By Fay Simmons

Tribune Business Writer

jsimmons@tribunemedia.net

Salary and payroll errors are costing Bahamian taxpayers around $120m per year, the Government’s top finance official disclosed yesterday, as he blamed the wastage on too many systems that are not linked to each other.

Simon Wilson, the financial secretary, speaking to government employees at the Oracle ERP (enterprise resource planning) system training and professional development workshop, said the public sector payroll is estimated to have a 10 percent error rate. With public service pay and benefits accounting for about 60 percent of the Government’s budget, he added this translated into a near-$120m annual loss.

“Well, our payroll accounts for 60 percent of the Government’s Budget. And if we have an error rate of 10 percent, that’s roughly $120m. That’s why it’s important. Those small errors…overpayments or underpayments and so forth. If you minimise those errors, you can have tremendous savings,” Mr Wilson said. Further errors occurred when persons who have died, or have left the public service, continue to receive a salary from the taxpayers.

Mr Wilson explained that the problems stem from having separate systems for payroll, general ledger, budget and final accounts, thus making it difficult and time consuming to move information across platforms.

“There is no one central application, so moving information between the various applications is time consuming, increases the workload of the officers within those applications themselves,” he added. “Basic functions are very manual and not properly understood.

“So, for example, we do salary reassessments, back pay. As is, it’s very, very manual. Repairing for pension payments, that is very, very manual. We can’t flip the switch and say: ‘This is what is owed’... There’s no tie-in to our revenue systems. So you still have posted manually revenue receipts. All these things take time, and to compensate for time we hire a lot of people.”

Pointing to specific difficulties, Mr Wilson said: “Everyone knows of the employees who get lost in the system. In the Family Islands, they work for local government, they work for the school board, but they are hired irregularly. They’re not in the pay sheet, they’re paid by some other mechanism or some other means.

“Every employee is going to be captured in this system. That is for us critical because we assume, sometimes wrongly, that we know of every employee, that we know the details of every employee. But every year, we find instances where we do not know an employee existed or was being paid or has been paid by the Government or the ministry.

“I know from my own experience in the Ministry of Finance we had employees in Andros who we paid for 40 years, every month, employees of the Ministry of Finance. We don’t know what he did, never did an ACR of those employees, but they were paid every month and they retired,” he added.

“And what they did when they retired? They took a flight and come up to the Ministry of Finance and said I retired, where is my gratuity? And we had no answer. We checked their records and, yes, surely enough we paid them from 1974 up until 2014, every month, but we had no record. We have too much instances like that, and persons go undetected, and then we have to go through this long, arduous process of trying to regularise them.”

Mr Wilson said the Oracle system’s time attendance feature will allow agencies to keep track of employees that work outside the Ministry of Finance headquarters. He added that in larger ministries such as education, employees may be absent from work for months without human resources being aware.

“Things such as time attendance, which we don’t have in the public service, is a key feature in this new application,” Mr Wilson said.”For larger agencies such as the Ministry of Education, time attendance is critical. You have 5,000 employees and 90 percent of those employees do not work in headquarters.

“They come to work, they don’t come to work, you don’t know, sometimes for months. Those are resources that we cannot recover, significant resources. So that’s why time attendance is a big feature of this application”

Another benefit of the system, Mr Wilson explained, is that less human intervention will be required when processing promotions and salary adjustments.

He said: “Paperless means less intervention by the finance accounting officer. Right now, in the public sector, promotions are done by the Commission, goes back into the ministry. The ministry sends one letter to the JD Edwards unit who uploads the new salary. That then goes into the department of the ministry, then the department calculates the back pay and make adjustments.

“In the new paradigm, promotions will be done by the Commission. That information will go into the JD Edwards unit and that’s it. Backpay calculated, salary changed, all of the above. Intervention from a department level will not be necessary.”

Mr Wilson added that Oracle has agreed to help transfer the existing payroll data on to its platform, ensuring that critical information is not lost or compromised. “That’s why we’re staying primarily with the Oracle family of applications, because the risks of moving to a different platform and not being sure of your data integrity was too great,” he added.

“We are not simply doing what we did before when you go in detail in terms of what offerings are under the fusion platform. You will realise this is not business as usual. We want to elevate and move the public service forward.”

Mr Wilson said he is hopeful the new platform will launch early next year and recognised the important role that financial officers will play in its successful implementation.

“The next couple of months is going to be very intense. Because we have gathered the information and the work rules to make sure that we flip the switch, hopefully around January/February, the system works as necessary. And so the role of the finance accounting officers is very, very important in this transition process,” he added.

“We cannot see results unless there’s buy-in from the finance accounting officers. This is not just about technology. We realise that we have to look out for the officers…. and make sure that they are satisfied because the best technology in the world is not going to change their own colours unless persons who are responsible for making sure processes are followed and doing it correctly are motivated.”

He noted that the launch of the Oracle payroll system and human resource features will provide government with the ‘greatest potential savings’. He added that in the coming months discussions will begin on how the transition will affect procurement, accounting, vendors, budgeting and final accounts.

Mr Wilson said: “This process is comprehensive. As we move on, we’ll be talking about the linkages between the procurement and the accounting system. We will be talking about vendor relationships and how they will be impacted; changed by the system. And, finally, we’ll talk budgeting and the final accounts.

“We want new final accounts which can be read by anybody, understood by anybody. That’s critical. To me, that’s a mark of success. Those are things that will be covered in the coming months but, right now, the first phase of this is concentrating on payroll, human resource models, because that’s what we are going to launch first and that has the greatest potential savings for the Government.”