Follow-Up to Internal Audit of Contracting and Procurement

Report Summary

The objective of this follow-up audit is to provide assurance that management has addressed the control deficiencies identified in the original audit report in September 2010. Overall, based on the scope above, we found that Management has addressed the majority of recommendations provided in the 2010 internal audit such as implementing a procurement policy and centralizing contract files. In addition, cancelled cheques are now retained for audit trail purposes; it was possible to verify that cheques were signed by appropriate individuals and that adequate segregation of duties was achieved. The following table presents specific findings from the audit of contracting and procurement activities reported in September 2010; it provides a description of the original audit recommendation and the current observation and the conclusion.

Original Audit Recommendations

Follow-up Observations and Conclusions

We recommend that the contracting policy be completed and that the new policy provide direction with respect to when a competitive process is required, procedures on how to conduct the process, as well as the level of documentation required for contracting and procurement decisions.

√ - Recommendation adequately addressed

The PPP Canada Procurement Policy has been approved and was implemented in December 2012. The Policy provides direction with respect to the when a competitive process is required, procedures on how to conduct the competitive process as well as the level of documentation required for contracting and procurement decisions.

We recommend that a centralized filing system be implemented for procurement and contracting documents.

√ - Recommendation adequately addressed

The Electronic Document and Record Management System (EDRMS) architecture has been developed and PPP Management expects EDRMS be implemented by April 2013.

We recommend that all contracts be executed by both parties prior to initiating work.

X - Recommendation not addressed

It was noted through testing that both the delegated contracting authority and the service provider had signed-off as evidence of agreement of the terms and conditions of the contract after the start date of the contracts for four (4) out of five (5) contracts. These four (4) contracts were call-ups against a Standing Offer which have pre-existing terms and conditions.

Management Response

The four contracts for which the observation applies were call-ups under the PPP Canada Standing Offer. Under these call-ups most terms and conditions are effectively already negotiated and the only item to be inserted into a final contract is the description of the Statement of Work including the expected deliverable. The risk level associated with this observation is therefore low. However, PPP Canada will continue to closely monitor contracts, including standing offer call-ups, to ensure all contracts are signed by both parties prior to initiating work.

We recommend that critical documents be retained for audit trail purposes.

√ - Recommendation adequately addressed

Documents are currently being stored centrally on a shared drive. PPP will continue to improve document management by implementing an Electronic Document Record Management System (EDRMS) in April 2013.

We recommend that steps be taken to obtain cancelled cheques in order to monitor compliance with the delegated authorities and appropriate segregation of duties.

√ - Recommendation adequately addressed

All cheques were signed by two approvers as per the Delegation of Operating Financial Signing Authorities Matrix in a timely manner and all cancelled cheques were retained for audit trail purposes.

We recommend that the Delegation of Financial Authorities be revised to clarify who should exercise transaction authority and that segregation of duties is clearly described.

√ - Recommendation adequately addressed

It was noted that the Delegation of Operating Financial Authorities Matrix is reviewed on an annual basis and approved by members of the Audit Committee. Transaction authority and approval of invoice is performed by the vice-president. Segregation of duties is achieved by having different individuals signing the cheque