By KHRISNA RUSSELL

Deputy Chief Reporter

krussell@tribunemedia.net

A DAMNING report from the Auditor General’s probe into the Department of Education has uncovered collusion among employees to defraud the government of nearly $450,000 by manipulating a system for stipends and honoraria.

The report covered the period from July 1, 2014 to February 28, 2018, and was sent to the Ministry of Education in September last year but not tabled in the House of Assembly. 

While a House official confirmed the report is expected to be tabled tomorrow, Education Minister Jeff Lloyd told The Tribune yesterday he had no knowledge of it.

Meanwhile, one official said there was a “shake-up” at the ministry in the aftermath of the report’s findings.

During this special probe, Auditor General Terrance Bastian said a team observed what appeared to be several irregularities perpetuated by staff members using an array of honoraria codes.

The report defines honoraria as being granted to officers who are required to perform extra duties in addition to their normal duties for a specified period.

While the director approved these payments, there was no accompanying formal approval from the Ministry of Finance, Ministry of Education and the Ministry of Public service as is required. This meant there were no project justification letters including cost, financial clearance, virement of funds and appropriation transfer warrants provided by the Department of Education.

A virement is an administrative transfer of funds from one part of a budget to another.

“Since staff were able to perpetuate a fraud to the tune of $448,230.68 using the honoraria description it would be reasonable to ascertain that other unethical uses of other codes could have been used,” the report dated September 12, 2018 read.

In one instance an assistant accountant received 43 honoraria payment of $125,505.82 in 44 months. At a separate time another accountant received $61,113.18 in 32 instalments in 20 months while those with lesser jobs including a general service worker received nine honoraria payments of $12,650 in 17 months.

There were at least 12 instances where this happened.

Auditors further noted a finance officer was signing on behalf of the head of department and authorised ten virements from the salary block totalling more than $2m for the 2016 and 2017 fiscal years.

There were also instances where auditors found that individual staff members received over $10,000 and as much $125,505.82 in honoraria payments in “unreasonable” time periods. A head of department also authorised $1.3m over two years.

“The department has an authorised budget amount of $4,000 per annum for the honoraria line item, which amounted to $16,000 for the period under audit,” the report read.

“This amount was consistently exceeded by the department and resulted in an overall expenditure of $448,230.68.

It further noted: “The $432,230.68 in excess of the approved budget was derived from the accounting department utilising 18 item codes to pay themselves as well as other staff members with requisitions stating ‘payment for services rendered.”

When each year was analysed, there was significant cost over run. In 2014/2015 there was an excess of $5,055; 2015/2016 saw a difference of $73,131.38; 2016/2017 $252,745.83; 2017/2018 $101,298.47.

While the report does not name employees, it assigned letters to eight officers two of which received large cheques for $76,063.43 and the other $20,850 respectively. Auditors ultimately found that between these two officers $24,900 and $20,350 could not be accounted for.

In six of the instances there were no signatures for the receipt of cash.

Auditors found that these payments were processed a number of ways including as honoraria, exam supervision fees, school quality assurance programme, security services contract, special employment projects, fees and other charges, and the national lunch programme among other things.

“It was further noted that there were payments made to some staff members that did not correlate to processed requisitions for example staff members received less or more than the amounts allocated on the requisition.

“An accounting staff member from another agency was allowed to perform accounting services during overtime hours and was paid $26,060 in honorarium payments for services rendered.”

The report said the majority of documentation received was incomplete meaning there were no minutes, justification letters, time sheets ad evidence of receipt of funds, adding one staff members receive $7,600 in cash for lifting and moving boxes.

In all, 93 requisitions were missing from the support presented for audit inspection.

“Payments related to these requisitions amounted to $109,890.37.”

Requests for honoraria should be submitted to the permanent secretary in the Ministry of Public Service for approval. These requests are to be accompanied by a definition of scope of work; duration of the project, level of responsibility or expertise or role and position; hours or work either during or after normal work hours, the proposed fixed payment amount; and availability of funding in the relevant ministry or department budget.

In some cases honoraria can be granted for special projects and may be referred to Cabinet for approval.

A stipend, according to the report, is a predetermined amount of money that is provided periodically to help offset expenses. They are often provided to those who are reassigned to assist in another government agency, non-government officers and individuals no on a government agency payroll.

In the completion of this special probe, the Auditor General made several recommendations including immediate discontinuation of officers receiving cheques in their name in order to pay other officers in cash for services rendered.

He said once a budget is approved by Parliament, ministries and departments are only authorised to spend money consistent with the final appropriations for each line item.

This should be supported by executive management within the Department along with budget analysts in the Ministry of Finance reviewing significant escalations above the approved budget to ensure spending is appropriate.

Absence of this kind of continuous oversight the report said could cause malfeasance in other service related payments without the knowledge if responsible parties.

“Since staff were able to perpetuate a fraud to the tune of $448,230.68 using the honoraria description it would be reasonable to ascertain that other unethical uses of other codes could have been used.”

The report also said: “We noted there are opportunities for improvement in strengthening the management of many areas with the DOE. Management has to ensure that the DOE has the appropriate level of skilled staff to achieve its goals in order to maintain a sound system of internal controls.

“Strong internal controls require continuous monitoring by management throughout the accounting process. This dictates that duties are appropriately segregated across the accounting staff to minimise the opportunities for collusion in the purchasing process.”

“Excessive honoraria payments in unreasonable and unrealistic time periods lends to overarching concerns relation to how the remuneration of $448,230.68 was determined. Management should ensure that there are documented measurements for all requests for overtime type payments.”

The report went on to caution that although it was clear collusion occurred in manipulating the system around issuing honoraria payments, management should not allow trust to negate its role of providing oversight.

Last year two Ministry of Education employees were charged in a Magistrate’s Court with defrauding the ministry of nearly $7,000 in salaries over a five-month in July 2017.

A former chief clerk at the ministry doctored overtime records so a friend could get a pay increase was ordered to serve three months in prison for her crime.

Paulette Wilson, 60, doctored pay sheets for her longtime friend Andrew Bridgewater, increasing his take home pay from $130 per week to $691 weekly, resulting in Bridgewater being overpaid $6,657.12 between October 2015 and March 2016.

Bridgewater was sentenced to one year in prison for fraud by false pretences and conspiracy to commit fraud by false pretences.