Audit of management practices of missions - Algiers

Final report

Global Affairs Canada
Office of the Chief Audit Executive

July 2017

Executive summary

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

Rationale for this audit

In 2015, the department conducted an internal investigation at the Canadian consulate in Haiti and discovered that fraudulent practices had been implemented by some locally engaged staff. The government’s losses resulting from those fraudulent practices were estimated at $1.7 million. As a result of the situation in Haiti, the Deputy Minister of Foreign Affairs asked that a series of management practice audits be conducted in select missions to determine whether problems similar to those discovered in Haiti might exist at other Canadian missions abroad. The Office of the Chief Audit Executive then conducted a risk assessment to identify missions that may be exposed to a high risk of fraud and was subsequently able to select which missions to audit. The Algiers mission was one of the five missions operating in a high-risk environment for fraud that were selected for audit.

What was examined

The mission’s management practices were examined with regard to supervision and oversight, procurement and asset management, and human resources, for the period of April 2015 to February 2017, the month in which the audit team visited the mission.

What was found

The audit’s findings were essentially related to planning and budgeting management, as well as to procurement and asset management. The audit team found that planning and budgeting were being done properly at the Algiers mission. However, the audit team found weaknesses in how the mission acquires and manages assets.  

Some acquisitions were not linked to a needs assessment and were not formally approved in advance. Also, the mission was not updating the inventory that had been previously uploaded to the inventory system and was not performing any updates after disposing of or using materials. In regards to contract management, there were weaknesses in evaluating bids from competitive processes and in managing contracts in accordance with policies and procedures, but also in selecting contracting tools to obtain services. There are indications that the mission had no tools in place to ensure value for money. The audit team also observed shortcomings in the management of the mission’s cash account: the financial information related to this account was incorrect and the associated transactions were not carried out in accordance with the related procedures.  

Conclusion

Overall, based on the established audit criteria, the audit team concluded that there were gaps in the management practices and in certain controls that ensure continuous good stewardship of resources at the Algiers mission and that enable the mission to support the achievement of Global Affairs Canada’s objectives.  
Recommendations are detailed in 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 is responsible for managing Canada’s diplomatic and consular relations, promoting the country’s international trade and leading Canada’s international development and humanitarian assistance efforts. The department 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 Departmental Performance Report, $928 million was spent on operating and supporting these missions.  

In 2015, the department conducted an internal investigation at the Canadian consulate in Haiti and discovered that fraudulent practices had been implemented by some locally engaged staff. The government’s losses resulting from those fraudulent practices were estimated at $1.7 million. As a result of the situation in Haiti, the Deputy Minister of Foreign Affairs asked that a series of management practice audits be conducted in select missions to determine whether problems similar to those discovered in Haiti might exist at other Canadian missions abroad. The Office of the Chief Audit Executive then conducted a risk assessment to identify missions that may be exposed to a high risk of fraud and was subsequently able to select which missions to audit. The following risk factors were taken into consideration:

• mission complexity in terms of the number and types of services provided;
• size of the mission, especially its workforce and footprint;
• administrative services budget;
• hardship level; ^{Footnote 3}
• banking system;
• accounts payable profile;
• mission spending patterns; and  
• Corruption Perceptions Index ranking, as published by “Transparency International.” ^{Footnote 4}

Based on this risk assessment and in consultation with the department’s senior management, five missions operating in an environment at high risk for fraud were selected for audit: Abuja, Nigeria; Algiers, Algeria; Moscow, Russia; Nairobi, Kenya; and New Delhi, India. Another mission—that of Seoul, South Korea—in an environment at low risk for fraud was selected for comparison purposes.

Embassy of Canada in Algiers

The Embassy of Canada (the mission) in Algiers, Algeria, is a stand-alone mission that, according to the department, falls into category 2 in terms of size. At the time of the audit, it had 9 Canada-based staff (CBS) and 45 locally engaged staff (LES) working in four departmental programs (Common and Consular Services, Foreign Policy and Diplomacy Service, Trade, and Security and Emergency Management) and for one other government department: Immigration, Refugees and Citizenship Canada (IRCC). The mission operates in a complex environment [REDACTED].

The construction of the diplomatic compound on a land purchased by Canada in 1988 was completed in 1998 and includes the Chancery annex (the former Official Residence between 1998 and 2006, which accommodate hospitality of all programs including the head of mission(HOM)) and 7 residences of Canadian employees, including the actual Official Residence since 2013. Since September 2015, [REDACTED] This enabled to release [REDACTED]trailer" style homes that had been established on a temporary basis [REDACTED] to accommodate [REDACTED] military police officers; [REDACTED].

