Audit of Management Practices of Missions - Manila

Final report

Global Affairs Canada
Office of the Chief Audit Executive

Tabling Date
December 2019

Acronyms and Symbols

ADM

Assistant Deputy Minister

CBS

Canada-based Staff

CBSA

Canada Border Services Agency

CMM

Committee on Mission Management

CSDP

Common Services Delivery Point

CSO

Common Services Officer

DMCO

Deputy Management Consular Officer

ECP

Emergency Cash Parcel

FAS

Finance and Administration System

FINSTAT

Financial Status

FPDS

Foreign Policy and Diplomacy Service

FY

Fiscal Year

GPS

Global Positioning System

HOM

Head of Mission

HQ

Headquarters

HR

Human Resources

IRCC

Immigration, Refugees and Citizenship Canada

IT

Information Technology

LES

Locally Engaged Staff

LESMCB

Locally Engaged Staff Management Consultation Board

MCO

Management Consular Officer

MPMP

Mission Property Management Plan

MRO

Mission Request Online

OR

Official Residence

P2P

Procure to Pay

PRIME

Physical Resources Information Mission Environment

SQ

Staff Quarter

Executive summary

In accordance with Global Affairs Canada’s approved 2019-20 Risk-Based Audit Plan, the Office of the Chief Audit Executive conducted the Audit of Management Practices of Missions – Manila. 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 Manila Mission to support 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 Performance 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.

What was found

The audit found that although mandatory corporate planning and budgeting tools were used, there was a lack of alignment between the budget, the plan and assessed mission operational needs.

The audit found deficiencies of non-compliance in the management of procurement activities for the Common Services program over the scope period from April 2017 to June 2019.

The audit found that while property and fleet maintenance and repair related costs were controlled and a new inventory tracking system was established, some control gaps in the management of inventories still existed at the time of the audit.

Lastly, the audit found that, in general, selected staffing actions appeared to have been fair, transparent and accessible. However, insufficient evidence was kept in staffing files to demonstrate that appointments were based on merit, as well as retention and completeness of key documentation. In addition, existing measures for managing overtime were not reinforced to ensure overtime had been pre-approved, warranted and appeared reasonable.

The audit concluded that sound management practices and key effective internal controls were mostly in place. While there was noticeable improvement of the Mission management practices and strengthened internal controls for the Common Services program, continued efforts were required in areas of compliance with applicable policies and procedures, whole-of-life asset management and human resource management.

The audit team verbally debriefed the Head of Mission (HOM), the Management Consular Officer (MCO) and Deputy Management Consular Officers (DMCOs) after completion of work on site.

Recommendations

1. The Head of Mission should ensure that the Mission’s budgeting and planning processes are based on rigorous assessment of operational needs and that purchases are linked to plans.
2. The Head of Mission should ensure that proper procurement mechanisms are in place and utilized in compliance with the applicable departmental policies and procedures.
3. The Head of Mission, until a departmental material inventory management system is implemented, should extend the implementation of the Mission’s current inventory management application to Chancery and Staff Quarter furniture and material, ensuring all mission assets are accurately recorded with key information to improve mission whole-of-life asset management practices.
4. The Head of Mission should take appropriate measures to enhance compliance of the Mission’s human resource activities with the Department’s directives and procedures.

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 Performance Report, Global Affairs Canada spent $1,040 million 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 2019-2020 Risk-Based Audit Plan included a series of management practices audits of select missions. The Embassy of Canada to the Philippines in Manila (the Mission) was one of the selected missions. These audits are intended to provide senior management with assurance regarding the state of management practices in supporting prudent management and good stewardship of resources in selected missions.

The Embassy of Canada to the Philippines – Manila

The Mission has recently become the seventh largest mission in the Department’s network abroad. Headed by an EX-03 Head of Mission, the Mission has 186 staff: 36 Canada-based staff (CBS) and 150 locally engaged staff (LES), as indicated in its Strategia submission for 2019-20. The Mission includes the following programs: Common Services and Consular; bilateral development assistance; Foreign Policy and Diplomacy Service (FPDS); Trade; and Security and Emergency Management. The Honorary Consul in Cebu City primarily provides certain notary services to Canadians abroad. The Mission is also a regional hub for Immigration, Refugees and Citizenship Canada (IRCC), with support from Canada Border Services Agency (CBSA). IRCC remains the largest Government of Canada program in the Philippines, one of the largest in the world, and drives a significant portion of the Mission agenda. In addition, the Mission hosts a Common Services Delivery Point (CSDP), which provides financial and procurement support to 28 missions in the region, including Manila itself.

