Audit of Management Practices of Missions - Beirut

Final report

Global Affairs Canada
Office of the Chief Audit Executive

Tabling Date
December 2019

Acronyms and Symbols

ACM

International Platform Branch

ADM

Assistant Deputy Minister

ARAK

Property Strategy Section (within ACM)

AWC

Physical Security Abroad

CBS

Canada-based staff

CRB

Contract Review Board

CSDP

Common Service Delivery Point

CMM

Committee on Mission Management

CSO

Common Services Officer

DMCO

Deputy Management and Consular Officer

ECP

Emergency Cash Parcel

EGM

Europe, Arctic, Middle East & Maghreb Branch

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

LES

Locally Engaged Staff

MCO

Management and Consular Officer

MHC

Mission Housing Committee

MPMP

Mission Property Management Plan

MRO

Mission Request Online

PRIME

Physical Resources Information - Mission Environment

RCRB

Regional Contract Review Board

SSAMA

Strengthening Security at Missions Abroad

ToR

Terms of Reference

SQ

Staff Quarter

VAT

Value Added-Tax

Executive summary

In accordance with Global Affairs Canada‘s approved 2019-2020 Risk-Based Audit Plan, the Office of the Chief Audit Executive conducted an audit of Management Practices of Missions – Beirut.  The objective of this audit was to determine whether sound management practices and effective controls were in place to ensure good stewardship of resources at the Mission in support of the achievement of Global Affairs Canada’s 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 its 2018-19 Departmental Results Report, Global Affairs Canada spent $1,040 million 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 June 2019. The audit also examined management practices for Canada’s mission in Damascus, which is temporarily managed from Beirut since it was evacuated in 2012.

What was found

Specifically, the Mission’s accountabilities, roles and responsibilities were clear and well understood; there were sufficient controls and practices in place to manage the Canadian assets in Damascus; and proposed budgets were in line with forecasted expenditures and planned operational needs. However, the following areas for improvement were identified:

• The Committee on Mission Management did not demonstrate that discussions on financial planning and budgeting, procurement, asset management, and human resources activities were taking place on a regular basis;
• Instances of non-compliance with government policies, regulations, and the Financial Administration Act regarding procurement and contract management practices were observed;
• There were no trend analyses conducted for utility expenditures and fuel consumption to detect any potential irregularities;  
• Inventory controls were not all in place as the inventory lists were incomplete; and
• Some critical information technology assets were not disposed of in a secured manner (i.e. hard drives were not removed from the devices before being disposed).

The audit concluded that while planning and budgeting and human resources were managed according to departmental requirements, there was a lack of management oversight and monitoring in the areas of local procurement, property, fleet and inventory management. Key government policies and regulations, and processes established by Headquarters relating to procurement and contracting were not consistently followed.

Recommendations

1. The Head of Mission should ensure that the Committee on Mission Management documents its oversight activities over financial planning and budgeting, and key operations.
2. The Head of Mission should take measures to strengthen controls for local procurement to ensure compliance with government policies, regulations, and the Financial Administration Act.
3. The Head of Mission should implement adequate controls to ensure that:
   • Utility expenditures and fuel consumption are accurately measured and tracked;
   • All assets in inventory are properly tracked; and
   • All IT equipment is disposed of in a secured manner in compliance with departmental IT security requirements.

Statement of Conformance

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 was 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 its 2018-19 Departmental Results Report, Global Affairs Canada spent $1,040 million to operate and support the missions. Therefore, administrative activities supporting the Department’s missions require effective and efficient management practices to help ensure sound stewardship of resources.

The departmental 2019-20 Risk-Based Audit Plan included a series of management practices audits of select missions. The Embassy of Canada to Lebanon located in Beirut (the Mission) was one of the selected missions. These audits are intended to provide senior management with assurance regarding the state of management practices to support prudent management and good stewardship of resources in select missions.

The Embassy of Canada to Lebanon - Beirut

The Embassy of Canada to Lebanon in Beirut is a medium-sized mission comprising of 81 staff (27 Canada-based staff and 54 locally engaged staff)^{Footnote 1}, which includes employees from two partner departments: Immigration, Refugees and Citizenship Canada and the Department of National Defence. The Mission delivers the following programs: Common Services and Consular; Development; Foreign Policy and Diplomacy Service (FPDS); Trade; and Security and Emergency Management.

