ARCHIVED - Audit of Staffing Transactions - NWT - Project 07/15 - December 19, 2007

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Author: Audit and Evaluation Sector
Date: December 19, 2007

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Table of Contents


Executive Summary

In 2004, INAC Human Resources Branch (HRB) discovered an anomaly in the pay records of the HR Development Officer (PE-03), Northwest Territories (NWT) region. The job data in PeopleSoft shows that the position data was overridden to reclassify an OM-04 position to the PE-05 level. This staffing transaction resulted in acting pay for the incumbent at the PE-05 level from July 23, 2002 through September 25, 2004. Internal Audit was asked by the current Director General of HR to review the matter.

The audit scope was expanded to review the controls governing this type of staffing transaction, including monitoring and PeopleSoft data integrity, The results of the audit can be summarized as follows:

Non-compliance with authorities

Finding:

The RDG of NWT exceeded his authority by classifying an OM-04 position at a PE-05 level and then making a retroactive staffing transaction at the PE-05 level without the approval of the Manager, Corporate Classification and Organization in HQ. The action taken by the RDG was contrary to the direction discussed with the Manager of HR of NWT.

Recommendation:

Managers with delegated signing authorities should understand the limitations of their authorities under the Treasury Board Secretariat and INAC’s Delegation of Signing Authorities and should act within their delegated signing authority. Managers who clearly exceed their delegated authority, especially when in contravention of direction provided by HR management, should be reviewed and appropriate disciplinary action taken, which could include up to revocation of their authorities in cases of abuse.

Failure of employees to disclose internal wrongdoing

Finding:

The RDG of NWT unilaterally decided to reclassify a position from OM-04 to PE- 05 despite contrary advice and explanation of the appropriate reclassification process from the Manager of HR. The acting pay transaction was processed based on pressure and written approval from the highest level of delegated authority in the region. The final decision served to override the controls in place of staffing transactions.

Based on section 33 and 34 of the FAA, employees with delegated authority for transactions should disclose wrongdoing using INAC’s formal conflict resolution mechanisms. Transactions that are not in compliance with policies and procedures resulting from undue influence should be brought to the attention of the appropriate authorities. Employees without delegated authority could also have disclosed the wrongdoing. Failure by employees to disclose internal wrongdoing is in breach of the public service code values and ethics.

Recommendation:

HR should require mandatory training on Ethics and Rules of Conduct in the Workplace and on the Public Servants Disclosure Protection Act for every employee in the department. This should be refreshed at regular intervals. Monitoring of staffing transactions by Head Quarters is minimal

Monitoring of staffing transactions by Head Quarters is minimal

Finding:

The officials interviewed in Head Quarters (HQ) expressed concern that monitoring of staffing transactions is minimal due to lack of resources and capacity. Without active monitoring of staffing transactions, it is difficult to assess the effectiveness of management practices and controls; and to provide timely assessments, prevention and remedial actions in areas where control deficiencies or failures have been identified.

PeopleSoft reports can be customized to provide excellent tools for active monitoring. Integrity of data in the PeopleSoft system (also a concern as outlined below), is crucial in order to place reliance on reports for monitoring purposes.

Internal Audit requested a PeopleSoft report which indicates that of 903 job records since 2002, 94 indicate an overfill position where the employee classification does not match the position classification at the time of the job record. The national capital region has the largest percentage of overfill positions (45%) followed by NWT (13%), Manitoba (11%) and BC (9%) regions.

Recommendation:

HR in HQ should establish the capacity to actively monitor, on an ongoing basis, HR management practices and controls. At a minimum, HR in HQ should verify all overfill positions to establish whether there are other occurrences of overpayment resulting from acting pay. Additionally, exception reports should be developed as needed to establish whether other anomalies exist and as such whether further work is required. If the ad hoc PeopleSoft report developed for the audit is to be used in the future, its reliability should be assessed. Audit and Assurance Services should be apprised of progress and results of this work.

