Board Governance & Accountability

The Board of Directors of Chatham-Kent Children's Services reflects a diverse, cross-section of the community, including representation from the police force, the judiciary, school boards/education, business, foster parents, health care and other community services. According to the Board members interviewed, when new members are recruited, consideration is given to the expertise required at the time a position becomes available. A strengths and needs matrix has been developed to support this process. Applications from prospective members are vetted by the Nominations Committee which undertakes an interview process and then formulates recommendations for consideration by the Board. Board members interviewed as part of the review see turnover on the Board as important as it allows for new ideas and a refreshed look at both challenges and opportunities.

The review of society documents indicates that the Board has a robust structure, with three standing committees: Executive; Finance and Property; and Services and Personnel. There are other ad hoc committees, i.e., Audit, and Nomination and Recruitment that meet as needed. Board members noted that there is a rotating membership on the Service and Finance committees—the two most active committees—and members are strongly encouraged to participate on each committee rather than remain on the same committee during their tenure. This allows for greater depth and expertise across the whole of the Board. Members interviewed reported that they believed the Board structure is effective as they feel it facilitates the engagement of all Board members to be active in their oversight responsibility. However, it was noted by the review team that the Board's finance committee does not include members outside of the Board, and the society may wish to consider having representation from the community and/or from financial auditors in keeping with generally accepted governance best practices.

The Board orientation process for new members and ongoing training for existing members appears adequate. In describing the Board orientation process, members cited multiple strategies. For example, information sessions on various service and financial issues are presented by staff before each meeting. Members have an opportunity to ask questions and seek clarification. Training regarding finance and the budget process is provided as one of the pre-Board meeting sessions. Members interviewed were less clear with respect to orientation on governance issues, noting that such training exists but they had not participated.

Board members interviewed present as extremely committed to the organization and their community. During the interview they highlighted their role as stewards of public funds and representatives of the community entrusted to ensure resources are managed in keeping with government expectations. However, within the context of their role in holding the society's senior leaders accountable for expenditure management, their understanding appeared less clear. For example, when asked about expenditure management planning within the organization, they noted that they have taken an oversight approach. It was noted by the review team that the Board does not receive an attestation from the CEO or Director of Finance that the society has met its statutory/financial obligations.

With respect to risk management in the society, Board members interviewed expressed confidence in staff expertise. However, it was the impression of the review team that the Board appears to struggle in assuming a strategic leadership role to provide guidance and direction to management around the need to reprofile the organization to deliver service in an efficient and effective way. For example, they have not required a balanced budget plan from the Chief Executive Officer with the identification of the risks associated with implementing such a plan. It was unclear what the society's plan is moving forward into 2013- 14 and beyond to manage the agency within approved allocations. This is increasingly critical in light of recent changes to Regulation 70 requiring CASs to submit balanced budgets.

The Board advised that it follows the society's policy regarding the requirement to evaluate the performance of the Chief Executive Officer. The CEO receives an annual performance evaluation which is conducted by the Board President; results are provided to the full Board. The evaluation is tied to the CEO's job description, which was not shared with the review team. It was not clear to reviewers how the CEO's performance goals and objectives are formulated or how they are assessed. Members of the Board expressed the opinion that the CEO is recognized for his expertise in child welfare as evidenced by his attendance at national and international forums in the field as well as his participation on OACAS and MCYS committees. They believe that many best practices emerge from CKCS due to his leadership.

The Board receives regular service and financial data reports from management, and Board members report that they have good access to data and information to inform their decision-making. However, what remained unclear was whether members received appropriate and relevant information to allow them to assess the effectiveness of management in running the organization and meeting strategic goals. It was the impression of the review team that the Board might not have a full understanding of what information to ask for and/or a process through which they might request pertinent information in a format conducive to their governance role. For example, the level of detail of the financial information provided to the Board appeared to be more appropriate for a line-by-line financial analysis rather than a broad focus on the agency's financial health and the effectiveness of senior financial staff in exercising full controllership and financial accountability.

