Table of Contents

Audit report

Audit of Travel, Conference and Hospitality Expenses
Project #07/08 01-01

Prepared by the Audit and Evaluation Directorate

March 2008

• Executive Summary
• Description of Mandate
• 1.0 Introduction
  • 1.1 Audit Project Rationale
  • 1.2 Audit Objective
  • 1.3 Scope
  • 1.4 Methodology
  • 1.5 Background
• Audit findings
• 2.0 Travel Expenses
  • 2.1 Travel Expenses Profile
  • 2.2 Description of Sample Examined
  • 2.3 Travel Authority and Advance
  • 2.4 Travel Expense Claim
  • 2.5 Proactive Disclosure of Travel Expenses
  • 2.6 Account Verification
• 3.0 Conference Expenses
  • 3.1 Conference Expenses Profile
  • 3.2 Planning of Public Event System
  • 3.3 Requisitions for Payment
• 4.0 Hospitality Expenses
  • 4.1 Profile of Hospitality Expenses
  • 4.2 Hospitality Approval Request
  • 4.3 Eligibility of Hospitality Expenses
  • 4.4 Proactive Disclosure of Hospitality Expenses
• Appendix A – Audit Objectives and Criteria
• Appendix B – Management Action Plan

Executive Summary

The overall objective of this audit project was to determine whether the existing management framework for travel, conference and hospitality expenses is satisfactory and in compliance with the Treasury Board Secretariat (TBS) Travel Directive, the TBS and Canadian Space Agency (CSA) Hospitality policies, the CSA Policy on the Planning of Conferences and the Financial Administration Act (FAA).

Our view is that management has introduced a satisfactory control structure for travel, conference and hospitality expenses.

More specifically with respect to conferences, our review showed that the events attended by participants were included in the Planning of Public Events (PPE) system, and were approved prior to the event and properly supported by vouchers.

In general, the hospitality expenses examined were eligible and consistent with the TBS and CSA Hospitality policies.

However, management should pay special attention to the following:

• Ensure that expenses for travel on government business by non-staff members are properly coded in order to provide accurate financial information.

• Remind travellers and their managers of the importance of:

  • completing all relevant sections of the Travel Authority and Advance (TAA) form and listing the justifications required for every type of non-standard expense, as well as any periods of personal travel,
  • allowing enough time before the approval of the TAA form and the scheduled travel date in order to be able to obtain the lowest airfares,
  • properly completing the non-staff letter of authorization, and
  • completing the travel expense claim in compliance with the TBS Travel Directive, particularly with respect to the amounts being claimed for meals and incidentals, or for non-standard accommodation, which must be justified at all times, and where required, to indicate on the claim any personal travel by the traveller during trips for which a claim is being submitted.
    
    

• Introduce the required controls to ensure that all travel and hospitality expenses are disclosed on the CSA Web site.

• Following the analysis of statistical reports from the central accounting verification system, introduce appropriate measures to reduce the current 45% error rate in travel expense claims to bring the rate closer to the maximum acceptable error rate of 10%.

This internal audit was carried out in compliance with the TBS Policy on Internal Audit and the Standards for the Professional Practice of Internal Auditing, published by the Institute of Internal Auditors. In our professional judgment, the audit procedures being followed and the evidence gathered are appropriate and sufficient to support the accuracy of the conclusions reached in this report. The conclusions are based on a review of the situations selected on the basis of the audit criteria established.

Description of Mandate

1.0 Introduction

1.1 Audit Project Rationale

The Audit and Evaluation Directorate's audit plan provided for an audit of travel, conference and hospitality expenses in the 2007-2008 fiscal year.

1.2 Audit Objective

The overall objective of this audit project was to determine whether the existing management framework for travel, conference and hospitality expenses is satisfactory and in compliance with the TBS Travel Directive, the TBS and CSA Hospitality policies, the CSA Policy on the Planning of Conferences and the FAA.

Appendix A provides more specific information about the audit objectives and the criteria used.

1.3 Scope

This audit covers travel, conference and hospitality expenses incurred during the 2006-2007 fiscal year.

1.4 Methodology

This audit engagement was carried out in accordance with audit standards set forth in the TBS Policy on Internal Audit, and the Standards for the Professional Practice of Internal Auditing, published by the Institute of Internal Auditors, which require that audit objectives be based on audit criteria.

Audit standards also require that the audit engagement be conducted in a methodical manner, according to a process that includes:

• a planning and preliminary review phase
• an execution phase, and
• the reporting and disclosure of results

Various audit procedures were used, including interviewing employees and reviewing and analysing documents, records and reports.

1.5 Background

An audit of travel expenses management was conducted in 2002. After the report was submitted in November 2002, many travel expense management practices were reviewed, as indicated in the annual follow-up reports of management action plans.