Although HR management indicate that the PeopleSoft system will be revamped, interim measures should be put in place to make the active monitoring of staffing transactions a priority. Lessons learned from active monitoring of staffing transactions will bring valuable input in developing the right system that will provide appropriate monitoring and control.

Data integrity in PeopleSoft continues to be an issue

Finding:

The corporate area of HR is accountable to the Treasury Board and the Public Service Commission for reporting on staffing transactions. They are responsible for obtaining updates on staffing transactions from regions and correcting discrepancies. The integrity of the data is essential for HR in HQ to perform its monitoring and oversight function. Currently, HQ has no control over the use of the PeopleSoft system in regions.

Recommendation:

For effective decision making, the data quality in PeopleSoft must be complete and accurate throughout the year. Good data quality is critical for the accurate reporting of staffing transactions. It is recognized that HR place great reliance on the work performed by regional staff. Functional responsibilities related to the regional HR roles should be clarified and documented. The organizational model should be enhanced to develop a stronger working relation and provide for greater independence in regards to the responsibilities for this role.

HR should work with the CFO sector (in particular – Information Management (IM) Services) to implement controls and tools to ensure the data integrity of the PeopleSoft system and the consistency of data with financial reporting systems.

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1.0 Introduction

In 2004, INAC Human Resources Branch (HRB) discovered an anomaly in the pay records of the HR Development Advisor (PE-03), Northwest Territories (NWT) region. The job data in PeopleSoft shows that the position data was overridden to reclassify an OM-04 position to the PE-05 level. This staffing transaction resulted in acting pay for the incumbent at the PE-05 level from July 23, 2002 through September 25, 2004.

The authority to classify a position at the PE-05 level is delegated to the Manager, Corporate Classification and Organization. However, between 1995 and 2005, there is no record of authorization to reclassify the subject position. In fact, in September 2005, the position was reconfirmed at the PE-03 level. In addition, during the years 2002, 2003 or 2004, the Publiservice Notice archives have no record of an appeal notice for the PE-05 acting assignment.

To clarify the situation, the Director General of HR wrote a letter dated November 29, 2004 requesting that the Regional Director General, NWT Region provide documentation supporting the classification and acting assignment transactions. The most recent correspondence (i.e. December 21, 2005) indicates that, as yet, no response was received from the Regional Director General of NWT Region. Internal Audit was asked by the current Director General of HR to review the matter.

The key parties involved in this transaction (i.e. the Director General of HR in HQ, the Regional Director General of NWT, the Associate Regional Director General, the Director of Corporate Services, the Manager of HR and the classification specialist in NWT) are no longer employed by INAC.

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2.0 Audit Objectives and Scope

2.1 Audit Objective<

To assess the extent to which the staffing transaction under review:

2.2 Audit Objective

The audit examined a specific Human Resources (HR) staffing transaction in place between July 2002 and September 2004. Interviews and examinations were conducted at headquarters during the survey and examination phase. The management control framework governing this type of staffing transaction was reviewed as necessary to identify gaps that contributed to the situation.

The audit included an examination of the classification files of position number 39059 and 39161 provided by HR in HQ:

Position # Position Title Group/Level Reporting Relationship
39059 Leadership Coordinator(Vacant Position) OM-04 Reporting to Position Number 21025 – Assistant Regional Director General (EX-02)
39161 Human Resource Development Advisor (Incumbent under review) PE-03 Reporting to Position Number 39059
 

Included in this audit was an examination of the response letter from the Regional Director General of NWT Region to the then Director General of HR and the pay & benefits file of the incumbent under review.

The audit did not include an examination of the staffing file of the incumbent under review since it could not be found in the NWT’s regional office.

The scope of the audit was expanded to include interviews with the HR Management System Manager in order to assess the reliance of the PeopleSoft reports for monitoring purposes and the Manager, Pay Accounting to determine the roles and responsibilities of sec. 33 under the Delegation of Human Resources Authorities.