The extent to which the Board and the CEO understand the difference between the types of information the Board requires to govern as opposed to manage the organization was unclear. For example, when asked about what information the CEO provides to the Board to demonstrate the safety of children who receive services from the agency, the CEO noted that the strategy he uses is to report to the Board President frequently.

Although the Board advised that they receive regular service data reporting, there was limited evidence that they were able to exercise their oversight role with respect to agency compliance with the Child Protection Standards in the absence of data from compliance audits conducted within the agency. Furthermore, some of the information provided to the Board regarding service issues may require more in-depth discussion at Board meetings. Specifically, Board members identified two service challenges for the society- the high number of children in care under Interim Care and Custody (ICC) orders and the workload demands associated with court ordered supervised access for children where the benefit of such access was not readily apparent. Members interviewed were of the impression that the society has limited to no avenues through which they might address these issues. In response, the review team provided information to the Board members who were interviewed regarding the society's ability to use Alternate Dispute Resolution (ADR) approaches to expedite children's legal status and permanency planning for children in care under ICCs, and to make a request to the court to vary supervised access orders where access was not deemed to be beneficial to or in the best interest of the child(ren).

A review of Board meeting minutes for the last year also raised some concerns regarding information provided to the Board, and/or the Board's understanding/interpretation of information provided to them. For example, when the ministry notified the society of its intention to conduct an expenditure management review of CKCS, the CEO was advised that the review was part of the ministry's 2012-13 expenditure management and fiscal sustainability strategy. He was also advised that the society had been selected for review, in part, because it was forecasting a deficit and the expenditure management plan submitted to the ministry indicated that the society would not be able to manage within its 2012-13 allocation. The stated purpose ofthe review, as articulated through the Terms of Reference provided to the CEO on February 20, 2013 was to work collaboratively with the society to understand cost drivers and identify potential areas for efficiencies. The Board meeting minutes dated March 3, 2013 indicate that the purpose of the review was to assist the ministry in developing a new funding model for child protection. Board meeting minutes reviewed generally reflected decisions made but not the content or nature of discussions; as a result it was difficult to determine the depth of discussion around various issues and the extent to which the Board questioned information provided to them by senior management. It should be noted however, that the letter dated February 20, 2013 from the ministry notifying the Board Chair of the review was appended to the minutes.

Accountability: Expenditure Management

Interviews with the CEO covered issues related to the society's forecasted financial pressure at the time of the review. The society's financial pressure was attributed predominantly to external issues such as inadequate funding and the timing of funding allocations. Further, it was noted from the interview that the uncertainty associated with the current funding model (i.e., the one in place for 2012-13) was an issue that contributed to the financial instability of CKCS. Given that the sources of the financial pressure were framed as external to the society, the strategy developed by the society to address financial issues was focused on ameliorating the external context. Examples include the involvement of the CEO in various provincial bodies to advocate for more funding for the sector and that CKCS was an applicant in the application for judicial review related to 2009-10 funding approvals process as a means to resolve the society's historical debt pressure. It was the impression of the review team that this focus on external circumstances was not accompanied by concerted efforts or a sense of urgency and responsibility to look at issues internal to the organization that might drive expenditures and/or opportunities for efficiencies.

Despite the submission of an expenditure management plan to the ministry on August 24, 2012, at the time of the review, the society had not tracked any progress against this plan and the 2012-13- forecasted deficit increased from $285,635 at Q2 (the time of submission of the plan) to $406,738 at Q3. This in- year deficit, combined with the society's historical deficit at the time of the review led the review team to conclude the society requires a more structured plan in place to manage expenditures within the revenues received by the organization and, in the case of child protection services, within the approved child protection services budget. Given the current fiscal environment, the society needs to look beyond immediate short-term efficiencies and think more fundamentally about how to manage the operation long term.

