Audit of management practices of missions - Abuja

Global Affairs Canada
Office of the Chief Audit Executive

July 2017

Executive Summary

Global Affairs Canada manages Canada’s international platform — a global network of 179 missions in 109 countries that supports the international work of Global Affairs Canada and 37 partner departments, agencies and co-locators^{Footnote 1}. Administrative activities that support the Department’s missions require effective and efficient management practices to help ensure sound stewardship of resources.

Rationale for this audit

In 2015, the Department initiated an internal investigation into the Canadian Consulate in Haiti, and found that fraudulent schemes had been put in place by locally engaged staff that resulted in estimated government losses of $1.7 million. Given the findings in Haiti, the Deputy Minister of Foreign Affairs requested a series of management practice audits of selected missions to determine whether similar issues could be taking place at other Canadian embassies abroad. The Office of the Chief Audit Executive conducted a risk assessment to identify those missions susceptible to higher levels of fraud risk and therefore selected for audit. The Abuja mission was one of five missions operating in a higher fraud risk environment selected for audit.

What was examined

The objective of this audit was to provide assurance that sound management practices and effective controls are in place to ensure good stewardship of resources at the Abuja mission to support the achievement of Global Affairs Canada objectives. This audit examined the mission’s management practices with regard to oversight and monitoring, procurement and asset management, and human resources between April 2015 and January 2017.

What was found

Overall, the audit team found that processes established by Headquarters relating to finance, procurement, contracting, asset management and overtime are not consistently followed and some key controls are not in place or are circumvented. There is an absence of mission-generated, reliable information for decision-making to promote and demonstrate good stewardship of resources.

Specifically, the audit team found that budget forecasting was primarily based on previous year’s actual figures rather than a detailed analysis of needs for the upcoming year. No analysis of expenditures was found that would identify questionable purchases requiring further review. The audit team also found weaknesses in the procurement and management of assets at the mission. There was evidence of lack of value for money and questionable choices of procurement methods. [REDACTED]

In addition, the audit team found management oversight weaknesses relating to the challenge function and monitoring activities for mission drivers’ overtime usage. Moreover, there was limited evidence of tracking, conducting trend analysis, and assessment of the reasonableness of overtime. Consequently, it is difficult for senior management to assess whether compensation for overtime is warranted.

Conclusion

Processes established by Headquarters relating to finance, procurement, contracting, revenues, and asset management were not consistently followed and some key controls were not in place or were circumvented. There was a lack of mission-generated, reliable information for decision-making to promote and demonstrate good stewardship of resources.

Recommendations are detailed under section 5 of this report.

Statement of Conformance

In my professional judgment as Chief Audit Executive, this audit was conducted in conformance with the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing and with the Treasury Board Policy and Directive on Internal Audit, as supported by the results of the quality assurance and improvement program. Sufficient and appropriate audit procedures were conducted, and evidence gathered, to support the accuracy of the findings and conclusion in this report, and to provide an audit level of assurance. The findings and conclusion are based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed upon with management and are only applicable to the entity examined and for the scope and time period covered by the audit.

Brahim Achtoutal
Chief Audit Executive

1. Background

Global Affairs Canada (the Department) manages Canada’s diplomatic and consular relations, promotes international trade and leads Canada’s international development and humanitarian assistance programs. It  also manages Canada’s international platform — a global network of 179 missions in 109 countries that supports the international work of Global Affairs Canada and 37 partner departments, agencies and co-locators.^{Footnote 2} According to the 2015-2016 Global Affairs Canada Departmental Performance Report, $928M was spent to operate and support the missions. Administrative activities that support the Department’s missions require effective and efficient management practices to help ensure sound stewardship of resources.

