Audit of management practices of missions - Kingston

June 2018

Executive summary

Global Affairs Canada manages Canada’s International Platform Branch — 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 Embassy 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 Missions 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 2016-17.  As part of a second phase initiated in 2017-18, the Kingston 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 Kingston Mission to support the achievement of Global Affairs Canada 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 staffing actions of locally engaged staff, overtime and corporate planning and budgeting requirements were followed. However, processes established by Headquarters relating to finance, procurement, contracting and asset management were not consistently followed, and some key controls were not in place. As a result, there is an absence of some Mission-generated, reliable information for decision-making to promote and demonstrate good stewardship of resources.

The audit team found a lack of monitoring and oversight of consular revenue management, procurement, contracting, and property and vehicle maintenance. Specifically, there was an absence of: identification and monitoring of procurement approaches; a functioning Contract Review Board; monitoring of property maintenance, and vehicle and generator fuel. These are all functions carried out by the Property and Materiel Section staff who were not clear about their roles and therefore, not properly carrying out their responsibilities. These weaknesses were further highlighted by the imbalance of responsibilities between the Management and Consular Officer and the Deputy Management and Consular Officer.

Inventory management was found to be weak as a result of the lack of an up-to-date inventory tracking mechanism, life cycle management of assets, and control over access to inventory storage areas in the Chancery. Moreover, instances were found of non-compliance with contracting and procurement regulations. Furthermore, the value-added tax applied to local purchases was not consistently claimed resulting in a loss of incoming funds to the Government of Canada.

Conclusion

The audit concluded that sound management practices and effective controls were partially in place to ensure good stewardship of resources at the Kingston Mission to support the achievement of Global Affairs Canada objectives. Processes related to staffing actions of locally engaged staff, overtime and corporate planning and budgeting requirements were followed. However, weaknesses were found relating to monitoring and oversight of consular revenue management, procurement, contracting and inventory management. As a result, there was a lack of some Mission-generated, reliable information for decision-making to support the achievement of Global Affairs Canada objectives.

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

The Office of the Chief Audit Executive conducted a risk assessment to identify those Missions susceptible to higher levels of fraud risk and therefore selected for audit. The 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’s 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, a first phase of Mission audits was initiated in 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 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 audit for comparative purposes.

The High Commission of Canada in Kingston

The High Commission of Canada (the Mission) in Kingston (Jamaica) is a medium-sized Mission comprising 17 Canada-based staff (CBS) and 49 locally engaged staff (LES), for a total of 66 employees at the time of audit. The Mission composition includes the following programs: Common Services and Consular; Development; Foreign Policy and Diplomacy Service; and Trade. The Mission’s partner departments include: the Canada Border Services Agency; Immigration, Refugees and Citizenship Canada; and the Royal Canadian Mounted Police. The Head of Mission (HOM) is accredited to Jamaica, the Bahamas, Cayman Islands and Turks and Caicos Islands.

Kingston is the capital of and largest city in Jamaica. The country’s economy is one of the larger and more diversified economies of the Commonwealth Caribbean. However, the country faces many challenges to growth, including high crime and corruption, large-scale unemployment and underemployment, and a heavy debt load.  In 2012, the Jamaican Government signed a US $1.27 billion, 27-month Standby Arrangement with the International Monetary Fund to support the country’s economic reforms and help cope with the consequences of the global economic crisis. The Jamaican Government faces the difficult prospect of having to achieve fiscal discipline in order to maintain debt payments, while simultaneously tackling a serious problem with crime that hampers economic growth.  Consequently, the cost of living has significantly increased in the past few years. Further, Jamaica is located in a seismic and hurricane zone. Taking these factors into consideration, the Kingston Mission faces challenges resulting from the country’s major concerns of criminality, health and poor transportation infrastructure. As such, the Mission is designated as a hardship level [REDACTED]. ^{Footnote 4}

Common Services Program

The Common Services Program in the Kingston Mission provides administrative support to the Mission’s programs and partner departments. The overall Common Services Program (Finance, Human Resources, Information Technology/Management, Security and Emergency Management, and Property and Materiel Sections) is managed by a Management and Consular Officer (MCO) at the FS-03 level. In September 2016, the Mission was integrated with the Common Service Delivery Point (CSDP) in Washington, D.C., with respect to financial transactions. See Table 1 for the Mission’s Common Services, and Property and Materiel expenditures from 2014-15 to 2016-17.

