Audit of Fleet Management Internal Audit Report February 2008 Table of Contents

Executive Summary
o o o

Audit Opinion Key Audit Findings Managements Response

Introduction
o o o o o

Background Audit Objective Audit Scope Audit Criteria Approach and Methodology

Audit Findings, Recommendations & Management Action Plan

o o o o o

Fleet Lifecyle Management Accounting of Fleet Monthly Expenses Fleet Maintenance Use of Fleet Acquisition Cards Reliability and Integrity of Data

Appendix A - Policies and Procedures Appendix B - Audit Criteria Appendix C - List of Acronyms

Executive Summary

The Audit Committee approved an audit of fleet management on June 21, 2006. This audit forms part of the Canada Border Services Agencys (CBSA) Risk-Based Multi-Year Audit Plan addressing stewardshipcompliance authorities. As of June 2007, the CBSAs vehicle fleet consisted of over 1,000 cars, vans, trucks and motorized conveyances such as tractors and boats. Fleet vehicles are located in all CBSA regions and are used to carry out the daily operations of the Agency. The net book value of the fleet as of March 31, 2007, was $5.9 million, including accumulated amortization. During the 20062007 fiscal year, the Agency spent $3.3 million on fleet operations. The objective of this audit was to determine whether Agency practices for recording fleet assets were compliant with Treasury Board (TB) materiel management and financial administration policies, and whether appropriate processes existed to ensure adequate governance and control over vehicle assets including fleet operating and maintenance expenses. The audit focused on national compliance with policies and procedures, the reliability and integrity of financial data and the adequacy of monitoring and control processes for the period from March 2005 to June 2007.

Audit Opinion The audit found that Agency practices for fleet management were compliant with TB materiel policies and procedures; however, the practices were not fully compliant with the Agencys financial policies and procedures with respect to account verification and post-verification procedures.

Key Audit Findings Fleet vehicles were managed and disposed of in accordance with TB materiel policies. A draft replacement plan has been developed and plans are under way to develop a long-term strategy to replace the fleet. The contract with Peterson, Howell and Heather (PHH) Arval, Inc. is working well and the fleet acquisition cards are used appropriately in accordance with the instructions provided by the CBSAs Comptrollership Branch. The Agencys first attestation of assets, completed in 20072008, represents a key control in ensuring the quality of information in the Corporate Administrative System (CAS). Opportunities exist to strengthen the CBSAs fleet management control framework with respect to fleet planning, CAS asset records and accounting processes such as the acquisition card payment to PHH, account verification and clearing of expenses in CAS.

Managements Response

Overall, the Comptrollership Branch is pleased that the audit found that Agency practices for fleet management were compliant with TB materiel policies and procedures. As a result of the Internal Audit Directorates findings related to fleet management account verification and post-verification procedures, the Comptrollership Branch, in collaboration with the Operations and Admissibility branches, has already taken the necessary corrective actions to address the findings.

1. Introduction 1.1 Background The Audit Committee approved an audit of fleet management on June 21, 2006. This audit forms part of the Canada Border Services Agencys (CBSA) Risk-Based Multi-Year Audit Plan addressing stewardshipcompliance authorities. As of June 2007, the CBSAs vehicle fleet consisted of over 1,000 cars, vans, trucks and motorized conveyances such as tractors and boats. Fleet vehicles are located in all CBSA regions and are used to carry out the daily operations of the Agency. The net book value of the fleet, including the accumulated amortization, for the years ended March 31, 2006, and 2007 is provided in Table 1. It should be noted that the fleet includes vehicles transferred at zero book value from the three legacy organizations that formed the CBSA. Many CBSA vehicles were purchased shortly after the events of 9/11 and are now near the end of their life cycle. Table 1 -- Fleet Assets (in thousands of dollars) Costs Opening assets balance Acquisitions 2006-2007 2005-2006 24,220 1,420 23,719 1,880 (1,379) 24,220

Transfers, disposals, write-offs and other (1,292) Closing assets balance Less: accumulated amortization Opening balance 16,304 24,348

14,095

Amortization

3,365

3,543 (1,334) 16,304 7,916

Transfers, disposals, write-offs and other (1,309) Amortization closing balance Net book value 18,360 5,988

