PARKS CANADA AGENCY NATIONAL AUDIT OF OPERATING REVENUE. Camping, Entry and User Fees

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PARKS CANADA AGENCY

NATIONAL AUDIT OF OPERATING REVENUE

Camping, Entry and User Fees

FINAL REPORT

Prepared by:

Office of Internal Audit and Evaluation

DECEMBER 2008

Report submitted to the Parks Canada Audit Committee at the meeting of May 20th, 2009

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Her Majesty the Queen in Right of Canada as represented by the Director General of Parks Canada, 2009

Catalogue No.: 978-1-100-13020-0 ISBN: R62-409/2009 E-PDF

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The Parks Canada Agency (PCA) is presently conducting a national audit of its operating revenue. A national audit provides, for a given subject, an overview of the entire organization, identifying the strengths and weaknesses or shortcomings of the general controls over existing processes, so that corrective action can be taken and best practices shared with the aim of achieving effectiveness and efficiency.

This first phase of the revenue audit is part of the financial component of the 2008–2009 annual audit plan. The audit includes a description of the operating revenue management process for the entire Agency. The three types of revenue identified for the first phase of the audit were entry fees to sites and parks, camping fees, and user fees for trails and backcountry wilderness campsites.

The objective of this audit was to determine that a control framework is in place to assure the accuracy and completeness of operating revenues and that the management of this revenue complies with effective PCA policies and directives.

The exercise included a review of the financial management control framework to ascertain its existence and effectiveness, and an analysis of the level of compliance with PCA policies and guidelines. We also evaluated the accuracy of financial data and completeness of revenue. Tests were done on the revenues entered in the STAR financial system between April 1, 2008, and September 30, 2008.

The audit method included a review of the relevant documents, interviews with the staff involved in revenue processing in the selected field units and at the National Office, and verification of sample transactions for the types of revenue chosen. The on-site work was carried out between July 14 and November 26, 2008.

In our view, the audit work carried out and the evidence collected were sufficient to support the conclusions in this report.

Through the audit, we determined that elements of a management control framework exist for all the processes covered. The segregation of duties principle is generally observed. However, roles and responsibilities must be clearly identified and communicated to ensure an adequate level of governance and strengthen the business process, thereby reducing the risks of error, fund misappropriation and revenue loss. The absence of clear directives on the reconciliation process and lack of financial control and

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uniformity in policy application diminish the quality of financial information. In addition, the reports produced by the different systems do not have a sufficient reliability level to ensure the accuracy of revenue data.

Audit Report rating summary

Ref. Management Process Rating

7.1 Management control framework YELLOW -- Moderate improvements needed

7.2 Compliance with policies and guidelines

ORANGE -- Significant improvements needed

7.3 Accuracy of financial data ORANGE -- Significant improvements needed

7.4 Completeness of revenues YELLOW -- Moderate improvements needed

Below is our list of recommendations for the Director General, Eastern Canada, Director General, Western and Northern Canada, Chief Financial Officer, and Director General, External Relations and Visitor Experience.

1- The Director General, Eastern Canada, and Director General, Western and Northern Canada, in consultation with the Field Unit Superintendents, must ensure that the operational manuals available at the points of sale are kept up-to-date.

2- The Chief Financial Officer, in collaboration with the Director General, External Relations and Visitor Experience, must ensure that the financial training guide on the use of the national reservation system is up-to-date and provided to the field units.

3- The Chief Financial Officer and the Director General, External Relations and Visitor Experience, must ensure that revenue management roles and responsibilities are clearly documented and communicated.

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4- The Director General, Eastern Canada, and Director General, Western and Northern Canada, in consultation with the Field Unit Superintendents, must ensure that the recurrent tasks of key positions are documented to facilitate the integration of a new employee in high season.

5- The Director General, External Relations and Visitor Experience, must work cooperatively with the Finance team to incorporate financial controls and monitoring procedures in the Parks Canada User Fees and Revenue Management

Policy.

6- The Director General, External Relations and Visitor Experience, must ensure that clear directives on the Quality Service Guarantee are developed and communicated to strengthen the consistency in the application across the country. 7- The Chief Financial Officer must ensure that procedures to standardize the

revenue data reconciliation process are developed.

8- The Director General, Eastern Canada, and Director General, Western and Northern Canada, in consultation with the Field Unit Superintendents, must ensure that the policy on accounts receivable is observed and the accounts are entered in the STAR financial system appropriately. The Chief Financial Officer should support the Field Unit Superintendents with regular communications. 9- The Director General, External Relations and Visitor Experience, must ensure that

the information produced through the national reservation system sales reports provides data according to types of products sold.

10- The Director General, External Relations and Visitor Experience, must ensure that the sales reports of the local point of sale system integrated with the national reservation system produce accurate information on dollar values.

11- The Chief Financial Officer must ensure that the sales reports produced by the “Commander” interface linked to the Vectron terminals are changed to provide information on the types of products refunded or discounted.

12- The Field Unit Superintendents in consultation with the Chief Financial Officer must ensure that financial information useful for recording of revenues is entered appropriately in the STAR financial system.

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13- The Director General, External Relations and Visitor Experience, must ensure that the controls required to prevent fund misappropriation are implemented in the point of sale system integrated with the national reservation system.

14- The Chief Financial Officer should consider making the field units responsible for their own data retrieval using “Commander” to encourage the interface’s use and development.

15- The Director General, Eastern Canada, and Director General, Western and Northern Canada, in consultation with the Field Unit Superintendents, must ensure that the safes used at the sites are securely installed and the deposits are kept in a safe to which attendants do not have access once the deposit is made. 16- The Director General, Eastern Canada, and Director General, Western and

Northern Canada, in consultation with the Field Unit Superintendents, must ensure that attendants control access to the sales kiosks by asking for a piece of identification and a valid reason for access.

17- The Director General, External Relations and Visitor Experience, should assess the possibility of instituting a more effective and secure national pass management system.

18- The Director General, External Relations and Visitor Experience, must institute tighter controls to prevent the resale of national passes.

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1. BACKGROUND

In fulfillment of its mandate, the Parks Canada Agency (PCA) provides a multitude of services to Canadians and non-Canadian visitors. These services are made possible by the set-rate fees charged to visitors to access national parks and historic sites.

