Audit of management practices of missions - Sao Paulo

February 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 Sao Paulo 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 Sao Paulo 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 September 2017.

What was found

The audit team found that generally planning and budgeting were done well along with regular discussions about the financial position of the Mission; however, there was no detailed plan to support the procurement of goods. Good practices regarding property management were noted by the audit team: expenditures were monitored against the budget for each staff quarter; a fit-up checklist was developed by the Mission to review the work of contractors; and an effort was made to lease staff quarters in better condition than previously to reduce fit-up costs. In addition, the Mission applied an innovative approach to prevent unexpected property maintenance costs by putting in place a contract to do regular property maintenance check-ups.

The audit team also noted some good procurement practices such as minimally using cash to pay vendors and making an effort to seek new vendors. However, the audit team found that there was no Contract Review Board in place at the time of the audit, thereby lacking a mandatory oversight body for the contracting process. In addition, due diligence relating to Section 34 of the Financial Administration Act was found to be weak, which is critical since the Mission carries out this function for the Rio de Janeiro Mission as well. The audit team also found multiple transactions in which the approvals of the contracting authority and delegated financial authorities (Section 34 and Section 33 of Financial Administrative Act) were not segregated from each other, as required.

Although the audit team found consular revenue to be managed well, a significant amount of fees were collected in cash resulting in the Mission experiencing an unnecessary level of risk associated with cash handling. Inventory management was found to be weak as a result of poor inventory tracking, no life cycle management of assets and a lack of up-to-date staff quarter inventory lists.

It was found that staffing processes were conducted in an appropriate manner. In addition, it was noted that performance evaluations of locally engaged staff were performed and leave and overtime reports were provided to program managers on a regular basis.

Conclusion

The audit concluded that sound management practices and effective controls were generally in place to ensure good stewardship of resources at the Sao Paulo Mission to support the achievement of Global Affairs Canada objectives. Processes related to consular revenue management, staffing actions of locally engaged staff, overtime and corporate planning and budgeting requirements were followed. Good monitoring and oversight practices were found with respect to property and fleet management. However, weaknesses were found relating to inventory management and certain key procurement processes. 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.

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 Consulate General of Canada in Sao Paulo

The Consulate General of Canada (the Mission) in Sao Paulo (Brazil) is a medium-sized Mission comprising 19 Canada-based staff (CBS) and 65 locally engaged staff (LES) for a total of 84 employees. The Mission composition includes the following programs: Common Services and Consular; Trade; Foreign Policy and Diplomacy Service; Development; and Security and Emergency Management. Three partner programs reside in the Mission: Canada Border Services Agency; Export Development Canada; and Immigration, Refugee and Citizenship Canada. In addition, Government of Ontario and Government of Quebec representatives are co-located in the Mission. 

The Sao Paulo Mission is led by an EX-03 Head of Mission (HOM) and is part of the Brazil Platform comprising the Embassy of Canada in Brasilia and the Consulate General of Canada in Rio de Janeiro. There are three trade offices in Belo Horizonte, Porto Alegre and Recife and an Honorary Consul in Belo Horizonte. The Consul Generals in Sao Paulo and Rio de Janeiro report to the Ambassador in Brasilia who in turn reports to the Assistant Deputy Minister (ADM) of Americas.

Sao Paulo is the most populous city in Brazil and is the capital of the wealthiest state in Brazil, Sao Paulo.  It exerts strong international influence in commerce, finance, arts and entertainment. Having the largest economy, based on gross domestic product, in Latin America and the Southern Hemisphere, the city is home to the Sao Paulo Stock Exchange. The Sao Paulo Mission faces challenges resulting from the country’s economic instability and political environment. Consequently, inflation in the country has resulted in a high cost of goods and services. Furthermore, high unemployment rates have led to a rise in petty theft and violent crime. Purse snatching, street robbery and car theft pose the greatest threat to foreigners and occur regularly. Personal safety and security of staff are a priority to all Brazil Missions. As such, the Mission is designated a hardship level [REDACTED].