In 2015, the Department initiated an internal investigation into the Canadian Consulate in Haiti, and found that fraudulent schemes had been put in place by locally engaged staff that resulted in estimated government losses of $1.7 million. Given the findings in Haiti, the Deputy Minister of Foreign Affairs requested a series of management practice audits of select missions to determine whether similar issues could be taking place at other Canadian embassies abroad. The Office of the Chief Audit Executive conducted a risk assessment to identify those missions susceptible to higher levels of fraud risk and therefore selected for audit. The following factors were considered:

• complexity of the mission in terms of the number and kinds of services provided;
• size of the mission, including staff complement and footprint;
• the mission’s budget for administrative services;
• the mission hardship level^{Footnote 3};
• nature of the host country’s banking system;
• the mission’s accounts payable profile;
• the mission’s expenditure trends; and
• Transparency International’s rating of the host country’s corruption perception index.

As a result of this work, and in consultation with senior officials in the Department, five missions that operate in higher fraud risk environments were selected for audit. These were: Abuja (Nigeria); Algiers (Algeria); Moscow (Russia); Nairobi (Kenya); and New Delhi (India). An additional mission that operates in a lower fraud risk environment, Seoul (South Korea), was selected for audit for comparative purposes.

High Commission of Canada in Abuja

The High Commission of Canada (the mission) in Abuja (Nigeria) is a medium sized mission comprised of 12 Canada-based staff (CBS) and 26 locally engaged staff (LES) working in five mission programs (Common Services, Consular, Development, Foreign Policy and Diplomacy Services and Security and Emergency Management). The Deputy High Commission of Canada in Lagos (Nigeria) also falls under the Head of Mission’s (HOM) responsibilities. The HOM is accredited to Equatorial Guinea and Sao Tome and Principe.

The Abuja mission faces challenges resulting from the external environment. [REDACTED] Consequently, living and working in this environment can be challenging for CBS. This makes it difficult for the Department to find staff willing to live in these circumstances that have the appropriate experience and competencies to fulfil their duties. The mission has also recently moved to a new Chancery and acquired a new Official Residence [REDACTED]

Common Services Program in the Abuja Mission

The Common Services (CS) Program in the Abuja mission provides administrative support to the mission’s programs. This Program is responsible for all financial transactions and human resources activities. Accountability and responsibility are held by the HOM. The CS Program provided administrative support to the mission in Lagos (Nigeria) until September 2016 when Lagos was transferred to the Common Service Delivery Point (CSDP) in Brussels (Belgium). At the time of the audit, the Abuja mission had also recently transferred to the CSDP in Brussels. The move resulted in a shift of some financial processes from Abuja to Brussels and a reorganization of the CS Program. The mission also received some financial and human resource support from the Regional Service Centre (RSC) in London (England). See Appendix A which illustrates the organizational chart for the Common Services and Consular Programs in the Abuja Missions.

The overall CS Program is managed by a Management and Consular Officer (MCO) acting in an FS-03 position. The MCO is supported by a Deputy MCO, an LE-07 Common Service Officer, two LE-06 Common Service Assistants, and an LE-07 Property manager. The mission’s CS Program expenditures have steadily increased from 2013-2014 to 2016-2017, as shown in Table 1 below.

Source: FAS Expenditures Report as at April 26, 2017

The Program’s Property Section is managed by an LE-07 Property Manager. This Section is responsible for the Chancery and staff quarters (SQs). Similarly, the Deputy Management and Consular Officer (DMCO) acting in an FS-02 position manages consular services and vehicle fleet, and is responsible for 7 LES staff including drivers. This section performs all consular and transportation related functions, including the maintenance of vehicles. See table 2 for details on the mission’s inventory of property and vehicles.

Source: Real Property: 2016-17 PRIME database; Vehicles: 2015 Real Property bureau’s Global Vehicle Fleet Inventory

Consular Service Program

The Abuja mission provides consular services and assistance to Canadians. This section is managed by the DMCO who is supported by an LE-06 consular assistant and overseen by the HOM and the MCO as a shared responsibility. This program provides consular services, such as notarial, passport and citizenship services. Global Affairs Canada employees at the Abuja mission are responsible for collecting, safeguarding, recording and depositing consular fees.

2. Audit Objective and Scope

The objective of this audit was to provide assurance that sound management practices and effective controls are in place to ensure good stewardship of resources at the Abuja mission to support the achievement of Global Affairs Canada objectives. The audit team examined common services at the mission related to human resources, procurement, and asset management. Detailed audit criteria are listed in Appendix B.