The mission also faces some significant operational challenges. The banking system is [REDACTED] cheques must be handwritten and withdrawals or transactions associated with foreign currencies require lengthy rationales and approvals. This bureaucracy is [REDACTED] obstacle to efficient operations [REDACTED]. Also, the pool of suppliers is quite limited, and the quality of the services provided by local suppliers ranges from satisfactory to poor, making it difficult to plan and carry out work.   

Internally, the Algiers mission is also facing other challenges, including the recruitment of experienced Canada-based staff. The human resources situation worsened following an internal crisis that saw the mission operate without a head of mission during 11 months in 2010-2011 and 13 months in 2014-2015. The consequences of this crisis are still being felt, but the situation seems to be improving[REDACTED] the mission seems to be slowly resolving its recruitment issues, although challenges have persisted until 2015 and 2016 [REDACTED]

Common Services Program

The Common Services Program at the Algiers mission provides finance, real property, human resources and information technology support to other mission programs, including the partner department (IRCC). At the time of the audit, the mission was receiving human resources and real property support from the Regional Service Centre in London, England, and contracting service support from Paris, France, and financially it was fully integrated into the Common Service Delivery Point (CSDP) in Brussels, Belgium.    

The Common Services Program is managed by an FS-03 management and consular officer (MCO) who is responsible for various sections, as indicated in the organizational chart in Appendix A.  

The MCO supervises an LE-07 accountant who manages the finance section and liaises with the Brussels CSDP, while the DMCO oversees the human resources section, which is managed by an LE-07 officer. With the finalization of common services restructuring and the integration into a CSDP, the accountant position and the human resources officer position have been abolished and are to be replaced by a common services officer position, whose role is to perform not only the remaining financial work still being done by the missions, but also the work to pick up the slack in other high-volume sections, such as human and material resources.   

Since 2013–2014, Common Services Program expenditures have not varied much, as can be seen in the table below.

Table 1: Property and Common Services Program Expenditures From 2013–2014 to 2016–2017^{Footnote 5}

An LE-07 property manager is responsible for the real property section, under the supervision of the DMCO. This section monitors and maintains all the buildings in the embassy complex and the staff quarters. Vehicle fleet management is the responsibility of the DMCO. The property and vehicle fleet inventory is presented in the table below.  

Table 2: Real Property and Vehicle Fleet Inventory (March 31, 2016)

As part of a sharing of responsibilities with the DMCO, the MCO oversees the Consular Program, which is managed by an LE-07 consular officer. This program provides consular services, including, on behalf of Immigration, Refugees and Citizenship Canada, the issuance of new or temporary passports, passport renewal and the issuance of emergency travel documents. Consular services were included in this audit because they generate revenue and because the mission is responsible for collecting, safeguarding and transferring the funds.  

2. Audit objective and scope

The objective of this audit was to provide senior management with assurances that sound management practices and effective controls were in place to ensure good stewardship of resources at the Algiers mission to support the achievement of Global Affairs Canada’s objectives. The auditors examined planning, oversight, monitoring, acquisitions, asset management and staffing practices for locally engaged staff (LES), based on the criteria set out in Appendix B.  

Each criterion was tested and the audit results were derived by examining documentation, analyzing data on mission expenditures and reviewing the main processes of the Common Services Program. The audit team visited the mission from February 5 to 16, 2017. A set of transactions related to contracts, acquisitions, asset disposal, overtime and staffing were examined. The inventory system was also examined. Interviews were conducted with mission staff (Canada-based staff and locally engaged staff) and with officers at headquarters, the Brussels Common Service Delivery Point (CSDP) and the London Regional Service Centre (RSC). During the field visit, members of the audit team met with officials at the embassies of Sweden, the United States and the United Kingdom to gather information about the challenges they face in Algeria and their best practices. They also met with local suppliers and the mission’s bank.

3. Observations

This section includes the pertinent findings and observations of the audit and is divided into six general themes: accountability and oversight, planning and budgeting, monitoring, procurement in the local market, asset management, and human resources – staffing of locally engaged staff. The recommendations and the management action plan are presented in Appendix C.    

3.1 Accountability and Oversight

The audit team expected to find that managers at the mission and at headquarters engage in some degree of oversight of activities and expenditures to ensure sound stewardship of mission resources. To form an opinion, the audit examined general administrative practices, as well as the roles and responsibilities of staff involved in managing common services at the Algiers mission.

