Corporation’s accounting practices under scrutiny
The Accident Compensation Corporation’s accounting practices has come under the scrutiny of the Audit Office.
An audit on the the effectiveness of managing special bank accounts for financial year 2015 at the Accident Compensation Corporation has compelled auditors at the Audit Office to note that the corporation has not been effective in managing special bank accounts under its care.
“The savings books and other records are all kept with the accounting and finance personnel and there have been cases of fraud and irregularity with people attempting forgery and other fraudulent activities to access funds.
“We noted the need for A.C.C. to improve on effectively managing the Special Accounts scheme. There exists the need to implement improved internal procedures and ensuring that existing internal procedures portray best practices, and exercise independence, good governance, transparency and accountability,” the audit report stated.
According to the auditor’s report previous experience of such an arrangement also did not end well.
In consideration of the legal opinion of the Attorney General, the Audit Office noted in its report that it is of the view that:
“The A.C.C. did not have to create this many special bank accounts, which it has not been able to cope with as far as proper accounting and record-keeping are concerned.
A.C.C. could have just created one bank account for all these compensation funds, subsidiary ledger accounts for each creditor or payable and a general ledger control account for reconciliation purposes.
A.C.C. legislation is silent as to when compensation is to be paid. This is left to the discretion of A.C.C. which also inherently obligates A.C.C. to handle with care the safeguard and custody of the compensation funds (i.e. a moral obligation) from when they are payable to the point of payouts and complete disbursement.”
The auditor’s report recommended the management and operation of the one special bank account, which is recommended for compensations as well as the general ledger control and individual creditors subsidiary accounts, which can then be made part of the normal accounting and finance processes of A.C.C.
“There should be segregation however between the oversight and custodian of the special bank account and individual subsidiary accounts on one hand and the control account in the general ledger on the other.”
The auditor’s report also recommended that the ACC should consider –based on a cost/benefit analysis – whether to use independent software for the maintenance and operation of the individual creditors’ subsidiary accounts or use the software currently in use for its accounting and financial reporting needs.