The Republic of the Philippines is one of the largest archipelagos in the world, with approximately 7,107 islands, and a land area of 300,000 square kilometres. The Philippines is currently experiencing strong economic growth, maintaining its position as a faster growing economy in Asia. However, corruption continues to represent a significant issue in the country. According to the 2014 United Nation World Risk Report, the Philippines is one of the most disaster-prone countries in the world, ranking second out of 171 countries. The main environmental hazards in the Philippines are seasonal heat, typhoons, storm surges, volcanoes, earthquakes, tsunamis, landslides and periodic destructive flooding. The potential impact of natural disasters is multiplied by a lack of preparedness and coping and adaptive capacities at the national and local levels.

Common Services Program

The Common Services (CS) Program in the Manila Mission provides administrative and operational support to the Mission’s programs and partner departments and is responsible for financial transactions and human resources activities. While accountability and responsibility are held by the Head of Mission, the Common Services program is managed by a Management Consular Officer, who is supported by two deputy MCOs responsible for Property and Consular programs. The CSDP is also under the leadership of the MCO. Table 1 shows the Mission’s Common Services Program expenditures from 2016-17 to 2018-19.

Consular Program

The Manila Mission’s Consular Program provides consular services and assistance to Canadians, including passport, citizenship and notarial services. The Consular Program is overseen by the MCO, while the DMCO is responsible for the Program’s operational activities.  The DMCO is supported by a Senior Consular Officer who is assisted by four Consular Assistants. The Mission is also responsible for the Honorary Consul in Cebu, which primarily provides certain notary services to Canadians abroad and provides support to our mission in Brunei.As part of the 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.

A detailed description of the audit criteria can be found in Appendix A.

2.1 Accountability and Oversight

The audit 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 Mission accountabilities, roles and responsibilities were clearly defined, communicated and understood. In addition, Mission’s oversight was exercised through various management committees and regular communication between the HOM and MCO and program managers as well as between the MCO and functional managers.

Accountabilities, Roles and Responsibilities

Accountability in the Manila Mission rests with the HOM, who reports to the Assistant Deputy Minister (ADM) of the Asia Pacific branch. Headquarters (HQ) has a role in supporting and enforcing HOM accountability. The present HOM joined the Mission in September 2016. The MCO and the DMCO Property arrived at the Mission in August and September 2017 respectively. The DMCO Consular joined the Mission in July 2016. Interviews conducted with Mission management and key staff indicated that they understood their roles and responsibilities in the respective areas. The audit noted that human resources, procurement and asset management related responsibilities are articulated in the performance management agreements of key CBS and LES staff. A review of delegation of authorities for financial transactions and staffing processes indicated that authorities and accountabilities for procurement, asset management and human resources are clear, communicated and understood.  Furthermore, the Mission program and functional managers generally understood the role that the CSDP plays in supporting the Manila Mission with a suggestion that further clarification on roles and internal coordination between the CSDP Contracting and Finance functions would contribute to more efficient mission operations.^{Footnote 4}

Mission Committees

The audit expected that Mission management would exercise effective oversight of procurement, assets management, and human resources activities, and that key oversight bodies would be in place and functioning at Mission. The audit found that there is a governance structure in place at the Manila Mission, with several established committees, including the Committee on Mission Management, Housing Committee, and Locally Engaged Staff Management Consultation Board (LESMCB).

