Auditors issue scathing review of postal service

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An entire set of financial records was improperly shredded, staff members willfully ignored directives of managers, managers routinely lapsed in their reporting responsibilities and $250,000 was spent on a system to track stamp sales that ultimately did not work at the Cayman Islands Postal Services Department.  

Those findings are among the myriad of problems uncovered by government’s Internal Audit Unit during a review of revenues earned by the postal service between 2011 and 2013. The review was completed toward the end of 2013, but was released only recently under a Freedom of Information request made by the Cayman Compass.  

The internal audit reviews, which typically do not use strong language to describe failings in government, were in this case utterly scathing in evaluating the magnitude of the errors, incompetence and insubordination discovered between 2011 and 2013. The revenue management process used by the postal service could not “be relied upon to provide reasonable assurance that the revenue objectives of the department would be achieved.”  

One official in the auditor general’s office, which is independent from the Internal Audit Unit, described the findings as “a horror” after reviewing the unit’s report.  

“The severity of these deficiencies is considered to be very high due to their risk implications for the accuracy of the government’s financial statements and exposure to losses in government assets,” the Internal Audit Unit opined in its review. “Management has attributed a number of these deficiencies to the lack of adequate staff resources, as well as some employees’ refusal to comply with instructions and directives despite repeated requests.” 

Records shredded  

Paper records of cash transaction sheets for all postal districts on Grand Cayman were “accidentally shredded” along with some of the postal service’s older financial records in 2011, internal auditors found.  

The Cayman Islands National Archive and Public Records Law requires revenue-related financial records of government, in all cases, be safely stored and retained for a minimum of seven years.  

In this case, the records were inadvertently placed among the files set aside for shredding, less than two years after they were created. Moreover, it seemed postal service staff were unaware that the newer documents had been disposed of until auditors asked for them.  

“It was discovered that the files were destroyed when the auditor requested these documents,” the review stated. “As a consequence, we could not evaluate the transactions for compliance with regulatory requirements, reporting accuracy and timeliness of bank deposits…”  

In her response to the audit findings, Postmaster General Sheena Glasgow acknowledged and agreed with the report, noting that a deputy postmaster had given the employee responsible for the shredding specific instructions about what types of records could be shredded.  

“The fact that such simple instructions were still not carried out properly is unacceptable for an officer of 20-plus years’ experience,” Ms. Glasgow’s response noted. “Unfortunately, this is but one example of a performance issue with this officer.”  

Ms. Glasgow noted that disciplinary action could be taken as a result, but the report did not specify if that had occurred.  

$250,000 bust 

A system used to track post office sales, as well as daily opening and closing cash balances for the department was purchased at a cost of $250,000. It didn’t work.  

Among other things, auditors noted that the “point-of-sale” system that was purchased required the manual coding of cash balances into the system, details that staff members sometimes entered erroneously. The set prices of stamps could be altered by postal service workers, if they wished. Also, the system does not record certain details of postal service transactions, including stamp supplies and the weight, size and destination of parcel post transactions.  

“It is apparent that the department did not receive a system that satisfies its business needs,” auditors found. “The postmaster general mentioned that, despite the tender requirements, the vendor may have significantly underestimated the amount of postal-specific programming that was required… 

“We are also concerned that unless these deficiencies are corrected, errors and irregularities will continue and may even lead to misappropriations perpetrated through employee manipulations.”  

Postal service management noted in its response to the auditors’ concerns that the “point-of sale” system was “fraught with problems,” but that the department didn’t have the money to replace it.  

Mismanagement 

There was inadequate management, generally, of stamp inventories at the district post offices, according to the Internal Audit Unit’s findings. The postal service has established detailed procedures regarding how stamp sales should be recorded and supply inventories conducted. However, during the audit, both overages and shortages of stamp inventories were noted with – in some cases – hundreds of dollars worth of stamp inventories unaccounted for.  

Auditors found no evidence that daily balance sheets kept by customer service officers were “consistently reviewed” by district managers. At one postal station, the daily balance sheet for the customer service officer hadn’t been prepared for more than a year, at the time the audit was conducted.  

“These various weaknesses happened due to the failure of district managers or the senior customer service officer to perform their supervisory roles,” the auditor report stated.  

