Audit of management practices at missions - Nairobi
Global Affairs Canada
Office of the Chief Audit Executive
Table of Contents
- Executive Summary
- 1. Background
- 2. Audit Objective and Scope
- 3. Observations
- 3.1 Accountability and Oversight
- 3.2 Planning and Budgeting
- 3.3 Monitoring
- 3.4 Local Procurement
- 3.5 Asset Management
- 3.6 Human Resources - LES Staffing
- 4. Conclusion
- 5. Recommendations
- Appendix A: Organization Chart for Common Services and Consular Programs
- Appendix B: About the Audit
- Appendix C: Management Action Plan
- Appendix D: Acronyms
Global Affairs Canada manages Canada’s international platform — a global network of 179 missions in 109 countries that supports the international work of Global Affairs Canada and 37 partner departments, agencies and co-locators.Footnote 1 Administrative activities that support the Department’s missions require effective and efficient management practices to help ensure sound stewardship of resources.
Rationale for this audit
In 2015, the Department initiated an internal investigation into the Canadian Consulate in Haiti, and found that fraudulent schemes had been put in place by locally engaged staff that resulted in estimated government losses of $1.7 million. Given the findings in Haiti, the Deputy Minister of Foreign Affairs requested a series of management practice audits of selected missions to determine whether similar issues could be taking place at other Canadian embassies abroad. The Office of the Chief Audit Executive conducted a risk assessment to identify those missions susceptible to higher levels of fraud risk and therefore selected for audit. The Nairobi mission was one of five missions operating in a higher fraud risk environment selected.
What was examined
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 Nairobi mission to support the achievement of Global Affairs Canada objectives. This audit examined the mission ’s management practices with regard to oversight and monitoring, procurement and asset management, and human resources between April 2015 and August 2016.
What was found
Overall, the audit team found that processes established by Headquarters relating to finance, procurement, contracting and human resources are not consistently followed and some key controls are not in place or are circumvented. There is an absence of mission-generated, reliable information for decision-making to promote and demonstrate good stewardship of resources.
Specifically, the audit team found that budget forecasting was based on previous year’s actual figures rather than a detailed analysis of needs for the upcoming year. In addition, it was found that there was no analysis of expenditures to identify questionable purchases. The audit team also found weaknesses in the procurement and management of assets and services at the mission. There was evidence of a lack of value for money and questionable choices of procurement methods. There were examples of a lack of effective controls surrounding property, vehicle fleet and inventory management which included no tracking of repairs and maintenance and no comprehensive inventory system to track goods in stock and their movement.
In addition, the audit team found oversight weaknesses relating to the management of staffing actions of locally engaged staff, such as limited involvement by Canada-based staff at key points in the staffing process and incomplete documentation. Consequently, it is difficult to assess whether recruitment is based on the merit principle.
The audit concluded that there were significant weaknesses in the management practices and controls in place to ensure good stewardship of resources at the Nairobi mission to support the achievement of Global Affairs Canada objectives. Processes established by Headquarters relating to finance, procurement, contracting and human resources are not consistently followed and some key controls are not in place or are circumvented. There is an absence of mission-generated, reliable information for decision making to promote and demonstrate good stewardship of resources. [REDACTED]
Recommendations are detailed in Section 5.
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.
Chief Audit Executive
Global Affairs Canada (the Department) manages Canada’s diplomatic and consular relations, promotes international trade and leads Canada’s international development and humanitarian assistance programs. It also manages Canada’s international platform — a global network of 179 missions in 109 countries that supports the international work of Global Affairs Canada and 37 partner departments, agencies and co-locators.Footnote 2 According to the 2015-2016 Global Affairs Canada Departmental Performance Report, $928M was spent to operate and support the missions.
In 2015, the Department initiated an internal investigation into the Canadian Consulate in Haiti, and found that fraudulent schemes had been put in place by locally engaged staff that resulted in estimated government losses of $1.7 million. Given the findings in Haiti, the Deputy Minister of Foreign Affairs requested a series of management practice audits of select missions to determine whether similar issues could be taking place at other Canadian embassies abroad. The Office of the Chief Audit Executive conducted a risk assessment to identify those missions susceptible to higher levels of fraud risk and therefore selected for audit. The following factors were considered:
- complexity of the mission in terms of the number and kinds of services provided;
- size of the mission, including staff complement and footprint;
- the mission’s budget for administrative services;
- the mission hardship level;Footnote 3
- nature of the host country’s banking system;
- the mission’s accounts payable profile;
- the mission’s expenditure trends; and
- Transparency International’s rating of the host country’s corruption perception index.
