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.”
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.
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.
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.
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.