(Source: Departmental performance information 20052006 and 20062007) The Agencys financial control framework was established to oversee compliance with Treasury Board (TB) policies and directives. This includes the Comptrollership Manual Finance Volume that describes the roles and procedures related to finance, materiel and administration, and the Corporate Administrative System (CAS) roles and modules that provide overviews of business processes and procedures for PHH[ 1 ] fleet vehicle payment (CAS Catalogue, Module 015). In 2007, the TB issued a Guide to Fleet Management[ 2 + to assist departments and agencies in implementing the TBs new Policy on Management of Materiel. (See Appendix A for a list of relevant policies, directives and guides.) The CBSAs Comptrollership Branch has overall authority within the Agency to ensure the continued optimization of fleet services and to provide functional guidance and support for operations. It is responsible for the administrative control of the acquisition, operation, maintenance, disposal and replacement of Agency vehicles, in cooperation with the Operations Branch. The CBSA has a national fleet coordinator and regional fleet coordinators who provide advice and support to regional personnel and coordinate the Agencys fleet activities. Once vehicles are assigned to a region, the responsibility for day-to-day usage and compliance with the relevant policies and procedures rests with the on-site manager and personnel. The Agency uses CAS for tracking the acquisition, entry into inventory, location, operation and eventual disposal of vehicles. The Agency has contracted with PHH for fleet management services. Under this contract, each vehicle in the fleet is assigned a unique acquisition card for the payment and tracking of vehicle costs; additional cards are assigned for surveillance vehicles and to purchase fuel in the United States. PHH maintains a fleet management information system (FMIS) that provides details on acquisition card transactions and fleet performance. Under the terms of the contract, PHH sends a consolidated (Agency) statement for all cardholders activities for the period, and the supporting transaction details are sent to cardholders. A PHH discount applies for payments made by the due date, and the Comptrollership Branch pays the invoice on receipt. In 2006, the Comptrollership Branch conducted the National Fleet Management Review Phase I. It resulted in the use of mandatory monthly vehicle trip logs to capture information such as the region, vehicle function, utilization codes, driver name and kilometres per trip, as well as other pertinent asset information.

The National Fleet Management Review Phase II, scheduled for completion in December 2007, focuses on optimizing the use of the fleet. This will include identifying underutilized vehicles, reducing replacement costs, lowering the average age of vehicles, reinforcing usage standards and increasing the use of alternative modes of transportation.

1.2 Audit Objective The objective of the audit was to determine whether Agency practices for recording fleet assets were compliant with TB materiel management and financial administration policies, and whether appropriate processes existed to ensure adequate governance and control over vehicle assets including fleet operating and maintenance expenses.

1.3 Audit Scope The audit scope was national and focused on fleet activities from April 2005 to June 2007. The audit reviewed the recording of fleet expenses in CAS and vehicle asset records to determine whether the information was complete, accurate and updated on a timely basis. The scope included a review of the treatment of PHH transactions. The audit scope excluded the vehicle procurement process, which requires departments to select vehicles from a potential pool of candidates identified by Public Works and Government Services Canada, and the vehicle contracting process.

1.4 Audit Criteria The audit criteria used to assess the CBSAs overall business practices, general controls and governance processes for fleet management is organized into three areas:

Compliance with policies and guidelines related to fleet management; Reliability and integrity of data, including fleet planning and inventory information; and Monitoring and control.

See Appendix B for detailed audit criteria.

1.5 Approach and Methodology This audit engagement was planned and conducted to be in accordance with the Internal Auditing Standards for the Government of Canada. The following methodology was used to conduct this audit:

Interviews with cardholders, regional finance/business management services units (BMSUs) personnel, managers and key officials in the Comptrollership and Operations branches. To ensure sufficient and representative audit coverage, district offices in five CBSA regions were visited;[ 3 ] An examination of the approval and payment process for the Agencys consolidated acquisition card statements from PHH (sample included February, March and April 2007 statements); An examination of monthly reconciliation procedures supporting the payment authorization process for February and March 2006 in selected districts; A review of the consistency between CAS and PHH data for the monitoring of fleet activities; and The inspection of 150 of the 600 regional vehicles, vehicle files and inventory data to review operating and maintenance expenses for compliance with the control framework.