The audit team found that the roles and responsibilities of Canada-based staff (CBS) are clear, communicated and understood, and they are set out in the performance management agreement. This includes a segregation of duties at the operations level and at the oversight level. For example, the roles of the MCO and the DMCO are clearly delineated to enhance the accountability of each. The HOM’s oversight and supervisory roles are also clear and well understood. For example, it is well established that the HOM chairs meetings of the Committee on Mission Management (CMM) once every week or two to keep managers informed of any developments and to provide instructions when needed.  

With regard to the oversight of contracting activities, though, the Algiers mission is in a special situation. The mission does not have a Contract Review Board (CRB). The mission is part of a Regional Contract Review Board (RCRB) pilot project initiated by the Regional Service Centre – Europe, Middle East and Africa, together with the Rome and Paris missions. The purpose of this board is to provide support, in particular for procurement and contracting, through advice, standard practices and tools. To achieve its goals, the RCRB established terms of reference and a process flowchart, as well as a table that indicates approval thresholds. The board provides support for drafting requests for proposals and for creating evaluation grids. Lastly, the RCRB takes care of uploading contract information to the Materiel Management (MM) module of the Finance and Administration System (FAS). The RCRB plays no role in evaluating bids or managing contracts.  

In the absence of a CRB, the audit team expected to find an entity at the mission that provides a degree of oversight of mission contracting activities, but that was not the case. The audit team found that there is a CMM, but it serves more as an information-sharing forum than as an oversight committee. Analysis of the meeting minutes showed, for instance, that information about upcoming work in the staff quarters was presented, but there was no evidence that this item was discussed or that the committee made any decisions, notably with regard to the choice of contracting tools.  

The audit team also noted that Headquarters (which is supposed to provide support to missions) conducts little or no data analysis in relation to acquisitions, asset management and human resources activities. In this regard, the mission would benefit from data analysis that could identify problematic situations or troubling trends. For example, a comparative analysis between similar missions would provide valuable information that could support a head of mission’s oversight responsibilities.

3.2 Planning and Budgeting  

The documentation seen and the interviews conducted with mission staff indicate that, overall, the Algiers mission has an effective process in place for planning its resources. It makes every attempt to plan and budget for the acquisition of goods and services and to determine its LES salary needs, and it uses the recommended corporate tools. Among other things, the mission uses Strategia, a corporate tool, to identify needs related to goods and services and to human resources for the year ahead, and to plan how to meet those needs. The mission also uses this tool to determine how much annual funding is required to acquire those goods and services. To determine its needs, the mission reviews expenditures from the previous year, in consultation with various program managers, and sets the amounts for the upcoming year. For the Common Services Program, the needs identified in 2016–2017 were broken down into two separate envelopes: one for common services and one for real property.   

The monthly financial status (FINSTAT) report is another step in the process of planning and using mission resources. This report allows missions to provide a plan that shows how they will control expenditures and manage forecasted shortfalls or surpluses. A review of the monthly reports and actual expenditures for periods eight, eleven and twelve of the 2015–2016 fiscal year at the Algiers mission showed that commitments had not been adjusted or cancelled when the mission did not obtain additional funding, giving an incorrect picture of the mission’s financial status.  

Also as part of its planning and budgeting exercise, the Algiers mission used Physical Resources Information - Mission Environment (PRIME) to identify the different maintenance work planned for all real property under the mission’s responsibility. Furthermore, the Algiers mission has an annual work plan that enables it to identify real property–related work in more detail and ensure follow-up. This work plan is continually updated throughout the year.  

It should be noted that human resources planning is also a component of the mission’s annual plan in Strategia. Overall, this exercise seems reasonable, especially in the context of the Algiers mission’s limited staffing activities.

3.3 Monitoring 

To ensure that mission operations in general and common services operations in particular are rigorously monitored by the managers concerned, the audit team examined the degree to which the following are monitored:

• procurement;  
• financial information, including its accuracy;
• vehicle expenses; and  
• expenditures on staff overtime.  

Procurement

In terms of expenditures for procuring goods and services, the team expected to find that the mission has a monitoring and reporting system to provide information on whether procurement activities comply with the policies and regulations in effect and to ensure that the mission receives what it has paid for. The audit team found no evidence that mission managers have the information they need to conduct this type of monitoring, or even periodic or spontaneous reviews. The team noted gaps that would have raised red flags if monitoring activities had been conducted. For instance, after examining 36 transactions, the audit team found that, while authority is exercised under section 34 of the Financial Administration Act (FAA), it is not always accompanied by the expected level of due diligence. Indeed, the quality and quantity of the goods or services received were not systematically verified and confirmed to support the certification. For example, the auditors observed that authority under section 34 of the FAA had been exercised on some quotes and that no invoice had been submitted in connection with the work actually performed. Treating a quote as an invoice signals a lack of the due diligence expected from managers and is an example of something that a monitoring system would have discouraged or brought to light so that corrective action could be taken.