When the Agency was created in 1997, the Parks Canada Agency Act was passed. Section 20(2) of this Act permits Parks Canada to spend amounts equal to the revenues resulting from the conduct of its operations in a given or subsequent fiscal year. According to the document “2008–2009 Highlights,” prepared by the National Office Finance group, the forecast operational revenues for the fiscal year are approximately $111 million and represent about 18% of the Agency’s total budget. It is vital to ensure that revenues are adequately controlled to allow the Agency to continue fulfilling its mandate.

The operational revenues reflect the Agency’s total revenues, derived from different sources, including operating revenue, real property rentals and business fees and other. The operating revenue includes all revenue received from visitors for the use and appreciation of the national parks and historic sites operated by the Agency.

PCA chose to begin by performing a national audit of its operating revenue. A national audit provides, for a given subject, an overview of the entire organization, identifying the strengths and weaknesses or shortcomings of the general controls over existing processes, so that corrective action can be taken and best practices shared with the aim of achieving effectiveness and efficiency.

This first phase of the revenue audit is part of the financial component of the 2008–2009 annual audit plan. The audit includes a description of the operating revenue management process for the entire Agency by selected line of business. Three types of revenue were identified for this phase of the audit, that is:

- Entry fees (sites and parks) - Camping fees

- User fees (revenue received for use of trails and backcountry wilderness campsites)

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These three types of revenue represent about 62% of all the Agency’s recorded revenues to March 31, 2008. To achieve the audit objectives, audit criteria were developed in four separate areas of the revenue process:

- Existence and effectiveness of the management control framework - Compliance with policies and guidelines

- Accuracy of financial data - Completeness of revenue

2. OBJECTIVES AND SCOPE

The objective of the audit was to provide assurance to senior management that a control framework is in place to ensure the accuracy and completeness of operating revenue and that the management of this revenue complies with effective PCA policies and directives. Tests were done on the revenues entered in the STAR financial system between April 1, 2008, and September 30, 2008.

Limitations

It is important to note that the audit covers only the processes used for the collection of revenue and available data and that the different point of sale systems (automation aspect) were not audited. However, we examined the data input process and the quality of the information produced in the reports generated by the systems.

3. METHODOLOGY

The audit methodology included the following activities: • Interviews with National Office Finance staff;

• Interviews with External Relations and Visitor Experience Directorate staff, in National Office;

• Interviews with finance and visitor services staff in the selected field units;

• Visit to national park entrance gates, campgrounds and certain historic sites in the selected field units;

• Review of the relevant documentation, particularly, the organization chart, training documents, laws and regulations governing the revenue management process, financial reports and operational manuals; and

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• Review of a sampling of transactions and their documentation for each selected field unit.

We also determined that the sites used for sampling would be selected among those generating over $75,000 annually.

The field units visited were selected based on the data on the books on March 31, 2008. The table below shows the revenues earned in 2007–2008, in thousands of dollars:

Field Unit Entry Fees (10030) Camping Fees (10021) User Fees (10025) Total Ratio (%) La Mauricie 945.2 835 9.6 1,789.8 2.62 % Cape Breton 2,165.2 436.4 3.8 2,605.4 3.81 % PEI 1,419.5 533.7 1,953.2 2.86 % Banff 22,900.2 3,327.4 144.2 26,371.8 38.57 % KYLL 3,641.3 2,298.2 251 6,190.5 9.05 % Jasper 7,170 3,474.5 131.2 10,775.7 15.76 % Total 38,241.4 10,905.2 539.8 49,686.4 72.66 % PCA Total 50,293.5 1,374.7 16,711.3 68,379.5 100.00 %

Our analysis of the process of collection, reconciliation and recording of the six field units’ revenue covered 72% of the total revenues for the selected accounts. The on-site work was performed between July 14 and November 26, 2008.

Once the fieldwork was completed, the finance managers of all the selected field units, as well as the Chief Finance Officer, and Director General, External Relations and Visitor Experience, were debriefed about our preliminary observations.

Our observations and recommendations were made in accordance with the Audit Reporting Rating System described below:

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Audit Reporting Rating System

RED

Unsatisfactory Controls are not functioning or are nonexistent. Immediate management actions need to be taken to correct the situation.

ORANGE Significant improvements needed

Controls in place are weak. Several major issues were noted that could jeopardize the accomplishment of program/operational objectives. Immediate management actions need to be taken to address the control deficiencies noted.

YELLOW Moderate

improvements needed

Some controls are in place and functioning. However, major issues were noted and need to be addressed. These issues could impact on the achievement of program/operational objectives.

BLUE Minor

improvements needed

Many of the controls are functioning as intended. However, some minor changes are necessary to make the control environment more effective and efficient.

GREEN Controlled Controls are functioning as intended and no additional actions are necessary at this time.

4. STATEMENT OF ASSURANCE

In our view, the audit work carried out and the evidence collected were sufficient to support the conclusions in this report.

5. CONCLUSIONS

Through the audit, we determined that elements of a management control framework exist for all the processes covered. The segregation of duties principle is generally observed. However, roles and responsibilities must be clearly identified and communicated to ensure an adequate level of governance and strengthen the business process, thereby reducing the risks of error, fund misappropriation and revenue loss. The absence of clear directives on the reconciliation process and lack of financial control and uniformity in policy application diminish the quality of financial information. In addition, the reports produced by the different systems do not have a sufficient reliability level to ensure the accuracy of revenue data.

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6. DESCRIPTION OF THE BUSINESS PROCESS

To be able to fulfill its mandate in regard to the Canadian public, the Agency is authorized to charge fees to visitors who wish to access or use the national parks and historic sites under its responsibility. The fees are established to be fair and equitable to both visitors and taxpayers in a way that respects Parks Canada’s mandate. Establishment of the fees that the Agency is permitted to collect as a federal agency is governed by a formal process. All Parks Canada fee changes are approved by the Minister under the authority of the Parks Canada Agency Act. All new fees and fee increases are also subject to the requirements of the User Fees Act including review by both houses of Parliament. Once the fees are set, they are published in the Canada Gazette, where they are accessible to the public. The types of fees selected for this audit were entry fees, which constitute any fees paid by a visitor to access a site operated by the Agency, including national passes; camping fees, which constitute any fees paid to spend a night at any campground operated by the Agency, including fire permits, activity permits and other merchandise available to campers; and user fees, which constitute any fees charged for the use of trails and backcountry wilderness campsites.