The Committee on Mission Management (CMM) in Manila represents the principal internal committee for the strategic oversight and management of the Embassy of Canada in the Philippines. The CMM comprises representatives from all the Mission programs. The audit reviewed all available committee minutes for the recent two fiscal years. The audit found that the CMM, which is chaired by the HOM, hosts regular meetings, exercises appropriate oversight, and discusses a wide range of mission management issues such as policies and guidelines, financial planning and budgeting, including Financial Status (FINSTAT) reports, HR activities and performance management. For example, FINSTAT was one of the standing items on CMM’s agenda and discussed frequently at the Committee. Mission budget and burn rate were discussed at the beginning and end of the fiscal year. Some budgeting elements, such as Value-added tax claiming process changes, budget cuts and surplus, and budget performance were discussed. As for the Housing Committee and LESMCB, the committee minutes review and interviews indicated that these committees functioned as expected.

2.2 Planning and Budgeting

The audit expected that planning and budgeting would be based on needs and that there would be a rationale for planned activities that support forecasted expenditures. The audit reviewed key operational plans, budget documentation, and trend analysis for the most recent three (3) years, and conducted interviews with key mission staff involved in the planning and budgeting process. The audit found that although mandatory corporate planning and budgeting tools were used, there was a lack of alignment between the budget, the plan and assessed mission operational needs.

The audit found that common corporate processes and tools, such as Strategia, FINSTAT, MPMP, Mission Maintenance Workplan, and Physical Resources Information Mission Environment (PRIME), were used by the Mission to plan and develop its budgets for the common services, property, Information Technology (IT) assets and human resources activities. For the past three fiscal years in the audit scope, budget forecasts were based on previous year’s expenditures and planning for year ahead. However, the audit was not able to determine whether operational plans were developed based on formal needs assessment and nor did the audit find any evidence to demonstrate that the budget would be aligned with its various plans. For example, it was expected that the Mission’s procurement plan, among other things, would be informed by routine house/building inspections to identify maintenance and repair needs, as well as an analysis of previous years ad hoc maintenance costs and Mission Request Online (MRO) property submissions. From this analysis more accurate procurement needs would be identified and prioritized for annual planning purposes. This needs-based plan would then be used to develop related budgets. For the years under audit, this was not a regular practice at the Mission. For example, only four out of thirty SQs were inspected in August 2018.

The audit assessed the extent of variances for the most recent three fiscal years between the Mission’s initial approved budget in Strategia and actual expenditures. The audit found that both Common Services and Property programs had fluctuated and significant variances between budgeted and actual expenditures over three-year period under review without all of them being explained. For example, there are a couple of commitment items (shown in table below as a subset of “Operations and Maintenance” in Table 1) that were significantly overspent in one year and underspent significantly the subsequent year. In addition, the audit noted that increases were requested for many initial budget items but were not spent. Budgeting based on the Mission’s operational needs can help decrease variances. The audit did not identify any concerns with both program and operational budgets for the management of FPDS, Trade, and Development Programs.

The audit noted that since August 2017, the Mission had made improvements in the rigour of its planning, budgeting, and forecasting practices. For example, the Mission has made progress fostering a budget management culture through the development of a Guide on Budget Management to support a budget management framework as well as detail the roles and responsibilities of key staff involved in budget management. There are now regular budget meetings in the Common Services section between the MCO and Common Services Officer (CSO). Further, the Mission applied a zero-based budgeting approach for core operational budgets to improve planning and budget management for 2019-2020 and developed a naming convention to code expenses. The Mission also drafted Materiel Management Procedures and Guidelines that has helped support the development of a procurement plan for 2018-2019 and 2019-2020.

Recommendation 1:

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

2.3 Monitoring

The audit expected that monitoring activities would be performed to provide information for decision-making and ensure that the Mission complies with policies and procedural requirements. The audit found that the Mission performs reasonable monitoring and reporting activities to inform management regarding the performance of various operational activities.

Interviews with mission management indicate that the HOM has regular bilateral meetings (2-3 times weekly) with the MCO to discuss HR, consular, property, housing, staffing, budgeting and all plans at Strategia exercise time, from which the HOM was able to understand and monitor the Mission’s operations and get problems/challenges solved on an ongoing basis.

In addition to the bilateral meeting between the HOM and the MCO, the Mission management team is also informed and monitors the Mission operations through routine bilateral meetings between the MCO and program managers as well as between the MCO and the DMCOs, along with functional managers, where financial and budgeting, procurement and, human resources issues are discussed.

