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AUDIT OF KEY FINANCIAL PROCESSES

AT THE CAPE BRETON FIELD UNIT

FINAL REPORT

Prepared by:

Deloitte & Touche LLP

NOVEMBER 2006

Report tabled and approved by the A&E Committee

Parks Canada Agency Audit of key financial processes Cape Breton Field Unit

Her Majesty the Queen in Right of Canada, represented by

the Chief Executive Officer of Parks Canada, 2007

Cagalogue No. : R60-3/2-18-2007

ISBN : 978-0-662-69896-8

PEAG 2 November 2006


TABLE OF CONTENTS

EXECUTIVE SUMMARY.......................................................................................................4

1 OVERVIEW.......................................................................................................................8 1.1 Background ........................................................................................................................... 8 1.2 Methodology ......................................................................................................................... 9 1.3 Assurance Statement ............................................................................................................. 9 1.4 Conclusion............................................................................................................................. 9

2 OBSERVATIONS AND RECOMMENDATIONS ......................................................11 2.1 Management Control Framework........................................................................................ 11 2.2 Payments to Suppliers ......................................................................................................... 13 2.3 Acquisition Cards ................................................................................................................ 16 2.4 Travel Expenditures............................................................................................................. 18 2.5 Contracting .......................................................................................................................... 20 2.6 Revenue ............................................................................................................................... 22 2.7 Financial Coding ................................................................................................................. 28 2.8 Small Value Assets.............................................................................................................. 29 Appendix 1 – Site Descriptions ..................................................................................................... 31 Appendix 2 – Revenue Process Descriptions By Site.................................................................... 32

Report tabled and approved at the A&E Committee meeting on May 28, 2007



E X E C U T I V E S U M M A R Y

BACKGROUND

Parks Canada Agency (PCA) is conducting a series of cyclical audits of Field Units, service centres and the national office to review key financial, administrative and management practices. The audits focus on compliance with Treasury Board of Canada Secretariat (TBS) and PCA policies and practices. The audit of the Cape Breton Field Unit was conducted as part of this cyclical audit program.

OBJECTIVES AND SCOPE

The objective of this audit was to confirm that due diligence was being exercised in key management processes at the Cape Breton Field Unit, and that the processes and controls in place were adequate to ensure compliance with TBS and PCA policies and practices.

The scope of this engagement covered the following key financial process areas: revenue, contracting, acquisition cards, payment to suppliers, travel expenditures, financial coding and small value assets. The audit covered the period from April 1, 2006 to September 30, 2006.

METHODOLOGY

The audit methodology included a review of relevant background documentation, interviews with Field Unit personnel and transaction testing in the key financial process areas. The Cape Breton Field Unit was visited during the periods of October 16 to 18, 2006 (Fortress of Louisbourg), October 19, 2006 (Alexander Graham Bell Museum), and October 20 to 24, 2006 (Highlands National Park and Golf Course).

ASSURANCE STATEMENT

In our opinion, sufficient audit work has been performed and the necessary evidence has been gathered to support the conclusions contained in this report.

CONCLUSION

Overall, the Cape Breton Field Unit has financial procedures in place that ensure accountability of financial transactions. However, due diligence could be strengthened with the definition and implementation of new procedures and controls related to revenue, contracting, acquisition cards, payments to suppliers, travel expenditures, financial coding and small value assets to ensure consistent compliance with TBS and PCA policies.



AUDIT REPORTING RATING SUMMARY *

Ref Management Process Rating

2.1 Management Control Framework Blue – Minor Improvements Required

2.2 Payments to Suppliers Yellow – Moderate Improvements Required

2.3 Acquisition Cards Blue – Minor Improvements Required

2.4 Travel Expenditures Blue – Minor Improvements Required

2.5 Contracting Yellow – Moderate Improvements Required

2.6 Revenue Orange - Significant Improvements Required

2.7 Financial Coding Green – Controlled

2.8 Small Value Assets Green – Controlled

RECOMMENDATIONS

Cape Breton Field Unit

Management and Control Framework

1. The Field Unit Superintendent should implement monthly meetings with the management team in order to assess the overall performance against the budget and to identify any potential issues. Regular meetings will allow a more open and efficient flow of information between the management team and senior Finance staff.

2. The Field Unit Superintendent should establish clear roles and responsibilities for all positions within the Finance and Administration function.

Payments to Suppliers

3. The Field Unit Superintendent should ensure that all invoices are date stamped when received at the site. This procedure provides the Finance staff with superior information so that the timeliness of processing can be monitored.

4. The Field Unit Superintendent should ensure that increased training relating to supplier payments takes place and that the benefits of following standard PCA and TBS procedures are stressed, especially the use of Purchase Orders (POs) and Local Purchase Order Authority (LPOAs). This should include detailing the beneficial impact on the control environment at the sites as well as the additional financial reporting capabilities



that are provided to Parks Canada when the proper procedures are followed. LPOAs should be signed by an individual with S.32 authorization, and a copy of each LPOA should be forwarded to the Finance group. Upon receipt of the invoice, the terms and prices should be matched to the LPOA.

5. The Field Unit Superintendent should ensure that funds are committed in the financial system for all significant transactions. Accurate financial commitment information improves the quality of financial reporting and consequently improves the manager’s ability to make decisions. Potentially, the S.32 managers could enter estimated commitments in the financial system in order to improve the relevance of the financial reporting.

Acquisition Cards

6. The Field Unit Superintendent should ensure that only individuals who require acquisition cards possess them. In order to reduce exposure, card usage should be reviewed semi-annually to determine if limits are excessively high or if individuals no longer require cards.

Travel Expenditures

7. The Field Unit Superintendent should ensure that all travel is properly approved by the appropriate signing authority prior to the departure date of the employee.

8. The Field Unit Superintendent should ensure that the finance clerks review travel expenditures using statistical sampling methods in order to improve the overall efficiency of the process.

9. The Field Unit Superintendent should encourage the use of Receiver General (RG) cheques when time permits the payment to be issued through regular cheque runs. The use of RG cheques, which ensure proper authorization, reconciliation and validity of expenses, should be stressed as well as the positive impact on the overall control environment.

Contracting

10. The Field Unit Superintendent should ensure that personnel understand and adhere to TBS procurement policies and procedures. Training sessions would be an effective means of educating the staff regarding appropriate practices and would provide an opportunity to bring issues to light. Furthermore, the Field Unit Superintendent should take actions to address staff who consistently, do not adhere to policy.



Revenue

GENERAL RECOMMENDATIONS (APPLICABLE TO ALL SITES) 11. The Field Unit Superintendent should ensure adequate segregation of duties with respect

to revenue is in place.

12. The Field Unit Superintendent should ensure that all attendants are issued unique usernames and stress the importance of maintaining the confidentiality of passwords. Furthermore, each attendant should be advised to lock or log-off their terminal when they are no longer using it.

RECOMMENDATIONS SPECIFIC TO THE LOUISBOURG FORTRESS

13. The Field Unit Superintendent should ensure that POS system is only used to track valid sales and receivables. Furthermore, the Field Unit Superintendent should advise the revenue clerks that all manually adjusting entries should be adequately documented and should receive additional scrutiny during their review procedures.

