In 2011, the Auditor General initiated a project known as “continuous controls monitoring” at the City. In general terms, the purpose of the project is to identify and isolate unusual, specific transactions throughout the City (such as excessive overtime in payroll) and forward this information to management for further review and analysis. The transactions are extracted from the financial information system using specialized audit software. Transactions initially selected for continuous controls monitoring at the City included employee overtime, mileage reimbursements, meal allowance and stand by pay.
The benefits of continuous controls monitoring is the ability to:
- Monitor every transaction throughout the organization
- Automate routine audit testing
- Detect anomalies that may trace fraud, abuse or errors
- Identify areas where internal controls are inadequate or need to be improved
Al its meeting of April 30, 2012, the Auditor General advised the TTC Audit Committee that a similar process was being undertaken at the TTC. At the request of the TTC Audit Committee, a status report on the project was provided at the Committee’s July 26, 2012 meeting.
This current report provides the result of our analysis of TTC payroll for the 6 months ended June 30, 2012 and the 12 months ended December 31, 2011. Exception reports relating to employees’ payroll related expenses were provided to TIC management in July 2012. The TTC Chief Executive Officer was requested to review the extent of overtime and other payroll related expenses and determine whether or not there were opportunities to reduce these expenditures and to ensure that appropriate controls are in place lo manage these expenditures.
We have reviewed information provided by management in response to the documentation provided by the Auditor General’s Office. In all cases, management indicated that the levels of overtime were appropriately approved and operationally required. In a number of cases however, it was indicated that overtime amounts would not recur in the future.
Continuous controls monitoring has led to an increased focus on the management of overtime. The Chief Executive Officer has indicated to us that “This issue is a priority area for me as Chief Executive Officer and it is a standing agenda item on the recently introduced monthly Performance Executive Meeting”.