Il-bieraħ 29 ta' Novembru l-uffiċċju tal-Awditur Ġenerali ppubblika r-rapport tiegħu għas-sena 2015. Fost diversi kontijiet pubbliċi kien hemm dak tal-fond Ġenerali tal-Pulizija li minkejja li suppost kien isir l-awditjar tiegħu kull sena, dan qatt ma kien sar għal snin sħaħ. Kien bis-saħħa tal-POU-GWU li għall-ewwel darba kellu jibda jsir tali awditjar tal-fond u jmur għall-verifika għand l-Awditur Ġenerali.
Iż-żmien qed jagħti raġun lill-POU-GWU li l-affarijiet ma kenux qed isiru sewwa u biex bdew isiru l-affarijiet skont il-liġi l-POU-GWU kellha tordna direttiva lill-membri tagħha ma jħallsux diversi kontribuzzjonijet. Fil-fatt l-unjin kienet ħarġet direttiva biex il-membri tagħha ma jħallsux il-kontribuzzjonijiet ta' Ġunju u Settembru tas-sena 2015, kif ukoll Ġunju ta' din is-sena.
Mir-rapport tal-Awditur Ġenerali joħorġu diversi nuqqasijiet għal mod kif jiġi amministrat tali fond. Hawn taħt wieħed jista' jsib il-kontenut tar-rapport tal-Awditur Ġenerali fejn jirrigwardja l-Fond Ġenerali tal-Pulizija.
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Malta Police General Fund
NAO Audit Report for year 2015
Background
The
Malta Police General Fund (MPGF) was set-up in November 1919 and has
been, to-date, maintained by the Commissioner of Police (CoP) for the
general benefit of the Force. In line with S.L. 164.01 Article 12 (1
and 2), all members of the Force, who joined after 30 November 1919,
shall make a mandatory contribution of €13.98 every three months.
The
aforementioned legislation also stipulates that the accounts related to
the Fund shall be audited annually by the Auditor General. However, no
records were ever forwarded to the National Audit Office (NAO) prior to
the year under review.
In
addition to the MPGF, in line with Article 11 of the same legislation
CoP keeps two accounts, namely an Officers’ Mess, as well as another
mess referred to as Other Ranks’ Canteen (ORC). In the former case,
which covers contributions from those members of the Force not below the
rank of Inspector, membership is compulsory. On the other hand, the
ORC comprises all the members below the grade of Inspector, and
subscription is voluntary. These two accounts, however, were outside
the scope of the audit.
A
number of internal circulars, dating back to 1978, were provided in
relation to the amount to be contributed, with the latest issued in
December 1998. The respective contributions payable by members of the
Force with effect from 1 January 1999 are being reproduced in Table 1.
The collected amounts are then apportioned as indicated in Table 2.
Auditors
were verbally informed that members of the Force are also given the
option to continue paying a standard contribution of €13.98 per annum
once they retire from the Force. However, no documentation was provided
during the audit to substantiate this rate.
Internal Circular No. 79, dated 23 July 1980, highlighted the principal aim of the MPGF as follows:
a. The welfare of officials who, for some reason or other, pass through hard times and would require assistance.
b. Other activities for the benefit of the Force, such as the learning of foreign languages.
This
was followed by another circular dated 9 June 1981, setting out the
payment of €2,329.37 (Lm1,000) to the dependants of Police Officers who
die while in service. Moreover, although not included in any of the
circulars provided, heirs of Police Officers who pass away after their
retirement receive the amount of €1,560.68.
Up
to December 2015, the upkeep of financial records related to the MPGF
fell under the responsibility of a civil servant, who was since
transferred to another Department. With effect from 1 January 2016,
such responsibility was taken over by a police constable, referred to as
the Accounting Officer throughout this Report. The Final Accounts of
the MPGF for the year 2015 were drawn up and forwarded to NAO for audit.
Financial Background
The
Final Accounts referred to above included two separate Income and
Expenditure Statements; one based on cash receipts and payments and one
that included income and expenditure amounts that were still outstanding
at year-end. A Cash Movement Statement and Notes to the Accounts were
also presented.
Income
Actual aggregate income received in 2015 amounted to €166,089. This comprised the amounts indicated in Table 3.
The
one-time deposit of €64,225 made into the MPGF came from the transfer
of proceeds from a number of other bank accounts administered by CoP5,
which were closed during the year under review. This transfer was
considered necessary since the funds available in the MPGF were not
enough to cover all the expenses.