14. The Field Unit Superintendent should investigate the root cause of processing errors within the POS system. The revenue reports that are produced from the POS system are the basis for all control within the revenue cycle. Accordingly, it is imperative that the system accurately records revenue transactions and produces complete revenue reports.

RECOMMENDATIONS SPECIFIC TO CBH

15. The Superintendent should ensure that revenue is being recorded in a timely manner in order to improve the pertinence of the data in the financial system. The timely recording of revenue will also have a positive impact on the overall control environment by reducing the number of errors and improving the staff’s ability to reconcile differences.

16. The Superintendent should ensure that the CBFU is receiving the appropriate amount of realty revenue in accordance with the agreements. This can be achieved by ensuring that all future agreements include provisions that entitle PCA to request an audited revenue schedule.



1 O V E R V I E W

1.1 BACKGROUND

Parks Canada Agency (PCA) is conducting a series of cyclical audits of key financial, administrative and management practices for all field units, services centres and the national office. There are 32 field units and four service centres in the PCA. Field Units are groups of national parks, national historic sites and national marine conservation areas that are usually in proximity to one another. Their proximity allows them to share management and administrative resources. The service centres support the organization in a variety of professional and technical disciplines. It is the responsibility of the Service Centre Directors and the Field Unit Superintendents to ensure that the policies, directives and guidelines issued by the Treasury Board of Canada Secretariat (TBS) and PCA are followed.

Deloitte & Touche LLP (Deloitte) conducted the audit of the Cape Breton Field Unit (CBFU) as part of this cyclical audit program.

The CBFU is responsible for the Fortress of Louisbourg, the Alexander Graham Bell Museum, and Cape Breton Highlands NP and the Highlands Links Golf Course, Marconi NHS, Canso Islands NHS, St Peter’s Canal and a number of plaqued monuments. See Appendix 1 for a description of the site and history.

Objectives and Scope

The objective of this audit was to confirm that due diligence was being exercised in key management processes at the CBFU, and that the processes and controls in place were adequate to ensure compliance with TBS and PCA policies and practices. To achieve this objective, the audit reviewed the management control framework in place covering the following key financial process areas:

♦ Revenue;

♦ Contracting;

♦ Acquisition Cards;

♦ Payments to Suppliers;

♦ Travel Expenditures;

♦ Financial Coding; and

♦ Small Value Assets

Transactions that occurred during the period from April 1, 2006, to September 30, 2006 were examined.



1.2 METHODOLOGY

The methodology used in conducting this audit included a visit to the CBFU and the execution of the following activities:

♦ Review of relevant documentation including: CBFU Sustainable Business Plan, PCA Financial Resource Management Principles, PCA Delegated Signing Authorities Chart, TBS and PCA policies dealing with the above key financial process areas, and financial reports prepared by the Field Unit Manager, Finance and Administration;

♦ Interviews with the CBFU management and personnel responsible for the key financial process areas; and

♦ Examination of a sample of transactions in each of the key financial process areas.

Upon completion of the interview process, a debriefing of our preliminary observations was held with the Acting Superintendent of the Cape Breton Field Unit.

Our observations and recommendations have been made in accordance with the Audit Reporting Rating System described below:

RED Unsatisfactory Controls are not functioning or are nonexistent. Immediate management actions need to be taken to correct the situation.

ORANGE Significant Improvements Needed

Controls in place are weak. Several major issues were noted that could jeopardize the accomplishment of program/operational objectives. Immediate management actions need to be taken to address the control deficiencies noted.

YELLOW Moderate Improvements Needed

Some controls are in place and functioning. However, major issues were noted and need to be addressed. These issues could impact on the achievement or not of program/operational objectives.

BLUE Minor Improvements Needed

Many of the controls are functioning as intended. However, some minor changes are necessary to make the control environment more effective and efficient.

GREEN Controlled Controls are functioning as intended and no additional actions are necessary at this time.

1.3 ASSURANCE STATEMENT

In our opinion, sufficient audit work has been performed and the necessary evidence has been gathered to support the conclusions contained in this report.

1.4 CONCLUSION

Overall, the Cape Breton Field Unit has financial procedures in place that ensure accountability of financial transactions; however, due diligence could be strengthened with



the definition and implementation of new procedures and controls related to revenue, contracting, acquisition cards, payments to suppliers, travel expenditures and financial coding to ensure consistent compliance to TBS and PCA policies.



2 O B S E R V A T I O N S A N D R E C O M M E N D A T I O N S

2.1 MANAGEMENT CONTROL FRAMEWORK

BLUE Minor Improvements

Needed


CURRENT PRACTICES

The Field Unit employs PCA policies for financial management. The Parks Canada financial signing authorities chart is implemented at the Field Unit. Most of the training given to new employees relating to internal controls is done on an informal basis. Existing employees stay current with policies and procedures by updates from the national office and by reviewing the relevant intranet sites.

The finance clerks who are responsible for recording transactions in the financial system are all very experienced and have been adequately trained with SAP. Relevant PCA directives, policies, and emails regarding internal control procedures are available on the intranet. Changes to these policies are generally communicated to staff employees via e-mail. Site Managers tend to rely on the services and expertise of the Manager - Finance and Administration. Formal finance and administration training has not been provided to the teams in approximately two years.

The management team meets on an impromptu basis during the operating season and monthly during the off-season in order to address the budget as well as any other pending issues. Issues pertaining to Finance or control procedures are brought to light as they occur. “Free Balance Reports” are regularly distributed to the management team. The report is generated in SAP and provides financial details of each internal order (project activity) by responsible manager, indicating the budget amount for a specific project, expenditure amounts incurred to date and the free balance remaining in the budget.

The management committee at each site within the Field Unit meets on a regular basis to discuss performance against objectives, operational issues, updates and activities.

The Cape Breton Field Unit identifies key issues, mitigating practices and strategies even though no formal risk assessment is performed. The budget is developed with the business plan. At the beginning of the year, managers identify their operational and capital investment needs for the year. The Superintendent challenges managers and makes the final decision on the amounts allocated to the various sections. The Manager - Finance and Administration, has a coordinating role in the budget planning exercise and has a challenge function. Managers are held accountable for achieving planned results with their budgets; variances are challenged.



If a manager is found to be consistently in violation of policies or procedures, then corrective action may be taken by the Superintendent (e.g., removal of contracting authority).

The CBFU has contingency plans in place for critical systems. The servers are backed up daily, weekly and monthly and the tapes are stored offsite. For security purposes, the administration offices at each park have a safe for cheques, petty cash and other items. A limited number of staff has access to the safe.

The CBFU has a number of partnerships with local organizations which are governed by signed agreements. There are not-for-profit organizations (NPO) operating gift shops and food concessions within the Louisbourg Fortress site, the Alexander Graham Bell Museum, and the Cape Breton Highlands National Park. The agreements lay out the terms and conditions with respect to collection of revenue, licensing of government property. The relationships with the NPO’s are mutually beneficial in that they pay a nominal fee to operate within the park but are responsible to contribute up to 95 % of their profits to projects sanctioned by Parks Canada. The inventory and supplies are the property of the NPOs and are not within the scope of this audit.

