overtime audit report-e

8/13/2019 Overtime Audit Report-E

1/42

AUDIT OF OVERTIME

INTERNAL AUDIT REPORT

September 2007

Office of the Chief Audit ExecutiveCanadian International Development Agency


2/42

List of Acronyms and Abbreviations

Acronyms and Abbreviations Description

AIS/SAP Agency Information System

CPAG Corporate Planning Agency Group

CWP Costed Work Plans

ESS Employee Self-Service System

HR Human Resources

OT Overtime (cash or in-leave)

TB Treasury Board


3/42

TABLE OF CONTENT

ITEM Description Page Summary ...................................................................................................................................... 4

1.0 INTRODUCTION .......................................................................................................... 8

1.1 Background ...................................................................................................................... 81.2 Mandate............................................................................................................................ 91.3 Objectives ........................................................................................................................ 91.4 Scope ................................................................................................................................ 91.5 Criteria........................................................................................ .................................... 101.6 Methodology .................................................................................................................. 111.7 CIDA Overtime Trend (2003-04 to 2005-06)............................................................... 12

2.0 OBSERVATIONS AND RECOMMENDATIONS .................................................. 12

2.1 Compliance with TB Overtime Policy, CIDA Overtime Directive, CollectiveAgreements...................................................................................................................... 12

2.2 Probity of Overtime Pay Transactions ............................................................................ 162.3 Management Practices and Controls............................................................................... 272.4 Efficient and Effective Use of Human Resources ......................................................... 30

3.0 CONCLUSIONS .......................................................................................................... 34

4.0 AUDITORS OPINION .............................................................................................. 34

Graph 1 Overtime Trend Lines 2003-04 to 2005-06 .............................................................. 11

Graph 2 Overtime as a percentage of entitled salaries 2003-04 to 2005-06........................... 30Graph 3 Monthly Overtime 2003-04 to 2005-06................................................................... . 32

Table 1a Employees entitled to claim overtime (2003-04 to 2005-06) ................................... 35Table 1b Number of employees who submitted overtime (2003-04 to 2005-06).................... 36Table 1c Employees who submitted 20 claims or more (2003-04 to 2005-06)....................... 37


4/42


5/42

Highlights of Findings

1. Agency Compliance with TB Overtime Policy and CIDA Overtime Directive andCollective Agreements.

The CIDA Overtime Directive does not provide sufficiently clear direction on Agency requirementsfor pre-approval of overtime (except for emergency situations and unusual, unplanned workdemands), and the requirement that this information be recorded in the SAP system.

It is not possible to determine the extent to which employees are given a choice between recordedand unrecorded overtime or the extent to which employees entitled to overtime under collectiveagreements are expected to work or travel in excess of the standard daily or weekly hours of workwithout being compensated, in time or money. However, results of the 2005 Public ServiceEmployee Survey reported that 37 % of the CIDA employees who completed the survey felt thatthey couldnt claim overtime compensation.

2. Probity of Overtime Pay Transactions

Managers are not always properly exercising their delegated signing authority under s.33 and s.34of the Financial Administration Act respecting the approval, recording and certifying of overtimecompensation for employees working outside normal working hours. In six (6) of the sixty-two(62) randomly selected overtime pay transactions examined, line managers approved the overtimewithout proper s.34 signing authority. Also, overtime was recorded in the SAP system andprocessed by the Human Resources Directorate exercising s.33 and s.34 authorities without theproper segregation of duties.

3. Management Practices and Controls

Managers indicated that the SAP system should better respond to their information needs on

overtime utilization rates, commitments and balances to assist in planning, organizing andcontrolling overtime work . The SAP system is viewed by managers and employees as not user-friendly and enhancements are required to facilitate ease of access, monitoring of data integrity,and production of management reports on OT performance.

Overtime data recorded in the SAP system continues to require manual corrections by HR pay


6/42

compensated in time. This also affects the ability of managers to effectively plan workloadrequirements without the benefit of consistent year-end reports on overtime costs.

In terms of managing overtime, managers interviewed recognized the need for standard practicesfor monitoring overtime to ensure transparency and equitable treatment of all employees. A numberof the branches have, or are planning, to introduce more effective monitoring practices for traveland overtime work at missions.

4. Efficient and Effective Use of Resources

The audit was not in a position to fully assess the extent to which managers consider cost effectivealternative solutions to mitigate the need for overtime. However, the audit identified some areastaking positive steps to ensure overtime is pre-approved and better justified as the most efficient andeffective means of providing essential services. In some cases, the use of overtime has beensubstantially reduced e.g. through introduction of organizational restructuring and streamlining.

While overtime represents approximately 3% ($3.0 M) of the total salaries of employees entitled toclaim overtime, this percentage is not considered significant when compared to the overall salarybudget of CIDA, consultant fees and temporary help expenses. However, given the practice of notrecording some of the overtime worked by employees, this figure may not be representative.

Conclusion

Generally, CIDA is in compliance with the applicable TB Overtime Policy, CIDA OvertimeDirective and collective agreements. Clear Agency policy direction is required for pre-approval ofovertime and the recording of this information.

Managers must ensure proper exercising of delegated signing authority under s.33 and s.34 of theFinancial Administration Act respecting the approval, recording and certifying of overtimecompensation for employees working overtime.

Management needs complete, accurate and timely information from the SAP to effectively manageovertime.

Consistent management practices for the use and monitoring of overtime would help to ensuretransparency and equitable treatment of all employees.


7/42

1.0 INTRODUCTION

1.1 BACKGROUND

Overtime in CIDA is governed by Treasury Board Policy on the Management of Overtime, published in 2000, and by CIDAs Overtime Directive . Overtime (OT) is defined as authorizedtime worked by an employee in excess of the standard daily or weekly hours of work and for whichthe employee may be entitled to compensation pursuant to the provisions of a collective agreementor a Treasury Board (TB) authority. It should be noted that the Treasury Board Policy on

Management of Overtime published in 2000 was repealed in early 2006.

The terms and rates governing overtime compensation, for work performed outside of anemployees regular hours at the employers request, are provided for in the various collectiveagreements. SAP is the departmental system that is used by employees and managers to requestapprove and record claims for overtime compensation. Human Resources Directorate (HRD)oversees the administration of these agreements and maintains the HR component of the SAPsystem while Finance maintains the financial component. The HR and Finance modules were in theprocess of undergoing improvements during the period of this audit. 2

The Treasury Board Policy on the Management of Overtime provides general direction. HRD hasestablished principles and guidelines promoting the management and administration of Agencyovertime. 3 The Agency financial signing authority and delegation of authority documents identifymanagerial responsibility for account verification and pay authorization procedures administered byFinance.