Stamps missing 

In most instances reviewed by the Internal Audit Unit, the post office employee who requisitioned stamp orders had not acknowledged receipt of the inventories.  

This led to “discrepancies” of nearly $6,000 in August 2011 between transactions posted to the postal service’s Quickbooks system and supporting details provided in the stamp requisition form.  

Without the acknowledgement of stamp receipt, there is no evidence to show the stamps were actually received by the postal service.  

Again, the postmaster general acknowledged the audit unit’s observations and noted that postal service staff had been instructed repeatedly by management to acknowledge accuracy of stamp orders and counts prior to accepting the stamps.  

“This is considerable frustration that the instruction continues to be ignored by certain officers,” Ms. Glasgow said.  

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The Cayman Islands Postal Service has come under fire in a recent government audit.
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  1. As with any organization, the ultimate responsibility for administrative or operational failure lies with the Chief Executive Officer – in this case the Postmaster General. However, we can no doubt anticipate that, at the end of the day, she will not be held accountable for being unaware of what was going on because of her failure to implement adequate internal controls.

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  2. Is anyone truly surprised to read this?

    We regularly receive mail that is weeks late. Or 3 months of bank statements all at once.

    Thank goodness for email and the Internet, which allows us to mostly avoid using the post office.

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  3. My suggestion would be to close the Down town Post office and allow it to be used for Cayman Islands National Museum. Many tourist that visit this Island each day, and has no where to go except the beach, and most of the elderly would prefer to visit our museum to learn what Cayman Islands are all about, and have the opportunity of taking back home a gift. If we had a large Museum set up in the center of George Town I am sure it would be full to capacity all day and week ends. People want to see what Cayman is all about. The little cramped up space that we call museum now is just not good enough. Just imagine the revenue that would be made on a daily basis not only from visitors, but by residents too. The museum shop is cramped in a little corner filled to capacity and tourist cannot even find it some times. We should be ashamed of ourselves to not do better with exposing our museum and all there is to see. Go and check it out for yourselves.
    On the Post office situation, I would suggest moving everything and everyone to Airport location; cutting out General Delivery, it is a waste of time, Cut out Large rental boxes and make small boxes available to everyone, charging a small fee of 25.00 yearly. In so doing I am sure every one could afford 25.00 a year including locals and residents and work permit holders Anything that would go into a large box would be in packaged department. This is a year that we are going to have to shuffle many things, so I thing we should begin early.

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  4. August 20th last year, the compass reported on credit card use and one of the major expenses was the postal conference in Qatar.

    Both the postmaster and deputy postmaster were gone for 22 days and with travel time they were effectively away for a MONTH.
    Given the entourage who also attended, this was probably more of a jolly than a nose to the grindstone fact-finding mission?

    In a private company, it would be an ‘either / or’ deal – the manager would go and leave the deputy in charge OR they send the deputy.

    Even the UPS and Fedex services on island seem to be pricier and slower than their mainland equivalents though how much of that is actually due to dealing with customs as opposed to lack of effective competition from Cayman’s post office.

    Things move on – Electric and utility companies worldwide have all but phased out paper billing in favour of emails and online payments (How much does the post service rely on the 10,000 CUC bills every month).

    I seem to remember a comment / question last year about whether there was an element of ‘social employment’ – giving someone a ‘job’ as opposed to benefits – can someone clarify that please?

    Even the airport post office is not up to the job – seems almost overwhelmed – long queues and no parking space most of the time.

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  5. This issue is the lowest of accountability I have heard about in my life. This sounds like the parents of the house making the rules of the house, then the children of the house breaking the rules and the parents saying no problem. Wake up you leader’s off the Cayman Islands and start leading by example/accountability. This looks like there is another top job opening from Ms Glasgow right down.

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  6. How bad does it have to get before first management, an then inadequate staff are fired?
    This report is as bad as it gets, and anyone found wanting, eg the manager that authorised shredding, and all upstream of him, have to go!
    The main question is, do the managers and staff understand they are deficient? Doesn’t sound like it.

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  7. A couple of years ago a kindly aunt in the UK sent me some chocolates as a birthday gift. She imagined that sending them two weeks before my birthday should leave enough leeway for them to arrive on time. I received a notice from the Cayman post office that the package was waiting for me sometime in September, a mere three months after my birthday! Luckily the chocs were just about still in date.

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