Further to the above, an aggregate amount of €62,406 was shown as outstanding income, as reported in Table 4.
Expenditure
Aggregate expenditure paid during the year under review totalled €107,508 and comprised the amounts shown in Table 5.
A further amount of €145,096 was recorded as outstanding expenditure, including the items in Table 6.
Taking
into consideration the opening cash balance of €18,890 and assuming
that all the outstanding income recorded in the Statement is received,
the above expenditure still leaves the MPGF in a deficit position of
€5,219 as at 31 December 2015.
Audit Scope and Methodology
The
main scope of the audit was to assess the level of internal controls
prevailing in the management of the MPGF, and to determine whether
day-to-day operations reflect efficient administration of the monies, in
line with applicable regulations. Other objectives of the audit were
to:
a.
obtain reasonable assurance that all monies were accurately recorded
and are duly covered by supporting documentation enabling independent
verification;
b.
identify any concerns with the procedures in place for receiving,
handling, safeguarding, and depositing of monies, and providing
recommendations thereto; and
c. determine the degree of compliance with applicable rules and regulations.
Initial
meetings held with the Accounting Officer, as well as the officer in
charge of the contributions’ collections revealed that adequate audit
trail for the collection of such amounts did not exist. Accounting
records were also incomplete and no safeguards were in place to prevent
or detect material misstatement.
As
a result, a risk-based approach was adopted for audit purpose, whereby
testing was largely focused on the revenue collection system in place to
determine the level of internal controls and reliability of records.
Testing carried out was focused on the following areas:
i. Contributions by serving members.
ii. Mutual Help payments to pensioners.
iii. Payments to heirs of serving and non-serving members.
iv. Contribution for Christmas parties.
v. Amounts transferred to MPA and the Police Officers’ Mess.
Limitation on Scope of Audit
Adequate
books of account were not in place as at time of audit. The only
records provided for audit purposes were two spreadsheets, both
comprising payments and receipts, one drawn up by the current Accounting
Officer following the assignment of his new responsibilities, while the
other one was drawn up by the outgoing officer during her tenure. The
latter record contained material discrepancies, highlighted further down
in the Report, and which data was considered unreliable. Thus, a new
one was drawn up by the Accounting Officer. However, this was solely
based on deposits and payments showing in the bank statements, with no
consideration for unreconciled deposits and cheques as at year-end.
Given
the lack of official documentation supporting the contribution of €6.99
made for each member of the Force for the organisation of Christmas
parties, the payments effected to heirs of non-serving members, as well
as other disbursements relating to hospitality, the regularity of such
transactions could not be ascertained. For the same reasons,
completeness of the amount of €3,980, recorded as received from MPA for
the 2014 children’s Christmas party, could not be confirmed.
Inadequate
audit trail and the lack of a unique receipt number also hindered
reconciliations between amounts forwarded to the Accounting Officer and
the deposits in bank. This shortcoming has since been partly addressed,
as a numbered receipt was then being given by the new Accounting
Officer every time money is received.
Key Issues
Financial Sustainability of the Malta Police General Fund
Despite
the one-time deposit of €64,225 transferred to MPGF from several
dormant bank accounts to cover part of the expenditure incurred during
the year, when taking into consideration both outstanding income and
expenditure, as well as cash available from previous year, the Fund
still ends the year in a net deficit of €5,219.
This
situation has been partly triggered by the fact that whilst the amount
received from retired officers during the year under review amounted to
€14,028, contributions due to heirs in respect of non-serving officers
who passed away during 2015 amounted to €40,5779. This also indicates
that the scheme is not sustainable and, unless changes to the present
contribution and payment system are established, the Malta Police Force
(MPF) may not be in a position to settle outstanding debt relating to
the Fund in question in the very near future, if the current level of
expenditure is maintained.
Lack of Internal Controls
The
audit revealed that the internal control structure, over the receipt
and handling of cash in particular, is inadequate and of considerable
concern to the NAO. Checks carried out made it amply clear that no
monitoring was in place to ensure that controls are properly designed,
executed and effective. Below is a list of internal control failures
identified during the audit, which will be discussed in more detail
further on in the Report.
a. No proper accounting records maintained.
b. No segregation of duties.
c. Lack of audit trail of cash and cheques received.
d. Receipt books used to record income from pensioners without a sequential number.
e. Financial records of prior years not submitted for auditing, in breach of standing regulations.
f. Lack of official documentation to indicate which expenses can be covered by the Fund.
g. Accrued income and expenditure omitted from the Final Accounts.
h. Cancelled receipts not supported by original copies.