The Highlands Links Golf Course draws a great deal of business to the community and has several agreements with local profit oriented businesses. These agreements are discussed in greater detail in the revenue section of this report.

OBSERVATIONS

The management control framework in place at the Field Unit is generally adequate to ensure stewardship of resources (financial, human resources, facilities). The audit has found some control weaknesses with respect to acquisition card management, contracting, payment to suppliers, travel expenditures and revenue. The details of these weaknesses are discussed in the relevant sections below, with corresponding recommendations. With respect to the overall management control environment, the following observations were made:

• At present, the CBFU does not hold formal management meetings during the operating season to discuss the group’s performance against the budget. The majority of CBFU’s expenses are incurred during the spring and summer months and additional monitoring activities should be implemented during that time period.

• During the execution of our audit procedures, we observed that there was a lack of assignment of clearly defined roles and responsibilities within certain components of the Finance function. Specifically, there was some confusion with respect to the responsibilities for the issuance and cancellation of AMEX travel cards and other tasks within the travel expenditure cycle. It is important to assess the skill sets and capabilities of individuals in order to leverage their talents and delegate responsibilities within the Finance and Administration group.



RECOMMENDATIONS

1. The Field Unit Superintendent should implement monthly meetings with the management team in order to assess the overall performance against the budget and to identify any potential issues. Regular meetings will allow a more open and efficient flow of information between the management team and senior Finance staff.

Management response

Disagree: As the management team for the field unit is spread over a large geographic area, monthly face to face meetings are not always feasible especially during the operational season. Each site, with the exception of the Fortress of Louisbourg holds its own montly meetings and each officer in charge of the site brings issues relating to budgets to the attention of the FUS and Manager of Corporate Services as they occur. Managers at the Fortress of Louisbourg bring their issues personally to the FUS and Manager of Corporate Services. The FUS and Manager of Corporate Services discuss budget issues on a regular basis throughout the year. Field Unit meetings are held between September and December for business planning purposes and discussions are held regarding current year issues as well as future years. Variance reports are submitted by each manager monthly beginning in August.

2. The Field Unit Superintendent should establish clear roles and responsibilities for all positions within the Finance and Administration function.

Management response

Agree – Partially completed: The F&A functions have recently been assessed under the National Reclassification process, which describes the core duties for each position. F&A functions are decentralized within the field unit. The Manager of Corporate Services will do a review and ensure that, staff are clear on their roles and responsibilities.

2.2 PAYMENTS TO SUPPLIERS


Needed


CURRENT PRACTICES

The procurement of goods and services are carried out through the use of contracts or acquisition cards (both of these procurement methods are detailed later in this report). Most of the minor purchases are now made via acquisition cards, within CBHNP but by requisition/PO at the historic sites, involving a subsequent cheque payment.



For credit purchases, the supplier provides the goods requested via delivery to either the “Stores” warehouse or directly to the individual who ordered the goods. Appropriate measures are taken to ensure that payments are only made for goods that are received in good order.

When an invoice is received it is date stamped and sent to stores to match the packing slip, requisition/PO (has the financial coding on it) with the invoice. Stores then forwards the documentation to the appropriate manager for S.34 sign-off. The authorized invoice is then forwarded to the Finance group at the Cape Breton Highlands (CBH) National Park, where the accounting clerk verifies the S.34 authorization and financial coding before processing the transaction in SAP.

Payment runs are released in SAP only by an individual with S.33 authorization, which is generally the Contracting/Procurement Officer at the CBH. The individual releasing payment will perform a high level review of payees and any suspicious or inappropriate payments would be identified at this point.

OBSERVATIONS

During our fieldwork we held discussions with key Finance staff and reviewed supporting documentation for fifteen supplier payment transactions. Overall, individuals seem to be carrying out their functions regarding supplier payments with a high level of diligence; however, certain key controls are lacking. We noted the following:

• Of the fifteen payments that were reviewed, four invoices were not date stamped when received by the site. This makes it difficult for Finance personnel to monitor the timeliness of processing.

• The importance of using purchase orders (PO) for credit purchases seemed to be overlooked. Frequently, POs and requisitions were authorized after the fact, solely for the purpose of recording the transaction. In several other cases invoices were submitted to CBH for payment and there was no PO attached to the invoice. This was evident both through discussion with the Finance officers and during our transaction testing. Purchase orders are a key control in order to ensure the validity of expenses and to help track commitments against the budget.

• Since many of the CBFU’s purchases are made on acquisition cards, there are rarely commitments made in the financial system. As a result, the reporting quality and the manager’s ability to analyze the budget are diminished.

RECOMMENDATIONS

3. The Field Unit Superintendent should ensure that all invoices are date stamped when received at the site. This procedure provides the Finance staff with superior information so that the timeliness of processing can be monitored.



Management response

Agree – Actioned: The Manager of Corporate Services has re issued instructions to the necessary personnel of this requirement.

4. The Field Unit Superintendent should ensure that increased training relating to supplier payments takes place and that the benefits of following standard PCA and TBS procedures are stressed, especially the use of PO’s. This should include detailing the beneficial impact on the control environment at the sites as well as the additional financial reporting capabilities that are provided to Parks Canada when the proper procedures are followed.

Management response

Agree: Finance had conducted training at least annually at each site and when the new finance staff are fully trained this service will be resumed. The Manager Corporate services has kept all staff informed of any policy changes which have occurred during this learning curve. Also individual attention was given to staff who had any training issues on an as required basis. Staff are also directed to various websites for additional information.

5. The Field Unit Superintendent should ensure that funds are committed in the financial system for all significant transactions. Accurate financial commitment information improves the quality of financial reporting and consequently improves the manager’s ability to make decisions. As best practice, estimated commitments could be entered in the financial system in order to improve the relevance of the financial reporting.

Management response

Agree: The field unit currently commits any PO over $1,000. Cost center managers will be instructed to estimate their expenditures for such things as travel, training, etc and make a manual commitment for these items.



2.3 ACQUISITION CARDS


Needed


CURRENT PRACTICES

Acquisition cards are frequently used and represent the preferred method of procurement for low dollar value items at the Cape Breton Field Unit (CBFU). Acquisition cards simplify the procurement process because they alleviate the need for purchase orders and they streamline the vendor payment process. Credit cards are used extensively within Cape Breton Highlands NP but not to the same extent in the Historic Sites – depends on the Manager’s requirements.

Policies and procedures relating to acquisition cards are available on the intranet and cardholders are provided with a “do’s and dont’s” guide upon card issuance. Cardholders sign off on a standard cardholder agreement which indicates that they understand the terms and conditions.

The supervisor of the respective cardholder is responsible for providing the S.34 sign-off on the subordinate’s acquisition card monthly statement. This is the most significant control with respect to monitoring of acquisition card purchases. Supervisors who are also cardholders are not authorized to provide their own S.34 sign-off as per PCA policy. Accordingly, their superior would perform the review and approval.

When an employee leaves the park, their acquisition card is cancelled by the acquisition card coordinator, located at Alexander Graham Bell Museum, by notifying the Bank of Montreal (BMO). The former cardholder’s card is physically retained by the administrative assistant and subsequently destroyed.

