Audit of Management Practices of Missions - Bogota

Global Affairs Canada
Office of the Chief Audit Executive

Tabling Date
June 2019

Acronyms

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

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 Ressources Information - Mission Environnent

RCRB

Regional Contract Review Board

SAP

Systems Applications and Products

SQ

Staff Quarter

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 – Bogota. 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 Bogota 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 — a global network of 178 Missions in 110 countries that supports the international work of Global Affairs Canada and 37 partner departments, agencies and co-locators. According to the Global Affairs Canada Departmental Results Report 2017-2018, $969M 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 a focus on Common Service Program, with regard to planning and budgeting, oversight and monitoring, local procurement, asset management, and human resources, between April 2016 and November 2018.

What was found

The audit team found that there is a good governance structure in place which plays an important oversight role of Mission operations. The current Mission management team and the key staff understand their respective accountabilities, and roles and responsibilities. The audit team also found weaknesses in the areas of planning, monitoring, local procurement, payment process, asset management and human resources. Some processes established by Headquarters relating to finance, procurement, contracting and human resources are not consistently followed and some key controls are not in place.

Recommendations

1. The Head of Mission should ensure that the Mission's budgeting and planning processes are based on rigorous operational needs assessment and that purchases are linked to plans.
2. The Head of Mission should implement monitoring practices over core operational activities designed to identify issues with the management of Mission procurement, finance, assets, and human resources, and to ensure compliance to departmental policies and procedures.
3. The Head of Mission should strengthen the Mission’s procurement process from initiation to payment by ensuring that:
   • Initiation of procurement transactions are based on Mission planning and needs, and are pre-approved;
   • Proper procurement mechanisms are in place and utilized according to the departmental policies and procedures; and
   • Mission management exercises the required due diligence to confirm goods are received and services are rendered prior to approving for payment.
4. The Head of Mission should put key inventory controls in place and strengthen existing controls to ensure a purchased asset is recorded, safeguarded, tracked through its life cycle and disposed of in accordance with the Department’s Material Management Manual.
5. The Head of Mission should ensure that the Mission’s staffing actions fully respect the Departmental Manager’s Guide to staffing of LES andall keysupporting documents for staffing decisions are retained on HR and personnel files.

Statement of Conformance

In my professional judgment as Chief Audit Executive, this audit was conducted in conformance with the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing and with the Treasury Board Policy and Directive on Internal Audit, as supported by the results of the quality assurance and improvement program. Sufficient and appropriate audit procedures were conducted, and evidence gathered, to support the accuracy of the findings and conclusion in this report, and to provide an audit level of assurance. The findings and conclusion are based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed upon with management and are only applicable to the entity examined and for the scope and time period covered by the audit.

1. Background

Global Affairs Canada (the Department) manages Canada’s diplomatic and consular relations, promotes international trade and leads Canada’s international development and humanitarian assistance programs. It also manages Canada’s International Platform — a global network of 178 Missions in 110 countries that supports the international work of Global Affairs Canada and 37 partner departments, agencies and co-locators. According to the 2017-18 Global Affairs Canada Departmental Results Report, $969 million 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.

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. Embassy of Canada (the Mission) in Bogota 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 Colombia - Bogota

The Embassy of Canada to Colombia in Bogota is the 2nd largest mission in Latin America. As of January 2019, the Embassy has 116 funded positions: 37 Canadian based staff (CBS), 79 locally engaged staff (LES) and a dozen contracted guards. A total of 14 programs are managed by Global Affairs Canada, other federal government departments and partners. The Mission staff includes 17 CBS from the Department and 19 employees from four (4) partner departments as well as one (1) employee from Export Development Canada as a co-locator. In addition to Bogota, an Honorary Consul in Cartagena provides passport and consular services to Canadians in that region.

The Mission hosts a high volume of events and high-level visits, which places 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 Mission Management team is led by the Head of Mission (HOM) with one Management Consular Officer (MCO) and one Deputy Management Consular Officer (DMCO). The Mission composition includes the following main programs: Common Services; Development; Trade; Foreign Policy and Diplomacy Service; Consular Service; Security & Emergency Management; Immigration; Defense, Public Safety and Royal Canadian Mountain Police program.

Common Services Program

The Common Services Program in the Bogota 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.

