An internal audit commissioned by the financial secretary into the salary scales of finance and accounting officers found breaches of the Public Service Commission regulations.
“The Treasury Department paid out to a list of officers sums which were in their estimation due without Public Service Commission review and approval and without authorized Ministry of Public Service letters of promotion/reclassification for salary increase on orders by the governor general,” according to the audit conducted by Kevin Archer, CPA, director in the Ministry of Finance Internal Audit Department.
Minister of State for the Public Service Pia Glover-Rolle drew the condemnation of members of the Bahamas Public Services Union last Tuesday when she said some finance officers made unauthorized adjustments to their salaries resulting in an overpayment of more than $4 million.
The audit that formed the basis of her statement does not speak directly to an overpayment of $4 million, nor does it speak directly to actions of any specific finance and accounting officers, but it does point to procedural irregularities and inconsistencies in how the salary scale adjustments were carried out and highlighted a serious lack of policy controls.
The audit found that some entitled officers received no remuneration or increase in baseline salary nor were they advised of the proper process.
The auditor reviewed the salary structure/template prepared by the Treasury Department and found it was “deficient in equitable distribution of increases”.
Increases granted and applied varied from $2,400 to $6,400 or from 11 percent to 15 percent, according to the audit.
“This has the unintended consequence of causing junior staff to surpass senior grade staff in salary based on the approved salary ranges which cause demoralization, and more severe overlapping between grades was noted,” the audit states.
It reads, “Auditors asked Treasury Department for their budget submission and found it lacking required details.
“It showed a gross wage amount, and the justification noted, to provide for new career path without detailing the head count and salary per employee (or by staff category). Only a gross fiscal year salary estimate was provided for the appropriation act submission.
“Salary line item was found to be overfunded. This overfunding allowed Treasury Department to pay out salary increases without Ministry of Public Service and governor general letters of promotion/reclassification.
“Ministry of Public Service and governor general promotion/appointment letters are the human resource authorization for public service salary rates, or changes to them, and were not in place.
“The Treasury Department paid out salary increases out of the consolidated fund based on their unilateral calculation and decision without appropriate official promotion/reclassification letters from the employment authority, Ministry of Public Service and Public Service Commission, a procedural irregularity.”
The auditor said proper budgeting procedures require submission of details of human resources such as: head count in posts, salary or cost estimate for each post/rank and total estimated salaries; this should be included in the budget book supporting the appropriation act.
“The Treasury Department should be advised of their breach of policy and the solution should be to immediately regularize all anomalies and inequity,” the audit states.
The report noted that the Cabinet approved salary scale upgrades with implementation with effect from January 1, 2020, but again, it noted the secondary approval necessary to effect the payments never came.
The audit found in this career path/salary scales upgrade process, due to a “procedural flaw”, all names for the new career path/scales were not forwarded by Ministry of Public Service to the Public Service Commission for inclusion on draft orders for governor general.
The audit noted that the objective of the salary increases was for good compensation, to attract and retain good employees and achieve pay parity.
“However, the pay increase was implemented inappropriately causing compliance-related inequities and the unintended consequence of inequitable distribution in the pay ranges,” the auditor found.
“Some positions had larger increases than others as well as there were some position level inequities. As remuneration is on an accrued basis, the outstanding wage increase for disadvantaged officers (including officers inadvertently left out) has to be resolved through restitution as it was approved.
“It may be considered that during this period, 2020 to 2021, due to the coronavirus pandemic, state of emergencies calling for lockdowns and disruptions to operations, that circumstances called for actions that were outside of the antiquated regulations without proper thought.”
The auditor found from interviews with the Public Service Commission that the commission only received the revised career paths for finance and accounting officers/audit officers (formerly finance officers).
The Public Service Commission did not receive the recommendations for promotion (reclassification with salary progression), that is, a complete list of officers affected and, thus, no further action was taken for staff to receive promotion letters, the audit states.
The auditor also found that there were no adequate controls over the production and distribution of the Government Salary Book and adjustments to it are not in place.
The audit states, “Auditors found the 2016 book had no security features so as to determine if figures were altered or adjustments were made over previous books. The 2016 salary book is posted on Ministry of Public Service’s website with no security features or notation of publisher. Officials at Ministry of Public Service informed auditors of discrepancies in the present 2016 book they had versus the one Treasury Department was using.”
The audit also states there was a breach of the Public Service regulations as the Treasury Department assessed and processed a fraction of employees’ estimated salary increase (as lump sum) due.
“As per audit review of all officers on their salary increase spreadsheet and salaries paid in the system, there is a lack of proper policy and control over input of payroll; these pay increases were processed and paid by the Treasury Department in the financial management system as direct deposit payment and in JD Edwards’ payroll system as benefit allowance causing irregular payments,” the audit states.
It added that changes to payroll systems are not appropriately documented to ensure compliance with good governance, Ministry of Public Service/Public Service Commission requirements and policies for promotions concerning upgrading of salaries.
The audit noted that the accounting and audit officers who received wage payments of the estimated salary increase need to be regularized by seeking the preparation and issue of job letters of appointment to new post/job type and salary.
A new career path should be provided to all officers as per the industrial agreement, the audit adds.
Also, officers not included (inclusive of several treasury staff, Internal Audit staff and auditor general) need to be given restitution of the approved salary increases for pay equity.
The auditor recommended that the Treasury Department “be enabled through an internal control section with officers to monitor payroll as it is the largest item in the government budget”.
This will ensure a second line of defense and a separate independent officer responsible for reviewing that monthly payroll is in line, the audit stated.
“There should be a policy instituted (included in the human resource manual, Public Service Commission regulations) stating that there should be no payments of salary increases in updated post/grades until such time as letters of appointment have been received at the agency responsible for processing them, Ministry of Public Service,” the auditor said.
The auditor opined that the implemented new wages/salary range is still subject to Public Service Commission review and final promotion/reclassification letters should be issued to authorize the correct salary increases.
Glover-Rolle told reporters last week the Ministry of Public Service and the Ministry of Finance were meeting “to figure out how we are going to address this administration of scales that was not properly authorized”.
“The normal policy of overpayment is recovery,” she said.
“So, I will say that the audit has revealed some gaps in terms of controls and the policy is to recover. We have found some things as a result of the audit that were done wrong and I’m sure consequences will follow.”