The audit fieldwork was conducted between February and June 2007.

2. Audit Findings, Recommendations & Management Action Plan Fleet vehicles were managed and disposed of in accordance with TB materiel policies. Appropriate controls were in place for the operation and efficient use of vehicles, including reassigning older vehicles within districts and across regions depending on operational requirements. The fleet was maintained regularly and the fleet acquisition cards were used appropriately in accordance with the instructions provided by the Comptrollership Branch. Opportunities exist to strengthen the CBSAs fleet management control framework with respect to fleet planning, CAS asset records and accounting processes such as the acquisition card payment to PHH, account verification and clearing of expenses in CAS.

2.1 Fleet Lifecyle Management Fleet replacement plans were developed for 20052006 and 20062007; however, the two-year plan does not address all the requirements for long-term fleet lifecycle management. TB policy requires that departments and agencies have capital acquisition, operations and maintenance, and disposal strategies for fleet management based on an ongoing analysis and systematic assessment of the assets against established targets and benchmarks. The audit found that the Comptrollership Branch has developed plans for the acquisition, maintenance and disposal of vehicles; however, the Branch does not presently have a long-term capital plan nor the resource requirements for fleet management. The replacement plan for 20062007 was held in

abeyance pending the results of the National Fleet Management Review Phase II. Concerns were expressed during interviews in regional offices regarding consultations related to fleet management decisions, and the need to ensure that appropriate standards are in place to meet operational requirements. As well, the audit noted the draft replacement plan does not include agreed-upon standards for fleet replacement. At the current rate of replacement, the audit estimated that the fleet would be replaced in 17 years rather than the benchmark of six or seven years.[ 4 ] Management is aware that many of its vehicles (2000 and 2001) are due for replacement in the near future. Without a long-term plan, it is difficult for the Agency to determine whether its current replacement plan is effective and appropriate for its resource level. The Government of Canadas Federal Identity Program (FIP) policy states that departments and agencies operating motor vehicles are required to identify the motor vehicles with Government of Canada markings and identify the institution operating the vehicle in accordance with FIP guidelines unless there is a justification on file. The audit found that the majority of the Agencys vehicles do not bear FIP markings. Although it is for security reasons that the motor vehicles do not have the markings, the Agency has not formally filed an exemption with justification nor established Agency guidelines for the policy. Recommendation: 1. The Comptrollership Branch, in consultation with the Operations and Enforcement branches, should develop a long-term multi-year fleet management strategy based on agreed-upon fleet standards. Management Action Plan The Comptrollership Branch will develop vehicle marking guidelines based on vehicle function and will have them approved by the President of the CBSA in accordance with TB policy. A communiqu will be prepared for wide distribution summarizing FIP standards and guidelines and highlighting the requirement for justification if no markings are to be placed on a vehicle. Regions/branches will be requested to provide an inventory of all vehicles for which they wish to request an exemption, with justification. An authorization for exemption will be included in the vehicle file. The Comptrollership Branch will develop a long-term strategy in consultation with the Operations and Enforcement branches to address long-term vehicle requirements. Among the topics of interest will be the approved vehicle matrix, funding and new vehicle procurement procedures. Completion Date April 2008

April 2008

The Comptrollership Branch will discuss its pressing long-term replacement plan needs with all branches and regions and outline its projected annual funding requirements.

