Audit exposes wide-reaching irregularities in courts’ accounts
NASSAU, BAHAMAS — An Auditor General’s report has revealed customers’ payments at the Magistrate’s Courts have been substantially reduced, significantly impacting the bank balance on their cards and the amounts to be paid out to the recipient.
Auditor General Terrance Bastian underscored altered payments could lead to “mistrust of the court system” in the report, dated January 9, 2020.
It was tabled in the House of Assembly on Wednesday.
The report examines the Office of the Judiciary — Magistrate’s courts accounts department — and covers the period July 1, 2016, to June 30, 2018.
A sample of receipts examined between August 30, 2017, and June 12, 2019, showed 12 instances where a customer’s payment was modified and reduced for a combined total of $1,670.
For example, on September 15, 2017, a customer, referred to as ‘Client B’ was set to pay $400; however, the amount was changed to $100.
Another customer on June 12, 2019, was set to pay $350, but their receipt was altered to zero.
In many instances, the modification was made hours later, and in one case 20 days later.
The auditor general noted that all discrepancies should be investigated and appropriate disciplinary action applied in instances where there is no adequate justification for the modification made.
“When a client makes a payment, the expectation is that the recipient of these payments would receive the amount paid,” Auditor General Terrance Bastian wrote.
“When a cashier alters a client’s receipt, it could lead to inaccurate maintenance support payments, inaccurate arrears calculations for both civil and domestic court clients, and mistrust of the court system.”
The auditor general recommended management should conduct a comprehensive review of clients’ payment to ensure that what was paid by the client was posted to their respective payment cards.
He also recommended for all discrepancies to be investigated and address accordingly to “affirm the integrity of the process”.
“Receipts are used for the purpose of maintaining a record that the actual cash was received,” said Auditor General Terrance Bastian.
“Additionally, it provides a way to track the date, time and the amount that was paid against a specific order. When receipts are altered arbitrarily, the amount for the intended recipient is compromised.”
The auditor general recommended that management review daily reports and ensure that changes made including edits and voids are legitimate.
The report said ideally, payments needing subsequent adjustment or voiding in the register requires on-site immediate approval from a supervisor in order to complete the transaction.
It continued: “Otherwise, the opportunity exists for a person to process a payment and later void the payment from the record.”
The report revealed that revenue collected between February 5, 2018 and April 9, 2018, — a total of $994.63 — was not deposited.
Additionally, on July 2, 2018, total cash of $158.13 was deposited into the Royal Bank main branch and recorded in the general ledger.
According to the report, up to the time of the audit, three deposited totaling $709.50 had not been deposited.
The auditor general recommended that the outstanding deposits be brought to account immediately, and all customers who wrote cheques be contacted with reference to cancellation of their cheques.
He suggested new cheques be written for the service previously provided by the courts.
During the audit, auditors were informed that several cheques were reported missing by staff members in the accounts department.
The total amount of the 20 missing cheques, dated between April 29, 2019 and May 3, 2019, was $13,675.
The cheques were not found during the audit and management had to place a stop payment on the cheques.
The report said: “Due to negligence, the deposit fund account incurred cancellation fees of $45 per cheque ($900). An investigation was undertaken by management which resulted in management having to prepare replacement cheques.”
The undeposited fund ballooned from $332,334.18 in June 2018 to $4.04 million as of June 2019, reflecting that the fund was not being utilized as designed.
The undeposited fund account holds customer payments in QuickBooks, a software implemented in March 2017, until deposited in the bank.
The report also noted bank reconciliations were not completed for the audit period, making room for errors and irregularities to go undetected for a long period.
As of June 30, 2018, the deposit fund income account balance of the magistrate’s courts was $1.43 million.
In response, management said there were several attempts over the years to reconcile bank statements without success as statements came to the courts three to four months late.
It said another contributing factor was limited and inadequate staff, which made it challenging to function efficiently.