Source: FAS Expenditures Report as at September 12, 2017

The Property and Materiel Section is managed by a Deputy Management and Consular Officer (DMCO) at the FS-02 level, who is supported by a team of LES comprising five office staff, three drivers and three technicians. This Section is responsible for the oversight and maintenance of the Chancery, the Official Residence (OR), staff quarters (SQs), and a fleet of vehicles. See Table 2 for the Mission’s Real Property and Vehicle Fleet Inventory.

Source: Real Property: 2017-18 PRIME database; Vehicles: 2017 Mission Inventory

Consular Program

The Kingston Mission, through its Consular Program, provides consular services and assistance to Canadians, including passport, citizenship and notarial services. The Consular Program is managed by the DMCO, who is supported by five LES. As part of this service, the Mission is responsible for collecting, safeguarding, recording and depositing consular fees in a timely manner. The Mission has three Honorary Consuls located in Montego Bay, the Bahamas and Cayman Islands as well as a Consular Agent that delivers limited services in Turks and Caicos. See Appendix A for the organizational chart for the Management and Consular Services Program in the Kingston Mission.

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 Kingston Mission to support the achievement of Global Affairs Canada objectives. The audit team examined management practices related to the Management and Consular Services Program at the Mission, specifically in the areas of local procurement, asset management and human resources. See Appendix B – About the Audit for detailed audit criteria.

Audit results were derived from the examination of documentation, data analysis of Mission expenditures, and walk-throughs of key common services, property and materiel, and consular processes. The audit team conducted work on-site at the Mission from September 18 to 29, 2017. A review of a sample of contracts, expenditures, payroll transactions, overtime payments, and staffing actions was undertaken, and the inventory system was examined. Interviews were conducted with the former and current HOMs, CBS management and key LES within the Management and Consular Services Program, as well as staff at Headquarters (HQ) and the CSDP in Washington, D.C. The audit team performed on-site visits to local vendors, the Mission’s bank and a sample of SQs. In addition, the audit team met with three like-minded Missions – Germany, the United Kingdom and the European Union – to gather information regarding their challenges and good practices.

3. Observations

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

3.1 Accountability and Oversight

It was expected that Mission and HQ management would exercise effective oversight of Mission activities and expenditures to ensure proper stewardship of resources. The audit examined roles and responsibilities of Mission staff in the management of the Management and Consular Services Program. 

Accountability in the Kingston Mission rests with the HOM who reports to the Assistant Deputy Minister (ADM) of the Americas Branch (NGM). HQ has a role in supporting and enforcing HOM accountability, including the provision of Common and Consular Services. Specifically, the MCO reports to the HOM and is also accountable to the International Platform Branch (ACM). At the time of the audit, the former HOM left his post at the Mission in summer 2017 and a new HOM came into place in September 2017.

Key oversight committees are expected to be in place at Missions. The audit team found that there was a Committee on Mission Management (CMM) which was in place. Based on a review of minutes, CMM met on an as-needed basis when a decision was required relating to key Mission issues. In addition, an Operations Committee met weekly that, according to management, was a useful information-sharing forum for CBS. Also, a Housing Committee was in place, met when required, and made recommendations to the HOM. However, the audit team found that there were no Terms of Reference for any of these committees which would clearly define member roles and responsibilities, and committee mandate.