Control Issues
Unclear Purpose of the Fund
Circular
No. 79 of 1980 stipulated that the principal purpose of the MPGF is the
welfare of officials who for some reason or other pass through hard
times and would require assistance. It also indicated that other
activities of benefit to members of the Force, though not connected to
personal hardships, can also be financed through this Fund, highlighting
as a case in point the learning of foreign languages. In addition, the
contributions paid shall cover the Malta Police Mutual Help
Association, the MPA, the MPGF and the Officers’ Mess.
a.
Except for the highlighted circumstances, no other documentation was
provided in connection with the operation of the funds retained in the
MPGF. In view of the vague information available vis-à-vis the expenses
that may be paid out of the MPGF, it could not be ascertained that
amounts charged to the Fund are actually for the general benefit of the
Force as indicated in S.L. and Circular No. 79 of 1980.
b.
An analysis of the expenditure charged to the MPGF during 2015,
totalling €107,508, revealed that 51% related to hospitality. The total
amount of €54,805 comprised different social activities and parties
organised by CoP (€43,866), and the contribution paid for parties to
members of the Force held in the individual districts and stations
(€10,939).
On
the other hand, as at 31 December 2015, payments to the heirs of
non-serving members, amounting to €29,913, were still outstanding.
In
the absence of guidelines clearly setting out the purpose of the Fund,
as well as its specific use, the possibility that monies deposited
therein are used as an extension of the budgeted allocation, for
purposes other than those intended for, is significantly increased.
Moreover, given that priority is being given to hospitality related
payments, MPF may not be in a position to meet other obligatory
commitments in the future.
Amounts Payable from the Fund not duly approved
a.
The amount of €3,144.65 payable to the heirs of each serving member,
exceeds that of €2,329.37 stipulated in Internal Circular No. 57 of 1981
by €815.28. This higher rate was not supported by documentation
evidencing approval.
b.
No official documentation was provided to substantiate the payment, as
well as the rate of €1,560.68 payable to heirs of non-serving members.
c.
Similarly, the payment of €6.99 paid by CoP on behalf of each member of
the Force, for the organisation of Christmas parties at the respective
districts and stations, is also not covered by any documentation,
confirming its approval.
Completeness of Income Receivable not ensured
Completeness
of the amount of €3,980, recorded as received in MPGF from MPA, could
not be ascertained since an agreement between both parties was not
available for audit purposes. Moreover, although Auditors were informed
that payments due to MPA covered the period up to February 2015, i.e.
the period when such contribution stopped being transferred to the
latter, this was not formalised.
Revenue Collection Process
Serving Members
General
collection of the contribution due takes place every quarter, where
cash is collected by all districts, units and divisions under their
charge from every serving member of the Force. Each of these sections
has a receipt book, with five receipts in every sheet. However, only
the sheet is numbered, with the individual receipts having no specific
reference. The receipts come in triplicate format, with the original
given to the paying officer, a copy kept by the officer in charge of the
contributions together with the money at the Police General
Headquarters, while the last copy retained by the individual sections.
Pensioners’ Contributions
The
contribution of €13.98 per annum by non-serving members is payable on a
voluntary basis. Respective receipts, which are not numbered, are
printed every year by the officer in charge of the contributions.
a. Lack of Segregation of Duties
Despite
the significant amounts collected from contributions which, as per the
financial records provided, amounted to €97,72210 in 2015, only two
officers were involved in the cash handling process, namely the officer
in charge of the contributions and the Accounting Officer. The former
collected the monies, retained custody thereof, issued receipts, carried
out reconciliations, as well as maintained the respective records,
while the latter was responsible for preparing the bank deposit slips,
the remittance of money into the bank and updating the spreadsheet.
Thus, segregation of duties was lacking and is of a major concern to
NAO.
