Annual Report

Presentation to Audit
Committee
November 26, 2015
Office of the Auditor General

OAG Annual Report: Audits

AUDIT OF 3-1-1 CONTACT CENTRE

AUDIT OF ACCOUNTS PAYABLE
AUDIT OF INFRASTRUCTURE SERVICES DEPARTMENT

AUDIT OF IT

ADMINISTRATION
TECHNICAL
RISK MANAGEMENT
IT SECURITY INCIDENT HANDLING AND RESPONSE

AUDIT OF THE MACKENZIE KING BRIDGE

RESURFACING
AUDIT OF SPECIES AT RISK
AUDIT OF WINTER OPERATIONS CAPACITY
PLANNING AND PERFORMANCE MEASUREMENT

OAG ANNUAL REPORT: AUDIT OF 3-1-1

CONTACT CENTRE

3-1-1 agents are courteous, knowledgeable and service-oriented clients are

generally satisfied with the service
Opportunities to better support the 3-1-1 agents by improving the information
in the knowledge base that they rely upon
Scheduling of agents could be improved
New scheduling system could be better used to eliminate unnecessary manual
activities
3-1-1 service standard is lowest of other municipalities
This standard not approved by Council
Semi-annual performance report is misleading
Wait times are longer than might be expected

Potential savings

Recommendations to automate a number of processes could create

efficiencies for 3-1-1 operations
Management agreed with all 34 recommendations

OAG ANNUAL REPORT: AUDIT OF ACCOUNTS

PAYABLE

Controls over the accounts payable process are adequate,

Sample invoices: 20% were paid late and 5% missed discount
totaling a potential savings loss of $603,437
Application controls within MarkView and SAP are operating
effectively
Increase use of application controls
Systems can be configured to search for duplicate payments

OAG ANNUAL REPORT: AUDIT OF ACCOUNTS

PAYABLE
Potential Savings

Use receipt date rather than the invoice date to increase

discounts taken

Tracking and sharing penalties paid for late payments would

allow the City to be aware of money that is being lost as a
result of inefficient/ineffective internal processes

Further opportunities to leverage existing technology to

prevent duplicate payments

Opportunities for potential savings through enhanced

analytics/monitoring tools
Management agreed with all 7 recommendations

OAG ANNUAL REPORT: AUDIT OF

INFRASTRUCTURE SERVICES DEPARTMENT
ADMINISTRATIVE MANAGEMENT

No budget management for capital expenditures

planned for the year
Could assist cash-flow management and improve
over-sight and control of projects
Current process of quarterly reviews of the
operating budget status could be improved by
monthly reviews

OAG ANNUAL REPORT: AUDIT OF

INFRASTRUCTURE SERVICES DEPARTMENT ADMINISTRATIVE MANAGEMENT

Overtime, sick leave and vacation were generally

found to be well managed
Opportunity to automate some paper forms
Minor issues found with ISDs training processes

Management agreed with all 9 recommendations

OAG ANNUAL REPORT: AUDIT OF

INFRASTRUCTURE SERVICES DEPARTMENT
TECHNICAL MANAGEMENT

Project management and inspection processes in place

Those processes not consistently applied
Areas requiring further attention

Project schedules
Budget control
Communications
Quality assurance
Project reviews

Issues identified in previous audits

Responsibility for redesign costs

Recovery of change orders due to errors
Exercising of contract liquidated damages
Project oversight and others

OAG ANNUAL REPORT: AUDIT OF

INFRASTRUCTURE SERVICES DEPARTMENT
TECHNICAL MANAGEMENT

Potential Savings

Modify procedures and/or the contract terms

requiring a reduction of 10% on the rates will deliver
a saving of $350,000 annually
Using more in-house construction inspectors

Management agreed with all 8 recommendations

OAG ANNUAL REPORT: AUDIT OF IT RISK

MANAGEMENT

IT-related risk is significant

Low maturity level of most City departments for IT Risk
Management due to Governance and Leadership issues
Comprehensive Governance component of an Information
Technology Risk Management (ITRM) Framework not
developed
Some components of an effective ITRM Framework embedded
in the ERM
Potential vulnerability of the IT risks could have significant
impacts on the Citys business lines

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OAG ANNUAL REPORT: AUDIT OF IT RISK

MANAGEMENT

Little flexibility for required adjustments to the ITS

infrastructure budget and/or other departmental budgets for
high priority
Decentralized approach used to fund IT projects and absence
of a City-wide priority ranking system impacts the effectiveness
of CITMTs authority relative to its mandate
Decisions made regarding IT investments/expenditures may
not be aligned with overall corporate priorities and/or risk
management objectives
The reporting structure to and from the CIO is not consistent
with best practises

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OAG ANNUAL REPORT: AUDIT OF IT RISK