Lebanon is a small country with a population of approximately 6.2 million that faces significant economic, social, demographic, political and security challenges. Lebanon ranks 80 out of 188 countries on the United Nations Development Programme’s 2018 Human Development Index. The country hosts the largest number of refugees per capita in the world. As of December 2016, there were over one million Syrian refugees registered by the United Nations High Commissioner for Refugees (UNHCR) in Lebanon, 450,000 Palestinian refugees and others, including Iraqis. The general volatility in the region, with the Syrian crisis and surrounding political instability, the ongoing threat of terrorism and current tensions between Hezbollah and Israel present a general risk to the Mission. Any security or emergency crisis could have a significant impact on the Mission’s business and its ability to deliver essential services.

On March 5, 2012, the Government of Canada evacuated all remaining Canadian employees from its mission in Damascus and suspended all of its operations in Syria. As a result, the Executive Coordinator for Syria, who is currently responsible for the management of the Canadian mission in Damascus, operates from the Embassy of Canada to Lebanon.

Common Services Program

The Common Services program at the Mission provides administrative and operational support to the Mission’s programs and partner departments. It is also responsible for financial transactions and human resources activities. Accountability and responsibility are held by the Head of Mission (HOM).

The Common Services program is managed by a Management and Consular Officer (MCO) at the FS-03 level. The MCO is supported by two Deputy Management and Consular Officers (DMCO) at the FS-02 level. With respect to financial services, the Mission receives support from the Common Service Delivery Point (CSDP) in Brussels. The Common Services program in Beirut also absorbed the management of the remaining common services responsibilities for the Damascus mission, including salaries for the LE-05 property assistant/caretaker, maintenance and security guard contracts, and processing invoices for the chancery and Crown-owned staff quarters (SQs). The Mission has a complex financial management framework due to the numerous fund centres, including specific earmarked funds that must be monitored and reported separately.

Tables 1 and 2 show Common Services program expenditures from 2016-17 to 2018-19 for Beirut and Damascus.

The DMCO Property oversees the property, materiel, and transportation section. This section is responsible for the maintenance of the chancery, official residence, Staff Quarters (SQs), inventory, and a fleet of 15 vehicles. Table 3 shows details on Beirut and Damascus’ respective inventory of property and vehicles.

Consular Program

The Mission’s Consular program provides consular services and assistance to Canadians, including passport, citizenship, and notarial services. The MCO oversees the Consular program, while the DMCO Consular is responsible for the program’s operational activities. The DMCO Consular is supported by a LE-08 Senior Consular Officer, two LE-06 Consular Assistants and two LE-05 Consular Assistants. The Mission also manages routine and complex consular cases stemming from Syria. As part of the Consular program, the Mission is responsible for collecting, safeguarding, recording and depositing consular fees in a timely manner.

Key elements affecting the Mission’s consular section include the vast diaspora of Lebanese-Canadians in Canada and residing or travelling in Lebanon, the complex Lebanese legal framework governing family and custody cases, as well as the cumbersome bureaucracy and systemic corruption. The precarious geopolitical situation in Lebanon and in the region, as well as the crisis in Syria, affect the Mission’s consular and emergency management workload, requiring the section to be in a constant state of emergency management readiness in the event a security crisis would occur.

2. Observations and Recommendations

This section sets out key findings and observations, divided into six general themes: accountability and oversight; planning and budgeting; local procurement; asset management; cash and revenue; and human resources. A detailed description of the audit criteria can be found in Appendix A.

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, roles and responsibilities of the Mission management team and key staff from the Common Services, Trade, Development and FPDS programs. The audit found that while Mission accountabilities, roles and responsibilities were clearly articulated and communicated, there were gaps in documenting Mission oversight by Mission management.

