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Audit of Travel and Hospitality

Departmental Audit Committee
December 20, 2018

Executive summary

Travel and Hospitality are required to fulfil government activities and to help organizations achieve their mandates. Expenditures in these areas are often the subject of scrutiny by the public and media since Canadians are looking for assurance that public money is well spent. As such, there is a need for greater oversight over these types of expenditures and diligence in the management of public funds.

Treasury Board (TB) Directive on Travel, Hospitality, Conference and Events Expenditures came into effect on April 1, 2017, replacing the 2013 Directive. The changes increased departments’ operational flexibility and reduce administrative burden for the approval of travel, hospitality, and events. This included the ability to delegate travel approval below Assistant Deputy Minister (Branch Head) level and increased hospitality and event approval thresholds. As a result, the Agriculture and Agri-Food Canada (AAFC) departmental delegation instrument was revised in August 2017.

The Audit of Travel and Hospitality was included in the 2018-19 Integrated Audit and Evaluation Plan as travel and hospitality expenditures have a high degree of sensitivity to public scrutiny and the recent policy change resulted in increased operational flexibility and approval thresholds for travel and hospitality expenditures.

The objective of this audit was to determine whether the management of travel and hospitality expenditures was in compliance with applicable policies and directives, and that the control processes are operating effectively.

Internal Audit concluded that AAFC’s management of travel and hospitality expenditures is operating in compliance with applicable policies and directives, and that control processes are operating effectively. The audit identified opportunities to improve the pre-payment verification and post-payment verification and the hospitality disclosure processes.

The following strong practices were noted:

1.0 Introduction

1.1 Overview

1.2 Audit Objective

1.3 Audit Scope

1.4 Audit Approach

1.5 Conclusion

1.6 Statement of conformance

2.0 Detailed observations, recommendations and management responses

The following sections present the key observations, based on the evidence and analysis associated with the audit. For observations that include an opportunity for improvement, recommendations have been provided with management responses that comprise:

Expenditure Management

Line of enquiry: Travel and hospitality expenditures are in compliance with applicable directives and acts.

Audit work conducted: To assess the compliance of Agriculture and Agri-Food Canada’s (AAFC) travel and hospitality expenditures, Internal Audit reviewed a sample of transactions against the requirements of the Financial Administration Act, the Treasury Board (TB) Directive on Travel, Hospitality, and Conference Event (THCE) Expenditures, the National Joint Council Travel Directive, and AAFC Guidelines for THCE Expenditures.

2.1 Travel Expenditure Compliance

2.2 Blanket Travel Authority Compliance

2.3 Hospitality Expenditure Compliance

Planning and Monitoring

Line of enquiry: Adequate planning and monitoring processes are in place to support compliance with applicable directives and acts.

Audit work conducted: To assess the above criterion, Internal Audit reviewed the following areas:

  • Whether adequate tools for planning travel and hospitality are in place to support compliance with applicable directives and acts;
  • Whether adequate tools for monitoring are in place to support compliance with applicable directives and acts, by reviewing the following:
    • Whether AAFC has adequate and clearly defined processes in place for budget reallocations;
    • Whether gating and sampling activities provide adequate coverage; and
    • Whether the results of gating and sampling activities are conducted and communicated in a timely manner.

2.4 Tools for Planning

2.5 Monitoring

Budget Forecasting

Gating and Sampling for Travel and Hospitality Expenditures

Gating Travel Expenditures

Gating Hospitality Expenditures

Timely Gating Reporting

Sampling

Risk-Based Pre-Payment and Post-Payment Verification Plan

Recommendation 1 – Risk-Based Verification Plan

The Assistant Deputy Minister, Corporate Management Branch should ensure a risk-based pre-payment and post-payment verification plan is documented, reviewed and updated on a regular basis.

Management response and action plan: Agreed.
CMB will review and update our current pre & post payment verification approach and processes while ensuring to document the updates.

Lead responsible: CFO and DCFO

Target date for completion: August 2019

Reporting

Line of enquiry: Reporting was conducted in compliance with applicable directives and acts.

Audit work conducted: Internal Audit reviewed the hospitality disclosure on the Open Government portal, AAFC hospitality expenditure data, other relevant documentation and conducted interviews with CMB and other AAFC branches.

2.6 Hospitality Disclosure

Recommendation 2 – Hospitality Disclosure

The Assistant Deputy Minister, Corporate Management Branch should develop and communicate guidance on the requirements for hospitality disclosure and document the verification process conducted to ensure that disclosure information is complete and in compliance with AAFC guidance and TB requirements.

Management response and action plan: Agreed.
CMB will develop and document the process of the quarterly disclosure of hospitality expenditures as follows:

  1. Ensure the process is communicated by CMB to Branch coordinators; and
  2. Develop and implement the use of an internal checklist for CMB to ensure completeness prior to the quarterly publication onto Open Government.

Lead responsible: CFO and DCFO

Target date for completion:

  1. March 2019
  2. February 2019

Annex A: Lines of enquiry

Annex B: Acronyms

AAFC
Agriculture and Agri-Food Canada
CMB
Corporate Management Branch
TB
Treasury Board
THCE
Travel, Hospitality, Conference, and Event
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