Acquisition Cards - March 2012
Appendix B – Approach and methodology
The audit was undertaken in a manner consistent with the TB Policy on Internal Audit and related guidelines and procedures, and with generally accepted auditing standards.
The methodology consisted of a review of pertinent documentation, systems, practices, procedures, and interviews with appropriate Department of Justice management and staff at headquarters and in the Ontario, Atlantic, and Quebec regions.
In conducting this audit, the audit team:
- prepared detailed audit criteria for each management framework area;
- prepared a detailed audit program with criteria;
- developed a sample selection methodology for testing acquisition card files (outlined in detail below);
- interviewed departmental management and staff;
- conducted on-site visits to headquarters and the Atlantic, Quebec, and Ontario regional offices to review their acquisition card files, conduct the appropriate testing, and conduct interviews with management and staff;
- reviewed documents including the following:
- TBS Directive on Acquisition Cards (October 1, 2009)
- Comptroller General: Acquisition Cards Program – Best Practice Guide
- Department of Justice Acquisition Process Flowcharts
- Delinquent Accounts Summary
- Listing of Active Cardholders
- Sample Emails to Cardholders with Accounts in Arrears
- Government of Canada Acquisition Card Application – Employee Account Request Form
- Department of Justice Delegated Financial Signing Authorities Chart
- Department of Justice – Supporting Notes to the Delegation of Financial Signing Authorities
- Departmental Acquisition Card Training Deck and related training material
- Department of Justice – Acquisition Card Procedures (Draft Version 5)
As of March 31, 2010, there were approximately 233 acquisition cards in the Department. During the timeframe of the audit, the audit team tested 165 acquisition cards in use at headquarters and in three regional offices.
In determining the sample size for the transaction testing, the audit team obtained an Excel file, downloaded from the card provider’s reporting system, containing all acquisition card statements for headquarters and the Atlantic, Quebec, and Ontario regions for both fiscal years. The file included 18,562 transactions, stratified as follows:
The audit team used the statistical sampling software IDEA to determine an appropriate sample size. Based on the total number of transactions for the two fiscal years audited, IDEA provided a sample of 360 transactions to review in order to obtain a sound representation of the complete transaction population. For the two fiscal years, IDEA outlined 180 transactions to be tested for each fiscal year. The sample size was determined based on the following parameters:
- total transaction population size (18,562 transactions)
- expected deviation rate of 2%
- tolerable deviation rate of 5%
- confidence level of 95%
A 95% confidence level signifies that 95 out of 100 items sampled will accurately represent the population being sampled.
Once a sample size for each fiscal year was determined, the audit team determined that a sample of 45 transactions to review was reasonable for each of the three regions and headquarters. Given the large number of transactions associated with cardholders in headquarters, Quebec, and Ontario as compared to the fewer transactions in the Atlantic region, the audit team used professional judgment to conclude that 20 transactions per fiscal year would be appropriate to be tested in the Atlantic Region and that 25 transactions needed to be allocated to the other three locations.
Using professional judgment and based on preliminary information obtained during the planning phase interviews with headquarters and the three regions, the audit team determined that the 25 transactions should be allocated to the remaining three locations as follows:
- Headquarters – nine transactions
- Quebec – eight transactions
- Ontario – eight transactions
In summary, the sample size of transactions reviewed for each location per fiscal year was as follows:
- Headquarters 54 transactions
- Atlantic 20 transactions
- Quebec 53 transactions
- Ontario 53 transactions
Total 180 transactions
Once the audit team determined the sample size, the audit team modified the reporting system transaction information as follows:
- All transactions valued at $10 or less were removed from the population, as the audit team determined that these amounts were immaterial dollar transactions that should not be reviewed, given the limited amount of time available to review them and given materiality considerations.
- All negative balance transactions identified as statement payments, credits, and refunds were removed, as they would be subject to separate testing procedures.
Once the reporting system’s database was modified by the audit team to adjust for transactions that would not be reviewed, the remaining transactions were imported into IDEA and the software was used to select a random sample of transactions for each region, based on the sample size per year as identified above.
The audit team determined that the above sample of 180 transactions for each fiscal year was sufficient information to make conclusions in relation to the audit objective.
FAA, Section 34 Compliance in all three Regions and at Headquarters
Audit testing revealed the following results by location and fiscal year for compliance with section 34:
|Section 34 Compliance|
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