Audit results were derived from the examination of documentation, data analytics of mission expenditures and walk-throughs of key CS processes. The audit team conducted work on-site at the mission from January 16 to 27, 2017. A review of a sample of contracts, expenditure items, payroll items, overtime items, and staffing actions was undertaken and the inventory system was examined. Interviews were conducted with the HOM, CBS management and key LES within the CS Program, as well as staff at Headquarters (HQ) and the Regional Service Centre in London (United Kingdom). The audit team performed on-site visits to storage facilities, local vendors, the mission’s bank and a sample of staff quarters. In addition, the audit team met with three like-minded missions, Australia, the United Kingdom and the United States of America, to gather information regarding their challenges and good practices in common services.

3. Observations

This section sets out key findings and observations, divided into six general themes: accountability and oversight; planning and budgeting; monitoring; local procurement; asset management; and human resources and LES staffing.

3.1 Accountability and Oversight

It was expected that mission and headquarters management would exercise effective oversight over mission activities and expenditures to ensure solid stewardship of mission resources. The audit examined roles and responsibilities of mission staff in the management of common services.

Accountability in the mission rests with the HOM who reports to the Assistant Deputy Minister (ADM), Geographic region, at HQ. HQ has a role in supporting and enforcing HOM accountability, including the provision of common services. The audit found that although the HOM is accountable, there was limited oversight and support from HQ in terms of data analysis and benchmarking on procurement and asset management, which could assist in detecting anomalies and discrepancies in inventory and revenues.

At the time of the audit, the HOM had been posted to Abuja for six months. The HOM’s responsibilities also include Lagos, a second medium-sized mission in a high-risk environment. Furthermore, complexity was added to mission management from the transition to CSDP Brussels, the move to the new Chancery and Official Residence, and ongoing projects related to the construction project and commissioning of the chancery. The audit team found that this created significant burden on mission management. While mission management made considerable efforts to manage critical operational issues and ensure safety and security of personnel, it did not exercise adequate oversight and monitoring of regular operations, such as consular revenues, diesel purchase and delivery, overtime, and vehicle maintenance.

The Mission has a Committee on Mission Management (CMM) which plays an oversight role. The audit found that the CMM meets regularly on a monthly basis, and discusses a range of issues, including budgets, asset maintenance and usage.

Another key oversight function at the mission is the Contract Review Board (CRB). The audit team found that the CRB does not function as effectively as it could. A review of a sample of contracts presented to the CRB and related meeting minutes showed an absence of rigour and challenge function by the members. This is due to limited tools and procurement knowledge on the part of the members, and the complexity and urgency of contracts related to projects for the new chancery and Official Residence.

The audit team noted that CBS roles, responsibilities, and accountabilities are clear, communicated and documented. They are articulated in the Terms of Reference for the mission’s Committee on Mission Management and the Contract Review Board, performance management agreements, and policy and procedure documentation. In addition, between rotation cycles, handover notes from outgoing to incoming CBS were prepared; however, some key elements were not included, such as issues with contracting processes and consular revenues. Despite roles and responsibilities being clearly articulated, the audit team observed that CBS do not always have sufficient knowledge required and the tools needed to perform their duties.

The LES play key roles in supporting mission management through their subject-matter, cultural and linguistic knowledge. Since the LES remain at the mission while the CBS rotate, it would be expected that they provide consistency in carrying out the appropriate processes and procedures that comply with Government of Canada policies and the mandate of the Department. The audit team found that although LES roles and responsibilities are clearly defined and communicated through performance management agreements, LES do not have sufficient knowledge and tools required to carry out their responsibilities.

3.2 Planning and Budgeting

The audit team expected that planning and budgeting would be based on need and performance to justify planned activities and forecasted expenditures.

The audit found that the mission used the corporate tool, Strategia, to plan activities and develop budget figures for each expenditure area under the common services and property budget envelopes for 2016-2017. However, a more detailed breakdown of planned activities and expenditures was not developed to support the day-to-day activities of the mission, for example, diesel consumption of generators and vehicles. In addition, the audit team noted that budget forecasting is based on the previous year’s actual figures with adjustments to account for anticipated spending and currency fluctuations. However, the mission does not perform a detailed needs analysis on its expenses, which limits the accuracy of its forecasts. A significant spike in spending on goods and utilities was noted in March 2016, which is indicative of limited planning.

