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HomeMy WebLinkAboutCAO-002-23Clarftwn Staff Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: Select a Meeting Date of Meeting: January 9, 2023 Reviewed By: Mary -Anne Dempster, CAO File Number: Report Number: CAO-002-23 By-law Number: Resolution#:GG-006-22 Report Subject: Corporate Risk Assessment — 2022 Findings Recommendation: 1. That Report CAO-002-23 be received for information; and 2. That staff initiate the workplan and report back to Council as projects are completed. Municipality of Clarington Report CAO-002-23 Report Overview Page 2 Staff have undertaken a high-level corporate risk assessment, having met with staff in all departments over the course of several months. The aggregated findings are included in this report under the following categories: • Cyber • Growth • Human Capital • Communication — Internal & External • Economic & Financial • Legislative & Political Based on the findings, a repository of projects has been provided, and it is expected to grow. The Project Manager — Audit and Risk will pull from this repository throughout the year to deliver on the workplan associated with the position. It is expected that other staff will also work on projects within this repository. 1. Background 1.1 In May 2022, the Internal Audit function moved from Financial Services to the Office of the CAO, where an amended workplan was created that saw the traditional scope of the internal audit function expanded. 1.2 The amended workplan, as endorsed by the former Audit and Accountability Committee, has been structured as follows (further explanation can be found in Report CAO-008-22, listed as Attachment 1): 1.2.1. Risk Assessment— Annually 1.2.2. Internal Audits — Twice per year 1.2.3. Value for money Audit — Once per year 1.2.4. Service Delivery Reviews — Twice per year 1.2.5. Undertake LEAN Initiatives across the organization — ongoing 1.3 To build a program that can deliver results for the Municipality, it is critical that a comprehensive corporate risk assessment be undertaken. The risk assessment will provide a baseline through which insights can be gained as to where resources should be allocated to make the most efficient use of the workplan. Essentially the risk Municipality of Clarington Report CAO-002-23 Page 3 assessment will drive the work. Due to the critical nature of the risk assessment, it will be completed annually to ensure that it provides as accurate of a picture as possible. It is expected that as the program develops over time, the outputs of the subsequent pieces (audits, service reviews, etc.) will drive efficiencies for the corporation. 1.3.1. Undertake an annual corporate risk assessment, through which the following set of initiatives would be the move of Internal Audit to the office of the CAO, there is now a requirement for an annual corporate risk assessment. This assessment would look at various layers within the municipality and not be exclusively financial risks. 2. Risk Assessment Overview 2.1 The risk assessment involved confidential one-on-one interviews with all departments — inclusive of both senior leadership and other critical staff. The interviews were conducted over several months and culminated in a significant amount of insightful material, which has been aggregated for the purposes of this report. 2.2 It is important to note that Health and Safety risks were not included in the scope of this assessment. The municipality has a dedication of resources to health and safety as well as a Joint Health and Safety Committee that meets regularly. 2.3 In reviewing the responses, risks were reviewed and classified into broad categories, which can be found below. Reputational risk was not included as a category as it is impacted by each listed. The categories are: • Cyber • Growth • Human Capital • Communication — Internal & External • Economic & Financial • Legislative & Political 2.4 Each of these segments is expanded with some specific examples and the potential impact of the risks. Each segment will lend itself to projects that can be undertaken by staff (project types listed in Section 1.3). Staff have pulled out critical projects from this risk assessment and populated a table at the end of this document to showcase items that will inform the Project Manager — Audit and Risk's workplan for 2023. It is expected that this list will continue to grow and act as a repository of work for other staff members Municipality of Clarington Page 4 Report CAO-002-23 to pull from as well (e.g. Manager of Corporate Performance and Innovation, Business Performance Specialist [in 2023 budget], staff trained with Lean Green Belt certification, etc.). Cyber 2.5 With the increased reliance on the Internet, online platforms and software solutions, cyber risk is a critical component of any municipal risk assessment. Cybercrime continues to increase and become more sophisticated, inclusive of ransomware attacks. In 2022 there were several cyber attacks at public sector organizations across Durham Region, most notably in November at the Durham District School Board which severely impacted critical operations. 2.6 Our IT division has initiated sourcing software to manage business continuity and disaster recovery, but further coordination outside of IT, stretching to managing physical, staffing, and cyber business operations more broadly is critical. This requires continued focus on coordination between all departments. 