The review team noted that salaries/ wages and boarding costs comprise over 88% of the child welfare expenditures for CKCS. Although a significant portion of staffing costs and all boarding costs are tied to service delivery-and it is acknowledged that reductions in these costs could impact service- prudent budget planning and a long-term expenditure management plan are critical to prepare the agency for the fiscal challenges ahead. The agency should begin by looking at solutions that will have impact on costs in the short-term (6-12 months) and also have a greater long-term impact. The long-term aim should be for the agency to increase its competence in cost management and to be continually challenging the cost structure, monitoring the relationship of costs incurred to service delivery and outcomes achieved, and aspiring to create an environment for increasing the value for money spent.

Accountability: Individual Performance

Data gathered by the review team indicate that there are limited practices in place at CKCS to hold staff accountable for individual performance. During interviews with the senior management team it was acknowledged that the organization is relatively weak in this area. Although the stated policy of the agency is for all staff to undergo a performance review every two years, many child protection staff reported going several years without a review, and some noted that it had been between six and eight years since their last review. It should be noted that most staff providing mental health services operated by CKCS have current performance appraisals as this was required to attain accreditation of the mental health program. The March 3, 2013 Board minutes report that CKCS overall (including both child protection and mental health staff) has a compliance rate of 67% with this policy, attributable to poor compliance in the child welfare program.

The CEO indicated that he has not been in the practice of conducting regular performance appraisals of those staff members who report directly to him. The view was that individuals who have achieved a senior level in the organization should be able to perform competently and possess the necessary knowledge and expertise to do their jobs well. There are no regular one-on-one meetings scheduled between senior staff and the CEO, although he noted that those who report directly to him interact with him on a day to day basis, giving him an opportunity to observe their performance daily as well as through their committee participation. If there is a performance issue, the CEO noted that he manages it "then and there", however it was not clear to the review team what the performance management process involved in those circumstances. It was noted in the interview with the CEO that a new performance appraisal process is under development and, when implemented, he understands that it will require his support and modeling, which he stated he is prepared to undertake.

Staff advised the review team that individual performance management has been identified as a priority by the society. The new approach will include mandatory training on performance appraisals and standardized scoring across the organization. Management advised that in April and May 2013 the society will complete a performance appraisal for every employee who has not had one in the last year.

Staff noted that in the absence of performance appraisals, supervision is used "widely" and has a clinical focus, although there was some evidence through the file review that certain issues that should be considered clinical priorities (e.g., permanency planning and its relationship to supporting children's attachment to a stable, primary caregiver) were not well attended to (further details are provided in the section on the results of the file review, pp. 25-28). Staff noted that formal supervision is carried out every four to six weeks and many also advised that they have access to their supervisor on a daily basis and immediate direction to address issues can be acquired.

It was of concern to the review team that staff may be of the impression that supervision is a substitute for performance reviews. "Supervision" in the context of front-line child welfare service delivery focuses on the needs and progress of clients. The purpose of staff performance reviews is to set goals and targets for the employee's performance, along with a detailed review/discussion of progress towards these goals and any issues requiring additional support and/or corrective action.

2.3.1 Key Findings

Financial Management and Controllership

The review team reviewed CKCS's organizational charts and financial policies and discussed general financial administration with the Director of Corporate Service and the Supervisor of Finance. The review team also met with the CKCS auditor to discuss the extent of their work related to financial and management internal control policies and procedures. Although a full compliance review of the policies was out of scope for this review, where exceptions were noted they have been identified in this report.

Monthly financial information is produced from their accounting system and a financial package is prepared and presented for discussion at the monthly Operations Committee meetings. Bank accounts are reconciled monthly and the Supervisor of Finance has a detailed spreadsheet that tracks costs and allocations and reconciles them to the financial system. Cost per child can be tracked using one of the modules, but not all costs are captured (e.g., if something is paid via credit card).

The society has policies on Financial Management, Financial Accountability and Governance that are posted on their intranet. However, while financial policies exist, they are not always adequate and/or followed. Further, the review team assessed the society's budget controls as relatively weak. The budget process appears to be used as a vehicle solely for forecasting expenditures with no emphasis placed on the allocation and control of expenditures and as a tool to promote accountability and effectiveness. Managers are not provided with a budget for their department/unit and, as a result, senior management do not have financial accountability for dollars spent related to their area of control. Senior managers from across the organization meet regularly as the Operations Committee, which is chaired by the Director of Corporate Services. Senior managers reported that expenditures are tracked against budget and discussed at the committee, however, the chair indicated that the nature of the discussions was information sharing. There was no structured discussion focused on additional strategies that could be employed to manage expenditures in excess of funding.

