Project Description

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B.C. Government Ministry of Finance

Office of The Comptroller General Strengthens Internal Controls

The Corporate Compliance & Controls Monitoring Branch of the B.C. Government’s Ministry of Finance (3CMB) monitors internal controls and provides a “threat of detection” to ensure employees are complying with government-wide procurement and financial policies. The B.C. Government used to rely on a highly cumbersome manual process for processing payments that employed significant people and technology resources and still resulted in payment errors. With continuous monitoring, the department has realized over $21 million in efficiency savings in each of the past two years and has strengthened its internal control framework. The team has been able to implement risk-based statistical sampling, improve data integrity, and provide more targeted recommendations for strengthening internal controls, while significantly cutting processing costs. Based on its considerable success, the 3CMB team has just implemented continuous monitoring for their purchasing cards area as well.

Challenges

The B.C. Government was using a pre-payment review process to determine the accuracy and appropriateness of all government expenditures. This involved manually reviewing each and every expenditure to confirm that an employee with the appropriate authority had approved the expense, ensure segregation of duties occurred with the receipt of goods and services, and that invoices were properly classified to the correct GL account. The use of purchase orders (POs) was not standardized across government.

Once this arduous review was completed, the payment was released with a customized “OK-to-Pay” code. The full process required significant time, staff resources and technology, and still resulted in errors. The government required a way to streamline the accounts payable (AP) and review processes, reduce risk and cut compliance costs.

Solutions

Since government’s Internal Audit and Accounting department already relied on ACL for audit analytics, it was the natural solution for the 3CMB team. The government used to conduct a pre-audit of all transactions, but with ACL, the 3CMB team expanded to a risk-based post-audit sampling methodology that resulted in $21.4 million in efficiency savings this past fiscal year alone. Using ACL as their foundation technology, the B.C. Government also realizes direct savings with recovery of overpayments.

Using ACL software, 3CMB has provided the government with greater confidence in its internal controls and stronger corporate compliance measures through the “threat of detection” program. It has enabled the government to implement risk-based sampling, resulting in reduced internal control costs and overall risk. The ACL solution has provided a mechanism to ensure government-wide policy compliance is achieved through systemic recommendations and ongoing improvements. As a result of their achievements, the team recently implemented ACL’s enterprise continuous monitoring solution and is planning to add more tests by deploying additional technology.

Results

  • Over $21 million in efficiency savings each year for the past two years thanks to full data coverage through risk-based sampling, without the manual labor necessary for pre-auditing payments.
  • Direct savings from recovery of incorrect expenditure payments.
  • Improved data integrity for financial reporting and greater ability to achieve policy compliance with lower cost.
  • Tighter internal control framework that boosts confidence, credibility and reliability.
  • More focused recommendations and insight for both financial and procurement policies and strengthening of internal controls.

The Payment Review Office at the B.C. Government’s Ministry of Finance was established in November 2001 by the Treasury Board, as part of the Office of the Comptroller General’s overall governance function. In 2004, resources were transferred from ministries to support an expanded mandate to reduce risks and overpayments. In October 2006, the name of the program changed to Corporate Compliance & Controls Monitoring Branch (3CMB) to recognize their broader mandate of improving internal controls.

3CMB is a necessary financial control, providing a “threat of detection” to encourage compliance across government ministries in B.C. The 3CMB program also improves internal controls and policy compliance, and reduces financial losses to government bodies by testing government and expense authority compliance with financial and procurement policies and legislation.

Products in use:

ACL GRC

ACL Analytics Exchange

"Having a solution that enabled us to develop new methodologies that are statistically valid and provide the foundation to report compliance and improve controls has been invaluable. ACL and one financial reporting system for government has significantly boosted stakeholder confidence and increased our credibility"

Shyrl Kennedy

Director of Corporate Compliance & Controls Monitoring