Fee structure

The fees are structured to give taxpayers an equitable economic return based on the market value or reasonable estimate thereof calculated through Canadian and international comparisons. The fee and discount determination process is long and cumbersome due to the rigorous and complex legislative requirements. Pricing is determined at both national and local levels. National pricing was adopted in 2002 for services that are normally offered at most parks and sites such as entry, camping, heritage presentation and backcountry use. Services that are unique to parks and sites such as facility rentals, pools and golf are proposed by field unit superintendents. In recognition of level of service differences, entry fees are set for each site according to predetermined national pricing tiers. Thus, visitors can know exactly how much entry fees will cost them depending on their itinerary.

The steps of the fee structure approval process are as follows:

- Granting of the mandate for proposal development and consultation by the minister

- Consultations with public and stakeholders

- Submission of proposals to both Houses of Parliament - Authorization by the responsible minister

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- Publication of the fees approved by the minister in the Canada Gazette and on the Agency’s website

- Review by the Standing Joint Committee on Scrutiny of Regulations.

For any changes in commercial fees, the operators are provided an advance notice of 18 months from the date of approval to have a chance to modify their rates.

As a government entity, the fees charged by the Agency are not to make a profit but rather to maintain the facilities, which it is responsible for, to enable people to continue enjoying it. Thus, the goal of the 2005-06 to 2008-09 fee increases was to raise $25 million per year in new revenues to invest directly in facilities and services that benefit visitors.

National passes

To accommodate visitors who regularly frequent one or more sites across the country and to add enhanced value, three types of national passes are available. These passes are valid in all national parks or historic sites operated by the Agency for one year from the month of purchase. The following national passes can be bought:

- National Parks of Canada Pass

- National Historic Sites of Canada Pass

- Discovery Package, which combines the two other passes

As the national passes are valid for 12 months from the date of purchase, the Agency must take care to apply the revenues to the appropriate fiscal year, in keeping with the accrual accounting method used at the Agency. At the end of the fiscal year, each field unit sends the National Office information on national passes sold and their month of issue. A calculation is then made of carried forward revenues to be entered on the Agency’s financial statements.

Points of sale

To facilitate transaction processing, the Agency has introduced a variety of tools. For example, different point of sale systems are in use across the country. As mentioned earlier, we reviewed the processes related to the main systems in order to understand their functioning (i.e. how data are inputted, what types of reports are produced), but the automated systems (forms, databases, security) were not audited. Sections 7.3 and 7.4 deal with points of sale.

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Most entrance gates and visitor centres accept credit and debit card payments. In addition to accommodating visitors, the use of these terminals reduces the amount of cash in circulation. The risks of error associated with money handling are considerably reduced and staff security is improved.

Sites generating less than $75,000 in annual revenues are not obliged to use the national point of sale system. They can choose a system that suits their needs while having basic controls assuring data completeness and accuracy.

The Vectron point of sale system used at sites generating over $75,000 annually is equivalent to a programmable cash register used in the retail trade. This system also includes a data retrieval interface, which automatically generates sales reports using a central server. The effectiveness of this system is analyzed in the sections on financial data accuracy and completeness.

The complete revenue management process can be divided into two parts. In the first part, visitor services staff are responsible for the operations, including reception of visitors and collection of revenues. In the second part, finance staff are responsible for recording the revenues. The audit team found an exception in one field unit, where recording of the revenue is the responsibility of Visitor Experience employees. However, these employees are not involved in the collection of revenues, thus ensuring the segregation of duties. In addition, there is no reporting relationship between employees involved in the accounting process and employees in the field.

Entry fees

The operational process at the entrance gates and visitor centres using Vectron is, with a few exceptions, the same across the country. Where differences are observed, there are three main reasons: visitor volume, availability and level of knowledge of visitor services staff, and remoteness of the collection site from the location of staff doing the accounting process.

Flow chart #1 shows the operational path of sales transactions at the entrance gates and visitor centres. This chart illustrates the general process without considering the exceptions:

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Flow chart #1

Excel worksheet (account entry form)

Operations – Entrance Gates

Input of information (sales, receipts) by officer responsible for gate entry

fees Purchases of daily

permits or annual passes at the

gates

Entry in the system used at the gate (POS, Vestron, ect)

Daily permit or annual passes given to the clients

Sales report generate by the system

Payment by cash, traveller’s check, credit or debit card

Daily count of the till by the cashiers

Daily deposit at the bank by the responsible gate officer

Deposit slip

Entry of credit card transactions via terminal

Credit card terminal report

Sales report generate by the system

Deposit slip

Credir card terminal report

Reconciliation of sales report and received payment date

Supporting documents sent to administrative

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Flow chart #2 below shows the accounting process for sales transactions generated by entrance gates and visitor centres:

Flow Chart #2

STAR Accounting Process – Field Unit

Input of information (sales, receipts) by a clerk in the accounts receivable module Deposit slip

stamped by the bank Excel worksheet

(account entry form) Reconciliation of the amoutns

Reports generated by the point of sale system and credit

cards

Camping and user fees

The Agency manages a large number of campgrounds that are accessible to the public and available at different prices. These campgrounds are located within the national parks. A campsite can be obtained in different ways:

- By reserving - Arriving on-site

- Through self-registration

For certain campgrounds, visitors can reserve a site in advance, either online at

www.pccamping.ca, on the Agency’s Web site or by telephone using the toll-free line.

The Agency has a contract with a service provider to manage the reservations Web site and data, as well as the call centre. Visitors usually pay for their site with a credit card when making the reservation. The third party sends the funds collected for reservations to the Agency according to the contract, using electronic transfer and an interface link to the STAR financial system. Under the agreement, between the time when visitors reserve their campsite and their arrival at the campground, the call centre is responsible for

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handling their requests for change or refund of a reservation. Once the visitors arrive, the site is responsible for requests. Usually, the campers arrive at the campground entrance kiosk with proof of their reservation. The employee records the arrival in the national reservation system and issues the permit. For recording of data, the national reservation system provides several reports, which finance officers can use to reconcile and enter sales in the STAR financial system.

For campgrounds not offering a reservation service and for un-booked sites in regular campgrounds, the “first come, first served” rule applies. The operational process is the same as described above, except for the issue of the permit, which is not done by the national reservation system. There are also campgrounds where self-registration is used for visitor registration and payment. This system is used in some small campgrounds and during the off-season, that is, when visitor traffic does not warrant the presence of a full-time employee to do registrations and take payments. As a general rule, at campgrounds using self-registration, the reconciliation process and segregation of duties principle are correctly applied.