As a result of this work, and in consultation with senior officials in the Department, five missions that operate in higher fraud risk environments were selected for audit. These were: Abuja (Nigeria); Algiers (Algeria); Moscow (Russia); Nairobi (Kenya); and New Delhi (India). An additional mission that operates in a lower fraud risk environment, Seoul (South Korea), was selected for audit for comparative purposes.
High Commission of Canada in Nairobi
The High Commission of Canada (the mission) in Nairobi (Kenya) is the principal diplomatic hub for Canada in Africa and one of Canada’s ten largest missions. At the time of the audit, it was comprised of 46 Canada-based staff (CBS) and 96 locally engaged staff (LES) working in six mission programs (Commercial Economic, Common Services, Consular, Development, Foreign Policy and Diplomacy Services, and Security and Emergency Management) in partnership with four federal departments (Canada Border Services Agency, Department of National Defence, Immigration, Refugee and Citizenship Canada and Royal Canadian Mounted Police). The Head of Mission (HOM) is accredited to Kenya, Burundi, Rwanda, Somalia, Uganda, United Nations Environment Programme and United Nations-Habitat. In addition, the HOM is responsible for coordinating activities with two Honorary ConsulsFootnote 4 located in Bujumbura (Burundi) and Kampala (Uganda).
The Nairobi mission faces challenges as a result of the external environment. [REDACTED] Common criminality is high. According to Transparency International’s Corruption Perception Index, corruption within the local government and businesses is common place.Footnote 5 Movement is restricted and goods and services are difficult to obtain. There is a lack of basic necessities and a high rate of unemployment that can make life difficult for many of the country’s citizens. Poor infrastructure and telecommunications make the conduct of daily business difficult and laborious .
During the period covered by this audit, the Nairobi Mission experienced exceptional circumstances which affected operations. For example, the civil war in South Sudan and the establishment of an Embassy in Juba, as well as the civil crisis in Burundi required additional administrative support from the Nairobi mission. In addition, the Westgate terrorist attack in September 2013 resulted in the Mission being designated as no-child-dependents, which triggered the repatriation of some CBS in order to reduce the Mission footprint due to security and duty of care concerns. As these events took place after the regular posting cycle had ended, recruitment to replace these CBS was significantly impacted due to a smaller pool of available candidates.
In recent years, the number of CBS at the mission has fluctuated; at times, key positions have been vacant due to the difficulty the Department has in finding staff who have the appropriate experience and competencies to fulfill their duties. [REDACTED]
Common Services Program in the Nairobi Mission
The Common Services (CS) Program in the Nairobi mission provides administrative support to the mission’s programs. This Program is responsible for all financial transactions and human resources activities. Accountability and responsibility are held by the HOM. The CS Program also provides administrative support to the missions in Kigali (Rwanda) and Juba (South Sudan). At the time of the audit, the mission received additional financial, human resource and property related support from the Regional Service Centre in London (United Kingdom). See Appendix A which illustrates the organizational chart for the Common Services Program.
The overall CS Program is managed by a Management and Consular Officer (MCO) acting in an EX-01 position. The Program’s Finance Section is led by an LE-08 Financial Management Officer and is responsible for financial transactions related to mission operations. The mission’s CS Program expenditures decreased from 2013-2014 to 2015-2016 and increased in 2016-2017, as shown in Table 1 below.
|Common Services||Operations and Maintenance||$2,074,496||$1,760,983||$1,229,454||$2,164,305|
|Property||Operations and Maintenance||$3,034,433||$2,755,562||$2,958,110||$2,651,293|
Source: FAS Expenditures Report as at April 26, 2017
The Program’s Property Section is managed by an AS-05 Deputy MCO who is supported by three LES managers for the Chancery, property and material lines of service. This Section is responsible for the oversight and maintenance of the Chancery and staff quarters (SQs). The Program’s Human Resources (HR) Section is managed by an AS-05 Deputy MCO who is responsible for 12 LES staff including drivers. This Section performs all HR and transportation related functions, including the maintenance of vehicles. See Table 2 below for details on the mission’s real property and fleet inventory.
|Chancery (including annex)||2||-||2|
|Other: parking garage||-||1||1|
|Vehicle Fleet||Armoured||Standard (soft shell)||Total|
Source: Real Property: 2016-2017 PRIME database; Vehicles: 2015 Real Property bureau’s Global Vehicle Fleet Inventory
2. Audit Objective and Scope
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 Nairobi mission to support the achievement of Global Affairs Canada objectives. This audit team examined common services at the mission related to human resources, procurement and asset management. Detailed audit criteria are listed Appendix B.