Accountabilities, Roles and Responsibilities

Accountability in the Mission rests with the HOM, who reports to the Assistant Deputy Minister (ADM) of the Europe, Arctic, Middle East and Maghreb (EGM) at Headquarters (HQ). At the time of the audit, the HOM had been posted to the Mission for two (2) years, while the MCO had been posted for approximately ten (10) months. The audit team noted that accountabilities, roles and responsibilities were included in the performance management agreements of the HOM, MCO, and both DMCOs (Property and Consular).

The audit team interviewed 13 key Mission management staff, including Canada Based Staff (CBS) and Locally Engaged Staff (LES) and they were all able to describe their current job and day-to-day tasks, including how they relate to employees of the same group and those in other sections. The audit team also noted that the LES have the required experience and training to fulfill their duties.

Departmental policies and guidelines, which delineate the specific areas of responsibility, are not posted on the Mission’s wiki page but they are readily available on the mission’s I-drive and MODUS and are communicated to the staff through emails.

Mission Committees

The audit expected that Mission management would exercise effective oversight of procurement, asset management, and human resources activities, and that key oversight bodies would be in place and functioning at Mission. Oversight of Mission operations is exercised through three key committees acting as decision-making bodies: the Committee on Mission Management (CMM), the Regional Contract Review Board (RCRB), and the Mission Housing Committee (MHC). The Mission also created a Green Committee to incorporate environmental practices into Mission operations.

The CMM, chaired by the HOM, oversees the Mission’s overall management, including monthly review of Mission budget and annual review of Mission Business Plans. The audit team reviewed the CMM meeting minutes for 2018-2019 and found that the Committee met on a regular basis. However, there was no evidence to show that topics of financial planning and budgeting were discussed, as outlined in the CMM Terms of Reference. Moreover, there were limited discussions about procurement, asset management, and human resources monitoring activities. Without properly documenting these discussions, the Mission could not demonstrate that the CMM was effectively providing oversight and strategic direction at the Mission.

The RCRB, chaired by the CSDP’s Manager of Operations in Brussels, provides oversight of procurement and contracting activities within the Mission’s authorities to ensure effectiveness and efficiency in meeting organizational needs and that processes are compliant with contracting requirements. Before September 2018, the Mission relied on its own Contract Review Board to review contracts above $10,000 CAD.  After September 2018, the RCRB became effective and is functioning as intended.

The MHC is composed of CBS appointed by the HOM, and assists and advises the HOM in the provision, allocation and administration of Crown-owned and Crown-leased properties. The audit team reviewed the MHC meeting minutes and found that the Committee members received proper information in order to make recommendations to the HOM.

In addition to these three decision-making bodies, the Mission established several other committees, such as an Occupational Health and Safety Committee, a Security and Emergency Management Committee, and a Green Committee. For example, the Green Committee is chaired by a CBS to incorporate HOM and CMM approved environmental practices into Mission operations to reduce the Mission’s environmental footprint. The Green Committee provides recommendations and updates to CMM on ongoing greening initiatives, such as recycling, compost, and shuttle services to reduce the use of fuel, plastic, electricity, and papers.

Damascus

The audit expected that there would be adequate monitoring over the assets in Damascus and sufficient budgets dedicated to maintain them. Despite the difficult circumstances, the audit found that the Canadian management team for Syria put sufficient controls and practices in place to monitor Canadian assets in Damascus.

Since the evacuation of Canada's mission to Damascus in 2012, CBS have been unable to enter Syria. There is only one LES left in Damascus acting as property assistant/caretaker to maintain the capital assets that still belong to Canada. Consequently, the Canadian management team for Syria, which includes an Executive Coordinator for Syria as well as the Beirut Common Services section, faces a unique challenge of providing oversight over Canadian assets in Damascus without being able to go onsite.

The Beirut MCO manages the budgets dedicated to the maintenance of assets in Damascus and signs Section 34 of the Financial Administration Act (FAA) on all the invoices related to common services to certify that the work was performed, the goods were received, or the services were rendered as per the contract or agreement terms. The Beirut MCO cannot be physically present and relies on documents, pictures, videos, and regular communication with the LES property assistant/caretaker to perform this task. The LES property assistant/caretaker also maintains a log that tracks all expenditures and the Beirut MCO approves them. In addition, the Canadian management team for Syria tracks usage of diesel fuel for the generators and utilities to ensure reasonability. Furthermore, the Mission arranged for the LES property assistant/caretaker to come to the Beirut Mission to report on Damascus asset management operations.

