2005 Audit Recommendations - Status Tracking

Document 6

Audit: Management Control Framework

(EMC Lead: K.Kirkpatrick / Staff Lead: various

Audit Recommendation

Management Response

Comments

Budget Implications
2007 or Beyond

Related Council Motions

Status Update

Audit Management Response

Action Required Based on DCM Implementation Plan

Management Timelines (Q1- Q4)

(Risks, issues regarding implementation, etc)

($$ if known)

1i)

That the Chief Corporate Planning and Performance Reporting (CCPPR) Officer assess the City Corporate Plan and process, and budgeting process for 2006, once completed, to identify lessons learned, and develop an action plan to address issues or outstanding items, including:

a) the planned introduction of performance measures against the key objectives within the City Corporate Plan.

Management agrees with these recommendations in principle. Plans for a post mortem of the City Corporate Plan (CCP) and related activities were established earlier in 2005, with post mortem workshops scheduled for early in Q1 2006. One of the specific questions addressed will be the link between the corporate planning process, the long-range financial plan and the budgeting process. Recommendations for changes to be considered in the next version of the CCP arising from the post mortem will be reviewed and signed off by the Executive Management Committee (EMC) in Q1 2006 and taken into account in the next refresh of the CCP, which will take place in late 2006.

In addition, in parallel with the CCP post mortem, the Office of the Chief Corporate Services Officer will conduct as assessment of the budget process, as it does each year, and bring forward any suggested changes to Council.

Management agrees with the recommendation regarding the planned introduction of performance measures against the key objectives within the City Corporate Plan. Work on these measures has already begun and a report on the
proposed performance measurement and reporting
framework was submitted to Council in Q1 2006.

Post mortems of the City Corporate Plan (CCP) and related activities were conducted in January 2006. One of the specific questions addressed was the link between the corporate planning process, the long-range financial plan and the budgeting process.

Q2 (June) - performance reporting on goals in Corporate plan.

Q3 (July) - approval of changes to integrated planning framework by CSEDC and Council.

Recommendations for changes to the planning framework were reviewed & signed off by EMC in Q2 2006 and were included in the Term of Council Planning and Budget Process and Timetable report submitted to CSEDC and approved by CSEDC and Council in July.

Performance indicators for each of the goals identified in the City Corporate Plan have been established and we reported on these in the City's 2005 annual report, which was issued in June 2006.

b) the planned linking of the budget to the City Corporate Plan.

Management will be linking the budget to the Corporate Plan as part of its Integrated Planning Framework. Following the next election, a “Term of Council” Plan will be developed and approved along with the next iteration of the City’s Long-Range Financial Plan. These will be the basis for multi-year budgeting and for the next version of the Human Resources Plan.

Management notes that capacity planning was included in the planning process and the plan. The planning process followed by Management specifically took capacity constraints into account. The feasibility of implementing each action item included in the CCP and Departmental Business Plans within the existing resource base was evaluated by the City department(s) involved. Where this was not possible, the additional resources required were highlighted and included in the costing of the plans that were submitted to Council. This is a simple, cost-effective approach to capacity assessment. If in future years Management sees that plans have been over committed, Management will re-assess the approach.

IPF framework provides for link between CCP and LRFP, which will provide direction for budget preparation.

Q3 (July) - approval of changes to integrated planning framework by CSEDC and Council.

IPF and Budget Process approved by CSEDC and Council in July 2006.

c) incorporating capacity planning in the planning process and the plan and,

Management agrees with explicitly identifying key assumptions used in the development of the plan. This will be addressed through post mortem – see response above. This will be implemented as part of the CCP refresh that will take place in late 2006.

Regarding the recommendation that the CCPPR Officer investigate the opportunity to integrate the Corporate Services Priority setting tool, see response regarding capacity assessment above. As noted by the Auditor General, the Corporate Planning process was implemented recently and will evolve over time. Through mechanisms such as the post mortem we are taking a continuous improvement approach and will identify areas where the process can be improved.

We disagree with this observation.

N/A

Capacity planning was included in the planning process and the CCP. The planning process followed specifically took capacity constraints into account. The feasibility of implementing each action item included in the CCP and DBPs within the existing resource base was evaluated by the City department(s) involved. Where this was not possible, the additional resources required were highlighted and included in the costing of the plans that were submitted to Council. This is a simple, cost-effective approach to capacity assessment.

Subject to further discussion between the Auditor General and the Council Audit Working Group.

d) explicitly identifying key assumptions used in the development of the plan.

Management agrees with the recommendation regarding monitoring and reporting on the timely completion of Individual Contribution Agreements across the City by the Director of Employee Services. As noted in the Auditor General’s report, the City just established its Corporate Planning Framework in 2005. In the first year, we developed the City Corporate Plan and Departmental Business Plans. In subsequent years these will cascade down throughout the organization and branch and unit workplans aligned with the CCP and DBPs will be prepared. At that point the link between ICA’s and business plans will be clearly demonstrated. For the time being the requirement to establish ICA’s for all Management staff remains, but these are based on management accountabilities and negotiated objectives. Management will continue to remind all Branch Management of their responsibility to complete ICA’s for their management staff. At the end of the performance cycle Management will report on the number of ICA’s completed as compared to the number of employees eligible for the performance pay program. This information will be presented to the
Executive Management Committee in Q2 of 2006.