Audit results were derived from the examination of documentation, data analytics of mission expenditures and walk-throughs of key CS processes. The audit team conducted work on-site at the mission from August 29 to September 9, 2016. A review of a sample of contracts, expenditure items, asset disposals, payroll items, overtime items, and staffing actions was undertaken and the inventory system was examined. Interviews were conducted with the HOM, CBS management and key LES within the CS Program, as well as staff at HQ and the Regional Service Centre in London (United Kingdom). The audit team performed on-site visits to storage facilities, local vendors, the mission’s bank and a sample of staff quarters (SQs). In addition, the audit team met with three like-minded missions - Australia, Sweden and the United States of America - to gather information regarding their challenges and good practices in common services.
This section sets out key audit 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.
3.1 Accountability and Oversight
It was expected that mission and Headquarters (HQ) management would exercise effective oversight over mission activities and expenditures to ensure solid stewardship of mission resources. The audit examined roles and responsibilities of mission staff in the management of common services.
Accountability in the mission rests with the HOM, who reports to the Assistant Deputy Minister (ADM), Geographic Region, at HQ. HQ has a role in supporting and enforcing HOM accountability, including the provision of common services. At the time of the audit, key long standing vacant CBS common services positions had just been filled. The audit found that although the HOM is accountable, there was limited oversight support from HQ in terms of data analysis and benchmarking on procurement and asset management, which could assist in detecting anomalies and discrepancies in inventory.
The audit found that mission management uses some tools developed by HQ for planning and reporting, such as Strategia and FINSTAT. Oversight is also reinforced by regular management meetings and communications with staff at all levels within the mission. However, no in-depth analysis or discussion over results was reported to take place at the mission to assess whether the mission is achieving its objectives.
The audit team noted that CBS roles, responsibilities and accountabilities are clear, communicated and understood. They are articulated in the Terms of Reference of the mission’s Committee on Mission Management, performance management agreements and policy and procedure documentation. However, the audit team found that oversight provided by mission management lacked rigour and consistency. The LES play key roles supporting mission management through their subject-matter, cultural and linguistic knowledge. Since the LES remain at the mission while the CBS rotate, it would be expected that they provide consistency in carrying out the appropriate processes and procedures that comply with Government of Canada policies and the mandate of the Department. However, mission management indicated that some good practices implemented by the former management team were discontinued between rotation cycles. In addition, mission management reported that rotation on a two-year cycle did not provide sufficient time to assess and implement the proper practices to enforce due diligence. Based on observations by the audit team and comments provided during interviews with mission staff, this could be related to several issues including:
- lack of formal handover notes from outgoing to incoming CBS;
- vacancies of key CBS positions for long periods of time between rotation cycles; and
- turnover of key mission management positions at the same time.
Another key oversight function at the mission is the Contract Review Board (CRB). The audit team found that the CRB did not function as effectively as it could. A review of a sample of transactions linked to a purchase order or contract revealed a lack of consistent rigour and challenge function by the CRB. This includes examples where contracts were approved without considering standing offer arrangements with existing vendors. The audit also found that the contract threshold for approval by the CRB was not clear - the Terms of Reference indicated $5,000 but certain CRB members understood it to be $10,000. There was no documented decision or rational to set a higher value.
3.2 Planning and Budgeting
The audit team expected that planning and budgeting would be based on need and supported by historical data to justify planned activities and forecasted expenditures.
The audit team found that the mission used the corporate tool, Strategia, to plan activities and develop budget figures for each expenditure area under the common services and property budget envelopes for 2016-2017. However, a more detailed breakdown of planned activities and expenditures was not developed to support the day-to-day activities of the mission. In addition, the audit team noted that budget forecasting is based on the previous year’s actual figures rather than an analysis of needs for the upcoming year. Given this practice and based on an examination of several key expenditures and an analysis of procedures, the overall budget forecasting at this level was found to be weak. For example, expenditures for utilities and security guards were inaccurately forecasted for 2015-2016 and 2016-2017 even though these are fixed, recurring items. A review of the change in monthly forecasts and expenditures for 2015-2016 indicated that in-year commitments were not adjusted to reflect the mission’s needs and certain expenditures were not recorded against their commitments, thereby resulting in an inaccurate financial balance. A significant spike in material purchases was noted in March 2016, which may be indicative of limited planning. In addition, numerous items such as vehicle tires, housewares and garden supplies, were purchased in 2015-2016 with no identified need.
