Audit of management practices of missions - Beijing

Final report

Global Affairs Canada
Office of the Chief Audit Executive

Tabling Date
December 2018

Acronyms and symbols

ADM

Assistant Deputy Minister

CBS

Canada-based staff

CSO

Common Services Officer

CSDP

Common Service Delivery Point

CMM

Committee on Mission Management

DMCO

Deputy Management and Consular Officer

FAA

Financial Administration Act

FAS

Finance and Administration System

FINSTAT

Financial Status report

FPDS

Foreign Policy and Diplomacy Service

HOM

Head of Mission

HQ

Headquarters

HR

Human Resources

IT

Information Technology

LES

Locally Engaged Staff

PO

Purchase Orders

MCO

Management and Consular Officer

MOPS

Mission Online Payment Services

MRO

Mission Request Online

OR

Official Residence

PRIME

Physical Resources Information - Mission Environment

RCRB

Regional Contract Review Board

SAP

Systems Applications and Products

SMFF

International Financial Operations Division

SQ

Staff Quarter

VAT

Value Added Tax

Executive summary

In accordance with Global Affairs Canada‘s approved 2018-19 Risk-Based Audit Plan, the Office of the Chief Audit Executive conducted the Audit of Management Practices of Missions – Beijing. The objective of this audit was to provide assurance that sound management practices and effective controls were in place to ensure good stewardship of resources at the Beijing Mission to support the achievement of Global Affairs Canada objectives.

Why it is important

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 178 Missions in 109 countries that supports the international work of Global Affairs Canada and 37 partner departments, agencies and co-locators. According to the 2016-17 Global Affairs Canada Departmental Results Report, $931M was spent to operate and support the Missions by providing a variety of services. Therefore, proper controls and strong management practices are critical to ensure sound stewardship of resources.

What was examined

This audit examined the Mission’s management practices related to the Management and Consular Services Program and other programs of the Mission, with regard to planning and budgeting, oversight and monitoring, local procurement, asset management, and human resources, between April 2015 and May 2018.

What was found

The audit team found that effective management controls were in place to support sound stewardship of resources at the Beijing Mission. Areas for improvement were identified related to consular revenue oversight and certain aspects of local procurement and contracting.

Specifically, the Mission had a good governance structure in place and management exercised effective oversight over operations. In addition, planning and budgeting functions were effective and monitoring mechanisms were in place to provide information for decision-making. Furthermore, the audit team found that staffing actions for Locally Engaged Staff were appropriate and respected applicable policies. Management of assets (property, materiel, fleet, and cash) and inventory control practices were also found to be adequate and appropriate.

Instances of a lack of effective controls were found surrounding consular operations and procurement. Specifically, the audit team found a lack of oversight and monitoring with regard to consular revenues. For local procurement, the audit team found that due diligence relating to Section 34 of the Financial Administration Act required improvement and that there was a lack of segregation of duties in the cheque payment process.

Recommendations

1. The Head of Mission should ensure that the Common Services Officer (CSO) receives the necessary training to fulfill the role. In addition, the CSO’s responsibilities should be clearly communicated to Mission staff.
2. The Head of Mission should take measures to strengthen oversight, controls and monitoring with respect to procurement and contracting processes to ensure consistency with government policies, regulations and the Financial Administration Act.
3. The Head of Mission should exercise required controls with respect to consular revenue to ensure compliance with departmental policies and procedures.
4. The Assistant Deputy Minister, Corporate Planning, Finance and Information Technology (Chief Financial Officer) should reassess the Personal Drawings authorization given to the Beijing Mission.

Statement of Conformance

In my professional judgment as the 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. According to the 2016-17 Global Affairs Canada Departmental Results Report, $931M was spent to operate and support the Missions by providing a variety of services. Administrative activities that support the Department’s Missions require effective and efficient management practices to help ensure sound stewardship of resources.

The departmental 2018-19 Risk-Based Audit Plan included a series of management practices audits of select Missions. The selection of these Missions was determined using a risk assessment to identify Missions susceptible to higher levels of fraud risk, and one Mission from a low-risk environment for comparison purposes. The Embassy of Canada to China (the Mission) in Beijing was one of the selected Missions. These audits are intended to provide senior management with assurance with regard to the state of management practices in supporting prudent management and good stewardship of resources in select Missions.