Card limits are set at $15K but may be increased to $25K for key personnel in the procurement process. A review of the limits will generally only be conducted if the individual expresses that their current limit is insufficient. Monthly acquisition card statements are received through regular mail and forwarded to the cardholder upon receipt. The cardholder will create an acquisition card register listing all the purchases and assign financial coding to the various expenditures. Receipts are attached to the statement, S.34 sign-off is obtained, and the documentation is submitted to the Finance group at CBH for payment and processing. It is the responsibility of the S.34 signing authority to review the acquisition card registers, credit card statements, and supporting receipts/invoices for accuracy and validity.

At CBH, the statement details are then entered into the appropriate SAP accounts by one of the finance clerks. Statement balances are paid as part of the normal S.33 payment release process in SAP.



The Acquisition Card Coordinator at AGB in Baddeck is responsible for the following duties:

Issuing and canceling cards; Maintaining an accurate listing of active cardholders; and Performing monitoring activities such as dealing with delinquent balances,

inappropriate usage, etc.

OBSERVATIONS

During our fieldwork we held discussions with key Finance staff and reviewed supporting documentation for fifteen acquisition card transactions. Our testing covered transactions that originated at the Fortress of Louisbourg, Alexander Graham Bell Museum and Cape Breton Highlands National Park. Overall, it appears that key financial controls are in place to ensure that acquisition card purchases are properly authorized, that the transactions are valid and that they are properly recorded in the general ledger.

• Currently, no individual at CBFU has been delegated responsibility for reviewing card usage patterns and card limits. Cardholders should have credit limits that are linked to their usage requirements in order to limit PCA’s exposure to fraud and inappropriate use.

RECOMMENDATION

6. The Field Unit Superintendent should ensure that only individuals who require acquisition cards possess them. In order to reduce exposure, card usage should be reviewed semi-annually to determine if limits are excessively high or if individuals no longer require cards.

Management response

Agree: Card usage has been reviewed annually and cards, which were not being used, were not renewed. The review will now be done semi-annually and those cards, which have not been used in more then 6 months will be cancelled.



2.4 TRAVEL EXPENDITURES


Needed


CURRENT PRACTICES

Travel costs are included in the individual section budgets, leaving the amount of travel expenditures incurred at the discretion of the manager with budget authority.

The need for travel is identified when an employee is notified that their attendance is required at a location other than their normal location at which they are employed. The most common reasons to incur travel costs are training seminars and workshops. If the individual travelling does not have budget authority then he or she would request authorization from their manager or supervisor. Authorization is usually given verbally, as most employees are covered by a blanket travel authority signed by the Field Unit Superintendent. Blanket authorities are in place to ease administrative procedures and they are reviewed yearly. They will set limits to an employee’s travel based on his/her current position. In most cases, someone who needs to travel outside the Cape Breton Field Unit would require a travel authority prior to the departure date.

It is the responsibility of the Travel Card Coordinator to oversee the administration of the travel cards (i.e., issuance, cancellation, delinquency, etc.). As was noted previously, there is some confusion with respect to the roles and responsibilities in the travel expenditure cycle, which will need to be clarified.

The Finance clerk is responsible for reviewing each travel claim for compliance to PCA and TBS policy and mechanical accuracy. Any issues requiring investigation are brought to the attention of the individual making the claim or discussed with the individual’s manager. Claim amounts are paid through the standard S.33 payment release process in SAP.

Although AMEX travel cards are used by the majority of staff in the Cape Breton Field Unit, employees are also entitled to receive travel advances as an alternative. The travel advance would be authorized by the S.34 manager prior to the trip and would be paid with either a manual cheque from the Departmental Bank Account or a Receiver General cheque. Generally, the clerks follow up on outstanding advances weekly to ensure that they are repaid by the employee within 15 days of the travel event.

OBSERVATIONS

During our fieldwork we held discussions with key Finance staff and reviewed supporting documentation for fifteen travel expenditure transactions. We noted that overall due diligence is being exercised over travel expenditures. However, some improvements could be made to



strengthen control procedures in some areas. We offer the following observations and recommendations:

• During the execution of our audit procedures, we noted one instance where an employee had incurred significant travel expenses but did not have an approved Travel Authorization form on file. Proper authorization helps to ensure that travel is in accordance with PCA’s mandate and will ensure that employees are reimbursed for all expenses incurred.

• The Finance clerks audit 100% of the expense items in the claim even though PCA policy permits them to review the expense claims using statistical sampling. This detailed review may not be efficient from a cost/benefit perspective and results in a duplication of efforts given that the S.34 signing authority is responsible for reviewing all expenditures.

• Our transaction testing revealed that manual Departmental Bank Account (DBA) cheques are frequently used to issue travel advances even though there is often sufficient time to request an official Receiver General cheque. Overall control in the payment cycle is strengthened when advances are processed through regular cheque runs because there are additional monitoring and review activities performed by the Finance clerks.

RECOMMENDATIONS

7. The Field Unit Superintendent should ensure that all travel is properly approved by the appropriate signing authority prior to the departure date of the employee.

Management response

Agree: Managers will be instructed to ensure that a properly authorized travel authority is in place for all staff prior to departure dates.

8. The Field Unit Superintendent should ensure that the finance clerks review travel expenditures using statistical sampling methods in order to improve the overall efficiency of the process.

Management response

Agree: The finance clerks have been instructed to discontinue 100% audit on travel except for those items specifically identified as “high risk” in PC policies such as foreign travel, etc.

9. The Field Unit Superintendent should encourage the use of Receiver General (RG) cheques when time permits the payment to be issued through regular cheque runs. The use of RG cheques, which ensure proper authorization, reconciliation and validity of expenses, should be stressed as well as the positive impact on the overall control



environment. The DBA should also be reviewed by an independent person including a sign-off on the bank reconciliations.

Management response

Agree. Management will reinforce the requirement to use RG cheques when time permits and a complete review of the use/reconciliation of the DBA will be carried out and improvements implemented by September 2007.

2.5 CONTRACTING

YELLOW Moderate Improvements

Needed

Some controls are in place and functioning. However, major issues were noted and need to be addressed. These issues could impact on the achievement or not of program/operational objectives.

CURRENT PRACTICES

The Cape Breton Field Unit purchases goods and services using the following types of contracts:

1) Purchase Order (PO), Local Purchase Order (LPO) 2) Sole-Source Contracting 3) Competitive Bid Contracting 4) Standing Offer Agreements 5) Credit cards

It is generally the responsibility of the managers to determine the appropriate method of contracting for a particular acquisition. However, significant acquisitions would generally involve the Contracting/Procurement Officer who is located at the Cape Breton Highlands (CBH) site. Managers are generally encouraged to consult this officer when there is a risk associated with the project. Risk would generally be defined by complex terms or the contract having a large dollar value. Service contracts over $500 require a contract.

Standing Offer

Generally, the first step would be to consult the intranet in order to determine if a standing offer exists for a particular good or service. If a standing offer does not exist, then another alternative may be pursued.



Sole-Source Contracts

These contracts are utilized when the manager feels that it would not be beneficial to use the competitive bid process (all sole source contracts over $5,000 must personally be approved by the Field Unit Superintendent). This may occur for one of two reasons: 1) The service is required as part of an emergency situation in which delays would be detrimental to the public interest (i.e., forest fire) or 2) Quite often at the rural sites there are very few contractors who are able to perform the work. When sole source contracts are used, a sole-source justification is included in the contracting file to document the decision to select the particular vendor/contractor.

