Audit of management practices at missions - Amman

January 2018

Executive summary

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

Rationale for this audit

In 2015, the Department initiated an internal investigation into the Canadian Consulate in Haiti, and found that fraudulent schemes had been put in place by locally engaged staff that resulted in estimated government losses of $1.7 million.  Given the findings in Haiti, the Deputy Minister of Foreign Affairs requested a series of management practice audits of selected Missions to determine whether similar issues could be taking place at other Canadian embassies abroad.

The Office of the Chief Audit Executive conducted a risk assessment to identify those Missions susceptible to higher levels of fraud risk and therefore selected for audit.  A first phase of Mission audits was initiated in Fiscal Year (FY) 2016-17, followed by a second phase initiated in FY 2017-18. The Amman Mission was one of five Missions operating in a higher fraud risk environment that was selected for audit in the second phase.

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 Amman Mission to support the achievement of Global Affairs Canada’s objectives. This audit examined the Mission’s management practices related to the Management and Consular Services Program, with regard to oversight and monitoring, procurement and asset management, and human resources, between April 2014 and August 2017.

What was found

The audit team found that processes related to LES staffing actions, cash management, disposals, fine arts and consular revenue, were mostly carried out well. However, processes established by Headquarters related to planning, asset management (including property, fleet and inventory), procurement, contracting, finance and human resources were not consistently followed, and some key controls were not in place or were circumvented. As a result, there is an absence of some Mission-generated, reliable information for decision-making to promote and demonstrate good stewardship of resources.

Generally, the audit team found that the roles and responsibilities pertaining to procurement, contracting and asset management (including property, fleet and inventory) need to be better defined, communicated and understood. These areas also require strengthening in order to ensure oversight, monitoring and reporting, in addition to compliance with guidelines, procedures and policies.

The audit team also noted that while the Mission’s planning and budgeting processes are in line with Headquarter requirements, the information utilized is of limited value. Specifically, the Mission does not have planning processes in place for overtime, procurement, property management, fleet management, and material management, limiting the accuracy of its forecasts. In addition, the Mission has made many coding errors in the past, which reduces the accuracy of any budget estimates based on historical expenditures.

Conclusion

The audit concluded that there were significant weaknesses in the management practices and controls in place to ensure good stewardship of resources at the Amman Mission. There is a lack of management oversight in the areas of local procurement, asset management, and human resources. Processes established by Headquarters relating to finance, procurement, contracting and human resources are not consistently followed and some key controls are not in place or are circumvented. There is also an absence of Mission-generated, reliable information for decision making to promote and demonstrate good stewardship of resources.

[REDACTED]

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.

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 2016-17 Global Affairs Canada Departmental Results Report^{Footnote 3}, $931M was spent to operate and support the Missions. Administrative activities that support the Department’s Missions require effective and efficient management practices to help ensure sound stewardship of resources.

In 2015, the Department initiated an internal investigation into the Canadian Consulate in Haiti, and found that fraudulent schemes had been put in place by locally engaged staff that resulted in estimated government losses of $1.7 million.  Given the findings in Haiti, the Deputy Minister of Foreign Affairs requested a series of management practice audits of select Missions to determine whether similar issues could be taking place at other Canadian embassies abroad.

The Office of the Chief Audit Executive conducted a risk assessment to identify those Missions susceptible to higher levels of fraud risk and therefore selected for audit.  The following factors were considered:

• complexity of the Mission in terms of the number and kinds of services provided;
• size of the Mission, including staff complement and footprint;
• the Mission’s budget for administrative services;
• the Mission hardship level;^{Footnote 4}
• 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, a first phase of Mission audits was initiated in FY 2016-17, in which 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.

As part of a second phase of Mission audits initiated in FY 2017-18, five more Missions that operate in higher fraud risk environments were selected for audit. These were: Amman (Jordan); Cairo (Egypt); Jakarta (Indonesia); Kingston (Jamaica); and Sao Paulo (Brazil). An additional Mission that operates in a lower fraud risk environment, Madrid (Spain), was selected for comparative purposes.

