The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s two key revenue-generating agencies are unable to rebound quickly if struck by a major disaster, the Auditor-General warning that they “are not effectively managing their [IT] systems”.

The March 31, 2015, report on information technology (IT) governance practices at the Customs and Inland Revenue departments found that neither would be able to resume operations within “a short period of time” should they be hit by a hurricane or any other catastrophe.

Terrance Bastian, the auditor-general, in summarising his office’s findings, said the weaknesses stemmed from neither department possessing “a formal or approved” Business Continuity Policy or Disaster Recovery Plan.

The audit, which assessed “the effectiveness of IT management” at the two agencies, found that Customs’ front-line and backup IT systems were not compatible and had to be “integrated”.

It added that this ‘integration’ was postponed due to the late-2014 rush to implement Value-Added Tax (VAT), and as a result Customs “is unable to do a full test for disaster recovery”.

The Auditor-General’s findings paint another damning picture of poor planning, organisation and readiness at two agencies who, prior to VAT’s implementation, collected a total 70 per cent of the Government’s annual revenues (based on the 2011-2012 fiscal year).

VAT’s arrival, and the creation of the Central Revenue Agency (CRA), means that the proportion of government income collected by Customs and the Department of Inland Revenue is likely, if anything, to have increased.

For the upcoming 2015-2016 Budget year, Customs is projected to collect around $648 million in import tariffs and Excise Taxes, while the Government is forecast to earn a collective $291 million in Business Licence fees and real property taxes via the Department of Inland Revenue

Thus the two agencies that are the subject of the Auditor General’s report are due to collect almost $939 million on the Government’s behalf over the next 12 months. And that excludes the $200 million Customs is projected to collect in VAT, which will ultimately be ‘netted off’ or reclaimed by businesses.

As a result, any significant IT-related disruption to either agency’s operations could seriously affect the Government’s revenue collection/operations at a time when it needs to lay its hands on every dollar due to it.

The audit, conducted over a two-year period that concluded at the end of the 2012-2013 Budget period, was presented to top Customs and Inland Revenue officials in February-March this year before being tabled in the House of Assembly yesterday.

Summarising its findings, the Auditor-General’s Office said:

“The Customs Department and Department of Inland Revenue are not effectively managing their revenue systems.....

“In the event of a disaster, Customs is uncertain if it can get up and running in a short period of time, and the Department of Inland Revenue will not be able to get back up and running in a short time period.

“We were informed that production and back-up systems at the Customs Department do not have the same operating system and, as such, have to be integrated. Customs is unable to do a full test for disaster recovery.”

The Auditor-General’s report added that Customs had planned to begin “synchronisation” of its IT systems in October 2014, which would have enabled it to conduct a disaster recovery test upon completion.

“However, due to the critical nature of VAT implementation, the synchronisation of the systems has been postponed,” the report added.

The Auditor-General’s report urged Customs to complete the integration as rapidly as possible, and called on the Inland Revenue Department to prepare and test its own disaster recovery plan.

In response, Customs said it had set a “target date” of this month to complete software migration that will allow it to test its back-up IT systems.

Its Business Continuity Plan was supposed to have been completed by May 30 - the end of last week, while the risk assessment is due to be finalised by July 2015.

Mr Bastian, in his overview of the report’s findings, said: “Customs and the Department of Inland Revenue do not have any reliable estimates for how long it would take them to recover from a disaster.

“The report reveals that the Customs Department and Department of Inland Revenue do not have a formal or approved IT governance structure, IT strategy or Business Continuity Policy.”

The Auditor-General’s audit appears to have been sparked by a combination of the two departments’ increasing importance, and the significant IT-related investments being made by the taxpayer in them.

Some $11.845 million, or 72 per cent, of a $16.5 million Inter-American Development Bank (IDB) loan is being used to strengthen, modernise and automate Customs’ processes.

And the Department of Inland Revenue has contracted Tyler Technologies to implement new software for a real property tax management system.

The Auditor-General’s report recommended that both Customs and Inland Revenue develop their own IT governance structures “to manage requirements and effectively use limited IT resources”.

Both agencies had said the Ministry of Finance was ultimately responsible for IT governance, but agreed to follow the Auditor-General’s recommendations and implement their own.

For the audit found that the Ministry of Finance, as well as its two key revenue collectors, did not have any bodies to oversee IT governance.

“Committees are created on an ad hoc basis with the relevant stakeholders such as the financial secretary, management of the relevant agency and an IT specialist,” the Auditor-General’s report found.

The Ministry of Finance was already moving to create a standing committee to oversee IT matters, something that was recommended by the Auditor-General, and Customs and the Department of Inland Revenue pledged to co-operate with it.

Both agencies also agreed with the recommendation that they develop IT strategies, as the Auditor-General’s Office also called on them to upgrade their ‘incident reporting’ systems.

“Customs Department management stated that about 25 per cent of the user incidents are handwritten,” the report said. “However, plans are in place to fully automate this process to better track issues and to develop a knowledge bank for future user support.”