In November 2015, the Mission’s financial operations were integrated with the Common Service Delivery Point (CSDP) in Mexico, which also plays a human resource management role in form of Virtual Classification Committee. CSDP Mexico also provides contracting services to the Mission, including support and reviews from the Regional Contract Review Board (RCRB).

The Common Services Program is managed by a MCO and supported by one DMCO. The Mission’s Common Services Program expenditures increased 44% from $1.8 million in 2015-16 to $2.6 million in 2017-18, as shown in Table 1 below.

Source: FAS Expenditures Report as at January 22, 2019

The MCO supervises the Common Service section including Finance section, Information Technology (IT) section, Transportation section and Human Resources section.

The Property and Material section is overseen by the DMCO. This section is managed and supported by a team of six (6) LES staff. This section is responsible for the maintenance of the Chancery, the Official Residence (OR) and Staff Quarters (SQs). Details on the Mission’s inventory of properties and vehicles are shown in Table 2 below.

Consular Program

The Bogota Mission’s Consular Program provides consular services and assistance to Canadians, including passport, citizenship applications and notarial services. The Consular Program is overseen by the DMCO, who is supported by one senior Consular Officer and one Consular Assistant. The Mission is also responsible for the Honorary Consul in Cartagena, which provides representation and consular services to Canadians. As part of this Consular Program, 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 management would exercise effective oversight of Mission activities and expenditures to ensure proper stewardship of resources. The audit examined the Mission’s key oversight functions and roles and responsibilities of the Mission management team and key Mission staff. The audit found that there is a good governance structure in place which plays an important oversight role of Mission operations. The current Mission management team and the key staff understand their authorities to operate, their respective accountabilities, and roles and responsibilities.

Accountability in the Mission rests with the HOM who reports to the Assistant Deputy Minister of the Americas Branch at HQ. The present HOM joined the Mission in July 2017. The MCO arrived at the Mission in August 2018. In addition to the HOM and the MCO, the Mission management team has one DMCO who reports to the MCO and is responsible for the Mission’s Property section and Consular Program.

Mission Oversight Function

The most important oversight of the Mission management is exercised through the following four committees in which the Mission’s management team is actively involved: the Committee on Mission Management (CMM); the Mission OPS meetings and Common Services team meetings; the Mission Housing Committee (MHC); and the Regional Contract Review Board (RCRB). In addition, there is a LES Management Consultation Board chaired by the HOM.

The audit team reviewed the terms of reference and the minutes of the CMM and the operations meetings for the Common Service Section and found that the CMM discussions are generally at high-level and mostly serves as a platform to update and remind program managers on what is occurring and to come. The CMM minutes are shared with all staff at the Mission.

Supplemented by the high-level CMM, the Mission’s daily operations with regard to finance, procurement, asset management and human resources are discussed weekly at Common Services Team Meeting. Minutes are kept and topics such as financial planning and FINSTAT, property forecast, HR activities including overtime and IT work plan were discussed.

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 Mission and the CSDP in Mexico further outlines their respective roles and responsibilities. The RCRB has a roster of 12 members from multiple Missions in the region. The DMCO from the Bogota Mission is a member of the RCRB.

In addition, the MHC meets as required. The Committee members attend the CMM and makes occasional updates on its activities, especially in regards to housing allocation and the SQ acquisition process. Both the MCO and the DMCO participate in MHC meetings and discussions. Recommendations are made to the HOM for approval.

Roles and Responsibilities

It was expected that the roles and responsibilities for key CBS and LES staff would be formally defined and clearly understood. The audit team reviewed four (4) Performance Management Agreements (PMA) for HOM, DMCO, Property Manager and Common Service Officer. The review confirmed that roles and responsibilities and accountabilities were well articulated in their respective PMA.

The audit team interviewed 18 key Mission management staff and program managers. These interviews showed that they were knowledgeable and understood their roles, responsibilities and accountabilities. These personnel interviewed were all able to clearly describe their current job and day-to-day tasks, including how they relate to employees of the same group and of those in other sections.

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

2.2 Planning and Budgeting

It was expected that planning and budgeting would be based on needs and there would be a reasonable estimate for planned activities and their related expenditures. It was also expected that the established plans would be used to guide the Mission's operations and that the related budgets would be monitored and respected with variances explained. The audit team examined Mission's planning and budgeting process for the most recent three (3) fiscal years. The audit team found that although annual plans and related budgets were developed, there was no trend analysis, and the alignment between the plan and the Mission's operational needs were not evident.