The audit identified some trend analysis performed by the Mission’s functional managers and key staff. For example, the CSO monitored telecommunications and shipping costs to ensure plans were not exceeded and best value-for-money was achieved. In addition, the property section manager uses a table to track monthly usage of utilities, which enables the team to monitor the trend over certain periods. Finally, the Fleet Logistic Officer monitors and tracks vehicle mileage and fuel expenditures to ensure appropriate usage.

2.4 Local Procurement

The audit 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 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 in the management of procurement activities for the Common Services program over the scope period from April 2017 to March 2019, which spanned two CBS management teams. Other programs generally followed the departmental procedures with few exceptions. The audit found that since August 2017, the Common Services program had made noticeable improvements and addressed many significant risks.

Procurement and Contract Management

The audit reviewed 42 procurement transactions and contracts, including purchases made with acquisition cards from April 2017 to March 2019, 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. The audit tested transactions for the procurement activities during the period from April to October 2017 and identified a number of issues with the management and administration of procurement activities. These issues included not establishing proper procurement mechanisms, poor contract management, and procurement administration gaps. Identified procurement issues and poor practices included:

• Active contracts were not in place for the following reoccurring services: regular property repairs and maintenance, and relocation services.
• Purchase orders were regularly established after work was completed or goods were received and vendors had invoiced the Mission.
• Work and payments continued on a contract that had expired.
• A regular practice was in place where cleaning contractors were asked to perform work not covered by terms of their contract but invoiced under that contract (e.g. cleaners performing tasks not related to cleaning such as repairs or furniture moving).
• Contracts were not always correctly coded as non-competitive or sole sourced, leading to contract being inaccurately disclosed as competitive under Proactive Disclosure.
• The processes of approving a contract and approving payment of an invoice on that contract were found to not always be segregated, as required.

The audit also focused on mission procurement and contract management practices at the time of the audit and noted that significant improvements had been achieved in stabilizing these activities and taking a more strategic approach to contracting. Improvements included the establishment of proper contracts for reoccurring services, ensuring competitive procurement processes, and strengthening contract monitoring. Transaction testing, nevertheless, identified some issues with procurement administration. These included:

• Call-ups against standing offers sometimes established after work was completed, and vendors had invoiced the Mission.
• Purchase orders were sometimes established after work was completed or goods were received, and vendors had invoiced the Mission.
• Vendor-provided quotations sometimes provided after work was completed.
• Purchase orders were not created when required.

Transaction sample testing on other mission program areas revealed that departmental procedures were generally followed, with the following exceptions:

• The established contracting process to hire temporary staff for the OR was not followed (no security clearance in place, payment for work outside of contract period).
• A hospitality expenditure under the security program was not in line with the policy requirements and lacked documented justification and HOM pre-approval on file.

While mission management, in particular the Common Services team, has made marked improvements to procurement practices, the audit identified the control deficiencies described above.  Effective administration of procurement practices, including compliance with Government of Canada contracting policies and practices enables missions to formalize services and goods expectations, control costs, establish service frequency, and to ensure Mission is getting the best value and quality for money in a fair and transparent manner. Without effective procurement controls, the mission is at elevated risk of not receiving quality services, on time, at competitive prices from reliable vendors.

Receipt and Payment

The audit expected that the Mission would have effective controls in place to ensure procurement expenditures are accurate, appropriate, and legitimate. The audit reviewed the payment process for a sample of 42 procurement transactions and contracts and found that overall, sufficient documentation was provided to support due diligence of section 34 of the Financial Administration Act to verify that services and goods were received as intended. Regarding segregation of duties between delegated authorities, the audit did not find any related issues through its sample transaction testing.

The sample testing indicated that, except for one instance presented earlier in this report, generally the Mission’s review and approval of payments was effective, including the segregation of contracting and payment authorities. However, the audit did identify some opportunities to improve the level of diligence over the verification of invoices. These include instances where details in approved invoices were not aligned to terms laid out in contracts, and where direct invoice payments were made without having a required purchase order. In addition, instances were found where invoices were missed and not paid, resulting in late payments. In one of these instances, the payment was made two years after the invoice was dated.