Another key oversight body at Missions is the Contract Review Board (CRB). The audit team found that a CRB had not been in place since March 2016. The audit team was told that this was due to the fact that the Mission was waiting for a regional CRB to be put in place by the CSDP; however, the implementation date for a regional CRB was not slated to be before March 2018. As a result of the lack of oversight normally exercised by a CRB, weaknesses were observed in the procurement process for goods and services.

The LES play key roles in supporting Mission management through their subject-matter, cultural and linguistic knowledge. Since the LES remain at the Mission while the CBS rotate, it would be expected that they provide consistency in carrying out the appropriate processes and procedures that comply with Government of Canada policies. The audit team found that the Consular staff and most of the Common Services staff were clear about their responsibilities and knowledgeable about processes. However, the audit team found that in the Property and Materiel Section, roles and responsibilities were unclear and therefore, not properly carried out. This was evidenced by the following:

• two staff members were acting in positions above their level for which they did not have job descriptions;
• a recently hired Property and Materiel Officer was not tasked with all of his responsibilities for which he was hired;
• reporting lines did not follow the mission organizational chart; and
• relevant training had not been provided.

Based on the Mission’s organization chart, the MCO is responsible for financial, human resources, security and emergency management, and information technology/information activities. He has seven employees (two CBS and five LES) reporting directly to him. The DMCO manages 16 LES who work in the areas of consular, property and materiel, fleet management and reception. The audit team was informed that the DMCO, in addition to his regular duties, also performed financial tasks and was heavily involved in emergency management due to hurricanes occurring in the Caribbean region at the time of the audit. The audit team found that the span of responsibilities carried out by the MCO and DMCO were imbalanced and contributed to limited CBS oversight of procurement, contracting and inventory management.

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 Mission uses Strategia, the corporate integrated planning and reporting tool, for its annual financial planning exercise. This ensures that the Mission’s financial planning aligns with departmental commitments. Management indicated that monitoring of expenditures against budgets, including forecasting, was done regularly by the MCO for each Financial Status report (FINSTAT) period. However, the audit team found that a more detailed breakdown of planned activities and expenditures was not prepared to support day-to-day activities, such as detailed property maintenance, procurement and materiel plans. Although the Mission had a list of repairs required for each SQ with an estimated cost for fiscal year 2017-18, these total costs were not linked to the budget and these repairs were not being monitored for progress.

3.3 Monitoring

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

Procurement

The audit team found that Mission management was not provided with information on expenditure trends that could highlight irregularities or areas of higher risk, although analysis of utility charges was performed in the past. Due to unclear roles and responsibilities of staff in the Property and Materiel Section, it was found that there was no monitoring of information on sole source and competitive contracts, local purchase orders, contract amendments and renewals. This limits management’s ability to carry out effective monitoring in support of decision-making.

The audit team further found that there was no challenge function performed for four contracts above $10,000 as there was no CRB in place. Moreover, there was not always an alignment between details of work on an invoice and the associated pre-approved transaction. This can create a risk of non-compliance with procurement procedures and may result in not obtaining value for money.

It was expected that the property related expenditures are monitored to determine reasonability. The audit team examined a sample of transactions and found an absence of the following:

• timelines and progress of work conducted at each SQ;
• detailed quotes for property maintenance work; and
• monitoring of fuel consumption of generators at the Chancery and SQs.

The audit team noted that the Mission Request On-line System ^{Footnote 5} was not used for property and vehicle service requests by Mission staff. This System would allow the Mission to provide services to clients in a formal and systematic manner by addressing requests in order of priority, providing status updates to clients and obtaining client feedback.

Fleet Management

It was expected that the Mission would manage its fleet in accordance with the Department’s Mission Fleet Management Guidelines and have a Mission transportation policy outlining proper conduct and management of the Mission fleet. The Mission has such a policy, approved by CMM in August 2017, which details appropriate use of Mission vehicles as well as a cost-recovery rate for CBS when making trips to the airport. The audit team found that cost-recoverable trips were not identified in vehicle logs and therefore recovery of these costs was dependent on CBS voluntarily remitting payment. Since the Mission did not proactively collect cost recovery funds, there may be a loss to the Mission.