The society does not have a formal policy on the apportionment of overhead cost and shared program cost. Shared costs are automatically charged to programs based on the percentage of staff in each department. This apportionment methodology is reasonable if it is applied consistently throughout the fiscal year; however, the society's staff explained that all programs provided through CKCS, except child welfare, are balanced at year end. Because of this year-end redistribution, the actual shared cost charged to programs does not align with the society's apportionment percentages.

It was noted that the society made several questionable spending decisions at year end, so that the amount of surplus reported to the ministry, was minimized. For example, in both 2010-11 and 2011-12 the agency paid down their mortgage and made other year end investments including prepayment for repairs and maintenance and the purchase of a vehicle. Prepayments are ineligible expenses under the ministry's funding policies. The integrity of the financial information in the agency's annual Child Welfare Transfer Payment Annual Reconciliation (CW- TPAR) is questionable.

There were several instances noted of funds being spent inappropriately, or payments made without adherence to agency policies, including:

• Non-interest bearing loans to staff including the Chief Executive Officer, for items such as computers, "wellness" equipment, iPhones, and salary advances. More than $135,000 related to such loans was outstanding at March 31, 2012, and in excess of $144,000 in 2013.Taxable benefits are not routinely charged for these items, as required by the Income Tax Act.
• Duplicate payments of travel costs for the Chief Executive Officer.
• In at least two instances, cost was recorded in one fiscal year (March 29, 2012), with the work being done in the following fiscal year (May 2012).
• Year-end cash expenditures for large amounts such as a mortgage payment of $25,000 on March 25, 2011 and a vehicle purchase of $38,000 on March 21, 2012. The mortgage payment did not have the requisite pre-approval from the ministry.
• A retirement stipend (█████) paid to the Chief Executive Officer, several years before his expected retirement.

Salaries, Wages and Benefits

It was the assessment of the review team that CKCS could explore additional strategies to contain salaries and benefits costs of unionized staff. The four-year Collective Agreement was established in 2010, effective from April 1, 2010 to March 31, 2014. The overall wage structure including grid progressions in most cases is approximately 5% and cost of living increases of 9% over the term. Over four years an existing employee could have had an overall increase of over 32% depending on their classification. Benefits including vacation entitlements, standard work hours, sick leave, the absence of co-payments for benefits, discretionary days, personal internet connections, etc., are also fairly generous compared to other BPS organizations.

Management Staff: although for two years there was no movement along the management/non-union wage grid as required by the Management Constraint Policy, CKCS management salaries increased by 6% effective April 1, 2012. This was reflected in the records as an effective "catch-up" amount, equal to the amounts union staff received over the same period (2.25% +2% +1.75% in each of 2010, 2011 and 2012 respectively). This catch-up increase is difficult to rationalize given the current fiscal challenges the agency and the sector are facing.

Boarding Costs

The review team performed a detailed review of boarding costs, clients' personal needs and health and related costs for the 2011-12 fiscal year actual expenditures. Fourteen client files from various categories were selected and all of the 2011-12 costs related to those clients were reviewed. No material discrepancies were noted.

The review team reviewed the "Foster Parent Financial Handbook" and concluded that CKCS has comprehensive policies in place to support boarding costs payments. The per diem rates and allowances appear reasonable. The review team also reviewed five Special Rate Agreements (SRAs) and confirmed that the billing rates matched the agreements. In addition, the team reviewed the reason(s) why the SRAs were requested and all appeared reasonable (unique medical conditions, aggressive behaviour tendencies, etc.). Based on the results of the reviews, the expenditures appear reasonable and in compliance with the "Foster Parent Financial Handbook." Financial processes are adequate.