Q1 2007 (January) - anticipated date of approval of CCP by Council.

Will be implemented as part of the CCP refresh that will take place in late 2006.

1(ii)

That the CCPPR Officer investigate the opportunity to integrate the Corporate Services priority setting tool more broadly within the corporate planning process.

N/A

See response regarding capacity assessment above. As noted by the Auditor General, the Corporate Planning process was implemented recently and will evolve over time. Through mechanisms such as the post mortem we are taking a continuous improvement approach and will identify areas where the process can be improved.

1(iii)

That the Director of Employee Services monitor and report on the timely and appropriate completion of Individual Contribution Agreements (ICA) across the City.

As noted in the Auditor General’s report, the City just established its Corporate Planning Framework in 2005. In the first year, we developed the City Corporate Plan and Departmental Business Plans. In subsequent years these will cascade down throughout the organization and branch and unit workplans aligned with the CCP and DBPs will be prepared. At that point the link between ICA’s and business plans will be clearly demonstrated. For the time being the requirement to establish ICA’s for all Management staff remains, but these are based on management accountabilities and negotiated objectives. We will continue to remind all Branch Management of their responsibility to complete ICA’s for their management staff. At the end of the performance cycle we will report on the number of ICA’s completed as compared to the number of employees eligible for the performance pay program. This information will be presented to the Executive Management Committee in Q1 of 2007.

Q1-07

At the outset of the next performance management cycle, Employee Services will give clear direction to departments to ensure they indicate whether ICAs have been completed when submitting performance ratings and pay recommendations.

None

In progress.

That the City Manager ensure there is a review to update the Centres of Expertise Service Level Agreements, including definition of performance levels, monitoring requirements and approach for identifying and resolving issues or disputes.

Management agrees with this recommendation. A draft proposed process, addressing all of these elements, will be presented to Senior Management Team (SMT) at the January 2006 meeting. This project is a priority identified in the 2006 Corporate Services departmental business plan and will be included in the 2006 workplan of the Office of the Chief Corporate Services Officer.

This project is a priority identified in the 2006 Corporate Services departmental business plan and will be included in the 2006 workplan of the Office of the Chief Corporate Services Officer.

Q4 - 2006

In progress. Successful meeting held with all Directors and EMC, providing clear direction for action.

That the Chief Corporate Services Officer develop a formal financial management control framework that clearly defines financial management accountabilities, control objectives, risks and the related control processes/mechanisms that have been put in place to mitigate the risks. The roles and responsibilities as they relate to shared services (in particular, the Financial Support Units) should link to those set out in the Service Level Agreements between Financial Services and client departments.

Management agrees with the recommendation to develop an overall framework. If this framework is supposed to be broad and intended to describe general control objectives, levels of responsibility, overall control policies and philosophy, then this exercise is achievable in 2006, likely within existing resources. One specific issue that will be addressed, as part of the SLA updates noted in the response above, will be a clarification of the role of the Financial Support Units, so that services will be provided on a consistent basis and their role will be well understood Management will also establish parameters for review of transactions that will be consistently applied.

The development of a financial control framework has not been initiated as the Auditor has undertaken an audit of the Financial Control Environment. This second audit will undoubtedly provide more substance as to the nature of the control framework therefore the work has been put on hold until the completion of the second audit.

Completion in 2007

While the original response indicated that the framework could be developed with existing resources this no longer is possible therefore to undertake this work in 2007 will require one-time funding of $100,000 to hire a consultant to deal with this and whatever arises from the 2nd audit.

On hold until completion of audit of Financial Control environment.

That the CCPR Officer introduce integrated risk management within the City, as part of the planning and performance management cycle. This would include such activities as:

a) development of an integrated risk management policy,

b) development of tools and approaches for risk management, and

c) provision of risk management training.

Although Management agrees with the Auditor General’s recommendation in principle, Management does not believe it would be practical to implement this recommendation at this point. The cost/benefit of implementing a full blown, organization-wide risk management initiative, as suggested by the Auditor General, is not clear, nor is it clear that this is a widely accepted best practice in municipal governance. Recent implementation of these types of programs in the private sector has been driven to a considerable extent by Sarbanes-Oxley requirements in the U.S. To Management’s knowledge, in the few cases where Canadian municipalities have experimented with them, implementation has not been successful.

Management’s priority at this point, from a management control framework perspective, is on rolling out the planning framework and developing and implementing the performance measurement and reporting framework, throughout the organization over the next 2-3 years. Nonetheless, certain steps Management is taking to enhance the Corporate planning process, such as the
presentation of a comprehensive environmental
scan, which will identify risks to be considered in
developing the City Corporate Plan and Departmental
Business plans, will address this issue.