Embassy of Canada in Amman

The Embassy of Canada (the Mission) in Amman (Jordan) is a medium-sized Mission, which, at the time of the audit, was comprised of 33 Canada-Based Staff (CBS) and 52 Locally-Engaged Staff (LES) working in six Mission programs (Commercial Economic, Common Services, Consular, Development, Foreign Policy and Diplomacy Services, and Security and Emergency Management) in partnership with five federal departments or agencies (Canada Border Services Agency, Department of National Defence, Immigration, Refugee and Citizenship Canada, Royal Canadian Mounted Police, and Public Safety).

Amman is the capital and most populous city of the Hashemite Kingdom of Jordan. It is the country's political, cultural and commercial centre and one of the oldest continuously inhabited cities in the world. Its population has been estimated at around 4.1 million, with an additional 1 million residing in the surrounding areas.

Canada and Jordan have maintained bilateral relations for more than 50 years. The Canadian Government's new Middle East strategy has provided important new resources for the Amman Mission to support the Jordanian government in maintaining stability and security through development and humanitarian assistance, and security and stabilization programming. The commercial relationship, while underpinned by the Canada-Jordan Free Trade Agreement (CJFTA), is relatively modest but specific sectoral opportunities exist.

Jordan is often characterized as an island of stability in a sea of crisis, but this characterization is expected to be increasingly challenged. During FY 2016-17, Jordan endured a number of high profile terrorist and security incidents in which multiple civilians and security personnel were killed, including a Canadian tourist. Jordan's economy continues to struggle as key export markets (e.g. Syria, Iraq) are severely reduced or closed completely owing to regional conflict.  The regional and internal threat environment has also severely hampered Jordan's tourism industry. As well, Jordan’s social, health, educational and municipal services are under severe strain from the more than 1 million Syrian and other refugees.

Taking the above factors into consideration, the Amman Mission faces challenges resulting from the country’s current economic, political and security environment. As such, the Mission is designated as a hardship level [REDACTED]. In addition, the Mission is undergoing a period of consolidation after a period of high growth due to the closure of the Damascus Mission in Syria, instability in Cairo, operational challenges in Beirut, the wars in Iraq and Syria, the influx of temporary duty officers, and growing programs.

Common Services Program in Amman

The Common Services (CS) Program in the Amman Mission provides administrative support to the Mission’s programs and is responsible for financial transactions and human resources activities.  Accountability and responsibility for the Common Services Program are held by the Head of Mission (HOM). The Mission received administrative support from the Common Service Delivery Point (CSDP) in London (United Kingdom) from November 2015 until May 2017, when support was transferred to the CSDP in Delhi (India).

The CS Program is managed by a Management and Consular Officer^{Footnote 5} (MCO) at the FS-03 level. The MCO is supported by a Deputy MCO^{Footnote 6} (DMCO) at the FS-02 level. The Program’s Finance Section is led by an LE-07 Common Services Officer, who is responsible for financial transactions related to Mission operations. The Mission’s CS Program expenditures increased from FY 2013-14 to FY 2015-16 and decreased in FY 2016-17, as shown in Table 1 below.

Source: FAS Expenditure Report, as of November 9, 2017.

The CS Program’s Human Resources (HR) Section is also overseen by the MCO, with the support of an LE-05 Common Services Assistant. The DMCO is responsible for the CS Program’s Property Management, with the support of an LE-07 Mission Maintenance Officer and an LE-07 Property Manager, who are responsible for the oversight and maintenance of the Chancery, Official Residence, and Staff Quarters (SQs). In addition, the DMCO is responsible for the transportation section, supervising an LE-05 Protocol and Transportation Coordinator and 4 Drivers. The DMCO is also responsible for the Consular Section, supervising an LE-08 Consular Officer and an LE-06 Passport Examiner. A detailed organizational chart for Common Services and Consular Programs is provided in Appendix A. See Table 2 below for details on the Mission’s real property and fleet inventory.