June 2008

2.2 Accounting of Fleet Monthly Expenses Acquisition Card Payment to PHH The Agency was not taking advantage of scheduling payments when due, as required to be compliant with TB policies. The TB policies on payment of due date and account verification require departments and agencies to pay their invoices by the due date to optimize cash management and to avoid paying interest. The audit found that the electronic payments to PHH are not complying with TB policies. The CBSA receives a monthly consolidated statement from PHH with the invoice for all cardholders activities for the period. Payment is issued by the Comptrollership Branch on a priority basis. [ 5 ] In accordance with CAS acquisition card procedures (Module 015), the Agency pays the PHH consolidated invoice on receipt, crediting the vendor for the full amount of the payment. At the same time, the National Financial Transaction Centre (NFTC) debits the accrued liability account for the appropriate amount to be charged to each region/BMSU. The audit tested three PHH invoices February, March and April 2007 for a total of $773,760. For two invoices, bank electronic transfers were made well ahead of the due date, 34 and 32 days respectively, which resulted in a loss of interest to the Government of Canada. The other invoice was paid 4 days after the due date, and the Agency did not benefit from a discount of $2,426. Interviews with staff at the NFTC found they were unaware of the TB policy requirements related to scheduled payments; they had been advised to treat the payments as priority payments and did not use CAS to schedule the payment. Recommendation: 2. The Comptrollership Branch should review the acquisition card payment process so that payment to PHH is scheduled on or before the due date, and it should encourage the use of the CAS scheduled payment function. Management Action Plan The Comptrollership Branch has developed an acquisition card control framework in which gaps were identified and corrective measures are taken in the accounting processes involving the payment to the acquisition Completion Date Completed

card company, account verification and clearing of expenses in CAS. The NFTC has improved service levels to ensure that early payment discounts are earned. A three-way reconciliation process has been developed and training has been provided to select areas. Regular training courses on the reconciliation activities are scheduled on a go-forward basis. Acquisition Card Payment Verification Process Delegated managers did not ensure that original receipts to support fleet expense reconciliation were included as part of the payment verification process (section 34 of the Financial Administration Act). Under section 34 of the Financial Administration Act (FAA), a delegated manager is responsible for ensuring that the work has been performed, the goods are supplied or the service is rendered, as the case may be, and that the price charged is according to the contract, or if not specified by the contract, is reasonable prior to authorizing payment. As stated in Module 015 of the CAS Catalogue, the regional finance/BMSUs use the section 34 report received from the responsibility centre manager to clear individual purchases against the debit entry of detailed transactions. A review of section 34 approvals noted that the delegated managers were not always signing off under section 34 for fleet expenditures with the supporting documentation. Of these, confirmation of supporting documentation and validation of payments was obtained during the audit. Interviews with administrative staff and regional fleet coordinators indicated that they were not aware of the requirement to include receipts with section 34 approvals. The NFTC and the regional finance/BMSUs did not follow up on the lack of receipts; hence, there was no consequence for not providing receipts. As well, interviews in one region indicated that the regional director was providing section 34 approvals for the region and that cardholders/delegated managers were not receiving and reviewing statements and were instructed to retain receipts on-site as these transactions were considered low risk. The audit discussed cardholder responsibilities with regional management in February 2007, and practices were immediately revised so that responsibility centre managers reconcile statements with original invoices and attach the supporting documentation for section 34 approvals. While the risk of not providing fleet receipts could be viewed as low, these actions are not consistent with the stewardship principles of the Agency. The Comptrollership Branch is responsible to the Receiver General for Canada and the Office of the Auditor General of Canada for ensuring clearing accounts are materially cleared at year-end (2006 2007). The audit reviewed the clearing of accounts including fleet transactions from previous years. The audit found that data entry in CAS was not occurring on a timely basis as a result of lack of training or experience in regional finance/BMSUs. The clearing ensures that all the unrecorded expenditures are entered in time for year-end and at the proper correct amount. Further, there was no evidence to indicate that any sign-offs or confirmation that month-end accounts were closed by regional finance/BMSUs as an important step to the preparation of accurate monthly financial reports. The audit noted that the Comptrollership Branch did conduct reconciliations on the fleet expenses at year-end.

This was undertaken because of insufficient capacity and employee turnover in the regional offices. While this is not the ideal process, this account clearing process helps improve the allocation of expenditures to the appropriate cost centre. Recommendations: 3. The Comptrollership Branch should advise regional fleet coordinators and delegated managers that supporting documentation is required as part of their responsibilities under section 34 of the FAA. Management Action Plan Completion Date