In 2005-06, 1,014 or 63.6% of the 1,594 employees 4 working for CIDA entitled to claimovertime, submitted claims totalling $2.942 M, for overtime compensation. In 2004-05,980 or 63.6% of the 1,541 employees working for CIDA entitled to claim overtimesubmitted claims totalling $3.078M. 5

The value of claims for OT as a % of salaries for those employees entitled to overtimecompensation was 2.8% in 2005-06 and 3.1% in 2004-05. 6

The value of OT claimed by employees submitting 20 or more claims per year representsapproximately 50% of the total value of all OT claims submitted each year. 7


8/42

The audit examined overtime data in the SAP HR salary system for fiscal years 2003-04, 2004-05,and 2005-06. Presently, the number of Full-Time Equivalent employees working for CIDA asidentified in the latest employee census, varies slightly from the numbers recorded in the SAP HRModule that formed the basis of the audit analysis of overtime. This does not have material impacton the overall audit findings.

1.2 MANDATE

This audit was identified and approved by the Audit and Evaluation Committee as part of theAgency Internal Audit plan for 2005-06.

1.3 OBJECTIVES

The objectives of this audit were to assess the adequacy of Agency measures to ensure: Compliance with applicable TB Overtime Policy, CIDA Overtime Directive, and collective

agreements; Effective management practices and controls; Efficient and effective use of human resources.

1.4 SCOPE

The audit reviewed the adequacy of internal controls and practices for ensuring that: Agency practices are compliant with TB Overtime Policy and CIDA Overtime Directive on

the management and administration of overtime; Managers properly exercise their responsibilities under s.33 and s.34 of the Financial Administration Act (FAA);

Employees are properly compensated for approved overtime in accordance with theprovisions of the applicable collective agreements; and,

Cost-effective alternative solutions are considered by managers to mitigate the need forovertime expenditures.

Scope Inclusions:

The audit: Assess work planning practices for managing overtime for travel and work at Headquarters

and at missions; Assess the adequacy of managerial controls to ensure the completeness and accuracy of


9/42

Scope Exclusions:

The audit did not: Include an examination of the impact of overtime on operational services or program

performance; Include the use of consultants although it is recognized that short term consulting contracts

can represent an alternative to overtime; Include the EX Group and other employees on performance pay who are not entitled to

overtime compensation; Include CIDAs Legal Services Branch (LSB) as these are Justice Department employees. Compare planned overtime allocations to actual expenditures as overtime is not

administered as a separate budgetary line item; Examine planning documents such as costed work plans; Attest to the overall integrity, accuracy and completeness of the data recorded in the SAP

system; and, Examine cases of authorized and informal flexible working arrangements where an

employee occasionally works outside normal working hours for short periods of time, andwhere such time is not recorded in the SAP system.

1.5 CRITERIA

Agency Compliance with TB Overtime Policy and CIDA Overtime Directive

Overtime is properly authorized by managers:o Before its occurrence, unless otherwise justified, by a person with proper delegated

authority; ando When the work or service is considered essential.

Management Practices and Controls

CIDA managers have access to complete, accurate, timely, authorized, detailed informationon overtime for planning, organizing and controlling overtime work within their respectivearea of responsibility;

Managers properly exercise their delegated authority under s. 33 and s.34 of the FAA toapprove and authorize overtime compensation for employees working outside normal

ki g h d titl d t ti ti d


10/42

Efficient and Effective use of Human Resources

Cost-effective alternative solutions are considered by managers to mitigate the need forovertime expenditures.

The rights of the employees as defined in TB Overtime Policy, CIDA Overtime Directiveand collective agreements are consistently applied across the Agency.

1.6 METHODOLOGY

The audit included employees working at Headquarters and at missions that have incurred overtimeexpenditures in the past three fiscal years (2003-04 to 2005-06).

The audit used standard questionnaires and the analysis of selected transactions of the SAP data on claims from the past three fiscal years. This information was used to identify causal factorsgenerating the need for overtime, to assess management practices and processes for controllingovertime, and to identify potential for improvements.

Individual and group interviews with managers, employees and union representatives wereconducted to identify issues, concerns and opportunities for improvement to compliance measuresas well as management practices and controls. Interviews were also conducted with HR officialsand pay specialists responsible for administrating the employee module of the SAP system and formonitoring and interpreting the application of the TB Overtime Policy, CIDA OT Directive andprovisions of applicable collective agreements.

Six (6) case studies were undertaken in areas of high OT intensity. This involved extensiveinterviews with various managers who were responsible for the approval of overtime and forensuring that human resources were utilized in an efficient manner. The audit team also selected arandom sample of 62 overtime transactions out of a total population of 7,600 transactions fromOctober 2005 to June 2006 to assess the adequacy of management practices and processes for theapproval, certification and processing of claims for overtime compensation. The audit team wasconfident that the size of the random sample was sufficient to provide high level of assurance of the

audit findings and that further audit analysis would not be an efficient use of audit resources.


11/42

1.7 CIDA OVERTIME INTENSITY (FYs 2003-04 to 2005-06)

Overtime intensity has been relatively stable during the past three (3) fiscal years. The OT trend-lines for this period are presented in Graph 1.

Graph 1CIDA Overtime Trendline

Overtime as % of salaries of employees entitled to OTFor fiscal years 2003-04, 2004-05 and 2005-06

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

A p r - 0 3

J u n - 0

3

A u g - 0

3

O c t - 0 3

D e c - 0

3

F e

b - 0

4

A p r - 0 4

J u n - 0

4

A u g - 0

4

O c t - 0 4

D e c - 0

4

F e

b - 0

5

A p r - 0 5

J u n - 0

5

A u g - 0

5

O c t - 0 5

D e c - 0

5

F e

b - 0

6

Source of Data: SAP - HR salary system (2003-04, 2004-05, 2005-06)

2.0 OBSERVATIONS AND RECOMMENDATIONS

Audit Objective:

2.1 COMPLIANCE WITH TB OVERTIME POLICY, CIDA OVERTIME DIRECTIVE,AND COLLECTIVE AGREEMENTS

Criterion 2.1.1 Overtime is authorized before its occurrence, unless otherwise justified, by aperson with proper-delegated authority.


12/42

Analysis

Overtime pre-approval can be verbal or in writing. The TB Overtime Policy, CIDA OvertimeDirective, and the applicable collective agreements do not explicitly state that the pre-approval mustbe in writing or necessarily recorded. The framework governing overtime expenditures, such aspre-approval and the consideration of cost-effective alternatives does not generally constitute aformal exercise supported by verifiable documentation. Consequently, the audit findings areformulated from interviews and other qualitative evidence.

CIDA Overtime Directive requires that overtime be approved in advance by the delegated level of

management who determines the duration of the overtime to be worked. The collective agreementsof the majority of CIDA employees (AS, CM, CR, DA, IS, OE, PM, ST and WP) mention that anemployee is entitled to overtime when the overtime work is authorized in advance by the employeror is in accordance with standard operating instructions and when the employee does not control theduration of the overtime work. In the case of the other groups (CO, CS, ES, PG, SI), therequirement that overtime be pre-approved is implicit: When an employee is required by theEmployer to work overtimethe employee shall be compensated

There are exceptional cases where overtime cannot be pre-approved. For example, an employeecan find him/herself in an emergency situation where work must be done, or travel incurred, and itis not possible or practical to obtain pre-approval from a manager.

