consistent with Audit and Evaluation Services’ audit results, there were no findings to report from the PricewaterhouseCoopers review.

Recommendation:

No recommendation required. Management has been provided with a memo describing the minor discrepancies that were identified.

We express our appreciation to staff and management of the Finance and Human Resources divisions for their assistance during the course of this audit.

This audit has been reviewed with:

J. Smolik, A/Chief Commissioner
G. Miles, Chief Operating Officer
C. Blahey, Chief Financial Officer

Audit and Evaluation Services Contact:

B. Brown, Chief Audit Executive

Appendix – Audit Criteria

Audit Objective #1: To provide assurance to Canadian Grain Commission management, stakeholders, and the Canadian public that effective controls are in place for travel, hospitality and conference expenses.

  • Audit Criterion 1.1: Travel, hospitality, and conference expenditures are planned and undertaken in a manner that maximizes effectiveness in meeting organizational mandates, minimizes costs, and demonstrates value for money.
  • Audit Criterion 1.2: Expenditures are pre-authorized in compliance with Treasury Board and Canadian Grain Commission directives and policies, as well as the Financial Administration Act.
  • Audit Criterion 1.3: Expenditures incurred are in accordance with Treasury Board and Canadian Grain Commission directives and policies.
  • Audit Criterion 1.4: Claims for reimbursement are adequately detailed and supported to enable certification and verification in accordance with the Financial Administration Act.
  • Audit Criterion 1.5: External reporting on travel, hospitality, and conference expenditures is in accordance with the Treasury Board directive.
  • Audit Criterion 1.6: Effective administrative controls and monitoring activities result in the ability to prevent and detect both unintentional and intentional actions (such as non-compliance, errors, omissions and fraudulent activities).
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