The Mission uses Strategia, the corporate integrated planning and reporting tool, to plan and develop its budgets for the common services, property, IT assets and human resources activities during its annual integrated financial planning exercise. One of the main drivers of the Mission’s procurement activities is the preparation and the maintenance of SQ during the relocation period. The Mission maintains 35 SQs and ORs in addition to the Chancery. In 2018-2019 relocation period, there were 10 CBS who arrived and 11 who departed the Mission. To develop a purchase plan, the Mission uses an annual housing inspection, relocation schedule and creation of new positions to identify type of repairs and maintenance that needs to be done; furniture and appliances to procure for each SQ and with the funds needed.

The audit team compared the Mission developed plans and related budgets against the actual spending on two line commitments under Common Services and found significant variances for three consecutive fiscal years from 2016 to 2018 as shown in Table 3.

The audit team found no sufficiently documented explanation to support these variances. A review of a sample of 37 procurement transactions showed that 11 out of 35 (30%) applicable transactions were not linked to any plans or documented needs assessment. As a result, not linking procurement activities to plans and needs assessment increases the risk that goods and services purchased may be in excess of what the Mission would actually need.

Recommendation 1:

The Head of Mission should ensure that the Mission's budgeting and planning processes are based on rigorous operational needs assessment and that purchases are linked to plans.

2.3 Monitoring

It was expected that monitoring activities would be performed to provide information for decision-making and ensure Mission's operations are carried out as planned and in compliance with policies and procedural requirements. The audit team found that although minimum monitoring activities were conducted, the expected monitoring and reporting activities to inform management regarding the performance of operational activities were not performed.

Financial Monitoring

The Mission has some monitoring activities in place for financial operations, including the review of reports of expenditures against budget and the corporate FINSTAT (Financial Status Report)  to ensure actual expenditures occurred during the year are aligned with the budgeted resources on an ongoing basis. However, the audit team did not find any documented multi-year trend analysis on the Mission’s expenditures such as the example in Table 3 presented earlier. The lack of trend analysis limits the abilities of decision-maker to take corrective measures when necessary.

Fleet

The Mission has eleven (11) vehicles among which are three armoured vehicles (AVs). The Mission monitors the vehicle fleet by conducting monthly inspections, along with random checks, of all vehicles to verify the reported mileage and vehicle condition. In addition, a monthly report is produced for transport requests, associated expenses, the mileage, gas purchases, maintenance and repairs of each vehicle.

The audit team was provided with spreadsheets of gas purchases made by all the drivers under the fleet team from January to September 2018 (excluding gas purchases made outside of the city). The information contained in these spreadsheets was not analyzed nor used by the Mission in order to identify any trends or anomalies. The audit team reviewed these spreadsheets and identified some fuel usage rates significantly above the vendor specifications. Despite the explanations provided by the Mission for these high fuel usage rates, the audit team could not conclude on the reasonability of these rates. The lack of timely monitoring of the vehicle fuel usage increases the risk of not identifying vehicle repairs needed and not obtaining timely explanation from the drivers for significant variation in fuel usage.

Consular Program

The Consular Program Assistant reconciles the payments received for consular services rendered and provides the DMCO with a spreadsheet of all the client names and the type of services they requested and paid. When the Mission processes a passport request, it is recorded in the formal IT Passport System Application called COSMOS. The audit team found that the Mission does not reconcile the number of physical passport requests processed against COSMOS. Though not required, this is a good practice to ensure that all passport requests processed by the Mission were properly recorded in COSMOS.

Human Resources

Overtime is monitored by the MCO and program managers who are regularly provided with a compensatory time report including tracked annual leave for each individual. Compensatory time is a bank of time off received by an employee who worked extra hours instead of receiving overtime pay. The audit team reviewed these time reports and found that the Mission did not perform trend analysis of overtime. This lack of analysis limits the Mission management in identifying the reasons for overtime and prevents them from taking appropriate corrective measures accordingly.