The audit team also found that the tracking of variances between budgets and actual expenditures was not done. The mission’s management does not use the corporate Business Warehouse and Business Intelligence software tools to extract data in order to conduct trend analysis of prior years’ expenditures. While this practice is not a requirement, doing so could inform planning of procurement activities and support mission management decision-making. This is particularly important when working in a difficult environment.
The audit found that planning of property maintenance was weak. A description in the 2016-2017 Strategia plan provides details of work required in SQs as a result of CBS staff rotation. The corporate database that holds property data - PRIME (Physical Resources Information - Mission Environment) - includes a notional forecast of property expenditures, including maintenance. However, since there was no detailed workplan to support activities, there was no way to link planned work with the actual work. Two examples of undocumented work included major roof repairs and the installation of mosquito screens in SQ windows.
The audit team also found that neither planning nor tracking of vehicle maintenance is done. Since there is no maintenance log for each mission vehicle, it was found that parts were purchased and maintenance was performed without clear justification and life cycle needs were not taken into consideration. An example is the purchase of ten tires for one vehicle over the course of a year. Key maintenance of vehicles could also be missed, in an environment in which wear and tear is heavy due to poor transportation infrastructure and which could result in extra costs to the mission.
It was expected that monitoring activities would be performed to provide general information on mission compliance with Government of Canada and Department specific policies and procedures.
The audit found that based on a sample of transactions, processes carried out by the responsible CBS were not always thorough enough to determine whether the quantity, brand and price charged matched the corresponding purchase orders or contracts. In one example, an inferior brand of tires was received even though the mission paid for a superior brand. As well, instances were noted in which the services received by the mission were not in accordance with the statement of work or purchase order, particularly for SQ maintenance, such as installation of grills for windows and plumbing work. There were some transactions in which prices were inflated, evidenced by the fact that at other times the same work was performed at a lower cost, such as plumbing work, repairs to masonry and painting of SQs. As a result, value for money may not have been realized.
Another area of concern to the audit team was the monitoring of LES overtime. The audit team examined the overtime paid to the LES staff working within the CS Program. It was noted that overtime had increased over the past three years from 2013-2014 to 2015-2016, exceeding the budget amount by approximately $60,000 in each of the last two of those fiscal years. The greatest amount of overtime was claimed by drivers who earned overtime pay representing on average 66% of their individual salaries in 2015-2016. There were no documented or reported efforts to minimize overtime or to provide justification. The LES Fleet Coordinator, who earned overtime pay of 48% of his salary in 2015-2016, pre-approves overtime for the drivers and approves the actual hours worked with no evidence of monitoring by a CBS. Furthermore, instances were found in which there was no pre-approval or clear rationale for overtime. CBS managers were not provided with reports on overtime expenditures, so they could not exercise a challenge function. Because overtime is not monitored, there is a risk it is not warranted or performed.
With regard to the monitoring of the use of vehicles, the audit team found that there is no review of vehicle logs to assess reasonability of usage in comparison to gas consumption or cost-recovery for any personal trips made by the CBS.
3.4 Local Procurement
It was expected that the procurement for goods and services at the Mission would be administered and managed in accordance with applicable policies and directives. Local procurement was identified as an area of risk during the audit planning phase. To ensure adequate internal controls were in place and functioning to manage the risk, the audit team examined the processes, mechanisms, and tools used for procuring goods and services at the mission.
The audit team selected a judgmental sample of contracts and transactions from April 2015 to August 2016. Using this sample, the audit team found that the initiation of procurement transactions was not linked to a needs assessment. It was also noted that in the sample of transactions the optimal approach to procuring goods or services was not chosen; either a contract was not put in place for recurring services or different procurement approaches were used for the same vendors. As well, the auditors noted that invoice payments were not consistently linked to corresponding purchase orders or contracts in the financial system. Other contracts included approval signatures dated after work had commenced.
With regard to demonstrating value for money, it was found that the terms of certain contracts did not demonstrate efforts by staff to ensure good use of departmental funds. The audit team found that in a sample of contracts, they were not supported by appropriate documentation and procurement processes were not followed, such as obtaining three quotes to select the best one to provide value for money.
Instances were also noted in which the processing of invoices in the financial system was not segregated. The same LES inputted invoices and then initiated the payment function. As the mission transitions to a Common Service Delivery Point whose role is to execute the payment process, this issue should be resolved. At the time of the audit, the financial system was not configured to ensure key financial management duties are segregated. A lack of appropriate control in this area could result in the increased risk of misappropriation of funds through invoice and payment manipulation.
3.5 Asset Management
Another area of increased risk identified by the audit team was with the management of assets at the mission. It was expected that once purchased, assets would be appropriately recorded, tracked, maintained and disposed of according to related policies and procedures. To examine this area, the audit team focussed on the management of inventory and cash.
