Audit of management practices of missions - Moscow

Final Report

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 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 Moscow 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 Moscow 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, revenue collection and human resources between April 2015 and November 2016.

What was found

The audit team found that financial reports are reviewed and discussed regularly by mission management, and the mission Contract Review Board is well coordinated with a challenge function being exercised by members. No issues were identified with a sample of staffing actions and personnel files for locally engaged staff, and key documentation was on file. However, Canada-based staff oversight and formal pre-approval are lacking with regards to overtime incurred by some Common Services Program staff.

The audit team found that there is a lack of rigour in procurement planning and asset management. Specifically, the initiation of procurement transactions was not always linked to a needs assessment. In addition, the appropriate approach to procuring goods and services was sometimes not selected and there were instances in which value for money was not clearly received based on contractor pricing. The audit team also found that full financial oversight to confirm the quantity and quality of goods and services received was not always performed. Furthermore, despite using a departmental system to track inventory, the tracking of goods in stock and their movement was not accurate.

Conclusion

The audit concluded that based on the criteria established, management practices and controls are in place, but improvements are required to ensure better stewardship of resources at the Moscow mission to support the achievement of Global Affairs Canada’s objectives. While mission management meets corporate reporting requirements, reviews financial reports on a regular basis and locally engaged staff staffing activities are appropriate, certain monitoring, procurement and asset management activities need to be improved to demonstrate better stewardship of resources.

Recommendations are detailed in Section 5.

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.

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.

Embassy of Canada in Moscow

The Embassy of Canada (the mission) in Moscow (Russia) is a medium-sized mission. In December 2016, it comprised 34 Canada-based staff (CBS) and 73 locally engaged staff (LES). It has five mission programs (Commercial Economic, Foreign Policy and Diplomacy Services, Security, Consular and Common Services) and six partners (Agriculture and Agri-Food Canada, Department of National Defence, Export Development Canada, Canadian Food Inspection Agency, Immigration, Refugee and Citizenship Canada, and Public Safety Canada). The Head of Mission (HOM) is accredited to the Republic of Armenia and the Republic of Uzbekistan. Currently there are two Honorary Consuls in Vladivostok (Russia), Yerevan (Armenia). A third Honorary Consul position in Tashkent (Uzbekistan) is unfilled [REDACTED]

The mission operates in a difficult environment [REDACTED] According to Transparency International’s Corruption Perception Index for Russia, corruption within public institutions and businesses is common place. Personal security and privacy are a major concern for foreigners in Moscow especially during times of poor bilateral relations. [REDACTED] As an additional complexity, Mission operations must also comply with Canadian sanctions related to designated Russian individuals and entities. Although English and French are not widely spoken in Russia, there is some limited use of English in Moscow as the capital city with a large expatriate population. [REDACTED] Consequently, it is difficult to attract CBS who are at level and experienced to work in this challenging environment. As a result, at the time of the audit, some key CBS positions were filled by actors. [REDACTED]

According to CBS staff at the mission, the dispersed physical layout and conditions of the Chancery (such as poor air circulation, inconsistent heating and cooling, and general deterioration) do not meet the needs of the mission [REDACTED] Headquarters (HQ) has been aware of the situation for several years and is working on a long-term solution. In the meantime, numerous small property-related projects have been undertaken to address immediate needs until the issue is resolved. Consequently, financial resources and staff time are expended on these activities to mitigate the sub-optimal working conditions.

Common Services Program in the Moscow Mission

The Common Services (CS) Program within the Embassy provides administrative support to the other mission programs, including its Government of Canada partners. At the time of the audit, the mission provided financial services to the mission in Astana (Kazakhstan), and information management and information technology services to both missions in Astana (Kazakhstan) and Riga (Latvia). Common Services are managed by a Management and Consular Officer (MCO) acting in an EX-01 position. At the time of the audit, the MCO had been in her position for a few months since her arrival in fall 2016. See Appendix A which illustrates the organizational chart for the Common Services and Consular Programs in the Moscow Mission.