Procurement

The audit team found that the Mission did not effectively monitor or report on procurement and asset management activities. No monitoring was done to ensure proper procurement methods were being used, if required contracts were in place, or if the Mission tends to always use the same vendor. As noted later in the report, the audit team found the Mission had not been following procurement policies and procedures, had not ensured proper procurement mechanisms were put in place, and had not been ensuring vendors were selected on a competitive basis.  Without strong monitoring of procurement activities, the Mission would not be able to assess if procurement is properly supporting Mission operations and providing value for money. In addition, there were some gaps in the monitoring of Mission assets, including property maintenance, vehicles, fuel, petty cash, and goods and supplies. These asset management issues are discussed in detail later in the report.

The limited monitoring and reporting inhibits management’s ability to make informed decisions in terms of budget planning, purchasing and expenditures. The lack of sufficient monitoring also prevents the identification of problems and the possibility of corrective action, thereby increasing the risk of financial loss, misappropriation and misuse of assets.

Recommendation 2:

The Head of Mission should implement monitoring practices over core operational activities designed to identify issues with the management of Mission procurement, finance, assets, and human resources, and to ensure compliance with departmental policies and procedures.

2.4 Local Procurement

The audit team expected that procurement of goods and services would be administered and managed in compliance with applicable policies and directives. The audit team examined the processes and procedures in place to procure goods and services at the Mission. A sample of 37 procurement transactions and contracts was selected and reviewed. The audit team found some weaknesses in the procurement process leading to risk of financial loss.

Procurement and Contract Management

The audit team reviewed 37 procurement transactions with the expectation that contracts, and purchase orders would be established and managed as per procurement policies and procedures to ensure fairness, transparency, and value for money. Overall, 14 of the 37 procurement transactions did not use the appropriate procurement method.

The audit team found that the Mission did not consistently establish formal contracts and purchase orders for transactions over $2,000. In many cases of purchases for goods over $2,000, there was no evidence, such as three valid quotes obtained, to support value for money. In addition, the Mission did not have a contract in place with two suppliers who have been providing repeated services at significant value for 10 and 18 years respectively.

Out of a sample of 37 procurement transactions, eight (8) had a contract in place. Of these eight (8) contracts, four (4) were done after the fact, that is, contracted work had started before the contract was signed. In addition, as indicated earlier, 30% of the tested sample was not linked to a documented need assessment, resulting in excess inventory in warehouses for many months and incurring extra storage costs. In fact, 18 out of 37 transactions examined did not have evidence on file of pre-approval as required by the section 32 of the Financial Administration Act (FAA). Management indicated that a verbal approval was given for these cases.

Without fair and competitive contracts and purchase orders in place, it is difficult for management to formalize services and goods expectations, control costs and to ensure Mission is getting the quality and best value for money.

Payment Processes

The audit team expected that the Mission would have effective controls in place to ensure procurement expenditures are accurate, appropriate, and legitimate.

The Mission uses acquisition cards, petty cash, cheques or bank transfers as its payment methods for purchased goods and services.

The Mission’s financial transactions are processed by the CSDP in Mexico which has the payment authority under section 33 of the FAA. The Mission is responsible for the certification of receipt of goods or services under section 34 of the FAA.

The audit team tested 37 transactions and found that the segregation of duties related to procurement approval and payment was appropriately carried out. Although the certification for section 34 of the FAA was signed off for all the 37 transactions, the audit team found a lack of available information to substantiate that services were rendered as required, or that purchased goods were received. This information is key to indicate that the required due diligence has been exercised to certify by management that goods or services have been received and payment can be issued under section 34 of the FAA. For example, one of the sample transactions examined was for the purchase of six (6) large appliances, and although the invoice was authorized under section 34 of the FAA, it revealed that the invoice indicated a wrong delivery address. No evidence could be provided to locate these appliances. The lack of evidence to support that goods and services were received could result in loss of funds through overbilling, non-receipt of goods, or inferior goods being provided.

The audit team also observed inefficient practices at the Mission. For example, the Mission provides a sim card to CBS and their dependents for security reasons. The Mission pays the phone line invoices, then calculates the CBS and dependents personal portion and request reimbursement from the CBS on a monthly basis. This process is performed by the IT and the Finance sections and is very time consuming and impact on their other responsibilities. Another example is the current cost recovery process for the Value Added Tax (VAT). Mission CBS staff are exempted from the VAT. Some CBS bring all their invoices to the Common Services section that compiles and fills out the VAT reimbursement templates on CBS behalf, requiring approximately 150 hours of work every two (2) months. These are highly inefficient practices that generate significant paperwork as both the IT and Finance sections spend a considerable amount of their time managing these practices. The audit team has brought these concerns to the Mission management team and in January 2019, a decision was made at CMM to cease these practices.