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>3.0 Methodology and Approach

The audit consisted of reviews of the classification files, the pay & benefits file of the incumbent under review, interviews and data review in the Human Resource Management System (HRMS).

During the survey and examination phase, the internal auditor:

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4.0 Audit Findings and Recommendations

Background

Background of the staffing process

The staffing transaction is a four step process beginning with a job requisition followed by classification, staffing, and Compensation and Pay Administration.

Job Requisition

The job requisition starts the staffing action. The job requisition is approved by the Responsibility Centre Manager (RCM). A request for acting pay requires a job requisition.

Classification

Classification is governed by Treasury Board policies. The classification process begins when a manager needs to create a new position, change the duties of an existing position or make changes to the organization structure. Depending on the degree of change, appropriate consultation on relativity issues takes place and necessary approvals from senior management are obtained. The first step is usually done in consultation with the Human Resources Advisor to assess the impacts and obtain advice on classification and organization design. The officially signed job description is submitted to the accredited classification specialist to proceed with the analysis and evaluation process and establish the appropriate group and level of the position. The classification decision is authorized by the accredited classification specialist and the manager by completing the Treasury Board classification action form TB330. The employees are advised of the result.

Treasury Board Policy restricts delegated departmental classification signing authority beyond the Deputy Head to classification specialists who have been accredited by the Treasury Board Secretariat. In INAC, classification authority is sub-delegated from the Deputy Minister to accredited classification advisors in the corporate office and regional offices. In INAC, there are basically three levels of sub-delegated authority. The highest level is held by the Manager, Corporate Classification and Organization; the second highest level is held by corporate classification advisors and the third level is held by regional classification advisors. In this case, the Regional Classification Advisors are authorized to classify the PE group from level 1 to level 3.

Staffing

The Public Service Employment Act (PSEA) governs staffing under the authority of the Public Service Commission (PSC). It requires appointments to be based on merit, which means that people are hired based on their qualifications. The PSC provides Manager’s Handbook on Staffing and Recruitment for guidance and procedures.

Acting assignment is where an employee is required to perform temporarily the duties of a higher classification level for at least the qualifying period specified in the collective agreement or the terms and conditions of employment applicable to the employee’s substantive level. The responsible manager must be able to demonstrate that the selection is meritorious if the assignment is for more than four months or is extended beyond four months. The accepted letter of offer is the certificate of appointment in acting situations that will exceed four months. The notice of right to appeal on appointments is required to be posted for 14 days except for appointments under the employment equity program. For acting appointment, the information should be retained for two years from the date of acceptance of an offer or last administrative action.

For collection of information and for monitoring and evaluation purposes, the following documentation must be kept for acting appointment:

Compensation and Pay Administration

Compensation and Pay Administration is governed by Treasury Board policies. The HR Benefits & Compensation Unit is responsible for ensuring that proper payment procedures are in place and that pertinent system profiles are updated as needed. Each regional office processes their compensation transactions. HQ - Compensation provides support for any questions the regional offices may have regarding compensation procedures and issues.

The Compensation and Benefits Consultant follows the Publiservice Virtual Pay Site checklist to process acting payments. The Compensation and Benefits Consultant does not check whether there is in fact an acting position. The Compensation and Benefits Consultant accepts the acting authorization document and / or letter of offer and acceptance as authorization for the acting assignment by the Classification unit and the Staffing unit in order to process the acting pay.

The results of the audit are as follows:

4.1 Non-compliance with authorities

The RDG of NWT clearly exceeded his authority by:

On January 12, 2005, the RDG of NWT region prepared a response to the Director General of HR letter of November 29, 2004. For unknown reasons, the letter was never sent to HQ.