Sources:  Real Property: 2016-2017 Business Intelligence database; Vehicles: 2017-2018 SAP: Asset Status Report; Interview notes.

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 Amman Mission to support the achievement of Global Affairs Canada’s objectives. The audit team examined the management practices related to common services at the Mission, specifically in the areas of human resources, procurement and asset management. Detailed audit criteria are listed in Appendix B.

Audit results were derived from the examination of documentation, data analytics of Mission expenditures and walk-throughs of key CS processes. The audit team conducted work on-site at the Mission from October 1 to October 12, 2017. A review of a sample of contracts, expenditures, asset disposals, payroll transactions, overtime payments, and staffing actions was undertaken, in addition to an examination of the inventory system. Interviews were conducted with the HOM, CBS management and key LES within the Management and Consular Services Program, as well as staff at Headquarters (HQ).  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, Sweden and the United Kingdom - to gather information regarding their challenges and good practices in the management of common services.

3.  Observations

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

3.1 Accountability and oversight

It was expected that management at the Mission and Headquarters (HQ) would exercise effective oversight over Mission activities and expenditures to ensure proper stewardship of Mission resources. The audit examined roles and responsibilities, as well as key oversight functions, of the Mission management team and key Mission staff from the CS Program.

Accountability for the Amman Mission rests with the HOM, who reports to the Assistant Deputy Minister (ADM) of the Europe, Middle East and Maghreb (EGM) Branch. HQ has a role in supporting and enforcing HOM accountability, including the provision of Common and Consular Services. The MCO, who reports to the HOM, is also accountable to the International Platform Branch at HQ. At the time of the audit, the HOM had been posted to Amman for approximately 13 months. During this time, the continual growth of the Mission, as well as the transition of financial services from the CSDP in London to the CSDP in Delhi, added challenges for Mission management.

The Performance Agreements for the HOM and DMCO both articulate clear responsibilities in regards to HR and financial management^{Footnote 7}. [REDACTED] The CS Program’s annual work plan for FY 2017-18 summarized the key responsibilities of all LES. For instance, responsibilities related to HR and asset management (specifically, repairs and maintenance) are well articulated. However, it was noted that responsibilities of key personnel in the areas of procurement, contracting and inventory management need to be better defined and communicated.

Key oversight committees are expected to be in place at Missions. The audit team found that the Amman Mission had in place a Committee on Mission Management (CMM), a Mission Housing Committee, and a Mission Contract Review Board (CRB). The Mission CRB ceased operations in July 2017, when the Mission transitioned to the CSDP in Delhi and its Regional CRB.

The CMM did not maintain records of decision for all of 2016, and only 4 months of minutes were provided to auditors for review (from mid-February 2017 to mid-June 2017). Based on discussions recorded during this limited period, the committee was well informed on HR issues for LES including performance management and staffing competitions. However, there was minimal evidence of CMM oversight on issues related to procurement, asset management, and finance.

The Mission CRB, which was chaired by the DMCO, was tasked with reviewing contracts over $10,000 CAD. The Board generally made well-supported decisions; however, there were several instances where its members demonstrated a lack of knowledge of procurement rules, which led to contracting rules not being respected and/or circumvented. As already noted, the Mission CRB has now been replaced by the Delhi CSDP Regional CRB, on which the MCO is the sole representative from the Amman Mission. It is expected that the Regional CRB will bring more experience and knowledge to support the oversight of the Mission’s contracting activities.

Finally, auditors reviewed the oversight exercised by the management team accountable for the management of common services. Through interviews and file review, the auditors noted that there is limited management involvement in overseeing procurement and asset management activities. This shortcoming was evidenced by issues noted in several areas, including financial coding, and property, fleet and inventory management, as well as with procurement, overtime and petty cash. These issues would have been minimized if the expected management oversight had been effectively exercised.