Recommendation 1:

The Head of Mission should ensure that the Committee on Mission Management documents its oversight activities over financial planning and budgeting, and key operations.

2.2 Planning and Budgeting

The audit expected that planning processes would be based on needs and that there would be a rationale for planned activities that support forecasted expenditures. The audit examined Mission planning and budgeting activities and found that proposed budgets were in line with forecasted expenditures and planned operational needs.

For its annual integrated financial planning exercise, 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. This tool is designed to ensure that the Mission’s financial planning and budgeting aligns with departmental planning commitments. Program managers are responsible for their own budgets and for identifying their needs for the upcoming year. The common services officer (CSO) gathers information from the programs and works with the MCO to review it. Once HQ finalizes the Mission’s budget, the CSO ensures that funds are allocated to their respective commitment item and entered into the financial system.

The Mission uses the corporate Financial Status Report (FINSTAT) to monitor its financial situation and ensure budget resources are appropriately managed on an ongoing basis. The CSO provides program budget burn rates to the MCO, who in turn discusses it with program managers and the HOM.

2.3 Local Procurement

The audit expected that the procurement for goods and services at the Mission would be administered and managed in accordance with policies, regulations, and the Financial Administration Act (FAA). The audit examined the processes, mechanisms and tools used by the Mission for procuring goods and services, from initiation to payment. The audit found instances of non-compliance with government policies, regulations, and the FAA in the management of procurement and contract activities.

Procurement and Contract Management

The audit team selected a judgmental sample of 40 transactions and examined the processes, mechanisms, and tools used by the Mission for procuring goods and services, from initiation to payment. For the 40 transactions reviewed, the audit found that there was no documented authorization to initiate the expenditure (Section 32 of the FAA) for 22 transactions. As a result, these 22 transactions were not committed into the financial system, increasing the risk for the Mission to exceed its financial authorities.

According to the departmental Directive on Recording of Contracts in the Financial and Administrative System Material Management Module (FAS/MM), the creation of a Purchase Order (PO) is required for every purchase over $2,000 CAD to allow the Mission to commit funds for the acquisition and ensure that funds are available. Out of 40 transactions reviewed, there were 19 transactions over $2,000. The audit found that 11 of these 19 transactions did not have a PO, as required by the Directive. For these transactions, the Mission did not use the appropriate procurement method to ensure that the transaction satisfied legal and policy obligations. In addition, four (4) of the 40 transactions reviewed were split transactions to circumvent petty cash and acquisition card transaction limits, which means that the individuals who initiated these expenditures exceeded their spending authority.

Receipt and Payment

The audit expected that effective controls would be in place to ensure that procurement expenditures are accurate, appropriate and legitimate. According to the departmental Delegation of Financial and Contractual Signing Authorities Instrument, there has to be segregation of duties between the person authorizing entry into a contract (Section 41 of the FAA) and the person certifying the payment under this contract (Section 34 of the FAA). In addition, an individual cannot authorize the initiation of an expenditure (Section 32 of the FAA) from which the individual can directly benefit. For the 40 transactions reviewed, the audit found four (4) instances where segregation of duties was not compliant with the Delegation of Financial and Contractual Signing Authorities Instrument. Without rigorous segregation of duties, there could be a potential risk that individuals might be perceived to benefit indirectly from the transaction process.

While reviewing the contracting process of the sampled transactions, the audit team also noted that several contracting files were missing key documentation, such as the selection methodology, evaluations of the bidders, and the proposals or quotes from the bidders.

Value-Added Tax

The audit expected that the Mission would be operating in accordance with departmental procedures for the reimbursement of the value-added tax (VAT) and recovering the VAT for exempted goods and services purchased. The Mission is recovering the VAT in accordance with Lebanese legislation. The reimbursement of the VAT in Lebanon takes up to one year. The Mission’s outstanding balance was $319,903 CAD as of March 31, 2019.

Recommendation 2:

The Head of Mission should take measures to strengthen controls over local procurement to ensure compliance with government policies, regulations, and the Financial Administration Act.