Common Services Program

The Common Services Program in the Sao Paulo Mission acts as the hub for administrative support to the Brazil Platform. The Sao Paulo Mission provides direct support to the Rio de Janeiro Mission for financial, human resource and property activities while support to the Brasilia Mission is provided upon request. The overall Common Services Program (Finance, Human Resources, Information Technology/Management, and Property and Materiel Sections) is managed by a Management and Consular Officer (MCO) at the FS-03 level. In October 2017, 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 January 12, 2018

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 two office staff, four drivers, a technician and two cleaners. 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 DMCO manages the Consular Program with the support of two LES while the MCO in the Brasilia Mission is designated as the Brazil Platform Consular Coordinator. The Sao Paulo Mission Consular Program provides consular services and assistance to Canadians, including passport, citizenship and notarial services. As part of this service, the Mission is responsible for collecting, safeguarding, recording and depositing consular fees in a timely manner. See Appendix A for the organizational chart for the Management and Consular Services Program in the Sao Paulo 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 Sao Paulo 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 October 16 to 27, 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 HOM, 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 a sample of SQs and met with the Mission’s bank. In addition, the audit team met with one like-minded Mission 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 Sao Paulo Mission rests with the HOM who reports to the Ambassador in Brasilia. 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).  

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 met weekly. The Mission proactively shared non-sensitive information in the CMM minutes with all Sao Paulo Mission staff and key staff of other Brazil Missions to promote transparency and provide an opportunity for collaboration on common issues. The Operations Committee met monthly and included representatives from partner programs, as well as co-locators, to share Mission-wide information widely.

Another key oversight body at Missions is the Contract Review Board (CRB). The audit team found that a CRB had not been functioning for approximately a year since the abolishment of a contracting officer position which was responsible for the CRB Secretariat function. The audit team further found that since there was no CRB in place, there was no challenge function performed for two large dollar value contracts, although these two contracts went through a formal, competitive process. At the time of the audit, it was the Mission’s intention to put in place a CRB for the Brazil Platform.  

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 Common Services and Consular staff were clear about their responsibilities and knowledgeable about processes.

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. Based on CMM minutes, discussions about the planning and budgeting of financial resources took place when needed. Also, according to Mission management, a discussion about monthly Financial Status reports (FINSTAT) took place with all program managers after each CMM meeting.

The Property and Materiel Section budget, which comprises the largest portion of the Common Services budget, was found to be appropriately broken down into major expenditures for each SQ. Since all of the SQs are leased, expenditures can be forecasted with more accuracy as there are fewer unpredictable emergency maintenance costs. However, it was found that there was no detailed plan to support the procurement of goods (for example, SQ furniture, small appliances).

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 good monitoring practices with respect to property maintenance. For example, property related expenditures are monitored against budgets for each SQ to determine reasonability and track costs. Also, the audit team noted an innovative approach applied by the Mission regarding a preventative property maintenance contract. A contract was put in place for regular maintenance check-ups and to help alleviate any unforeseen major maintenance expenditures. In addition, the Mission mentioned the intention to hire a maintenance technician to supervise contractors in order to obtain better quality workmanship. Furthermore, it was noted that the DMCO held weekly and sometimes daily meetings with her Property and Materiel Section staff to review the status of property work based on requests from the Mission Request On-line System^{Footnote 4}. Also, the DMCO verified work performed in SQs prior to CBS moving in during rotation season. The audit team noted a decrease in property maintenance expenditures following a spike in 2015. This may be attributed to a combination of the preventative maintenance regime, the discontinued use of high priced vendors and the Mission’s effort to lease SQs in better condition that require less fit up and maintenance work.

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 for the Brazil Platform, approved by the CMM in 2015, and is in the process of being updated. It details appropriate use of Mission vehicles and mission-specific cost recovery rates. The audit team found that logs for each vehicle were maintained by drivers who recorded the necessary details of each trip. In addition, it was noted that vehicle maintenance was scheduled twice per year and noted in vehicle maintenance logs along with gas purchases for each vehicle. The vehicle trip and maintenance logs as well as vehicle gas statements were regularly reviewed by the DMCO to monitor vehicle activity and assess reasonability of costs.