3.2 Planning and budgeting

It was expected that planning and budgeting would be based on need, and there would be a rationale for planned activities and forecasted expenditures. The audit team noted that the Mission’s planning and budgeting processes are based on HQ requirements, including Strategia (the corporate integrated planning and reporting tool), for its annual financial planning exercise, and related Mission Property Management Plans and Mission Maintenance Workplans. The Mission also updates its financial forecasts during the fiscal year through the FINSTAT process.

When planning for the upcoming fiscal year, the Mission reviews its historical expenditures and makes adjustments for events which are anticipated to affect budget requirements. However, the Mission does not have planning processes in place for procurement, property management, fleet management, and material management, limiting the accuracy of its forecasts. In addition, the Mission has made many coding errors in the past, which reduces the accuracy of any budget estimates based on historical expenditures.

Over the past three years, the Mission’s planned expenditures have varied significantly from actual expenditures. Although the Mission experienced considerable growth and was also the hub for the Operation Syrian Refugee, this does not account for all of the variances. In particular, for FY 2016-17, where operations returned more to normal, the Mission returned 6.5% of its total budget in P11  (February 2017), in addition to spending higher than expected amounts in March 2017, which are strong indications that operational planning needs improvement. There was also insufficient evidence to support CMM’s involvement in the planning process, since the limited meeting minutes provided were for meetings taking place outside of the planning timeframe.

Overall, the Mission’s planning and budgeting process would be strengthened by putting in place processes to ensure detailed operational plans for procurement, property management, fleet management, and material management activities. The Mission should also ensure the use of correct coding in order to be able to rely on historical expenditures for its forecasts.

3.3 Monitoring

It was expected that monitoring activities would be performed to ensure Mission compliance with Government of Canada and Department-specific policies and procedures.

The monitoring and reporting of procurement, asset management and human resources at the Mission are insufficient. The monitoring activities taking place are limited to ongoing monitoring of the LES staffing statuses and monitoring of the FINSTAT reports. Although FINSTAT reports are monitored, there are no detailed analyses completed in terms of usage against individual expenditure items with respect to the budget. As well, the audit team tested 65 samples and found that 30 (46%) of these transactions had coding errors. Though HQ identified and communicated many times with the Mission about the high coding error rate, the problem still persists. This high error rate also raises a concern about the due diligence surrounding signing-off under Financial Administration Act section 34 as it includes verifying proper coding of the transaction. Had expenditures been closely monitored by the Mission, the high coding error rate would have been identified in a timely manner and corrected, which would have enabled trend analyses and accurate budgeting and forecasting based on historical expenditures.

There was no evidence of monitoring mechanisms in place for utilities at the SQs. The Mission only recently started compiling expenditures in regards to the fuel purchased for boilers. If proper monitoring had been in place, the anomalies with fuel consumption at two SQs that was recently discovered could have been caught immediately and addressed in a timely manner. There is also no tracking of property maintenance and repairs. As the property expenditures were not being carefully monitored, the Mission was unaware that it went above certain thresholds, which would have triggered the requirement for contracts or purchase orders with some of the vendors. For instance, during the relocation season, direct invoicing for various services was utilized because each individual transaction was below the contracting threshold. The lease agreements were also not being monitored by the Mission, which resulted in a negative financial impact. For example, documentation review indicated that certain maintenance expenditures (e.g., boiler maintenance) were paid when in fact; the lease agreements specified that these expenses were under the responsibility of the landlords.

Another concern is with regard to fleet maintenance and use, which are not being monitored. As a result, the Mission has no information on whether the fuel expenses are reasonable. Moreover, as there are no maintenance logs, there is no monitoring of the maintenance done on the vehicles and the Mission has no information on whether the maintenance expenses are reasonable. As a consequence, it is not possible to determine if the frequency and specifications of maintenance and related purchases are reasonable based on the fleet profile.