Sixty-two (62) overtime transactions were selected at random for employees at headquarters andmissions covering the period from October 2005 to June 2006. Eleven (11) of the transactions werefor travel overtime, and the remaining fifty-one (51) were for work overtime. For each transaction,the approving manager was asked whether the overtime was approved verbally or in writing, and inthe latter cases, to provide a copy of the pre-approval document or exchange of emails.

In the case of travel overtime, the travel authorization, which is mandatory, indicates the hours ofdeparture and arrival to destination. In most cases, the approving authority knows whether the traveltime will exceed normal working hours. In some branches, the employee requesting travelauthority is required to submit, in advance, a trip planning document detailing estimated overtime,travel and site work plans which must be pre-approved.

A total of 11 travel OT transactions were examined by the audit team to determine if the travelovertime was pre-approved by the manager. The employee e-mail survey revealed that one (1)employee received verbal pre-approval and five (5) received pre-approval in writing. Five (5)employees did not respond to the audit survey.


13/42

A number of managers provided verbal explanations on the need for overtime worked by certainemployees. However, without written pre-approval records, it is difficult to verify the terms of the

pre-approval, as required in the CIDA Overtime Directive.

Criterion 2.1.2 Overtime is authorized when the work or service is considered essential andthis is the most appropriate and cost-effective means.

Finding

Managers at all levels of the organization generally viewed overtime work as an importantmanagement tool to meet expected, and sometimes unexpected, pressing operational and programdemands. The CIDA Overtime Directive provides clear direction to managers on the need torationalize the use of overtime as a means of meeting urgent and essential service requirements.

Analysis

Managers and employees interviewed indicated that every effort is made to ensure that workovertime is used as a last means to meet pressing policy, program or operational needs, both inheadquarters and missions. However, practices vary among branches and divisions in terms of thepre-approval process and whether this is written or verbal. In terms of travel overtime, all requestsare authorized in advance.

With respect to the level of detail in travel itineraries, including overtime work planned at missions,practices vary among branches and divisions. Some managers request very detailed estimateswhile others are less demanding. Some managers request and review trip reports in minute detailbefore approving the overtime claims while others rely more on trust and the professionalism oftheir staff and do not query claims in detail. Managers interviewed by the audit team, indicatedthat, for the most part, they try to ensure that:

o Overtime is scheduled on a Saturday rather than a Sunday;o Traveling time is kept to a minimum and only when required; ando Compensatory time off does not create a need for additional overtime.

Managers reported that occasionally alternatives to overtime are not always considered due to timeconstraints (the need for urgent policy clarifications, responses for Question Period and BriefingNotes/Presentation Packages for senior management) or other emergency requirements e.g.evolving international situations such as Sudan, Darfur, and Indonesia.


14/42

Analysis

Unrecorded overtime: Refers to the time worked and/or traveled, which is not recorded in SAP but for which the

employee has the right to be compensated under a collective agreement; and,

Does not refer to the normal flexibility that is expected from professionals who may remainat work a little longer at the end of the day and may be allowed to come a little late or leavea little earlier another day, provided this does not lead to the accumulation and the banking

of expected compensation.

Unrecorded overtime does not leave a management trail and is therefore difficult to detect and evenmore difficult to measure. Questions regarding the existence and extent of unrecorded overtimewere raised with all managers. Some admitted they were using this practice while others said theywere not. One manager reported keeping a written private record of all outstanding unofficialcompensatory time owed to employees.

The two main reasons given for using unrecorded overtime were less administration and reducedcost if the overtime is compensated on a 1:1 basis or less. Unrecorded overtime offers the possibilityto remain within the planned salary budget even if significant overtime is worked.

It is not possible to determine the extent to which employees are given a choice between recordedand unrecorded overtime or even to which extent employees entitled to overtime under theircollective agreement are expected to work or travel in excess of the standard daily or weekly hoursof work without asking for any compensation, in time or money.

However, the results of the 2005 Public Service Employee Survey suggest that 37 % of the CIDAemployees who completed the survey felt that they couldnt claim overtime compensation. Inaddition to its other impacts such as understating operating cost, unrecorded overtime may result inlitigation related to the status of employees in case of accident. Unrecorded overtime may alsoresult in a loss by the employee if the manager with whom there is an informal agreement leaves orgoes on long term medical leave, leaving no trace of the overtime worked by his/her employee(s).

Recommendations

It is recommended that:


15/42

2. Human Resources Directorate monitor performance and report to CorporateResources Committee on compliance with the mandatory requirement to pre-

approve overtime in writing.

Managements Response

1. The Human Resources Directorate agrees with the recommendation andacknowledges the importance of a mandatory requirement to pre-approve allovertime work in writing. To this end, the CIDA Overtime Guidelines are currently

being revised. The Human Resources Management Committee (HRMC) reviewedthe draft on May 8, 2007. It will be presented to Unions at the next LabourManagement Consultation Committee meeting scheduled for June 20, 2007. Oncethis is done, the final draft will be sent for presidential approval. It is expected thatthe revised CIDA Overtime Guidelines will be ready for release by September 2007.

The proposed Guidelines will require the pre-approval of all overtime work atHeadquarters and missions, except in extraordinary circumstances where there isinsufficient notice to do so.

2. CIDAs Financial Services Section and Human Resources Directorate are currentlyelaborating an overtime pre-approval monitoring process that will be systematicallyimplemented by the Post-Payment Verification Unit (PPVU). This unit willperform statistically-based testing of overtime payments and of the related pre-approvals that were granted during a given fiscal year, and report on the results ofthis work through an annual compliance report to the Business ManagementCommittee.

The tools enabling the monitoring process will be developed by October 2007 andmonitoring will commence on overtime payment transactions incurred in the lasthalf of fiscal year 2007-08.

It is not felt that reports need to be made to the CRC on such issues unless there aresignificant problems identified in the monitoring process.


16/42

Audit Objective:

2.2 PROBITY OF OVERTIME PAY TRANSACTIONSAppropriate delegation of authority

Criterion 2.2.1 Managers properly exercise their delegated authority under s. 33 and s.34 ofthe Financial Administration Act (FAA) to approve and authorize overtime compensation foremployees working outside normal working hours and entitled to overtime compensation.

Findings

Managers do not always properly exercise their delegated signing authority under s.33 (requisitions)and s.34 (payment for work, goods or services) of the FAA for approving and certifying overtimeclaims. In six (6) of the sixty-two (62) randomly selected overtime pay transactions examined; linemanagers approved the overtime without proper s.34 signing authority. Also, overtime wasrecorded in the SAP system and processed by the Human Resources Directorate exercising s.33 ands.34 authorities without the proper segregation of duties.

Analysis

The Financial Administration Act (FAA) sets specific rules, most notably in the areas of collection,management, and spending of public funds.

The FAA imposes rights and duties on ministers and directly on deputy heads in relation to theinstitutions they manage. These include, notably, the obligation for a deputy head to establishprocedures and maintain records respecting the control of financial commitments chargeable topublic funds, the fact that only a minister or his / her delegate can request the issuance of a payment,and that before a payment is issued in return for work, goods, or services, the deputy or a minister(or another delegate) must certify that the work has been performed, the goods received, or theservices rendered (sections 33, 34).