2.4 Asset Management

The audit expected that adequate controls would be 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: property, vehicles, and inventory. The audit found control gaps in the management of these three type of assets.

Property Management

The audit expected that Mission property would be properly maintained. Most of the Mission’s properties are leased buildings, which are tracked using the departmental Physical Resources Information – Mission Environment (PRIME) system. The Mission uses the Mission Request Online (MRO) system to track all requests related to property, including all required maintenance work. The audit found that the Mission developed the following plans and checklists to maintain its properties:

• Five-year Mission Maintenance Workplan for preventive and corrective maintenance projects over $10,000 at the chancery, with expenses divided by fiscal year;
• Cyclical-replacement schedule for the SQs’ furniture. This schedule identifies projects and prioritizes them based on maintenance and lifecycle considerations, in coordination with the Property Strategy Section (ARAK) at HQ; and
• Checklist for SQs inspections created in 2017. However, the checklist templates are not detailed and do not include dates confirming when the inspections were conducted or when the repairs were completed. Without historical data, it is difficult for Mission management to assess the reasonability of repairs.  

The audit also found that the Mission does not conduct any trend analyses for utility expenditures and fuel consumption. For example, the Mission does not track the expenditures for electricity usage at SQs. Without trend analyses, Mission management cannot assess the reasonability of utility consumption or detect any unusual activities.

The Mission uses diesel fuel to fill up the chancery generators. The audit team witnessed the delivery of fuel by the service provider and noted that the meter in the service provider’s fuel truck measured a higher quantity of fuel delivered than the meter on the Mission’s fuel tank. The Mission and the service provider were unable to explain this difference. In addition, neither the Mission nor HQ knew exactly what the size of the underground fuel tank was. To mitigate this lack of information, the Mission built a measuring stick to estimate the quantity of fuel in the tank before and after delivery. However, without precise measurement of the underground fuel tank, the Mission cannot accurately validate the quantity of fuel delivered at the chancery.

Fleet Management

The audit 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’s fleet.

The Mission has a Transportation Policy, approved in April 2018, detailing appropriate use of Mission vehicles. In addition, the Mission maintains hard copies of trip logs for each vehicle, which include the time of the trip, destination, distance, and driver on duty.  However, the Mission did not use the logs to perform trend analyses on usage of vehicles. The absence of trend analyses limits the Mission management’s ability to carry out effective monitoring in support of planning and decision-making.

The audit also found that the Mission created an annual Vehicle Maintenance Schedule to record the time when vehicles need servicing and when preventive and corrective maintenance were performed, including cost information. However, the Mission did not carry forward the vehicle maintenance information from the previous annual schedule to the next and trend analyses were not conducted. Therefore, it is difficult for Mission management to assess the reasonability of maintenance and repairs.

The audit also found that the Mission did not track fuel consumption to detect any irregularities, even though the data to do so is readily available. The audit team conducted a fuel consumption reasonability test using Mission data and noted that fuel consumption for all vehicles was unreasonably high compared to dealers’ specifications. The Mission could not provide an explanation for the high fuel consumption of its vehicles. The lack of fuel consumption analyses makes it challenging for Mission management to identify issues, their root causes, and the proper measures to be implemented to address them.

Material Management and Inventory

The audit expected that once the Mission purchased an asset, it would be recorded, safeguarded, tracked through its lifecycle and disposed of in accordance with the Department’s Materiel Management Manual. The audit found that the Mission put in place a manual inventory management system using the departmental template. However, the Mission did not implement the Radio Frequency Identification Device (RFID) system as it is deemed ineffective (e.g., sticker does not hold, the scanner is malfunctioning). The Mission regularly takes pictures of all assets located at the chancery (offices and basement storage), the official residence, and the SQs. Inventories are updated when assets are moved or sold through garage sales.