Travel/Mileage

Following a review of travel and mileage expenditures the review team concluded that the society requires significant improvement in controls and oversight to ensure that costs are appropriate, staff are accountable, and everyone complies with the society's Travel, Meal and Hospitality policy. Existing policies are usually lacking or weak and where policies are present and appropriate, they are not followed and there appears to be no consequences for staff who fail to comply. Support for this finding is outlined below.

The employee travel and meal allowance policy allows $9.00 breakfast, $13.00 lunch, and $21.00 dinner, with no requirement for receipts. The Chief Executive Officer has a per diem of $60 per day within the region, $75 outside the region. Although some useful tools have been developed (e.g. the Trip Calculator), the review team found very little evidence that the tools were being used or that anyone was actually reviewing travel claims with a critical eye. Further to this, the review team also noted that the process for travel, business and mileage claims was duplicative and inefficient. For example, staff are required to use different forms for meals ("expense claim form") and for mileage ("mileage report"), even though they might be claiming for one trip. Often 2 levels of approvals are required, but the signatures appear only there as a requirement, not as a control (i.e. the manager is not actually reviewing the claim with a view of assessing compliance as the claims are non-compliant). Examples of specific issues are outlined below:

• Under the BPS travel directive, economy class should be the standard class for rail travel and appropriate level of approval is required for any other class (VIA-1 or business class). However, under the society policy/management handbook management staff traveling by rail can travel by VIA-1 travel business class provided they spend a majority of their time on the train working on society business. A review of senior management travel for the period August to November 2012 revealed that 52% (14 of22) of the rail travel was by Business Class (VIA-1). There was no evidence attached to the travel claims that proved that staff was working on society business when they travelled VIA-1 .
• The review team could not find evidence of verification of staff mileage prior to sign off and payment. The team reviewed staff mileage for nine (9) staff. Of those, 88.8% of claims were incorrect in mileage, with most rounded upwards. Although a manager is signing off on the claim, it does not appear that effort is made to review the worker's mileage claim prior to forwarding to the Finance department for payment. When questioned, the Finance department advised that they do random reviewing of claims, however it did not appear that the reviews were effective. CKCS does not maintain standard mileage charts for common trips. Often senior staff mileage claims do not provide actual starting or destination address, only the general area to which they travelled.
• The review team noted several instances of management staff using their own vehicles for car trips greater than 200 km, with no indication why it was not operationally feasible to find a cheaper means of transportation, as required by the society's policy.
• The review team noted several instances of travel claims without accompanying receipts (e.g. cab fares), even though the policy states that "taxi travel will be reimbursed only with receipts and where justified by exceptional circumstances."
• The review team noted some instances of meal claims in excess of the standard per diems, with no accompanying explanation.
• The review team noted other claims that did not have accompanying receipts (gas claims, personal internet connections).
• The review team noted two instances of the CEO being paid the per diem meal allowance and also charging meal costs on the same travel claim.
• Out-of-province travel claims by the CEO regularly included meals in excess of the per diems, and often receipts were not attached or only the credit card receipt was attached, and at times it was questionable whether the costs were only for one person.
• Meals at meetings such as Practice and Research Together or Adoption Resource Exchange that included staff were regularly in excess of the sum of the per diem costs per person.

Procurement

CKCS has a procurement policy in place -the Contract Relationships and Purchased Services Policy. Through a review of five procurement files, the review team concluded that several of CKCS's procurements did not follow the Purchased Services Policy and did not demonstrate that publicly funded goods and services were acquired through a process that was open, fair and transparent. Details of the concerns identified through these five files reviews are outlined below:

1. Roofing Contracts

   Three roofing contracts have been awarded to one vendor, with the following findings noted by the review team:

   • 2008 Tender for 495 Grand Ave.
     • There is no professional evaluation of the roof condition or any subsequent business case that might justify replacing virtually the whole roof.
   • 2009 Tender for 215 Murray St.
     • Letter from external consultant providing recommendations regarding which parts of the roof should be replaced, recommended time frame and an estimated budget, including drawing
     • Recommended areas of the roof for the current year: 1, 2, 5
     • Estimation of pricing $82,000-$93,000
     • Bid price $86,670 + GST (considered reasonable by the review team)
   • 2010 Tender for 215 Murray St.
     • Tender to replace several roof sections (A, B, D, E, F, H, I, J,) including drawing
     • Sections 3 (D) and 4 (F), were included in the tender. Section 3 recommended to be done in 2010, section 4 to be done in 2011. Sections A, 8, E, H, I, J were not included in the replacement recommendations. There was no record of a different recommendation and No business case for added sections.
     • Estimated price for sections 3 and 4$134,000-$144,000. Winning bid price for tendered roof areas $249,170 + GST . The lowest bid was $229,790 + GST but was not accepted as two references were not included in the bid package
     • Contract was not fully executed

   Concerns of the review team based on the information in the contract file included the possibility that work is being done that is not required. and that efforts should have been made to pursue the lowest bid and save approximately $20,000 given that the wording in the request document is conditional:, "Errors, incomplete tenders ... may render the tender invalid"; the agency could have asked lowest price bidder to provide the two references.

2. HVAC Conversion Contracts

   Two HVAC Conversion contracts were reviewed. Both of these procurements were not compliant with the Contract Relationships and Purchased Services Policy in many areas. Findings are detailed below:

   HVAC Conversion at 495 Grand Ave.

   • According to provided file-one supplier was contacted to provide the work, no other communication with other potential vendors was found, and no RFP/tender was issued
   • The bidding price was over $40,000; at this level the CKCS Competitive Procurement Thresholds require a minimum of 3 suppliers be invited to bid
   • No reason or business case provided to justify the work
   • No reason provided for why only one supplier was contacted
   • No requisition approval
   • No contract
   • The invoice was dated for March 30, 2012 and received April 11, 2012; however, the cheque requisition was dated March 22, 2012
   • A cheque was written for March 20, 2012, returned to the Procurement Manager, held until work was completed; cheque was debited from the society's bank statement on May 28, 2012

   HVAC Conversion at 215 Murray Street

   • No justification/business case in regard to why replacement needed to be done
   • RFP was issued March 1, 2012
   • No signed contract
   • No requisition approval
   • Purchase order is dated March 29, 2012
   • Invoice is dated March 29, 2012
   • Cheque requisition is dated March 29, 2012
   • Cheque was held until work was completed; cheque was debited from the society's bank statement on May 30, 2012
3. Snow Removal Contract

   A review of the snow removal contract between the agency and its snow removal contractor revealed questionable procurement practices including a potential conflict of interest that was not declared. Detailed findings include:

   • Tender was issued; 4 suppliers responded with a proposal
   • Review of the evaluation criteria raised concerns about the clarity of what was being asked in the evaluation criteria. The differences in the evaluation scores given can be explained by differences in the understanding of the criteria in the minds of the evaluation team members.
   • The existing supplier, who has been providing the service since shortly after the society's inception, was awarded the contract.
   • Upon review of the contract, it appears that an employee listed on the successful Supplier's submission is a relative of the owner. The work number listed for this employee is CKCS's phone number. The employee is also an employee of CKCS. The contract contains Article VI "Conflict of Interest" and the parties have signed to certify that there is no conflict of interest. The potential conflict was not recognized and no mitigation measures were put in place.

Volunteer Drivers

Like many non-profit organizations, CKCS relies on services provided by volunteers to reduce costs and establish a connection with the community. Given that CKCS clients are children and quite vulnerable, it is critical that all volunteers who have unsupervised access to children are adequately screened so that clients are not unnecessarily exposed to risk.

CKCS pays more than $600,000 annually to volunteer drivers. With respect to the expense claims, the volunteer is responsible for submitting a kilometer expense report, indicating the child's name, the pick-up and drop-off locations, as well as the kilometres driven and hours spent. The supervisor stated that she would look at the report to double check that the volunteer had been asked to go to those locations on those days, however, she noted that she does not confirm the listed kilometres or independently verify the stated kilometres using MapQuest or Google Maps.