For the fiscal year ended on March 31, 2007, the CSA spent $6,128,295 on travel expenses, $197,733 on conference expenses and $109,402 on hospitality expenses.

In 2006-2007, 4,210 travel expense claims were submitted to the accounting services for verification and payment.

Audit Findings

2.0 Travel Expenses

For the fiscal year ended March 31, 2007, the CSA spent $6,128,295 on travel expenses.

2.1 Travel Expenses Profile

Our analysis of travel expenses showed that 68% of these expenses were incurred for travel on government business by public service servants, for business trips authorized by the employer.

Table 1 provides details of travel spending incurred in the 2006-2007 fiscal year, as well as the estimated number of travel expense claims filed.

Tableau 1 – Travel Expenses
Ledger Account	Travel Expenses	Number of Claims
Travel for Conferences	$816,413	289
Travel on Official Government Business	$4,160,664	3,074
Taxis on Official Government Business	$4,422	86
Travel for Training	$313,959	485
Travel for Conference – Non public Servants	$51,068	25
Travel on Official Government Business – Non public Servants	$781,116	240
Other	$653	11
Total	$6,128,295	4,210

For comparison purposes, the travel expenses incurred at the time the last audit was conducted, for the 2001-2002 fiscal year, totalled $5,605,859.

For information, we also broke down the travel expenses by directorate / branch, as well as by ledger account, as shown in Table 2. We also subdivided the table into two sections, with the first for programs and the second to include all corporate sectors.

This breakdown shows that 85% of travel expenses were incurred by the Agency's program sectors.

Our analysis of the Table 2 data also showed that expenses were very high for Travel on Official Government Business of Non public Servants in the Space Science Directorate, compared to similar expenses in the other directorates. Our audit of these expenses showed that $430,739 had been incorrectly coded. This amount consisted of four payments to the National Research Council of Canada (NRC) for these Interdepartmental Memoranda of Understanding:

• Hubble Funding
• Ultra-Violet Imaging Telescope (UVIT)
• Far Ultraviolet Spectroscopic Explorer (FUSE)

Those activities for which NRC was responsible included data archiving, infrastructure development to support space astronomy missions, and the development of virtual observatory capacity. These activities are unrelated to Travel on Official Government Business of Non public Servants.

Recommendation

Finance directorate

Ensure that travel expenses are properly coded in order to provide accurate financial information.

2.2 Description of Sample Examined

As the objective of this audit was to determine whether the current management framework for travel expenses was satisfactory and in compliance with the TBS's Travel Directive, we randomly selected 21 travel expense claims among the 4 main General Ledger accounts related to travel expenses.

Table 1 shows the population in terms of number of travel expense claims and value of expenses, from among which we made our selection for the purposes of this audit.

The travel expense claims selected for audit are broken down as follows.

Tableau 3 – Audit Sample
Ledger Account	Number of Claims	Value of Claims
Travel for Conferences	6	$45,220
Travel on Official Government Business	10	$49,986
Travel for Training	1	$6,729
Travel on Official Government Business – Non public Servants	4	$13,397
Total	21	$115,332

Our review of a sample of travel expense claims for the 2006-2007 fiscal year showed the following.

2.3 Travel Authority and Advance

The Travel Authority and Advance (TAA) form is essential for planning and monitoring travel expenses because it contains information relevant to the various facets of travel: length of trip, mode of transportation, class, accommodation, meals and incidentals, as well as all other expenses involved in the trip. This information makes it possible for the manager to approve travel conditions, monitor the financial commitments and ensure that the expenses being claimed were planned for and eligible for reimbursement.

The TBS Travel Directive states the following with respect to the TAA.

• The employer has the responsibility to authorize and determine when business travel is necessary, and to ensure that all travel arrangements are consistent with the provisions of this Directive. Following consultation between the employer and the employee, the determination of travel arrangements shall best accommodate the employee's needs and interests and the employer's operational requirements.

• Business travel shall be authorized in advance in writing to ensure all travel arrangements are in compliance with the provisions of this directive. In special circumstances, travel shall be post authorized by the employer.

Our review of a sample of travel expense claims showed that out of the 17 claims for which a TAA had been completed, there were anomalies in the TAA in 13 instances (see Table 4).

Tableau 4 – Anomalies Observed in Our Review of TAAs
Nature of Anomalies	Number of Cases
Missing information (mode/class/time)	6
Personal travel not indicated	4
Justification missing – non-standard items	5
Non eligible or missing expense	3
Manager signed in wrong place	2
Manager exceeded delegated authority	1
Changes to travel dates without change made to TAA	1

With the exception of one instance in which the manager failed to include the date, the TAAs had been signed by the managers prior to the travel date (based on the date entered by the manager).