Departments are primarily responsible and accountable for the following:

The expenditure of funds and management of assets that they have been allocated; Delivering the results that they commit to achieving with the resources they have been

allocated; and Meeting management expectations according to performance indicators in the Management

Accountability Framework (MAF) for performance reporting and accountability.


17/42

Ministers and deputy heads must formally delegate and communicate financial authorities in

writing and establish an appropriate division of responsibilities in order to ensure that controls areapplied in the spending of public money. 9

The Minister responsible for CIDA and the President of CIDA both approved the transfer ofDelegated Authority for exercising s.33, payment responsibilities, from the Director General,Finance to the Director General, Human Resources. The CIDA Delegation of Selections Authoritiesand Contractual and Financial Signing Authorities, Table 3 Operating and Expenditures and

Miscellaneous Authorities, dated January 26, 2004 reflects the transfer of delegated authorities for

s.33 to the Director General, Human Resources. The basis of this official transfer of delegatedresponsibilities was an agreement reached by the then respective Directors General of Finance andHuman Resources in a memorandum dated April 26, 1999.

The policy objective of the Treasury Board Comptrollership Policy on Pay Administration, whichbecame effective April 1, 1997; is to ensure that adequate controls are established andimplemented for financial pay transactions, and to ensure the efficiency and effectiveness of the pay

process within the framework of departmental financial management.

Departments must establish policies and procedures that will ensure an adequate level of controlover delegated authorities and that persons with delegated authority are well informed of theirresponsibilities in this regard. 10

CIDA responsibilities are outlined in the Financial Bulletin Account Verification Policy, datedOctober 5, 2003 as this relates to:

The nature and extent of account verification required under Section 34 of the FAA; and The roles and responsibilities of the Finance Division, branches, Section 34 officers and

account verification staff relating to the verification of accounts.

Roles and Responsibilities

The Treasury Board Comptrollership Policy on Pay Administration requires the following elements

of a control framework to be in place in support of delegation of financial authorities to humanresources:

Responsibilities Section 33 of the FAA

3(a) Financial officers with payment authority under section 33 of the FAA must ensure


18/42

3(b) Section 33 of the FAA authority can be delegated to a person outside the lineauthority of the Senior Financial Officer (SFO) of the department (Agency). In such

cases the SFO, being responsible for the overall quality of financial management,remains entirely responsible for the effectiveness and efficiency of the personexercising that authority.

3(c) Therefore, the SFO should establish procedures and, probably, an audit program toensure that authority under section 33 of the FAA is exercised in accordance withdepartmental standards and control objectives. As well, the SFO must ensure that

proper mechanisms are in place to allow the person with authority under section 33

of the FAA to verify the legality of the payment and the availability of funds.

Responsibilities Section 34 of the FAA

4(a) Persons who have delegated authority under section 34 of the FAA must receive aset of instructions or procedures to ensure that they respect all departmental, legaland regulatory requirements.

4(b) Those officers who are delegated payment authority under section 33 of the FAA areresponsible for issuing these instructions and for the system of verifying accountsand related financial controls.

Other requirements

5(a) Two principles must be observed:

- No person shall exercise signing authority under both sections 33 and 34 ofthe FAA with respect to a particular payment; and

- No person shall exercise spending authority (section 34 of the FAA) withrespect to a payment from which he or she personally can benefit, directly orindirectly.

The audit identified several areas where the Agencys Delegation of Selection Authorities Table3, and the Financial Bulletin Account Verification Policy (94-7) do not fully comply with theTreasury Board Comptrollership Policy on Pay Administration.

More specifically:

The current roles and responsibilities of Human Resources Directorate in terms of the


19/42

The audit observed that:

The Account Verification Policy - Financial Bulletin 94-7 does not reflect the transfer ofs.33 responsibilities from Finance to HR for all pay transactions, including overtimecompensation;

The Human Resources Directorate is performing both s.33 (payment) and s.34 (accountverification) responsibilities without a separation of functions (persons) as required byTreasury Board - Comptrollership Policy on Pay Administration, s.5(a).

o The Manager, Labour Relations and Compensation have not assumed the fullresponsibilities for exercising s.33 as outlined in the CIDA Financial Bulletin 94-7 -Account Verification Policy.

o The Chief, Compensation (direct reporting relationship) and the two (2) payspecialists (indirect reporting relationship) are exercising s.34 account verification,and s.33 payment authorization for pay and overtime claims.

o The two pay specialists are responsible for verifying, on behalf of the s. 34 officer,the accuracy of accounts for payment. Account verification staff act in a support roleto the s.34 officer, identifying all matters of concern in connection with thelegitimacy and correctness of accounts for payment. 11

Treasury Board Policy on Delegation of Authorities requires:

- No person shall be permitted to exercise authorities unless the minister or the deputy ministerhas formally delegated these authorities and the officer to whom the incumbent of the positionreports has formally designated the person .- Persons properly designated to exercise authorities shall not delegate these authorities.

S.33 payment responsibilities of the FAA have been delegated to the Manager, Labour Relationsand Compensation, Human Resources and Corporate Services Branch. The Chief, Compensation

(direct reporting relationship) and two (2) pay specialists are also exercising s.33 paymentresponsibilities. The re-delegation of s.33 responsibilities from the Manager, Labour Relations tothe Chief, Compensation and the two pay specialists does not comply with the Treasury BoardPolicy on Delegation of Authorities.


20/42

Other areas requiring management attention include:

Improvements are required in the following areas:Training

The level of training and experience required for certifying financial officers in the carrying outs. 33 responsibilities is extensive. It is not clear what training and development the HR payspecialists received to perform comparable functions to those previously performed by financialofficers in the exercising of s.33 responsibilities. 12 As important as training is, there is an

apparent lack of understanding to keep s.33 and s.34 as separate functions (responsibilities).

Separation of functions (responsibilities) s.33 and s.34 of the FAA

In terms of procedural requirements Treasury Board Policy on Delegation of Authoritiesrequires:

In assigning responsibility to individuals involved in the expenditure process, a deputy head

must ensure that the following functions are kept separate:

Procurement; Certifications of entitlement, verification of accounts, and preparation of requisitions for

payment or settlement (s.34); and Certification of requisitions for payment or settlement pursuant to section 33 of the

Financial Administration Act.

The audit identified the following process weaknesses:

Signatures (s.34) of managers authorizing OT payment are not checked against theirsignature cards as part of the HR s.34 verification process.

OT corrections in the SAP system (time or cash) are not returned to the appropriate

manager for re-certification under s. 34. OT recorded as time in the SAP system is not reviewed/validated under s. 33 prior to

sending payment requisition (cash) to PWGSC.

It is noted that Electronic Authorization and Authentication of FAA Section 33 procedures and


21/42

adequacy of section 34 account verification system relative to the risk level of the transactionsreviewed. This function is not presently being performed.

