2006 audit committee report for website - english
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2006 audit committee report for website - english

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Audit Committee of the Department of Foreign Affairsannual report 2006Department of Foreign AffairsAn Roinn Gnóthaí Eachtrachadesigned by www.reddog.ieCoiste Iniúchta an Roinn Gnóthaí Eachtrachatuarascáil bhliantúil 2006An Roinn Gnóthaí Eachtracha Department of Foreign AffairsC on ten tsChairman’s Statement 1Membership of the Audit Committee 4Audit Committee Charter 5 Operation of the Audit Committee 6Audit Environment of the Department 7 1. Structure of the Department 7 2. External Environment 7 3. High Level Goals, 2005-2007 8 4. Financial Management 8 5. Audit Arrangements of the Department 8Audit Committee Comments and Recommendations for 2006 10 1. Management Information Framework 10 2. Internal Controls 11 3. Internal Audit 11 4. Evaluation 13 5. Risk Identification 15 6. Organisational and Resource Matters 17Appendix 1 – Dates of Audit Committee Meetings: 20Appendix 2 – Documents considered by the Audit Committee: 21Appendix 3 – Presentations received by the Audit Committee: 22Appendix 4 – Summary of Expenditure 2006 23Appendix 5 – Audits, Evaluations and Value for Money Reviews in 2006 25ClárRáiteas an Chathaoirligh 2006 1Ballraíocht an Choiste Iniúchta 4Cairt an Choiste Iniúchta 5Feidhmiú an Choiste Iniúchta 6Timpeallacht Iniúchta na Roinne 7 1. Struchtúr na Roinne 7 2. Timpeallacht Eachtrach 7 3. ...

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AuditCommittee  oftheDepartment ofFeiorAgniaffsr

annualreport2006
                                                        
Contents

ChairmansStatement MembershipoftheAuditCommittee AuditCommitteeCharter OperationoftheAuditCommittee AuditEnvironmentoftheDepartment 1.StructureoftheDepartment 2.ExternalEnvironment 3.HighLevelGoals,2005-2007 4.FinancialManagement  5.AuditArrangementsoftheDepartment AuditCommitteeCommentsandRecommendationsfor2006 1.ManagementInformationFramework 2.InternalControls 3.InternalAudit 4.Evaluation 5.RiskIdentification 6.OrganisationalandResourceMatters Appendix1–DatesofAuditCommitteeMeetings: Appendix2–DocumentsconsideredbytheAuditCommittee: Appendix3–PresentationsreceivedbytheAuditCommittee: Appendix4–SummaryofExpenditure2006 Appendix5Audits,EvaluationsandValueforMoneyReviewsin2006

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ChairmansStatement2006
StatementbytheChairmanoftheAudit CommitteeoftheDepartmentofForeign Affairs ThisisthethirdannualreportoftheAuditCommittee oftheDepartmentofForeignAffairs.Thisreport relatestotheyear2006.ThemembershipoftheAudit Committeecontinuestobecomprisedofmembers whoarealldrawnfromoutsideofGovernment Departments.TheAuditCommitteereportstothe SecretaryGeneraloftheDepartmentofForeignAffairs, whoistheAccountingOfficerforVotes28and29.The expenditureprofileofbothVotesisrepresentedinthe followingtable: Estimate Outturn 2006Gross 2006Gross (million) (million) Vote28Foreign243.4227.0 Affairs Vote29International600.6599.5 Cooperation Totals 844.0 826.5 Vote28comprisesof80%administration-related expendituresupportingthepolicydivisionsin headquarters,consularservicesandtherunningofthe Missionsabroad.Vote29,ontheotherhand,comprises ofover90%programme-relatedexpenditure,funding thevariouscomponentsoftheIrishAidProgramme. TheDepartmentofForeignAffairsexercisesits missioninadynamicallychangingandevolving environment.Thediversityofchallengesthat engagedtheDepartmentofForeignAffairsduring 2006isevidentinthefollowingprojects:(a)working forpeaceandreconciliationinsupportingtheSt. AndrewsAgreement;(b)theestablishmentofa ConflictResolutionUnit;(c)visitingandaddressingthe complextragedyinDarfur;(d)theprocessofreform andrenewalatUNlevel;(e)sponsoringlegislationto assisttheaccessionofnewmemberstotheEuropean