Air travel

We further noted that of the 18 travel expense claims reviewed for which there was air travel, eight TAAs had been approved less than 14 days prior to the start of the trip, leaving little time to properly plan the trip to reduce costs. Indeed, we found that the prices of airline tickets varied considerably depending on whether the reservation was made a reasonable amount of time before the trip or at the last minute. For example, a ticket for Russia for which there was TAA approval more than 14 days prior to the departure date cost $1,516, whereas a ticket for the same destination for which TAA approval was eight days prior to the scheduled departure date cost $9,245.

In view of the fact that annual spending on airline tickets is approximately $2.4 million, or about 40% of all travel expenses, it would be worthwhile to look into potential savings that could materialize by planning trips in advance.

On this score, the TBS Travel Directive states that the standard for air travel is economy class, that the lowest available airfares appropriate to particular itineraries are to be sought and that bookings are to be made as far in advance as possible.

Non public servant letter of authorization

Where the traveller is not a public servant, a letter of authorization must be completed and approved by the manager.

In connection with this, the person in charge of travel at CSA on June 8, 2007 sent all employees a memorandum entitled "Update on travels for staff and non-staff." This update was to inform all employees that:

• a new version of the non public servant letter of authorization had been prepared, and
  
  
• as the signature on the non public servant letter of authorization consisted of a contractual engagement with the traveller, as of April 15, 2007 all letters of authorization had to be signed by a contracting officer or the Senior Vice-President.

Our review of four non public servant travel expense claims showed that two of the four authorization letters contained errors in the rates authorized for the purposes of the claims. In these two specific cases, the travel claims contained errors.

Recommendations

Finance directorate

1. Remind travellers and their managers of the following:
   • Ensure that all relevant sections of the TAA are completed and indicate the justifications required for all types of non-standard expenses as well as any personal travel periods.
   • Whenever possible, allow for sufficient time between the approval of the TAA and the scheduled travel date in order to be able to benefit from the lowest possible airfares.
   • Ensure that the non public servant letter of authorization is completed properly.
     
     
2. Inform travellers concerned of any anomalies found on TAAs or non public servant letters of authorization and determine the best way of proceeding to ensure that TAAs/letters of authorization are properly prepared. For example, any improperly completed TAA or letters of authorization could be returned to the traveller or manager for corrective action.

2.4 Travel Expense Claim

To receive reimbursement for their travel expenses, travellers must prepare and submit to their manager for approval, a travel expense claim accompanied by all required vouchers, including the original invoices. Once the manager has examined and approved the claim under section 34 of the FAA, it is sent to the finance clerk for processing and verification before payment is made.

Our review of 21 travel expense claims showed that for most of them, expenses that required vouchers did indeed have them. In a few instances, statutory declarations were sworn when there were no vouchers.

On the other hand, we noted a number of cases in which the amounts on the travel expense claim did not correspond to the TBS Travel Directive.

• Incorrect rate claimed for meals and incidentals (four cases);

• Non-standard accommodation claimed without support in the form of a written justification nor in the travel expense claim nor in the TAA (two cases).

In addition, in four instances, a personal trip made by a traveller was not indicated on the travel expense claim.

In two cases, corrections were made to the rates for meals and incidentals after the account verification was done by the accounting clerks.

Recommendations

Finance directorate

1. Remind travellers and their manager that they need to complete the travel expense claim in compliance with the TBS Travel Directive, particularly with respect to
   • the rates claimed for meals and incidentals;
   • non-standard accommodation, which must always be justified; and
   • where required, indicate on the travel expense claim any personal trips made by the traveller during a trip for which a claim is being submitted.
     
     
2. Inform the travellers concerned of any anomalies observed on travel expense claims and determine the best way of ensuring that the claims meet the requirements of the TBS Travel Directive.

2.5 Proactive Disclosure of Travel Expenses

The Government of Canada has adopted a set of measures to further strengthen the transparency, supervision, accountability and management across the public sector. Among these measures, the government has introduced a proactive disclosure policy that requires mandatory quarterly publication of travel and hospitality expenses of its senior government representatives.

Information about expenses must be posted on the Web site within 30 days following the end of each reporting period. This requirement came into force on December 12, 2003, and required the first publication of such information by March 31, 2004.

In keeping with this policy, CSA engages to publicly post and regularly update the travel expenses of its senior representatives.

During the period audited, from April 2006 to March 2007, 63 travel expenses worth a total of $101,090 were disclosed on the CSA Web site. These expenses were incurred by the Acting President and the Vice-President, Science, Technology and Programs (VPSTP).

On the basis of our audit, we determined that all travels made by CSA senior representatives were published on the CSA Web site and that the amounts disclosed matched the amounts spent on travel expenses, except for the following.