The audit team found that logs for each vehicle were maintained by drivers who recorded the necessary details of each trip. However, these logs were not periodically reviewed in order for the DMCO to be aware of vehicle activity. In addition, it was found that vehicle maintenance (including repairs and purchasing of parts) was not planned, tracked and monitored. Without a history of vehicle maintenance, such as in the form of a vehicle maintenance log, Mission management cannot assess the necessity and reasonability of repair and maintenance work.

Fuel for vehicles is purchased through one established vendor using fuel cards designated to each vehicle. The Mission receives a monthly fuel purchase statement that details the quantity, charge, vehicle, the driver code and odometer reading. Using statements from September 2016 to July 2017 for two vehicles, the audit team computed fuel purchase against kilometres driven, and found fuel consumption to be reasonable. However, the audit team noted that such a test was not periodically performed by the Mission to detect any unusual activity in fuel consumption given that data is readily available.

Overtime

The audit team found that generally overtime was well managed. The greatest amount of overtime was performed by the Mission drivers while minimal or no overtime was performed by other Common Services and Consular staff. The audit team noted that the DMCO followed proper procedures to pre-approve and approve overtime for his staff. In addition, it was found that that MCO and DMCO closely monitored Mission overtime budgets to ensure that estimates were not exceeded. The CMM approved a Mission Transportation Policy in August 2017 in order to clarify issues relating to overtime.

3.4 Local Procurement

The audit team expected that procurement of goods and services would be in compliance with the Treasury Board Contracting Policy 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. A sample of 29 procurement transactions and contracts was reviewed by the audit team.

Procurement and Contract Management

The Mission’s financial transactions are processed by the CSDP. The audit team found that segregation of duties related to procurement approval and payment was appropriately carried out, as payment authority (Section 33 of the Financial Administration Act (FAA)) is under the responsibility of the CSDP and certification of receipt of goods or services (Section 34 of the FAA) is under the Mission’s responsibility. Further, the audit team could not find initiation approval (Section 32 of the FAA) by a CBS in six transactions (which represents 22% of the sample) nor a clear link to a needs assessment in 13 transactions (which represents 54% of the sample).

The audit team found that Section 34 of the FAA was signed by the appropriate authority; however, there was no evidence that a confirmation was performed by a CBS to ensure that goods were received or services rendered as expected. The audit team noted that a few invoices were stamped by the vendor stating that goods and services were delivered; however, the Mission did not have a similar practice to confirm receipt as per order.  

A review of procurement transactions indicated that generally three quotes were not obtained before selecting a vendor, which is a specific task included in the job descriptions of two LE-04 Property and Materiel staff. The audit team noted that several of the vendors were long-standing suppliers from one contract period to another with no effort made by the Mission to seek new vendors to ensure better quality and pricing through normal market competitiveness and reduce the risk of potential conflicts of interest. The audit team found a list of government approved vendors on the internet of which the Mission was not aware. Like-minded missions, with whom the audit team met, indicated that using a vendor from this list provided some confidence in the legitimacy and quality of the vendor. 

The audit team reviewed a sample of seven local contracts and purchase orders and found that:

• three maintenance contracts (heating and ventilation system, elevator and cleaning) were amended for greater than 50% of their original value, which is contrary to departmental guidance;
• a sole source contract was entered into, which exceeded the $25,000 limit as per the Government Contracts Regulations of the FAA;
• the Mission continued to obtain services for two contracts (heating and ventilation system and elevator maintenance) beyond their expiry dates and before new contracts were put in place;
• there was no evidence that a competitive process was used when engaging  vendors (cleaning and painting services); and
• multiple purchase orders were created for the same contract which resulted in misinformation of the total value of the contract.