The audit team also found that tracking of variances between budget and expenditures was done informally as part of the monthly Financial Status (FINSTAT) reporting process. However, the mission’s management does not use the corporate Business Warehouse and Business Intelligence software tools to extract data in order to conduct trend analysis of prior years’ expenditures. While this practice is not a requirement, doing so could inform planning of procurement activities and support mission management decision-making. This is especially important when working in a difficult environment.

Aside from the Chancery and Official Residence, the mission does not own any properties. Instead, staff quarters are rented, with maintenance fees included as part of the leases, which reduces the requirement to forecast for property maintenance. Following the move to the new Chancery, the mission incurred additional property maintenance costs related to issues with the new building. These were included in its Strategia forecasts for fiscal year 2016-2017.

The audit also found that limited planning and tracking is performed for vehicle maintenance. While maintenance is performed prior to trips outside of Abuja and on an ad hoc basis, the information is not recorded. This limits the mission’s ability to track vehicle performance and plan for future requirements. In one example, 25 tires were purchased for 5 of the official vehicles at the end of March 2016, despite new tires having already been purchased and installed in summer 2015. The purchased tires remained uninstalled at the time of the site visit in January 2017.

3.3 Monitoring

It was expected that monitoring activities would be performed to provide general information on mission compliance with Government of Canada and Department specific policies and procedures.

Procurement

The audit team expected to find a monitoring and reporting process to support procurement activities in compliance with relevant policies and legislative requirements, and to achieve value for money. The audit team found that management is not provided with procurement reports or information on procurement trends that could highlight irregularities or areas of higher risk. For example, there is no information on the number of contracts awarded, sole source contracts, amendments or changes to contracts. This limits the management’s ability to carry out effective monitoring and oversight.

Asset and Material Management

The audit team found that there was limited monitoring of asset management based on life cycle needs and value for money. The audit team noted that while records are kept for a variety of activities and assets (for example: gasoline and diesel consumption, driver logs, and office supply inventory), the information is not analyzed to inform decision-making. For example, the audit team noted that vehicle maintenance (including repairs and purchasing of parts) is not tracked or monitored. There is also no comparison of diesel and gas consumption for official vehicles to vehicle mileage, or an assessment of fuel remaining in the mission reservoirs as compared to fuel sold to mission staff and consumed by official vehicles and generators. This lack of monitoring makes it difficult for management to assess the reasonableness of fuel consumption, service performed and parts purchased.

The audit team compared data on mileage recorded in vehicle logs with fuel consumption for a sample of official vehicles. Instances were found where the fuel purchased for a vehicle was not reasonable compared to the mileage incurred. In addition, the audit team compared maintenance and repairs records with mileage incurred and found that the frequency of maintenance was not reasonable.

Without information and data on the conditions and usage of assets and materials, it is difficult for management to ensure that asset management is carried out based on life cycle needs, and areas of higher risk of misuse and corrective measures are identified.

Overtime

Another area of concern to the audit team was the monitoring of LES overtime. The audit team examined the overtime paid to the LES staff working within the CS Program and found that overtime was pre-authorized.

The audit team expected to find overtime reports and trend analysis prepared by management, and processes in place to identify excessive use or other issues. The audit team found limited monitoring of overtime. A review of a sample of overtime transactions revealed that while drivers’ time sheets were compared to daily vehicles’ logs, mission management was not tracking overtime or conducting trend analysis. In addition, management did not perform a challenge function for drivers’ overtime usage. In cases where the audit team found overtime to be excessive, monitoring had not been performed to detect or to address such excesses. This lack of monitoring leads to an increased risk that overtime may not be warranted or actually performed.