Transaction fees

The amount for the airline ticket shown on travel expense claims generally does not include the transaction fees invoiced by the provider, American Express – Travel AcXess, when the reservation is made. These fees are approximately $45 per transaction. In many instances, these fees are not shown on the travel expense claim along with the prepaid airline ticket amount because the traveller does not necessarily think to include these fees on travel expense claims.

Travel-related financial information

Furthermore, when the person responsible for providing financial information in order to disclose travel expenses searches in the financial system to obtain the total cost of a trip, problems are encountered because it is difficult to identify expenses related to a specific travel in the financial system.

Indeed, there is no standard process within the sector financial operations team for entering a commitment number for travel reservations made using the Travel AcXess travel provider. Some clerks use the number assigned by the travel service provider (the "TAN"), whereas other clerks use the "TAN" and add a number that corresponds to the fiscal year, while other clerks use a manual commitment number.

Standardizing the travel identification procedure would give the person responsible for supplying financial information for proactive disclosure of travel expenses readier access to reliable information.

Recommendations

Finance directorate

1. Ensure that all travel-related expenses are included in the proactive disclosure of travel expenses on the CSA Web site.

2. To facilitate the compilation of financial data for the proactive disclosure of travel expenses, consider standardizing the procedure used to record travel-related financial commitments.

2.6 Account verification

Travel expense claims are verified in compliance with the CSA Policy on Account Verification. A sampling plan has been established and claims are verified in accordance with the plan.

All information pertaining to travel expense claims that have been audited is entered into a database, called the central accounting verification system (CAVS). When errors are identified in the travel expense claims, they are entered into the CAVS, and if corrections need to be made, an e mail to which a CAVS report is attached is sent to travellers to inform them of changes made to their claim. If corrections and a manager's signature are required, the travel expense claim may be returned to the traveller.

Following the audit of travel expenses conducted in 2002-2003, the follow-up of management action plans on March 31, 2004 had noted that the following actions had been taken further to the recommendations concerning account verification:

• The sampling system was made operational and made it possible to prepare non-compliance reports.
• The analysis of the audit results makes it possible to identify appropriate measures.
• In view of the account verification results, mandatory information sessions were arranged for staff members identified in the course of the expense accounts verification whose error rates were high.
• After the information sessions, new procedures were also recommended to inform managers of corrections made to their employees' claims, and asking them to approve them once again.

Our audit determined that the sampling system was indeed operational and that it could produce non-compliance reports.

In addition, travel information sessions for travellers and their managers were held in 2005.

Since then, there have not been any information sessions, regardless of how high the error rate identified in the verification of travel expense claims. However, a person is available every Tuesday from 9:30 a.m. to 10 a.m. to answer travellers' questions. These information sessions are available to all travellers and their managers. On the basis of the information obtained from the person who gives these sessions, an average of two people per week come to ask for information.

Furthermore, according to the information gathered, contrary to what was mentioned in the audit follow-up of March 31, 2004, managers are not being advised directly when errors or anomalies are observed in travel expense claims submitted by the travellers reporting to them. As mentioned above, only the travellers are being advised and if a manager's approval is required, it is up to the traveller to advise the manager as required.

We reviewed the non-compliance reports generated by the CAVS for last year (from December 2006 to March 31, 2007) as well as for the current year (from April 1 to November 30, 2007). Table 5 shows the error rate per year by travel category.

Tableau 5 – Error Rate Identified Following Account Verification
	2006-2007 Year		2007-2008 Year
Travel Category	Number of Claims Verified	Error Rate	Number of Claims Verified	Error Rate
Between $1,000.01 and $2,000.00	77	49.4%	182	44.5%
Between US$1,000.01 and $2,000.00	3	33.3%	14	35.7%
Below $1,000	112	33.9%	284	34.5%
Non public Servant	38	47.4%	73	43.8%
Overseas	64	71.9%	178	61.8%
Over $2,000	29	58.6%	77	46.8%
Total	323	48.9%	808	44.8%

Our review showed that the error rate is high compared to the Maximum Acceptable Error Rate (MAER) of 10% for all types of payment, as set out in the CSA Policy on Account Verification. It is also important to mention that from April 1 to November 30, 2007, downward adjustments to claims totalling $36,661 were made by accounting services clerks following account verification.

Since the introduction of the CAVS and the release of the non-compliance reports, apart from the weekly information sessions, no action has been taken by accounting services to concretely reduce the high error rate noted during the verification of travel expense claims, according to the information we received.

Recommendation

Finance directorate

Further to the analysis of CAVS statistical reports, appropriate measures should be implemented to reduce the travel expense claim error rate to bring it closer to the MAER.

