Audit of management practices of missions – Seoul

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 endure 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 put in place by locally engaged staff (LES) 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 with one mission operating in a lower fraud risk environment for comparative purposes. The Seoul mission was identified for audit as a lower fraud risk mission.

What was examined

The objective of the 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. 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 November 2016. This report covers audit work up to November 2016.

What was found

Overall, the audit team found that effective management controls are in place in the planning and oversight of local procurement and asset management, although improvement is needed in material inventory management and information analysis for informed decision-making.

Specifically, the audit team found that the mission adequately oversees and monitors its procurement activities through the exercise of due diligence. It had developed various planning and budgeting documents to support the management of material, property, human resources and salary. The mission’s procurement activities are administered and managed in compliance with the departmental policies and procedures, and most procurement transactions over $2,000 under review were linked to a plan or needs assessment. Further, staffing actions for LES were appropriate and respected applicable policies.

Areas for improvement were also identified by the audit team. Specifically, inventory management for assets under $10,000 were not consolidated or tracked. Reliable information sources exist for decision-making, such as the departmental Finance and Administration System (FAS). Nevertheless, the Mission did not perform budget-to-actual and trend analyses at the asset level to inform decision-making on mission property management.

Conclusion

The audit team concluded that there were effective management practices and controls in place to ensure good stewardship of resources at the Seoul mission to support the achievement of Global Affairs Canada objectives.

Effective management controls are in place in areas of local procurement and asset management planning and oversight. Overall, management fulfils its responsibilities and corporate reporting requirements. Some improvement is needed in material inventory management and information analysis for informed decision-making.

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 Seoul (South Korea)

Canadian interest in developing commercial ties with South Korea has increased with the Canada-Korea Free Trade Agreement (CKFTA), which came into force in January 2015. In December 2016, a Science, Technology, and Innovation agreement was signed, which offers valuable opportunities to boost relations in commercial and bilateral relations. On the consular side, close to 25,000 Canadians are in South Korea at any given time. The provision of top-quality services to Canadians is a key driving force at all levels in the mission hierarchy.

The Canadian Embassy in Seoul consists of 16 Canada-based staff (CBS) and 42 Locally engaged staff (LES) representing Global Affairs Canada, the Department of National Defence, Agriculture and Agri-food Canada and Immigration, Refugee and Citizenship Canada, as well as the Government of Alberta. An Honorary Consulate in Busan serves clients there. The mission is part of several regional networks, with common services and visa services handled from Manila, regional emergency management handled from Kuala Lumpur, and several accredited programs located in Beijing.

[REDACTED] where the main difficulties for the mission’s activities reside in the cultural and language differences between Canadians and South Koreans. The mission is experiencing an increase in its number of staff as a consequence of increased interest in South Korea by Canadian organizations.

Following the mission’s closure of the Immigration, Refugees and Citizenship Canada (IRCC) Program in 2013, space at the Crown-owned Chancery is vacant. Working with HQ, the mission is attempting to establish a pricing model that will attract tenants. The evaluation of the current layout has been done to assess how best to re-configure the mission to allow co-location with external tenants. The Mission is looking at innovative options that would help it meet its objectives in South Korea.

Common Services Program in the Seoul Mission

The Common Services (CS) Program within the Seoul mission provides administrative support to the mission’s programs and its Government of Canada partners. Accountability and responsibility are held by the Head of Mission (HOM). See Appendix A which illustrates the organizational chart for the Common Services Program.

Common Services are managed by a Management and Consular Officer (MCO) acting in an FS03 position while the financial operations of the mission are managed under the Common Service Delivery Point (CSDP) in Manila.

The Mission’s CS and property expenditures have been stable for the last 3 years at approximately $3.7M, as shown in Table 1 below.