As a result, there is a risk that the Mission may not obtain value for money when procuring goods and services. In addition, the audit team found that purchased goods are delivered to the Chancery basement and not tracked. Instances were found in which there was a lack of segregation of duties among the functions of purchasing, receiving and custody of goods (for example, photocopy paper) that were performed by the same LES thereby increasing the risk of misappropriation of goods.

In the Departmental Finance and Administration System (FAS), it was found that vendor accounts were created [REDACTED] upon email requests from CBS. This function is normally performed by HQ in order to reduce risk associated with payments at the Mission. However, this risk persists since vendor accounts are created again in the banking system portal to make manual, electronic fund transfer payments to vendors due to the Mission not using the standard bank recommended by HQ. The audit team found that eight employees had access rights to the banking portal, some of whom no longer carried out this function. In addition, there was no CBS oversight of the two LES Common Services staff responsible for the creation of vendors in the banking system portal.

In 2016-17, the Mission issued approximately 11% of its payments through manual cheques authorized by the CSDP. The cheques were then distributed to vendors by either the LES Property and Materiel Manager or a contracted security guard. To ensure appropriate segregation of duties, cheques should be distributed by a Mission employee outside of the Property and Materiel Section.

Value Added Tax

It was expected that the Kingston Mission would be operating in accordance with the procedures related to exemption and reimbursement of the value-added tax (VAT) to ensure that tax was not paid on exempted goods and services. Since February 2015, the local government allowed exemption letters to be obtained which the Mission provided to its major vendors so that VAT is not charged, thus reducing the administrative burden of the VAT recovery process. For other vendors, it was expected that the Mission record the VAT paid in a separate account in order to claim reimbursement. However, it was noted that VAT paid on these other expenditures, such as those made by acquisition card, were not always recorded in this separate account. Based on a review of a sample of transactions, the audit team found that since October 2016, the Mission did not record approximately $1,200 per month of VAT recoverable, making it difficult to track and claim at a later date. Also, other VAT amounts were recorded and claimed but the reimbursements were not reconciled by the Mission and the CSDP. The audit team noted that there was no CBS monitoring and oversight with respect to VAT-related processes. As a result of these discrepancies, there may be a loss of incoming funds to the Government of Canada.

3.5 Asset Management

Another area of risk identified by the audit team concerned the management of assets at the Mission, specifically the management of inventory, properties, 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 six vehicles, tracked in FAS from purchase to disposal. Additionally, there are four types of materiel inventory repositories: information technology (IT) equipment; fine art; SQ and OR-related assets; and storage in the Chancery.

The audit team found that the IT equipment and fine art inventories were adequately tracked and safeguarded. In addition, the audit team noted that inventory lists comprising major items in SQs were signed by occupants shortly after arrival. However, it was noted that the Mission was neither using the corporate inventory tracking system, Radio Frequency Identification (RFID), nor capturing sufficient detail (for example, year of purchase, make, model and condition) on SQ inventory lists to accurately track assets.

Various furniture, equipment and supplies (for example, paint cans, paper, and property maintenance items) are held in the Chancery basement. A 2015 inventory list of old furniture kept in storage was provided to the audit team; however, there was no up-to-date, detailed inventory list of items in the Chancery including all of the new office furniture and equipment as a result of the Chancery refurbishment in 2015. The audit team observed that items in the Chancery basement were stored haphazardly in open areas rather than in a secure and organized manner. Furthermore, the audit team found that a lock for a storage closet that held cleaning supplies in the Chancery basement was cut without the knowledge of any CBS.

The audit team examined the Mission’s disposal of materiel assets in December 2016 and August 2017.  This Mission used an auction company for the disposals which is a good practice. A listing of assets with their estimated value was reviewed by the DMCO for the August 2017 disposal. After disposal, either through auction or direct sale, the auction company remitted cheques for the proceeds along with a listing of items and sale price. However, there was no evidence that a reconciliation was performed between items put up for sale and items actually sold. Since the Mission did not track inventory, it is difficult to determine whether the assets were in a condition that warranted disposal. In addition, the audit team attempted to trace old air conditioning units that were replaced in SQs in 2017. Based on the audit team’s analysis, it was found that five out of 13 old air conditioning units could not be accounted for. Consequently, there is a risk of misappropriation of assets.

