REMEDIAL
MEASURES
In Amman
35. The new Ambassador has taken urgent steps to
ensure that payments are no longer made in cash, except where
absolutely necessary, and that all requests for payment are carefully
scrutinised to avoid any danger of duplication or falsification.
The new Senior Management Officer has taken steps to introduce
controls over purchasing and payments in line with Departmental
guidance.[43]
36. In view of the crisis in Amman and as control
in the Embassy had not been working, the Department have appointed
a UK-based accountant at the post. The Department said that the
cost of a locally-based accountant was approximately a quarter
of the cost of a UK-based accountant; there would therefore be
diseconomies of scale in going over to a rule of all UK-based
accountants.[44]
General
37. In view of the serious irregularities that have
taken place in Amman, and earlier in Sana'a,[45]
we asked the Department what they were doing to make sure that
their management staff in overseas posts complied with the required
checks and controls. The Department said that they had a number
of measures in hand:
- the Accounting Officer's predecessor had written
again to all posts pointing out how dangerous and damaging it
was not to comply with Diplomatic Service Procedures,[46]
and the current Accounting Officer would be getting the message
across firmly and clearly in the near future;[47]
- requiring all posts where there was a high risk
to look not just at one month's accounts but horizontally across
the months;[48]
- calling back more monthly accounts of posts at
risk for checking in London;[49]
- instructing the top 40 posts to retain invoices
until the next visit by internal audit, on average for six years;[50]
and
- tightening up the rules on cash transactions.48
1. After the Sana'a fraud the Department had instituted
a new early warning system and devised a mathematical model to
try to predict vulnerable posts where fraud was most likely.[51]
Amman was one of the top ten in the resultant league table of
vulnerable posts.49 The Financial Compliance Unit had
visited all ten posts, or had plans to do so in 1998. In addition
internal auditors plan to visit every one of the 222 posts in
the world every six years, visiting the highest risk posts most
often.[52] The Department
gave us a list of the top 40 vulnerable posts.[53]
2. The Committee suggested to the Department that
they had a culture which allowed things to carry on without any
enthusiasm for dealing with invoices, cash payments and so on.
The Department hoped that we were wrong. They thought it very
important to send a message to the service that management, and
financial controls particularly, really matter.[54]
3. The Department told us that, although they could
not give a guarantee of 100 per cent confidence, they did give
an absolute guarantee of 100 per cent effort to try to make sure
that such irregularities did not happen again.[55]
Conclusions
4. The Committee note the remedial measures which
the Foreign and Commonwealth Office have instituted at the Amman
Embassy: minimal payments in cash, the careful scrutiny of all
bills and the introduction of controls to ensure compliance with
Departmental guidance. We regard these as essential changes but
regret that it should have taken two sets of irregularities perpetrated
over a long period to bring them into being, especially as Amman
is considered to be a high risk post.
5. We can see why the Foreign and Commonwealth Office
felt the need to reinforce their earlier advice to all posts
about the need to comply with Diplomatic Service Procedures; any
failures damage the taxpayer as well as the Service's reputation.
At the same time we are disturbed at the implication that the
Department's earlier message did not strike home. At all posts,
whether regarded as high risk or otherwise, there is a requirement
for sound financial management, regardless of whether it is in
the hands of locally-engaged or UK-based staff. We look to the
Service to eschew any culture that regards financial management
as a second-order activity.
6. We agree that, especially in the case of the high
risk posts, transactions and spending patterns should be reviewed,
locally and in London, across several months and not month by
month in isolation. We also think it sensible that vouchers should
be kept until the following internal audit visit has been completed.
43 C&AG's Report, paragraph 11 Back
44 Q8 Back
45 33rd
Report of Session 1994-95 Back
46 Q9 Back
47 Q60 Back
48 Q53 Back
49 Q86 Back
50 Q92 Back
51 Q61 Back
52 Qs
86-89 Back
53 Evidence,
Appendix 1, p 21-25 Back
54 Q77 Back
55 Q98 Back
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