Source: FAS Expenditures Report as at April 26, 2017

Functional managers within the Common Service Program are responsible for day to day mission operations and report directly to the MCO. The MCO provides general oversight of procurement and asset management activities and approves assets that need to be purchased or replaced. A material manager is responsible for acquisitions and contracting for Staff Quarters (SQ), furniture, utility bills, and fleet acquisitions. This manager keeps track of maintenance costs for vehicles and monitoring of the fine arts inventory, as well as fleet disposals. The property manager is responsible for acquisition of equipment, parts, tools, as well as selecting quotes and contracting for property services. The program manager also takes care of planning, organizing and supervising property maintenance.

The mission owns ten separate property units, including the office portion of the chancery, seven residential units in the chancery, a separate residential unit and the new official residence. Additionally, three buildings were sold in 2015: two residential units (October 2015); and the old official residence (November 2015). The mission has eight leased residential units for CBS staff.

The mission owns five standard vehicles, including one that was scheduled for replacement in FY2017-2018. Table 2 below shows the Mission’s FY2016-17 inventory of property and vehicles.

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

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 Seoul mission to support the achievement of Global Affairs Canada objectives. This audit team examined common services at the mission related to human resources, procurement and asset management. Detailed audit criteria are listed 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 November 7 to 19, 2016. A review of a sample of contracts, expenditure items, asset disposals, 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 HQ and the CSDP in Manila. The audit team performed on-site visits to storage facilities, local vendors, the mission’s bank and a sample of SQs. In addition, the audit team met with three like-minded missions - Australia, Swedish 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 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 Headquarters (HQ) management would exercise effective oversight over mission operations and expenditures with clearly defined accountabilities, roles and responsibilities to ensure solid stewardship of mission resources.

The accountability in the mission rests with the HOM, who reports to the Assistant Deputy Minister (ADM), Geographic Region, at HQ. HQ has a role to support and enforce the HOM’s accountability. Through documentation review, the audit team found that accountability, roles, and responsibilities of the HOM, the MCO, and the mission management team are clearly defined in several documents, such as the Terms of Reference of the Mission’s Committee on Mission Management (CMM), the Contract Review Board (CRB), the Housing Committee, performance management agreements and applicable policy and procedures documentation. Roles and responsibilities for LES key personnel are also clearly defined in their respective job descriptions.

Interviews conducted with key mission management personnel indicated that these accountabilities, roles and responsibilities in relation to mission management, particularly in the areas of local procurement, asset management and LES staffing are clearly understood and communicated. For example, the Housing Committee’s terms of reference set out the HOM’s responsibility for the provision, allocation and administration of Crown-leased properties located in the mission. The Committee assists and advises the HOM in the execution of responsibilities for the allocation, renewal and change of accommodations.

The audit team reviewed a sample of transactions which showed that transaction initiation and payment approval were performed by the required level of manager in accordance with delegated financial authorities. The audit team also found that the HOM, the MCO and the functional managers undertake their respective roles and responsibilities related to local procurement, contracting, and LES staffing activities as defined.

Oversight of mission management is exercised through three key committees acting as decision-making bodies: the CMM; CRB (located in Manila CSDP); and the Mission Housing Committee. The audit team reviewed the committee minutes taken for the past 12 months and found that issues related to procurement, asset management and LES staffing in terms of planning, performance and outcomes, and asset usage by the mission were actively discussed and documented. In addition to these committees, the HOM and MCO oversee mission management through regular bilateral meetings and weekly meetings with functional managers.

To assist the mission management team to fulfil its operational roles and responsibilities, procurement and asset management usage policies and guidelines are readily available on wiki and the intranet.

Several tools are available on Modus^{Footnote 4} for Mission financial operations, Accounts Payable Automation^{Footnote 5} (P2P) transaction checklists for Missions and a new payment input form. The audit team noted that functional managers have the appropriate help and tools required to perform their work. For example, HQ provides support for shop@DFATD^{Footnote 6} and the CSDP in Manila provides intranet support with all the documents necessary for establishing service contracts.

3.2 Planning and Budgeting

It was expected that the Mission would use appropriate systems and tools for its planning and budgeting activities based on an operational needs assessment.