2.7 As part of business continuity planning, IT is looking to increase redundancies in terms of cellular service providers. For example, when the Rogers outage took place, several staff were obviously unable to connect to the network. There are technology solutions to allow for the ability to switch between networks (e.g., Rogers and Bell). This would ensure the ability to provide continuity in service delivery in several areas. This will be seriously pursed in 2023. 2.8 The overall staffing compliment in IT is quite lean. According to the IT Strategic Plan (completed in 2017), it had a built -out staffing plan that should see us at a structure of 17 positions. We are at 11 as of the end of 2022. 2.9 The utilization of an IT Steering Committee was identified several years ago through the IT Strategic Plan and was formed in 2018. Upon reflection it became increasingly clear that further consideration had to be given to membership. Having Senior Leadership Team members on it, simply because of title was not necessarily the most effective approach. Earlier this year the structure was revamped, inclusive of implementing a more robust intake for IT related initiatives through this Committee. The Committee and its effectiveness will be monitored throughout 2023 and reported back on through the next annual risk assessment. Growth 2.10 Growth in the Municipality can be viewed as a double-edged sword, bringing with it both opportunity and risk. Clarington has been undergoing relatively significant growth for a number of years and is preparing itself for an even greater growth rate. This is compounded by the housing targets, and fee claw -back provisions included in recent Municipality of Clarington Page 5 Report CAO-002-23 Provincial legislation. There is considerable pressure on the Planning and Infrastructure Department as they work through the flurry of changes, many of which have not been fully fleshed out by the government. 2.11 Beyond the immediate pressures on planning services, increased growth creates demands and pressures on existing municipal services. More growth increases traffic and demands on infrastructure, demand for recreation services, and increased in resident inquiries and complaints. This will force staff to look at our processes, particularly related to how we accept, track, and execute against inquiries and complaints. Our previous processes may no longer be viable due to the sheer volume we are currently experiencing, let alone against the projected growth. 2.12 Aging infrastructure limits our ability to meet increased demand. A key example of this would be the Hampton Operations Centre. The facilities available are significantly constrained. The structure is aging, there is not enough space to store equipment (reducing useful life), internet connectivity is weak, limited washing facilities (garden hose used for outdoor washing), lack of potable water, and lack of space to undertake larger training efforts. The list is quite long, but not comprehensive, and ultimately underscores a need to match growth with investment in services. Any net level of growth would create a significant strain. Seriously consideration needs to be given to the long-term viability of the Centre, and potential future options. 2.13 The population growth and changing demographics have and will continue to have an impact on any customer facing service we provide. Ranging from the type of services residents are interested in, to the level of service expected. Human Capital 2.14 The challenges related to the recruitment and retention of staff is a commonplace across the province. Clarington, like other municipalities, is feeling this and it has impacted our ability to provide the level of service in certain areas that we would hope to. For example, the limited ability to recruit lifeguards has resulted in a reduction in the amount of aquatic programming that can be offered. 2.15 More broadly, hiring managers have found themselves in situations where they receive no applications or those who do apply are severely underqualified — leading them to have to re -tool and eventually go back to market. Sometimes still with no success. All of these delays in the filling of positions puts additional pressure on existing staff. There are some cases where this dynamic has led to those existing staff then leaving. Hiring managers often seem not build in overlap, particularly with known retirements, whereby the new employee could shadow the former one for a period, providing invaluable on- the-job training. Municipality of Clarington Report CAO-002-23 Page 6 2.16 The aging workforce has brought with it a wave of senior retirements, leading to the loss of a considerable amount of institutional knowledge. This happens in any industry, but in our case, there is limited succession planning in place, which further amplifies the issue. 2.17 When hiring new staff or promoting others, despite candidate skillset and experience, there is increased pressure on hiring managers, and direct supervisors to ensure the quality of the work. This requires dedicated time to train and in some -cases up -skill. This can be true even in cases when experienced staff are moving into a new position, time must be dedicated to appropriately onboard and set expectations. In some areas this causes re -work or corrective action. 2.18 Consideration should be given on significant projects, particularly things like an IT system roll -out where existing staff, often subject matter experts, are utilized to test and validate new systems/programs. This can create gaps when staff are essentially seconded to these projects but there is no one to back fill their existing responsibilities. Project management of such initiatives should take these resourcing challenges into account. 