Four files of volunteers who received large (in excess of $2,000) monthly cheques were reviewed. After tracking many of the routes, three files had many drives for which the kilometres seemed to be overstated. One file showed the volunteer driving over 86,800 km for the year. Some days the driver indicated they were driving for approximately 12 hours. This amounted to the volunteer receiving over $38,000 in travel expenses, for which kilometres were not verified.

Mortgage Payments

The agency has two outstanding mortgages. Payments (principal and interest) are charged to "Building Occupancy" and funded by ministry. Under the ministry's admissible/inadmissible expenditure policy mortgage expenses (principal and interest) are admissible expenses only with the prior approval of the ministry. In addition, based on the ministry funding model guidelines only "approved" financing cost should be included under "Building Occupancy".

The ministry did not approve any mortgage funding for the agency. In addition the agency paid down $25,000 on their mortgage on March 25, 2011 without ministry prior approval.

Admission Prevention

Contrary to the Ontario Permanency Funding Policy Guidelines, CKCS is counting family episodes more than once. In 2011-12 04 there were 35 episodes of admission prevention.

The ministry's reporting requirements for Admission Prevention are:

1. CASs must report an unduplicated number of families receiving admission prevention services. For example, if a family receives episodic support on more than one occasion, that family may only be counted once.
2. Expenditures reported under Admission Prevention are for "financial assistance" only and are only to be provided on an "episodic/emergency basis to meet short term needs and address immediate health and safety of the child and could prevent an admission to care". Expenditures such as, but not limited to, salaries and wages or administration must not be reported as Admission Prevention expenditures.

The review team reviewed the finance department's records with respect to Admission Prevention and noted that volunteering time/travel was posted to one family with 12 episodes being counted. As travel was to and from daycare, this is not considered episodic. Four other families were counted twice each.

Kitchen Arrangement

Kitchen facilities were included when the extension of the Grand Ave location was built. CKCS has contracted with an independent operator to "run" the kitchen.

At the time of the review, the arrangement was that the operator supplies all consumables and pays any staff that she has working in the kitchen. The operator does not pay rent or any other fee. Payment can be made either by cash or via an employee account. The staff member provides their employee number and the operator provides the accounts receivable listing to the society's payroll department. The payroll department then deducts the amount owing from the employee's pay, and provides a cheque to the operator. The operator pays no fees for this service from payroll.

Payroll staff indicated that they spend approximately 1.5 hours between 2 staff members on a bi-weekly basis to complete the needed work to provide the operator with her earnings.

File Conversion

CKCS incurred high costs for converting and indexing documents. In 2011-12 there are two invoices from Maple City (MC} Imaging totalling $99,982.40 for converting /indexing paper documents (closed historical client files) to DVDs. The total amount of one invoice $49,991 .20 was prepaid in March 2012 per note on invoice, with the final amount of $24,995 being paid August 2012 when the work was completed. CKCS no longer converts files to DVDs as it is considered too costly. Currently the society has laser fiche software and does on-site scanning of notes, etc. to the laser fiche software. When there is a high volume of scanning, the society outsources the scanning and conversion.

Disposing of Computer equipment

CKCS does not have a formal IT Asset Disposal Policy. Their practice is to replace desktop equipment and servers every 4 to 5 years, depending on the use of equipment. Computers are repurposed where possible; otherwise hard drive and memory modules are pulled. Computers are then recycled to local organizations or businesses that participate in Ontario electronic stewardship (e.g. Goodwill, Staples). Monitors that are in working order are usually donated to local organization to distribute to the community. Hard drives are either repurposed or destroyed mechanically. When servers are replaced, all hard drives and memory modules are either repurposed or destroyed, which is more often the case.

Network switches, routers, radio equipment are upgraded or replaced in a 5 to 7 year time frame. These items are recycled.