3.0 Conference Expenses

The CSA's current Policy on the Planning of Conferences was adopted on January 15, 2008. It replaced the October 29, 2003 policy.

Among other things, the new policy identifies the reasons why CSA employee attendance at conferences is important, i.e. because:

• Space-related conferences are an excellent opportunity to promote CSA achievements and to exchange ideas with scientists, engineers, researchers and others who work in the space sector;

• Space-related conferences provide development and networking opportunities for CSA staff, enabling them to keep abreast of science, engineering and technology breakthroughs, programmatic changes and evolving policy direction in areas of interest to the Agency and its stakeholders, and

• Space-related conferences are also a mean for the CSA to increase its visibility and broaden its sphere of influence among stakeholders.

Compared to the previous policy, a number of restrictions were added concerning the maximum number of participants who can attend various types of conferences.

3.1 Conference Expenses Profile

In 2006-2007, conference spending totalled $197,733.

Table 6 provides details about the breakdown of these expenses between the various CSA directorates/branches.

Tableau 6 – Conference Expenses 2006-2007
Directorate/Branch	Amount	%
Vice-President, STP	$2,310	1,2%
Space Science	$22,829	11,6%
Space Technologies	$91,335	46,2%
Space Programs	$4,988	2,5%
Space Operations	$38,003	19,2%
Canadian Astronauts	$4,265	2,2%
Subtotal	$163,730	82,9%
President's office	$843	0,4%
Senior Vice-President	$3,790	1,9%
Finance	$4,353	2,2%
IM/IT	$660	0,3%
Human Resources	$400	0,2%
Security and Facilities	-	0,0%
Communications	$5,791	2,9%
Policy, Planning and Relations	$9,656	4,9%
External Relations	$8,510	4,3%
Total	$197,733	100,0

On the basis of this information, we can see that most conference expenses over the past fiscal year were incurred by employees in the various programs.

3.2 Planning of Public Event System

In order to be able to manage and plan the public events attended by CSA employees, The Communications and Public Affairs Directorate established a Planning of Public Events (PPE) system. Details concerning the conferences scheduled for the year are entered into the PPE system at the beginning of the year. All this information gathered consists of the conference plan. The Executive Committee approves the conference plan annually, reviews it quarterly and approves attendance changes as required.

Tableau 7 – Number of Employees Per Directorate/Branch Versus Number of Events Attended by these Employees
Directorate/Branch	Number of Employees	Number of Events	Number of Events Per Employee
Vice-President, STP	6	7	1.167
Space Science	31	66	2.129
Space Technologies	132	172	1.303
Space Programs	46	11	0.239
Space Operations	148	70	0.473
Canadian Astronauts	19	6	0.316
Subtotal	382	332	0.869
President's Office	7	2	0.286
Senior Vice-President	5	-	-
Finance	68	-	-
IM/IT	75	-	-
Human Resources	28	-	-
Security and Facilities	16	-	-
Communications	28	4	0.143
Policy, Planning and Relations	13	9	0.692
External Relations	11	17	1.545
Total	633	364	0.575

Our analysis of information from the PPE system for the 2006-2007 fiscal year shows that the number of events attended per employee varies from 0.143 (Communications) to 2.129 (Space Science).

Our analysis of information from the PPE system also revealed that 57 employees attended the ASTRO 2006 conference held in Montreal, 30 the IAC 2006 conference in Valencia and 19 the SPACE OPS 2006 conference in Rome.

As mentioned in section 3.0 of this report, the CSA's new Policy on the Planning of Conferences adopted in January 2008 now places restrictions on the number of attendees per conference. For example, the new policy places a limit of 12 persons who can attend broad interest conferences like the IAC (International Aeronautical Congress).

Apart from the ratios that we mentioned in Table 7, Table 8 provides information about the number of employees who attended one or more conferences during the 2006-2007 fiscal year.

Tableau 8 – Number of Employees Receiving Approval for One or More Events in a Given Year
Number of events	Number of Employees Receiving Approval for the Number of Events Indicated
6 events	1
5 events	4
4 events	10
3 events	28
2 events	57
1 event	100

The table shows that several employees attended two or more events during the year.

3.3 Requisitions for Payment

Our review of payment requisitions for attendance at events showed that, in general, the events attended by participants had been entered into the PPE system and had been approved prior to the event.

Furthermore, all payment requisitions examined were properly supported by vouchers and approved by a person with appropriate financial signing authority.

4.0 Hospitality Expenses

For the 2006-2007 fiscal year, hospitality expenses totalling $109,402 were incurred.

4.1 Profile of Hospitality Expenses

The breakdown of hospitality expenses as set out in Table 9 shows that the Space Science and Space Technologies directorates account for a major share of hospitality expenses.

