Audit and Evaluation

RCMP International Operations Branch / Foreign Affairs Canada Memorandum of Understanding Audit Final Report - July 2004

Background

The Audit and Evaluation Committee of the RCMP, requested that Audit and Evaluation conduct an internal audit of the funds paid to Foreign Affairs Canada (FAC) by the International Operations Branch (IOB) with regards to the Memorandum of Understanding (MOU) established in October 12, 1988, between the Royal Canadian Mountain Police (RCMP) and FAC. The purpose of the audit was to provide reasonable assurance that the internal controls surrounding the financial accounting of mission (related to first year mission fit-up only) and program expenses related to the activities of Liaison Officers (LOs) operating in missions abroad are appropriate and compliant with the requirements of the MOU. The audit focussed on the financial data and controls surrounding the activities of LOs operating abroad for fiscal years ending March 31, 2002 and March 31, 2003.

Conclusion

Based on the overall results of the audit and the conclusions reached for each of the audit objectives for the period under review, we conclude that overall the internal controls surrounding the financial accounting of first year mission fit-up expenses paid through IS process along with all program expenses are appropriate and transactions are compliant with the requirements of the existing MOU. Nevertheless, the audit identified specific areas of concern warranting attention as presented in the Appendices A and B.

Main Audit Findings and Recommendations

• While supporting documentation for program expense transactions paid through the IS system was available, sufficient justification from FAC for first year mission fit-up expenses, paid through the IS system, for the creation of new LO positions abroad is not available. Recommendation: IOB should ensure that the appropriate supporting documentation to justify mission expenses for first year fit-up costs are obtained and maintained.
  
  
• Weaknesses in the authorization under section 32 of the Financial Administration Act (FAA) for funds transfers through the Interdepartmental Settlement (IS) process and under section 34 of the FAA for LO expense claims. Recommendation: IOB, in consultation with Finance Branch, should ensure compliance with the FAA.
  
  
• While most program expenses related to the activities of LOs in missions abroad are recorded in the RCMP corporate accounting system, certain types of program transactions such as LO advances and posting loans are recorded in a manual accounting system. Recommendation: Follow-up on the possibility of recording such transactions in the corporate accounting system and ensure that back-up copies of the manual system are retained until the transition occurs.
  
  
• Although it was concluded that the interpretation of allowable expenses used were reasonable and therefore compliant with Appendix A of the MOU, the definition of allowable costs, as stated in the current MOU is unclear and leaves room for interpretation. Recommendation: Clarify definition in negotiations for new Interdepartmental MOU.

The RCMP International Operations Branch / Foreign Affairs
Canada Memorandum of Understanding Audit (PDF) (204 KB) is available in Adobe Acrobat format.

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