The audit team conducted a trend analysis and noted a significant amount of overtime incurred by drivers over the period of the audit. This was despite the fact that overtime paid in cash in 2016-2017 decreased compared to 2015-2016. The audit team did not find any evidence that mission management examined options to optimize the use of the mission resources. For instance, all drivers worked the same 7:30am to 4:30pm schedule, which does not necessarily meet the mission’s operational requirements.

The audit team found that through data analysis and review of overtime transactions that in some cases, the total hours of work including overtime were unreasonable. Specifically, records indicated some drivers worked between 10 and 18 hours per day, sometimes for several months and including days of rest. Adopting a shift schedule would reduce the cost of overtime, and the health and safety risk related to working such long hours.

3.4 Local Procurement

Local procurement was identified as an area of risk during the audit planning phase. The audit team examined the mechanisms and tools in place to procure goods and services at the mission. The audit team selected a judgmental sample of contracts and procurement transactions from April 2015 to January 2017.

The audit team expected to find that the mission procures goods and services in compliance with regulations while achieving value for money. A review of a sample of contracts and procurement transactions revealed instances of non-compliance with contracting regulations and policies. In some instances, there was no evidence that three quotes for goods and services had been obtained in order to select the one that provided the best value for money. In addition, the audit team noted that the majority of contracts were not entered into the departmental financial and administrative system (FAS). This resulted in invoice payments not being linked to a purchase order and contracts greater than $10,000 not being disclosed as required by proactive disclosure requirements.

The audit team expected to find that contracts were managed in compliance with their terms and conditions. From a review of a sample of contracts, the audit team found several instances where the contract was paid in full in advance of services received. In one instance, the contract was signed after the work had commenced. In another instance, the supplier was paid a lump sum instead of two separate payments as set out in the contract. In another instance, a contract employee was paid a higher overtime rate than the one specified in the contract. In yet another instance, the value of the contract was significantly exceeded without a contract amendment.

Furthermore, a review of a sample of procurement transactions showed that due diligence under section 34 was not always carried out by the responsible CBS to ensure proper use of departmental funds. Specifically, when invoices were received, there was no certification of work performed or goods received. The audit team also found instances where excessive quantity of goods and services were purchased (for example: fleet maintenance and repairs, vehicle parts, and fuel) or the price paid for the same goods varied. In addition, there were instances found in which prices of diesel were inflated.

3.5 Asset Management

Another area of increased risk identified by the audit team was the management of assets at the mission. To examine this area, the audit team focussed on the management of inventory, vehicles and cash.

Inventory

The audit team expected that once an asset is purchased it would be appropriately recorded, safeguarded, tracked and disposed according to the related policies and procedures.  The audit team found limited management of inventory at Abuja mission.  The corporate inventory tracking system, Radio Frequency Identification Device (RFID), is not being used by the mission. The audit team did not find a formal mechanism to manage and monitor inventory.  Records of assets are kept in hard copy format but are not sufficiently detailed and up-to-date.  For example, the mission’s inventory of appliances does not track information about model and serial number, location, movement, or repair history.  Despite this, the audit team verified the existence of selected items on the inventory list and appliances purchased and found no material errors.

The audit team was unable to assess whether parts purchased by the mission such as tires [REDACTED] were received as there was no tracking of vehicles parts. When the audit team compared a sample of records of vehicle part purchases with the inventory and invoices for vehicle repairs, the audit team could not trace any of these parts.

The audit team also found a lack of physical controls over inventory. [REDACTED]

The mission has two fuel dispensers for gasoline and diesel respectively. The diesel dispenser is for official vehicles only, and the gasoline dispenser is for both official vehicles and for mission staff on a cost recovery basis (selling gasoline to staff). The audit found that there is a log book for the two dispensers. The quantity of gasoline sold to staff is noted in the official receipts remitted to staff; however, it is not recorded in the gasoline dispenser’s log.  This limits the effectiveness of the cost recovery and completeness of information to monitor the usage of gasoline.  The audit team also found a lack of access controls to the dispenser; specifically[REDACTED] there is no segregation of duties relating to fuel filling.