The Finance Section is responsible for all financial transaction processing relating to mission operations until the mission is integrated into a Common Service Delivery Point (CSDP) in London (United Kingdom) in 2017. It is led by an FI-03 Financial Management Officer who arrived in fall 2016 for a one-year assignment. This position was vacant for a few months in between the early departure of the previous officer and the arrival of the incumbent. The mission’s CS Program expenditures decreased from 2013-2014 to 2015-2016 and increased in 2016-2017, as shown in Table 1 below.

*Fluctuation in expenditures trend was significantly impacted by large fluctuations in the value of the Russian Ruble.
Note: Figures above do not include the approximately $3.4M annual lease payment for the planned future Chancery.
Source: Expenditures Report from FAS at April 26, 2017

The Property Section is responsible for the oversight and maintenance of the Chancery, staff quarters (SQs), the Official Residence, and fleet of vehicles. It is managed by an AS-06 Deputy Management and Consular Office (DMCO). At the time of the audit, this position had been vacant for many months due to a delay by the incumbent in receiving his visa by the Russian government. In the meantime, a CBS Warrant Officer, seconded from the Department of National Defence, was acting in this position. The mission’s real property and vehicle inventory is shown in Table 2 below:

Source: Real Property: 2016-2017 PRIME database; Vehicles: FAS Asset Status Report at November 2016.

Consular Services Program

The Consular Program is led by an FS-02 First Secretary, Consul who manages four LES, including two part-time receptionists. The mission is responsible for providing consular, passport and citizenship services throughout Russia, Armenia and Uzbekistan. To facilitate coverage of this vast territory, which is the largest in the world, there are three Honorary Consuls in Vladivostok (Russia), Yerevan (Armenia) and Tashkent (Uzbekistan).

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 Moscow mission to support the achievement of Global Affairs Canada objectives. The audit team examined common services at the mission related to procurement, asset management, and human resources. 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 and Consular Program revenue collection processes. The audit team conducted work on-site at the mission from November 21 to December 2, 2016. In addition, files were tested which included a review of a sample of contracts, expenditure items, asset disposals, payroll items, overtime items and staffing actions. Interviews were conducted with the HOM, CBS management and key LES of the Common Services and Consular Programs, as well as employees at HQ. The audit team performed on-site visits to storage facilities, local vendors, the mission’s bank and a sample of SQs. The inventory system was also tested. In addition, the audit team met with five like-minded missions - Australia, New Zealand, Sweden, United Kingdom and the United States of America - to gather information on their challenges and good practices in common services.

3. Observations

This section sets out key audit 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 HQ management would exercise effective oversight over mission activities and expenditures to ensure solid stewardship of mission resources.  The audit examined general administrative practices, roles and responsibilities of mission staff in the management of the common services.

Accountability in the mission rests with the HOM, who reports to the Assistant Deputy Minister (ADM), Geographic, for the region at HQ. HQ has a role to support and enforce HOM accountability including the provision of common services.  The audit team found that although the HOM is accountable at the mission, there was limited monitoring in the form of data analysis and benchmarking done by HQ relating to procurement and asset management.  Data analysis by HQ could have raised signals of discrepancies that were detected by the audit team, such as inventory, which could have supported and enhanced the HOMs’ oversight responsibilities.  At the time of the visit by the audit team, the DMCO Property position had not had stability for a long period of time.  A clear consequence of this gap was noted in the management of procurement activities and inventory as outlined in sections 3.3, 3.4, and 3.5 of this report.

Management makes use of mandatory management tools developed by HQ, such as Strategia and FINSTAT, and regular discussions about the financial position of the mission take place. Management meetings are held regularly including communications with staff at all levels within the mission.

The audit team found that CBS roles, responsibilities and accountabilities are clear, communicated and understood. For example, contracting roles and responsibilities are articulated in the Terms of Reference of the Contract Review Board (CRB), performance management agreements, and policy and procedure documentation. One exception noted was the lack of clarity of the Deputy Head of Mission’s (DHOM) role with respect to exercising delegated authority. His position does not have delegated financial authority, although he has been given responsibilities regarding the Common Services Program. This creates a lack of clarity regarding the extent of his responsibilities. Overall, the audit found that at this mission there is a good foundation and structure in place to provide oversight, but certain improvements are required.