2.19 The pandemic has had a significant impact on employee mental health. There were efforts to roll -out a comprehensive program corporate -wide but anecdotally the uptake was there at the beginning, but the momentum was not sustained. References were made generally around mental health and supports. Further consideration could be given to enhance or shift resources within the employee benefit plan to better support access to mental health services. 2.20 Staff have been involved in several corporate initiatives that adjust how and where services are offered (customer -centric ground floor, shared offices, online service offerings). This changing environment has left an impact on some people as the changes are over and above their current workload, leaving them with limited capacity to adapt. 2.21 The pandemic did affect many departments and their service delivery. The Municipality did adapt frequently, and many staff were able to work from home. Increased staff absences due to illness was also a factor. In some departments, training programs slowed or were delayed. Some training is still constrained as external training services are working on meeting the backlog and increased demand. Departments are working towards increasing their training, but this is an ongoing challenge. Fire Services has a software solution that is used to track and document staff's training and compliance with new policies. Due to the nature of Fire Services work they have an established system in place. They are working at having staff meet new certification requirements. The other departments would benefit from a learning management system to better document staff training, certification and awareness of new policies. This would certainly be an asset for Health and Safety systems as well. Municipality of Clarington Page 7 Report CAO-002-23 2.22 Overall, Clarington is a lean organization. Using data from 2021 Financial Information Return comparing the full-time staff per capital and full-time staff per household Clarington is one of the lowest. Fire staff numbers are excluded as Clarington has a composite fire service model. See the chart below (*Pickering 2021 data unavailable). Municipality* Population Households FT Fire FT Fire PT FT Staff per capita (excluding Fire) FT Staff per household (excluding Fire) Clarington 105,000 38,000 359 74 125 0.27% 0.75% Ajax 131,700 39,310 422 113 1 0.23% 0.79% Oshawa 183,800 66,847 768 208 0 0.30% 0.84% Whitby 138,500 46,628 580 141 1 0.32% 0.94% Communications — Internal and External 2.23 Communication is an integral part of adapting to change and ensuring there is a clear understanding of expectations. While there have been some changes within the Communications division, communication is part of everyone's job. There is a need to have a clearly articulated internal communications protocol on key issues — utilizing a variety of mediums. This is particularly true in terms of the reliance on filter down communications from senior leaders to staff. It was apparent that staff in different departments were not privy to the same information, particularly as it related to strategic corporate initiatives. This can leave staff feeling overwhelmed and not appropriately engaged in change. There were also considerations related to the delay in bringing key staff or services into projects early on, at a point where potential problems could be identified before they happen. 2.24 External communication is an important part of informing and managing expectations related to municipal services and their delivery. New residents may not understand the large geographical area of Clarington. Often the Municipality is the first choice for inquiries, despite the request potentially not being within our jurisdiction (e.g., school bussing issues, information on easements, insurance inquiries, etc.). Communication with the public on the services that we do (and don't) offer should be looked at in the future. Economic and Financial 2.25 Inflation has been significant in the last year. This impacts both operating and capital budgets. For municipal capital budgets the non-residential building consumer price index (NRBCPI) is a relevant guide. From Statistics Canada the NRBCPI shows significant increases. The base year is 2017 at 100 and the third quarter of 2022 for Municipality of Clarington Page 8 Report CAO-002-23 Toronto area at 180.2, an 80 per cent increase. These inflationary pressures make it challenging to complete existing capital projects. 2.26 There has been challenges in securing consultants for several projects. The Provincial funding and short timelines have created shortages for some consulting services. Also, there has been a consolidation of firms in some industries that reduces the pool of vendors. 2.27 Contract management has been a challenging in some areas, where the contractor does not meet all of the terms of their obligation, but due to the limited number of firms, staff feel they have reduced leverage in addressing poor workmanship, or lack thereof. 