The mission uses the corporate integrated planning and reporting tool, Strategia, for its integrated annual planning exercise, including initial financial planning and budgeting. This ensures that the mission aligns with the departmental planning commitments and allocates resources accordingly. The MCO finalize mission planning in Strategia once the HOM reviews and approves it. To support this high level planning and budgeting exercise, the mission has in place various sub planning and budgeting processes in key managerial areas under common services and property budget envelopes, such as LES salaries and benefits, SQs, property maintenance, assets replacement, procurement and material.

The planning and budgeting process starts with a needs assessment and review of the asset life cycle. The MCO has an overall responsibility for the mission’s annual budget. For the mission’s budget preparation, the expenditures incurred in the last two years are used as a basis. Mission management then identifies what will be expected from one year to the next, such as staff relocations and project changes, and factors this into the budgets. Work plans are then established.

The mission uses different systems and tools for this planning and budgeting exercise. For example, the mission budget for SQs is created in PRIME (Physical Resources Information - Mission Environment) at the beginning of the year and appliances are purchased based on the plan. For the salary budget, HR reporting is used for budget preparation. There is also a plan in excel format for asset replacement based on a five-year cycle. The Mission’s functional managers use spreadsheets which help in determining the costs and expenditures that can be expected for the next fiscal year. These spreadsheets are used to backup suggested changes for new budgets.

Once the budget is finalized from HQ, the MCO, in addition to ensuring that all commitments are entered in the system, checks the salary and all other commitment information on an on-going basis for each Financial Status report (FINSTAT) period.

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.

The Mission uses the corporate FINSTAT report to monitor its financial situation and ensure budgeted resources are appropriately managed on an on-going basis. Both the HOM and MCO are heavily involved in the monthly FINSTAT reporting exercise. The audit team noted that due to the Mission’s rigorous financial planning and budgeting process, there were few variances between budgeted and actual expenditures. Spending is constant throughout the year and the Mission returns funds to HQ when not needed. When there are variances, they are explained and reviewed by the HOMs.

Monitoring is performed via different systems and tools. PRIME is used to create property identifiers (PRID) when SQs are bought or leased and to forecast property expenditures. Local assets are maintained by a material manager who uses a spreadsheet that is kept up to date. Large value assets, such as buildings and cars, are tracked in the departmental information system. The mission has five cars. A detailed driver log is used for tracking car usage. The material manager is responsible for inventorying and monitoring fine arts - at each ambassador’s arrival and departure, there is a count of the inventory. The facility manager is responsible for the maintenance of the chancery building and Crown-owned SQs for "preventive" and "break-down" maintenance.

Weekly meetings led by the MCO occur with mission staff in relation to Finance, Property, Human resources, and IT functions. These meetings inform mission management on issues so that they are resolved in a timely manner. The audit team observed the Finance and HR meetings, and found that they were effective monitoring tools to support the achievement of mission objectives.

The audit team visited one local bank with which the Mission has its major day-to-day banking activities. Standard banking services are provided to the Mission and the relationship with the Mission is considered good by the bank. 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.

The audit team noted that the mission did not perform budget-to-actual or trend analyses at the asset level to inform decision-making. For example, the mission could leverage the property management tool, PRIME, to compare the forecasted properties with actual spending by asset. Trend analysis was not considered, as the small size of the mission allowed budgets to be surveyed at the general ledger level. Trend analysis at the asset level could be useful in detecting unusual fluctuations, such as an increase in utilities in a rented staff quarter.

The mission prepares and sends an HR report to HQ once a year. They also started producing quarterly survey reports for the LES Management Consult Board (MCB), as well as for the HOM.

3.4 Local Procurement

It was expected that the procurement for goods and services at the Mission would be administered and managed in accordance with applicable policies and directives. Local procurement was identified as one of the key risk areas during the audit planning phase. To ensure adequate internal controls were in place and effective in mitigating the risk, the audit team examined the processes, mechanisms, and tools used for procuring goods and services at the mission.