Tableau 9 – Hospitality Expenses 2006-2007 by Directorate/Branch
Directorate/Branch	Expenses
Vice-President, STP	$2,465
Space Science	$19,858
Space Technologies	$20,383
Space Programs	$5,948
Space Operations	$5,402
Astronautes canadiens	$10,678
Subtotal	$64,734
President's Office	$11,571
Senior Vice-President	$112
Finance	$1,593
IM/IT	$3,296
Human Resources	$7,392
Security and Facilities	$195
Communications	$579
Policy, Planning and Relations	$6,588
External Relations	$13,342
Total	$109,402

Moreover, our analysis determined that $13,342 in hospitality expenses incurred by Policy and External Relations Directorate were overestimated by $5,711 because of a coding error. A hospitality expense of $7,611 was in fact included when in reality it ought to have been entered as $1,900. The difference should have been coded to another ledger account. As this expense was paid under an interdepartmental settlement because there was a Memorandum of Understanding (MOU) between departments, it did not go through accounting services for the purpose of verifying accounts prior to payment. The expense has, however, transited by the office of the sector finance operations clerk before being paid.

Recommendations

Finance Directorate

Ensure that hospitality expenses are properly coded in order to provide accurate financial information.

4.2 Hospitality Approval Request

Under the CSA's Hospitality Policy, all hospitality expenses must be approved ahead of time, either by the Minister for hospitality activities costing more than $5,000, by the President for activities exceeding $1,500 and equal to or less than $5,000, or by the delegated manager for hospitality expenses of up to $1,500, excluding types of hospitality events that require approval by the President, regardless of the amount.

For approval, a Hospitality Approval Request form must always be completed and signed by someone with the required delegated authority before an event is held.

For audit purposes, we selected the payment requisitions for the largest amounts. Our review of seven hospitality expense requisitions for payment totalling $27,890, or 25% of our population, revealed shortcomings in four of the requests, as follows.

• There was no Hospitality Approval Request form completed for an hospitality claim totalling $5,222.35 for a reception held in Florida in connection with the launch of the STS-115. According to information obtained, the transaction took place in two steps; an advance was paid in March 2006 and the actual transaction was recorded as hospitality expenses in April 2006. It is on this latter date that the Hospitality Approval Request form ought to have been completed and signed by someone with the required delegated authority.

• No Hospitality Approval Request form was completed for a $7,611 expense in connection with a Memorandum of Understanding between the CSA and the Department of Foreign Affairs / Embassy of Canada in Cairo, Egypt. This MOU provided that the CSA would pay the expenses incurred for a mission in Egypt. In light of the information included in the MOU and the documents attached to the interdepartmental payment request, we determined that in addition to the fact that the approval request form was missing, only $1,900 was in fact eligible as hospitality expenses.

• Two Hospitality Approval Request forms were completed for a transaction worth a total of $4,626 in connection with the Radarsat-2 Symposium. One of the forms, covering hospitality expenses of $73, was approved by someone with delegated authority 15 days after the event, whereas it ought to have been approved prior to the event. The other form, for hospitality expenses totalling $4,553, was not signed in section 4.2 "Initiation of expenditure," although the President ought to have signed given the amount of the expense.

• A hospitality expense of $585 was incurred in connection with the RADARSAT Constellation Mission Phase A2 Final Review event. Sixty people, of which 37 were from the federal government, attended this activity. Under Article 3.1.2 of the CSA's Hospitality Policy, the President must give prior approval to hospitality activities when the number of government employees attending is likely to exceed the number of persons not working for the government, and where the total cost of the event is above $500. As over 50% of the attendees at the above event were government employees and the expense exceeded $500, the Hospitality Approval Request form ought to have been approved by the President. In fact, it was approved by the delegated manager, namely the Director General of the branch in question.

Recommendations

Finance Directorate

1. When accounts are being verified by sector finance operations and accounting services clerks, ensure that there is a Hospitality Approval Request form duly completed and signed by a person with the required delegated authority for each hospitality expenses payment request.

2. Remind managers of their obligation to authorize hospitality expenses ahead of time by completing the Hospitality Approval Request form.

4.3 Eligibility of Hospitality Expenses

Our review of a sample of hospitality expenses showed that, in general, the expenses examined were eligible and complied with the TBS and CSA Hospitality policies.

4.4 Proactive Disclosure of Hospitality Expenses

The Government of Canada has adopted a set of measures to further strengthen the transparency, supervision, accountability and management across the public sector. Among these measures, the government has introduced a proactive disclosure policy that requires mandatory quarterly publication of travel and hospitality expenses of its senior government representatives.

Information about expenses must be posted on the Web site within 30 days following the end of each reporting period. This requirement came into force on December 12, 2003, and required the first publication of such information by March 31, 2004.