In the letter, the RDG of NWT explained that the incumbent under review was assigned in an acting capacity as a backfill to the vacant position of Leadership Coordinator (i.e. group/level OM-04) effective July 23, 2002. The ARDG, the incumbent and the HR Senior Staffing Officer determined that the duties of the Leadership Coordinator were equivalent to the responsibilities of a PE-05. Meanwhile, the region started a restructuring initiative within Human Resources and Leadership & Learning (L&L) that would require a comprehensive review of each work description within the two units. The RDG of NWT believed that the restructuring exercise and the review of the work description would confirm his assessment that the OM-04 position should be at the PE-05 group and level.

Notwithstanding the advice of the Manager of HR to proceed with a formal review, re-write and classification of the OM-04 work description, the RDG of NWT made the ultimate decision to classify the position of the Leadership Coordinator at the PE-05 group and level. The NWT office used the Career Enhancement Program (CEP) assignment agreement form to classify the incumbent at the PE-05 level. The Right to Appeal was posted in the L&L work unit for 10 business days. The RDG of NWT directed the pay administration to use their internal Staffing and Classification Action Request form over the authorized TB 330 form as the authority to change the classification level and to proceed with the acting pay at the PE-05 group and level.

The RDG of NWT clearly abused his authority by overriding the following transactions:

The officials interviewed discovered other anomalies from the review of the RDG of NWT’s letter and the incumbent’s Pay & Benefits file. The Compensation Manager noted that indeterminate employees under the CEP cannot receive acting pay. The Section Head HR Staffing added that as soon as acting pay starts, the assignment becomes redundant. Furthermore, the Section Head HR Staffing indicated that acting appointments of members of employment equity groups are excluded from appeal rights under article 4(1) and from the merit principle under section 10 of the old Public Service Employment Act (PSEA).

The action taken by the RDG was contrary to the direction discussed with the Manager of HR of NWT.

Recommendation:

Managers with delegated signing authorities should understand the limitations of their authorities under the Treasury Board Secretariat and INAC’s Delegation of Signing Authorities and should act within their delegated signing authority. Managers who clearly exceed their delegated authority, especially when in contravention of direction provided by HR management, should be reviewed and appropriate disciplinary action taken, which could include up to revocation of their authorities in cases of abuse.

4.2 Failure of employees to disclose internal wrongdoing

The RDG of NWT made the final decision of reclassifying the position from OM- 04 to PE-05 despite the advice of the Manager of HR regarding the proper reclassification process. The acting pay transaction was processed based on the pressure from the highest level of delegated authority in the region and with supporting documentation to take this final decision. The final decision served to override the controls in place of staffing transactions.

Employees with delegated authority (i.e. sec. 34 and sec. 33) who were directly related to the transaction should have come forward to disclose the wrongdoing using INAC’s formal conflict resolution mechanisms. Employees without delegated authority could have disclosed the wrongdoing. Failure from employees to disclose internal wrongdoing is also a breach to the values and ethics code of the public service.

Recommendation:

HR should require mandatory training on Ethics and Rules of Conduct in the Workplace and on the Public Servants Disclosure Protection Act for every employee in the department. This should be refreshed at regular intervals.

4.3 Monitoring of staffing transactions by Head Quarters is minimal

The staffing transaction under review was discovered by chance by HR in HQ. HQ proceeded to investigate the matter by calling in HR in NWT but there were in NWT the benefit of the doubt and a chance to explain their action. NWT prepared a response letter but was never sent. HR in HQ did not pursue the matter due to staff turnover at that time.

In interviews conducted in HQ, the Section Head Human Resources Staffing and the Compensation Manager confirmed that at that time the Public Service Commission (PSC) and the Department were not monitoring staffing transactions due to lack of resources, lack of experienced staff and high staff turnover in HQ.