Financial information

As for the monitoring of financial information, the audit team found some discrepancies that point to a lack of rigour in the monitoring needed to ensure the quality of the available financial information, as well as a lack of analysis that would help to recognize problematic situations. For example, the audit team found that financial coding is not being used properly, especially the code for recording the value-added tax (VAT) that the mission pays to acquire some goods and services. The review of the transactions revealed that the invoiced VAT is not always recorded in FAS in accordance with the procedure on value-added tax at missions, creating a shortfall for the Government of Canada. Also, when the VAT is recorded in the financial system, the mission has a lot of trouble recovering the sums, which appear as assets in the FAS. [REDACTED] the current practice for receiving the VAT exemption is to request it prior to receiving the invoices (for example, when signing a contract), but the audit team found that the mission did not follow this practice in all cases in which it should have done so. While the audit team expected to find that the mission had analyzed the situation to determine its scope and thus make it a priority, the team found no evidence that such was the case. It should be noted that as of April 18, 2017, the GL account for VAT to be recovered stood at $190,722.49.

Another gap involves bank reconciliation. The audit team found that, while the mission receives a copy of the bank reconciliations done by the CSDP, it was not taking steps to correct the noted discrepancies in a timely manner. Today, after the new MCO got involved, the necessary corrections seem to have been made. The same goes for the reconciliation of the cash account that the mission forwards to the CSDP, which is uploaded to the FAS. The audit team found that the information forwarded does not reflect the actual financial position of the cash account.  

Vehicle expenses

To monitor vehicle expenses, there are dashboards in which information is collected on trips and fuel consumption. However, the mission conducts no systematic follow-up or analysis of the expenditures or the use of the vehicle fleet to identify patterns and discrepancies. Although this analysis is not required, it would tell the mission whether its fuel expenditures are reasonable, thereby ensuring that it is getting value for its money.  

3.4 Local Procurement

The audit team examined existing mechanisms and tools for acquiring goods and services at the mission. The team used its judgment to select and examine a sampling of contracts and transactions covering the period from April 2015 to February 2017.  

Based on the review of the transactions, the audit team found that improvements need to be made regarding the initiation of work: of the 36 transactions examined, 16 were not linked to a needs assessment, and for 11 of them, there was no evidence of prior approval. Improvements must also be made regarding the selection of contract vehicle used to acquire goods and services. For example, though a contract is supposed to be used to acquire a service worth more than $10,000, two batches of work of a similar nature performed without a contract by the same supplier one week apart were invoiced separately, even though the total sum for the work exceeded that ceiling. In another case, a note on the pro forma indicated that there had been only one supplier available to provide professional mosquito net installation services. The audit team checked and confirmed that other suppliers had been available.

The audit team observed that for professional service contracts, such as landscaping services, contract durations were for no more than one year, even though the service was provided virtually uninterrupted for several years. This deprives the mission of the opportunity to secure a reduced rate over several years and may be an inefficient use of resources, which must start the contracting process over again each year. One of the negative consequences of this practice is illustrated by the fact that expenditures on the above services rose by nearly 20 percent between two contracts for identical services and by 68 percent over the past three years.

The mission must also make improvements to supplier selection. The audit team observed that, for three competitive processes, the mission did not apply the principles of fairness, openness and transparency when evaluating the bids.  

Another source of concern stems from the fact that, aside from contracts resulting from competitive processes, the mission was not following the department’s Directive on Recording of Contracts in the Finance and Administration System’s Materiel Management module (FAS/MM). This contravenes the department’s policy, which requires all relevant information relating to contracts, with a few exceptions, to be recorded accurately and promptly in the FAS/MM. These contracts as defined in the directive range from standard purchase orders (POs) worth $2,000 to $10,000 to contracts worth over $25,000. The purpose of this is to ensure that effective decision-making, accountability and transparency are supported by reliable and timely financial information. This directive indicates that all payments against a contractual agreement covered by the directive must reference the FAS/MM contract number.

It should be noted that payments are authorized by the CSDP, which enters the data into the financial system after the invoice is submitted, duly certified by the mission officer with section 34 authority. This provision reinforces the segregation of financial duties and ensures a degree of effectiveness in payment-related controls. However, the audit team noted payments that had been made to suppliers whose name differed from the one on the invoice. [REDACTED] The audit team also observed that the Algiers mission had authorized payments to suppliers outside existing contractual agreements. In another case, the mission had treated expenditures for additional work performed after a contract’s expiry date as an individual transaction unrelated to the underlying contract.