The campgrounds and other points of sale also sell activity permits, including fishing permits, wilderness passes and entry permits. These sales are recorded in the local point of sale used. Each product type is recorded with an item number and a report is available to help the attendants balance their till. Central reports are later used by the administrative staff to reconcile and record the sales. The attendants must keep an inventory of these types of permits to control the sale of these products.

Flow chart #3 shows the complete process of the operations performed in conventional campgrounds:

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Operations - Campgrounds Issue on-site of camping permit by

Vectron or POS indicating the type and location of site

Duplicate of permit placed on a holder or board to show reserved

sites

This system provides control over

assigned and available sites Permit given to clients

Information entered in the National Reservation Syatem to keep the inventory

of available sites updated. (step for sites not using local POS)

Sales report generated by Vectron or local POS

Payment in cash, or debit or credit card

for certain sites

Daily till count by employee and supervisor

Daily deposit at the bank Bank deposit slip

Credit card terminal report Entry of credit card transaction via

terminal

Number of entry or activity permit sold

Reconciliation of permits sold and revenue and adjustment of manual permit inventory Credit card

terminal report

Sales report

Recording process in accounts receivable module (SAP) Confirmation of the reservation in

the National Reservation Syatem on arrival

Reservation of a campsite via National Reservation System

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Flow chart #4 shows the complete process of operations performed at self-registration campgrounds:

Flow Chart #4

Campers come to the campground for

self-registration

Campers complete the envelope with the permit

and include payment

The payment is deposited in a lock box

Campers detach the permit and display it at

their campsite Parks Employees come

on-site daily

The lock box is open

The envelope number is entered in a log

Verification is done to see that all campers have paid

The envelopes are sent to the administration

office

Those who have not paid are asked to do so

immediately The envelopes from the

lock box

Envelope log

Reconciliation of the envelope number and preparation of deposit

Input of information on an Excel reconciliation

sheet

Deposit at the bank

Entry in STAR Operations – Self-Registration Campgrounds

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7. OBSERVATIONS AND RECOMMENDATIONS 7.1 Management Control Framework (MCF)

YELLOW Moderate improvements needed

The financial management control framework for processes associated with PCA revenue collection and processing comprises task distribution, Agency policies and guidelines that supplement Treasury Board policies, staff training, support and the monitoring function. Section 7.2 deals with compliance with policies and section 7.3 deals with the monitoring function and other.

To determine whether the management control framework exists and is sufficient to assure the accuracy and completeness of operating revenue, we conducted interviews with 57 staff members at all levels of the organization, taking into account the following criteria:

C1- The staff receive appropriate training to ensure that they know and understand the procedures to be followed.

C2- Job descriptions are provided to the staff involved in the revenue process. The job descriptions are sufficiently detailed to ensure that they know their role and responsibilities and the objectives to be attained.

Legislative and policy framework

A number of laws, policies and working instructions apply to operating revenue management:

- Parks Canada Agency Act - Financial Administration Act

- Parks Canada Agency User Fees and Revenue Management Policy - Parks Canada Campground Reservation Service Terms of Use - Policy on Accounts Receivable

- Working instructions on year-end procedures, deferred revenues section - Parks Canada Master List of Fees, Canada Gazette

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- Parks Canada prescribed US currency exchange rate Section 7.2 covers compliance with policies and guidelines. Staff training

Training of operational staff is done by the visitor services supervisors assisted by field unit administrative staff. Standard basic training in client service (QVS) is provided to all staff working in the field. A financial component is also delivered to ensure that attendants understand their financial responsibilities. As many seasonal employees return year after year, an update at the start of the season is often sufficient to upgrade their knowledge. Experienced employees are often twinned for a certain time with new employees, which gives them a chance to share their experience and win the new employees’ trust.

As attendants are often required to work alone at remote sites, many of which lack a network connection, they usually have access to an operational manual, to which they can refer for unusual or complex situations. These manuals contain information, communications and reminders, which are very helpful to attendants for performing their work. In addition, duty supervisors are available to help attendants with special situations. However, our visit to several sites revealed that certain operational manuals are not kept up-to-date. An update should be done prior to each summer season to ensure the accuracy of information available to the attendants.

Training of administrative staff on the accounting process is the responsibility of the field units’ finance and administration managers. As no training guide or clear directives exist at the Agency to direct the conciliation process, there are almost as many processes as there are field units. The impact of this lack of uniformity on the quality of the information available in the STAR financial system is discussed in section 7.2.

The National Office Finance team provides training, on request, on the financial use of the national reservation system and the Paymentech banking system. The training document dates from March 2007. Since that time, a number of changes have been made to the national reservation system and more specifically, to the available reports for reconciling sales, but the document has not been updated.

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Recommendations

1- The Director General, Eastern Canada, and Director General, Western and Northern Canada, in consultation with the Field Unit Superintendents, must ensure that the operational manuals available at the points of sale are kept up-to-date.

Management response

The Director General, Eastern Canada

Agree: The Director General, Eastern Canada will speak personally to Eastern Canada FUS on this issue during a weekly teleconference and will follow up with a memo, by July 31st 2009, to all Field Unit Superintendents requesting that operational manuals are made available at all points of sale and that these manuals are updated on a regular basis.

Director General, Western and Northern Canada

Agree: The Director General, Western & Northern Canada will speak personally to Western & Northern Canada FUS on this issue during a weekly teleconference and will follow up with a memo, by July 31st 2009, to all Field Unit Superintendents requesting that operational manuals are made available at all points of sale and that these manuals are updated on a regular basis. As this is often times the responsibility of seasonal Visitor Experience staff completion for full compliance will be July 2009.

2- The Chief Financial Officer, in collaboration with the Director General, External Relations and Visitor Experience, must ensure that the financial training guide on the use of the national reservation system is up-to-date and provided to the field units.