One of the corrective measures for a gap identified in the acquisition card February 2008 control framework was the development of a roles and responsibility acceptance document for delegated section 34 managers. Managers will be required to sign and acknowledge their roles and responsibilities, which include their responsibilities under section 34 of the FAA. 4. The Comptrollership Branch should ensure that CAS users responsible for the reconciliation of invoices and clearing of accounts are provided with the appropriate training. Management Action Plan A three-way reconciliation process has been developed and training has been provided. A train the trainers session was completed for regional finance offices, whereby personnel at headquarters (HQ) provided training to a regional supervisor who in turn provided the same training in the region. At HQ, three separate training sessions have now been given (two in English and one in French). Regular training courses on these reconciliation activities have been scheduled on a go-forward basis. Completion Date Completed

2.3 Fleet Maintenance Maintenance guidelines were followed to ensure safe operation and availability. Vehicles were being maintained to ensure their safe operation in compliance with warranty conditions. The audit reviewed 150 vehicles and their records in five regions and found them to be in acceptable condition. The audit noted that vehicles contained a number of items for safe operation such as accident report forms, contact information for road assistance, insurance documents and safety and related equipment. For the 20062007 fiscal year, the CBSA paid the following amounts to PHH to support the maintenance and operation of the fleet:

$1.19 million for maintenance and repairs; $1.76 million for fuel; and $72,000 for administration fees.

The audit confirmed that PHH is addressing the maintenance and warranties in accordance with its contract with the Agency. Vehicle repairs were made in compliance with the warranty terms and conditions, and maintenance schedules were being followed. In the case of accidents and incidents, PHH informed the regional fleet coordinators and provided supporting documentation. Details of incidents and accidents were recorded in the PHHs FMIS; accidents accounted for 2 percent of total costs in the 20062007 fiscal year.

2.4 Use of Fleet Acquisition Cards Fleet acquisition cards were used appropriately for fleet vehicle operations and maintenance, and they were stored adequately when not in use. Approved Services Under an agreement with the Government of Canada, the fleet acquisition cards are used to reduce and simplify the procurement and payment process for the purchase of fuel, repairs and maintenance of the vehicle fleet. Taken across government, this approach allows for major cost avoidance in the procurement of low-risk, high-volume purchases under $500. For the 20062007 fiscal year, there were 43,560 transactions recorded on the fleet acquisition cards. Fuel charges related to 88 percent of the transactions and 11 percent were for maintenance expenditures. Regional fleet coordinators managed the use of fleet acquisition cards, coordinated regional activities, reported calls to PHH, followed up on repairs and expenses, and provided monthly database updates to PHH based on vehicle logs. The Comptrollership Branch issued instructions to regional fleet coordinators on the use of fleet acquisition cards, e.g. expenses over $500 require the vendor to obtain authorization from PHH. Based on interviews and on the record of authorizations given, the audit found that fleet acquisition cards were used appropriately in accordance with PHH instructions and that required repair and maintenance services were reported by PHH to a CBSA manager or a regional fleet coordinator and approved on a timely basis. The audit found one exception where a vendor proceeded with the installation of communications equipment in two Agency vehicles before obtaining authorization from PHH. The region and the vendor were both unaware that this type of service is not covered under the list of approved services. Having the transaction pre-authorized ensures the Agency is aware of the appropriateness of the request, the price quoted, available discounts and the applicability of warranties. PHH agreed to accept the transactions for $4,500 and $5,000 following discussions with CBSA regional management.

Card Safekeeping To protect assets from loss or misuse, departments and agencies are expected to manage their assets with prudence. The audit found good practices regarding the safekeeping of the fleet acquisition cards and records. Records and logs pertaining to each vehicle were well organized and easily located. One region reported instances where cards were reported lost or never received by the Agency and they were promptly cancelled and re-issued. The audit reviewed PHH reports of spare cards. These reports were available from the PHH database; however, they were not being used for monitoring purposes by responsibility centre managers. This was brought to the attention of senior management during the audit, which resulted in the cancellation of unused cards.

