Audit of management practices of missions - Singapore

Final report

Global Affairs Canada
Office of the Chief Audit Executive

Tabling Date
December 2018

Acronyms and symbols

ADM

Assistant Deputy Minister

ASEAN

Association of Southeast Asian Nations

CS

Common Services

CBS

Canada-based staff

CSDP

Common Service Delivery Point

CMM

Committee on Mission Management

DMAO

Deputy Mission Administrative 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

OGM

Asia Pacific Branch

PRIME

Physical Resources Information - Mission Environment

RCRB

Regional Contract Review Board

ToR

Terms of Reference

SQ

Staff Quarter

Executive summary

In accordance with Global Affairs Canada‘s approved 2018-2019 Risk-Based Audit Plan, the Office of the Chief Audit Executive conducted an audit of Management Practices of Missions - Singapore. 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 Singapore 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 at the mission, with regard to planning and budgeting, oversight and monitoring, local procurement, asset management and human resources, between April 2016 and May 2018.

What was found

The audit concluded that sound management practices and effective controls are generally in place to ensure good stewardship of resources at the Singapore Mission to support the achievement of global Affairs Canada objectives. The audit did, however, identify some opportunities for improvement in the administration of some aspects of local procurement, staffing processes, and petty cash management.

The audit team found that effective management controls were in place to support sound stewardship of resources at the Singapore Mission. Specifically, mission management exercises effective oversight over operations and expenditures, and accountabilities, roles and responsibilities were clearly defined. In addition, planning and budgeting functions were effective, and monitoring and reporting were in place to provide information for decision making. Management of assets (property, materiel, fleet, and cash) and inventory control practices were also found to be adequate and appropriate.

The audit team also found that improvement was needed in some areas within the procurement and human resources operations. The following issues were identified; inconsistent procurement pre-approval, inappropriate selection of procurement method, improper procurement administration, non-compliance with petty cash procedures, and staffing guidelines not clearly applied.

Recommendations

1. The Head of Mission should ensure rigour and compliance regarding the selection of appropriate procurement method, the administration of established contracts, and the proper use of acquisition cards and petty cash accounts.
2. The Head of Mission should seek approval from Information Management and Technology Directorate for the use of its fleet management application.
3. The Head of Mission should re-assess the vehicle fleet size for the mission in consideration of the current staff rotation and available transportation options.
4. The Assistant Deputy Minister, International Platform, in collaboration with the Assistant Deputy Minister and Chief Financial Officer, should identify, evaluate and implement an automated solution to manage mission vehicle fleets.
5. The Head of Mission should ensure that appointed locally engaged staff meet each essential merit criterion.

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 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. Therefore, 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 High Commission of Canada (the Mission) in Singapore is one of the selected missions as the low-risk comparator. 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.

High Commission of Canada in Singapore

The High Commission of Canada (the Mission) in Singapore is a medium-sized Mission comprising 78 staff (19 Canada-based staff (CBS) and 59 locally engaged staff (LES)). The Singapore Mission includes the following programs: Common Services and Consular; Foreign Policy and Diplomacy Service; Trade; and Security & Emergency Management. The Mission's partner departments and co-locators include Immigration, Refugees and Citizenship Canada, Department of National Defense, Canada Border Services Agency, and the provincial government of Alberta.

Singapore, officially the Republic of Singapore, is a Southeast Asian island city-state off the southern tip of the Malay Peninsula. The population of Singapore is 5.6 million people and is reflected in its diversity with four official languages: English, Chinese, Malay, and Tamil. One of the five founding members of the Association of South East Asian Nations (ASEAN), the country is also the host of the Asia-Pacific Economic Cooperation (APEC) Secretariat, and a member of the East Asia Summit, the Non-Aligned Movement, and the Commonwealth. Singapore is an important regional trade partner and is Canada's third largest export market in the ASEAN. The relationship between Canada and Singapore is wide-ranging, characterized by cooperation in a variety of areas, including security and defence, governance and the rule of law, pluralism, trade, science and technology and Arctic matters. The Singapore Mission is designated as a non-hardship Mission.

Common Services Program

The Common Services (CS) Program in the Singapore Mission provides administrative and operational support to the Mission's programs and partner departments, and is responsible for financial transactions and human resources activities. Accountability and responsibility are held by the Head of Mission (HOM). Until July 2017, the Singapore Mission received administrative support from the Common Service Delivery Point (CSDP) in New Delhi (India). Subsequently, support was transferred to the CSDP in Manila (Philippines) which also provides financial support to other Missions across the Asia Pacific region.