Competitive Bid Contracts

The procurement officer at CBH would always be involved in the competitive bid process. The process would begin with the local manager submitting a list of potential vendors/service providers to the procurement officer. The procurement officer would then be responsible for obtaining bids from the contractors and selecting the successful candidate. A contract would be created and sent to the site for signature by the local manager and the contractor.

For all of the contracting alternatives, the vendor would submit invoices according to the contract terms. The responsibility of monitoring the payments and contract completion rests with the local manager and not with the procurement officer. The processing of the invoices was detailed in the “Payments to Suppliers” section.

OBSERVATIONS

During our fieldwork, we held discussions with key Finance staff and reviewed supporting documentation for a sample of fifteen contracting transactions. Overall, it appears that individuals seem to be carrying out their functions regarding contracting with a high level of diligence; however, certain key controls are lacking. We have noted the following:

• The Contracting Officer at CBH has many years of experience in government procurement. Accordingly, when the Contracting Officer was involved in the process, the contract files were generally complete and contained a PO, statement of work and sole-source justifications where applicable. On the other hand, when the Contracting Officer was not involved there were several instances of inappropriate procurement processes. Additionally, there was rarely a cost rationale included in the contract files, as the documents were likely maintained by the local managers.

RECOMMENDATIONS

10. The Field Unit Superintendent should ensure that personnel understand and adhere to TBS procurement policies and procedures. Training sessions would be an effective means of educating the staff regarding appropriate practices and would provide an opportunity to



bring issues to light. Furthermore, the Field Unit Superintendent should take actions to address staff who, consistently do not adhere to policy.

Management response

Agree re training. Finance had conducted training at least annually at each site and when the new finance staff are fully trained this service will be resumed. The Manager Corporate services has kept all staff informed of any policy changes which have occurred during this learning curve. Also individual attention was given to staff that had any training issues on an as required basis. Staff are also directed to various websites for additional information.

Disagree re taking action to address staff who consistently do not adhere to policy.

When policy is not adhered to, the Contract Officer will speak to that person directly and if it consistently happens, the contract officer will bring the problem to the attention of the Manager of Corporate Services. The Manager of CS will review the incidents and speak with the person directly re policy and FAA requirements and the consequences of not adhering to the rules and regulations. If it continues then the Manager of CS will make the Field Unit Superintendent aware of the situation and make recommendations such as suspending section 34, further formal training, etc. Finance Staff are notified if signing authority has been withdrawn but not if any other disciplinary action has been taken.

2.6 REVENUE

ORANGE Significant Improvements Needed

Controls in place are weak. Several major issues were noted that could jeopardize the accomplishment of program/operational objectives. Immediate management actions need to be taken to address the control deficiencies noted.

GENERAL OVERVIEW

In Cape Breton, each site is responsible for collecting, depositing and recording revenue. As a result, there are subtle differences in the processes from site to site. These differences are described in detail in Appendix II – Revenue Process Descriptions by Site. The following analysis provides general process descriptions for each revenue stream as well as their relative significance. Table 1 illustrates the revenue streams, which are applicable to the specific sites.



Table 1: Revenue Streams by Site

X: denotes a revenue stream that is applicable to the site

Fortress of Louisbourg Alexander Graham Bell Historic Site

Cape Breton Highlands National Park

Park Entry Fees X X X

Guided Tour Fees X

Camping Fees X

Golf Green Fees X

Land Rents and Concesssions X

Staff Housing X X

CURRENT PRACTICES

Through discussions with members of the Finance and Visitor Services groups, we found the following control procedures and processes were in place with respect to revenue:

Park Entry/Guided Tour Fees

All transactions are processed through a customized Point of Sale (POS) system. The gate attendants are responsible for inputting the payment method into the POS system which print passes automatically as a receipt for the customer.

Gate attendants begin their shift with a cash float. At the end of each shift the gate attendants run sales reports from the POS system and reconcile their cash and card totals. Cash deposit procedures vary slightly from site to site but are generally adequate to ensure that cash inflows are properly deposited and recorded.

The revenue clerks are responsible for reviewing the revenue reports and banking information as well as processing transaction in SAP. Revenue reports from the POS system are appropriately reconciled with deposit documentation. The SAP clearing account to which all deposits (cash, debits, credits) are entered is monitored regularly and whenever deposits appear in the account the amounts are matched to POS reports and cleared.

Camping Fees

The procedures relating to the initiation and processing of camping fees are the same as those for park entrance fees discussed above in detail. The main exception is that the cash register system that is used at some of the park entry gate kiosks is different. Campground gate kiosks use what is called a Parks Canada Reservation System (PCRS). This system generates similar shift ending sales reports to the POS system and reconciliation procedures are virtually the same.



Campground visitors can also book reservations online prior to arriving at the park. When the visitor arrives at the campground, the attendant pulls up the visitor’s reservation on the PCRS to confirm the booking. Online booking revenues are tracked by a service organization and the monies are automatically deposited into the bank account. The revenue clerk reconciles revenues booked online as reported by PCRS and the automatic deposit amounts.

The process for recording of camping fees into SAP is essentially the same as it is for park entry fees as described above.

Self-Registration Camping Fees

During the off-season and other limited periods throughout the summer the campgrounds operate on a self-registration system. Visitors are required to complete the registration information on the envelope, enclose payment and deposit the envelope in a locked box at the campsite. The entire process is based on the honour system and there is no monitoring performed to ensure all visitors have paid. Two park attendants are required to remove the envelopes, count the cash and enter the registration information into the sales system. The staff admitted that this is not always possible given the lower staffing levels in the off-season.

Highlands Links Golf Course

Golf green fees are exclusive to the Highlands Links Golf Course (HGC), which is located at CBH. The operations of the golf course are described in detail below.

Revenue transactions are initiated when a customer enters the pro shop. All transactions are processed through a customized Point of Sale (POS) system, which was purchased from a third party and is specifically designed for golf course operations. The POS system allows PCA staff to book tee times, check-in customers and record cash receipts.

Land Rents and Concessions

The pro shop and food concession operations are also privately owned businesses, which operate independently of PCA in order to generate a profit. The terms and conditions of PCA’s business relationships are governed by signed agreements. Both operations pay a minimum annual rent and/or a % of gross sales over a certain amount (whichever is greater) to PCA in accordance with the agreement. The fee is based on a percentage of gross sales and is payable at the end of the operating season. The revenue clerk is responsible for submitting invoices in accordance with the agreement and the payments are reconciled and recorded based on the procedure discussed below.

GENERAL OBSERVATIONS (APPLICABLE TO ALL SITES)

It appears that, in general, due diligence is being exercised in the management of revenues and that financial processes and controls were in place at the Cape Breton Field Unit for the period of the audit to mitigate the risk of non-compliance with TBS and PCA policies. However improvements could be made based on the following observations, which apply to all of the sites within the Cape Breton Field Unit (CBFU):



• The segregation of duties with respect to the collection, deposit and recording of revenues need to be strengthened to better mitigate the risk of misappropriation. It was noted that one individual would be responsible for preparing bank deposits and recording the revenue in the financial system. Or that one individual is responsible for collecting the fees, recording sales amounts and preparing the deposit.