In keeping with this policy, CSA engages to publicly post and regularly update the hospitality expenses of its senior representatives.

During the period audited, from April 2006 to March 2007, 18 hospitality expenses totalling $2,670 were disclosed on the CSA Web site. These expenses were incurred by the Acting President and the VPSTP.

Our audit of hospitality expenses incurred and recorded in the financial system revealed that seven hospitality expense claims totalling $473 (excluding taxes) had not been disclosed as required.

Recommendations

Finance directorate

Introduce the controls required to ensure that all hospitality expenses incurred are disclosed on the CSA Web site.

Appendix A - Audit Objectives and Criteria

The overall objective of this audit project is to determine whether the existing management framework for travel, conference and hospitality expenses is satisfactory and in compliance with the TBS Travel Directive, the TBS and CSA Hospitality Policies and the FAA.

More specifically, the following objectives were set for the audit.

Objective #1	Ensure that there is a satisfactory travel expense management framework in place.
	Criterion 1.1	Travel authorities are completed and approved prior to each trip.
	Criterion 1.2	Travel authorities are approved by someone who has required delegated spending authority for travel.
	Criterion 1.3	Expenses claimed on travel expense claims match the expenses anticipated in the travel authority.
	Criterion 1.4	Expenses claimed on travel expense claims are consistent with the TBS Travel Directive with respect to meals and incidentals, the kilometric rate and the maximum authorized for accommodation.
	Criterion 1.5	Expenses claimed on travel expense claims are properly supported by vouchers.
	Criterion 1.6	Someone with the required delegated financial authority certifies the travel expense claims in compliance with section 34 of the FAA.
	Criterion 1.7	The accounting services clerks verify travel expense claims in compliance with section 33 of the FAA by means of the sampling plan.
	Criterion 1.8	The procedures and systems in place ensure the accuracy of travel expenses of CSA senior representatives disclosed on the CSA Web site in conformity with TBS disclosure requirements.

Objective #2	Ensure that there is a satisfactory conference expense management framework in place.
	Criterion 2.1	Conference attendance requests are entered into the Planning of Public Events (PPE) system as required by the CSA Policy on the Planning of Conferences.
	Criterion 2.2	Requests to attend conferences entered into the PPE system are approved prior to the event.
	Criterion 2.3	Requisitions for payment for conference expenses are supported by appropriate vouchers.
	Criterion 2.4	Someone with the required delegated financial signing authority certifies the requisition for payment of conference expenses in compliance with section 34 of the FAA.
	Criterion 2.5	Accounting services clerks verify the requisitions for payment for conference expenses in compliance with section 33 of the FAA by applying the sampling plan.

Objective #3	Ensure that there is a satisfactory hospitality expense management framework in place.
	Criterion 3.1	A Hospitality Approval Request form is completed and approved by someone with the required delegated financial authority before incurring the hospitality expenses.
	Criterion 3.2	The hospitality expenses incurred and claimed are eligible in compliance with the TBS and CSA Hospitality policies.
	Criterion 3.3	The hospitality expenses claimed are supported by appropriate vouchers.
	Criterion 3.4	Someone with the required delegated financial authority certifies the requisition for payment of hospitality expenses in compliance with section 34 of the FAA.
	Criterion 3.5	The accounting services clerks verify the requisitions for payment of hospitality expenses in compliance with section 33 of the FAA by applying the sampling plan.
	Criterion 3.6	The CSA Hospitality Policy is in line with the corresponding TBS policy.
	Criterion 3.7	The procedures and systems in place ensure the accuracy of hospitality expenses of CSA senior representatives disclosed on the CSA Web site, in conformity with TBS disclosure requirements.