Agree: The financial training guide is in the process of being updated. The document is substantially complete and has been sent to the ERVE Directorate for their review. The document is expected to be complete by April 30th 2009 and will be communicated to the field units. National

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Office Finance and ERVE will hold Webinar sessions with both Finance and Visitor Experience staff in early May to review the training guide. Roles and responsibilities

In the field units, roles and responsibilities are partly defined by the generic job descriptions of the regular staff involved in the process. In addition, during the annual appraisals, certain persons are assigned associated tasks as part of their job. Assigning these additional or specific tasks makes it possible to clearly define who performs them and to provide an appraisal platform for the supervisors. During the summer, the Agency employs students, who are given group objectives at the beginning of the season. These objectives serve as guides for job performance and inform the students on the appraisal criteria. Despite the generic job descriptions and group objectives, no formal document exists describing in detail the activities to be performed by the staff in key positions in the revenue management process. As the front-line employee turnover rate is high and frequent staff changes occur during high season, these documents would help ensure a more effective staff transition and greater process uniformity within the field unit.

The audit revealed that recent changes at the National Office have created a vacuum in the assignment of responsibilities between the ERVE and Finance groups. It is important to create or update the documentation describing each service’s roles and responsibilities and to ensure that this information is communicated. The existence of such documents would increase the level of the sectors’ accountability, improve the functioning of the revenue management process and prevent important tasks from being left undone or duplicated. Following are examples of areas in which the roles and responsibilities should be documented:

- Financial controls

- Management of Policy on Revenue Use - Data reconciliation

- Training (financial and system) - Field unit support

- Spot checking of revenue transactions

- Management of point of sale systems and financial reports Recent changes in the structure of the roles and responsibilities of the different directorates have led to confusion and created the need for more effective communication to support operations. The roles and responsibilities must be clearly identified at the

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National Office to ensure an adequate level of governance and strengthen the business process related to operating revenue.

Recommendations

3- The Chief Financial Officer and the Director General, External Relations and Visitor Experience, must ensure that revenue management roles and responsibilities are clearly documented and communicated.

The Chief Financial Officer and Director General, External Relations and Visitor Experience

Agree: The responsibility for pricing, revenue management and financial controls all previously resided with Strategy and Plans and at that time it was clear what the roles and responsibilities were within the directorate. With the formation of the ERVE Directorate the responsibility for pricing (as a market related function) was transferred from Strategy and Plans. Thus responsibility for the pricing and revenue management functions now spans two directorates and is less clear.

Based on the observations of this audit, the 2006 Parks Canada User Fees

and Revenue Management Policy will be revised in 2009/10 to strengthen

the specific accountabilities, role and responsibilities. As part of this clarification it is recommended that the current policy be divided into two distinct but linked policies. The majority of the policy would remain under the responsibility of the ERVE Directorate including policy direction for the pricing of services, discounting, multi media fees, business licenses, fee consultation, User Fee Act approval requirements, the Parks Canada Guarantee, service standards, upgrading passes, commissions on the sale of permits, communicating the use of revenues and evaluation of the pricing program. The remainder of the Policy would fall under the responsibility of the Chief Financial Officer including the pricing direction for rights and privileges, revenue and expenditure coding, retention and use of revenues, revenue shortfalls, reporting and any other new requirements related to financial controls. A revenue comptrollership guide will be developed as the POS procurement project advances (see

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management response to recommendation #11 for more details about the project).

4- The Director Generals, Eastern Canada, and Director General, Western and Northern Canada, in consultation with the Field Unit Superintendents, must ensure that the recurrent tasks of key positions are documented to facilitate the integration of a new employee in high season.

The Director General, Eastern Canada and Director General, Western and Northern Canada

Agree: The Director General, Eastern and Western & Northern Canada, will speak personally to all FUS on this issue during a weekly teleconference and will follow up with a memo, by July 31st 2009, to all Field Unit Superintendents requesting that key positions in the revenue collection process be examined and that recurrent tasks are documented to facilitate integration of new employees. Those Field Units that do not currently have written documentation in place will take the necessary steps to do so by October 2009.

7.2 Compliance with policies and guidelines

ORANGE

Significant improvements needed

To determine whether operating revenue management is compliant with the effective policies and directives, we used the following audit criteria:

C3- Working instructions on revenue processing exist, are adequately documented and accessible to all the concerned staff.

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C5- The fees charged to visitors match the prescribed fees published in the Canada

Gazette.

Practices and observations

Parks Canada User Fees and Revenue Management Policy

The User Fees and Revenue Management Policy was developed by the Strategy and Plans directorate at a time when it had direct responsibilities for pricing, fee approval, revenue management and financial controls. The Agency’s User Fees and Revenue

Management Policy has been in effect since February 2006. Since then, the ERVE

directorate has taken the lead for pricing and fee approvals while the Strategy and Plans Directorate has functional leadership for revenue management and controls.

The Agency’s User Fees and Revenue Management Policy covers fee setting, discounts, public consultations, quality of services and revenue management. However, the policy makes no mention of performance standards for evaluating compliance with these provisions. Further, there is no directive on the reconciliation process or the required financial controls. As indicated in section 7.1, since the audit’s identification of a shortcoming at the national level in responsibility for the revenue management process, some necessary changes have been made. Although the Policy currently resides under the responsibility of the External Relations and Visitor Experience Directorate (ERVE), the staff are not specialized in financial controls, which are essential for the provision of sound and reliable oversight of the revenue management process, the National Office Finance staff should play a role in supporting the responsible group in the development of monitoring methods and financial controls.

The audit also revealed that the application of the Quality Service Guarantee section of the policy is not uniform across the country. As no criterion has been defined to manage the application of visitor refund requests, the field units’ interpretations of this matter differ. Different processing of visitor requests from one region to another can be perceived as a lack of fairness and risks undermining public trust in the Agency, especially in regions where sites are close together or where the application of the policy is tighter. Clear directives from the National Office should be communicated to the field units to correct this situation.

Data reconciliation and point of sale system

The audit made clear that no internal policy or directive exists to guide the data reconciliation process. As the Agency favours a decentralized approach, each field unit is free to develop its own procedure. The lack of a uniform policy on the reconciliation process directly affects the reliability of the data entered in the financial system. Section 7.3 discusses this element in greater detail. In addition, the absence of this policy creates

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confusion and discourages cooperation among the operational units due to the differences in methods.

We also noted that except for the rule on $75,000 in annual sales for the implementation of the national point of sale system (Vectron), there is no guideline to steer the field units in their choice and use of recommended point of sale systems. A clear directive on this subject would bring greater stability to the financial practices surrounding the revenue management process and would permit the development of common training and system use tools.