Given that the Manila mission is also a client of the CSDP in Manila, the audit expected that incompatible approval authorities would be segregated. It was found that staff were segregated between the Mission and CSDP so those individuals approving sections 32 or 34, along with those uploading invoices to FAS Procure to pay (P2P) module, had no access to payment function (section 33 / Payment Run). In addition, Mission staff access rights to the financial system were based on the alignment of duties between the Mission and CSDP.

Recommendation 2:

The Head of Mission should ensure that proper procurement mechanisms are in place and utilized in compliance with the applicable departmental policies and procedures.

2.5 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, inventory, petty cash, and consular revenues. The audit found that while property and fleet maintenance and repair related costs were controlled and a new inventory tracking system was established, some control gaps in the management of inventories still existed at the time of the audit.

Property Management

Missions are responsible for ensuring that all Mission properties are properly maintained. The audit did not identify any significant issues with regards to real property management at the Mission. For the Mission’s leased property portfolio (SQs and Chancery), the audit noted that repairs and maintenance costs were well-controlled. A review of a sample of repairs and renovations found the quality of work to have been in line with expectations. Regular and reoccurring maintenance, such as air conditioning maintenance, is scheduled and completed as per typical industry standards. Unplanned repairs are identified through property inspections or through an MRO from the tenant. The audit noted that during the audit scope period the assessment and planning of repair needs at each SQ was not robust and formalized. Inspections were not always done on a regular basis, and were often limited to when a tenant changed, generally leading to more ad hoc repairs as required. For the current fiscal year, Common Services management is implementing a regular inspection schedule, and compiling results into a repair needs assessment, which is then integrated into procurement planning.

The Mission’s only owned property is the Official Residence. The audit found that recent investments had been made into upgrading and improving many areas of the property, including fencing/gates, and staff areas. A review of completed work found that the quality was in line with expectations. Regular maintenance work (e.g. air conditioning maintenance) is scheduled and completed as per industry standards, and unplanned repairs are identified and initiated through property inspections or through an MRO submission.

Fleet Management

The audit expected that the Mission would manage its fleet in accordance with the Department’s Mission Fleet Management Guidelines. Overall, the audit found that the Mission’s fleet of 10 vehicles was well-managed. The audit found that an up-to-date transportation policy is in place to govern transportation activities, and the Mission uses trip logs and Global Positioning System (GPS) vehicle trackers to monitor usage.  Annual vehicle maintenance is planned and scheduled in advance according to specifications laid out in the fleet manual. Tracking sheets are used to monitor kilometres driven and gas consumption. The Mission indicated that it was planning to move to a fleet management application, which would automate more of the planning and monitoring activities for the fleet.

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 in accordance with the Department’s Material Management Manual. Based on a walkthrough of the mission’s inventory practices; an inspection of on-site storage areas; selected SQs; IT assets and fine art; and reconciling a sample of procured goods against inventory records, the audit found that although noticeable improvement had been made in recent months, some control gaps in the management of inventories still existed.

The Mission manages a large inventory of furniture, equipment and supplies such as household furniture, large and small appliances, electronic items, cleaning supplies, and office supplies held in a storage facility in the basement of the Chancery office building. The audit found the storage facility to be well organized with areas allocated to full home furniture sets to better manage rotation of SQs.

The audit performed inventory checks for selected SQ furniture, IT assets and fine art. Although no significant discrepancies were found with the IT and art inventories, it was noted that SQ and Official Residence inventories were comprised of only the property Content Lists, which were created when CBS tenants initially moved in, along with attached Material Transfer Forms (created when an item was added to the property). The audit found that these inventory lists were not always accurate and not updated regularly. In addition, they did not include sufficient details about items (e.g. model/make, serial number, description, acquisition date etc.), which does not allow for an effective whole-of-life asset management, nor does it facilitate the Mission’s procurement planning and budgeting.

The audit found that the inventories of cleaning supplies and office supplies are being tracked using spreadsheets, which are regularly updated based on usage. An inspection of all fine art against the inventory list at the OR and Chancery indicated that all pieces existed at the time of inventory check. However, the audit could not find an inventory list of Chancery furniture.