Furthermore,
given that both officers were doing this over and above their normal
duties, they were receiving a quarterly allowance11 for the extra work
involved.
b. Lack of Basic Accounting Records
Proper
books of account were not maintained; neither by the officer in charge
of contributions nor by the Accounting Officer. The latter kept a
spreadsheet; however, this merely indicated the transactions as
reflected in the bank statement, including expenses such as bank
charges. Furthermore, it contained a number of errors as highlighted in
the next observation. Moreover, because of a computer problem in 2014,
which resulted in a loss of records pertaining to the last six weeks of
that year, the opening balance for 2015 was also taken to be that of
the respective bank statement.
c. Discrepancies in Records
As
already indicated, the spreadsheet kept by the previous Accounting
Officer was deemed to be unreliable. The following shortcomings were
identified during the audit:
i. A cheque amounting to €4,129.80, was included twice in the said spreadsheet.
ii.
Deposit of €140 related to the contribution collected for quarters
March, June and September 2015, was recorded in the said spreadsheet as
€1,400.
iii.
Revenue entries, amounting in total to €1,916.60, as well as proceeds
transferred from other accounts, totalling €64,225, were not traced in
the spreadsheet.
iv.
A total amount of €2,174.66 remitted to bank between 11 and 12 February
2015 was indicated in the previous Accounting Officer’s records as
deposits by Gozo. However, this was neither supported by bank deposit
slips nor confirmed by the Gozo Superintendent.
While
acknowledging that these shortcomings were already identified by the
new Accounting Officer, and a new spreadsheet eventually drawn up, the
relevant record created was only based on the bank statements and cheque
stubs traced in retrospect, thus still lacking completeness.
Furthermore,
despite that the date of payment of the respective contribution
constitutes a main audit trail, it transpired that not all receipts were
dated.
d. Weakness in the Pensioners’ Contribution Collection Process
The
only records related to the contributions paid by pensioners are the
receipts, indicating the date of payment on the stub. This does not
provide the required level of comfort as regards completeness of
income.
e. Serving Members’ Contributions
The
fact that receipts given on the collection of contribution from serving
members are not individually numbered, and thus, no reference to this
could be made in the manual records drawn up, does not promote
transparency and also lacks audit trail.
Eleven
contributions related to the sampled period, i.e. September quarter,
were not traced in the records. It transpired that three of the said
receipts were omitted from the 2015 records. These were then included
in 2016, after being pointed out during the audit. In the other
remaining eight cases, these were still not traced in amounts forwarded
to the Accounting Officer for the eventual deposit.
Several
instances were also noted where cancelled receipts were not supported
by their originals. Furthermore, it transpired that the officer in
charge of contributions was signing the receipts in advance.
f. Handing over of Cash not substantiated
Besides
the lack of segregation of duties, it also transpired that the transfer
of money to the Accounting Officer was not supported by any
documentation. During the year under review, the then Accounting
Officer only endorsed the amounts indicated in the manual records
maintained by the officer in charge of contributions. With effect from 1
January 2016, a receipt started being issued by the Accounting Officer
once money is handed over; however, completeness of the said amounts is
still not being checked.
g. Discrepancies between Monies Collected and Bank Deposits
As
per information gathered by NAO, monies collected in respect of the
2015 annual contribution payable by pensioners amounted to €14,418, of
which €6,256 was prepaid in 2014.
It
was established that a total of €10,582 from the amount in question was
deposited in bank in 2015. However, total amount actually deposited in
2014 could not be reliably determined, in view of the lost data
pertaining to the said period, as indicated further up in this Report.
As a result, completeness of such remittance could not be ascertained.
The
officer in charge of contributions remitted a total of €77,655 covering
contributions received from serving members between 6 January and 24
December 2015. On the other hand, deposits in bank between 8 January
and 28 December 2015 totalled €80,958. Again, a reconciliation could
not be performed because amounts received in previous year which were
not deposited could not be separately identified. Furthermore, without a
unique reference, such as a receipt number, attempts to reconcile
individual quarter deposits also proved very difficult.
Contributions paid in Cash
Despite
that the payment of contribution is a statutory requirement and has to
be paid by all members of the Force, the settlement thereof is still
being effected by cash, rather than through more effective options
available, such as direct deduction from the respective salaries. As a
result, the officer in charge of contributions is ending up with
significant amounts of cash in hand.
In
addition to the risks prevailing with cash handling, this method does
not ensure that all contributions due are collected in a timely manner,
if at all. It also results in a significant unnecessary workload.