The audit team found that there is limited management of inventory at the mission; most goods are not tracked and controlled from purchase to disposal. The audit team attempted to trace items purchased in March 2016 to goods kept in various storage rooms at the mission. From a list of 18 items, only three categories of goods were fully accounted for. Items, such as submersible pumps, lawn mowers, tires, microwaves, kettles and toasters, could not be located and no explanation could be provided for the missing items. The Department’s inventory tracking system, RFID (Radio Frequency Identification Device), is not being used by the mission. The hand-written logs of inventory that could be found were neither up-to-date nor complete. Furthermore, goods are stored in the basement of the mission in a disorderly manner in multiple storage rooms, most of which are accessible to all. For the rooms that are locked, keys are not well monitored.
In January 2014, the mission sold 590 surplus assets at a public auction. The process was approved by the HOM as required by Government of Canada policy. However, documentation related to the disposal of the assets did not include essential information, such as item description, asset condition and asset number, to determine whether the disposal of these assets was justified and maximum proceeds were obtained.
As a consequence of these practices, there is an increased opportunity of risk of misappropriation or unintentional loss of goods. While goods in inventory are of low dollar value, they may be attractive due to the country’s difficult socio-economic environment, and therefore they need to be safeguarded. Continuous loss over the years can become significant.
Another asset found in some missions is cash; a supply is required for small, urgent, unusual purchases not covered by other means. Some countries, such as Kenya, rely heavily on cash as opposed to acquisition cards or electronic systems. The mission has [REDACTED] petty cash accounts ranging from [REDACTED] A review of a sample of petty cash transactions indicated that either documentation was incomplete or was missing. Also, five instances were found in which the individual transaction limit [REDACTED] was exceeded. Furthermore, expenditures, such as translation fees and vaccination costs that normally would not be paid through petty cash, were done so. Monthly costs of approximately [REDACTED] were found to be paid through petty cash with no supporting documentation or rationale. At the time of the audit, the MCO was in the process of rectifying the practice relating to these [REDACTED] costs. The audit team noted that CBS had not been exercising their monitoring functions by performing regular reconciliations of the petty cash accounts which have mostly LES custodians. [REDACTED]
3.6 Human Resources - LES Staffing
It was expected that the mission would have a staffing plan in place and would monitor it to ensure operational needs were met and that staffing actions were appropriately approved, fair, open and transparent.
The audit team found that for 2016-2017, HR planning activities are documented directly in Strategia rather than in a formal HR staffing plan. However, the audit team found this practice reasonable, given the low LES turnover and consequent limited HR staffing activities. Discussions regarding staffing needs that do arise occur at the Committee on Mission Management meetings.
The mission manages all aspects of LES staffing actions and is provided with assistance from the Regional Service Centre in London (United Kingdom) when required. A sample of three staffing actions that took place in 2015-2016 and 2016-2017 was reviewed. Based on this sample, the audit team found limited evidence of CBS involvement at key points of staffing actions, such as the development of evaluation criteria, testing tools and the evaluation of candidates. In addition, key documentation to support the activities was not found in the files. As a result of a lack of documentation and over-reliance on LES staff to carry out staffing processes, management cannot assess whether merit-based selection processes were followed. Consequently, there is an opportunity for unethical practices, such as favoritism and non-compliance with staffing policies.
The audit concluded that there were significant weaknesses in the management practices and controls in place to ensure good stewardship of resources at the Nairobi mission to support the achievement of Global Affairs Canada objectives. Processes established by HQ relating to finance, procurement, contracting and human resources are not consistently followed and some key controls are not in place or are circumvented. There is an absence of mission-generated, reliable information for decision-making to promote and demonstrate good stewardship of resources.
The audit team verbally debriefed the HOM and the MCO after completion of work on-site. As a result, mission management has taken measures to address issues identified by the audit.
Recommendations to the Nairobi Mission:
- The Head of Mission should increase oversight to ensure planning and budgeting for common services includes a needs assessment, adjustments are made to account for changes, and there is periodic monitoring of high risk financial transactions.
- The Head of Mission should ensure that responsibilities and accountabilities of Canada-based staff and locally engaged staff are communicated, consequences of poor performance reflected in performance appraisals and corrective actions taken when required.
- The Head of Mission should take measures to strengthen oversight, controls and monitoring for common services to ensure procurement and contracting processes comply with regulations, proper management of the inventory cycle is undertaken, with corrective actions when non-compliance is detected.
- The Head of Mission should ensure local engaged staff staffing activities adhere to regulations, are documented to demonstrate fairness, transparency and openness, and include appropriate Canada-based staff oversight.