Processing of Overtime Compensation

Overtime is recorded in the SAP Employee Self-Service System (ESS). Each employee hasprotected access to his/her ESS account through a user name and a password. When claimingovertime, the employee enters the date and the time worked or traveled outside regular workinghours and the type of overtime requested. The request is then sent electronically to the appropriatemanager identified in the system. The manager then approves or denies the request pursuant to

his/her delegated responsibility under Section 34 of the Financial Administration Act .

The manager has the legal obligation under s.34 to certify that the employee was working or ontravel status during the period for which overtime is claimed, that the date and time are correct andthat the employee is entitled to the compensation in accordance with the applicable collectiveagreement.

In most cases, the manager trusts the employee and accepts the request as he/she was not present

during the period claimed and has no direct knowledge that the overtime was actually done. If themanager questions any aspect of the overtime claim, he/she has the responsibility to verify that thework was actually done and services/deliverables met.

Out of the 62 transactions reviewed, six (6) different branch managers did not have the properdelegation to approve overtime.

Account Verification Process

Human Resources Directorate and the Finance Directorate are not complying with s.33 (d) ofthe FAA in terms of providing assurance of the adequacy of the s. 34 account verificationresponsibilities.

Section 33 (d) of the FAA stipulates that Financial officers with payment authority pursuant to FAA s.33, must provide assurance of the adequacy of the s.34 accountverification and be in a position to state that the process is in place and is being properlyand conscientiously followed.

In a memorandum dated April 26, 1999, the respective Directors General of Finance and HumanResources mutually agreed to transfer the delegated authority for s.33 (payment) from Financeto the Human Resources branch. This agreement required the DG Human Resources to assure


22/42

Recommendations


3. Human Resources Directorate (HRD) in consultation with Finance Branch shouldreview CIDA Overtime Directive and Account Verification Policy (FinancialBulletin 94-7), including management controls for assuring Agency compliance withTreasury Board Comptrollership Policy on Pay Administration.

4. Human Resources Directorate (HRD) in consultation with Branches should ensurethat the CIDA Overtime Directive clearly describes managers accountability,including:

Certifying the accuracy of employee requests for overtime and overtimeclaims; and

Ensuring that the authorized signing delegation under S. 34 of the FAA isaffixed.

5. Pursuant to s.33 of the FAA , Finance Division should approve overtime paymentsand certify the proper exercising of s.34 responsibilities by HR pay specialists forall overtime miscalculations.


3. The HRD agrees with the recommendation and acknowledges the importance ofincluding management controls for assuring Agency compliance with TreasuryBoard Comptrollership Policy on Pay Administration. To this end, and asmentioned earlier, HRD is currently revising the CIDA Overtime Guidelines, whichare expected to be ready for release by September 2007. Further, the AccountVerification Policy (Financial Bulletin 94-7) will be reviewed in order to include theroles and responsibilities for the HRD as for the expenditures process related toovertime. This is expected to be completed by November 2007. The approvalprocess related to the authority under Section 34 of the FAA granted to HRD willbe reviewed in order to ensure that it is in line with Treasury Board policies.

4. HRD agrees that the CIDA Overtime Guidelines should clearly describe manageraccountability regarding employee requests for overtime and overtime claims.Consequently, and as noted above, CIDAs Overtime Guidelines are currently


23/42

5. As the TB Policy on Pay Administration enables the Finance Division to delegateapproval of salary, including overtime payments, under Section 33 of the FAA toHRD, the Finance Division will continue to delegate this authority to HRD.A committee, comprised of Finance and HR members, will develop options andpropose recommendations: for the proper process to confirm the exercising ofSection 34 certification; and its verification. Recommendations will be presented tosenior management by March 31, 2008.

Compensation of Overtime

Criterion 2.2.2 The compensation for overtime is calculated in accordance with theprovision of applicable collective agreements.

Findings

Overtime data recorded in the SAP system continues to require manual corrections where these are

non-compliant with the provisions of collective agreements.

Analysis

The approach for processing employee overtime compensation once it has been certified by themanager is dependent on whether the claim is to be paid in cash or time. If the employee hasrequested time, the time credit is recorded in the SAP HR module and stays there until thecompensatory time is taken by the employee or the deadline specified in the Collective Agreement(September 30 for most employees) occurs, at which time all credits accumulated are paid in cash.

If the employee has requested cash, the request is extracted manually from the SAP HR module andtransferred to the SAP Finance Module where it becomes a payable until the employee has receivedhis/her compensation.

In both cases, the amount of compensation is automatically calculated by SAP. An internalverification and validation of overtime data put into the SAP time system in June 2005 identifiedirregularities related to compliance with the provisions of some collective agreements. Subsequenttesting by the audit team confirmed that these irregularities continue to persist. Overtime requestsare manually verified every month to ensure that the calculation agrees with the amount of time and


24/42

Recommendation


6. Human Resources Directorate and Finance Division monitor the progress of theintegration of the HR and Finance modules of SAP and report to the CorporateResources Committee on the success in reducing the number of manualinterventions to correct pay transaction errors


6. The Agency Information Systems (AIS) SAP-HR team is working closely withIMTB to implement functionality that will mitigate the risks associated with thisissue. HR is working to leverage the use of self-service technology, byincorporating the collective agreement rules regarding overtime compensation foreach group into the current AIS. Among other things, this will reduce the numberof codes for types and reasons for overtime, matching them to those that areactually covered by collective agreements. It will also ensure the system drives the

payment in accordance with collective agreement rates and conditions, reducing thepossibility of errors. Internally, this particular correction is known as ServiceRequest Number 1370. It is expected that this functionality will be implemented bythe end of the fiscal year, subject to Agency pressures and priorities. CRCreporting on this issue is not seen to be necessary to fulfill the intent of thisrecommendation, nor is it an effective use of limited resources to prepare reports toa senior committee on this level of detail.

Payables at Year-End

Criterion 2.2.3 Compliance with TB Policy on Payables at Year-End (PAYE)

Findings

Incomplete and inconsistent financial reporting of overtime costs impacts on Agency year-endfinancial reports. The overtime incurred and compensated in time during the year is not captured asa cost and is not reported in the year-end financial statements.


25/42

Overtime claimed during the same fiscal year as incurred

When overtime is taken in time and claimed in the same fiscal year, the time bank is cleared asthe compensatory time is taken. As a result, the overtime incurred and compensated in time duringthe year is not captured as a cost and is not reported in the year-end financial statements.

The impact of variances in reporting of overtime between cost-centres can have an impact on theoverall perception of operational efficiency and economy. For example, two cost centres can varyin how they compensate overtime during the year. One cost-centre may compensate in cash whilethe other may compensate in time. Everything else being equal, year-end financial reports will

show higher operating costs for the first centre while the second will appear to have operated muchmore efficiently and economically.

In the opinion of the auditors, the cost of overtime exists in both of these cost centres and should berecorded using either the full dollar equivalent or the incremental cost approach.

Earned overtime paid in subsequent fiscal year

In some cases, overtime earned during a period is compensated during the subsequent period. Forinstance, over a thousand claims for overtime deposited between April and June 2006 were forovertime earned during the 2005-06 fiscal year.