Community;(f)thepreparationandlaunchofthefirst everGovernmentWhitePaperonDevelopmentAid. TheAuditCommitteenotesthattheIrishAid Programmeisatanimportantstageinitshistory. Thecombinationoffactorssuchas:(i)thesignificant increaseinfundingallocationstooverseasaid onanannualbasisinpursuitoftheobjectiveof contributing0.7%ofGNPtooverseasaidby2012;(ii) theannouncementofnewandadditionalprogramme countries;(iii)thedecentralisationofIrishAidto Limerick,allpresentchallenges,opportunitiesand risks. TheAuditCommitteeispleasedtoreportthatthe patternandpracticeoftheDepartmentofForeign Affairsinaddressingtherecommendationsfromthe AuditCommitteesreportshascontinuedduring2006. Itwillbecomeevidentinreadingthisreportthatmany oftherecommendationshighlightedintheAudit Committee’sannualreportsfor2004and2005are nowfirmlyestablishedintheproceduresandpolicies oftheDepartmentofForeignAffairs. TheAuditCommitteearticulatesseveralconcerns andmakesmanyrecommendations.Thesematters arehighlightedindetailintheSectiontitledAudit CommitteeCommentsandRecommendationsfor 2006,whichcommencesonpage10.Manyofthese relatetotheAidProgramme,andtheCommittee recognisestheinherentlevelofriskassociatedwith thedevelopmentaidenvironment.Thesevenelements oftheDepartment’sauditenvironment,whichare outlinedintheSectiontitledAuditEnvironmentof theDepartmentcontributetothelevelofassurance astotheproperuseofpublicfunds.Outlinedbelow aresomeofthemostsignificantcommentsand recommendationsundertwoheadings:

AuditCommitteeoftheDepartmentofForeignAffairsAnnualReport2006
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(i)Risk,InternalControls,AuditandEvaluation • TheCommitteelooksforwardtothecompletion oftheauditstrategyandmulti-yearworkplanfor Vote28withthecorrespondingapprovalfromthe SecretaryGeneral. • TheAuditCommitteewillreviewtheoperation oftheDepartmentsinternalcontrolframework, includingthedelegationofresponsibilityfor ensuringtheeffectivenessoftheframework,in 2007. • TherecentapprovalofaninternalFraudPolicy fortheDepartmentofForeignAffairsismost welcome.TheCommitteelooksforwardtothe developmentofguidelinesandprocedureswith regardtofraudoccurrencesinorganisationsin receiptofIrishpublicfunds. • Riskisinherentinadevelopmentaid environment.TheAuditCommitteeconsidersthat thedevelopmentofanappropriateriskpolicy hasthepotentialtoenhanceriskmanagement, informpublicdebateandoutlinestepsto mitigatetheimpactofsignificantrisks. • TheAuditCommitteerecognisesthatmanyof IrishAid’spartnerscontinuetohavesignificant weaknessesanddeficienciesintheiraccounting proceduresandinternalcontrolsystems.Given thelargefundingallocatedtosuchpartners,itis importantthatIrishAidproactivelycontinuesits determinedefforts,incollaborationwithother donors,toaddressauditissuesandstrengthen partnerssystemsofinternalcontrol. • TheAuditCommitteealsorecognisesthat,in commonwithotherdonors,itisappropriatethat IrishAidincreasinglyreliesonpartneraudits undertakenbytheequivalentoftheOfficeof theNationalAuditorGeneralinprogramme countries.Inviewofthisarrangement,IrishAid shouldcontinuetowork,inpartnershipwith