The Embassy of Canada to China - Beijing

The Embassy of Canada to China in Beijing is one of the largest diplomatic Missions within Canada’s network abroad; with 301 staff (77 Canada-based staff and 224 locally engaged staff). The three Consulates General in mainland China (Shanghai, Guangzhou, and Chongqing) report to the Embassy in Beijing. The Beijing Mission includes employees from seven partner departments: Immigration, Refugees and Citizenship Canada; Canada Border Services Agency; Royal Canadian Mounted Police; National Defence and the Canadian Armed Forces; Agriculture and Agri-Food Canada; Canadian Food Inspection Agency; Public Safety Canada; as well as employees from the following co-locators: Export Development Canada, and the provincial governments of Quebec, Ontario and Alberta.

The Beijing Mission hosts a high volume of events and high-level visits, which place additional pressure on the Mission. In 2017-18, the Mission hosted several ministerial and provincial premier visits, as well as visits by the Prime Minister and the Governor General.

The Beijing Mission has a Head of Mission (HOM) as well as a Deputy Head of Mission (DHOM) with full delegated authorities. The Mission composition includes the following programs: Management, Consular and Security Services; Trade; Foreign Policy and Diplomacy Service; Immigration; and Security & Emergency Management.

Common Services Program

The Common Services Program in the Beijing 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 HOM with full delegated authority for the DHOM. Until September 2017, the Beijing Mission was functioning as a Common Services Delivery Point (CSDP) providing financial support to the Missions in Beijing, Shanghai, Guangzhou, Hong Kong, Chongqing, and Ulaanbaatar. Subsequently, Beijing ceased to be a CSDP host Mission and clients were transferred to the CSDP in Manila (Philippines).

The Common Services Program is managed by a Management Consular Officer (MCO) at the EX-02 level. The MCO is supported by three Deputy MCOs at the AS-06/FS-03 level. The Mission’s total Common Services Program expenditures have been consistent from 2014-15 to 2017-18, as shown in Table 1 below.

The DMCO of Human Resources has total of 20 Locally Engaged Staff (LES) mainly responsible for three functions: Events & Logistics, LES HR for mainland China Missions, and transportation using the Mission's vehicle fleet, including drivers. The DMCO of Physical Resources section is supported by 44 LES and one CBS. This section is responsible for the Chancery, the official residence (OR) and staff quarters (SQs). Details of the Mission's inventory of properties and vehicles are shown in Table 2 below.

Since 2015, the Mission has made significant efforts to reduce the environmental footprint of its operations. The Beijing Mission's greening initiatives, led by the MCO, aim to improve the Mission's environmental performance and to achieve cost efficiencies. The Mission has implemented a number of actions, such as the replacement of fleet vehicles with hybrid and electric alternatives and the installation of low-flow toilets. The Mission has also taken numerous measures to reduce its electricity consumption, including the installation of timers to turn off lights after work hours and the replacement of fluorescent light bulbs with LED lighting. The Mission tracks its electricity consumption and expenditures and, as a result, is able to demonstrate the concrete impact of these greening initiatives. Based on the available information provided, since 2012-13, the Mission has reduced its annual electricity consumption by 16%, which has resulted in cumulative savings of over $100,000.

Consular Program

The Beijing Mission, through its Consular Program, provides consular services and assistance to Canadians, including passport, citizenship and notarial services. The Consular Program is managed by a 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.

Appendix A shows the organizational chart for the Management and Consular Services Program in the Beijing Mission.

2. Observations and recommendations

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.

2.1 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 the Beijing Mission's oversight function and roles and responsibilities of the Mission management team and key staff from the Common Services, Commercial and the Foreign Policy and Diplomacy Service (FPDS) Program. The audit team found that Mission accountabilities were clearly articulated and communicated, and that management exercises appropriate oversight. However, the audit team noted some confusion between the roles and responsibilities of the Mission and the CSDP.

Accountability in the Mission rests with the HOM who reports to the Assistant Deputy Minister (ADM) of the Asia Pacific Branch at HQ . The DHOM has full delegated authority for the Mission, including the provision of Common and Consular Services. The MCO reports to the DHOM and is also accountable to the International Platform Branch . At the time of the audit, the DHOM had been planned to rotate back to HQ in August 2018.