Petty Cash and Emergency Cash Parcel

The Mission has [REDACTED] petty cash accounts ranging from approximately [REDACTED] held by the Property Clerk, Consular Officer and a driver. The audit team found that the petty cash accounts held by the Consular Officer and the driver were being used by each of them only and for specific purposes. However, these petty cash accounts would be more appropriate as standing operational advances ^{Footnote 6} which would eliminate the administrative burden of completing forms and obtaining approvals for each transaction. In addition, the Department’s Mission Accounting Manual requires that regular petty cash counts and reconciliations be performed by Mission management; this was not always conducted by a CBS as required. The Mission also has four standing operational advances with three Honorary Consuls and an LES in a partner department.

The Kingston Mission has an Emergency Cash Parcel, a special fund to be used only in an emergency or crisis to evacuate CBS and their dependents, and to enable the Mission to continue to provide essential services. At the time of the audit, the Emergency Cash Parcel was adequately safeguarded and accounted for.

Consular Revenues

The audit team expected that fees collected for Consular Services would be properly accounted for, reconciled, safeguarded and deposited as required. The Kingston Mission collects consular fees for issuing passports and travel documents, as well as for providing notarial services. The Mission also collects fees on behalf of Immigration, Refugees and Citizenship Canada for services, such as issuing citizenship certificates.

Overall, the audit team found consular revenues to be carried out well by the consular staff in terms of collection, safeguarding, reconciliation and deposit processes. Although consular staff indicated that they were clear about their roles relating to consular revenue management, the audit team noted a lack of CBS monitoring and oversight in the process in order to take corrective action when required. In addition, the audit team found that approximately 55% of revenues were collected in cash (Canadian, U.S. or Jamaican currency) which could be reduced to minimize risks related to cash handling.

3.6 Human Resources and 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. The audit team found that the Mission annually prepared human resource plans as required by HQ comprising background demographic information about the Mission workforce; planned and completed staffing actions; and succession planning. In addition, it was noted that the Mission carried out planned staffing actions as noted in the plans.

It was expected that staffing actions undertaken during the audit period would be in compliance with relevant policies and procedures, were conducted in a fair, open and transparent manner, and that staffing files would contain the required documentation. The audit team examined a sample of staffing files and found that human resources management practices were conducted in an appropriate manner and the files contained key documentation.

A sample of personnel files of LES was reviewed to ensure that the files contained the required documentation, such as job descriptions, performance agreements and any documentation related to disciplinary actions. The audit team found that the personnel files reviewed were properly documented and well organized. It was noted that performance evaluations of LES were regularly conducted and LES leave reports were sent to program managers every quarter.

4. Conclusion

The audit concluded that sound management practices and effective controls were partially in place to ensure good stewardship of resources at the Kingston Mission to support the achievement of Global Affairs Canada objectives. Processes related to staffing actions of locally engaged staff, overtime and corporate planning and budgeting requirements were followed. However, weaknesses were found relating to monitoring and oversight of consular revenue management, procurement, contracting and inventory management. As a result, there was a lack of some Mission-generated, reliable information for decision-making to support the achievement of Global Affairs Canada objectives.

[REDACTED]

The audit team verbally debriefed the Head of Mission on the major audit findings after completion of on-site work.