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otherdonors,tosupportandstrengthenthe capacityoftheseauditinstitutions. • Thelessonlearningfromthejointdonor evaluationofGeneralBudgetSupportshould informandinfluencepolicydeliberationsand implications.Thisshouldbeaccompanied byaclearstatementofcriteriaforIrishAid’s engagementwithGeneralBudgetSupport.The learningfromthisjointdonorevaluationshould influencepolicyandstrategydevelopment including,forexample,newprogrammecountry planning. •  Thedecisiontoincreasesignificantlythefunds allocatedtotheMultilateralAgenciesneeds tobeaccompaniedbyawelldevelopedand appropriateriskmanagementstrategyanda robustmonitoringframework,soastoensure thatIrishAidfundingisusedeffectively. (ii) Resources •  Thecurrentstaffinglevels,includingrecent approvalforadditionalrecruitmentattheaudit andevaluationfunctions,allowformeaningful multi-annualauditandevaluationplans.Audit andevaluationstaffinglevelsshouldbereviewed regularlytoensuretheiradequacytoprovidethe levelofaudit,evaluationandvalueformoney assurancethatisdesirableinthecontextofa rangeofcomplexaidmodalitiesinarapidly expandingaidbudget. •  ThedecentralisationofIrishAidtoLimerickmay resultinthelossofkeypersonnelwhocontribute significantaddedvaluetotheorganisationand theIrishAidprogrammes.Itmustbeapriority thatattentionisgiventoensureanadequate levelofretentionofqualifiedandexperienced staff,tominimisestaffturnoverandmitigatethe riskstotheAidProgrammethatareinherentin thisdecentralisationmove.

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•  TheDepartmentshouldensurethatitsplanned systemofrotationofdiplomaticandspecialist staffdoesnotadverselyaffectthecontinuityof managementofbilateralCountryProgrammes. •  TheHumanResourceManagementStrategy needstoprovideappropriatecareerdevelopment optionsforprofessionallyqualifiedstaffinthe financearea. TheAuditCommittee’sfocusfor2007isoutlined undertheSectionthatdetailstheOperationofthe AuditCommittee. TheAuditCommitteewasdeeplyupsetandshockedto receivethenewsinJune‘07aboutthesuddendeath ofourdeeplyappreciatedcolleagueJohnA.Jackson. WecherishedJohn.Wevaluedenormouslythedepth ofwisdomandexperiencethatJohnbroughttoour deliberations.Johnsgoodhumour,greatintegrityand hardworkisfondlyrecalledandcelebrated.Weextend toJohn’sfamilyoursinceresympathies.Mayherestin peace. IwishtothankthemembersoftheAuditCommittee, thelateJohnA.Jackson,ValerieLittle,JohnS.Pittock, andMikeScottwhojoinedusthisyear,fortheirtime andvaluablecontributiontoitsworkduringtheyear.I amverypleasedthatMikeScotthasjoinedus,bringing totheCommitteethedepthofhisexperienceasa formerHeadofEvaluationandAuditinIrishAid. OnbehalfoftheAuditCommittee,Iwishtoexpress ourdeepappreciationofthesupportandcooperation receivedfromthemanagementandstaffofthe DepartmentofForeignAffairs.Asinpreviousyears, Committeemembershaveexpressedtheiradmiration andrespectforthequalityandcommitmentofthe managementandstaff,whodeliveronthemissionof theDepartmentofForeignAffairsinaspiritoftrue publicduty.