Recommendations to Headquarters:
- The Assistant Deputy Ministers, Geographic Branch, should ensure that responsibilities and accountabilities of the Heads of Mission are communicated; consequences of poor performance are reflected in performance appraisals and corrective actions taken when required.
- The Assistant Deputy Minister, International Platform Branch, in collaboration with the Assistant Deputy Minister, Corporate Planning, Finance and Information Technology Branch (Chief Financial Officer) should reinforce headquarters’ oversight and monitoring of common services in missions by: assessing higher fraud risk missions; identifying specific higher fraud risk areas for increased oversight in missions; developing performance indicators to identify potential issues; and conducting comparative analysis with missions of similar risk to support Heads of Mission.
- The Assistant Deputy Minister, Human Resources Branch, should adapt rotation processes for higher fraud risk missions to consider: longer postings; overlap of key positions; composition of Canada-based staff with the required competencies; and past Canada-based staff performance and experience in the selection process; as well as customized training for higher fraud risk missions.
Appendix A: Organization Chart for Common Services and Consular Programs
FSITP: Foreign Service Information Technology Professional
The diagram shows the structure of the Common Services and Consular Programs at the Mission in Nairobi and the reporting relationships. At the top of the hierarchy, there is the Director, Management & Consular Services (EX-01). The following positions report to the Director:
The diagram shows the structure of the Common Services and Consular Programs at the Mission in Nairobi and the reporting relationships.
At the top of the hierarchy, there is the Director, Management & Consular Services (EX-01). The following positions report to the Director:
Appendix B: About the Audit
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 Nairobi mission to support the achievement of Global Affairs Canada objectives.
The scope of the audit included those management practices and expected controls in place to support the Nairobi mission operations excluding the administrative services provided to missions in Kigali (Rwanda) and Juba (South Sudan). Specifically, the audit examined processes related to procurement and the management of finances, including materials, vehicles and property. Human resource processes relating to LES staffing actions, LES payroll and overtime were also examined.
At the time of the audit, plans were underway to integrate the mission into a Common Service Delivery Point in Berlin (Germany) in 2017. As of the report date, this move has been completed; some administrative processes are completed in Berlin (Germany).
The most up-to-date documentation available as at August 2016 was reviewed. In addition, Common Services Program expenditures and data for property and fleet were examined from 2013-2014 to 2016-2017. A sample of files and transactions were tested for activities that took place from 2015-2016 to 2016-2017.
|Description of Testing Sample||Number of samples|
|Procurement transactions with associated contract or purchase order||37|
|Procurement transactions through direct purchase (no associated contract or purchase order)||18|
|Acquisition card purchases||4|
|Petty cash transactions||4|
|Visits to staff quarters to review maintenance work and on-site inventory||7|
|Disposed asset files||2|
|LES staffing action files||3|
|LES personnel files||3|
Criteria were developed based on a detailed risk assessment.
Criterion 1: Adequate and effective oversight and accountability are in place to support stewardship of mission resources.
- 1.1 Management exercises effective oversight of procurement, asset management and human resource activities.
- 1.2 Authorities and accountabilities for procurement, asset management and human resources are clear, communicated and understood.
- 1.3 Planning processes are in place for procurement, asset management and human resources, which consider needs, asset life cycle, and resources.
- 1.4 Monitoring and reporting of procurement, asset management and human resource activities take place to inform decision-making.
Criterion 2: Effective management practices and controls are in place to ensure stewardship of mission resources and compliance with relevant policies and legislative requirements.
- 2.1 Effective controls are in place to ensure that procurement of goods and services comply with relevant policies and legislative requirements and achieve value for money.
- 2.2 Effective controls are in place to ensure that procurement expenditures are accurate, appropriate, and legitimate.
- 2.3 Inventory control and asset management practices are adequate and appropriate.
- 2.4 Cash is managed in accordance with relevant policies and legislative requirements.
- 2.5 LES staffing actions comply with relevant policies and legislative requirements and are fair, open and transparent.
- 2.6 LES salaries and overtime payments are accurate and complete.