The audit team noted that diesel purchases represent important common service expenditure [REDACTED] after having moved to the new Chancery. Specifically, in the last two fiscal years, diesel consumption has significantly increased (increase of 50% in 2015-2016 and 82% in 2016-2017).  The fuel tanks and dispensers are connected to the building management system which was not working properly due to the poor installation. Furthermore, the audit team found no controls over the delivery process of diesel, such as recording and verifying the quantity of diesel delivered. In addition, at the time of the audit, the mission was unable to calculate the volume of diesel delivered and consumed. As a result, data was not collected for controls and monitoring purposes.

Fleet Management

The audit team noted a lack of controls over vehicle maintenance (including repairs and purchasing of parts) and fuel consumption. There were no maintenance logs for official vehicles, making it difficult to assess whether vehicle maintenance was carried based on life-cycle needs. Furthermore, there was a lack of controls to ensure that maintenance and repairs were required and services and parts were provided to the satisfaction of the mission. A review of a sample of maintenance invoices and vehicle logs showed that some vehicles had excessive engine oil changes and brake pads replacements. Without vehicle maintenance logs, management cannot assess the reasonability and legitimacy of repairs and maintenance expenditures.

Cash and Collection of Revenues

The mission requires a cash supply for small, urgent or unique purchases not covered by other means. The mission has [REDACTED] petty cash accounts [REDACTED] account is used to pay for some security services provided by local authorities and [REDACTED] pay for property and material related expenses.  A review of a sample of the second petty cash transactions indicated that some supporting documentation was incomplete or missing.  In one instance, the audit team found the individual transaction limit of [REDACTED] was exceeded. Furthermore, the audit team noted that CBS did not exercise their monitoring function by performing regular petty cash counts and reconciliations.

[REDACTED]

3.6 Human Resources - LES Staffing

The audit team was advised by mission staff that for 2016-2017, human resources (HR) planning activities were documented directly in Strategia rather than in a formal plan. The audit team noted that three LES positions were mentioned in Strategia, including a driver, a facility officer and a handyman. The audit team found, this practice reasonable, given the low LES turnover and consequent limited HR staffing activities.

The mission receives support from the Regional Service Centre - London for its staffing actions. Minimal LES staffing actions took place during the audit period due to low turnover. The audit team examined the single staffing action that took place in 2016-2017 for the financial officer who made a lateral move to common services after the CSDP transition. The staffing action was handled by the RSC who communicated with candidates. Key documentation to support the above was provided. The audit team found that the staffing action was undertaken in accordance with the regulations.

4. Conclusion

The audit team concluded that there were significant weaknesses in the management practices and controls in place to ensure good stewardship of resources at the Abuja mission to support the achievement of Global Affairs Canada’s objectives. Processes established by HQ relating to finance, procurement, contracting, revenues, and human resources were not consistently followed and some key controls were not in place or were circumvented. There was a lack of mission-generated, reliable information for decision-making to promote and demonstrate good stewardship of resources.

[REDACTED] The audit team verbally debriefed the HOM and the MCO after completion of work on-site. As a result, mission management has taken measures to address issues identified by the audit.

5. Recommendations

Recommendations to the Abuja Mission:

1. The Head of Mission should increase oversight to ensure planning and budgeting for common services includes a needs assessment, adjustments are made to account for changes, and there is periodic monitoring of high risk financial transactions.
2. The Head of Mission should ensure that responsibilities and accountabilities of Canada-based staff and locally engaged staff are communicated, consequences of poor performance reflected in performance appraisals and corrective actions taken when required.
3. The Head of Mission should take measures to strengthen oversight, controls and monitoring for common services to ensure procurement and contracting processes comply with regulations, proper management of the inventory cycle is undertaken, with corrective actions when non-compliance is detected.

Recommendations to Headquarters:

1. The Assistant Deputy Ministers, Geographic Branch, should ensure that responsibilities and accountabilities of the Heads of Mission are communicated; consequences of poor performance are reflected in performance appraisals and corrective actions taken when required.
2. The Assistant Deputy Minister, International Platform Branch, in collaboration with Corporate Planning, Finance and Information Technology Branch (Chief Financial Officer) should reinforce headquarters’ oversight and monitoring of common services in missions by: assessing higher fraud risk missions; identifying specific higher fraud risk areas for increased oversight in missions; developing performance indicators to identify potential issues; and conducting comparative analysis with missions of similar risk to support Heads of Mission.
3. The Assistant Deputy Minister, Human Resources Branch, should adapt rotation process for higher fraud risk missions to consider: longer postings; overlap of key positions; composition of Canada-based staff with the required competencies; and past Canada-based staff performance and experience in the selection process; as well as customized training for higher fraud risk missions.

