Highlights of Internal Audit recommendations, Sept 2013-Mar 2014

IA recommendations and useful guidance to governing bodies and individual directors that wish to make effective use of the internal audit function in respect of gaining assurance concerning the adequacy of ILRI‘s risk management and internal control systems.

September 2013 – March 2014

Recommendation
1.	Management should develop Center Recharge guidelines along with the Full cost recovery manual which was planned to be developed to help in establishing, costing, pricing, and administering ILRI recharge Operations. This will based on costing and pricing based, FINANCIAL GUIDELINES SERIES NO. 5.
2.	A clause requiring personnel provided by the service provider be subjected to background checks in conformity with the requirements of the security and safety service of ILRI. (Certificate of good conduct, copy of national identity card and CV with two referees) should be included in all long term service contract agreement with the exception of the banking service contract.
3.	ILRI security office should ensure the service providers staff back ground check information is current by requiring that the certificate of good conduct to be availed at least on an annual basis rather than only at the time the staff is joining ILRI.
4.	The contracts office in liaison with the legal office should adopt standard contract template for ILRI.All contracts should include the basic minimum information required from any contractor.
6.	The Supply Chain Unit should set the timetable for all the key stages in the contracting process, as well as the length of time expected for each stage. The timetable should be determined at the outset of the contracting process and be monitored to ensure compliance; reasons for adverse variance should be documented.
7.	The Supply Chain Unit should coordinate the process of monitoring compliance to the SLA by the service providers. The actual monitoring is a role of budget holders/contract contact person.
8.	A mechanism of capturing the total contract value in the accounting system (SUN system) should be developed and the amount used as on a drawdown basis for settlement of outstanding invoices on account of a particular contract (processing of contracts in the Sun Financial System)
9.	A clear timeline for disposing the items declared dead/slow moving/expired should be developed and be adhered to facilitate conclusion of this process without undue delays.
10.	Damaged / expired/obsolete stock items should be segregated on continuous basis from the good stocks. Some obsolete stocks had not moved for more than three years. Measures of how they will be disposed them should be made.
11.	Bin cards should be issued to the Kapiti stocks controller, for stock recording and dip sticks for measuring the fuel that is outgoing, hence making it easy to update their records. There is need for stock recording for what is outgoing and incoming and ensuring the movement of stock is recorded.
12.	Stores performance management system with targets on acceptable stock losses should be put in place and be monitored to ensure that the stock losses are minimized from the current 1.48% to approximately 0.1% in line with the best practices in stock management and safeguard ILRI’s interests.
13.	The Supply Chain Unit risk register was developed in 2007 and has had some changes since then, however, it has not been updated to include risks on asset disposal. The Supply Chain Unit should carry out a risk assessment to identify risks associated with asset disposal and update the unit risk register. For example; Lack of an annual disposal plan that results in accumulation of obsolete/idle assets ILRI does not obtain the maximum possible benefits from the disposal methods available/chosen. Conflict of interest – the committee members benefit financially or personally from the disposal and fail to disclose the matter to the committee. Unauthorized disposals of fixed assets. Incomplete recording of asset disposals.
14	Controls over replacement and disposal of computers should b tightened. From the review, IAU noted that ICT department does not maintain a regular reconciliation of computer purchases, issues, old computers returned and transfers to stores. Asset transfer forms are not filled comprehensively with the relevant information such as serial numbers and asset numbers of the old asset being returned, the date the asset was returned, the name and signature of the IT staff that received the asset. 52% of 495 computers (i.e. laptops, desktops and monitors) disposed in 2013 were faulty.
15	The ICT department should strengthen the controls by performing a regular reconciliation on computer purchases, issues and returns. The Asset transfer forms should be properly maintained. The department should also ensure that old computers replaced and earmarked for disposal, are disposed off in good time to prevent accumulation of obsolete assets in the stores.
16	IAU noted that 13% of 495 computers disposed were missing in 2013 components such as Hard disks and Random Access Memory (RAM). There is no documentary evidence to indicate if formal authorization was given for the removal of the parts from the computers and how the components were used. Currently ICT department does not have a policy guiding the removal and re-use of computer spare parts from.
17	IAU recommends that guidelines on cannibalization/use of parts of computers be developed. The use of spare parts from old computers for repair of other computers should be authorized and the authorization documented. The authorization should only be done by the ICT Manager.
18.	The Transport Management policy provides a detailed schedule of how vehicles should be replaced. Currently there are vehicles that have not been replaced after the years specified as per the policy.
19.	There is a lack of accountability by Computer for Schools Kenya on the donation of computers to schools. There is no documentary evidence to indicate which schools donation of computers were made. To improve on ILRI’s CSR, IAU recommends that a proper follow up is done to ensure donations reach the intended recipients. Where possible, an ILRI employee can be present during delivery of the equipment to the institution. Management should consider making donations of the computers directly to the schools after obtaining a recommendation of the schools to receive donations from Computer for Schools Kenya.
20.	There are assets in the Fixed Assets Register (FAR) whose status is not up to date i.e. the FAR has 4 vehicles that have already been disposed as at 31^st December 2013 but their status has not been updated as disposed. The disposal account has not captured all disposals that were done in 2012 and 2013 including their proceeds. The disposals not captured are disposals of scrap, housing equipment and lab equipment.The Fixed Assets Register should be updated promptly with assets that have been disposed.