Staff overtime is also not tracked at the mission, thus, the mission cannot perform any trend analysis to determine if the overtime is appropriate, or if adjustments to workload or plans are required. Weaknesses were also identified in terms of pre-approval and rationale, as well as its reasonableness. For example, it does not seem reasonable that an individual would require regular overtime throughout the year to complete his/her job. Of particular concern were the pre-approval of overtime without specifying the approximate duration for the overtime, and the certification of overtime (section 34 of the Financial Administration Act) prior to the overtime actually having been completed. Finally, overtime for LES was described as part of the work culture, with almost all LES claiming at least some overtime in FY 2016-17. Following the payout of all accumulated overtime in March 2017, mission management committed to changing this culture.

In terms of consular revenues, there are minimal monitoring activities in place. Furthermore, the LES who are responsible for the revenue collection determine when to perform the reconciliations, and the DMCO responsible for consular services appears to play a limited role in reviewing reconciliations presented for his approval. Mitigating the situation is the decision by the Mission to no longer accept cash payment for consular services. This is mostly adhered to, with very few cash revenues being collected by the Mission.

Overall, there are insufficient monitoring activities being performed at the Mission, resulting in issues of coding, purchasing, expenditures and budget planning and reporting, which prevent the identification of problems and the possibility of corrective action, thereby increasing the risk of financial loss.

3.4 Local procurement

The audit team expected that the procurement for goods and services at the Mission would be administered and managed in accordance with applicable policies and directives, and would achieve the best value for money. The audit team examined the mechanisms and tools in place to procure goods and services at the Mission. To that effect, a sample of 65 procurement transactions and contracts, covering the period between April 2015 and August 2017, was reviewed.

This review led the audit team to note that issues of concern are mainly the lack of evidence supporting procurement initiation, the use of incorrect procurement methods, insufficient management of some contracts and lack of evidence that value for money was always considered. Also, multiple instances were noted where transactions were split in order to avoid thresholds for various procurement options, including petty cash, acquisition cards, and contracting.

Specifically, the audit team found that there was a lack of documented pre-approval (section 32 of the Financial Administration Act^{Footnote 8}) for the majority of the transactions reviewed, and there was insufficient evidence to demonstrate that certain transactions were reasonable. In fact, more than half of the sampled procurement transactions did not have a clear link to Mission requirements, nor were they properly pre-approved. Without linking purchases to Mission needs and obtaining pre-approval prior to purchase, the Mission greatly increases its risk that it will pay for goods/services it does not require. This was well illustrated in the case of appliances purchased at year end that remained with the vendor more than six months after their purchase. Moreover, this case, along with other multiple purchases of spare items without justification, was especially problematic given that the Mission does not keep adequate inventory records.

Another concern in relation to the above issues is the lack of due diligence in exercising section 34 of the Financial Administration Act, which is to certify that goods or services have been received and payment can be issued. Although section 34 was signed for all transactions, the receipt of procured goods or services could not be confirmed in all cases. As an example, section 34 was signed for a consultant’s timesheet for an unreasonable number of hours worked (12 hours per day for 30 days in one month). Of particular concern was the confirmation of receipt and section 34 approval for the purchase of several appliances. The invoice had a “goods received” stamp, indicating that the items had been received, even though these items are still with the vendor. This demonstrates a lack of due diligence on behalf of the staff holding this authority, given that the items were never delivered by the vendor.

Concerning procurement method, although the majority of reviewed transactions were procured using the appropriate method, a significant portion (30%) was not appropriately procured. In particular, there appears to be an overall lack of effort to get multiple quotes from vendors in order to ensure that value for money is being obtained. As an example of inappropriate procurement, the Mission has used the same vendor to paint its SQs since 1999, with 94% of the payments ($542K CAD) paid through direct invoices. For predictable and recurring work such as painting SQs, a competitive process should be used, or a standing offer put in place. In another case, an acquisition card was used to pay an amount that exceeded the card’s transaction limit but the transaction was split into three transactions to circumvent this rule. In addition, given its value, the purchase should have been sent to the Mission CRB for approval. These particular issues were noted for several similar acquisition card purchases.