• During the audit it was noted that the attendants were often utilizing the usernames and cash tills of other staff while covering breaks. The absence of individual accounts for each user results in a loss of accountability and formalized audit trail for each individual user’s actions.

GENERAL RECOMMENDATIONS (APPLICABLE TO ALL SITES)

11. The Field Unit Superintendent should ensure adequate segregation of duties with respect to revenue is in place.

Management response

Agree. During the operating season segregation of duties is possible at a much higher level than the off-season. The recommendation will be implemented to the fullest extent possible within the limits imposed by current staffing levels in the CBFU.

12. The Field Unit Superintendent should ensure that all attendants are issued unique usernames and stress the importance of maintaining the confidentiality of passwords. Furthermore, each attendant should be advised to lock or log-off their terminal when they are no longer using it.

Management response

Agree. This is the policy of the field unit. Attendants are currently issued unique usernames and are instructed to keep these confidential. Operation procedures are currently part of the attendant training at the beginning of the operating season it will be reinforced on a daily basis by the supervisors.

OBSERVATIONS SPECIFIC TO THE FORTRESS OF LOUISBOURG

During our fieldwork, we held interviews with key staff and reviewed supporting documentation for a sample of fifteen revenue transactions. Based on our discussions and the testing performed, it appears that in general due diligence is being exercised in the management of cash revenues and that financial processes and controls were in place at the Fortress of Louisbourg for the period of audit to mitigate the risk of non-compliance to TBS and PCA policies. However, controls could be improved with respect to the handling of cash generated from certain revenue streams.

• One individual at the Fortress of Louisbourg is currently responsible for preparing the bank deposits and recording the transactions in SAP for invoiced revenues. The



segregation of duties should be improved by separating the responsibility for custody of the asset, preparation of the deposits and the recording entries (see recommendation #11). One individual should be delegated to retrieve the mail from the mailroom and create a listing of the cheques received. Another individual would be responsible for making the necessary bank deposits and another individual should be recording the transaction in SAP. The individual who opened the mail should reconcile their listing of cheques received to the bank deposit in order to ensure the completeness of the revenue.

• Several receivables were entered in the POS system that did not represent valid sales. These transactions were subsequently eliminated using manual entries, which were hand-written on the end of shift reports. Eliminating transactions using manual entries overrides controls that are inherent in the point of sale system and increases the risk of misappropriation.

• The POS system at the Fortress of Louisbourg was not producing accurate sales data for a period of time in July. Specifically, it was noted that the sum of total sales by cash, credit cards, debit cards and accounts receivable did not agree to the total sales in the POS system.

RECOMMENDATIONS SPECIFIC TO THE FORTRESS OF LOUISBOURG

13. The Field Unit Superintendent should ensure that POS system is only used to track valid sales and receivables. Furthermore, the Field Unit Superintendent should advise the revenue clerks that all manual-adjusting entries should be adequately documented and should be approved by an independent person.

Management response

Agree. The POS system is used to track valid sales and receivables. On occasion an attendant may use the wrong button and complete the sale before the error is detected and therefore requires an explanation. Attendants will be instructed not to change the figures on the reports but to give a full written explanation of the occurrence and then have it signed by their supervisor.

14. The Field Unit Superintendent should investigate the root cause of processing errors within the POS system. The revenue reports that are produced from the POS system are the basis for all control within the revenue cycle. Accordingly, it is imperative that the system accurately records revenue transactions and produces complete revenue reports.

Management response

Done: The incident causing this recommendation was investigated prior to the audit. It was determined to be a programming error. The programmer was notified, adjustments to the program were made and new reports were run with the correct information.



OBSERVATIONS SPECIFIC TO AGB

During our fieldwork we conducted interviews with key staff and reviewed supporting documentation for a sample of fifteen revenue transactions. It appears that in general due diligence is being exercised in the management of revenues and that financial processes and controls were in place at Alexander Graham Bell Historic Site for the period of the audit to mitigate the risk of non-compliance to TBS and PCA policies. General recommendations are described below which apply to the entire CBFU.

RECOMMENDATIONS SPECIFIC TO AGB

None

OBSERVATIONS SPECIFIC TO CBH:

Based on our interviews with key staff and transaction testing, it appears that in general due diligence is being exercised in the management of revenues and that financial processes and controls were in place at CBH for the period of audit to mitigate the risk of non-compliance to TBS and PCA policies. However, segregation of duties could be improved with respect to the handling of cash generated from certain streams and also invoiced revenues.

• There is a lack of segregation of duties involving the collection of cash and recording of sales amounts in the financial system with respect to self-registration camping and automated pass machines. In each of these processes, only one individual is responsible for collecting the fees, recording sales amounts and preparing the deposit. This weakness could expose the park to the possibility of fraud by way of misappropriation of assets (see recommendation #11).

• CBH typically postpones the recording of several revenue streams until the off-season when staff is more readily available. As a result, financial data from the following revenue streams is several months in arrears:

The revenue from the POS system was last recorded in SAP in June 2006;

The revenue from the campground reservation system was last recorded in SAP in April 2006; and

The revenue from the web and call centre was last recorded in the SAP in July 2006.

Entering data in a timely manner increases the relevance of the data in the financial system, which, in turn, will have a positive impact on the decision-making of the management team.

• There is currently no mechanism to ensure that CBH is receiving the appropriate amount of fees in accordance with the agreement. There is a possibility that the



proshop, food concession business and not-for-profit organizations are understating their revenue in order to reduce the fee due to the park.

RECOMMENDATIONS SPECIFIC TO CBH

15. The Superintendent should ensure that revenue is being recorded in a timely manner in order to improve the pertinence of the data in the financial system. The timely recording of revenue will also have a positive impact on the overall control environment by reducing the number of errors and improving the staff’s ability to reconcile differences.

Management response

Agree. An investigation of the root cause of this problem will be undertaken and every attempt will be made to ensure data entry in the financial system is done monthly.

16. The Superintendent should ensure that the CBFU is receiving the appropriate amount of revenue in accordance with the agreements. This can be achieved by ensuring that all future agreements include provisions that entitle PCA to request an audited revenue schedule.

Management response

Disagree. Revenues from Licences of Occupation are collected according to the signed agreements. The minimum to be paid is invoiced on April 1st of each year and once PCA receives the year-end financial statements and determines if an amount is owed an invoice is generated a month after year-end. All Licences of Occupation within the field unit already contain a provision, which allows PC to request an audit be made on the licensee’s books.

2.7 FINANCIAL CODING


CURRENT PRACTICES

Financial coding is primarily the responsibility of the Field Unit Manager or Supervisor who authorized the expenditure. PCA coding guidelines are available on the intranet, which can be accessed by all employees. Managers are also provided with manual copies of the chart of accounts.

