By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

STAFF members at the Department of Social Services participated in a “fraudulent” scheme in which they used food coupons intended for Bahamians on welfare to purchase groceries, according to Auditor General Terrance Bastian.

The audit - covering the period July 1, 2013 to June 30, 2015, and tabled in

Parliament yesterday - exposes a litany of internal weaknesses in the Department of Social Services’ (DOSS) accounting department and raises questions about how effectively top officials were providing oversight and management during the period in question.

Regarding the fraudulent scheme that saw several employees purchase groceries using food coupons, an investigation into the matter resulted in the termination of one staff member while two others have been placed on administrative leave.

Some of the pre-printed food coupons used in the scheme were for businesses that no longer exist, such as Stop ‘N Shop Grocers, Mr Bastian said.

By using the coupons for 10 different clients, several employees of the DOSS were able to obtain grocery items on August 30, 2015.

“The store’s name as printed on the coupons had been manually crossed out and replaced with an existing food store’s name,” he said.

“There was no authorising signature on the coupons when they were used by the DOSS staff members. As a result of the supposed acts between the food store personnel and the aforementioned DOSS staff members, these staff members were able to use the unsigned coupons to obtain grocery items.”

In fact, when management of Stop ’N Shop Grocers recognised discrepancies with the coupons, a senior member of the DOSS collected them from an employee of the store, promising to have them signed.

The employee, described as a senior DOSS accounts staff member, had access to the signature-stamping machine of the department’s director and used it to stamp the director’s signature on the coupons.

The employee later delivered the coupons “to the food store’s accounts department for processing.”

“The lack of control over the director’s signature stamping machine could result in inappropriate actions by employees entrusted with carrying out their daily functions,” Mr Bastian noted.

“It can also result in the director bearing the risk and responsibility for fraudulent activities and financial losses to the government.”

He added: “Through apparent collusion, staff members were able to perpetrate a fraudulent act utilising (items) intended for the disenfranchised. This act by these staff members is an indication that one staff member was given too much authority, apparently with minimal or no supervision. This act may also be indicative of a more complex scheme being perpetrated with public funds.”

The department employees used $1,034 worth of food stamps.

Mr Bastian criticised the DOSS’ internal controls, noting that the coupon fraud was not discovered by the department but instead by the vendor.

He also criticised the lack of consistently prepared reconciliations related to vendors’ accounts for redeemed food coupons.

This lack, he said, “could contribute to over/under payment of vendor invoices.”

Additionally, Mr Bastian raised concerns about poor oversight by executive management related to the review of vendor requests and payments.

Despite a requirement that approvals of such requests and payments be completed by the finance officer, in one instance a cheque request for a food store in the amount of $544,200 was “authorised by an accounts officer” without either a signature from the finance officer or executive management.

In fact, $3,682,636 in cheque requests were processed with the director’s signature, despite requirements.

Allowing this to take place “indicates a lack of accountability on the part of executive management,” Mr Bastian said.

Such problems led Mr Bastian to call for duties in the accounts department of the DOSS to be more properly segregated.

“The risks associated with inadequate segregation of accounting functions can escalate leading to erroneous and inappropriate actions if one individual is in charge of handling assets, recording transactions, reconciling, and processing payments.”

The poor segregation of duties led to questionable acts and fraud, he said.