5. Recommendations

Recommendations to the Kingston Mission:

1. The Head of Mission should ensure that responsibilities:
   1. carried out by the Management and Consular Officer and the Deputy Management and Consular Officer are balanced; and
   2. are clearly communicated to the locally engaged staff in the Property and Materiel Section according to their up-to-date job descriptions and Mission organization chart
2. The Head of Mission should take measures to strengthen oversight, controls and monitoring with respect to property and vehicle management and procurement and contracting processes by:
   1. strengthening due diligence related to Section 32 and 34 of the Financial Administration Act;
   2. putting a Mission Contract Review Board in place while waiting for a Regional Contract Review Board to be in place;
   3. using the Mission Request On-line system;
   4. performing spot checks of vehicle and generator fuel consumption;
   5. establishing vehicle maintenance logs; and
   6. diversifying the pool of vendors to obtain value for money.
3. The Head of Mission should ensure that proper management of the inventory cycle is undertaken, including recording, tracking and maintaining inventory, ensuring adequate access controls and warranted disposal of surplus and obsolete assets.
4. The Head of Mission should ensure that CBS exercise oversight of consular revenue and consider options to reduce or eliminate cash collected to mitigate risks associated with cash handling.
5. The Head of Mission should ensure that:
   1. access to the banking system portal, relating to vendor accounts, is limited to pertinent employees and CBS exercise appropriate oversight; and
   2. reimbursement process of the value-added tax (recording, claiming and reconciling) is applied

Recommendations 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.
2. The Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology Branch, should take over the creation of vendor accounts in the Financial and Administration System from the Kingston Mission; confirm that HQ is creating vendors for all missions; and perform proper due diligence when creating vendors.

Appendix A: Organizational chart for the Management and Consular Services Program

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 Kingston 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 Kingston Mission operations. Specifically, the audit examined processes related to the management of consular revenues, procurement and asset management (including property, vehicles, cash and materiel). 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 2014-15 to 2016-17. A sample of files and transactions were tested from activities that took place from 2015-16 to 2017-18, as shown in Table 3.

Criteria

Criteria were developed based on a detailed risk assessment.

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

1. Management exercises effective oversight of procurement, asset management and human resource activities.
2. Authorities and accountabilities for procurement, asset management and human resources are clear, communicated and understood.
3. Planning processes are in place for procurement, asset management and human resources, which consider needs, asset life cycle, and resources.
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.

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. Effective controls are in place to ensure that procurement expenditures are accurate, appropriate, and legitimate.
3. Inventory control and asset management practices are adequate and appropriate.
4. Cash is managed in accordance with relevant policies and legislative requirements.
5. LES staffing actions comply with relevant policies and legislative requirements and are fair, open and transparent.
6. LES salaries and overtime payments are accurate and complete.

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, property management plans etc.)
• Walkthrough of key common services, property and materiel, and consular processes
• Data analytics of Management and Consular Services Program expenditures
• File testing (contracts and expenditures relating to Common Services Program, payroll, overtime costs and staffing actions)
• Interviews (Head of Mission, CBS management and key LES of Management and Consular Services Program and relevant employees at HQ and Common Service Delivery Point)
• Inventory testing
• Petty cash counts
• On-site examination of Chancery, storage facilities and a sample of staff quarters
• Comparisons with like-minded Missions
• Visits to a sample of local vendors
• Visit to Mission bank

Appendix C: Management Action Plan

Appendix D: Acronyms

ACM

International Platform Branch

ADM

Assistant Deputy Minister

CBS

Canada-based staff

CFO

Chief Financial Officer

CSDP

Common Service Delivery Point

CRB

Contract Review Board

CMM

Committee on Mission Management

DMCO

Deputy Management and Consular Officer

FAA

Financial Administration Act

FAS

Finance and Administration System

FINSTAT

Financial Status report

HOM

Head of Mission

HQ

Headquarters

IT

Information Technology

LES

Locally Engaged Staff

MCO

Management and Consular Officer

NGM

Americas Branch

OR

Official Residence

PRIME

Physical Resources Information - Mission Environment

RFID

Radio Frequency Identification Device

SQ

Staff Quarter

VAT

Value Added Tax