The contracts for the printing of pension books leave the Ministry of Human Services and Social Security “open to exploitation,” according to an audit of the Old Age Pension (OAP) Programme and the Ministry has asked the guidance of the Audit Office in revising them.
The review of the OAP has also found that it still takes a long time to process applications, resulting in pensioners losing their entitled benefits since pension payments are not back-dated. The Performance/Value for Money audit was undertaken by the Audit Office of Guyana and the report was submitted to the National Assembly recently. It covered the period January 2008 to September 2009. At September 2009, there were 42, 666 persons receiving pension payments, which totalled $2.419B.
According to the report, the audit revealed several weaknesses, including that the contract with the printery regarding pension books had significant deficiencies and resulted in weaknesses over the security and the control of pension books. The Ministry did not design, control or have ownership of the software used for the printing of pension books. In addition, there were no measures in place to monitor the printing process and the quality of printed books. “As a result of the lack of control over the software and printing process, there is a risk of fraud occurring,” the report says.
In response, Permanent Secretary in the Ministry Trevor Thomas said that the Ministry would appreciate the guidance of the Audit Office in revising the contracts. In relation to the Ministry taking steps to obtain ownership of the software for the printing of pension books, he said that this will no doubt improve the security and integrity of the coupon but it should be noted that there is no specific or customized design software for the OAP coupons and consequently the actual design can be replicated. To prevent this from happening, the ministry has included some specific features, he said. Thomas also committed to reviewing the storage and security measures in place for pension books during the distribution process, the implementing of quality control systems for the production and receipt of pension books and updating records.
Deficiencies
Another weakness identified by the report is that although the Ministry has an undocumented internal policy for processing—which requires applications for Georgetown and its environs, and hinterland areas be processed within five and 15 working days, respectively—its targets are not being met. On average, it took 12 and 36 working days to process applications for Georgetown and its environs, and the hinterland areas, respectively. In relation to the OAP programme in the hinterland areas, irregularities may occur from payments made to ineligible, deceased or non-existent persons, as a result of the lack of verification of applicants and the manner in which payments are made in those areas, the report says.
Further, information on deceased pensioners is entered into the database between 42 to 131 days after death. As a result, pension books may be issued for such persons and payments made to mediating parties or authorized parties beyond the date of death. This increases the risk of inappropriate pension payments. Furthermore, a sample of death notifications throughout 2008 and 2009 found that in some cases, the database had not been updated at all, the report says.
Thomas said that efforts will be made to ensure that pension applications are processed within the time frame, in accordance with articulated policy and established procedures.
The report also pointed out that the serial number of pension books issued to pensioners were not entered into the OAP database as a means of tracking the allocation of pension books and coupons to pensioners. In addition, information on pension payments processed by the Guyana Post Office Corporation (GPOC) was not entered into the database. As a result, the Ministry could not match payment information to pensioners recorded in the database to ensure that only eligible persons were in receipt of pension payments. Without cost information entered into the database, the Ministry could not readily monitor pension programme costs, the report points out.
It also pointed out that physical access to the rooms at the Ministry where the servers and workstations supporting the OAP database are located, is not restricted. And although the Ministry has established backup procedures, there is no security software on the server.
It was also noted that the Ministry has adopted a policy since 2005 whereby re-migrants must have resided in Guyana for two years prior to application for OAP. Consequently, all pensions paid to re-migrants based on the adopted policy are outside the scope of the Minister’s legal authority, the report pointed out.
In breach
It concluded that the Ministry was in breach of the Old Age Pension Act 1944, by not applying the proper eligibility criteria for the payment of OAP to re-migrants. In addition, there is a risk of pension payments being made to ineligible or non-existent persons. Also, there were deficiencies over the production, distribution and storage of OAP books and there was no evidence to support the accuracy, completeness and security of the database. Further, since pension payments were not reconciled to the database, this impaired the ability of the Ministry to account for pension costs. Therefore, the OAP system administered by the Ministry did not allow for the prevention and detection of manipulation or fraud.
In response, Thomas said that the draft recommendations to the Old Age Pension Act are currently at the Attorney General’s chambers. He also said that the Ministry will consider strategies to ensure that the database is promptly updated to allow for accuracy and completeness of the Ministry’s pension population as well as restricting access to the Database Processing Department to authorized personnel only. In relation to a recommendation to review the access of users so as to reduce the risk of fraud or misuse, Thomas said that only the Systems Analyst and Data Administrator can change the structure of the database. With regards to a recommendation to institute measures to distinctly account for old age pension payments, the Permanent Secretary said that it will be discussed with the Budget Office, Ministry of Finance. In response to another recommendation for the Director of Social Services to ensure that the database is updated promptly with all payment information to allow for the detection of error or fraud, Thomas said the Ministry wishes to seek further guidance and clarification on the way forward. He did not respond to a recommendation to ensure that reconciliation for bank account No. 3191 as well as schedules of payment from the GPOC and the Ministry should be duly prepared and certified in a timely manner to enable the detection of error or fraud.