The Common Services Program is managed by a Management and Consular Officer (MCO) at the FS-03 level. The MCO is responsible for 14 LES in the areas of human resources, finance, IT, consular services, and property and material management. Table 1 shows the Mission's Common Services Program expenditures from 2014-15 to 2017-18.

Under the direction of the MCO, the property, materiel, and transportation section is organized and managed by an LE-08 Deputy Mission Administrative Officer (DMAO). She is supported by an LE-06 Property & Material Manager and by an LE-05 Customs & General Services Officer. This section is responsible for the oversight and maintenance of the Chancery, Official Residence, and Staff quarters (SQs), inventory, and a fleet of vehicles. In addition, the Customs General Services Officer is responsible for the transportation section, supervising two (2) drivers. Details on the Mission's inventory of property and vehicles are shown in Table 2 below.

Consular Program

The Singapore Mission's Consular Program provides consular services and assistance to Canadians, including passport, citizenship and notarial services. The Consular Program is managed by the MCO who is supported by an LE-08 Senior Consular Officer and an LE-06 Consular Officer. As part of this service, the Mission is responsible for collecting, safeguarding, recording and depositing consular fees in a timely manner.

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 Mission resources. The audit examined roles and responsibilities, as well as key oversight functions of the Mission management team and key Mission staff from the Common Services, Trade, and FPDS Program. The audit team found that Mission accountabilities were clearly articulated and communicated, and that management exercises appropriate oversight.

Accountability in the Mission rests with the HOM who reports to the Assistant Deputy Minister of the Asia Pacific (OGM) Branch at HQ. At the time of the audit, the HOM had been posted to the Singapore Mission for approximately two (2) years and the MCO for over three (3) years. The audit team noted that HOM, MCO and Program Managers' accountabilities were documented through performance management agreements. In addition, interviews conducted with Mission staff indicated that accountabilities, roles, and responsibilities, particularly in the areas of local procurement, asset management, and human resources, were clear and understood. The audit team noted that these responsibilities were also articulated in the performance management agreements of key Mission personnel in the Common Services section. These roles and responsibilities were supported by policies and guidelines which are readily available on the Mission's wiki page and staff indicated they knew where to find additional guidance.

The Committee on Mission Management (CMM), which oversees management and administrative matters, exercises its oversight function by meeting regularly to discuss a range of issues, including budgets, planning, asset management and human resources. In addition, oversight is also exercised through weekly operations meetings as well as weekly meetings between the HOM and Program Managers (Trade and FPDS) and the MCO. Further, the Common Services team meets regularly to discuss daily operations with regards to human resources, finances, procurement, and asset management.

2.2 Planning and Budgeting

The audit team 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, for its integrated annual planning exercise, as well as FINSTAT (Financial Status Report) to assist them in forecasting the budget. The Mission planning process for the upcoming year involves a review of previous years' activities and the identification upcoming initiatives. Proposed plans are reviewed by the HOM before submission in Strategia. Preparing budget forecasts for common services and property involves an analysis of reoccurring expenses, such as cleaning services and rent, with adjustments made based on inflation, changing needs, and upcoming initiatives. In addition, the Mission reviews contracts to determine which have expiry dates coming up and the ones that needs to be renewed.

2.3 Monitoring

The audit team expected that monitoring activities would be performed to provide information for decision making and ensure Mission compliance with policies and procedural requirements. The audit team found that monitoring and reporting activities were in place to inform management regarding the performance of operational activities.

Monitoring of expenditures against budgets is being done using the corporate FINSTAT reports, allowing managers to monitor budgets through forecasting and burn rate analysis. Discussion of financial position and FINSTAT are discussed at CMM, operations meetings and at the weekly meetings with MCO and Program Managers.

In addition, managers received overtime reports which allow them to monitor overtime usage against available allocated budget. It was also noted that the MCO had developed an electricity utilization dashboard in order to monitor usage and utility costs in SQs. The audit team did find, however, no procurement reporting generated by Mission management that would allow for monitoring of procurement/contracting expenditure trends and vendor utilization patterns.

2.4 Local Procurement

The audit team expected that the procurement for goods and services at the Mission would be administered and managed in accordance with applicable policies and directives. The audit team examined the processes, mechanisms, and tools used by the Mission for procuring goods and services, from initiation to payment. A sample of 36 procurement transactions and contracts was reviewed by the audit team, including purchases made with acquisition cards, from April 2016 to March 2018.