It should be noted that the External Relations and Visitor Experience Directorate is currently working on developing a proposal for the acquisition of a new point of sale system better suited to the Agency’s needs concerning visitor services, financial control and collection of statistical data.

Accounts receivable

As a way of encouraging group visits, tourism firms are granted visitor volume discounts. Special prices are also given to school groups. To streamline the on-site payment process, several options are available to the field units, including that of creating a receivable or billing account. Under this option, the visit organizers are sent a bill when the number of visitors is known. A financial policy on accounts receivable management has been created to harmonize this process and guide the staff on the following subjects:

- The accrual accounting principle

- The principle of fairness to Agency clients

However, we noted that this policy is not always observed. To let managers make informed decisions, accounts receivable information must be timely, reliable and accurate. Under the policy, accounts receivable must be entered in STAR in a timely manner and the amounts to be recovered must be managed on a monthly basis. However, certain field units manage their accounts receivable manually, in direct contravention of the policy, while others use the financial system appropriately. Manual management of accounts receivable increases the risks of the following:

- Non-recovery of amounts owing

- Incorrect application of the effective interest rates - Lack of fairness to clients

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It is worth mentioning that some field units have developed alternative methods to reduce their accounts receivable volume, such as payment in advance or creation of agreements with travel agencies. The risk associated with accounts receivable volume is deletion of bad debts due to failure to recover due amounts. In this sense, the observed alternative methods serve to reduce the risk.

Foreign currency and the fee structure

The visit to the sites confirmed that the fee structure published in the Canada Gazette is observed.

In general, the point of sale systems used are programmed to permit fee payments in Canadian or US currency; the conversion is made automatically. Visitors are given change in Canadian funds only. To avoid daily exchange rate fluctuations, a mechanism sets the rate to be used across the country. The current exchange rate is checked every week and adjusted as needed.

To provide adequate control over US currency prices and revenues and to ensure uniformity, only supervisors have access to the point of sale programming function for changing the prices or exchange rate in effect. For units using the “Commander” interface, it is possible to make the change in one place and propagate it through an update to the other terminals. For those not using Commander, each unit has to be updated individually. At no time may the staff involved in revenue collection make changes to the point of sale programming.

The absence of clear directives on the reconciliation process, the lack of financial control in the Parks Canada User Fees and Revenue Management Policy, the absence of a formal monitoring process and the lack of uniformity in the application of the Quality

Service Guarantee serve to weaken the controls put in place for revenue management. Recommendations

5- The Director General, External Relations and Visitor Experience, must work cooperatively with the Finance team to incorporate financial controls and monitoring procedures in the Parks Canada User Fees and Revenue Management

Policy.

Disagree: The ERVE Directorate consider that financial controls and associated monitoring procedures are the responsibility of the Chief Financial

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Officer. As stated above in response to Audit Recommendation 3, the

Parks Canada User Fees and Revenue Management Policy will be divided

by functional area into two distinct but linked policies. The Chief Financial Officer will have clear responsibility and leadership for revenue management policies and will have the opportunity to make direct revisions to resolve issues with reconciliation and financial controls.

The Finance team will develop a Revenues comptrollership guide, as stated in the response to audit recommendation 3. This guide will address the importance of financial controls and monitoring.

6- The Director General, External Relations and Visitor Experience, must ensure that clear directives on the Quality Service Guarantee are developed and communicated to strengthen the consistency in the application across the country.

Agree: The Visitor Experience Branch has been working on the development and implementation of Service Standards and Prevention Guidelines to be applied at all locations. These standards will improve the consistency of services offered at the parks, sites and NMCAs. The implementation of these standards including training is to be completed during the 2009-operating season.

The Service Standards and Prevention Guidelines will include procedures on the application of The Parks Canada Guarantee as a service recovery tool. The use of a common set of standards will allow FUs to better measure their successes and to offer visitors’ a far more consistent service. This will also allow for a more consistent approach to service recovery. Included in the procedures and training, will be information on how to handle issues brought up by visitors who had a less than excellent experience. Staff will be trained in skills to better explore avenues to correct the issues and ensure that the visitors feel their experience was well worth their time and money. A consistent approach to service recovery and the use of the Parks Canada Guarantee will be a focus of the guidelines and training.

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Although the Parks Canada Guarantee is a standardized service recovery tool that needs to be responsive and timely to help resolve visitor complaints, ERVE Directorate staff will work with Finance to ensure that it is compliant to any requirements that may be identified for financial control.

7- The Chief Financial Officer must ensure that procedures to standardize the revenue data reconciliation process are developed.

Agree: In the short term, National Office Finance will develop a template and guideline for facilitating a more standardized reconciliation process. This template and guide will be completed during the development of phase 2 of Financial Management at Parks Canada and distributed to the field for implementation by September 2009.

National Finance team will work with ERVE to ensure the template and guide will be further developed as the work on the National Point of Sale project progresses and included in the revenue comptrollership guide previously mentioned.

8- The Director General, Eastern Canada, and Director General, Western and Northern Canada, in consultation with the Field Unit Superintendents, must ensure that the policy on accounts receivable is observed and the accounts are entered in the STAR financial system appropriately. The Chief Financial Officer will support the Field Unit Superintendents with regular communications.

The Director General, Eastern Canada and Director General, Western and Northern Canada

Agree: The Director Generals, Eastern and Western & Northern Canada, will support the CFO by speaking personally to all FUS on this issue during a

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weekly teleconference and will follow up with a memo, by July 31st 2009, to all Field Unit Superintendents emphasizing the importance of adherence to the policy on accounts receivable. The memo will further request that the FUS review the situation in their field unit to ensure that accounts receivable are input in the financial system in a timely manner and take corrective action where this is not the case.

Chief Financial Officer

Agree: The CFO will send a communiqué to all Field Unit Superintendents and Finance and Administration community, before June 2009, reminding them of the requirement to comply with the Agency’s Account Receivable Policy (including recording accounts in our financial system on a timely basis), available on the National Intranet site. National Office Finance has incorporated this requirement in their year-end instructions, which were communicated in March 2009 as is done every year. National Office Finance will also emphasize this requirement in their mid-year instructions and enhance monitoring.