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 her staff. In addition, it was found that the MCO and LES Human Resources manager closely monitored Mission overtime expenditures to ensure that budgets were not exceeded. Any driver overtime due to usage of Mission vehicles beyond business hours was charged to the related Mission program. This is a good practice and encourages programs to use more cost efficient modes of travel such as taxis or Uber.  

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 43 procurement transactions and contracts was reviewed by the audit team.

Procurement and Contract Management

The audit team noted that the majority of the Mission’s financial transactions are processed by the CSDP while the Mission processes a subset of payments such as time sensitive payments to vendors and LES salaries. The audit team found that segregation of duties related to  those transactions processed by  the CSDP are appropriately carried out as certification of receipt of goods or services (Section 34 of the Financial Administration Act (FAA)) is done by the Mission while payment authority (Section 33 of the FAA) is performed  by  the CSDP. However, based on a sample of transactions processed solely by the Mission, the audit team identified multiple instances in which there was a lack of segregation of approvals among the contracting, receipt and payment authorities as required by the Departmental Directive on Delegated Authorities for Procurement and Contracting-2014. Further, the audit team could not find a formal pre-approval by a CBS in seven transactions (which represents 16% of the sample).

The Mission is responsible for carrying out Section 34 of the FAA function for expenditures incurred by both the Sao Paulo and Rio de Janeiro Missions. The audit team found that Section 34 of the FAA was signed by the appropriate authority; however, it was noted that formal confirmation of goods received or services appropriately rendered is inconsistently obtained by CBS. Recently, an SQ fit-up checklist was developed by the Mission to facilitate the review and confirmation of work performed by contractors. This is a good practice and could be performed for all property service related work. The due diligence function requires strengthening given that the Mission has poor inventory management and given that the Mission carries out this function remotely for the Rio de Janeiro Mission.

The audit team noted the following good practices related to procurement:

• Based on a review of vendors used in the last three years, the Mission has made an effort to seek new vendors for greater competitiveness and to mitigate conflict of interest situations – one way was through referrals from like-minded Missions.
• Based on a review of payments, the Mission minimally used cash as most vendors accepted payment by credit cards and electronic transfers.
• The Mission assessed the reasonability of the cost of certain services to be contracted based on information available on an internet site to request services.

The audit team reviewed a sample of 43 transactions and found that there were no purchase orders obtained for four transactions over $2,000, as required. By not obtaining purchase orders, the Mission cannot demonstrate that a competitive process was used to obtain value for money. In addition, it was found that there was no documented justification for two sole source contracts. 

Brazilian vendors have strict and short payment terms, consequently, the Mission had occasionally paid late payment fees. Also, the Mission had been reported to a municipal organization that tracks delinquent payments which impacted the Mission’s local credit worthiness. Given that the payment process has recently transitioned to the CSDP for the majority of expenditures, the Mission continues to process payments for transactions with short payment terms. As such, the Mission should continue to ensure timely payments to vendors, while maintaining segregation of approvals among the contracting, receipt and payment authorities. In addition, the Mission should work with the CSDP to establish compensating controls for these payments processed locally to ensure oversight.

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-leased buildings tracked in the Physical Resources Information – Mission Environment (PRIME). The Mission also has an inventory of six vehicles, tracked in the Finance and Administration System (FAS) from purchase to disposal. Additionally, there are four types of materiel inventory repositories: information technology equipment; fine art; Chancery, SQ and OR-related assets; and storage in the Chancery building.

The audit team found that the fine art inventories were adequately tracked and safeguarded. In addition, the audit team noted that inventory lists comprising major items in SQs were created in an Access database and signed off by occupants shortly after arrival; however, at the time of the audit, these lists were not being updated as items were moved or added. It was also noted that the Mission was not using the corporate inventory tracking system, Radio Frequency Identification (RFID), not tracking items using a unique identifier (e.g. inventory number, bar code), and not capturing sufficient detail (for example, year of purchase, make, model and condition) on inventory lists to accurately track assets. In addition, it was noted that office furniture and equipment in the Chancery were not inventoried and tracked. Hence, due to the lack of life cycle management of furniture and equipment, the condition of assets was assessed based on observation.