Recommendation 3:

The Head of Mission should strengthen the Mission’s procurement process from initiation to payment by ensuring that:

• Initiation of procurement transactions are based on Mission planning and needs, and are pre-approved;
• Proper procurement mechanisms are in place and utilized according to the departmental policies and procedures; and
• Mission management exercises the required due diligence to confirm goods are received and services are rendered prior to approving for payment.

2.5 Asset Management

It was expected that adequate controls would be in place to ensure the effective management of assets. In order to assess the state of these controls, the audit team examined the management of property, inventory, vehicle fleet, petty cash and consular revenues. The audit found weaknesses and control gaps in the management of inventory leading to risk of financial loss.

Property Management

The Mission has properties that include Crown-owned Chancery, OR and leased SQs, which are tracked in the Physical Resources Information – Mission Environment (PRIME) system.

Property up for Sale

The Mission also owns a land on which stands an unoccupied and ready to be demolished residential property. This property is located from a walking distance of the Chancery and was purchased in 2010 with an intention to build the Mission’s Official Residence. This was part of the rightsizing program under the Deficit Reduction Action Plan (DRAP) initiative. However, this construction project could not be carried out as originally planned due to new guidelines and authority issues. A decision was made to sell the property in 2013. A new OR was purchased in May 2017 and now is occupied by the HOM.

The audit team found that the disposal of the property was not in the Headquarters list of properties for sale. Some attempts have been made to sell the properties but the sale has never been materialized. The building on the property is in an insalubrity condition representing health and safety risk. Mission management indicated that they informed Headquarters about the property not being on the disposal list, which had been corrected at the time of the audit.

Inventory Control and Disposal

It was expected that once an asset was purchased, it would be recorded, safeguarded, tracked through its life cycle and disposed of in accordance with the Department’s Material Management Manual. Based on walkthrough of Mission’s inventory practices, an inspection of the external warehouse and onsite storage areas, and sampled inventory verification, the audit found significant control deficiencies and gaps in the management of inventories.

The Mission keeps inventory lists for OR, SQs, IT, and external warehouse assets. The Mission uses a tagging system where each individual asset has a sticker with a barcode on it. Although most of the Mission assets information is recorded, the level of tracked information does not indicate how many assets the Mission currently has, their acquisition value, purchased date and location. Not tracking these assets at certain level of detail limits the ability of management to monitor, safeguard and manage these assets during their life cycle. This practice also prevents the Mission from making right procurement decisions.

The Mission also keeps an inventory of wine, gifts, and fine art. However, there are no inventory lists of Chancery furniture and material, small appliances for SQs, inventory at the Chancery storage and Handyman’s office. The audit team inspected a sample of assets at Chancery, SQ and OR, including furniture, appliances and fine art. The audit team was able to reconcile the assets against the inventory lists.

The audit team also visited the onsite storage area for information technology (IT) assets and the basement area and found a serious lack of organization of assets. Of the 25 sample IT assets examined, the audit team could not locate six (6) monitors and a fax machine. The audit team also found that any IT asset purchased outside of shop@DFATD, the Department automated system to order goods and services, was not recorded on the formal IT inventory system-- Remedy, and the Mission did not have a complete list of these IT assets. The audit team also examined the list of disposed IT assets recently sold in an auction. Since the Mission could not provide evidence on which IT assets were disposed, the audit team could not assess whether these IT assets were removed as active assets from the Remedy system, whether their hard disks were removed and destroyed prior to their disposal. The last point is even more important especially if these IT assets were located in the high secured zone. The current disposal process does not capture that information. As a result, the Mission could not confirm, at the time of the audit, which IT assets had been disposed of, in which condition they were and whether their memory disks were wiped out for sensitive information.

The basement storage area contains appliances, office supplies, cleaning suppliers, SQ furniture, pack up kits, parts and tools. The handyman shop is also located in this room. So, there is a lot of movement within the storage area. The Mission could not provide a reliable inventory list of the assets in this area. As a result, it is difficult for the Mission to determine what is in stock, in which quantity and condition they are and when they need to be restocked.