At the request of the DG of HR, the Manager of Human Resources Management Information Systems ran a PeopleSoft report to determine if there are other similar scenarios, called overfill, whereby the incumbent’s classification is greater than the position classification (e.g. an employee classified as PE-05 group/level occupying a position classification PE-03 group/level). The report captured all job records since 2002 where the employee’s classification does not match the position classification at that time of the job record. Only scenarios within the same group (e.g. PE, FI, AS) were counted because of its apparent anomalies. Similar scenarios of overfill between different groups (e.g. an employee classified as PM-03 group/level occupying a position classification AS-03 group/level) were not counted since it would take an expert in classification and staffing to make that determination.

The report shows the following results of overfill scenarios across the department:

Regions # of Records % of Total # of Overfill % of Total Overfill
Ontario 43 5% 2 2%
Alberta 31 3% 2 2%
Saskatchewan 10 1% 2 2%
Atlantic 70 8% 3 3%
Nunavut 26 3% 3 3%
Quebec 33 4% 5 5%
Yukon 74 8% 5 5%
BC 160 18% 18 9%
Manitoba 42 5% 10 11%
NWT 194 21% 12 13%
NCR 220 24% 42 45%
TOTAL 903 100% 94 100%
 

The report shows a high incidence of potential overfill positions in BC, Manitoba, NWT and NCR.

Recommendation:

HR in HQ should establish the capacity to actively monitor, on an ongoing basis, HR management practices and controls. At a minimum, HR in HQ should verify all overfill positions to establish whether there are other occurrences of overpayment resulting from acting pay. Additionally, exception reports should be developed as needed to establish whether other anomalies exist and as such whether further work is required. If the ad hoc PeopleSoft report developed for the audit is to be used in the future, its reliability should be assessed. Audit and Assurance Services should be apprised of progress and results of this work.

Although HR management indicate that the PeopleSoft system will be revamped, interim measures should be put in place to make the active monitoring of staffing transactions a priority. Lessons learned from active monitoring of staffing transactions will bring valuable input in developing the right system that will provide appropriate monitoring and control.

4.4 Data integrity in PeopleSoft continues to be an issue

The Manager of Human Resources Management Information Systems confirmed that data integrity in PeopleSoft continues to be an issue, more so in NWT. The Manager Corporate Classification & Organization expressed the same concern for the Department. As a result, HQ cannot rely on reports for purposes of analysis and monitoring.

HQ has no control over the use of the PeopleSoft system in regions. The corporate area of HR is accountable to the Treasury Board and the Public Service Commission for reporting on staffing transactions. They are responsible for contacting the regions for updates on staffing transactions and to correct any discrepancies. It is essential for monitoring requirement that data integrity is ensured.

Recommendation:

For effective decision making, the data quality in PeopleSoft must be complete and accurate throughout the year. Good data quality is critical for the accurate reporting of staffing transactions. It is recognized that HR place great reliance on the work performed by regional staff. Functional responsibilities related to the regional HR roles should be clarified and documented. The organizational model should be enhanced to develop a stronger working relation and provide for greater independence in regards to the responsibilities for this role.

HR should work with the CFO sector (in particular – Information Management (IM) Services) to implement controls and tools to ensure the data integrity of the PeopleSoft system and the consistency of data with financial reporting systems.

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5.0 Concluding Comments

We thank the management team and their staff interviewed in HQ for the cooperation and support extended during this audit.

Action Plan

Project Title: Audit of Staffing Transactions - NWT
Region or Sector: HR in HQ

Recommendations Actions Responsible Manager (Title) Planned Implementation Date
1. Managers with delegated signing authorities should understand the limitations of their authorities under the Treasury Board Secretariat and INAC’s Delegation of Signing Authorities and should act within their delegated signing authority. Managers who clearly exceed their delegated authority, especially when in contravention of direction provided by HR management, should be reviewed and appropriate disciplinary action taken, which could include up to revocation of their authorities in cases of abuse. HR will continue to provide staffing subdelegation training to provide participants with the knowledge and skills necessary to undertake their roles, responsibilities and accountabilities related to staffing within the PSEA framework.

A policy on sub delegation will be developed outlining clear sub-delegation terms and conditions.

