The Auditor General’s Audit Work Plan included the development of a system of Continuous Controls Monitoring for selected City expenses. The objective of the Continuous Controls Monitoring Project is to develop reports on a regular basis to assist management in proactively monitoring financial transactions, detect expenses that appear unusual and identify areas where internal controls may be inadequate.
The Continuous Controls Monitoring process involves the ongoing and regular identification of unusual transactions in the City’s SAP financial information system. The Auditor General uses specialized proprietary audit data extraction software to assist in the continuous controls monitoring process.
The use of continuous controls monitoring was initiated by the Auditor General’s Office in early 2011. The initial expenses selected for the application of continuous controls monitoring were employee overtime and employee mileage reimbursements.
For 2011, employee overtime amounts in excess of 50 per cent of annual base salary and mileage reimbursement amounts exceeding $10,000 were identified and reviewed.
For the period January 1, 2011 to December 31, 2011, overtime expense decreased from approximately $45 million in 2010 to $41 million in 2011. Similarly, mileage reimbursement payments were reduced from approximately $4.2 million in 2010 to $3.9 in 2011.
As part of the continuous controls monitoring process, the City Manager was requested to review unusual levels of overtime and mileage reimbursements identified by the Auditor General. The City Manager was requested to report back to the Auditor General on the reasons for the overtime and mileage reimbursements identified. Management responses indicated that divisions are currently monitoring the level of overtime and mileage reimbursements on an ongoing basis as part of an effort to reduce operating budgets.