Financial coding is recorded directly on invoices and credit card log sheets in order to allocate expenses to the proper accounts and cost centres. There are four relevant coding fields: cost centre, activity, internal order and general ledger (GL). Once Finance receives the invoice with coding assigned, it is reviewed and entered into SAP by one of the clerks. In certain cases, the manager will use the wrong combination of financial codes at which point they are notified by the Finance clerk, who changes the coding on the invoice and enters it into SAP.



In other cases, the coding will need to be changed after it has been entered into SAP. Journal entries are made and journal entry vouchers are kept on file relating to these correcting entries.

OBSERVATIONS

During our fieldwork, we conducted interviews with key staff and reviewed a sample of fifteen invoices. It appears that due diligence is being exercised over financial coding and that financial processes and controls were in place at the Field Unit for the period of audit to mitigate the risk of non-compliance to TBS and PCA policies and procedures.

RECOMMENDATIONS

None.

2.8 SMALL VALUE ASSETS


Although the CBFU does not maintain an inventory of goods for resale, it does however have small inventories of frequently used items at the Fortress of Louisbourg and the Cape Breton Highlands National Park. Within the CBFU, this reserve is called the “Stores” inventory. The purpose of the stores inventory is to retain supplies, components and materials that are frequently used in Parks Canada’s day-to-day operations. Examples of these items include plumbing and electrical components, cleaning and maintenance supplies, automobile maintenance goods, etc. A listing of the inventory is maintained in a DOS-based system, which has limited tracking capabilities. An inventory count is performed once per year and the staff explained that there are rarely differences that arise from the count. Overall, the controls with respect to the Stores inventory appear to be adequate to reduce the risk of misappropriation and report an accurate value in the financial system.

Upon completion of our fieldwork, we were informed that the National Finance Office is in the process of developing and implementing a user-friendly National System for High Risk Low Dollar Value Items using the STAR (SAP) integrated finance and material system. It is anticipated that the inventory system will be operational by April 1, 2007. Field Units will be required to populate the database with only new acquisitions purchased after April 1, 2007.



OBSERVATIONS

During our fieldwork, we conducted interviews with key staff. It appears that due diligence is being exercised with respect to Small Value Assets and that financial processes and controls were in place at the Field Unit for the period of audit to mitigate the risk of non-compliance to TBS and PCA policies and procedures.

RECOMMENDATIONS

None.



APPENDIX 1 – SITE DESCRIPTIONS

Fortress of Louisbourg

The French came to Louisbourg in 1713, after ceding Acadia and Newfoundland to the British by the terms of the Treaty of Utrecht, which ended the War of the Spanish Succession. France's only remaining possessions in what is now Atlantic Canada were the islands of Cape Breton and Prince Edward. In 1719, they began to construct at Louisbourg a fortified town which was only completed on the eve of the first siege in 1745.

Alexander Graham Bell National Historic Site

Alexander Graham Bell was one of the outstanding figures of his generation in the education of the deaf. Bell first came to Baddeck in 1885 and returned the next year to establish a vacation home for his family, far from the formality and summer heat of Washington D.C.

Cape Breton Highlands National Park and Golf Course

Cape Breton Highlands National Park is known for its spectacular highlands and ocean scenery. The Cape Breton Highlands are the most striking feature of northern Cape Breton. Steep cliffs and deep river canyons carve into a forested plateau bordering the Atlantic Ocean. One third of the Cabot trail, a world-famous scenic highway, runs through the national park along the coasts and over the highlands.

Located at the Cape Breton Highlands National Park is the Highlands Links Golf Course. The Highlands Golf Course is an 18-hole, par 72 course set within one of Canada’s most beautiful natural settings – the Cape Breton Highlands National Park of Canada. The Highlands Links Golf Course is highly ranked in Canada and internationally. Parks Canada owns a clubhouse facility, which contains a proshop, food concession operations and maintenance facilities.



APPENDIX 2 – REVENUE PROCESS DESCRIPTIONS BY SITE

Fortress of Louisbourg

CURRENT PRACTICES

The Fortress of Louisbourg earns revenue from several activities with the following three

being the most significant:

Park Entry Fees

Guided Tour Fees

Staff Housing

Park Entry and Guided Tour Fees

Park entry fees represent the largest revenue source at approximately $920,000 annually. Guided tours and staff housing, which represent the second and third most significant revenue streams, only amount to a combined $13,000.

Through discussion with members of the Finance and Visitor Services groups, we found the following control procedures and processes were in place with respect to revenue:

Park entry and guided tour fees are initiated when a customer pulls up to the visitor centre at the park entrance. Customers can purchase a day or season pass (at rates published in the Canada Gazette) and payment is made using cash, debit or credit card. All transactions are processed through a customized Point of Sale (POS) system. The gate attendant is responsible for inputting the payment method into the POS system along with the sale type (i.e., pass type). Passes are printed automatically as a receipt from the POS system and provided to the customer.

Each gate attendant starts their shift with a cash float which is appropriately kept in a safe overnight. At the end of each shift the gate attendant runs a sales report from the POS system and reconciles their cash and card totals. Employees are responsible for performing the reconciliation and are accountable for any cash over/under amounts, which must be adequately explained. Once the employee has balanced their cash, they are responsible for preparing their individual bank deposits, which are subsequently dropped into the nearby safe. The site watchman picks up the deposits from the safe and delivers them to the local bank branch. Debit and credit sales data is automatically uploaded to the bank via a secure link through the 2020 machines.

Louisbourg has a revenue clerk onsite who is responsible for reviewing the revenue reports and banking information as well as processing transaction in SAP. The local bank branch returns the deposit slips to the administration office by mail. The revenue clerk receives the POS reports from the visitors centre and matches them with the appropriate deposit slips. The



SAP clearing account, to which all deposits (cash, debits, credits) are entered is monitored by the revenue clerk regularly and whenever deposits appear in the account the amounts are matched to POS reports and cleared.

Staff Housing Revenue

Staff housing is available to employees at the Fortress of Loisbourg site and base rental rates, are generally set by Canada Mortgage and Housing Corporation. Employees have the option of paying rent by cheque (seasonal employees) or through pay deductions. Cheques would be submitted to the administrative assistant and the typical deposit procedures would apply.

Deposits of Public Monies

The amount of cheques received on an annual basis is not significant as most revenues are derived from cash. The administrative assistant at the Louisbourg administration office is responsible for opening the mail and receiving cheques. The administrative assistant lists all cheques received by mail and forwards them to the revenue clerk so that they can be recorded and deposited. As cheques are received, the revenue clerk prepares the bank deposits and clears the receivables in SAP.

Alexander Graham Bell Historic Site Park Entry Fees

The Alexander Graham Bell (AGB) Historic Site earns all revenue in the form of entry fees. Entry fees are initiated when a visitor enters the buildings and approaches the visitors counter. The revenue is collected and reconciled by the gate attendants in a process that is very similar to that of Louisbourg. The only significant difference between the processes at the two sites is that the attendants at AGB are responsible for preparing their individual bank deposits and delivering them to the local branch in comparison to Louisbourg where these duties were segregated. The role of the revenue clerk at AGB is also similar to that of the revenue clerk at the Louisbourg Fortress. The revenue clerk at AGB is responsible for reviewing the POS system reports, deposit slips, and recording the transactions in SAP.