Directed and special reviews/investigations of particular staffing activities will be undertaken when abuse of authorities is brought to our attention or is identified through monitoring activities.

Based on evidence of contravention of delegated authorities, timely action will be taken to address unauthorized transactions and to take appropriate corrective action, including removal of authority if warranted.
Director of Aboriginal and Corporate Resourcing April 2008
2. HR should require mandatory training on Ethics and Rules of Conduct in the workplace and on the Public Servants Disclosure Protection Act for every employee in the department. This should be refreshed at regular intervals Training in the areas of values and ethics (V&E), the new Code of Conduct (presently under development at the federal level), and the Public Servants Disclosure Act should be developed and made available to INAC employees. OPI: Director General HR OCI: Corporate secretariat  
  Short term plans include the delivery of a training/information session in the NWT region in the New Year focussed on the day-to-day application of values and ethics.
Other departmental initiatives include the release of :
  March 31, 2008
i) V&E web-site called Insite; February 28,2008
ii) lunch and learn sessions in the NRC; March 31, 2008
iii) reviewing INAC's Orientation training to update information about V&E and disclosure of workplace wrongdoing. April 30, 2008
3. HR in HQ should establish the capacity to actively monitor, on an ongoing basis, HR management practices and controls. At a minimum, HR in HQ should verify all overfill positions to establish whether there are other occurrences of overpayment resulting from acting pay. Additionally, exception reports should be developed as needed to establish whether other anomalies exist and as such whether further work is required. If the ad hoc PeopleSoft report developed for the audit is to be used in the future, its reliability should be assessed. Audit and Assurance Services should be apprised of progress and results of this work. HRB will monitor on an ongoing process of qualitative and quantitative information on current and past staffing results to assess staffing management and performance and identify early corrective action, if required, to manage and minimize risk and improve staffing performance.

The monitoring of staffing activity will be a shared responsibility between management and Human Resources HRB will carry out four (4) types of monitoring as per an approved Staffing Management Accountability and Monitoring Framework:

regular on-going;
Director of Aboriginal and Corporate Resourcing April 01, 2008
Although HR management indicate that the PeopleSoft system will be revamped, interim measures should be put in place to make the active monitoring of staffing transactions a priority. Lessons learned from active monitoring of staffing transactions will bring valuable input in developing the right system that will provide appropriate monitoring and control.
  • cyclical review of staffing activities including on-site reviews;
  • thematic reviews;
  • directed, special reviews of particular activities.
   
4. For effective decision making, the data quality in PeopleSoft must be complete and accurate throughout the year. Good data quality is critical for the accurate reporting of staffing transactions. It is recognized that HR place great reliance on the work performed by regional staff. Functional responsibilities related to the regional HR roles should be clarified and documented. The organizational model should be enhanced to develop a stronger working relation and provide for greater independence in regards to the responsibilities for this role.

HR should work with the CFO sector (in particular – Information Management (IM) Services) to implement controls and tools to ensure the data integrity of the PeopleSoft system and the consistency of data with financial reporting systems.
HRB will monitor the integrity of PeopleSoft data using feedback from Public Service Commission, Auditor General and other pertinent audits in order to provide assurance as to data quality and to allow for exception reporting and corrective action on a timely basis.

HRB will ensure that quarterly reports produced for central agencies will be completed as per reporting requirements and that recommended actions are completed on a timely basis.

Appropriate HR performance measures including for quality assurance will be developed in consultation with the Staffing Management Accountability Framework (SMA F) project now underway within the Department.

Director of Aboriginal and Corporate Resourcing

April 2008

A new Staffing PeopleSoft HRMS training manual has been developed and recently distributed.

A data management strategy will be developed in the context of the implementation of PeopleSoft 8.9.

Director of HR Planning and Systems
Internal Audit should consider HR transactions within its planned Quality Assurance Monitoring Audit. Director Audit and Assurance Services
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