2.28 Ontario One Call, who are responsible for proving clearance before any digging can begin on a project, are often slow in their turnaround. These delays cascade into extended municipal led project timelines. This can be particularly problematic when it delays initiation of work. Legislative and Political 2.29 The Province has introduced significant legislative changes with shortened transition times. Certainly, this is evident with respect to Planning Services. These changes place immense pressure on the staff and resources of the municipality. 2.30 Other areas have also been affected by legislative and regulatory changes. Changes to the Building Code previously occurred every few years. Building officials are now seeing changes in the Building Code several times a year. These changes must all be understood and put into practice, despite overall challenges on the recruitment of qualified building inspectors. 2.31 Many of the legislative and regulatory changes are happening fast and come out with limited detail, making it hard to plan and then interpret what is expected of us. 2.32 There are several significant changes to Public Sector Accounting Standards (PSAB) coming into place over the next few years. This puts additional demand on staff to set up new processes to meet these new reporting requirements. 3. Workplan — Audits and Reviews 3.1 As discussed, the finding from the risk assessment will inform the audit workplan through 2023, as well as provide an ongoing repository or projects that can be completed by other municipal staff members. Municipality of Clarington Page 9 Report CAO-002-23 3.2 The chart below summarizes some of the proposed projects in the three categories: Internal Audit Value for Money Service Delivery Reviews & Audit LEAN Projects. Inventory Review (Public Corporate Cell Business Continuity Plan (BCP) Works) Phone Usage and Disaster Recovery Plan Includes fleet parts, fuel, salt Compliance with (DRP). and sand, paper and corporate policy, CAO office to oversee this project Community Services products usage and as it a corporate wide scope. for sale. appropriate staff As determined by risk As follow up from Audit and allocation. assessment. Accountability Intake #3 and Purchasing Card internal audit Letters of Credit — Securities Capital Project Municipal Law Enforcement held for development and Process Service Delivery (Customer other projects. Specifically change Journey) Due to the value of securities orders and overages, This would be a follow up on held, the recent process for project Animal Services service delivery implementation of AMANDA management. review 2017 and the transfer of all and the number of new staff enforcement to MLE. Also, handling Letters of Credit. implementation of AMANDA Review of a completed Building Inspection Services capital project. Include Service Delivery (Customer compliance with municipal Journey) policies and contracts. Due to staff turnover, introduction Form the value of large of AMANDA system, rapid growth infrastructure projects. and the potential risks. Corporate Succession Planning Program As per risk assessment — critical to long-term human capital planning. 3.3 Staff will report back to Council on projects as they are completed. Municipality of Clarington 10 Report CAO-002-23 4. Financial Considerations Not Applicable. 5. Concurrence Not Applicable. 6. Conclusion Page It is respectfully recommended that Report CAO-002-23 be received for information and that staff begin implementing the workplan. Staff Contact: Catherine Carr, Project Manager — Audit and Risk, ccarr(cr).clarington.net or Justin MacLean, Manager — Strategic Initiatives, net Attachments: Attachment 1 — Report CAO-008-22 (Strategy, Intergovernmental Affairs, Transformation (SIT) Division Interested Parties: There are no interested parties to be notified of Council's decision. Clarington Staff Report If this information is required in an alternate accessible format, please contact the Accessibility Coordinator at 905-623-3379 ext. 2131. Report To: Audit and Accountability Committee Date of Meeting: August 3, 2022 Reviewed By: Mary -Anne Dempster, CAO File Number: n/a Report Number: CAO-008-22 By-law Number: Resolution#: Report Subject: Strategy, Intergovernmental Affairs and Transformation (SIT) Division Recommendation: 1. That Report CAO-008-22 be received for information. Municipality of Clarington Report CAO-008-22 Report Overview Page 2 In May 2022, the Strategy, Intergovernmental Affairs and Transformation Division was created within the CAO Office. Internal Audit has moved from Financial Services to this new division. The Internal Audit Manager is now the Project Manager, Audit and Risk. This report highlights the general workplan of this position with a focus on internal audit, service delivery reviews, value for money audits and LEAN initiatives. 1. Background 1.1 In May 2022, there were some staffing changes to the Office of the CAO with the creation of the Strategy, Intergovernmental Affairs and Transformation (SIT) Division. The Internal Audit Manager, Catherine Carr, has moved from Financial Services to the new division as the Project Manager, Audit and Risk. Samantha Gray is the Project Manager, Strategic Priorities, one of the key responsibilities of this new division. 2. Work Plan 2.1 The Project Manager, Audit and Risk has been working with the CAO and Manager of SIT to develop an amended workplan that will see the traditional scope of the internal auditor function expanded. The contents of the workplan will still fit within the original Terms of Reference of the Audit and Accountability Committee (AAC) and report to the Committee accordingly. 