Mission Committees

Oversight of Mission management is exercised through three key committees acting as decision-making bodies: the Committee on Mission Management (CMM); Regional Contract Review Board (RCRB) (under the supervision of the Manila CSDP); and the Mission Housing Committee. In addition, there is the LES Management Consultation Board chaired by the HOM.

The audit team found that the CMM, chaired by the DHOM, exercised appropriate oversight and discussed a wide range of topics, such as human resources and asset management, through regular meetings every four to six weeks. Each decision made by the CMM was signed off by the HOM. CMM meetings were supplemented by regular management meetings consisting of the DHOM, the Head of Trade Program and the MCO to discuss financial management and operations.

The accountabilities of the RCRB regarding contracting oversight were found to be well-defined in the Terms of Reference. A Service Level Agreement between the Beijing Mission and the CSDP in Manila further outlines their respective roles and responsibilities. The RCRB has a roster of 55 members from multiple Missions, including seven members from the Beijing Mission. Contracting activities presented to the RCRB require the approval of up to three Board members, depending on the type and threshold of the activity.

In addition, the Mission's Housing Committee meets on an as needed basis. Although minutes are not taken, key decisions are documented.The DHOM approves housing allocations.

Roles and Responsibilities

The audit team observed that HOM and DHOM's roles and responsibilities were documented through performance management agreements. Key CBS roles, responsibilities, and accountabilities were also documented and generally clear and understood.

The LES play integral roles in supporting Mission management through their subject-matter, cultural and linguistic knowledge. The audit team observed that, in general, the Mission has high-calibre staff with the required education and experience to fulfill their roles.

The transition of the CSDP from Beijing to Manila was completed in September 2017, resulting in the creation of a Common Services Officer (CSO) position. A Common Services Assistant position was also created. However it was vacant at the time of the audit. The roles and responsibilities of the CSO are outlined in generic work description, which indicates that the incumbent is responsible for the coordination of regionalized common services requests from the Mission to the CSDP, as well as the provision of guidance and advice. However, concerns were raised due to existing confusion with respect to the roles and responsibilities of the CSDP and Mission staff. More specifically, program staff at the Mission were directing their inquiries directly to the CSDP, rather than through the CSO for coordination. As a result, multiple inquiries on same issues were directed to the CSDP. This confusion is mainly due to lack of communication and training. The lack of clarity of roles and responsibilities could result in duplication of effort and inefficiency.

Recommendation 1:

The Head of Mission should ensure that the Common Services Officer (CSO) receives the necessary training to fulfill the role. In addition, the CSO's responsibilities should be clearly communicated to Mission staff.

2.2 Planning and Budgeting

It was expected that planning and budgeting would be based on needs and there would be a rationale for planned activities and forecasted expenditures. The audit examined Mission planning and budgeting activities, and found that adequate practices were in place to ensure proposed budgets were in line with forecasted expenditures and planned operational needs.

The Mission uses Strategia, the corporate integrated planning and reporting tool, to outline planned activities for each expenditure area under the common services and property budget envelopes for its annual integrated financial planning exercise. The required plans were prepared by the Mission and approved by the appropriate authority in HQ, and supported by detailed budgets for each expenditure area. Once the budget is finalized by HQ, the CSO on behalf of the MCO ensures that funds are allocated to their respective commitment item and are entered into the financial system.

The Mission also outlined a detailed breakdown of planned activities in a 52-week schedule for property maintenance, as well as a five-year procurement plan based on the lifecycle of assets.

2.3 Monitoring

It was expected that monitoring activities would be performed to provide general information on Mission compliance with Government of Canada and Department-specific policies and procedures. The audit team found that the Mission conducted monitoring of the budget, utilities expenditures, vehicle usage, and overtime. However, no monitoring was conducted for property and fleet maintenance or procurement.

Finance

The Mission uses the corporate FINSTAT (Financial Status Report) to monitor its financial situation and ensure budget resources are appropriately managed on an ongoing basis. On a monthly basis, the MCO informs the DHOM and other program areas of their burn-rate for budget and CBS overtime and follows up on unspent dollars.

Property and Fleet

The Mission tracks its SQ utilities expenditures on a monthly basis. For its Crown-owned SQs, the Mission tracks maintenance requestsreceived through the Mission Request Online (MRO) system, however, it does not maintain a log or conduct any periodic reporting on repairs done for each SQ. Without specific historical data on individual SQ, it is difficult for management to properly plan for the life cycle management of the Crown-owned SQs.