We do not believe it would be practical to implement this recommendation at this point. The cost/benefit of implementing a full blown, organization-wide risk management initiative, as suggested by the Auditor General, is not clear, nor is it clear that this is a widely accepted best practice in municipal governance. To our knowledge, in the few cases where Canadian municipalities have experimented with them, implementation has not been successful. Our priority at this point, from a management control framework perspective, is on rolling out the planning framework and developing and implementing the performance measurement and reporting framework, throughout the organization over the next 2-3 years.

N/A

$425K

Subject to further discussion between the Auditor General and the Council Audit Working Group.

Regarding the development of an integrated risk management policy management, Management believes that the Auditor General’s observations in this area should take into account that the City has a risk management policy, which was approved by Council in 2001, confirms the City’s commitment to sound risk management processes. Some of the specific measures that Corporate Services has taken to explicitly address risks in different areas are outlined in this policy. For example, risk management principles are explicitly applied in investment decisions, in decisions regarding insurance coverage and in providing and maintaining safe conditions in the workplace. In addition, risk management processes are also applied in other key areas. The Emergency Measures Unit has identified catastrophic risks that could impact the City and has developed a program/plan to address them. Moreover, on an ongoing basis, Public Works staff perform construction/maintenance project risk assessments and procedures have been adopted by the City to ensure that risks are reasonably transferred through the tender,
contract and agreement process. Both Real
Property Asset Management and Public Works and
Services have adopted Comprehensive Asset
Management Strategies that have been approved by
City Council and that include inventories, gap
analyses and strategies for decommissioning and
rehabilitating infrastructure reaching the end of its
lifecycle.

Nonetheless, certain steps we are taking to enhance the Corporate planning process, such as the presentation of a comprehensive environmental scan, which will identify risks to be considered in developing the City Corporate Plan and Departmental Business plans, will address this issue. We have also developed an estimate of the cost involved in implementing an
integrated risk framework on a
Corporate-wide basis and will include
this activity for consideration by Council in the 2007 budget submission.

That the Chief Corporate Services Officer complete plans for reviewing and updating corporate administrative policies and developing a new corporate policy framework, which should include a single point of access, common look and feel, the consolidation of by-laws, and defining a timetable for when the process will be completed. Departments should monitor their plans to ensure that the harmonization of operational policies and procedures are completed on a timely basis.

Management agrees. Plans are currently being developed within Corporate Administrative Policy and Performance Management (CAPPM) for reviewing and updating Corporate Administrative Policies and developing a new corporate policy framework. This framework will be completed and presented to EMC for approval in
Q4 2006.

In defining a timetable for when the overall policy update process will be completed, consideration has to be given to availability of resources. The same resources to complete work outlined in 4.2 COE, will be deployed to complete this work. The Management Advisory Committee chaired by the Chief Corporate Services Officer will prioritize the updating of policies.

Plans are currently being developed within CAPPM for reviewing and updating Corporate Administrative Policies and developing a new corporate policy framework. This framework will be completed and presented to EMC for approval in 2006. The Management Advisory Committee chaired by the Chief Corporate Services Officer will prioritize the updating of policies.

Anticipate the Framework will go forward to MAC in November, 2006.

By-laws are now consolidated on the City’s Intranet, work being completed by these same resources.

With regard to departments monitoring of their plans to ensure timely harmonization of operational policies and procedures, management agrees but no specific changes or initiatives are required in response to this recommendation. As noted by the Auditor General, this responsibility rests with each department. CAPPM will work with each department
regarding Corporate Administrative Policy to share experience, tools and approaches, however operational policies and procedures at the sub-corporate level (Departmental or Branch) are the responsibility of those policy owners. The CAPPM will monitor the implementation of the corporate framework and report on an annual basis to the Chief Corporate Services Officer.

That the Chief Information Officer, supported by the service departments and administrative branches, follow through on plans to develop a City-wide information management/information technology strategy to support the City Corporate Plan, within a defined timeline.

Management agrees with this recommendation. ITS initiated the development of a new IT Strategic Plan in the fall of 2004, replacing the original plan approved in 2000 by the Ottawa Transition Board. However, the new Plan was put on hold in 2005 following announcement of the City Corporate Plan and Departmental Business Planning exercise. ITS will complete the new IT Strategic Plan to support the City Corporate Plan by Q1, 2006.

ITS initiated the development of a new IT Strategic Plan in the Fall of 2004, replacing the original plan approved in 2000 by the Ottawa Transition Board. However, the new Plan was put on hold in 2005 following announcement of the City Corporate Plan and Departmental Business Planning exercise. The City has already begun developing a new IT Strategic Plan that will support the City Corporate Plan. The final draft of the plan is now complete and is ready for review by the Chief Corporate Services Officer.

Q3-06

No budget implications outside of what is already in place in existing LRFP or capital budget.

Complete