3.5 Asset Management

Inventory

The audit team found that there were different storage areas, depending on whether the items were office supplies, cleaning supplies, computer hardware, equipment, automobile parts or furniture, and that the areas used were secure, with restricted access. However, the mission does not use the Materiel Management module of the department’s financial system to manage and update its inventory of movable assets (the inventory of assets had been uploaded to the system in 2014). As a result, the mission is forgoing a tool that could help it better locate the goods that it has in stock, [REDACTED]

The audit team examined the disposal of a surplus of movable assets and the disposal of a vehicle. The movable assets were disposed of through an auction process that was open to all mission employees. The audit team observed that the organizers of the sale also took part in it and made significant purchases, thereby violating one of the basic rules governing auctions. The disposal of the vehicle was done in accordance with the Materiel Management Manual’s provisions on disposal.  

Cash  

As part of its operations, the Algiers mission is responsible for collecting, safeguarding and transferring Consular Program funds. In that regard, the mission has put measures in place to ensure the funds are collected and reconciled on a daily basis and securely held. The audit team conducted a general review exercise to ensure that there had been a proper segregation of duties for collecting and safeguarding consular revenue. The Algiers mission has [REDACTED] petty cash accounts and one cash account managed by the MCO. The cash account is used to collect revenue, primarily from the Consular Program, and to pay for some transactions in cash, among other things.  

A physical reconciliation of the cash account during the visit indicated that the mission had measures in place to track the cash account’s withdrawals and deposits. However, the team found that the monthly cash account reconciliation that the mission submits to the CSDP does not provide accurate financial information [REDACTED] This is because the mission has implemented a parallel system for withdrawing and tracking cash that does not follow the procedure for managing cash accounts at missions. [REDACTED]

3.6 Human Resources – LES Staffing

 The audit team examined staffing files to determine whether adequate management practices and controls were in place. Some staffing files completed in 2015–2016 and 2016–2017 were subject to this examination. The audit team found that in one case, the staffing action had not been approved by the person with the proper authority before it was launched, and that in six of the eight files reviewed, the staffing action was not linked to a plan. Also, the staffing files did not contain all of the documentation required to prove that the processes complied with existing legislation, policies and directives. In addition, the transparency and fairness that must be a part of any staffing decision were not systematically observed.  

4. Conclusion

The audit concluded that there were significant weaknesses in the existing management practices and controls for ensuring sound stewardship of resources at the Algiers mission to support the achievement of Global Affairs Canada’s objectives. The audit team is of the opinion that the mission must strengthen its management practices, oversight and controls to ensure that the Administration Program fulfills its mandate as effectively as possible. The mission is not using the appropriate tools to track expenditures and financial information, as these tools are supposed to support it in its decision-making and resource planning, thereby ensuring value for money. In addition, the financial management, asset management, acquisition, contracting and staffing procedures stipulated by Headquarters are not being systematically followed. In this regard, the audit team gathered sufficient evidence showing that certain management practices do not comply with departmental policies and directives.

[REDACTED]

The audit team submitted the preliminary observations to the Ambassador and to the MCO at the end of the field visit and whenever it was necessary to do so. The mission’s administration began taking corrective action and continues to do so.

5. Recommendations

Recommendations to the Algiers mission

1. The Head of Mission should strengthen oversight and ensure that periodic follow-up is conducted for high-risk financial transactions to identify cases of non-compliance.  
2. The Head of Mission should ensure that the responsibilities and accountability of Canada-based staff and locally engaged staff are communicated, that consequences for poor performance are reflected in performance evaluations and that corrective action is taken when necessary.
3. The Head of Mission should take steps to strengthen oversight, control and monitoring practices related to common services, so as to ensure that procurement and contracting practices comply at all times with existing policies, that inventory management is improved, and that the results achieved are measured, while taking the necessary corrective action.
4. The Head of Mission should ensure that hiring activities for locally engaged staff adhere to existing policies and are supervised by Canada-based staff, and that the files include the documentation needed to demonstrate the values of fairness, transparency and openness.  

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 the  Assistant Deputy Minister, 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 SEOUL Mission to support the achievement of Global Affairs Canada objectives.

Scope

The scope of the audit included those management practices and expected controls in place to support the Algiers mission.  Specifically, the audit examined processes related to procurement and the management of finances, including 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 in February 2017 was reviewed. In addition, Common Services Program expenditures and data related to assets and the vehicle fleet from 2013–2014 to 2016–2017 were examined to identify trends. A sample of files and transactions for activities that took place from April 2015 to February 2017 were examined.

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: Mmanagement action plan

Appendix D: Acronyms