2.5 Reliability and Integrity of Data CAS and PHH Data The vehicle identification number (VIN), licence plate number and year of vehicle were not being entered accurately in CAS asset master records and inconsistencies in data were found between CAS and the PHH fleet database. CAS is an integrated financial system that includes the CBSAs principal budgetary, accounting and reporting activities. In CAS, there is a materiel management module that contains records for each capital asset. For fleet vehicles, this includes the make, model, year, capitalization date, acquisition date, accumulated amortization, net book value, vehicle identification number, licence plate number, responsibility centre and cost centre. Roles and responsibilities for CAS data entry are defined in the Finance Volume, Chapter 4: Capital Assets, Financial Administration Control Framework (Role 29). The Comptrollership Branch is responsible for creating the asset master record at the time of asset planning. The branches or regions that have been assigned a vehicle are responsible for updating and maintaining the asset record in CAS each month. In addition to CAS the CBSA tracks its vehicle fleet through the PHH database (FMIS). Under the contract, PHH assigns a unique acquisition card to each vehicle. This card is used for the payment and tracking of all vehicle maintenance and operating costs. Should a vehicle be relocated to a different cost centre, a new card is requested and assigned to the vehicle. The FMIS includes the physical information associated with the fleet, which is more comprehensive than what is included in CAS (e.g. size of engine, type of fuel, colour, history of vehicle and costs). The FMIS is also updated monthly as regional fleet coordinators send operating information on the fleet (e.g. odometer readings, vehicle location and cost centre changes) to PHH.

The audit reviewed the data in CAS and found that asset records were recorded in CAS at the time of vehicle procurement. However, it was noted that the information in CAS was not always correct, complete or updated regularly. There was missing vehicle identification numbers, duplicate or missing CBSA asset numbers, incorrect license plate numbers, incorrect asset class and inaccurate vehicle locations and cost centres. Management was advised of these discrepancies during the course of the audit and action was taken to correct the information. The audit also reviewed data in the FMIS and found that the information in the FMIS is reliable and updated regularly with supporting documentation. The review of the two systems revealed that the FMIS is not integrated with CAS. Hence the updates provided to PHH to update the FMIS were not used to update CAS. Interviews with fleet management personnel from both the Comptrollership Branch and the regions indicated that the regional roles and responsibilities relating to updating CAS on a monthly basis were not well understood. The engagement of personnel in this process has decreased due to multiple operational priorities. As well, the audit found that the Comptrollership Branch was not monitoring the CAS updates on a regular basis to ensure accuracy of the information. During the conduct of the audit, the Comptrollership Branch initiated a physical attestation of fleet assets. The audit did not review the physical attestation process that was ongoing during the audits examination phase. The physical attestation required each branch to confirm information on fleet asset master records including the serial number, location, asset class and responsibility and cost centre. Fleet asset records in CAS were not maintained regularly and resulted in the involvement of many individuals to finalize the first annual attestation of assets in 2007. By not having correct, updated information in CAS, staff take longer to verify asset information and correct inaccuracies. This has an impact on the information in CAS that managers use to monitor their budgets and on the year-end valuation of assets. Capitalization of Assets The process for recording fleet assets and the life-cycle treatment of those assets are compliant with the TB policy. The Treasury Board Accounting Standard 3.1 Capital Assets requires departments and agencies to ensure that all capital assets held are properly valued and recorded. The Comptrollership Branch provides functional oversight and guidance and is responsible for ensuring that capital assets are properly valued and recorded. The audit reviewed the process for the capitalization of assets in CAS and found it is compliant with TB policy. The capitalization of assets is done in CAS with a threshold of $10,000 for the capitalization of all vehicle types that are amortized on a straight-line basis for a period of five years. Amortization is recorded on a monthly basis, on the last working day of the month, and applied to the cost centre associated with the vehicle on that date. The cost centre information is updated in CAS using details obtained from the monthly statements received from PHH that indicate the physical location of the vehicle at the end of the reporting period if the move has resulted in a change in responsibility centre.

CAS reports total fleet assets on hand at the end of each accounting period, by category and by responsibility centre, with accumulated totals being reported at higher levels of responsibility; hence, the value of the assets is fairly reported. Recommendations: 5. The Comptrollership Branch, in collaboration with the OperageBranch, should clarify the roles and responsibilities for updating the materiel management module of CAS and provide the necessary training to affected employees. Management Action Plan The Comptrollership Branch will arrange an initial meeting to come to a consensus on proper CAS materiel management procedures in keeping with TB policy and the constraints of CASs capabilities, and to identify training requirements for affected employees. The Comptrollership Branch will forward the updated procedures to the Operations Branch for review and invite comments and feedback. Finalized CAS procedural changes will be communicated to affected employees. Appropriate training modules will be established and arranged for affected employees. 6. The Comptrollership Branch, in collaboration with the Operations Branch, should develop a quality assurance process to monitor the accuracy and completeness of asset information in CAS and report on the results to management. Management Action Plan Completion Date Completion Date September 2008

The Comptrollership Branch, in collaboration with the Operations Branch, June 30, 2008 will develop a quality assurance process to monitor the accuracy and completeness of asset information entered in CAS by the branches/regions. Feedback will be requested and the process will be adjusted as warranted. The process will be finalized and the Comptrollership Branch will ensure it is widely distributed to affected employees.

Appendix A - Policies and Procedures CBSA Comptrollership Manual -- Finance Volume Financial Administration Control Framework:

Chapter 4, Capital Assets Chapter 6, Accounts Payable and Accrued Liabilities

Treasury Board Policies and Guidelines

Policy on Management of Materiel Directive on Fleet Management: Light Duty Vehicles Guide to Fleet Management Acquisition Cards Program Management Guide Treasury Board Accounting Standard 3.1 Capital Assets Payment on Due Date Policy Policy on Acquisition Cards Account Verification Policy Framework for the Management of Assets and Acquired Services

Appendix B - Audit Criteria The audit criteria used for this audit were the following: Lines of Enquiry Compliance Audit Criteria* Plans for the appropriate management of the fleet are documented and implemented and include short- and long-term time frames. Vehicle operating and maintenance expenses are authorized in compliance with Section 34 of the Financial Administration Act (FAA). Payments to the fleet services provider (PHH) are made in a cost-effective manner. Vehicles are being maintained to ensure their safe operation in compliance with warranty conditions. Reliability and integrity of data Vehicle operating and maintenance expenses are recorded in the Corporate Administrative System (CAS) and subsequently verified in accordance with Treasury Board (TB) policies on acquisition cards and the

account verification process to allow for an accurate and timely reconciliation with payments made to the fleet services provider. Vehicle location, classification, amortization and disposal are accurately recorded in accordance with TB policy on accounting for capital assets. Monitoring and control Procedures exist at headquarters and in the regions to review fleet management practices, including reconciliation and close of month/yearend. Procedures exist to protect the use of fleet acquisition cards from waste, abuse or fraud. *The sources of the above criteria included the Criteria of Control (COCO) and Committee of Sponsoring Organizations (COSO) models, and Treasury Board policies and guidelines.

Appendix C - List of Acronyms Acronym BMSU CAS CBSA FAA FIP FMIS NFTC PHH Description branch management services unit Corporate Administrative System Canada Border Services Agency Financial Administration Act Federal Identity Program Fleet Management Information System National Financial Transaction Centre Peterson, Howell and Heather Arval, Inc.

TB VIN

Treasury Board Vehicle Identification Number

Notes 1. Peterson, Howell and Heather (PHH) Arval, Inc. is a fleet management services provider. [Return to text] 2. Guide to Fleet Management, Chapter 1: Light Duty Vehicles, Materiel Management: Frameworks and Guidelines, TB [Return to text] 3. HQ Branches and National Financial Transaction Centre, WindsorSt. Clair region: Windsor and St.Clair districts; Atlantic region: Nova Scotia district; Pacific region: Vancouver and Victoria districts; Greater Toronto Area region: selected offices in the Greater Toronto Area region; and the Quebec region: Quebec regional office and the St. Bernard de Lacolle sector. [Return to text] 4. The Agency has developed a preliminary points-based approach based on age, kilometrage and repair costs for the fleet, and this approach is consistent with the benchmark for vehicle replacement. The 18 percent replacement target would ensure a rotation of the fleet every six years or so. The effective lifecycle is approximately seven years for most CBSA vehicles, depending upon their use and the environment. [Return to text] 5. The Comptrollership Branch is the sole delegated authority to issue priority payments, in accordance with CBSAs Financial Delegation Matrix. *Return to text] Date Modified: 2008-05-09

Top of