Approach and Methodology
In order to evaluate the above audit criteria, and based on identified and assessed key risks internal controls associated with the related business processes, the audit methodology included, but was not limited to the following:
- Planning documentation review
- Walkthrough of key business processes at Mission
- Data analysis of Common Services Program expenditures
- Transactions testing (contracts and expenditures relating to Common Services Program, asset disposal, payroll, overtime costs and staffing actions)
- Interviews with key management positions at Mission, HQ and Common Service Delivery Points (CSDP) in Manila
- Inventory review
- Petty cash counts
- On-site examination of Chancery, storage facilities and a sample of staff quarters
- Benchmarking with like-minded Missions (Australia, Sweden and the United States of America)
- Visits to a sample of local vendors and Mission bank
Appendix C: Management Action Plan
|Audit Recommendations to Nairobi Mission||Management Action Plan||Area Responsible||Expected Completion Date|
|1. The Head of Mission should increase oversight to ensure planning and budgeting for common services includes a needs assessment, adjustments are made to account for changes, and there is periodic monitoring of high risk financial transactions.||Procedures have already been put in place for Management and Consular Officer and Head of Mission oversight of budgeting processes, and Head of Mission detailed examination of budget requests as well as FINSTATs. The Head of Mission and Deputy Management and Consular Officer monitor major financial transactions, and have put in place systems to review smaller, but higher risk, transactions.||Head of Mission / Nairobi||December 2018|
|2. The Head of Mission should ensure that responsibilities and accountabilities of Canada-based staff and locally engaged staff are communicated, consequences of poor performance reflected in performance appraisals and corrective actions taken when required.||All Canada-based staff and locally engaged staff have performance management agreements that reflect the expectations of their positions. The Mission has reassessed some locally engaged staff financial positions (owing to the move to a Common Services Delivery Point and will reclassify and reallocate these staff members to inventory control and procurement. Training has been provided to key staff.||Head of Mission / Nairobi||December 2018|
|3. The Head of Mission should take measures to strengthen oversight, controls and monitoring for common services to ensure procurement and contracting processes comply with regulations, proper management of the inventory cycle is undertaken, with corrective actions when non-compliance is detected.||Procedures have already been put in place to strengthen oversight of procurement and contracting processes. We have clarified the role of the Contract Review Board and provided training to its members. The Management and Consular Officer is taking a lead role in managing new systems / processes for inventory management, vehicle use, etc. and the Head of Mission is providing oversight.||Head of Mission / Nairobi||December 2018|
|4. The Head of Mission should ensure locally engaged staff staffing activities adhere to regulations, are documented to demonstrate fairness, transparency and openness, and include appropriate Canada-based staff oversight.||The Head of Mission has required fully documented staffing actions, and the Deputy Management and Consular Officer for Human Resources is developing complete dossiers to demonstrate transparency and openness. All transactions and processes have been personally reviewed by the Head of Mission. Locally engaged staff have already expressed satisfaction with improvements in the staffing policies and procedures.||Head of Mission / Nairobi||December 2018|
|Audit Recommendations to Headquarters||Management Action Plan||Area Responsible||Expected Completion Date|
1. The Assistant Deputy Ministers, Geographic Branch, should ensure that responsibilities and accountabilities of the Heads of Mission are communicated; consequences of poor performance are reflected in performance appraisals and corrective actions taken when required.
The Assistant Deputy Minister, Asia Pacific Branch, will ensure that the Head of Mission responsibilities and accountabilities related to sound management practices and stewardship of resources are communicated via the Head of Mission mandate letters and executive performance agreement objectives/indicators.
The importance of maintaining sound management practices and stewardship of resources is, and will continue to be, communicated via quarterly the Assistant Deputy Minister/Head of Mission calls and in quarterly Director General messages (DG grams) to Heads of Mission.
Poor performance in this area will be reflected in the Head of Mission performance appraisals.
Assistant Deputy Minister, Asia Pacific Branch
Responsibilities and accountabilities of the Heads of Mission are currently communicated by the responsible Assistant Deputy Minister and Director General through a number of mechanisms:
To address concerns raised in the audit, the Director General will ensure that the Head of Mission addresses the mission-specific recommendations, and reports on actions taken. Failure to do so will be reflected in the Head of Mission’s performance management agreement.
Assistant Deputy Minister, Sub-Saharan Africa Branch
Starting this year, letters will be sent to all new Heads of Mission by the Assistant Deputy Minister outlining broad expectations, including mission management and stewardship of resources. (Last year, letters were sent only to new, first-time Heads of Mission). New this year, Heads of Mission will be expected to report on how they have met the stated expectations.
Assistant Deputy Minister, Sub-Saharan Africa Branch
Letters to be sent when all new Heads of Mission are announced.
Head of Mission responses to the letters will be requested for early fall 2018
Europe, Middle East, Maghreb and Circumpolar Affairs Branch accepts the recommendation and will implement it through discussions between the Assistant Deputy Minister, relevant Director Generals and Heads of Mission during the year, specifically during the performance management agreement process.
