Item - 2015.AU3.10

The Audit Committee recommends that:

1.  City Council receive the report (May 29, 2015) from the Auditor General for information.

Continuous Controls Monitoring Program

Since 2011 the Auditor General’s Work Plan has included a project in relation to continuous controls monitoring of selected City expenses. The objective of the Continuous Controls Monitoring Program is to provide periodic reports to management which assist in proactively monitoring financial transactions, detecting unusual expenses and identifying areas where internal controls could be strengthened.

The Continuous Controls Monitoring Program involves the ongoing and regular identification of transactions exceeding predetermined criteria.  The objective is to provide periodic reports to management to assist in proactively monitoring financial transactions, detecting unusual expenses and identifying areas where internal controls could be strengthened.

Program evolution

- 2011 - initiated continuous monitoring of employee overtime and mileage reimbursements

- 2012 - program expanded to include standby pay

- 2013 - initiated review of staff absenteeism for selected ill, ill dependent leave and bereavement leave

- 2014 - initiated review of telecommunication expenses

Telecommunication expenses are included in the Auditor General's Continuous Controls Monitoring Program as significant funds are involved and a number of issues were identified during our 2014 audit of telecommunication expenses.  Our 2014 audit report on telecommunication expenses is available at:

http://www.toronto.ca/legdocs/mmis/2014/au/bgrd/backgroundfile-70658.pdf

This current report provides the results of our review of City telecommunication costs incurred from January 1, 2014 to December 31, 2014. 

The City maintains approximately 15,000 wireless phones and devices and over 24,000 landlines or voice-over-internet phones (VOIP).

Our continuous controls monitoring criteria was based on the following criteria:

-  Data usage charges exceeding $750 per year

-  Roaming charges over $500 per year

-  Annual texting and airtime charges in excess of $100 each

-  International and Directory Assistance calls over $50 during the year

-  Active phones with no call activity during the year

-  Users with multiple active telecommunication devices

-  Costs incurred on inactive phones

The exception criteria are reviewed on an ongoing basis and revised based on improvements in controls and the number of exceptions noted in each monitoring cycle.

Our analysis identified over 1,000 phones meeting one or more of the criteria noted above.  The exceptions were provided to management for review and comment.  Management responses and actions are provided in Table 1 below.

As a result of management actions, savings of $320,000 have been identified. These savings include $290,000 in annually recurring savings which will result in recurring savings of approximately $1.5 million over a 5-year period.