The audit team performed an inventory check of the chancery, the official residence, and two staff quarters and found that assets at the official residence and the two SQs were properly accounted for and in the condition indicated in the inventory, including fine art located at the official residence. At the chancery, the Mission uses the basement to store furniture, appliances, and surplus assets waiting for disposal. The audit team identified some assets in the basement that were not included in the inventory list. For example, small appliances are not tracked when they are stored, only when they are transferred to a new SQ, which usually takes a few weeks. As a result, the Mission did not have a clear and accurate overview of its assets, which may result in the purchase of unnecessary assets and put the Mission at risk of misappropriation of assets.

Disposal of Assets

The audit expected that the disposal of surplus assets would be conducted as effectively as possible and as soon as possible after they become surplus to the requirements of program delivery, in a manner that obtains highest net value for the Crown. The audit assessed the disposal process for four (4) armoured vehicles and two (2) series of laptops.

Armoured Vehicles

According to departmental procedure, armoured vehicles must be completely destroyed at the end of their lifespan. The Mission destroyed the first armoured vehicle in August 2015 but the departmental authorization for the disposal was missing from the file. In January 2019, during a routine check, the Physical Security Abroad (AWC) at HQ found that the Mission was using three armoured vehicles as soft-skinned vehicles, which is not permitted based on duty of care requirements. Physical Security Abroad (AWC) instructed the Mission to destroy these three armoured vehicles immediately as they no longer met the base standard specifications of the Department. In March 2019, the Mission requested the authorization from the Lebanese Ministry of Foreign Affairs to destroy these three armoured vehicles but it was still waiting for a response at the time of the audit. The Mission continued to use the armoured vehicles as soft-skinned vehicles as late as May 2019 despite previous instructions.

In addition, the audit also found that this miscommunication between the Mission and HQ lead to misspending of Mission funds. Specifically, in July 2018, the Mission purchased a new set of tires for two of these armoured vehicles at a cost of approximately $2,000 CAD, unaware of the fact that armoured vehicles could not be used as soft-skinned vehicles. According to the guidelines provided by Physical Security Abroad (AWC), the brand new tires will have to be destroyed with the rest of the vehicles as they do not fit on the other armoured vehicles currently at the Mission. This finding will be further addressed in the upcoming internal audit of fleet management.

Information Technology (IT) Equipment

In October 2018, the Mission disposed of several laptops through garage sale. The audit team verified the disposal process of thirteen (13) laptops and found that the Mission disposed of the assets in a manner to obtain highest value, in accordance with departmental policy, and that the HOM signed the disposal reports.

Before the disposal of IT equipment, the Mission must erase the memory of hard drives using approved software, remove hard drives from the equipment, and ship them to HQ via Diplomatic Mail Service to be physically destroyed. As the Mission was about to sell IT equipment at a garage sale in June 2019, the audit team assessed whether hard drives had been disposed of in accordance with departmental policy. The audit team found three (3) hard drives where the memory had not been erased and one printer’s hard drive that had not been removed. In addition, the Mission did not have a log to track the number of hard drives in storage waiting to be sent to HQ for destruction. As a result, the Mission has no assurance that all the hard drives had been properly disposed of in order to protect government information.

Recommendation 3:

The Head of Mission should implement adequate controls to ensure that:

• Utility expenditures and fuel consumption are accurately measured and tracked;
• All assets in inventory are properly tracked; and
• All IT equipment is disposed of in a secured manner in compliance with departmental IT security requirements.

2.5 Cash and Revenue

The audit expected that adequate controls would be in place to ensure the effective management of Mission assets. In order to assess the state of these controls, the audit examined the management of the petty cash, the emergency cash parcel, and consular revenues. The audit found that the Mission had put adequate controls in place to manage consular revenues; however, there were some control gaps in managing petty cash.

Petty Cash and Emergency Cash Parcel

The audit expected that petty cash would be managed in accordance with relevant policies and procedures. The audit found that both of the Mission's petty cash accounts as well the Emergency Cash Parcel were adequately safeguarded, accounted for, and reconciled. Overall, the transactions related to petty cash were in compliance with departmental policy. However, the audit found that petty cash was regularly used to pay for taxis to and from airports, whereas this is an expense that should be included in employees’ travel claims. The audit team verified 58 taxi expenses paid through petty cash and found no errors. Nonetheless, this practice increases the risk of double dipping where taxi expenses could be claimed from both the petty cash and the travel claims.