Finally, throughout the review of the procurement transactions, issues in terms of financial coding were noted. Incorrect General Ledgers (GLs) were frequently used to describe the purchases, which in turn negatively impact the Mission’s ability to identify expenditure trends and plan future budgets. Thus, any budget planning and allocation completed by the Mission would be based on incomplete / inaccurate historical spending information.

3.5 Asset management

Another area of risk identified by the audit team concerns the management of assets at the Mission, specifically the management of inventory, properties, vehicles, petty cash and consular revenues.

Inventory Control and Disposal

It was expected that once an asset was purchased, it would be recorded, safeguarded, tracked through its lifecycle and disposed of in accordance with the Department’s Materiel Management Manual. The Mission has an inventory of properties that includes Crown-owned and leased buildings tracked in the Physical Resources Information – Mission Environment (PRIME). The Mission also has an inventory of 15 vehicles, tracked in the Financial and Administrative System (FAS) from purchase to disposal.  Additionally, there are various types of materiel inventory repositories: information technology equipment; fine art; SQ and OR-related assets; and storage in the Chancery basement. There is also inventory held at a secure storage facility off-site, which contains personal items arrived via shipment for new CBS, surplus SQ furniture and furnishings, and items getting ready for disposal at the next auction. There is no inventory list available for the storage facility and the items stored in the Chancery’s basement.

The audit team found that the fine art inventories were adequately tracked and safeguarded. However, issues were noted with the other inventories. In fact, there is no formal mechanism to manage and monitor these inventories. The corporate inventory tracking system, the Radio Frequency Identification Device (RFID), is not being used by the Mission. Inventory lists were only found for the SQs and select maintenance equipment/tools at the Chancery. The records of SQ inventories are kept in a hard copy format but these are not completed in a timely manner, sufficiently detailed and are not kept up-to-date. In order to be of use and an accurate reflection of the contents of an SQ, the SQ inventories must be updated when new items are purchased, when new items are obtained from either storage or another SQ, or when items are removed from the SQ. When the audit team discussed the use of the RFID with Management at the Mission, the Mission indicated that support from Headquarters was needed in order to ensure proper life cycle management of its’ assets.

Other inventory concerns were noted by the audit team. For example, the audit team learned that some SQ appliances (e.g., fridges, washers and dryers) were purchased and paid for from a private company but not delivered; instead the appliances are held with the company until the items are required by the Mission. When the audit team requested a list of the inventory currently being held at the company, the Property Manager provided the copy of an invoice of a bulk, year-end purchase of appliances. When an auditor visited the vendor, the vendor indicated that they also had a fridge that was purchased by the Canadian Embassy prior to the bulk purchase. Since this fridge was not purchased as part of the year-end bulk purchase, and the Chancery does not have an actual inventory of the items stored with the company, the fridge is not included in the Chancery’s list of items being held by the company. Given the lack of an inventory and that all of the company’s invoices were stamped to say the items were received, the Mission cannot accurately identify which of the purchased items are still with the company and which have actually been delivered. Overall, the lack of a detailed inventory system to capture the Mission’s assets negatively impacts the Mission’s ability to plan for future purchases (including life cycling) and safeguard its assets, all resulting in potential losses.

With regard to disposal, the audit team found that decisions to dispose of the assets were justified, efforts were made to maximize the disposal revenues and the disposal methods were appropriate. All records related to the disposal were also documented and kept by the Mission. Of concern, however, is that staff members participated in disposal activities even though their roles and responsibilities prohibit them from doing so. Particularly, it was inappropriate for a CBS, who was organizing the disposal of one of the vehicles, to bid on this vehicle.