The audit was informed and able to verify that the Mission was implementing an inventory management application, which tracks items description (make/model), location/movement, and life cycle details (purchase date). The inventory of items in storage has been uploaded to this application, and a review of a sample of items on site and recently purchased found that this inventory system is accurate, up-to-date, and well managed. The audit was informed that this inventory management application currently under implementation is intended to integrate SQ and OR inventories and would be expected to address the deficiencies noted above through sufficient details, updated in real time.

The audit examined the disposal of a selection of surplus goods through auctions, as well as the disposal of a vehicle. The review of the surplus goods sale found that it generally followed departmental procedures and noted that the Mission used a third-party auction company, which is a good practice to mitigate potential conflict of interest with staff. The review of the vehicle disposal found that although procedures were followed, the justification for sale was not found on file, as required.

Recommendation 3:

The Head of Mission, until a departmental material inventory management system is implemented, should extend the implementation of the Mission’s current inventory management application to Chancery and SQ furniture & material ensuring all mission assets are accurately recorded with key information to improve mission whole-of-life asset management practices.

2.6 Cash and Revenue Management

Petty Cash

The audit expected that petty cash would be managed in accordance with relevant policies and procedures requirements. The petty cash transaction analysis showed that the Mission had three petty cash accounts with a low frequency of transactions and relatively low balance. For example, the procurement and material assistant only had petty cash transactions once per week. The analysis also indicated that, over the period covered by the audit scope, there was no transaction exceeding the $200 limit as per the policy requirement. In addition, the audit verified that reconciliations of the petty cash were performed regularly on a quarterly basis and surprise counts were also performed by cash account holders along side with the MCO or DMCO Property. No issues were identified.

Emergency Cash Parcel

The mission’s two Emergency Cash Parcels (ECPs), in local currency and USD respectively, reconciled with HQ’s records. The audit performed a surprise count and found no significant issues regarding the adequacy of the ECPs' safeguards. However, the custodian was not sufficiently practiced to access the ECP in a timely manner. There is a risk that in an emergency, the ECP might not be accessed and available quickly.

Consular Revenue

The Manila Mission collects fees for issuing passports and travel documents, as well as for providing notarial services. The audit found that consular fee collection is managed in accordance with relevant policies and legislative requirements. In addition, the Mission does not accept cash for consular services, only electronic payments and bank drafts, which greatly simplifies cash management at the Mission.

2.7 Human Resources

The audit expected that Mission human resources activities would be managed effectively to ensure operational needs are met, and that transactions would be appropriate and compliant with applicable policies and procedures. The audit assessed whether HR staffing plans were in place and based on identified 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 although a staffing plan was developed as part of the Mission business plan for the period under review, there was not an obvious link between the Plan and actual staffing actions. In general, selected staffing actions appeared to have been fair, transparent and open. However, sufficient evidence was not found on staffing files to demonstrate expected merit of appointees as well as retention and completeness of key documentation. In addition, existing measures for managing overtime was not reinforced to ensure overtime is pre-approved, warranted and appeared reasonable.

Human Resources Planning

The Mission’s HR planning activities were presented in its business plan in Strategia. The audit reviewed the Plan for 2017-2018 and 2018-2019 and noted that many HR pressures were identified due to the growth of the Mission in terms of its size and complexity of various programs, particularly the growth of one of the co-locators’ programs and the CSDP Manila.

LES Staffing

The audit examined six 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. The audit found that the five applicable staffing actions reviewed were conducted in a fair, transparent and assessable manner. As well, while one file lacked evidence, the other four files all demonstrated that the members of the evaluation team attested to not having any conflicts of interest. However, room for improvement was identified with respect to the absence of sufficient evidence to demonstrate merit for appointees and completeness of key documentation in staffing files. For example, in five processes reviewed, exam and interview questions were not linked to essential criteria for the position being staffed. Furthermore, pass scores were not indicated in advance of interviews and exams in three of the processes.  As a result, the audit was unable to determine whether the appointee met all essential criteria.  In addition, the audit was unable to conclude if the Statement of Merit Criteria was approved prior to the advertisement and if the evaluation team received proper instruction prior to evaluation, as there was no evidence on file to this effect.