Various furniture, equipment and supplies (for example, household furniture, large and small appliances, electronic items) are held in two storage rooms in the basement of the Chancery office tower. The audit team noted that the storage rooms were locked and access was restricted to appropriate Mission staff. However, there was no inventory list of items in the storage rooms.  

The audit team examined the Mission’s disposal of materiel assets that took place from 2015 to 2017 as well as one vehicle. The Mission used an auction company for the disposals which is a good practice. However, there was no evidence of approval from the HOM prior to disposal. 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 a sample of items from purchase to placement in SQs,  but many could not be located or specifically identified due to poor inventory tracking. The general lack of rigour with regards to inventory management could result in a risk of misappropriation of assets.

Petty Cash

The Mission has [REDACTED] petty cash accounts [REDACTED] held by the receptionist and the MCO’s administrative assistant. The audit team reviewed a sample of petty cash transactions for which the appropriate procedures were followed. 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 converted three petty cash accounts held by Mission drivers to standing operational advances^{Footnote 5}. This is appropriate given their use for specific purposes; however, HQ was not informed of this change. [REDACTED]

Consular Revenues

The audit team expected that fees collected for Consular Services would be properly accounted for, reconciled, safeguarded and deposited as required. The Sao Paulo 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 managed well by the consular staff in terms of collection, safeguarding, reconciliation and deposit processes. A few instances were noted in which the Consular Program held cash for about a week before transferring it to the Finance Section. A more timely transfer would reduce the risk of loss. In addition, the audit team found that approximately 50% of revenues were collected in cash (Canadian or Brazilian currency) which could be greatly reduced to minimize risks related to cash handling. This is possible given that Brazil is not a heavy cash-based society. The audit team was informed by a like-minded Mission in Sao Paulo that they accepted only non-cash forms of payments.  

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 information about the Mission workforce, and planned and completed staffing actions. In addition, it was noted that the Mission generally carried out staffing actions as outlined in the plans.

It was expected that staffing actions undertaken during the audit period would be conducted in compliance with relevant policies and procedures 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. Furthermore, it was noted that the Sao Paulo Mission provided support to Brazil Platform Missions upon request on human resource activities.

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 and overtime reports were sent to program managers every month.  

4. Conclusion

The audit concluded that sound management practices and effective controls were generally in place to ensure good stewardship of resources at the Sao Paulo Mission to support the achievement of Global Affairs Canada objectives. Processes related to consular revenue management, staffing actions of locally engaged staff, overtime and corporate planning and budgeting requirements were followed. Good monitoring and oversight practices were found with respect to property and fleet management. However, weaknesses were found relating to inventory management and certain key procurement processes. 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.

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 Sao Paulo Mission:

1. The Head of Mission should take measures to strengthen oversight, controls and monitoring with respect to procurement and contracting processes by:
   1. putting a functional Contract Review Board in place;
   2. formalizing pre-approval of expenditures, including goods procurement;
   3. strengthening due diligence related to Section 34 of the Financial Administration Act;
   4. segregating approvals relating to contracting  and  Section 34 and 33 authorities of the Financial Administration Act;
   5. working with the CSDP to establish compensating controls for payments processed locally by the Missions; and
   6. ensuring purchase orders are in place when required and justification of sole source contracts is adequately documented.
2. The Head of Mission should ensure that proper management of the inventory cycle is undertaken, including recording, tracking and maintaining inventory.
3. The Head of Mission should mitigate risks associated with cash handling by:
   1. reducing or eliminating cash revenue collected; and
   2. ensuring that spot checks and safeguarding of petty cash and standing operating advances are done.

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: 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 Sao Paulo 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 Sao Paulo 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 September 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.

• 1.1 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 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
• Visit to Mission bank

Appendix C: Management action plan

Appendix D: Acronyms

ACM

International Platform Branch

ADM

Assistant Deputy Minister

CBS

Canada-based staff

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

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