Consular Revenues

The audit expected that fees collected for consular services would be properly accounted for, reconciled, safeguarded and deposited as required. The Mission collects fees for issuing passports and travel documents, as well as for providing notarial and citizenship services but does not accept payments in cash, which significantly lowers the risk level. Using daily and weekly reports compiled by the Consular Assistant, the DMCO Consular performs reconciliations every week to ensure that all the revenues are accounted for. The audit examined consular revenue transactions over a period of 18 days and found that internal controls were in place for ensuring fees collected are properly accounted for, reconciled, and safeguarded.

2.6 Human Resources

The audit expected that Mission human resources (HR) activities would be managed effectively to ensure operational needs are met, and that HR transactions would be appropriate and compliant with applicable policies and procedures. The audit team assessed whether LES staffing actions were properly approved, fair, open and transparent; and LES salary and overtime payments were accurate and reasonable. The audit found that, in general, the selected staffing actions were appropriately approved, fair, open and transparent; and LES Salary and Overtime were well managed and documented.

LES Staffing

The audit team examined three staffing files to determine whether adequate human resources management practices and controls were in place. The audit found that the staffing process for two of these sampled files was conducted in a transparent, open and fair manner. However, in one case, the audit found that the Mission did not conduct a reference check for the successful candidate since the candidate was already employed by the Mission. Without following a strict staffing process, the Mission may be perceived as not being fair to external candidates. The audit team discussed this observation with the MCO for future staffing activities.  

LES Salary and Overtime

The audit expected to find that only actual employees were receiving payments and that any salaries paid in cash would be supported by a valid explanation. The audit team compared the Mission’s payroll with the most current organization chart, the testing confirmed that all employees receiving pay in March 2019 were employed by the Mission during the period reviewed. The audit expected that the payroll and HR data would be accurate and that the Mission would pay the LES as per LES salary scale. The audit team reviewed the payroll for the 2018-19 fiscal year and found that the pay rates matched the salary scale for 2018-19.

It was also expected that overtime would be pre-approved and that the hours worked would be warranted and reasonable. The audit reviewed the two situations where overtime was the highest and found that in both cases, the overtime was properly pre-approved and that hours worked in overtime were warranted and reasonable.

3. Conclusion

The audit concluded that while planning and budgeting and human resources at the Beirut Mission were managed according to departmental requirements, there is a lack of management oversight and monitoring in the areas of local procurement, property, vehicle fleet and inventory management. Key government policies and regulations, and processes established by Headquarters relating to procurement and contracting were not consistently followed and some key controls were either ineffective or not in place.

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

Appendix A: About the Audit

Objective

The objective of this audit was to determine whether sound management practices and effective controls were in place to ensure good stewardship of resources at the mission in support of the achievement of Global Affairs Canada’s objectives.

Scope

The scope of the audit included those management practices and controls in place to support the Mission’s 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 audit team reviewed the most up-to-date documentation available as of June 2019. In addition, the audit team examined Mission expenditures and data for property and vehicle fleet from 2016-17 to 2019-20. For files and transactions review, the audit team selected a judgmental sample of 40 procurement transactions and 10 other files related to activities that took place from 2016-17 to 2019-20, as presented in Table 5.

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 communicated to the auditees. The detailed criteria are presented as follows.

1. Adequate governance is in place to support good stewardship of mission resources.
2. Effective controls are in place to ensure that the procurement and payment of goods and services comply with relevant policies and legislative requirements and achieve value for money.
3. Effective controls are in place to ensure that the management of assets (non-cash) complies with relevant policies and legislative requirements.
4. Effective controls are in place to ensure that the management of cash complies with relevant policies and legislative requirements.
5. Effective controls are in place to ensure that human resources activities comply with relevant policies and legislative requirements.

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:

• Onsite audit procedures performed at the Mission from May 21 to 31, 2019
• Documentation review (e.g., budgets, business plans in Strategia, property management plans)
• 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 and petty cash counts
• Onsite examination of Chancery, storage facilities and a sample of SQs
• Comparisons with like-minded Missions
• Visits to a sample of local vendors and visit to Mission bank

Appendix B: Management Action Plan