7.3 Data accuracy

ORANGE

Significant improvements needed

As approximately 18% of the Agency’s total budget is based on the revenues forecast for 2008–2009, it is important to ensure that budgetary estimates are met, or at least, to know where one is in relation to the estimates. Each field unit is assigned a revenue target and funds corresponding to this target are advanced at the beginning of the year. When the recorded revenues exceed the target, the field unit can keep and spend the surplus. However, when the target is not met, the field unit must reorganize its expenditures or borrow the foregone revenue from another administrative unit. It is also possible, using certain criteria, to ask the Finance Committee to reduce the target if the deficit exceeds 3% of the field unit’s budget. The three criteria permitting a reassessment of the target are found in section 56 of the User Fees and Revenue Management Policy:

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- Temporary or permanent interruption of revenue-producing activities to maintain or restore ecological or commemorative integrity;

- Reduction in visits indicating that the revenue target is no longer achievable; - An extraordinary event having negative impacts on revenue (e.g. fire, flood). To enable managers to adequately forecast their expenditures during the fiscal year, it is essential that they be able to track the progress made toward the target set at the beginning of the year. To this end, the information on revenues earned must be reliable, accurate and available within a reasonable time to permit decision-making.

To determine whether the financial process for operating revenue management is adequate to assure the accuracy of financial data, we used the following audit criteria: C6- Sales and revenue management reports are used to control activities and facilitate

budget planning.

C7- The collected data are reliable, adequately reconciled and entered in STAR within a reasonable amount of time.

C8- The information on revenue is reconciled with the deposit reports generated by STAR.

Practices and observations Management report

Through the audit, we found that the visited field units track the progress of their operating revenues. The reports used are in Excel format and compile information generated by the different systems used. With the exception of the Mountain Parks, which use a harmonized report format, the field units have developed reports suited to their needs and based on the accuracy of the information at their disposal. The weaker the quality of the revenue information, the less useful is the management report for decision making. Two field units out of the six we visited were unable to give us a management report for the current fiscal year because their sales information is not entered in the financial system on a regular basis.

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As stated earlier, revenue management is somewhat different for the Mountain Parks, which have chosen to implement a system of revenue distribution among the field units. As the entry fees paid in a park in the Rockies are valid for all the mountain parks, and as certain parks are more popular and accessible to visitors than others, this system ensures that all the field units within the Mountain Parks group benefit from a fairer and more uniform revenue distribution. A separate account has been created in the financial system to permit tracking and redistribution of the revenues. A standard revenue progress report is used by these field units to give them all the same basic information for decision-making.

Point of sale system reports

The different point of sale systems used produce various reports to help the responsible staff reconcile financial data and the visitor service managers analyze park attendance data. All the systems generate useful information, but major enhancements are needed to let users improve the quality of the information they collect and to assure the accuracy of revenue data.

National reservation and local point of sale system

The national reservation system includes two components. The first is the “reservation” component, which is managed by a third party for advance reservations of campsite, but is also used by attendants to register campers upon their arrival and to manage campground occupancy. Normally, the detailed sales summary is used to enter sales in the financial system and reconcile deposits. This summary report provides information on sales, payment method, refunds and service charges to be paid to the third party for reservation management by campground for a specific period. This report can also be used to reconcile deposits by type of card used and enter the sales and service charges in the financial system, but only globally, that is, without details on the type of service sold or refunded.

The national reservation system does not provide the tools needed for the reconciliation done by administrative staff. However, a list of items exists for recording the types of sales made and reporting them individually in the financial system. Unfortunately, the detailed sales report produced by this system only gives data compiled by campground, but not by type of sites reserved. This diminishes the quality of the financial information entered in STAR. To obtain information by type of site, it is necessary to check each transaction and enter the information manually on another reconciliation sheet. The large

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volume of transactions makes the use of this method difficult. Moreover, the risk of error is high due to the required manipulations. A report on the types of campsites sold would be useful both to the staff involved in the reconciliation process and to visitor services staff. It would facilitate the compilation of statistics, analysis of campers’ attendance patterns and decision-making.

The second component of the reservation system is the local point of sale system, which permits users to sell campsites without prior reservation and sell available on-site products. This system works with the same equipment and in the same environment as the reservations. The system consists mainly of a programmable cash register that operates using a conventional computer.

The shortcomings of the point of sale system lie in the information provided by the sales reports. The detailed sales report gives us a sales summary by product, including the quantities sold and refunded. However, the dollar values are not accurate if we compare them to the quantities sold and the prescribed prices. One explanation may be that some field units charge reduced prices at the beginning of the season, but the system does not make the distinction. But other discrepancies could not be explained. The quantities were validated and the information is reliable. Thus, information on quantities sold has to be entered on a spreadsheet including the price matrix to obtain the exact cash values and perform the reconciliation and entry in the financial system. There is a need to improve these reports to obtain accurate information on sales values.

Vectron / Commander

The Vectron terminals are programmed to compile the sales information by work shift and by day. After their work shift, attendants have access to their detailed “X” sales report, which is used to balance their till. At the end of the day, a “Z” report can be generated, providing the totals of the day’s shifts for the terminal. The field units not using the “Commander” interface must use a manual reconciliation sheet to compile the information and enter it in STAR. Entering information manually increases the risk of error and these potential errors can affect the data accuracy.

The “Commander” interface also produces different reports on sales made on the terminals linked to it. Reports can be obtained by terminal or for all terminals for a given period. These reports provide information by product type and by site. However, in contrast to the “Z” terminal report, information on refunds and discounts given is compiled in a single line, making it impossible to know which items were refunded or

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sold at discount. It would be useful to change these reports to link the information on discounts and refunds to the items sold.

Recommendations

9- The Director General, External Relations and Visitor Experience, must ensure that the information produced through the national reservation system sales reports provides data according to types of products sold.

Agree: Under the current contract with the service provider, ERVE Directorate staff, in collaboration with national office finance staff, have the responsibility to ensure that national reservation system point of sale capabilities respond to requirements for financial control and accountability.

Data according to types of products (eg. firewood, campsites, entry) sold is collected in the reservation system but is not currently available through a report in the user interface. A mock-up of the required change is being prepared and this system change will be implemented before the 2010 season.

10- The Director General, External Relations and Visitor Experience, must ensure that the sales reports of the local point of sale system integrated with the national reservation system produce accurate information on dollar values.