Fleet Management

The fleet is comprised of a total of 15 vehicles and is managed by two different individuals: the Property Manager is responsible for the armoured vehicles, while the Protocol and Transportation Coordinator is responsible for all soft shell vehicles. Management stated that this arrangement was part of the transition plan, as armoured vehicle maintenance requires specialized technical knowledge, and the Property Manager has this experience, having previously been the Protocol and Transportation Coordinator.

The usage of all vehicles, with one exception, are being tracked and recorded in trip logs that capture the required information. However, the information provided by these logs is neither analyzed nor monitored to determine whether the vehicles are used only for Mission-related transportation and whether mileage and fuel expenses are reasonable. For example, the Mission was unable to explain the fuel consumption for one particular vehicle that was noted as having exceeded the reasonability threshold on multiple occasions.

Properties

The audit team noted that the Mission does not have a property maintenance plan and does not track/monitor property maintenance, repairs and other SQ related expenditures, such as utilities and furnishings. Concerning SQ furnishings, the guidelines outlined in the Department’s Materiel Management Manual, were not being respected by the Mission.

Of particular concern was the fact that the Mission was incurring maintenance costs that are covered by SQ lease agreements (e.g., boiler maintenance). In fact, the audit team learned that the Mission has been completing and paying for all maintenance required in SQs, even though lease agreements clearly identify most of these costs to be the responsibility of the landlords. The Mission recently began revisiting their lease agreements in order to stop paying for things that should be provided by the landlords, as per the lease agreements. The Mission has also started tracking fuel usage at the SQs and has already identified issues in terms of the fuel usage at two SQs.

Petty and Emergency Cash Parcel

The Mission mostly manages its cash in accordance with relevant policies and legislative requirements. However, some concerns were noted. For example, it was noted that several of the requirements from the Department’s Procedures on Petty Cash for Missions are not being observed. The issues noted include a lack of surprise petty cash counts, a petty cash holder who has other revenue collection functions, a transaction split to avoid limits, transactions exceeding petty cash limits, and transactions without original receipts. On a positive note, all [REDACTED] petty cash accounts reconciled during the surprise counts performed by the audit team and the funds are stored in safes with appropriate access.

Controls around the emergency cash parcel are sufficient. The funds are all accounted for and were recently counted by the HOM and MCO. Access is controlled and restricted to select individuals.

Consular Revenues

The Mission rarely receives cash and keeps copies of the official receipts with the related consular service applications, which minimizes the risk of loss. However, reconciliations between revenues and receipts are being performed much less frequently than required by departmental procedures (every 1-3 months instead of daily). As a consequence, the Mission does not make regular deposits of consular revenues in their bank account. This was supported by a review of consular revenues included in the Mission’s bank reconciliations for a 12-month period (from September 2016 to August 2017); only 4 months had consular-related deposits. No other consular-specific issues were noted with the reconciliations.

3.6 LES staffing

The audit team examined staffing files to determine whether adequate human resources management practices and controls were in place.  The auditors expected that staffing actions undertaken during the audit period would be in compliance with relevant policies and procedures, conducted in a fair, open and transparent manner, and that staffing files would contain the required documentation.

Based on the files reviewed, LES staffing actions were found to comply with the relevant policies and requirements, and appeared fair, transparent and open. Moreover, key documentation was being retained in each individual’s file and these files were mostly complete. The only area in need of improvement pertains to obtaining proof of education, which is an essential requirement in all staffing actions. Specifically, there was no proof of education found in any of the files reviewed; staff responsible for the Human Resources section confirmed that it is not a practice at the Mission to request proof of education.

A sample of the personnel files of key LES was also reviewed to ensure the retention of required documentation, such as job descriptions, performance agreements and any documentation related to values and ethics and disciplinary actions. The audit team found that overall the personnel files reviewed were properly documented.