Inaccurate Balance of Funds at Year-end
As
highlighted under ‘Background’, the difference between the amounts paid
by higher ranks and the €13.98 is initially paid into the MPGF, and
eventually transferred out to the Officers’ Mess account. Similarly,
the contribution of €3.49 per officer, payable to MPA up to February
2015, was also being deposited to the MPGF and then transferred to the
Association. By the end of 2015, the aggregate balance which was not
yet transferred amounted to €26,333, out of which €19,174 pertained to
MPA for the last two quarters of 2014, and €7,159 due to the Officers’
Mess. As a result, the bank balance as shown in the account prior to
the said transfers is theoretically inflated. This might result in MPF
entering into commitments based on the said financial information, which
in fact will not be able to be met out of the actual funds available.
Insufficient Control over Income for Mutual Help
In
line with Internal Circular No. 91 of 1998, €3.50 of the contribution
paid shall be used for Mutual Help. However, given that this money is
not segregated, it cannot be ensured that the portion of contribution
intended for such assistance is actually being retained and used for its
intended purpose, particularly in view of the limited controls over the
said Fund.
Incorrect Payments and Other Administrative Shortcomings
a.
The amount of €37,196 reported in the Income and Expenditure statement
as ‘Payments to heirs of non-serving members’ was overstated by €1,300
and €2,861 when compared to the amounts indicated in the spreadsheet
supporting the accounts and the list of cheques respectively. It
transpired that part of the latter discrepancy was due to the fact that a
cheque, amounting to €1,561, was included in the spreadsheet but not in
the list of cheques provided with the same record.
b.
A variance of €7,804 was also noted between the amount paid to heirs of
non-serving members, as per information obtained from the officer in
charge of contributions (€28,092) and the amount of €35,896 indicated as
paid in the spreadsheet.
c.
According to a spreadsheet provided by the officer in charge of
contributions, a total of 1,656 officers paid the contribution due for
the said period by the 25 November 2014, being the date of cheque to
MPA. Based on this information, the related payment to MPA should
amount to €5,77912 and not €6,090 as shown in the financial records.
d.
As indicated earlier on in this Report, the CoP makes a contribution of
€6.99 per officer towards Christmas parties organised in the individual
districts and stations. It transpired that while the payments effected
tallied with the amount in the financial records, the number of
officers showing in the calculation of contribution differed from those
included in Human Resources (HR) records, despite that the list of
contributions payable is drawn up by the same HR Section.
Moreover,
it was noted that the amount paid in 2015 was €10,939; however, only
€4,977 related to that year and just covered the contribution of 712 of
the 2,162 employed as at 31 December 2015. As a result, the amount of
€4,620, being outstanding contribution featuring in the accounts, which
covers only 661 employees, is significantly understated as this should
be increased by an additional €5,28413.
e.
As per NAO’s workings, the payment due to MPA (€21,481), and that
reported in the financial records (€19,174) varied by €2,307. However,
given that information provided indicated only the deposit date rather
than the collection date, the accurate amount could not be established.
Misleading Accounting Information
As
highlighted in the ‘Financial Background’, the records provided were
fragmented and a combination of cash and accrual accounting. Whilst
acknowledging that this is the first time that financial records were
drawn up, the method adopted shows a misleading picture for the year
under review. It is also considered an unreliable basis for strategic
decisions that may be taken thereupon.
Christmas and Police Day Social Activities
a.
A total of €43,866, being 41% of the expenditure incurred during 2015
from the MPGF, related to Christmas and Police Day social activities.
From this amount, €7,562 covered the acquisition of presents for
children for the 2014 Christmas party. It was also noted that the
respective invoice, as well as another bill amounting to €398, raised by
ORC in connection with the same party, were both addressed to the
Entertainment Committee MPA. However, both invoices were charged to
MPGF.
b.
An amount of €3,980 was eventually received from MPA in respect of the
said Christmas party. Since no documentation was provided by CoP,
reflecting the agreement between MPA and the Police Force, correctness
and regularity of the amounts in question could not be ascertained.
c.
Another €35,763 out of the aforementioned amount of €43,866 covered
payments to ORC in respect of food and beverages, provided for the
various receptions and other social activities hosted by CoPs in 2014
and 2015. On analysing the respective records, it was noted that
certain items were not individually priced, hindering verification.
However, the manual invoice was still endorsed.
d.