Assistant Deputy Minister, Europe, Eurasia, Middle East, Maghreb and Circumpolar Affairs Branch
2. The Assistant Deputy Minister, International Platform Branch, in collaboration with the Assistant Deputy Minister, Corporate Planning, Finance and Information Technology Branch (Chief Financial Officer) should reinforce headquarters’ oversight and monitoring of common services in missions by: assessing higher fraud risk missions; identifying specific higher fraud risk areas for increased oversight in missions; developing performance indicators to identify potential issues; and conducting comparative analysis with missions of similar risk to support Heads of Mission.
The International Platform Branch agrees with the recommendation and is actively engaged with the Assistant Deputy Minister, Corporate Planning, Finance and Information Technology (Chief Financial Officer), the Inspector General Office, and others to reinforce headquarters’ oversight and monitoring of common services in the network abroad through the development of a framework to identify and assess higher fraud risk missions and higher fraud risk areas at missions; the identification of performance indicators to monitor on-going implementation of the framework and identify potential issues; and the development of a mechanism to conduct comparative analysis with missions of similar risk. In addition, fraud mitigation measures have been identified in the 2017-18 Corporate Risk Profile under Fund Management and Fiduciary Oversight and the International Platform Branch is involved along with other stakeholders to support their implementation.
In terms of immediate measures, the International Platform Branch is delivering enhanced training to Management and Consular Officers in the field, with the support of the Canadian Foreign Service Institute, focused on fraud awareness and financial management in a regional context– in particular those managing the Common Services Delivery Points. The International Platform Branch is also proactively engaged in planning/participating in inspections of Common Services Delivery Points ; generates lessons learned from feedback received from missions and partners as implementation of the Common Services Delivery Point model moves forward; and consults with other Ministries of Foreign Affairs regarding lessons learned and best practices related to similar issues.
Assistant Deputy Minister, International Platform Branch
March 31, 2019
3. The Assistant Deputy Minister, Human Resources Branch, should adapt rotation processes for higher fraud risk missions to consider: longer postings; overlap of key positions; composition of Canada-based staff with the required competencies; and past Canada-based staff performance and experience in the selection process; as well as customized training for higher fraud risk missions.
Within the discussion of adapting the rotational process for higher fraud risk missions, if the concept of overlap is retained as an option, Human Resources will consider implementing it if funding is sourced/identified (funding is with Geographic Branches).
Assistant Deputy Minister, Human Resources Branch
The Fraud Awareness Training has been made mandatory for all Management and Consular Officers this year and over 30 outgoing Management and Consular Officers have had an intensive one day Fraud Awareness Training before they depart for post. Approximately 60 outgoing Program Managers, 15 Foreign Service Executive Administrative Assistants and 40 new Heads of Missions have had Fraud Awareness included in their pre-departure training program.
The Canadian Foreign Service Institute is working with the Special Investigations Division to provide one on one meetings with the Management and Consular Officers that the Division identified as going to high risk missions.
An online Fraud Awareness Course will be developed.
Revisions of assignment guidelines for 2018 assignments will consider adding that all applicants put down at least one hardship mission amongst their six assignment preferences. Rotationality as a condition of employment is also being reinforced in consultation with managers, employees and unions in an effort to expand the assignment horizons of our existing employees. Business needs will be better balanced against employees preferences.
Longer postings in high risk (and by definition higher hardship) missions will be considered for the management teams – including all managerial positions (EX and non-EX) and the Heads of Mission. Those decisions have to be looked at in terms of the impacts on staff and their families, declining value compensation packages controlled by Treasury Board Secretariat and the ability of the department to secure high performing candidates for high risk and high hardship assignments.
As the Competency-Based Approach matures, it can better track the competencies and experiences of employees and the requirements of the positions. The approach will allow assignment decisions to better align the requirements of the positions, and not just for fraud risk issues. The approach will also permit the department to better identify and track the training requirements, integrated into the assignment process. The competency database is now making its way through the Signet build/certification process and is hoped to be in production sometime in 2018. Once in production, the competency profiles for employees and positions will take a few years to become fully effective in support of the risk mitigation strategy.
Appendix D: Acronyms
- Assistant Deputy Minister
- Canada-based staff
- Chief Financial Officer
- Common Services
- Contract Review Board
- Finance and Administration System
- Financial Status Report
- Foreign Service Information Technology Professional
- Head of Mission
- Human Resources
- Locally engaged staff
- Management and Consular Officer
- North America Free Trade Agreement
- Performance management agreement
- Physical Resources Information - Mission Environment
- Radio Frequency Identification Device
- Staff Quarter
- Date Modified: