Audit of Parking Facilities

January 2011

Recommended for Approval to the Deputy Minister by Departmental Audit Committee on January 25, 2011

Approved by the Deputy Minister on January 31, 2011

Table of Contents

• 1.0 Executive Summary
  • 1.1 Introduction
  • 1.2 Overall Conclusion
  • 1.3 Main Findings
  • 1.4 Recommendations
  • 1.5 Statement of Assurance
  • 1.6 Audit Opinion
• 2.0 About the Audit
  • 2.1 Background
  • 2.2 Audit Objective
  • 2.3 Audit Scope
  • 2.4 Methodology
• 3.0 Findings and Recommendations
  • 3.1 Introduction
  • 3.2 Internal Control
    • Finding 1.0: Management Review
    • Finding 2.0: Establishment and Communication of Parking Procedures
    • Finding 3.0: Application of Parking Procedures
  • 3.3 Recommendation
• Appendix A: Audit Criteria
• Appendix B: Management Action Plan

1.0 Executive Summary

1.1 Introduction

In accordance with the approved Industry Canada 2010–2011 to 2012–13 Multi-Year Risk-Based Audit Plan, the Audit and Evaluation Branch (AEB) undertook an audit of Parking Facilities.

Treasury Board Secretariat (TBS) is responsible for providing general direction on parking facilities occupied by the Crown, and Public Works and Government Services Canada (PWGSC) is responsible for establishing policy for parking facilities under its administration. The PWGSC Custodial Parking Policy provides direction for the provision of parking to tenant departments and the acquisition, management and disposal of parking facilities under the custodianship of PWGSC. An update to this policy was conducted in 2010, and, as a result, government employees are required to pay market rates to park in any government-owned buildings and facilities, with the exception of employees with disabilities¹. In addition, all employee parking facilities will be transferred to the private sector.

Beginning in July 2010, Industry Canada implemented the requirement that all employees pay full market rate for their parking privileges. At the same time, the project to transfer its employee parking services to private sector operators was initiated. This transition is expected to occur until all existing Occupancy Instruments terminate. Industry Canada anticipates the majority of its parking facilities will be transitioned to private operators by May 2011. Until transition to private operators, Industry Canada will maintain its current process whereby payroll deductions are used to collect parking fees from employees who have been allocated parking spaces. Upon transition to private operators, parking fees will be paid directly by the employees to the private operator. As a result, at that time, Industry Canada will not have any involvement in the allocation of parking spaces to employees and the collection of parking fees (pending clarification from TBS on remaining responsibilities that Industry Canada may have with respect to meeting 'Duty to Accommodate' requirements).

In preparation for this transition, a management review of employee parking administration and payroll deduction practices for Industry Canada parking facilities was conducted jointly between Industry Canada's Facilities Management Directorate, Comptrollership and Administration Sector (CAS) and Human Resources Branch (HRB) in the May/June 2010 timeframe. The purpose of the review was to ensure compliance with applicable policies, and to provide recommendations regarding any corrective measures that may be required. As a result of this management review, new Industry Canada parking administration procedures and quality controls were documented and implemented by CAS and HRB, effective July 1, 2010.

The objective of this audit was to determine whether Industry Canada employees with allocated spaces were paying the applicable parking rate in accordance with TBS, PWGSC and Industry Canada policies, and that adequate controls are in place to support reporting and monitoring.

The scope of the audit included management's review of parking administration and pay deduction practices, as well as parking 'actions'² processed between July 1, 2010 and September 30, 2010, under the new Industry Canada parking administration and quality control procedures. The scope covered parking administration and quality control procedures conducted by HRB and the Facilities Management Directorate, at NCR Headquarters, Measurement Canada, Canadian Intellectual Property Office, and regional offices.

1.2 Overall Conclusion

Overall, adequate controls are in place to ensure that Industry Canada employees with allocated spaces are paying the applicable parking rate and to ensure that management's reporting and monitoring over Industry Canada's parking facilities process is satisfactory and effective.

1.3 Main Findings

Internal Control

• Management's review of parking administration and payroll deduction practices, actions taken to address issues identified, as well as management's ongoing monitoring of parking administration were found to be adequate. TBS has informed Industry Canada that for medical/disabled parking tenants there would be no change to current processes until December 2010, when further direction was to be provided. When further direction is provided by TBS regarding 'Duty to Accommodate' requirements, management should confirm the validity of Provincial Medical Certificates for employees who have received a 'medical' status in relation to their parking space.
• Parking administration procedures were established and the procedures addressed most policy requirements. Controls established through the new parking administration procedures are appropriate. Procedures were communicated and understood. The audit noted that there is an opportunity to further refine and reinforce the importance of applying the new parking procedures.
• Parking procedures were applied adequately to ensure new parking space allocations were processed accurately. Controls have been designed and implemented to ensure Industry Canada employees with allocated parking spaces are paying the applicable parking rate. To enhance the application of the parking procedures, a suggested improvement is to retain supporting rationale for parking administration decisions.

1.4 Recommendations

Given the impending transition in parking administration to the private sector, management should assess the improvement opportunities noted through this audit to determine appropriate actions that may be required. Potential areas of improvement are outlined below:

1. As additional direction is provided by TBS in December 2010 regarding 'Duty to Accommodate' requirements, confirm existing parking tenants' medical status and implement a procedure for re-confirmation of Provincial Medical Certificates that have a periodic expiry date.
2. Ensure procedures are clearly documented and communicated with respect to: the determination and treatment of EX-equivalent applicants; notification of termination of parking passes; and maintenance of spare parking passes.
3. Further reinforce the importance of applying the new parking payroll procedures (specifically the tracking log), specifically to regional offices.
4. Retain sufficient supporting evidence to demonstrate application of the new parking procedures and to demonstrate rationale for parking allocation decisions for employees on waitlists.

1.5 Statement of Assurance

In my professional judgment as Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support the accuracy of the opinion provided and contained in this report. The opinion is based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed on with management. The opinion is applicable only to the entities examined and within the scope described herein. This audit was conducted in accordance with the Internal Auditing Standards for the Government of Canada.

1.6 Audit Opinion

In my opinion, Industry Canada has no material weaknesses in its parking-related internal control processes and these processes are effective.

2.0 About the Audit

2.1 Background

In accordance with the approved Industry Canada 2010-13 Multi-Year Risk-Based Audit Plan, the Audit and Evaluation Branch (AEB) undertook an audit of Parking Facilities. The audit was identified in response to a risk that highlighted parking facilities may not be managed in accordance with Treasury Board Secretariat (TBS), Public Works and Government Services Canada (PWGSC) and Industry Canada policies, procedures and guidelines.

TBS is responsible for providing general direction on parking facilities occupied by the Crown and PWGSC is responsible for establishing policy for parking facilities under its administration. The PWGSC Custodial Parking Policy provides direction for the provision of parking to tenant departments and the acquisition, management and disposal of parking facilities under the custodianship of PWGSC. An update to this policy was conducted in 2010, and, as a result, government employees are required to pay market rates to park in any government-owned buildings and facilities, with the exception of employees with disabilities³. In addition, all employee parking facilities will be transferred to the private sector.

Within Industry Canada, the Facilities Management (FM) Directorate, which is under the Comptrollership and Administration Sector (CAS), is responsible for developing the department's parking policy and parking administrative procedures. The application of the parking policy and procedures is a shared responsibility between the parking administrators for the National Capital Region (NCR), Canadian Intellectual Property Office (CIPO), Measurement Canada and administrators in regional offices. Industry Canada is responsible to manage its parking holdings in accordance with the requirements of applicable legislation, TBS direction, PWGSC policies and policy-related documents, and with due consideration to municipal bylaws. Industry Canada is responsible for managing parking holdings for employees of the Department of Justice who park in Industry Canada parking spaces; however, the Department of Justice is responsible for ensuring employee deductions occur.

Beginning in July 2010, Industry Canada implemented the requirement that all employees pay full market rate for their parking privileges. At the same time, the project to transfer its employee parking services to private sector operators was initiated. This transition is expected to occur until all existing Occupancy Instruments terminate. Industry Canada anticipates the majority of its parking facilities will be transitioned to private operators by May 2011. Until transition to private operators, the Department will maintain its current process whereby payroll deductions are used to collect parking fees from employees. Upon transition to private operators, parking fees will be paid directly by the employees to the private operator. As a result, Industry Canada will not have any involvement in the allocation of parking spaces to employees and the collection of parking fees (pending clarification from TBS on remaining responsibilities that Industry Canada may have with respect to meeting 'Duty to Accommodate' requirements).

In preparation for this transition, a joint management review of employee parking administration and payroll deduction was conducted between Industry Canada's Comptrollership and Administration Sector (CAS) and Human Resources Branch (HRB) in the May/June 2010 timeframe. The purpose of the review was to ensure compliance with applicable policies, and to provide recommendations regarding any corrective measures that may be required. As a result of this management review, new Industry Canada parking administration procedures and quality controls were documented and implemented by CAS and HRB, effective July 1, 2010.

The table below outlines the approximate number of Industry Canada employee parking spaces held during the audit scope as well as the number of parking 'actions' (i.e. "commence", "amend", or "stop" parking actions) made between July 1, 2010 and September 30, 2010 under the new Industry Canada parking administration and quality control procedures in NCR, Measurement Canada, the Canadian Intellectual Property Office (CIPO), and the regions:

2.2 Audit Objective

The objective of the audit was to determine whether Industry Canada employees with allocated spaces were paying the applicable parking rate in accordance with TBS, PWGSC and Industry Canada policies, and that adequate controls are in place to support reporting and monitoring.

2.3 Audit Scope

The scope of the audit included management's review of parking administration and pay deduction practices (conducted in May/June 2010 timeframe), as well as parking 'actions' (i.e. "commence", "amend", "stop") processed between July 1, 2010 and September 30, 2010, under the new business process and quality control procedures. Specifically, the audit scope included:

• A walkthrough and testing of management's review of parking administration, actions taken to correct errors, and how progress was reported and monitored; and,
• Control testing of the total population of "commence", "amend" and "stop" actions processed between July 1, 2010 and September 30, 2010.

The scope covered procedures conducted by HRB and FM, both at Headquarters, Measurement Canada, the Canadian Intellectual Property Office (CIPO), and the regional offices. With respect to Industry Canada parking holdings used by Department of Justice employees, the audit scope included the activities and responsibilities of Industry Canada, but did not include practices implemented by the Department of Justice.

2.4 Methodology

This internal audit was conducted in accordance with Treasury Board's Policy on Internal Audit and its Internal Auditing Standards for the Government of Canada. Audit fieldwork was conducted during November 2010. The audit approach consisted of the following:

• A planning phase was conducted in October 2010. It included a risk assessment based on information gathered through a review of key documents and preliminary interviews with key parking administration process stakeholders in the NCR. An audit planning memorandum was developed, including audit criteria which were presented to Industry Canada management. The audit criteria are detailed in Appendix A.
• The principal audit techniques used to conduct the audit included:
  • Review of parking policy and procedure documents to ensure relevant policy requirements were addressed and key controls were in place;
  • Review of key documents related to management's review of parking administration, the ongoing monitoring of parking administration, and the implementation of the new parking procedures;
  • Testing of key controls in the parking administration process for the total population of 36 parking actions (i.e. "commence", "amend" and "stop"), and review of supporting documentation; and,
  • Interviews with parking administrators and compensation advisors in the NCR Headquarters, Measurement Canada, the Canadian Intellectual Property Office, and regional offices for inquiry and corroboration of audit findings.

3.0 Findings and Recommendations

3.1 Introduction

This section presents detailed findings from the audit of Parking Facilities. Findings are based on the evidence and analysis from both the initial risk analysis and the audit conduct phase.

3.2 Internal Control

Finding 1.0: Management Review

In reviewing management's actions, we expected to find that a comprehensive review was conducted, that adequate actions were taken by management to address identified issues, and that ongoing monitoring by management of the parking administration process was sufficient.

The audit confirmed that management's review included reconciliation of a PWGSC report which listed all Industry Canada employees with parking-related payroll deductions with a listing from Industry Canada's FM group of all parking tenants. In the regions, this reconciliation was performed by regional parking administrators and human resources personnel. It was observed that CAS, FM and HRB worked jointly to investigate and resolve any discrepancies. Corrective measures were taken and management has developed a process for tracking progress.

The audit found that management's review of parking administration did not, however, include confirmation of parking tenants' medical status with respect to Provincial Medical Certificates provided by employees as proof as disability (based on Provincial issuing standards). Given that TBS informed Industry Canada that, for medical/disabled parking tenants, there would be no change to current processes until December 2010, (pending clarification from TBS on remaining responsibilities that Industry Canada may have with respect to meeting 'Duty to Accommodate' requirements).

Lastly, an additional tool used by management is the quarterly reconciliation report which compares a listing of employees with allocated spaces against monthly payroll deduction reports. At the completion of fieldwork, the first completed quarterly reconciliation was still in the final stages of approval, and, as such, the reconciliation was not reviewed as part of this audit.

Finding 2.0: Establishment and Communication of Parking Procedures

In reviewing the establishment and communication of parking procedures, we expected to find documented Industry Canada parking procedures that addressed relevant policy requirements along with appropriate established controls. We also expected to find that management took the necessary actions to communicate the parking procedures and ensure they were understood by key stakeholders.

The audit found that parking administration procedures were documented in a logical and understandable manner, outlining the required steps in the parking administration process; however, the audit found a few instances where the parking procedures did not address policy requirements. Specifically, the procedures did not adequately describe the following: how EX-equivalent applicants will be determined and treated with regards to parking space allocations; the requirement for employees to provide one-month notification of requests to terminate parking passes; and, the requirement to maintain spare parking passes.

Through email communication, telephone conversations, and a "frequently asked questions" document, management distributed and communicated to the parking administrators and Industry Canada employees that Industry Canada was transferring its employee parking services to private operators. In addition, parking administrators noted that they had received a notification and been informed of the new parking procedure requirements. The audit also found that, although they were aware of the new procedures, due to low volumes of parking spaces and infrequent changes to parking space allocations, not all regions deemed it necessary to implement the usage of the new tracking log, which is a key control to ensure parking-related payroll deduction requests are actioned.

Finding 3.0: Application of Parking Procedures

In reviewing the application of parking procedures, we expected to find that the controls established through the new parking administration procedures were appropriately applied to ensure that any new parking space allocations were processed accurately. We also expected to find that supporting rationale and approvals for parking administration decisions were documented and retained.

Parking procedures are documented and from a design perspective, were found to include key control activities such as monthly reconciliations, sign-offs of the monthly reconciliations by HRB and FM, and the retention of key supporting documentation and rationale to support decisions. Management took actions to confirm that market rates were applied to all parking tenants, effective July 1, 2010.

The audit found minor instances where sufficient supporting documentation was not retained (or not on file). Evidence demonstrating acknowledgement of payroll deduction request was not always kept (for 6 out of 21 relevant actions tested in this audit – it should be noted that this was early in the implementation of the new procedures), and, in one instance, a parking application form was not completed. Additionally, it was found that, although waitlists are maintained for the CD Howe location, documentation is not retained to support the assignment of spaces to individuals on the waitlist.

3.3 Recommendation

Given the impending transition in parking administration to the private sector, management should assess the improvement opportunities noted through this audit to determine appropriate actions that may be required. Potential areas of improvement are outlined below:

1. As additional direction is provided by TBS in December 2010 regarding 'Duty to Accommodate' requirements, confirm existing parking tenants' medical status and implement a procedure for re-confirmation of Provincial Medical Certificates that have a periodic expiry date.
2. Ensure procedures are clearly documented and communicated with respect to: the determination and treatment of EX-equivalent applicants; notification of termination of parking passes; and maintenance of spare parking passes.
3. Further reinforce the importance of applying the new parking payroll procedures (specifically the tracking log), specifically to regional offices.
4. Retain sufficient supporting evidence to demonstrate application of the new parking procedures and to demonstrate rationale for parking allocation decisions for employees on waitlists.

Appendix A: Audit Criteria

Appendix B: Management Action Plan

¹ In December 2010, additional clarification is expected from the TBS Office of the Chief Human Resources Officer on Industry Canada's 'Duty to Accommodate' obligations for medical/disabled employees. (Back to reference 1)

² Parking actions include "commence", "amend", "stop" actions (Back to reference 2)

³ In December 2010, additional clarification is expected from the TBS Office of the Chief Human Resources Officer on Industry Canada's 'Duty to Accommodate' obligations for medical/disabled employees. (Back to reference 3)

⁴ Audit criteria are aligned with Treasury Board of Canada Secretariat Core Management Controls (CMC). (Back to reference 4 )