TB Policy on Payables at Year-End states that:

It is the policy of the Government of Canada to record liabilities to outside organizations andindividuals incurred up to and including March 31st in each fiscal year and to charge them toexisting appropriations or provide for them through a central provision for valuation.

Amounts incurred by March 31 and to be paid after that date for salaries and wages, overtime,retroactive wage and salary settlements, and other entitlements for items such as compensatoryleave, extra duty, shift work and lay days for ships crews are debts and therefore must be accruedunder the requirements of this policy.

HRD uses the PAYE method to charge the unremunerated overtime identified at the end of thefiscal year. It establishes a PAYE amount representing the unpaid overtime to be compensated incash and in time, using the full dollar equivalent in the latter case.

As outstanding overtime claims are processed during the subsequent fiscal year, the amount paid tothe employee, or the full dollar equivalent of the overtime taken in compensatory time, is deducted


26/42

Recommendations


7. HRD, in consultation with Finance and the Branches, develop a consistent approachfor recording the cost of overtime compensated in time and monitor compliance.


7. The SAP entries for overtime compensation directly identify whether overtime is to beclaimed in cash or in compensatory time, and HRD is therefore able to identify andreport on overtime claimed

Additionally, the CIDA Overtime Guidelines will remind managers that overtimecompensation is normally to be paid in cash, in accordance with Central Agencydirectives. This will reduce the organizations risk of overtime compensatory timeproducing a need for on-going overtime, as well as the risk of employees using

compensatory time in lieu of annual leave vacation time and requiring the department tocash out annual leave in excess of the carry-over allowable limits.

There will also be new system reports available to managers to track overtime usage andcosts. (See recommendation 9)

2.3 MANAGEMENT PRACTICES AND CONTROLS

Criterion 2.3.1 CIDA managers have access to complete, accurate, timely, authorized,detailed information on overtime for planning, organizing and controlling overtime workwithin their respective area of responsibility.

Findings

The absence of a specific overtime forecast in the Costed Work Plans (CWP) reduces the capacityfor management at the branch and corporate level to effectively monitor the use of overtime.

Analysis


27/42

In the Instructions and Definitions for Completing the Financial Data Template of the Costed WorkPlan , salary is defined as including actual salary forecast and overtime . None of the 10 Branch-level CWPs examined by the auditors contained a separate forecast for overtime. The Instructions do not require that salaries and overtime be presented separately and do not make reference toovertime compensated in time.

Although a forecast for overtime may be established in the cost centre for internal use, the absenceof a specific overtime forecast in the CWP reduces the ability of management to monitor the actualuse of overtime against the planned use. To maintain responsibility and accountability within the

cost centres, a forecast including all the planned overtime, whether compensated in time or inmoney, should be included in the CWP.

In terms of managing overtime, managers interviewed recognized the need for standard practicesfor monitoring overtime to ensure transparency and equitable treatment of all employees. A numberof the branches have, or are planning, to introduce more effective monitoring practices for traveland overtime work at missions. Travel arrangements are supported by detailed travel itineraries andlocal work plans at missions, where advance documents are provided for planning purposes. These

plans are approved in advance. Overtime claims are reviewed against these plans and trip reportsupon the employees return to work. Managers are becoming increasingly aware of the need toeffectively monitor and manage overtime.

Recommendation


8. CPAG, in consultation with the Branches, should modify the Instructions andDefinitions to require that Costed Work Plans include a separate forecast forovertime compensated in time and money


8. CPAG is in the process of reassessing the current Costed Work Planning exercise tostreamline the approach for fiscal year 2008-09. In this context, the new approachwill consider introducing the requirement to include a forecast overtime budget foreach branch. CPAG will consult with the branches and their FMAs on thefeasibility of forecasting overtime in both time and compensation within thisapproach.


28/42

Management Information on Overtime (SAP)

Criterion 2.3.2 CIDA managers have access to complete, accurate and timely overtimeinformation from SAP.

Findings

The SAP system maintains data on recorded overtime but this information is not easily accessible.Managers are not able to readily access SAP overtime data for monitoring and planning purposes.The SAP system is not considered user-friendly. HRD does not provide regular reports to

managers on overtime performance, trends or results against planned activity.

Analysis

Managers and employees expressed some frustration with the SAP system, as it was not responsiveto their needs or user-friendly.

SAPs Employee Self Service System (ESS) is used by the employee to request overtime andother leave and by the manager to certify and/ or approve requests for overtime and leave.

Each employee has access to a screen showing the outstanding overtime requests, the requestcertified, the amount of overtime paid or payable and the compensatory time in bank. Themanager can access this screen for each of his/her employees to obtain information on individualemployee OT utilization rates and compensation commitments, either in cash or time. Presently,the SAP system does not provide regular summary reports / information at the cost-centre level.The manager must add up all employees OT records to obtain a total figure for his/her area ofresponsibility. This manual approach is considered neither practical nor efficient. Of the managersinterviewed, very few undertook this effort.

Managers can specifically request ad hoc reports from the SAP system but the system does notregularly provide managers with reports on OT utilization, commitments and performance againstplanned expenditures. Managers interviewed indicated that they rarely request ad hoc overtimereports due to the length of time to obtain the reports and their limited management utility. Anumber of managers expressed interest in receiving reports on overtime usage at the Directorate andAgency level for comparison and planning purposes.

Recommendation


29/42


30/42


31/42

The largest proportion of work done remotely is for checking e-mails and for utilizing standardoffice software (Word Processing, Spreadsheets, Lotus Notes applications). Specialized work suchas risk application, IT support, and utilizing CIDAs Intranet is also being carried out. 14

The study group noted there is currently (2000) a gross tangible benefit to CIDA of $1,087,178 byoperating the remote access facility. This includes $466,000 in actual time spent while connected,an estimated $489,300 in benefit by people working at home while ill, and estimated $131,878 intime saved by people not having to catch up upon return from foreign travel. 15

The intangibles include improved productivity on both an individual and cumulative level. It also

affects CIDAs ability to hire and retain permanent and contract staff. Through remote access,telecommuters working in remote parts of Canada are delivering a service to CIDA that otherwisewould not be delivered. The net derived benefit to CIDA is $903,305, representing a benefit peruser per day of $6.75. 16 It is noted that CGI qualified these statements regarding the benefitsachieved via remote sensing in stating, it should be made clear that insufficient data exists toaccurately measure the benefits achieved from the remote access facility. Approximations have beenmade by extrapolating from a relatively small sample of log data. 17

The report also identified a number of issues with the current remote access implementation,including:

There is a perception from employees that, with the availability of remote access, overtimeis now expected. This is a perception that should be addressed. 18

The degree to which CIDA should compensate those individuals connecting from homeshould be resolved. 19

The extent to which this continues to be an issue for employees connecting from home andregularly working extra hours each day needs further study. Based on the interviews of employeesand managers, policy direction is not clear with respect to overtime consideration in these cases.

Overtime Drivers

Managers and employees interviewed mentioned several factors, which influence the use ofovertime such as long-distance travel, last minute requests, staffing delays and vacant positions; aidfund increases with no corresponding Full Time Equivalent employee increases, and tighterdeadlines.