Agree: Under the current contract with the service provider, ERVE Directorate staff, in collaboration with national office finance staff, have the responsibility to ensure that national reservation system point of sale capabilities respond to requirements for financial control and accountability.

At the time of the testing done for this audit, the reports were producing inaccurate information. This is being fixed and will be implemented on the system by May 31, 2009.

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11- The Chief Financial Officer must ensure that the sales reports produced by the “Commander” interface linked to the Vectron terminals are changed to provide information on the types of products refunded or discounted.

Disagree: Parks Canada is currently planning on purchasing new (POS) equipment over the next three years and the result may render the "Commander" interface and reports obsolete depending on the successful bidder. An investment in the current equipment would not make sense at this time. One of the mandatory requirements for the new POS equipment is to associate each line item to its associated PCA material code and to provide a breakdown of transactions associated with each material code and comply with the audit recommendation. The POS equipment will be pilot tested in 2009 with phased in implementation starting in 2010.

The CFO will communicate, before June 2009, the requirement for all FUS to maintain backup records or other reasonable tracking system of the refund and discount information until the new POS system will be implemented.

Reconciliation process

As the Agency’s operations are decentralized, the absence of clear directives has led the field units to develop their own method for reconciling and entering sales in the financial system. Most of these reconciliation methods use Excel spreadsheet software. In addition to lack of uniformity in practices, we noted that some of the spreadsheets used are not protected to ensure the completeness of the related calculations and macros. The lack of spreadsheet security is a major risk because the recording of financial data is based entirely on these spreadsheets. This problem could be solved by the development of clear directives on the reconciliation process and the creation of a secure and standard spreadsheet, which would be provided to the field units.

Our review of each field unit’s accounting entry method showed that, overall, the revenue data entered in the financial system over the year do not reflect the actual revenues because:

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- The frequency of data entry in STAR is not uniform

- The deposits are not reconciled in STAR in a regular way for everyone

- Exchange rate fluctuations are not all entered in the account reserved for this purpose

- The field units do not all treat cash over/under amounts in the same way - The cash over/under accounts are not used everywhere

- The field units do not all use the same reports generated by the points of sale, which may lead to discrepancies with the actual situation

- No monitoring method is in place to assure the validity of accounting entries Further, our audit of data entry in the STAR financial system revealed the existence of at least three different methods. To enter sales, a billing document is created. Information on the quantity sold and unit price per product type is entered in the billing document to obtain the total sales value. Discrepancies stemming from foreign currencies and cash over/under amounts are charged to the corresponding ledger accounts. This method is adequate to provide data accuracy.

However, certain field units enter information at net in the financial system. In one case, the product price is not taken into consideration; a unit price of $1 is always entered and the total dollar value is entered in the quantity column. In another case, the entered quantity is always one unit and the total dollar value is entered in the unit price column. These two methods diminish the quality of the financial information and distort the data on products and quantities sold. It is therefore very difficult to identify precisely the portion of income corresponding to the increase in rates. This information is essential for the Agency to meet its obligations to recapitalize. In addition, analyses of attendance and prices cannot be made using the financial system, despite it being the only system containing all information on operating revenue.

Recommendation

12- The Field Unit Superintendents in consultation with the Chief Financial Officer must ensure that financial information useful for recording of revenues is entered appropriately in the STAR financial system.

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Agree: In the short term, National Office Finance will develop the standardized template and guidelines referred to in recommendation #7 above, to support the proper reconciliation process and the recording of revenues in the Agency’s financial system. National Office Finance has already taken steps to support accurate and timely information being entered in the Agency’s financial system by making changes to the Field Unit Representation Letter. The representation letter is signed each fiscal year by all Field Unit Superintendents or Fund Centre Directors attesting to the accuracy and the timeliness of the information entered in the STAR financial system.

Results of analyzed transactions

To assess the reliability of the data entered in the financial system and the quality of the data reconciliation process, we analyzed a sample of transactions from the sales entered in the financial system during summer 2008. To round out the selection, we were obliged to look at the summer 2007 transactions for two of the field units visited. We audited 61 transactions, for a total of $3,723,715, representing 7.5% of the revenues entered for the targeted field units. It should be noted that a transaction entered in the STAR system can cover several shifts, days or weeks of work. We also selected a transaction for which the entry covers the whole operating season.

Although the field units use different methods, the operating revenue reconciliation process used is minimal but correct and the variances noted are immaterial. However, the following errors were identified during our transaction review:

- 16 transactions for which the shift sheets were not signed or initialled by the duty attendant. This control makes it possible to validate that the attendant uses his/her employee code or personalized key in the point of sale system, rather than that of another attendant. The signature serves as additional proof that the attendant has properly closed his/her work shift.

- 5 transactions for which the sales data were not reconciled. The sales were entered based on the deposits and the variance was simply removed or added to another sale item. This practice must be prohibited, as it completely distorts the data entered in the STAR financial system and has a direct impact on data reliability.

- 1 transaction for which the deposits were not reconciled because the bank never provided the deposit slips.

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- 24 transactions for which cash over/under amounts were not explained by the duty attendant or his/her supervisor.

- 4 transactions for which documents supporting refunds or changes to a permit were missing.

As 23 out of the 61 transactions cover more than a week of operation, and considering the volume of the associated supporting documentation, we can say that the results of the transaction review were quite positive.

Apart from the elements identified by the transaction review, other minor shortcomings were detected. These local problems were discussed with the managers of the field units concerned and can be corrected rapidly.

The weakness of the reports produced by the system and the lack of uniformity of the data reconciliation and entry process make it impossible to ensure the accuracy of the information on operating revenue over the year. To permit appropriate decision making, it is vital to be able to track revenue progress both locally and globally.

7.4 Completeness of revenue

YELLOW Moderate improvements needed

Revenue completeness is linked to three key concepts. First, assurance of revenue completeness is conditional on observance of the principle of segregation of duties. Adequate segregation of duties implies that several parties are involved in the revenue collection process to ensure the totality of the funds. Second, quality of revenue protection is essential to reduce the risk of misappropriation of funds. There must be measures in place to ensure the security of deposits and cash register funds. Third, basic systemic control must be in place to ensure that transactions are correctly processed with the points of sale.

To determine whether the financial process is adequate to assure the completeness of operating revenue, we used the following audit criteria:

PARKS CANADA AGENCY NATIONAL AUDIT OF OPERATING REVENUE. Camping, Entry and User Fees