In addition, in most files reviewed, appointees met the security requirements of the position.  However, in one case, an individual provided services as a cook for a month and a half before being formally presented with a letter of offer near the end of the term, for which the individual was not required by the hiring manager to meet the security requirements but should have been at the time of the appointment.

The audit found that key documentation was retained, in sequential order and complete only for three of the six staffing actions examined. 

LES Salary and Overtime

The audit expected to find that LES salaries and overtime payments would be accurate and complete. The audit compared the payroll and HR data for the month of November 2018. The testing confirmed that all employees receiving pay in November 2018 were employed by the Mission during the period reviewed and had a single unique bank account with no duplicates. However, there were some minor discrepancies. Notably, position numbers did not always match.

The audit judgmentally selected 10 employees for the following fiscal years: 2017-18 and 2018-19. The audit then reviewed their monthly salaries. For each sampled employee, the audit reviewed detailed salary information and compared the pay rates to the salary scales. It was found that LES employees at the Mission were paid using the appropriate rates as indicated in their salary scale.

It was expected that the overtime would be pre-approved, warranted and appear reasonable. The audit examined a sample of four overtime transactions and found that although all overtime claims were approved by appropriately delegated authorities, none of these employees had documented evidence for pre-approval required from their respective manager.

The review and analysis of the HOM driver's overtime claims along with his time/activity reporting (for the recent two fiscal years) shows there is some reported overtime that was not linked directly to official events. The review of time reports for other OR staff also revealed that some of their over time was not linked to reported official events during fiscal years 2017-18 and 2018-19. In addition, the audit noted three instances where one of the OR staff worked on non-official events at the OR during their day-off and was inappropriately compensated by being given time off during official work hours.

The audit sample testing also revealed that one of the overtime payments was made at the year-end for claims accumulated during the year, which might not have allowed for an effective cash and budget management.

Personnel Files

Regarding the management of LES personnel files, a sample of four files was reviewed to verify if required documentation was on file, such as job descriptions, performance agreements and any documentation related to values and ethics and disciplinary actions. The audit found that the personnel files reviewed generally contained essential documentation, although copies of the employment Letters of Offer, security clearance, and Values and Ethics code signed by the employee were not always on file.  In addition, the audit noted that the completion status for mandatory training such as values and ethics, Signet, and fraud prevention training was tracked at the mission level, but was not evidenced on sample personnel files.  As a result, it would be challenging to determine whether employees are aware of critical departmental information relating to their wellbeing and other requirements.

Recommendation 4:

The Head of Mission should take appropriate measures to enhance compliance of the Mission’s human resource activities with the Department’s directives and procedures.

3. Conclusion

The audit concluded that sound management practices and key effective internal controls were mostly in place. While there was noticeable improvement of the Mission management practices and strengthened internal controls for the Common Services program, continued efforts were required in areas of compliance with applicable policies and procedures, whole-of-life asset management and human resource management.

The audit team verbally debriefed the Head of Mission (HOM), the Management Consular Officer (MCO) and Deputy Management Consular Officers (DMCOs) after completion of work on site.

Appendix A: About the Audit

Objective

The objective of this audit was to determine whether sound management practices and effective controls are in place to ensure good stewardship of resources at the Manila 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 Manila 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 June 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 63 files and transactions were tested with focus on activities that took place from April 2017 to March 2019, as shown in the following Table.

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 the Comptroller General of the Treasury Board Secretariat. The audit criteria were discussed and agreed upon with the auditees. The following table outlines the audit criteria developed to meet the stated audit objective and audit scope:

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:

• Field work was performed by the audit at the Manila Mission from May 6 to 17, 2019.
• 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;
• Transaction 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);
• Asset and material inventory inspection and count;
• On-site examination of Chancery, storage facilities and a sample of staff quarters;
• Comparisons with a sample of like-minded Missions;
• Visits to a sample of local vendors; and
• Visit to Mission’s main bank.

Appendix B: Management Action Plan