4. Conclusion

The audit concludes that there are significant weaknesses in the management practices and controls in place to ensure good stewardship of resources at the Amman Mission. There is a lack of management oversight in the areas of local procurement, asset management, and human resources. Processes established by HQ relating to finance, procurement, contracting and human resources are not consistently followed and some key controls are not in place or are circumvented. There is also an absence of Mission-generated, reliable information for decision-making to promote and demonstrate good stewardship of resources.

[REDACTED]

The audit team verbally debriefed the HOM and the MCO after completion of work on-site. As a result, Mission management has started taking measures to address issues identified by the audit.

5. Recommendations

Recommendations to the Amman Mission:

1. The Head of Mission should ensure that responsibilities and accountabilities of Canada-based staff and Locally-Engaged Staff in the Property and Materiel Section with regards to procurement, contracting and asset management are clear and communicated.
2. The Head of Mission should take measures to strengthen planning, oversight, controls and monitoring with respect to property (including the enforcement of lease agreements and the process surrounding repairs and maintenance) and fleet management.
3. The Head of Mission should take measures to strengthen oversight, controls and monitoring to ensure that procurement and contracting processes comply with governmental policies and regulations and provide value for money, with corrective actions when non-compliance is detected. This also includes ensuring the respect of the guidelines outlined in the Department’s Materiel Management Manual.
4. The Head of Mission should ensure that proper management of the inventory cycle is undertaken, including recording, tracking and maintaining inventory.
5. The Head of Mission should take appropriate measures to enhance accuracy in financial coding and reporting.

Recommendation to Headquarters:

1. The Assistant Deputy Minister of the International Platform Branch (ACM) should reassess the use of RFID as the formal corporate inventory system for missions. In the meantime, and in order to mitigate the current risks, the Assistant Deputy Minister of the International Platform Branch should communicate to the missions clear expectations and provide guidance for adequate life cycle management of their inventory to ensure proper due diligence.

Appendix A: Organization chart for common services and consular programs

Appendix B: About the audit

Objective:

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

Scope:

The scope of the audit included those management practices and controls in place to support the Amman Mission operations.  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 at August 2017 was reviewed.  In addition, Common Services Program expenditures and data for property and fleet were examined from FY 2013-2014 to August 2017. A sample of files and transactions were tested for activities that took place from FY 2015-2016 to August 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 and CBS overtime compensation is reasonable.

Approach and Methodology:

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

• Documentation review (budgets, business plans in Strategia)
• Walkthrough of key Common Services processes
• Data analytics of Common Services expenditures
• File testing (contracts and expenditures relating to Common Services, asset disposal, overtime costs and staffing actions)
• Interviews (HOM, CBS management and key LES of Common Services and relevant employees at HQ and Common Service Delivery Point)
• Inventory testing
• Petty cash counts
• On-site examination of Chancery, the storage facility and a sample of staff quarters
• Benchmarking with like-minded Missions
• Visits to a sample of local vendors
• Visit to Mission bank

Appendix C: Management action plans

Appendix D: Acronyms and symbols

ADM

Assistant Deputy Minister

CBS

Canada-Based Staff

CJFTA

Canada-Jordan Free Trade Agreement

CMM

Committee on Mission Management

CS

Common Services

CSDP

Common Service Delivery Point

CRB

Contract Review Board

DMCO

Deputy Management and Consular Officer

EGM

Europe, Middle East and Maghreb Branch

FAA

Financial Administration Act

FAS

Finance and Administration System

FINSTAT

Financial Status Report

FSITP

Foreign Service Information Technology Professional

FY

Fiscal Year

GL

General Ledger

HOM

Head of Mission

HQ

Headquarters

HR

Human Resources

LEITP

Locally Engaged Information Technology Professional

LES

Locally-Engaged Staff

MCO

Management and Consular Officer

PMA

Performance Management Agreement

PRIME

Physical Resources Information - Mission Environment

RFID

Radio Frequency Identification Device

SQ

Staff Quarter