Cape Breton Highlands National Parks CURRENT PRACTICES

Cape Breton Highlands National Park (CBH) generates revenues from the following sources:

• Camping fees;

• Park Entry;

• Green Fees from the Highlands Links Golf Course;

• Land Rents and Concessions;



• Staff housing; and

• Other miscellaneous revenues (business licenses, sale of Crown assets, equipment rentals)

The Highlands Links Golf Course (HGC) is the largest revenue source for the CBH site. The operations of the golf course are described in detail below. Apart from the golf course’s revenues, the park entry fees and the camping fees tend to be the site’s most significant revenue sources. Due to apparent staffing shortages at CBH there are significant delays in the recording of revenue transactions in SAP. The staff explained that for some revenue streams the recording delays were as long as six months.

Through discussion with members of the Finance and Visitor Services groups, we found the following control procedures and processes were in place with respect to revenue:

Entry Fees

The process for the initiation and collection of entry fees at Cape Breton Highlands National Park (CBH) is very similar to that of Louisbourg as described above. There are minor differences in the recording and deposit procedures at CBH.

Park entry fees are initiated when a customer pulls up to one of the 7 kiosks within the park. Customers can purchase a day or season pass (at rates published in the Canada Gazette) and payment is made using cash, debit or credit card. All transactions are processed through a customized Point of Sale (POS) system. The gate attendant is responsible for inputting the payment method into the POS system along with the sale type (i.e. pass type). Passes are printed automatically as a receipt from the POS system and provided to the customer.

Each gate attendant, starts their shift with a cash float which is kept in a safe overnight. At the end of each shift, the gate attendant runs a sales report from the POS system and reconciles against the batch totals from the 2020 machine, and the amount of cash in the drawer. Employees are responsible for performing the reconciliation and are accountable for any cash over/under amounts, which must be adequately explained.

Debit and credit sales data is automatically uploaded to the bank via a secure link through the 2020 machine. Cash is placed in a sealed envelope and placed in the safe until deposited. Ideally two park attendants go together and pick up deposit bags from the kiosks. The staff admitted that staffing levels do not always permit two people to perform this task. The bank deposit bag is separated from the paperwork and the paperwork is forwarded to the Finance Officer at the administration building while the bank deposit is delivered to the local branch. A deposit tally sheet is maintained in the administration office on which the bank deposit bag number, amount and facility at which it was generated is documented.

The revenue clerk performs an audit of the revenue documentation submitted and attendants are required to explain cash discrepancies. They can also access each of the entry gates’ computer system from the administration building and will follow up with staff on any unusual items. Cash summary sheets are matched to the deposit amounts recorded on deposit



tally sheet. In order to ensure that all differences were adequately explained by the attendants, CBH implemented a standard form which is filled out and attached to any sales report which did not reconcile. Although this is a useful initiative, it was noted during the transaction testing that this procedure was not always performed.

The revenue clerk is responsible for inputting batches of weekly sales data into SAP. Our discussions with the Finance staff revealed that, for some revenue streams, revenue recording in SAP was up to six months in arrears.

Camping Fees

The procedures relating to the initiation and processing of camping fees are the same as those for park entrance fees discussed above in detail. The main exception is that the cash register system that is used at some of the park entry gate kiosks is different. Some campground gate kiosks use what is called a Parks Canada Reservation System (PCRS). This system generates similar shift ending sales reports to the POS system and reconciliation procedures are virtually the same.

Campground visitors can also book reservations online prior to arriving at the park. When the visitor arrives at the campground, the attendant pulls up the visitor’s reservation on the PCRS to confirm the booking. Online booking revenues are tracked by a service organization and the monies are automatically deposited into the bank account. The revenue clerk reconciles revenues booked online as reported by PCRS and the automatic deposit amounts.

The process for recording of camping fees into SAP is the same as it is for park entry fees as described above.

Self-Registration Camping Fees

During the off-season and other limited periods throughout the summer, the campgrounds operate on a self-registration system. Visitors are required to complete registration information on the front of an envelope, place payment in the envelope and peel off a registration sticker permit, which is to be placed on a post at the campsite. The envelope containing the cash is then deposited in a lock box. The entire process is based on the honour system and there is no monitoring performed to ensure all visitors have paid. The envelopes are kept in the lock box until two park attendants remove the envelopes, count the cash and enter the registration information into the sales system. The supervisor indicated that the self-registration system is generally used during the off-season when staffing levels are lower. As a result, one person would generally pick up the cash and there would be no segregation of duties.

Highlands Links Golf Course

The Highlands Links Golf Course is an 18-hole, par 72 course set within one of Canada’s most beautiful natural settings – the Cape Breton Highlands National Park of Canada. The Highlands Links Golf Course is highly ranked in Canada and internationally. Parks Canada owns a clubhouse facility, which contains a proshop, food concession operations and maintenance facilities.



Revenue transactions are initiated when a customer enters the proshop. All transactions are processed through a Point of Sale (POS) system, which was purchased from a third party and is specifically designed for golf course operations. The POS system allows PCA staff to book tee times, check-in customers and record cash receipts. This system also accommodates the seasons passes for the 180 members of the course.

Customers generally book tee times in advance by calling the proshop. All players must check in with the proshop prior to starting on the first tee. The customer pays by credit card, debit card or cash and sale is recorded in the point of sale system. The customer receives a two copy receipt: one copy is retained by the customer and one copy is given to the starter at the first tee. The starter will not allow a player to begin their round without proof of payment.

Each attendant has their own cash float and uses a unique ID in the POS system. At the end of the day, each attendant is responsible for balancing their till against the POS report, preparing a deposit slip and securing it in the safe. The deposits are picked up by the Accounts Officer the following morning and taken to the local bank. The revenue is reconciled and recorded by the revenue clerk in a process, which is very similar to the entry and camping fees.

The Highlands Links Golf Course draws a great deal of business to the community and has several partnerships with local profit oriented businesses. To encourage visitors to stay longer in the area the Highland Links, in cooperation with the local accommodation industry, offers promotional packages to be sold through participating tourist accommodation operators. The terms and conditions of the partnerships with the accommodation operators are governed by signed agreements. CBH provides the accommodation operators with prenumbered vouchers which represent a green fee paid. The accommodation operators are given prenumbered vouchers which are bundled with accommodations and sold to the customers. The sequence of the vouchers is adequately tracked in a spreadsheet by the finance group at CBH. Customers present the vouchers at the proshop and the accommodation operators are invoiced monthly for the vouchers that were presented at the proshop.

The proshop and food concession operations are also privately-owned businesses which operate independently of PCA in order to generate a profit. The terms and conditions of PCA’s business relationships are governed by signed agreements. Both operations pay a fixed annual rent and variable royalties to PCA in accordance with the agreement. The royalty is based on a percentage of gross sales and is payable at the end of the operating season. The revenue clerk is responsible for submitting invoices in accordance with the agreement and the payment are reconciled and recorded based on the procedure discussed below.

Receipt and Deposit of Public Monies

Mail is opened by the administrative assistant at the Administration Office. A listing of all cheques received is maintained by the administrative assistant and available for reference. The recording of the cheques and clearing of the receivables in the system, as well as the preparation of the bank deposits, would generally be performed by either the Revenue Clerk or the Accounts Officer.


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