2.5.2 Recommendations: Finance Review

It is recommended that the ministry should retain a third party audit team to conduct a full review of staff expense claims, procurement practices and the society's practice of providing loans to staff to ensure appropriate controls and mechanisms are developed for the ongoing sustainability of the organization and demonstration of value for money.

It is recommended that Chatham-Kent Children's Services should:

1. Continue working on strategies to manage within funding allocations including the reviewing of resource commitments (staffing and other expenditures) to ensure fiscal prudence and regard for economy and efficiency. There should be increased focus on HR planning in the society's planning and budgeting process to support strategic HR considerations that will promote the allocation of resources based on operating requirements and the delivery of services in an efficient and effective manner.
2. Strengthen its financial management by implementing departmental/unit budgeting. This should include the development of a formal Board-approved policy for allocating costs among the various program areas, and follow it consistently. The overall goal should be to apportion costs reasonably and in a consistent manner.
3. Review its financial management practices to ensure they support strategic planning and decision making and to improve accountability by holding managers to approved budgets.
4. Implement a cost management system that provides managers with accurate, useful, relevant and timely information on the full cost of delivering a service. This will help managers understand the costs associated with delivering services, and would be useful as the focus on delivering services as efficiently and economically as possible.
5. Have its Board should put more emphasis on its stewardship role through increased involvement in the budget approval process, including requesting and looking at the cost and financial information to guide decisions about improving value for money.
6. Remind all staff of existing financial and internal control policies and require compliance from everyone, including management.
7. Put systems in place to ensure that ministry financial policies are followed, specifically the ministry's Transfer Payment Operating Funds -Basis of Accounting policy; the Admissible/Inadmissible Expenditures policy and Year-End Reconciliation policy
8. Ensure all taxable benefits are charged to all staff as appropriate.
9. Pay only for costs incurred by CKCS staff that are appropriately supported with detailed receipts and in compliance with policy and BPS directives.
10. Revisit its Travel, Meal and Hospitality policy and consider amendments that will reduce costs and enhance accountability, such as:
    • Requiring all staff (including senior management) to review and comply with CKCS's revised Travel, Meal and Hospitality policy
    • Requiring receipts to support travel expenses
    • Requiring the use of the Trip Calculator (attached to the claim) or requiring staff to enter specific locations for all trips
    • Consider undertaking a competitive process to retain a vehicle rental company to have vehicles available for staff trips in excess of 200 km
    • Consider corporate travel cards for staff who travel regularly.
    • Establish standard mileage charts for common trips.
    • Require prior approval by the CEO for managers travelling by VIA-1, and Board President prior approval of CEO travel by VIA-1
11. Revise existing procurement policy and guidelines to comply with the requirements of the Broader Public Sector Procurement Directive, including the 25 mandatory requirements and provide procurement training for all staff and management associated with procurement activities.
12. Establish and follow a more rigorous controllership model for procurement so that goods and services are paid for only after they have been received.
13. Work with the South West Regional Office to ensure appropriate mortgage agreements are in place for mortgages funded by the ministry.
14. Establish and follow a more rigorous controllership model for volunteer drivers, including independent verification of kilometers travelled and hours driven.
15. At the conclusion of the existing kitchen services contract, competitively procure the services and require a fee from the operator that recognizes the cost of space, utilities, and employee time.
16. Instruct staff and management responsible for the acquisition of I&IT goods and services to follow the existing procurement practices, including approvals and tendering requirements. The society should also ensure appropriate documentation is on file for all I&IT acquisitions.
17. Adjust the Admission Prevention account to make sure only eligible expenditures are included. This includes ensuring that only an unduplicated number of families is reported as receiving Admission Prevention services, in accordance with ministry requirements.
18. Consider discontinuing non-interest bearing loans for computers, iPhones and other goods or services for management and non-union staff and explore alternative funding arrangements. Proposed changes must be assessed within the requirements of the current collective agreement. Loans already granted by the society should be documented by the society as a taxable benefit in keeping with Canada Revenue Agency's Taxable Benefits and Allowances-T 4130(E) Rev. 12.

The ministry will continue to work with the society to support the implementation of the recommendations outlined in this report.