32/42

However, the absence, in most cases, of written pre-approved overtime records reduces the abilityof CIDA management and of auditors to objectively and rigorously analyze the circumstances underwhich overtime was approved or not and whether alternatives existed or were fully considered.

Graph 3 presents the overtime intensity for the last three fiscal years where OT usage is lower in thesummer months and peaks around April and October. The opportunity exists to examine more fullythe reason for these trends.

Graph 3

CIDA Monthly OvertimeOvertime as % of salaries of employees entitled to OTFor the years ended March 31, 2004, 2005 and 2006

0.00%0.50%1.00%1.50%2.00%2.50%

3.00%3.50%4.00%4.50%5.00%

A P R

M A Y

J U N

E

J U L

Y

A U G S E

P O C

T

N O V

D E C J A

N F E

B

M A R

Y E A

R

2004

2005

2006

Source of Data: SAP HR salary system (2003-04, 2004-05, 2005-06)

TB Overtime Policy and CIDA Overtime Directive lack broad principles and guidance on whatactivities must be considered as work or official travel eligible for overtime compensation.

The attitude varies among employees and managers as to what constitutes time worked by anemployee in excess of the standard daily or weekly hours of work. Some employees and theirrepresentatives mentioned activities such as attending a work-related social event or seminar thatwere considered eligible for overtime by some managers and not by others.

Some employees indicated they did not count their hours and did not expect any compensation other


33/42

unofficial, unrecorded arrangements and some insist that overtime be recorded and compensated incompliance with the TB Overtime Policy, CIDA Overtime Directive and collective agreements.There are examples where a change of manager has modified the way overtime was handled in acost centre.

The 2005 Public Service Employee Survey supports the findings of the interviews. CIDAparticipants revealed that 44% of them complete their assigned workload during their regularworking hours (Public Service of Canada (PSC): 59%; DFAIT: 42%); that 30% feel pressured byothers to work more than their regular hours (PSC: 22%; DFAIT: 37%); 63% of CIDA employeeswho completed the survey feel they can claim overtime compensation (cash or leave) (PSC: 61%;DFAIT: 66%). During the last year, 45% were compensated for overtime (cash or leave), which isa 5% increase compared to the 2002 Survey (PSC: 50%, no variation; DFAIT: 54%, diminution of1%).

CIDAs Centre for Workplace Effectiveness and Well-Being deals with conflict and servesemployees and managers. The Centre informed the auditors that few employees seek its servicessolely on the subject of overtime but rather within other aspects of a conflicting relationship with amanager. There have been no overtime grievances in the last three years.

Recommendations


10. HRD, in consultation with the Branches, amend the CIDA Overtime Directive toclarify the types of activities eligible for overtime compensation


10. As noted above, CIDAs Overtime Guidelines are currently being revised and thetarget date for finalization and dissemination of the proposed guidelines is September2007. The guidelines will contain direction and clarification surrounding the overtimeissue overall. System enhancements outlined in recommendation 6 will also aligndetermination of reasons for overtime with those allowed for in respective collectiveagreements. It is anticipated that these 2 changes will provide managers with clear andconsistent direction on the management of overtime. While there will always remain theneed for managers to retain the appropriate flexibility, the clear and well-establishedframework will support managers in determining what their employees need to do tomeet their business objectives, and how and when these activities should be undertaken.


34/42

3.0 CONCLUSIONS

Generally, CIDA is in compliance with the applicable TB Overtime Policy, CIDA OvertimeDirective and collective agreements. Clear Agency policy direction is required for pre-approvalof overtime and the recording of this information;

Managers must ensure proper exercising of delegated signing authority under s.33 and s.34 ofthe Financial Administration Act respecting the approval, recording and certifying of overtimecompensation for employees working overtime;

Management needs complete, accurate and timely information from the SAP to effectivelymanage overtime;

Consistent management practices for the use and monitoring of overtime would help to ensuretransparency and equitable treatment of all employees.

4.0 AUDITORS OPINION

In our opinion, based on an examination of the oral and documented evidence provided, we supportwith a high level of assurance the above conclusions on the management of overtime in CIDA.


35/42

Table 1a is a summary of overtime data by employees entitled to claim overtime by numbers andsalaries for fiscal years ended March 31, 2004, 2005, and 2006 compensated in cash and by timeoff (Note: This table does not record unreported overtime compensated by time off).

TABLE 1a

Source of Data: SAP HR salary system (FYs 2003-04, 2004-05, 2005-06)

Table 1a demonstrates that the % of employees by #s and the % of employees by salariesentitled to claim overtime has remained relatively constant over the three fiscal years examined.

Summary of Overtime Data byEmployees entitled to Claim Overtime

for fiscal years endedMarch 31, 2004, 2005, and 2006

Description Fiscal Year EndedMarch 31, 2004

Fiscal Year EndedMarch 31, 2005


Total # ofemployees 1,709 1,687 1,723Total salaries $112,858,717 $114,582,053 $119,893,428# of employees

entitled toclaim OT 1,562 1,541 1,594% ofemployeesentitled toclaim OT 91.4% 91.3% 92.5%Salaries ofemployees

entitled toclaim OT $98,057,149 $99,590,029 $105,582,416% by salariesof employeesentitled toclaim OT to #of totalemployees 86.9% 86.9% 88.1%


36/42

Table1b is a summary of overtime by employees who submitted claims for overtime for fiscalyears ended March 31, 2004, 2005, and 2006 compensated in cash and by time off (Note: This tabledoes not record unreported overtime compensated by time off).

TABLE 1b


Summary of Overtime Claimsby Compensation TypeFor fiscal years ended

March 31, 2004, 2005, and 2006

ITEM Fiscal Year EndedMarch 31, 2004



Comp.Type

Paidin

Cash

Paidin

Time Total

Paidin

Cash

Paidin

Time Total

Paidin

Cash

Paidin

Time Total

1.

# ofemployeeswhosubmittedOT claims 391 543 934 422 558 980 411 603 1,014

2.

# of OTclaimssubmitted 6,584 6,655 13,239 6,650 6,843 13,493 5,230 7,196 12,426

3.

Value ofOT claimssubmitted $1,280,205 $1,565,805 2,846,010 $1,368,522 $1,709,311 $3,077,833 $1,123,616 $1,818,525 $2,942,141

SUMMARY TOTALSTotalvalue ofOT claimssubmitted $2,846,010 $3,077,833 $2,942,141Total %of salariesforemployeesentitled to

claim OT 2.9% 3.1% 2.8%


37/42

Table1c is a summary of overtime by employees who submitted 20 claims (or more) for overtime forfiscal years ended March 31, 2004, 2005, and 2006 compensated in cash and by time off (Note: This tabledoes not record unreported overtime compensated by time off).