The audit team noted that LES play key roles supporting mission management through their subject-matter expertise, and cultural and linguistic knowledge. Since the LES remain at the mission while the CBS rotate, it would be expected that they provide stability by continuing to carry out the appropriate processes and procedures that comply with Government of Canada policies and the mandate of the Department. However, long absences in between CBS rotations may result in good practices being discontinued. Mission management reported that rotation on a two-year cycle did not provide sufficient time to assess and implement the proper practices to enforce due diligence. [REDACTED] Based on observations by the audit team and comments provided during interviews with mission staff, continuity of business processes could be negatively impacted by:

• lack of formal handover notes from outgoing to incoming CBS;
• vacancies of key CBS positions for  long periods of time in between rotation cycles; and
• turnover of a key mission management positions at the same time rather than a staggered approach.

Based on a review of minutes of the Mission’s Committee on Mission Management and Housing Committee, relevant topics are discussed and decisions made accordingly. An Operations Committee, chaired by the HOM, also takes place on a regular basis [REDACTED] At the time of the audit, the audit team found that there were no formal Terms of Reference documents in place for either the Committee on Mission Management or the Operations Committee. Mission management noted that these committees are operating in accordance with the HOM Handbook, and new committee members receive a briefing upon arrival. However, without a formal and communicated Terms of Reference document for members to continually refer to, there is a risk that members will not have a clear understanding of the respective mandates of both committees, the make-up and frequency of meetings, and their specific roles as members.

Another key oversight function at the mission is the CRB. The audit team found that the CRB is well coordinated by the LES General Services Officer who circulates and retains all key documentation. A review of the CRB’s Records of Decision for 2015-16 and 2016-17 demonstrated that members exercise a challenge function. However, it was noted that members of the CRB as well as program managers rely heavily on the General Services Officer to inform them of the appropriate threshold limits, justification and procedures to comply with departmental contracting policies. In addition, some members with less knowledge and experience expressed a need for specific contracting training.

3.2 Planning and Budgeting

The audit team expected that planning and budgeting would be based on a needs analysis, supported by historical data with adjustments made to reflect planned activities and forecasted expenditures.

The mission uses the corporate tool, Strategia, to outline planned activities and develop budget figures for each expenditure item under the common services and property budget envelopes.  The mission engages in a planning process where some trend analysis feeds the budget estimate and forecasting process.  This is a good practice that can be enhanced through the use of departmental software tools, FAS reporting functionality and Business Intelligence, to extract data. While this practice is not a requirement, doing so on a regular basis would better inform planning of procurement activities. However, it was noted that forecasting analysis for 2016-2017 was not made available to the incoming CBS from the former CBS.  Consequently, this breakdown in corporate memory transfer can impact current management's activities for the upcoming planning cycle.

The mission documents property maintenance activities in three planning documents:  Strategia; the mission property management plan; and a project schedule. Furthermore, a list of additional small, easily implemented property maintenance projects is maintained in case of any available funds remaining during the last quarter of the year.

Although there is no fleet maintenance plan, there is a mechanic on site to repair the vehicles allowing maintenance costs to remain low. Not having a formal fleet maintenance plan is reasonable given that the mechanic continues to maintain vehicles as per fleet guidelines.

3.3 Monitoring

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

Procurement

Based on a review of a sample of procurement transactions and discussions with mission management, it was found that formal confirmation of goods received or services appropriately rendered is inconsistently obtained by CBS when executing financial oversight (section 34 of the Financial Administration Act) of procurement transactions. Without a strong monitoring process to confirm that the goods purchased match those received, and that the services performed were line with the contract, there is a risk that the Mission will make inappropriate payments, and not receive value for money. This gap in financial oversight also exacerbates the risks associated with the inventory management gaps discussed in section 3.5.