2.2 It is the intention of the revised workplan to provide the following outputs, which will be discussed below in greater detail. • Risk Assessment — Annually • Internal Audits — Twice per year • Value for money Audit — Once per year • Service Delivery Reviews — Twice per year • Undertake LEAN Initiatives across the organization Municipality of Clarington Report CAO-008-22 Page 3 LEAN Initiatives Risk Management Framework Value -for- Service money Delivery Audit Reviews 2.3 To build a program that can deliver results for the Municipality, it is critical that a comprehensive corporate risk assessment be undertaken. The risk assessment will provide a baseline through which insights can be gained as to where resources should be allocated to make the most efficient use of the workplan. Essentially the risk assessment will drive the work. Due to the critical nature of the risk assessment, it will be completed annually to ensure that it provides as accurate of a picture as possible. It is expected that as the program develops over time, the outputs of the subsequent pieces (audits, service reviews, etc.) will drive efficiencies for the corporation. 2.4 There will then be two internal audits conducted per year, the intention of which is to ensure that said processes have the proper controls in place to mitigate risk. The results of these assessments will provide important insights in determining the area(s) of focus for future internal audits. An example of these compliance style audits would be the recent purchasing card audit, which looked at transactions and compliance with municipal policies. 2.5 Value -for -money audits are evidence -based exercises that examine and report on fund expenditures and if they are being done in an effective and efficient manner. One of these audits will be done annually. An example of this would be reviewing the corporate cell phone program and gaining an understanding of things like usage, which positions have access to a phone, etc. Municipality of Clarington Page 4 Report CAO-008-22 2.6 Service delivery reviews have been undertaken in the past, and that will continue under this new program. These reviews are a systematic evaluation of a municipal service with the intention to find efficiencies within the current delivery model and make recommendations for change. The current provincial government has provided three intakes to its Audit and Accountability Fund (AAF), which provides municipalities like Clarington the opportunity to apply with specific efficiency style projects to obtain financial support. We have successfully applied to this fund three times. • Organizational Structure Review (completed) • Centralized Customer Service Review (completed) Process Modernization of Public Works — Payroll and Job Allocations (currently underway) 2.7 The current project (Process Modernization of Public Works) as listed above, is focused on reviewing the administrative process of managing payroll and then being able to determine how wage cost can be attributed to services. Having an accurate picture of this will allow management to be able to clearly articulate and understand costing per service area. The results of this work will be presented to the Audit and Accountability Committee in early 2023. As per the terms of the funding, this project must be conducted by a third -party provider and a final report must be posted by February 1, 2023. Due to the tight timeline, the municipality has single sourced a consultant to start the project this July. The Project Manager, Audit and Risk will oversee the project. To date, Clarington has received approximately $336,000 in funding to support these projects plus a commitment for additional funds to be received upon the completion of the current project. 2.8 It is also important to note that in the past, after a service delivery review was undertaken, the responsible department did not always report the implementation results/status. It is the intention of the new program that as these reviews are completed that the implementing department(s) provide appropriate updates that can be taken back to this committee. This will allow for better tracking of results including appropriate metrics. 2.9 As a final component of this new program, there will be a renewed focus on LEAN initiatives. LEAN initiatives are the identification, reduction, and elimination of waste within suboptimal processes - thereby creating efficiencies. In July of this year, seven municipal staff have begun working towards obtaining their LEAN Green Belt certification. This initiative will have two expected outcomes. The first being a greater bench of staff who have formal LEAN training, which can be utilized in the future. The second being that as part of obtaining the certification, each participant must be involved in a real -world LEAN project at their workplace. It is expected that once these Municipality of Clarington Report CAO-008-22 Page 5 projects are completed later this year, that the results will be reported to this committee in early 2023. 3. Concurrence Not Applicable. 4. Financial Considerations Not Applicable. 5. Conclusion It is expected that this updated program will play a critical role in the transformation and modernization of municipal services into the future. It is respectfully recommended that the committee receive this report for information. Staff Contact: Justin Maclean, Manager, Strategy, Intergovernmental Affairs and Transformation, 905-623-3379 ext 2017 or jmaclean@clarington.net. Attachments: Not Applicable Interested Parties: There are no interested parties to be notified of Council's decision.