Finally,Iwishtoexpressthankstoallstaffwho haveparticipatedat,ormadepresentationsto,the Committeesmeetingsthroughouttheyear.Ialsowish toacknowledgetheoperationalsupportprovidedto theAuditCommitteebythestaffoftheEvaluationand AuditUnit–FionaEnglishandDonalMacDonald(who bothlefttheUnitduringtheyear),FinbarO’Brien, PatrickEmpey,BrianNolan,HelenSmithandTom Hennessy. GerardOConnor Chairman AuditCommitteeoftheDepartmentofForeignAffairs Date:25th October 2007.
AuditCommitteeoftheDepartmentofForeignAffairsAnnualReport2006
MembershipoftheAudit Committee
MembersoftheAuditCommitteearewholly independentanddrawnfromoutsidetheDepartment ofForeignAffairs.TheyareappointedbytheSecretary GeneraloftheDepartment.
During2006,themembersoftheCommitteewere:
Fr.GerardOConnorC.Ss.R.,Chairmanofthe Committee.Fr.OConnorworksinCherryOrchard Parish,Dublin,andhasabackgroundinDevelopment andAccountancy.Heiscurrentlyamemberofthe AdvisoryBoardforIrishAid(AppointedNovember 2003).
ProfessorJohnA.Jackson,EmeritusProfessorof Sociology,TrinityCollege,Dublin.ProfessorJackson wasformerlyChairmanoftheIrelandAidAdvisory CommitteeandamemberoftheIrelandAidReview Committee(AppointedNovember2003).
Ms.ValerieLittleisHumanResourceManagerof ESBNetworks,andformerlyHeadofInternalAudit, ElectricitySupplyBoard(AppointedJune2004).
Mr.JohnS.PittockisaCharteredAccountantanda directorofanumberofcompanies.Hewasformerly chairmanofDeloitte(AppointedNovember2003).
Mr.MichaelScottisaformerHeadofEvaluationand Audit,IrishAid(AppointedJune2006).

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AuditCommitteeCharter

TheAuditCommitteeoftheDepartmentofForeign Affairsisformallyappointedby,andwillreportto, theSecretaryGeneraloftheDepartmentofForeign Affairs,whoistheaccountingofficerforVotes28and 29(ForeignAffairsGeneralandIrishAid,Department ofForeignAffairs,respectively).Asappropriate,itwill advisetheMinisterforForeignAffairsandtheMinister ofStateforDevelopmentCooperation. TheCommitteewillhaveaChairpersonandat leastthreeordinarymemberswhowillbedrawn fromoutsidetheDepartment.Themembersof theCommitteewilleitherhavegeneralaccounting experience,professionalauditexperienceor professionalexperienceintheareaofdevelopment cooperationandtheevaluationofaidprogrammes. Additionalexperiencemaybeco-optedona consultancybasis.Thememberswillnormallyservefor atleasttwoyears,soastoensureeffectiveoversightof theprogramme.TheCommitteewillnormallymeetat leastsixtimeseachyear. TheCommitteewillprovideanindependentappraisal oftheauditandevaluationarrangementsforthese twoVotes,withaviewtostrengtheninginternal controlsandriskmanagementaswellasenhancing theeffectiveoperationoftheauditandevaluation functionwithintheForeignAffairsVoteandIrishAid (theDevelopmentCooperationDirectoratewithinthe DepartmentofForeignAffairs). TheCommitteewillprovideanannualreporttothe SecretaryGeneralonitsworkinrelationtothesetwo Votes.Thiswillbebased,interalia,on:   areviewoftheevaluationandauditstrategyfor theForeignAffairsandIrishAidprogrammesand theannualworkprogrammearisingfromthis;  areviewoftheimplementationofthese  programmesbyForeignAffairsandtheEvaluation andAuditUnitofIrishAid;
  areviewoftheresourcesavailableforthispurpose;  areviewoftheinternalcontrolsystemsofForeign  AffairsandIrishAid;   areviewoftheriskmanagementsystemsin ForeignAffairsandIrishAid. SinceoneofthefunctionsoftheAdvisoryBoard forIrishAid,theindependentbodyappointedby theGovernment,istooverseespecificandgeneral evaluationsofIrishAidprogrammesandprojects, withageneraloversightofpolicyandexpenditure , themembershipoftheAuditCommitteewillalways includeamemberoftheAdvisoryBoard. TheCommitteewillinvitetheComptrollerandAuditor General,orhis/herrepresentative,tomeetwithitat leastonceayear.

AuditCommitteeoftheDepartmentofForeignAffairsAnnualReport2006