The audit found that generally the Mission was managing the procurement of goods and services appropriately. However, through the testing of a sample of procurement transactions, the audit team identified instances of improper procurement pre-approval, inappropriate procurement method used, and procurement administration issues. These instances included:

• Paying for long term storage invoices under a contract that did not include that type of service.
• Paying for regular air conditioner maintenance without establishing a competitive overarching contract, which would establish the price and frequency for this reoccurring service.
• Instances of using multiple acquisition cards to pay for large furniture purchase by splitting payments into smaller transactions in order to circumvent card limit controls in place to ensure appropriate use of acquisition cards.
• Additional renovation work completed prior to the contract being amended to include the work. Renovation contract was established under HQ contracting authority, requiring HQ approvals on contract changes and invoices. Delays in obtaining approval from HQ might have contributed to this contract administration issue.
• Evidence of formal pre-approval not maintained for acquisition card purchases.

The audit team noted during the audit site visit an update to Mission acquisition card procedures was communicated by the MCO and indicated that formal and written pre-approval was mandatory going forward, and should be added to files.

As for the receipt and payment of goods and services, the audit team found that controls in place to manage expenditures were effective. Based on transactions testing, payment amounts and methods were accurate, appropriate, and legitimate, and financial coding was aligned to expense type. The audit team found evidence that receipt of goods and services was confirmed before invoice payment was approved, and goods were reflected in Mission inventories soon after purchase. In addition, a recovery process was in place to ensure Value Added-Tax (VAT) refunds were requested from local government.

Recommendation 1:

The Head of Mission should ensure rigour and compliance regarding the selection of appropriate procurement method, the administration of established contracts, and the proper use of acquisition cards and petty cash accounts.

2.5 Asset Management

The audit team expected to find that adequate controls are in place to ensure effective management of Mission assets. In order to assess the state of these controls, the audit examined the management of the following assets: inventory; property; vehicles; petty cash; and consular revenues. The audit found that assets were generally well managed, although greater attention should be paid to the management of petty cash accounts.

Property Management

Missions are responsible for ensuring that all Mission property is properly maintained. The audit team did not identify any issues with regards to real property management at the Mission, or any gaps with department processes and directives. The audit team found that the Mission identifies needs and submits proposed maintenance works to the Physical Resources Bureau (ARD) to authorize special projects to leverage the availability of HQ funding wherever possible. For the Mission's leased property portfolio, the audit team noted that repairs and maintenance costs were well-controlled. Additionally, the Mission indicated that it was moving towards shifting the responsibility of air conditioning maintenance onto the landlords. Lastly, as previously noted, the Mission developed, and posted on the Mission wiki page, an internal dashboard to track SQ electricity utilization in order to encourage users to decrease consumption.

Inventory Control and Disposal

The audit team found that at the Mission purchased assets were recorded, safeguarded, tracked through their life cycle, and disposed of in accordance with policies and procedures. The Mission utilizes an inventory management application that tracks inventory activity. The audit team did not find any significant issues during the inventory counts performed on-site. Further, recently acquired items were found in the staff quarters and updated on the Mission's inventory lists.

The audit team also examined the disposal of assets, including surplus materials and one Mission vehicle and determined that the disposal processes were mostly performed in accordance with departmental policies and procedures. With regards to the vehicle disposal, the audit team found the diplomatic license plate was not returned to the Mission, as per departmental procedure. The MCO explained, however, that this was not the process in Singapore as the risk of misuse or abuse of diplomatic plates is low because vehicle registration is tightly controlled by the Land Transport Authority.

Petty Cash

The audit team was informed that petty cash reconciliations were performed by the common services officer every couple of months, and that surprise checks were performed by the MCO once a year on all petty cash accounts. The audit team's review of petty cash procedures and transactions found that payments for reimbursement were accurate and approved by the appropriate person. However, instances of transactions over the permitted $200 threshold were identified, and an inspection of a petty cash account found that not all relevant supporting documentation was kept with the account to reconcile the balance.

Consular Revenues

The Singapore Mission collects fees for issuing passports and travel documents, as well as for providing notarial services. The audit team found that consular cash revenues are managed in accordance with relevant policies and legislative requirements. Specifically, revenues are collected, safeguarded, accounted for, reconciled, and deposited as required. The audit team was also informed that the Mission would no longer accept cash in Singapore Dollars for consular services as of July 1st 2018, which would further simplify cash management at the Mission.

Fleet Management

It was expected that the Mission would manage its fleet in accordance with the Department's Mission Fleet Management Guidelines. Overall, the audit team found that the Mission's fleet of four (4) vehicles was well-managed. The audit team observed that the Mission uses a fleet management application to perform tasks that are normally done more laboriously by hand and with the assistance of office software in other missions audited. The application helps track, analyze and improve the Mission's fleet operations. Data about asset utilization, maintenance costs, fuel efficiency, parts and labour can all be tracked within the application. The application reports important fleet metrics allowing the Mission to gain insights into fleet maintenance and operational trends. This type of fleet management application could potentially prove beneficial to other missions. [REDACTED] Mission staff confirmed that the application had not yet been formally endorsed by the Department for secure use.