The Mission also leases storage space located about 30 minutes from the Chancery. Assets such as OR, Chancery and SQ furniture and appliances are stored in wooden containers piled up three storeys high. A detailed list of assets for this warehouse exists and is maintained by the service provider. However, this list does not capture when the asset was purchased, its unique identifier number and their cost. The Mission organized an auction in May 2018 to dispose of surplus assets and still, the Mission leases space on a square metre basis for about 30 containers. The Mission could not explain why such quantity of assets was kept in storage. The audit team examined the purchased appliances made in the last quarter of 2017-18. The Mission purchased a first wave of nine (9) appliances in January 2018 which was based on a need analysis from visits of SQ done in the fall of 2017. A second wave of 37 appliances was done at the end of March 2018 and the mission could not provide evidence to support the need for these appliances. The audit team traced back where these 37 items were located and nine (9) appliances are still in the warehouse nine (9) months after they have been purchased. In addition to pay for storage of the assets that can be easily purchased locally, the Mission pays transportation fees to move these appliances in SQ when needed and until then, the warranty is running out.
In summary, the inventory controls are weak and do not allow for an effective management of the life cycle of assets. Data to manage life cycle of assets is crucial for budgeting purchases and for preparing purchase plans. A lack of proper planning on asset needs may result in surplus inventory which increases storage costs and also the risks of obsolescence or misappropriation of these assets.

Fleet Management

It was expected that the Mission would manage its vehicle 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 had appropriate processes in place to manage the usage of its vehicle fleet on a daily basis. The Mission keeps an activity log requiring each driver to record the destination for each trip, the name of the passenger, the time of departure and arrival, the program area that requested the service. A regular inspection of the fleet takes place every month by the head of the vehicle fleet to assess the condition of the vehicles and that the odometer reading is accurate and reflective of what's recorded.

The audit team reviewed two (2) vehicle disposals and found that the files contained the appropriate documentation and the assets were disposed at a time in the asset’s life cycle, when both the maximum benefits from use and the maximum benefits from disposal proceeds could be obtained. The proper authority was received for the disposal of both assets.

Petty Cash and Emergency Cash Parcel

The audit team 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 Mission has [REDACTED] petty cash accounts: [REDACTED]. In addition, there is a Standing Advance account to cover utilities until the Mission transitions to online payments, and the Emergency Cash Parcel to manage emergencies. [REDACTED].

The audit team conducted an onsite count and observed that cash was all safeguarded and reconciled with the account balance. However, the reconciliation and count was not always performed regularly and documented by the account holders. The Mission could not provide documentation showing that random physical checks and reconciliations were performed by a CBS signing authority. The lack of random physical counts increases the risk of not detecting irregular uses of the petty cash.

The audit testing sampled three (3) petty cash transactions. The review of these petty cash payments showed one instance of an expense going over the $200 CAD limit as well as an instance of transaction splitting to avoid going over the limit, which does not follow the petty cash policy and procedures.

The audit team counted the Emergency Cash Parcel onsite and observed that it was appropriately safeguarded by the Readiness and Security Program Manager. The audit team was able to reconcile the cash in the safe against its account balance. It was also noted that periodic verification has been performed by the MCO.

Consular Revenues

The audit team expected that fees collected for consular services would be properly accounted for, reconciled, safeguarded and deposited as required. The audit team examined consular revenue transactions from three different months and found that internal controls were generally in place for ensuring fees collected would be properly accounted for, reconciled and safeguarded. Weakness was identified for the daily revenue control and timely recording. However, since April 2018, the mission no longer accepts cash payments for consular services unless they are made in Canadian currency or in case of emergency. Two instances were also identified in which revenues were recorded twice in the system. Management was informed of these discrepancies and indicated that the request for correction has been sent to the CSDP Mexico.

The audit team did a count of Temporary Passport and Emergency Travel Documents and did not find any issues.

Recommendation 4:

The Head of Mission should put key inventory controls in place and strengthen existing controls to ensure a purchased asset is recorded, safeguarded, tracked through its life cycle and disposed of in accordance with the Department’s Material Management Manual.

2.6 Human Resources and LES Staffing

The audit team expected that Mission Human Resource activities would 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 salary and overtime payments were  accurate and reasonable. The audit found that except for one case of insufficient documentation, the Mission HR actions follow the relevant policies and staffing procedures.

