The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The agency responsible for the government’s digital transformation has yet to fully address admitted weaknesses in its procurement and supplier controls that “could open the door for wrongdoing”.

Management at the Department of Transformation and Digitisation, responding to the “unsatisfactory” rating given by the Auditor General’s Office, pleaded guilty to deficiencies in its processes and the absence of policies to guide management of payments to its vendors.

It pledged to write the necessary guidelines and policies by end-April 2021, and implement them - together with a vendor management system - by June 30 this year. Given that the Auditor General’s Office report assessed the period between July 1, 2018, and June 30, 2019, this is seemingly an admission that the vulnerabilities identified have yet to be fully addressed two years’ later.

“The Department of Transformation and Digitisation acknowledges the deficiencies of its processes/procedures,” the Auditor General’s Office report said of management’s response to its findings. “It is also agreed that there is a need for proper vendor management, the creation of policies and the establishment of a registry for easy access to the policies.

“Management agreed that these weaknesses were not indicative of fraud, criminality or malfeasance although if not corrected they could open the door for wrongdoing.” The report added that a finance officer was employed at the department from 2019 to address payment and procurement processing, while the registry referred to is set to be created by June 30 this year.

Outlining “a lack of governance” and “inconsistency in the execution of vendor payments and lack of adherence to policies”, the Auditor General’s Office found some 346 payments - more than 20 percent - of a total 1,426 made by the department between 2017-2018 and 2018-2019 - lacked an invoice number, while dates were missing for two invoices - worth almost a collective $104,000.

“This can result in transactions being processed before invoices are received or vendors may be paid before goods and services are received without the proper approvals,” the report found.

Turning to purchase order processes, the Auditor General’s Office added: “During our review we requested supporting documentation for 50 transactions. However, the Department of Transformation and Digitisation was unable to provide the supporting documentation for seven of the requested transactions.”

These involved collective payments worth $1.5m to the vendors involved. As for its inspection of the supporting documents that were received, the Auditor General’s Office said: “We noted that various transactions did not have the appropriate approval in accordance with the Department of Transformation and Digitisation’s policies.

“Specifically we observed 16 transactions without a service request approval from the authorised personnel. Where Department of Transformation and Digitisation’s policies are not followed, transactions taking place without the appropriate authorisation can lead to misappropriation of funds. 

“In addition, the Department of Transformation and Digitisation can be held liable for actions performed by individuals who were not authorised to do so.” The 16 transactions identified again involved combined payments worth more than $1m, with the highest amount paid to a single company just shy of $500,000. None of the vendors were named in the report.

The Auditor General’s Office also found that the signatory on one invoice was a messenger, while four invoices had no signature at all. It added that duplicate invoices could easily be entered in the absence of a tracking system, which could result in under or overpayment to vendors, late and missed payments and unauthorised payouts.

Some payments were also being made without invoices, and instead relied on sales orders, statements and quotes. And of 25 contracts requested by the Auditor General’s Office for inspection, only three were produced, leading to the possibility of “unwarranted” payments.

“Through discussions with management we were advised that the Department of Transformation and Digitisation does not currently have a process to monitor vendor performance and service management to ensure that contracts/services are being performed in accordance with the agreed terms,” the Auditor General’s Office said.

“We noted that contracts are not reviewed on an annual basis. As a result, management was unable to accurately track when payments were due in accordance with contracts. This resulted in late fees being incurred.... These late fee payments related to two vendors in the amount of $63,358.”

Six transactions that took place in 2017-2018 were also recorded in the following fiscal year. “As a result of the lack of contract review and management, avoidable expenditure can be incurred resulting in the Department of Transformation and Digitisation not utilising funds as efficiently as possible due to non-compliance with contract terms,” the Auditor General’s Office added.