Moreover, while the quantities did not change much from one reception
to another, prices were rather inconsistent. This also applied for the
‘Miscellaneous’ charge, which was included in each and every invoice, to
cover all disposables, comprising amongst others, napkins, tooth-picks,
plates, cups, tumblers, dishes, forks and table covers.
Compliance Issue
Financial Records not submitted to NAO for Auditing Purposes
Despite
that it is clearly stipulated in the law that records related to MPGF
shall be audited by the Auditor General on an annual basis, no financial
records were ever submitted to NAO prior to the year under review. In
addition to non-compliance with the law, this has enabled a culture of
lack of controls to prevail, allowing the highlighted malpractices to
become embedded in daily operations, and which now may be hard to
change.
Recommendations
Key Issues
Financial Sustainability of the Malta Police General Fund
A
thorough exercise, to establish the contribution to be paid and to
identify any unnecessary expenses, is recommended. Related expenditure
is also to be controlled through strict budgetary measures, taking
immediate action in case of deviations.
Lack of Internal Controls
CoP
is urgently expected to review and strengthen the internal control
systems in order to ensure sound financial management. Such controls
are fundamental to the successful operation and day-to-day running of
the Fund. To this effect, Management is to develop its own procedures
having regard to its specific circumstances and characteristics.
Ideally, controls are to be embedded in the operations and form part of
the overall culture, be capable of responding quickly to evolving risks,
and include procedures for reporting immediately to appropriate levels
any identified weaknesses and significant control failures. This would
ensure timely corrective action.
Notwithstanding
the above, sound internal controls cannot eliminate the possibility of
processes being deliberately circumvented by the collusion of employees
or poor judgement in decision-making. Thus, staff and operations should
be duly supervised by competent officers who understand the processes
and procedures that are in place, and who are ready to query as
necessary, and take the required action to address any shortcomings in a
timely manner.
Control Issues
Unclear Purpose of the Fund
MPF
is expected to prioritise expenditure, leaving aside enough funds to
cover committed disbursements. After consultation with the trade unions
representing the members of the Force, a circular to this effect can be
drawn up, highlighting the nature of expense that is to rank before
hospitality.
Amounts Payable from the Fund not duly approved
It
is recommended that an official policy is drawn up, indicating what may
be charged to the MPGF, as well as the respective amounts.
Completeness of Income Receivable not ensured
Another
policy should highlight the nature, frequency and amounts receivable,
enabling independent parties to carry out verifications intended to
ascertain completeness of income.
Revenue Collection Process
Lack of Segregation of Duties
Segregation
of duties constitutes a critical component of an effective internal
control system. The main idea is that of maintaining checks and
balances by preventing any one person from having access to the asset,
as well as having the responsibility for maintaining its
accountability. It is thus recommended that key tasks, particularly
those relating to the receipt of cash, custody, record keeping and
reconciliations, are assigned to different individuals.
In
view of the above, NAO recommends that, as far as possible, more staff
is involved in the revenue collection process. Another officer should
thus keep independent records of such revenue. On a daily basis, all
income together with the respective receipts is to be forwarded to the
latter who shall record it in a cashbook. Once cash is remitted to the
Accounting Officer, he shall also record the money received in a
separate cashbook. Ideally, the money is handed over to a different
officer who shall prepare the bank deposit slip and remit the amount to
bank. The Accounting Officer shall then carry out regular bank
reconciliations to ensure completeness. It is also recommended that
such key tasks are covered by Standard Operating Procedures, clearly
highlighting the established course of action and roles of the
respective officers.
Lack of Basic Accounting Records
NAO
reiterates the importance of keeping proper books of account at each
point where money is received, including the use of a cashbook. It can
be maintained in either manual or electronic format. However, in order
to be effective, besides the amount, the cashbook must contain at least
the date and nature of transaction. Ideally, it is also to include a
reference to underlying documents such as receipts, as well as a
signature of the officer recording the transaction.
In
the case of the officer in charge of contributions, such record will
only include the income received on specific days, the source and the
amount forwarded to the Accounting Officer. To ensure an adequate audit
trail, receipt numbers are to be indicated. A separate entry should
also be made when the monies are forwarded to the Accounting Officer.
The
cashbook of the Accounting Officer is expected to include any income
received and payments issued from the account, as well as relevant
details and bank deposits. This record shall then be reconciled to the
bank statement on a regular basis and a bank reconciliation statement
drawn up.