Appendix A: Organization Chart for Common Services and Consular Programs

Appendix B: About the Audit

Objective

The objective of this audit was to provide assurance that sound management practices and effective controls are in place to ensure good stewardship of resources at the Abuja mission to support the achievement of Global Affairs Canada objectives.

Scope

The scope of the audit included those management practices and controls in place to support the Abuja mission operations excluding the administrative services provided to the mission in Lagos. Specifically, the audit examined processes related to the collection of consular fees, procurement and asset management (including cash, materials, vehicles and property). Human resource processes relating to LES staffing actions, LES payroll and overtime were also examined.

The most up-to-date documentation available as at January 2017 was reviewed. In addition, Common Services Program expenditures and data for property and fleet were examined from 2013-2014 to 2016-17. A sample of files and transactions were tested from activities that took place from 2015-2016 to 2016-2017, as shown in Table 3.

Criteria:

Criteria were developed based on a detailed risk assessment.

Criterion 1: Adequate and effective oversight and accountability are in place to support stewardship of mission resources.

• 1.1 Management exercises effective oversight of procurement, asset management and human resource activities.
• 1.2 Authorities and accountabilities for procurement, asset management and human resources are clear, communicated and understood.
• 1.3 Planning processes are in place for procurement, asset management and human resources, which consider needs, asset life cycle, and resources.
• 1.4 Monitoring and reporting of procurement, asset management and human resource activities take place to inform decision-making.

Criterion 2: Effective management practices and controls are in place to ensure stewardship of mission resources and compliance with relevant policies and legislative requirements.

• 2.1 Effective controls are in place to ensure that procurement of goods and services comply with relevant policies and legislative requirements and achieve value for money.
• 2.2 Effective controls are in place to ensure that procurement expenditures are accurate, appropriate, and legitimate.
• 2.3 Inventory control and asset management practices are adequate and appropriate.
• 2.4 Cash is managed in accordance with relevant policies and legislative requirements.
• 2.5 LES staffing actions comply with relevant policies and legislative requirements and are fair, open and transparent.
• 2.6 LES salaries and overtime payments are accurate and complete.

Approach and Methodology

In order to evaluate the above audit criteria, and based on identified and assessed key risks internal controls associated with the related business processes, the audit methodology included, but was not limited to the following:

• Planning documentation review
• Walkthrough of key business processes at Mission
• Data analysis of Common Services Program expenditures
• Transactions testing (contracts and expenditures relating to Common Services Program, asset disposal, payroll, overtime costs and staffing actions)
• Interviews with key management positions at Mission, HQ and Common Service Delivery Points (CSDP) in Manila
• Inventory review
• Petty cash counts
• On-site examination of Chancery, storage facilities and a sample of staff quarters
• Benchmarking with like-minded Missions (Australia, Sweden and the United States of America)
• Visits to a sample of local vendors and Mission bank

Appendix C: Management Action Plan

Appendix D: Acronyms

ADM

Assistant Deputy Minister

CBS

Canada-based staff

CMM

Committee on Mission Management

CRB

Contract Review Board

CS

Common Services

CSDP

Common Service Delivery Point

DMCO

Deputy Management and Consular Officer

FAA

Financial Administration Act

FAS

Finance and Administration System

FINSTAT

Financial Status report

FSITP

Foreign Service Information Technology Professional

HOM

Head of Mission

HQ

Headquarters

HR

Human Resources

LES

Locally engaged staff

MCO

Management and Consular Officer

NAFTA

North America Free Trade Agreement

PMP

Performance Management Program

PRIME

Physical Resources Information - Mission Environment

RFID

Radio Frequency Identification Device

SQ

Staff Quarter