In 2018, the Mission produced a Vehicle Fleet Review which, based on data collected from November 2017 to April 2018, provides statistics on usage, such as average kilometres driven per month, average monthly fuel consumption per vehicle, and average litres consumed per 100 km. However, the audit team noted that the Mission did not track vehicle maintenance or produce maintenance reports. Without specific historical data on individual vehicles, it is difficult for management to assess the reasonability of repairs and maintenance done on vehicles.

Overtime

The audit team observed that program's burn-rate for CBS overtime was regularly monitored as part of monthly FINSTAT overview. A LES overtime budget status report is shared with program managers on a monthly basis. To minimize overtime, the Mission has four staggered shifts for drivers, based on peak usage times. When a Mission vehicle is requested outside of these working hours, the cost of the driver's overtime is usually paid for by the program that requested the vehicle.

In 2018, Beijing Mission paid $81,147 as overtime to LES, which represents 0.77% of LES salaries paid ( $10,499,490). The audit team found that the overtime paid to the LES working within the Common Services program was not formally pre-approved, but done verbally. Overtime is inputted in the Employee Service System after-the-fact, and approved by the employee's supervisor with Financial Administration Act (FAA) Section 34 authority.

Procurement

The audit team found that Mission did not conduct any trend analyses on procurement expenditures. For example, there is no information on the number of sole-source contracts, renewals or amendments to contracts. The audit team was informed that the Mission had an employee responsible for monitoring standing offers; however the employee left the Mission and this responsibility was not reassigned. Without such trend analyses this limits mission management's ability to carry out effective monitoring in support of decision-making.

2.4 Local Procurement

The audit team expected that procurement of goods and services would be in compliance with 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 44 procurement transactions and contracts was selected (based on a judgmental sampling strategy) and was reviewed by the audit team.

Procurement and Contract Management

The Mission's financial transactions are processed by the CSDP in Manila. Segregation of duties related to procurement approval and payment was appropriately carried out, as payment authority (Section 33 of the FAA) is under the responsibility of Manila CSDP and certification of receipt of goods or services (Section 34 of the FAA) is under the Mission's responsibility. The audit team examined 44 transactions and found that 93% were properly pre-approved.

The Directive on Recording of Contracts in the Financial and Administrative System Material Management Module (FAS/MM) requires creating a Purchase Order (PO) for every purchase over $2,000. This allows the Mission to commit funds for the acquisition and ensure funds are available. Of the 44 transactions, the audit team reviewed the 29 transactions over $2,000 and found that POs had been created for all but one transaction. In three instances, the PO was created after services were rendered.

In addition, the audit team selected six contracts and examined their related procurement processes. For one contract, the Mission had three consecutive sole-source contracts with the same vendor, totalling approximately $87,000. All three sole-source contracts had been reviewed and approved by the RCRB. This practice is inconsistent with the Treasury Board Contracting Policy . In addition, the audit team found three transactions over $10,000 that did not go to the RCRB for review and approval and another that went after-the-fact.The RCRB is intended to provide a challenge function to ensure that the acquisition process is in line with the principles of transparency, fairness and value for money. Furthermore, for the three transactions that did not go to the RCRB, the POs were created by the Mission, rather than by the CSDP in Manila. The audit team was informed that Mission management has instructed its staff to no longer create POs and that the CSDP is planning to remove the Mission's ability to create POs.

Payment Processes

For the 44 transactions reviewed, the audit team found that t he methods of payment were appropriate and the amounts paid matched the amounts stated in the documents. Proper financial coding was used to make payments.

However, the audit team identified some weaknesses with regard to the cheque payment process and Section 34 of the FAA. First, the audit team found that CSO is responsible for both vendor creation and for writing and safeguarding cheques, which results in a lack of segregation of duties. In addition, cheques are not remitted directly to the vendor but handed to a LES from the program responsible for the contract or procurement, who then gives them to the vendors. As a best practice, the program responsible for the contract or procurement should not be involved in the payment process. Second, the audit team also found that Section 34 of the FAA was not always appropriately exercised. More specifically, there were 11 transactions where Section 34 was exercised on a quotation rather than a formal invoice and five (5) transactions where services were not fully rendered (including two paid in advance before the work started). This is not consistent with the purpose of Section 34 certification.

Value Added Tax

It was expected that the Beijing Mission would be operating in accordance with the departmental procedures related to reimbursement of the value-added tax (VAT) to ensure that tax was recovered for exempted goods and services purchased. The Beijing Mission has an effective process in place to claim all VAT paid, as long as the official invoices are made available for processing. In FY 2017-18, the Beijing Mission recovered $540,558 in VAT from the Chinese tax authorities. Furthermore, for the same period, the Mission recorded a gain due to foreign exchange of $10,940 following the cleaning of the VAT recoverable general ledger, as required.

Recommendation 2:

The Head of Mission should take measures to strengthen oversight, controls and monitoring with respect to procurement and contracting processes to ensure consistency with government policies, regulations and the Financial Administration Act.

2.5 Asset Management

It was expected that adequate controls would be in place to ensure the effective management of assets. Overall, the audit found that assets were generally well managed, although greater attention should be paid to the management of consular revenues.

Property Management

The Mission has properties that include Crown-owned and leased buildings, which are tracked in the Physical Resources Information – Mission Environment (PRIME) system. The audit team observed that the Beijing Mission had identified maintenance activities in the required Property Management Plan and an Annual Maintenance Work Plan. For regular maintenance on Crown-owned facilities, the Mission relied on an annual maintenance schedule; while leased SQswere fully maintained by the landlord. For unforeseen maintenance, the MRO system was used to request services, track requests, and generate monthly reports.

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 Beijing Mission had appropriate processes in place to manage the usage of its official fleet on a daily basis; driver logs were kept and drivers had a staggered schedule to minimize overtime. The audit team noted that use of Mission vehicles outside office hours was monitored to ensure only approved usage occurred.

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 policies and procedures.

Although the Radio Frequency Identification Device, the corporate inventory tracking system, was not in use at the Mission, inventory management processes were in place to track assets.The Mission kept manual inventory spreadsheets, using MS Access and Excel. The audit team observed that inventory for IT equipment, fine art, and SQ furniture and appliances were adequately tracked and safeguarded, however, inventory of furniture in the Chancery were not. The need for a formal corporate inventory system was raised to HQ in a previous Mission audit and will be addressed by March 2019.

Emergency Cash Parcel and Petty Cash

The audit team also expected that the Mission's petty cash and Emergency Cash Parcel would be managed according to departmental policy and procedures. It was also expected that petty cash would be overseen by a CBS with signing authority, who would conduct random and regular reconciliations.

The audit team observed that the Emergency Cash Parcel was appropriately safeguarded, including periodic verification by the MCO, and reconciled to the correct amount.

The Beijing Mission has [REDACTED] petty cash accounts ranging from [REDACTED]. The audit team reviewed the documentation for each petty cash account and noted that all were properly used and managed. For example, no transactions exceeded the $200 limit. In addition, all [REDACTED] petty cash funds were properly safeguarded.

While LES are responsible for the petty cash, each petty cash holder is overseen by a CBS (either the MCO or a DMCO). The audit team found that regular reconciliations or surprise counts were not performed for 12 months (May 2017 to April 2018). Mission management acknowledged that the petty cash counts had not been performed as frequently as they should have been. In May 2018, all [REDACTED] petty cashes were verified by Mission management and a tracking tool was created to help ensure that counts are performed on a quarterly basis.

Consular Revenues

The Beijing Mission collects fees for passport services, citizenship services, and notarial services. The Consular Services section also collects fees on behalf of Immigration, Refugees and Citizenship Canada. The great majority of payments are received through Chinese debit cards or Canadian credit cards. Occasionally, cash payments are also received by the Consular Services section.

The audit team expected that fees collected for consular services would be properly accounted for, reconciled, safeguarded and deposited as required. Overall, the audit team found weaknesses in the management of consular revenues related to d aily revenue control and uploading to the Procure-to-Pay tool.

