There are no financial implications resulting from the receipt of this report.

Transcription

1 STAFF REPORT February 9, 2004 To: From: Subject: Audit Committee Auditor General Terms of Reference Purpose: To provide the Audit Committee with the terms of reference for certain audit projects included in the 2004 Audit Work Plan that will be commencing shortly. Financial Implications and Impact Statement: There are no financial implications resulting from the receipt of this report. Recommendations: It is recommended that this report be received for information. Background: Each year my office provides a work plan to the Audit Committee that summarizes the projects that will be undertaken. Part of our audit process requires the development of a terms of reference for each project which provides the background, objectives and reporting timeframe for the respective assignment. Comments: The terms of reference for the following projects are provided as appendices to this report. It should be noted that these terms of reference have been reviewed with senior management of the respective program area. (1) Fleet Operations Review Phase Two (2) Corporate Absenteeism/Attendance Management Follow-up Review

2 - 2 - Conclusion: Terms of reference for audit projects are important in that they provide direction and focus for the work to be undertaken. They also specify the parameters, scope and objectives of the review, as well as the expected reporting date. However, it is important to comprehend that the audit process is not specifically restricted to those areas contained in the terms of reference. Contact: Jeffrey Griffiths Auditor General Tel: (416) , Fax: (416) Jeff.GRIFFITHS@toronto.ca Jeffrey Griffiths Auditor General cg List of Attachments: Appendix: 1. Fleet Operations Review Phase Two 2. Corporate Absenteeism/Attendance Management Follow-up Review C:\DATA\Audit\2004\Reports\AG's Office\Terms of Reference - Feb 9, 2004.doc

3 - 3 - APPENDIX 1 AUDITOR GENERAL S OFFICE TERMS OF REFERENCE Department/Board: Corporate Services Division: Fleet Services Project Name: Fleet Operations Review Phase Two Year of Audit: 2004 Project Code: 04-CFL-01 A. Introduction/Background The Auditor General s 2003 Work Plan included a review of the fleet operations. Given the significant extent of the City s fleet operations, the review was divided into two phases. Phase One of the review has been completed and the report has been submitted to the February 2004 Audit Committee meeting. Phase One of the review covered the areas of fuel management; vehicle procurement, utilization and disposal; vehicle and equipment replacement reserve; the greening of the fleet program; and fleet safety. The Auditor General s 2004 Work Plan includes Phase Two of the review of fleet operations. This review covers fleet maintenance, the fleet management information system, parts inventory control and management, and customer service. It will also include a review of the awarding and management of external contracts. B. Financial/Operational Highlights Fleet Services Division manages a diverse portfolio of over 4,000 vehicles and equipment comprised of light, medium, heavy and speciality vehicles in addition to groundskeeping equipment and attachments such as snowplows, saltboxes and trailers. The division does not manage the fleets of the Toronto Police Service, Emergency Medical Services or Fire Services. Fleet Services Division operates on a full-cost recovery basis at a gross expenditure budget of $31.4 million for 2003 (2004 recommended budget - $31.3 million). An equal amount is charged to the various departments based on their expected usage of services provided by Fleet Services. The division operates four main garages and seven satellite garages to provide maintenance and repair service to the City s fleet, excluding Toronto Police Service, Emergency Medical Services and Fire Services fleet. The division also administers the service contracts with various external garages to provide specialized services or other services that may not be accommodated internally.

4 - 4 - C. Key Financial/Operational Issues and Controls The effectiveness of fleet management directly affects the quality of the City s service delivery. For example, lack of proper vehicles and equipment could result in service interruptions and delays of key services, e.g., snow removal or waste disposal. In addition, improper use or inadequate maintenance of vehicles, equipment or facilities could pose potential risks to employees and the public. Non-compliance with regulatory safety standards could also result in fines, impounding of vehicle or equipment, or shutdown of operations. D. Audit Objectives and Scope The objectives of this review are to assess the effectiveness of fleet management and to identify opportunities for improvement, cost savings and improved efficiencies and controls for: (1) Fleet Maintenance and Repairs: - City-owned garage operations; and - Awarding and administration of external contracts for parts and service; (2) Parts inventory control and management; (3) Fleet Management Information System (M4 System); and (4) Customer Service. Phase One of the review included an assessment of the business objective of each major area of fleet operations, the associated risks and the consequences of non-achievement. This review will include an assessment of the controls in place to mitigate those risks related to the areas covered in this review. The audit work will involve a review of policies and procedures, interviews with relevant staff, site visits, customer survey, examination of documents and records, analysis of data, review of relevant audit reports and best practices from other jurisdictions, and other procedures we deem appropriate. This review will focus only on fleet services managed by the Fleet Services Division of the Corporate Services Department. It does not include the fleet operations of the Toronto Police Service, Emergency Medical Services and Fire Services. E. Expected Reporting Date Audit Committee Meeting Fall 2004

5 - 5 - APPENDIX 2 AUDITOR GENERAL S OFFICE TERMS OF REFERENCE Department/Board: Corporate Services Division: Human Resources Project Name: Corporate Absenteeism/Attendance Management Follow-up Review Year of Audit: 2004 Project Code: 04-CCS-01 A. Introduction/Background In January 2001, the Auditor General issued a report entitled Corporate Absenteeism/Attendance Management Review. Although we were not able to conduct a policy compliance audit, given the difficulties experienced by the City in identifying, monitoring and managing employee absenteeism effectively, we did review the processes in place to identify, monitor and manage employee absenteeism and commented accordingly. Our report recommended that the Commissioner, Corporate Services, present an employee absenteeism/attendance policy to the Administration Committee by June 30, 2001, and report on a framework for reporting absenteeism across the Corporation. Activity required to be performed by the Attendance Management Committee was also addressed in this report. B. Operational Highlights The City s employees are its most valuable resource. It is, therefore, important that absenteeism be properly managed in order that maximum value can be obtained from these resources and assistance can be provided where necessary and appropriate. The development of a corporatewide policy on employee absenteeism is of significant importance in the efficient and effective management of the human resources of the City. Parallel to such a policy is the development of adequate meaningful management reports to assist in the management of absenteeism. C. Key Financial/Operational Issues and Controls Salary costs represent the most significant expenditure in the City. A lack of an appropriate corporate absenteeism framework, the inability to measure actual absenteeism results against reasonable absenteeism rates, and inadequate management reporting system that supports timely corrective action could result in unnecessary costs due to excessive absenteeism.

6 - 6 - D. Audit Objectives and Scope - To determine the extent of implementation of recommendations made in the Auditor General s January 2001 report; and - To recommend further action, if any, required to achieve the substance of recommendations made in the January 2001 report. E. Expected Reporting Date Audit Committee Meeting July 2004 C:\DATA\Audit\2004\Reports\AG's Office\Terms of Reference - Feb 9, 2004.doc