The Mission uses standing offers, contracts, and direct invoices for its goods and services procurement activities. As modes of payment, the mission uses direct transfer and credit cards, and does not use cheques or cash accounts other than petty cash. Standing offers were used where possible to ensure that a predictable and reliable supply for goods and services can be called upon, such as moving, security, painting, and cleaning services. When contract values exceed the $10,000 threshold, the Mission Contract Review Board located in Manila CSDP is involved. Where direct invoices were used, such as where the transactions were under the $2,000 threshold under which the MCO had procurement authority, best efforts were made to obtain at least three competitive quotes prior to initiating further steps. The acquisition card reports were reviewed and reconciled by the MCO, who approves every purchase on the common service acquisition card. The other mission programs (Trade, Foreign Policy and Diplomacy Service) have their own acquisition cards for which they can certify the transactions. The MCO also has an acquisition card [REDACTED] for emergency purposes which at the time of the audit were never used. In the case of a purchase value exceeding $1,000, the MCO and DMCO play a challenge function for every request. The Mission planned to implement a guide on prohibited purchases.

Because the mission’s financial management is covered by the CSDP Manila, segregation of duties related to procurement approval and payment was not an issue, as incompatible management duties were effectively segregated. Mission management is responsible for initiating and certifying that funds are available, and requested goods and services were received. Mission management uses the P2P system to upload documentation and to transmit it to the CSDP for payment processing.

The audit team selected a sample of 24 procurement transactions, including contracts, which took place from April 2015 to November 2016. The audit team focused on the procurement mechanisms, procurement initiation, and approval. The audit team assessed whether the approach chosen for procuring goods or services was optimal, whether the quantities and nature of services were reasonable, and whether contracts and purchase orders were appropriately used as per CSDP guidelines. The audit team also verified contracts over $10,000 that required approval from the Mission Contract Review Board and noted that they all received approval prior to contract issuance. The audit team found that in most instances the initiation of procurement transactions was linked to plans or needs assessments. In all instances, appropriate approvals were present prior to the disbursement of funds. Most transactions were supported by sufficient documentation and adequately recorded in the financial system. For all tested transactions, certification was appropriately exercised to confirm that the goods and services were received. In all but one case, the contract was signed prior to receiving the services. In the one instance, the call-up had to be re-done as per CSDP request, which caused the signature date to appear after the date of receiving the service. Overall, for the tested transactions, the audit team found no issues with invoice payments.

The mission has an appropriate approach, processes, and procedures to procuring goods and services, which is in compliance with the applicable policies, directives, and guidelines.

3.5 Asset Management

It was expected that once purchased, assets would be appropriately recorded, tracked, maintained and disposed of according to related policies and procedures.

The mission owns ten property units and leases eight residential units. To manage and maintain these properties, a Mission Property Management Plan (MPMP), a five-year material plan, a Mission Maintenance Work Plan (MMW) and budget plan for property maintenance were developed . Each of those plans has a different purpose in making the best use of available resources, in ensuring that property assets are repaired in a timely fashion and in ensuring compliance with HQ requirements. As a good practice, the property manager has developed a Gantt chart to track residential rotations and required maintenance.

The mission has an inventory of assets valued over $10,000 that includes Crown-owned buildings and vehicles, tracked in both FAS and PRIME, from purchase to disposal. Additionally, there are six types of materiel inventories: Information Technology (IT) equipment; Fine Art; Wine; SQ related assets; Chancery; and Embassy Storage. The auditors performed inventory counts and were able to find most of the items (specifically, IT equipment, fine art, staff quarter, and storage). However, the audit team noted that the Radio Frequency Identification System (RFID) was not used. As a result, six different inventory systems were used, which creates inefficiencies and inconsistencies in the way inventories are tracked. For instance, some items appeared in the wrong inventory and others in two inventories. It was also noted that storage procedures at the mission were not always followed. [REDACTED]

The audit team also examined the disposal of three large assets: the old official residence (OR); and two SQs. Of the 14 steps identified in the asset disposal process, most of them were performed. The MCO leveraged advice from Financial Operations, International Division (SMFF), thereby demonstrating a problem solving approach that resulted in adequate and timely disposal of property. However, the audit team noted that the proceeds from the disposal of the two SQs were less than the prices evaluated in the area. This may result in the Crown not having received appropriate compensation for the property.