The audit team selected and examined five (5) new hiring actions that took place during the past three fiscal years. Two overtime transactions for employees working in the Common Services Program and four (4) personnel files were also selected for review.

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. It was noted that the staffing actions reviewed were linked to an approved staffing plan and/or need assessment. The Mission also indicated that some unexpected staff departures occurred during the year and those vacant positions, although not initially planned, were also staffed.

LES Staffing

To meet the operational needs, the Mission had 16 newly indeterminate staffing actions for the past three fiscal years, from which the audit team selected and examined five (5) appointment files. The audit team found that except for one, all four staffing actions generally respected the relevant staffing policies and procedures and were performed in fair, open and transparent manner. The lack of documentation was identified as an area for improvement.

For the one exception case, the file review and additional documentation revealed that the staffing action was for a key management position, for which the Mission received 154 applications. The final decision to appoint the successful candidate was based on the “best fit”. The hiring managers used a second interview and additional reference checks to support their “best fit” decision. Using “best fit” as a basis to appoint a LES is not in alignment with the Departmental Manager’s Guide to staffing of LES, which requires highest score as the basis of merit. In addition, the audit team could not find in the file the documented evaluation results from the second interview and additional reference checks used by the hiring managers as a basis for their decision to appoint. During the audit, the Mission has taken actions to correct this practice through recent staffing actions.

While key staffing procedures were generally followed, the audit team found that some key documents were missing from the HR staffing files reviewed, such as the process of pre-screening; criteria assessment process; reference check; management’s pre-approval of the position and copy of the candidate’s credential/diploma. This lack of documentation does not provide evidence for the fairness, openness and transparency of the process.

LES Overtime

The audit team found that there is a process in place at the Mission for LES overtime. Based on the tested sample, files indicated that overtime hours worked appear warranted and reasonable. However, no pre-approval was found on file. By not enforcing the requirement for overtime pre-approval, there is a risk that excessive or unnecessary overtime can be claimed and overtime budgets can be exceeded. In fact, in 2017-18, the Mission actual expenditure for LES overtime ($82,192) exceeded by 20% its budget ($99,362).

Personnel Files

The audit team examined a sample of four (4) personnel files 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 key information and documentation were found on file, for instance the employee start day of employment, degree certificate, training records, and PMPs. However, a key documentation, such as leave requests, was missing. It was noted that the signed declaration of the values and ethics code was attached to the signed letter of offer in staffing file. Incomplete personnel files can have a significant impact on salary administration, performance feedback, promotions and disciplinary action of employees.

Recommendation 5:

The Head of Mission should ensure that the Mission’s staffing actions fully respect the Departmental Manager’s Guide to staffing of LES andall keysupporting documents for staffing decisions are retained on HR and personnel files.

3. Conclusion

The audit concluded that the Mission has some sound management practices and controls in place such as a good governance structure to oversee its operations; and the development and implementation of annual plans and related budget for key administration activities and programs.

Areas for improvement were identified in regard to planning, monitoring, local procurement, payment process, asset management and human resources. Some processes established by Headquarters relating to finance, procurement, contracting and human resources were not consistently followed and some key controls were not in place or needed to be strengthened.

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

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 Bogota Mission to support the achievement of Global Affairs Canada objectives.

Scope

The scope of the audit included the examination of the management practices and related internal controls to support the Bogota Mission operations. Specifically, the audit examined processes and procedures related to the management of procurement and asset management (including property, material and equipment, vehicles, and cash), consular revenues, and human resource processes relating to LES staffing actions, LES payroll and overtime were also examined.

The most up-to-date documentation available as of January 2019 was reviewed. In addition, Common Services Program expenditures and data for property and fleet were examined from 2016-2017 to 2018-19. A sample of 55 files and transactions were tested from activities that took place from April 2016 to November 2018, as shown in the following Table.

Field work was performed by the audit team at the Bogota Mission from December 3 to 14, 2018.

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:

• 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 staff, and relevant employees at HQ and Common Services Delivery Point);
• Inventory inspection and count;
• Petty cash counts;
• On-site examination of Chancery, storage facilities and a sample of staff quarters;
• Comparisons with two like-minded Missions;
• Visits to a sample of two local vendors;
• Visit to Mission’s main bank.

Appendix B : Management Action Plan