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 in the CS Program. Although overtime costs were within the budget, the greatest amount of overtime was performed by drivers who earned overtime pay representing on average 26% of their salary in 2015-2016. Although drivers are on a shift schedule, the mission has not conducted a review of driver usage to optimize it and reduce the amount of overtime required. It was also noted that the LES Transport Supervisor approves overtime with no review done by a CBS. In addition, CBS managers are not provided with overtime reports which would inform them of overtime expenditures and prompt them to exercise a challenge function when required. Since overtime is not strictly monitored, there is a risk of abuse of overtime claims through compensation for overtime that is not warranted or overtime that is not actually performed.

Vehicle Usage

The audit team found that vehicle usage in terms of kilometres driven and gasoline purchased is effectively tracked and monitored.  At the time of the audit, it was noted that CBS passengers were not signing trip logs, although management indicated this practice was to be implemented shortly.

Management indicated that work activity has been low due to subdued engagement with the Russian government and gaps in CBS positions.  The audit team encourages the mission to continually monitor transportation requirements against the capacity of the fleet to ensure operational needs are met, while the maintained fleet size is efficient.

Employee Performance

Based on observations throughout the audit, the audit team found evidence of poor performance of certain staff in performing well established procedures. Examples included: staff not following established inventory procedures; and not adhering to petty cash management policies. While some actions have been taken by mission management to address these issues through formal performance management mechanisms, these shortcomings continue.

Local Bank

The audit team visited the mission’s bank.  Standard banking services are provided to the mission and the bank considered the relationship with the mission to be positive.  The mission’s bank agreement is up-to-date and reflective of current services provided. Proper and up-to-date specimen signatures are on file.

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 and selected a judgemental sample of contracts and transactions from April 2015 to November 2016. The audit team found that the initiation of procurement transactions was not always linked to a plan or needs assessment.  In addition, it was noted that there was a general lack of formal pre-approval for the initiation of goods procurement, although the LES staff indicated that they received oral pre-approval from managers.

The audit team also found that the approaches selected for procuring goods or services was not always optimal and the most appropriate. File testing found that:  contracts were not in place for some property maintenance projects where one was required; a standing advance was used rather than an acquisition card for a large dollar purchase (likely a television, although a detailed receipt was not on-file); and the purchase of televisions was split into two acquisition card transactions. Furthermore, it was found that several transactions were not supported by appropriate documentation and procurement processes were not followed (specifically, ensuring a sole source contract is sufficiently justified, and obtaining three quotes for goods and services before selecting the best one that provides value for money). The audit team also found instances of sole source contracts wrongly coded as competitive in the financial system thereby resulting in inaccurate information being published on the departmental website for proactive disclosure purposes.

The mission operates in an environment in which reliable vendors are few. These vendors are also sought by other Western embassies and firms often making it difficult to secure their services. Given these circumstances, property staff provided a justification for the frequent use of one particular foreign vendor for property maintenance work despite the quoted price being much higher than local vendors’ quotes because of the superior quality of materials and services.  A small vendor pool makes lowest cost options more difficult to select. At the time of the audit, a significant review of available vendors by the mission, with the objective of expanding the pool of reliable and cost-effective options, had not been undertaken.

During the period of the audit, the mission experienced a lack of stability in the DMCO Property position. This position was vacant for a long period of time and filled by CBS on temporary duty assignments and a CBS Warrant Officer acting in this position who lacked sufficient GAC experience and training for the role. Consequently, contracting procedures and policies were not always followed and value for money was not always realized when procuring goods and services.