Appendix B – Management action plan

Réf.	Recommendation	Designated Authority		Action Plan Details	Time Frame
		Organization	Function
2.0 Travel Expenses
2.1 Travel Expenses Profile
Ensure that travel expenses are properly coded in order to provide accurate financial information.		Finance Directorate	Senior Manager, Sector Financial Operations	An e-mail will be sent to clients to explain the importance of using the proper financial coding in order to provide financial information that is as accurate as possible for the annual financial coding update.	April 30, 2008
2.3 Travel Authority and Advance
i) Remind travellers and their managers of the following: Ensure that all relevant sections of the TAA are completed and indicate the justifications required for all types of non-standard expenses, as well as any personal travel periods. Whenever possible, allow for sufficient time between the approval of the TAA and the scheduled travel date in order to be able to benefit from the lowest possible air fares. Ensure that the non public servant letter of authorization is completed properly.		Finance Directorate	Manager, Accounting, Financial Reporting and Policies and Senior Manager, Sector Financial Operations	This responsibility must be shared between Finance and the managers of the various sectors. A reminder will nevertheless be sent by Finance to travellers and managers so that they can all handle their appropriate responsibilities.	March 31, 2008
ii) Inform travellers concerned of any anomalies found on TAAs or non public servant letters of authorization and determine the best way of proceeding to ensure that TAAs/letters of authorization are properly prepared. For example, any improperly completed TAA or letters of authorization could be returned to the traveller or the manager for corrective action.		Finance Directorate	Manager, Accounting, Financial Reporting and Policies and Senior Manager, Sector Financial Operations	A new procedure will be introduced requiring that, whenever finance clerks find anomalies while checking a travel authority, the traveller be notified and corrections made to the TAA.	April 30, 2008
2.4 Travel Expense Claims
i) Remind travellers and their manager that they need to complete travel expense claims in compliance with the TBS Travel Directive, particularly with respect to the following. the rates claimed for meals and incidentals; non-standard accommodation, which must always be justified; and where required, indicate on the travel expense claim any personal trips made by the traveller during a trip for which a claim is being submitted.		Finance Directorate	Manager, Accounting, Financial Reporting and Policies and Senior Manager, Sector Financial Operations	Include these requirements in the reminder under 2.3 i).	March 31, 2008
ii) Inform travellers concerned of any anomalies observed on travel expense claims and determine the best way of ensuring that travel expense claims meet the requirements of the TBS Travel Directive.		Finance Directorate	Manager, Accounting, Financial Reporting and Policies and Senior Manager, Sector Financial Operations	1) Travellers are informed by the accounting clerk, through the CAVS system, of any anomalies observed on travel expense claims. 2) The CAVS provides us with statistics about the most common errors, and we will send out reminders or even provide training, if necessary, to reduce the number of anomalies. A new procedure will be introduced requiring that whenever a finance clerk finds anomalies while checking a travel expense claim, the traveller be notified and corrections be made to the claim.	Done (100% complete)           April 30, 2008
2.5 Proactive Disclosure of Travel Expenses
i) Ensure that all travel-related expenses are included in the proactive disclosure of travel expenses on the CSA Web site.		Finance Directorate	Manager, Accounting, Financial Reporting and Policies	The omissions usually involve the $45 Travel AcXess transaction fee. A new procedure has been established to prevent such omissions. SAP controls (Finance and GL) have been introduced.	Done (100% complete)
ii) To facilitate the compilation of financial data for the proactive disclosure of travel expenses, consider standardizing the procedure used to record travel-related financial commitments.		Finance Directorate	Manager, Accounting, Financial Reporting and Policies and Senior Manager, Sector Financial Operations	This improvement falls within the terms of reference of the commitment control committee (established under the procedures simplification plan), which has a representative from accounting and two SFO representatives.	April 30, 2008
2.6 Account Verification
Further to the analysis of CAVS statistical reports, appropriate measures should be implemented to reduce the travel expense claim error rate to bring it closer to the MAER.		Finance Directorate	Manager, Accounting, Financial Reporting and Policies	Review the types of errors in the CAVS to determine the error rate. 2) Identify frequent or high-risk errors. 3) Take corrective action in the form of reminders or training.	May 31, 2008
4.0 Hospitality Expenses
Profile of Hospitality Expenses
Ensure that hospitality expenses are properly coded in order to provide accurate financial information.		Finance Directorate	Senior Manager, Sector Financial Operations	1) Clarify the hospitality policy and identify the types of expenses that must be coded under hospitality. 2) Send a reminder to SFO and accounting clerks	May 31, 2008
4.2 Request for Approval of Hospitality Expenditure
i) When accounts are being verified by sector finance operations and accounting services clerks, ensure that there is a Hospitality Approval Request form duly completed and signed by a person with the required delegated authority for each hospitality expenses payment request.		Finance Directorate	Manager, Accounting, Financial Reporting and Policies and Senior Manager, Sector Financial Operations	Send a reminder to SFO and accounting clerks once the action identified in point 4.1 has been taken.	May 31, 2008
ii) Remind managers of their obligation to authorize hospitality expenses ahead of time by completing the Hospitality Approval Request form.		Finance Directorate	Senior Manager, Sector Financial Operations	Send a reminder to managers (re. 4.1 and 4.2 i).	May 31, 2008
4.4 Proactive Disclosure of Hospitality Expenses
Introduce the controls required to ensure that all hospitality expenses incurred are disclosed on the CSA Web site.		Finance Directorate	Manager, Accounting, Financial Reporting and Policies	The omissions result from the expenses paid by BMO. A new procedure has been established to prevent such omissions. Controls have been introduced at the President and VP's administrative assistant level, at the accounting clerk level and through SAP (financial centre and GL).	Done (100% complete)