MANAGEMENT

IT issues and priorities that are critical to City-wide objectives

do not necessarily rise to the top
In some business units, people who have little or no technical
training are being tasked, under the ERM Framework, with the
identification of risks and/or related mitigation strategies
The process of identifying IT risks is first impeded by the
absence of a full inventory of the IT universe across the City
(applications, business owners, networks, interdependencies,
etc.)
No complete risk register that is developed with input from
trained and qualified IT professionals

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OAG ANNUAL REPORT: AUDIT OF IT RISK

MANAGEMENT
Potential Savings

Overall efficiencies and improved direction, advice and reporting of IT

activities on a City-wide basis will lead to economies of scale and
better decision making for IM/IT related decisions

Improved identification, assessment and mitigation initiatives will

protect the City against potential system failures or security breaches,
including cyber-attacks, which could interfere with business activities

Necessary changes to upgrade/replace the Citys infrastructure and to

adequately increase the Citys IT security protection will require
significant investment in coming years.

Management agreed with all 8 recommendations

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OAG ANNUAL REPORT: AUDIT OF THE

MACKENZIE KING BRIDGE RESURFACING

Part of the OC Transpo Transitway

Also part of the NAC parking garage, leakage a chronic
problem
These factors affected conditions of pavement
City had to mill and repave portions of the bridge annually
2004 study of options concluded that most economical
solution:

Annual pavement repairs for 30 years

Mill and repave the entire surface every 15 years
Replace the waterproofing and asphalt every 30 years
By 2007 staff worked to find a different approach

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OAG ANNUAL REPORT: AUDIT OF THE

MACKENZIE KING BRIDGE RESURFACING

Staff decided to remove the waterproofing and asphalt, and repave

using a new product
Total cost of removing the waterproofing for the entire length of the
bridge and repaving was $625,000 in 2008
In 2009 asphalt had to be removed and repaved using conventional
waterproofing and asphalt at a cost of $718,000
A portion of the cost of the 2008 and 2009 repaving contracts (a total
of $1,243,000) could have been avoided if the City had continued with
the program of milling and repaving only those sections of the bridge
pavement requiring repair in accordance with the recommendations of
the 2004 report
The decision to repave using a new product was made without proper
design and testing, and without following alternative evaluation
methods that were formalized in the guidelines for structure renewal
There were 38 findings
Management agreed with all 11 recommendations

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OAG ANNUAL REPORT: AUDIT OF SPECIES AT

RISK

Good understanding of the requirements to comply with the

regulation
Protocols and official documents to guide City operations
Operational improvements are required

Mitigation measures by Public Works department are not specific

enough for maintenance activities

For major infrastructure projects, there is no protocol to review the

environmental and legislative contexts before starting the work
on-site.
Up-to-date list of species at risk in the Ottawa area, but it is not
available to all staff members having to deal with such species
Improvements to the communication process are required

Management agreed with all 8 recommendations

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OAG ANNUAL REPORT: AUDIT OF WINTER

OPERATIONS CAPACITY PLANNING AND
PERFORMANCE MEASUREMENT

City Council approved Maintenance Quality Standards (MQS) in May

of 2003
MQS are higher than Provincial Minimum Maintenance Standards
MQS not been reviewed or assessed for financial impact since they
were set
City has a high ratio of owned to contracted equipment
The City has not conducted a full analysis to determine the optimum
mix of internal and external services to achieve the highest level of
economy and efficiency for these services
There is a risk that City staff are spending time on tasks that are
available at lower cost and therefore is paying more than necessary
for winter control services

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OAG ANNUAL REPORT: AUDIT OF WINTER

OPERATIONS CAPACITY PLANNING AND
PERFORMANCE MEASUREMENT

Potential Savings
The demand for these miscellaneous activities has not been
quantified to clearly demonstrate the need and legitimacy
High likelihood that these activities could be reduced to lower
costs
City could conduct a review to ensure the City has the optimal
mix of internal and contracted services for Winter Operations
Review of and changes to current MQS to bring them in line
with provincial standards
Better controls over receipt and use of materials

Management agreed with all 20 recommendations

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OAG ANNUAL REPORT: COMMON THEMES FROM

AUDITS

Lack of financial analysis used in decision-making

Full efficiencies are not realized or evaluated when
new technology implemented

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OAG Annual Report

Reporting going forward:

Report annually on audit reports completed

during the year
Follow-up audits will be presented as they are
completed
Fraud and Waste Hotline report will be
presented annually

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Acknowledgement
We wish to express our appreciation for the continued
cooperation and assistance afforded the audit teams by
the City Manager, management and staff.
Staff of the Office of the Auditor General
Suzanne Bertrand
Sonia Brennan
Alina Chimet
Ken Hughes
Ed Miner
Janet Onyango
Louise Proulx
Lise Renaud
Margaret Sue
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Questions

Thank you

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