3.5 Asset Management

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

Inventory

The mission makes use of the corporate RFID (Radio Frequency Identification Device) inventory tracking system. However, the audit team found that the management and execution of inventory practices require strengthening. Numerous instances were found of inaccurate or incomplete information in the inventory system (such as items in storage that did not exist in the system; items coded to the incorrect storage location; or items with the wrong description). Due to these widespread errors in the system, information is unreliable. In addition, it was found that valuable goods (such as televisions) were not consistently tracked from acquisition to disposal and could not be located. Low dollar value goods, such as kettles and irons, were tracked using a spreadsheet. When these items left storage, their number count was reduced but there was no description as to where these items went. Furthermore, goods are stored in multiple locations on-site as well as off-site.  One of the reasons for the dispersed inventory is the various detached annexes in the Chancery compound and an empty off-site building that was supposed to be the location of a new Chancery at one point in time. [REDACTED]

Cash

Another asset found in some missions is cash; a supply is required for small, urgent, unusual purchases not covered by other means. At the time of the audit, with the arrival of the finance officer, the mission had recently reduced the number of petty cash accounts to [REDACTED] and increased standing advances to [REDACTED]. Due to this recent changeover, the custodians were not carrying out their duties which included using the appropriate forms to distinguish the responsibilities of the two types of cash holdings. In addition, instances were noted in which inappropriate purchases were made through petty cash and were in excess of the [REDACTED] transaction limit. The audit team conducted a cash count of all [REDACTED] accounts and found the cash to be reconciled as per current records and receipts.

The mission has a cash account for the purpose of making payments to a few vendors and in emergencies situations. There is limited activity in the cash account as the majority of vendors are paid by electronic transfer. At the time of the audit, the mission had proactively reduced the balance in the cash account to mitigate risks associated with cash handling. Overall, the audit team found the cash account to be appropriately managed.

Collection of Consular Revenue

The Consular Program is led by an FS-02 First Secretary, Consul who manages four LES including two part-time receptionists.  The mission is responsible for providing consular, passport and citizenship services throughout Russia, Armenia and Uzbekistan.  To facilitate coverage of this vast territory, which is the largest in the world, there are two Honorary Consuls in Vladivostok (Russia) and Yerevan (Armenia). A third Honorary Consul position in Tashkent (Uzbekistan) is currently unfilled. The majority of service requests are passport-related. The mission collects approximately [REDACTED] of its fees in cash, with the other [REDACTED] collected by credit card. The audit team found that there is an appropriate process in place to manage the cash received.

3.6 Human Resources - LES Staffing

For 2016-2017, human resources (HR) planning activities are documented directly in Strategia rather than in a formal HR staffing plan. This practice seems reasonable, given the low LES turnover and thereby limited staffing activities. Staffing is mostly related to short-term placements, such as for maternity leave or emergency employment.

The mission manages all aspects of LES staffing actions and can seek assistance from the Regional Service Centre in London (United Kingdom) when required. Based on a sample of three staffing actions out of six that took place from April 2015 to November 2016, it was found that CBS were sufficiently involved at various points in the process. In addition, key documentation was found in this sample of staffing files as well as a sample of personnel files.

4. Conclusion

The audit concluded that there were weaknesses in the management practices and controls in place to ensure good stewardship of resources at the Moscow mission to support the achievement of Global Affairs Canada Objectives. While mission management meets corporate reporting requirements, reviews financial reports on a regular basis and LES staffing activities are appropriate, certain monitoring, procurement and asset management activities need to be improved to demonstrate better stewardship of resources.

The audit team verbally debriefed the HOM and the MCO after completion of work on-site at the mission. As a result, mission management has already begun to address some issues identified by the audit.

5. Recommendations

Recommendations to the Moscow Mission:

1. The Head of Mission should work with Headquarters to clarify the role of the Deputy Head of Mission and ensure his financial authorities are in line with his responsibilities.
2. 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.
3. 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.
4. 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 Moscow 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 Moscow mission operations.  Specifically, the audit examined processes related to the collection of Consular fees, procurement, and asset management (including materials, vehicles, and property). Human resource processes relating to LES staffing actions, LES payroll and overtime were also examined.

Plans to integrate the mission into a Common Service Delivery Point in London (United Kingdom) in 2017 are underway which means that some administrative processes will be reduced at the mission.

The most up-to-date documentation available as at October 2016 was reviewed.  In addition, Common Services expenditures and data for property and fleet were examined from 2013-2014 to 2016-2017 to obtain trends. A sample of files and transactions were tested from activities that took place from 2015-16 to 2016-17.

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