The audit team also reviewed fleet usage. The GAC Mission Fleet Management Guidelines recommends that a fleet utilization review be done by Missions annually to ensure fleet size is appropriate. The audit team conducted a comparison analysis on the usage of the Mission's four (4) fleet vehicles as per thresholds determined by Treasury Board and GAC guidelines (80% working days used or 20,000 Km per year). The analysis indicated that only one vehicle satisfied either of these thresholds. Mission staff informed the audit team that they expected increased vehicle use as a result of staff changes.

Recommendation 2:

The Head of Mission should seek approval from Information Management and Technology Directorate for the use of its fleet management application.

Recommendation 3:

The Head of Mission should re-assess the vehicle fleet size for the mission in consideration of the current staff rotation and available transportation options

Recommendation 4:

The Assistant Deputy Minister, International Platform, in collaboration with the Assistant Deputy Minister and Chief Financial Officer, should identify, evaluate and implement an automated solution to manage mission vehicle fleets.

2.6 Human Resources and LES Staffing

The audit team expected that mission Human Resource activities be managed effectively to ensure operational needs are met, and that transactions are appropriate and compliant with policies and procedures. The audit team assessed whether HR staffing plans were in place and addressed needs; LES staffing actions were appropriately approved, fair, open and transparent; LES personnel files were well documented; and LES overtime payments were accurate and reasonable. The audit team found that these HR practices were generally managed appropriately and in accordance with departmental policies and procedures, although there is opportunity to improve the administration of staffing activities.

Human Resources Planning

Mission HR planning activities for 2016-17 and 2017-18 were documented directly in the Strategia business plan, rather than a separate staffing plan, which is a reasonable practice given the low staff turnover and limited staffing activities. HR needs were discussed regularly at CMM and communication regarding human resources was facilitated through weekly meetings between the HOM and Program managers. Over the next 5 years, 16 LES, which represents 30% of the workforce, will be eligible for retirement. Mission staff informed the audit team that it is aware of the situation and that it has started to think about a succession plan.

LES Staffing

The audit team examined two (2) LES staffing files to determine whether they were in compliance with relevant policies and procedures, conducted in a fair, open and transparent manner, and that staffing files contained the required documentation. For both files, the audit team was unable to conclude if the successful candidates met all of the essential qualifications as the rating guide used by the Mission was structured to provide a total overall assessment, rather than an assessment against each individual merit criterion. As per the department's Manager's guide to staffing LES, the candidate selected must, at a minimum, meet the essential qualifications and any other merit criteria as specified on the job advertisement.

Personnel Files

Regarding the management of LES personnel files, a sample of four (4) files was reviewed to ensure the retention of required documentation, such as job descriptions, performance agreements and any documentation related to values and ethics and disciplinary actions. The audit team found that the personnel files reviewed were generally well documented, although job descriptions and proof of education were not always on file.

 Overtime

The audit team examined four (4) overtime transactions, and found that the hours claimed appeared to be warranted and reasonable based on operational requirements. Although formal pre-approval for OT could only be found in two of the four instances, there was evidence that the MCO was aware of the activities that necessitated the overtime. Also, as previously noted, overtime budgets were closely monitored, and program managers actively discussed overtime at CMM.

Recommendation 5:

The Head of Mission should ensure that appointed locally engaged staff meet each essential merit criterion.

3. Conclusion

The audit concluded that sound management practices and effective controls are generally in place to ensure good stewardship of resources at the Singapore Mission to support the achievement of global Affairs Canada objectives. The Mission has in place management practices to ensure effective oversight, planning and budgeting, monitoring over procurement, asset management, and human resources. The audit did, however, identify some opportunities for improvement in the administration of some aspects of local procurement, staffing processes, and petty cash management.

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

Appendix A: 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 Singapore 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 Singapore Mission operations. Specifically, the audit examined processes related to the management of consular revenues, procurement and asset management (including property, vehicles, cash and materials). 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, Mission expenditures and data for property and fleet were examined from 2015-16 to 2018-19. A sample of files and transactions were tested from activities that took place from 2015-16 to 2018-19, as presented in Table 3.

Criteria

The criteria were developed following the completion of a 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 June 4th to June 15th, 2018
• Documentation review (budgets, business plans in Strategia, property management plans etc.)
• Walkthrough of procurement processes, property and materiel, and consular processes.
• Data analytics of Mission expenditures
• File testing (Mission contracts and expenditures , payroll, overtime costs and staffing actions)
• Interviews (Head of Mission, CBS management and key LES staff, 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 B: Management action plan