Departmental procedures require that a Daily Summary Report (i.e. Daily Sylvia Report) and consular fees be submitted to the DMCO Consular for review and signature/approval. The audit team found that the DMCO Consular did not reconcile the daily revenues or approve the Daily Sylvia Report. In addition, when cash received, the DMCO did not perform a count before transferring to the Common Services section. Departmental procedures also require consular fees to be transferred from the Consular Section to the Common Services Section on a daily basis. While cash payments were transferred to the Common Services section on the same day, the Daily Sylvia Reports for non-cash payments were not transferred to the Common Services Section on a daily basis. These controls are important as they ensure consular revenues are reconciled, deposited and recorded correctly and in a timely manner.

Personal Drawings

The Beijing Mission is among 24 missions pre-authorized by the International Financial Operations Division (SMFF) to process Personal Drawings for CBS from their credit card. Personal Drawings are permitted at Missions located in countries where the safety and security concerns or local banking restrictions prevent CBS from withdrawing the local currency^{Footnote 1}. The CBS can in such circumstances use their personal credit cards or cheques to request the local currency from the Mission. The most recent decision to authorize the Beijing Mission to process personal drawings was made in 2015 and was supported by the limitations of the banking system in China at the time.

In 2017-18, 305 transactions were processed for the payment of Personal Drawings at the Mission, as well as 318 transactions to initiate those payments. The Department pays, on average, 1.7% in processing fees for each transaction of $5,000 or more. Of the 305 payment transactions processed for the Beijing Mission, there were 147 transactions at the $5,000 limit and one that exceeded, totalling $751,000 and resulting in transaction fees of around $12,767.

The Personal Drawings process is very cumbersome and each transaction requires the use of resources at the Mission, at Headquarters, and at the CSDP. Furthermore, the practice of Personal Drawings may create the perception that CBS get personal gain by collecting rewards points from their credit cards.

Through interviews conducted with officials at the local bank and with like-minded Missions, the audit team was informed that the local banking system allows the CBS to transfer Canadian funds to their Chinese bank account.

Recommendation 3:

The Head of Mission should exercise required controls with respect to consular revenue to ensure compliance with departmental policies and procedures.

Recommendation 4:

The Assistant Deputy Minister, Corporate Planning, Finance and Information Technology (Chief Financial Officer) should reassess the Personal Drawings authorization given to the Beijing Mission.

2.6 Human resources and 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, were conducted in a fair, open and transparent manner, and that staffing files would contain the required documentation.

After ceasing to be a CSDP in 2017, the Beijing Mission continues to provide a full range of HR services, including payroll, recruitment, and benefits administration for the four mainland China Missions, namely, Beijing, Shanghai, Guangzhou, and Chongqing. The audit team reviewed six LES staffing action files and determined that the staffing process for these sampled files were conducted in a transparent, open and fair manner. Personnel files were also found to be well-organized with key documentation in paper and in electronic format.

Based on the information provided, the Mission's LES workforce turnover is approximately 10-12% per year which includes internal movement. Management indicated that the main reasons for those departing the Mission are personal reasons/relocation and the lack of development opportunities. The Mission has HR strategies in place to address this turnover, including improvement of staff training and development opportunities.

3. Conclusion

The audit team found that effective management controls were in place to support sound stewardship of resources at the Beijing Mission. Areas for improvement were identified related to consular revenue oversight and certain aspects of local procurement and contracting.

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

Appendix A: Organizational chart for the managemnet 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 Beijing Mission to support the achievement of Global Affairs Canada objectives.

Scope

The scope of the audit included management practices and controls in place to support the Beijing Mission operations and excluded those of the Consulates General in mainland China (Shanghai, Guangzhou, and Chongqing).Specifically, the audit examined processes related to the management of consular revenues, procurement and asset management (including cash, materials, vehicles, equipment, and property). Human resource processes relating to LES staffing actions, LES payroll and overtime were also examined.

The most up-to-date documentation available as of May 2018 was reviewed. In addition, Common Services Program expenditures and data for property and fleet were examined from 2015-16 to 2017-18. A sample of files and transactions

Criteria

The criteria were developed following the completion of the detailed risk assessment and considered the Audit Criteria related to the Management Accountability Framework developed by the office of Comptroller General of the Treasury Board Secretariat. The audit criteria were discussed and agreed upon with the auditees. The detailed criteria are presented as follows.

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:

• On-site audit procedures performed at the Mission from May 28 to June 8, 2018
• 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 (Mission contracts and expenditures , payroll, overtime costs and staffing actions)
• Interviews (Head of Mission, CBS management and key LES, 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