Disposal of materiel was also examined. The audit team noted that while details were provided in the department mandated form, there was no rational for the disposals and little information about the state and age of disposed items.

3.6 Human Resources - LES Staffing

It was expected that the Mission would have a staffing plan in place and would monitor it to ensure operational needs were met and that staffing actions were appropriately approved, fair, open and transparent.

The audit team found that for 2016-2017, HR planning activities were documented directly in Strategia rather than in a formal HR staffing plan. The audit team found this practice to be reasonable, given the low LES turnover. The mission HR activities are closely monitored through weekly meetings held by the MCO. For example, the overtime budget was well managed and surplus was returned to HQ as part of the FINSTAT process. In addition, when someone leaves for a long period of time, such as on maternity leave or retirement, the MCO works with the program to fill the vacant position. The creation of new positions in the mission is mostly driven by HQ. In 2014, when the mission was migrated to the CSDP, a review of workload and job requirements for common services resulted in a reduction of four mission positions. Mission management indicated that the current workforce is at a good balance and there is no need for new positions.

For fiscal year 2016-2017, the mission went through many staffing changes:  two employees [REDACTED] three went on [REDACTED] leave; there were two temporary employees; and there were three vacant indeterminate positions.  [REDACTED]

While the mission manages all aspects of LES staffing actions, it also seeks assistance from the Regional LES Classification Committee in Manila as required. The audit team reviewed a sample of four staffing actions and one new classification position that took place in 2016-2017. It was noted that the responsible CBS manager was involved at all key points of the staffing actions, such as the development of evaluation criteria, testing tools and the evaluation of candidates. The audit team observed that key staffing documentation was on file, such as an evaluation check-list and evaluation grid for essential qualifications assessment.

Furthermore, the audit team noted that staffed positions under review were advertised with an online poster in both official languages and included all the necessary qualifications and requirements for the positions. To encourage LES to gain different experience, one acting position was advertised internally within the Mission.

Overall, staffing actions under review were based on needs assessment, monitored closely, and performed in a fair, open and transparent manner.

4. Conclusion

The audit concluded that there were effective management practices and controls in place to ensure good stewardship of resources at the Seoul mission to support the achievement of Global Affairs Canada’s objectives.

Effective management controls are in place in areas of local procurement and asset management planning and oversight. Overall, management fulfils its responsibilities and corporate reporting requirements. Some improvement is needed in material inventory management and information analysis for informed decision-making.

The audit team verbally debriefed the HOM and the MCO after completion of work on-site.

5. Recommendations

Recommendation to the Seoul Mission:

The Head of Mission should work with Headquarters to implement an inventory management system for tracking inventory levels, orders, consumption, movement, and disposal of assets.

Recommendation to Headquarters:

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.

Appendix A: Organization Chart for Common Services Programs

During fiscal year 2015-2016, the mission migrated to the Common Service Delivery Point (CSDP) model and is now dependent on Manila for all of its payments and many budgetary needs. With the introduction of phase 2 of the regionalization of Missions, the HR services will be transferred from the Mission to the CSDP in Manila.

The CS Program is managed by a Management and Consular Officer (MCO) responsible for various sections as shown in the organizational chart below.

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 Seoul 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 as of November 2016 was reviewed. In addition, Common Services Program expenditures and data for property and fleet were examined from 2013-2014 to 2016-2017. A sample of files and transactions were tested for activities that occurred from 2015-16 to 2016-2017.

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