TABLE 1c


Summary of Overtime DataEmployees 20 claims per year

For fiscal years endedMarch 31, 2004, 2005, and 2006

Description Fiscal Year EndedMarch 31, 2004



Paidin

Cash

Paidin

Time Total

Paidin

Cash

Paidin

Time Total

Paidin

Cash

Paidin

Time Total

# of employeeswho submitted 20 OT claims 67 105 172 86 105 191 86 102 188# of OT claimssubmitted bythese employees 2,947 3,540 6,487 4,210 3,628 7,838 4,382 3,549 7,931Value of theseclaims for OT $557,393 $848,739 $1,406,132 $794,527 $815,620 $1,610,147 $764,673 $732,083 $1,496,756Total value ofthese claims $1,406,132 $1,610,147 $1,496,756


38/42

# inReport Recommendation

Addressedto Management Response Target date

1 Human ResourcesDirectorate obtainapproval of the CorporateResources Committee toamend the CIDAOvertime Directive toinclude a mandatoryrequirement to pre-approve, in writing, allovertime work atHeadquarters andmissions.

HRD The Human Resources Directorate agrees with the recommendation and acknowledges theimportance of a mandatory requirement to pre-approve all overtime work in writing. Tothis end, the CIDA Overtime Guidelines are currently being revised. The HumanResources Management Committee (HRMC) reviewed the draft on May 8, 2007. It will bepresented to Unions at the next Labour Management Consultation Committee meetingscheduled for June 20, 2007. Once this is done, the final draft will be sent for presidentialapproval. It is expected that the revised CIDA Overtime Guidelines will be ready forrelease by September 2007.

The proposed Guidelines will require the pre-approval of all overtime work atHeadquarters and missions, except in extraordinary circumstances where there isinsufficient notice to do so.

Sept. 2007

2 Human ResourcesDirectorate monitorperformance and report toCorporate ResourcesCommittee oncompliance with themandatory requirement topre-approve overtime inwriting.

HRDFinance

CIDAs Financial Services Section and Human Resources Directorate are currentlyelaborating an overtime pre-approval monitoring process that will be systematicallyimplemented by the Post-Payment Verification Unit (PPVU). This unit will performstatistically-based testing of overtime payments and of the related pre-approvals that were

granted during a given fiscal year, and report on the results of this work through an annualcompliance report to the Business Management Committee.

The tools enabling the monitoring process will be developed by October 2007 andmonitoring will commence on overtime payment transactions incurred in the last half offiscal year 2007-08.

It is not felt that reports need to be made to the CRC on such issues unless there aresignificant problems identified in the monitoring process.

Oct. 2007

38


39/42

39



3 Human ResourcesDirectorate (HRD) inconsultation with FinanceBranch should reviewCIDA OvertimeDirective and AccountVerification Policy(Financial Bulletin 94-7),including managementcontrols for assuringAgency compliance withTreasury BoardComptrollership Policyon Pay Administration.

HRDFinance

The HRD agrees with the recommendation and acknowledges the importance of includingmanagement controls for assuring Agency compliance with Treasury BoardComptrollership Policy on Pay Administration. To this end, and as mentioned earlier,HRD is currently revising the CIDA Overtime Guidelines, which are expected to be readyfor release by September 2007. Further, the Account Verification Policy (FinancialBulletin 94-7) will be reviewed in order to include the roles and responsibilities for theHRD as for the expenditures process related to overtime. This is expected to be completedby November 2007. The approval process related to the authority under Section 34 of the

FAA granted to HRD will be reviewed in order to ensure that it is in line with TreasuryBoard policies.

Nov. 2007

4 Human ResourcesDirectorate (HRD) inconsultation withBranches should ensurethat the CIDA OvertimeDirective clearlydescribes manageraccountability, including:

Certifying theaccuracy of employeerequests for overtimeand overtime claims;andEnsuring that theauthorized signingdelegation under S34of the FAA is affixed.

HRDFinance

HRD agrees that the CIDA Overtime Guidelines should clearly describe manageraccountability regarding employee requests for overtime and overtime claims.

Consequently, and as noted above, CIDAs Overtime Guidelines are currently beingrevised. As a result of HRMC consultation regarding this matter, a communicationsstrategy highlighting key responsibilities will accompany the release of the Guidelines toensure that all CIDA employees, including managers, are well aware of theirresponsibilities. Management responsibilities regarding the determination, authorization,and conditions surrounding overtime are clearly spelled out in the guidelines.

Being revised


40/42


41/42

41



7 HRD, in consultationwith Finance and theBranches, develop aconsistent approach forrecording the cost ofovertime compensated intime and monitorcompliance.

HRDFinance

The SAP entries for overtime compensation directly identify whether overtime is to beclaimed in cash or in compensatory time, and HRD is therefore able to identify and reporton overtime claimed

Additionally, the CIDA Overtime Guidelines will remind managers that overtimecompensation is normally to be paid in cash, in accordance with Central Agency directives.This will reduce the organizations risk of overtime compensatory time producing a needfor on-going overtime, as well as the risk of employees using compensatory time in lieu ofannual leave vacation time and requiring the department to cash out annual leave in excessof the carry-over allowable limits.There will also be new system reports available to managers to track overtime usage andcosts. (See recommendation 9)

8 CPAG, in consultationwith the Branches, shouldmodify the Instructionsand Definitions to requirethat Costed Work Plansinclude a separateforecast for overtimecompensated in time andmoney.

CPAGBranches

CPAG is in the process of reassessing the current Costed Work Planning exercise tostreamline the approach for fiscal year 2008-09. In this context, the new approach willconsider introducing the requirement to include a forecast overtime budget for each branch.CPAG will consult with the branches and their FMAs on the feasibility of forecastingovertime in both time and compensation within this approach.

FY 2008/09

9 HRD in consultation withIMTB and Branchesdetermine how the SAPsystem can be enhancedto meet overtimeinformation needs andmake the necessaryadjustments.

HRDIMTB

Branches

The Agency Information Systems (AIS) SAP HR team has already developed reports thatwill provide managers with the ability to obtain the necessary overtime information. Therewill be three reports available to managers with overtime informationestimates ofovertime payable, i.e. time in the bank; overtime paid in time; and overtime paid in money.

This system functionality depends on the implementation of Service Request 1370, whichis outlined in the management response to recommendation 6. It is therefore expected thatthese reports will be available to managers by the end of the current fiscal year.

Mar. 2008


42/42

42



10 HRD, in consultationwith the Branches, amendthe CIDA OvertimeDirective to clarify thetypes of activities eligiblefor overtimecompensation.

HRDBranches

As noted above, CIDAs Overtime Guidelines are currently being revised and the targetdate for finalization and dissemination of the proposed guidelines is September 2007. Theguidelines will contain direction and clarification surrounding the overtime issue overall.System enhancements outlined in recommendation 6 will also align determination ofreasons for overtime with those allowed for in respective collective agreements. It isanticipated that these 2 changes will provide managers with clear and consistent directionon the management of overtime. While there will always remain the need for managers toretain the appropriate flexibility, the clear and well-established framework will support

managers in determining what their employees need to do to meet their businessobjectives, and how and when these activities should be undertaken.

Consultation has already taken place with HRMC. Unions and other stakeholders will beconsulted to finalize of the Guidelines.

Sept. 2007

overtime audit report-e

Documents