Discrepancies in Records
MPF
is encouraged to implement the recommendations provided under the
previous observations as soon as possible. Furthermore, it is important
that someone with a basic accounting knowledge oversees their
implementation and explain the importance of such changes while ensuring
that they are embraced by all.
Weakness in the Pensioners’ Contribution Collection Process
An
urgent overhaul of the current system is recommended. A standard
application form can be drawn up to be filled by non-serving members
interested in paying the contribution and recorded accordingly in a
spreadsheet, where payments and their respective dates are to be
indicated. Details shall be verified on a regular basis with records
obtained from the HR Section. Furthermore, the use of pre-printed,
sequentially numbered receipts is recommended. It would also be ideal
if both the paying and the receiving officer endorse the receipts. All
transactions are to be recorded in a cashbook, clearly showing income
received and bank deposits.
Serving Members’ Contributions
As
already indicated, both Head Office and the individual sections are to
use pre-printed general receipts which are individually numbered. It is
also recommended that all payments received at a specific section, with
receipts issued there from, are remitted accordingly. A reconciliation
exercise is to be carried out on a regular basis to ensure
completeness. If need be, separate records may be kept to show the
employees allocated to their specific units, and whether contribution
has been paid or not.
Handing over of Cash not substantiated
The
handing over of money is to be accompanied by a record showing a
detailed breakdown of the amounts in question. Surprise checks are also
to be carried out on the receipts maintained by the officer in charge
of the contributions to ensure accuracy of records and amounts submitted
to the Accounting Officer.
Discrepancies between Monies Collected and Bank Deposits
Records
are to be maintained in a way that enable reconciliation between the
different sets of documents. It is recommended that the receipt number
is used as a unique reference. This would provide a full audit trail
from the collection of cash to its eventual deposit in bank. The
cashbook shall also clearly indicate the receipt numbers supporting both
the income received and the deposits effected.
Contributions paid in Cash
Management
is encouraged to consider collecting the contribution through bank
transfers simply by deducting the necessary amounts from the respective
salaries. In addition to ensuring that all the monies are collected as
they fall due, this will reduce significantly the workload of the
officer in charge of contributions, since most of the tasks identified
previously will be eliminated, while mitigating the risk of errors and
abuse that very often is associated with cash.
Inaccurate Balance of Funds at Year-end
In
order to have accurate and reliable information, enabling efficient and
effective decision-making, it is recommended that funds that do not
relate to the MPGF are remitted directly into the respective accounts.
Insufficient Control over Income for Mutual Help
Money
intended for specific purposes is to be kept in separate accounts,
ideally managed by different officers. Hence, more control will be
exercised over the said funds, reducing the possibility that they are
used for reasons other than those intended. Furthermore, this will also
result in more accurate, reliable and up-todate information,
translating into effective and efficient decision-making.
Incorrect Payments and Other Administrative Shortcomings
Payments
are to be computed on the basis of reliable and updated information,
providing adequate audit trail to enable independent verification.
Misleading Accounting Information
It
is recommended that financial records are drawn up in line with
International Accounting Standards. Expenditure shall be accounted for
in full, reporting one end figure of surplus or deficit. Ideally, a
Statement of Financial Position, wherein all assets and liabilities,
including prepayments, accruals, receivables and payables amongst
others, shall accompany such financial records.
Christmas and Police Day Social Activities
It
is recommended that expenditure incurred during such activities should
be invariably contained within the limits of available financial
resources.
As
regards ORC, it is recommended that a thorough review of the items
provided and respective prices is carried out, ideally after obtaining
quotations from other commercial entities in order to ensure that the
prices being charged are fair and reasonable. Orders are also to be
placed in writing, enabling reconciliation of the invoice at a later
stage. It is also recommended that thorough checks are carried out
prior to effecting payment.
Compliance Issue
Financial Records not submitted to NAO for Auditing Purposes
The
provisions of the law are to be complied with and records are expected
to be submitted to NAO in a timely manner. Such a review is also to be
considered as an exercise aimed at identifying areas for improvement.
Actions to implement the recommendations provided in this Report are to
be taken, thus ensuring that best practices are incorporated in
day-to-day operations.
Management Comments
As at date of publication of this Report, no Management comments were submitted.
Report by the Auditor General on the Public Accounts for year 2015 - Published on 29/11/2016
