An audit of purchasing practices in Heritage Minister Pablo Rodriguez’s department has found there is no governance committee that “actively provide[s] guidance and oversight over procurement activities.”
PCH spent a total of $20.5 million in 2020–21, according to the auditors.
“The audit team identified a gap in terms of the Department’s governance framework as it relates to procurement. Specifically, while the team’s work identified two (2) governance bodies that have some visibility to procurement as part of function, neither body is providing active guidance and oversight regarding the Department’s procurement plans and activities.” the report said.
The auditors were referring to PCH’s Executive Committee (EXCOM) and the Finance, IT, and Human Resources (FITHR) committee.
The audit found that although EXCOM functions as a senior decision-making committee, information pertaining to departmental procurement plans or activities “is rarely presented or discussed” at its meetings.
‘No Regular Process’
The report stressed that fraud-related risks could happen if no proper governance is in place.“This could include a number of scenarios including staff members taking advantage of a conflict of interest, bid rigging schemes, targeting specific suppliers, and bribes or kickbacks.” said the audit team.
“As such, assurance is required that the Department has adequate internal controls to mitigate against these risks and that it is able to sufficiently demonstrate that value for money is being achieved through its procurement activities.”
The auditors also noted that a good number of contracts were sole-sourced without any competitive bidding.
“The mandate of the department and its core responsibilities … requires that it engages in a relatively higher number of procurements that do not involve traditional competitive processes,” the report said.
“While this does not necessarily suggest non-compliance with government contracting requirements, it can introduce risks related to the Department’s ability to demonstrate value for money.”
The report added there is “no regular process” by which the senior management in the heritage department reviews and provides strategic direction for procurement.
‘Without Delegated Authority’
A random pick of 145 files by the audit team found cases where six contracts were not documented, nine not dated, one unreadable, and two provided by personnel not authorised to do so.“In addition, another seven contracts with amendments (out of 51 tested) that increased the value of the [contract] were either missing a documented expenditure initiation and commitment approval for the amendment, and/or the approval date,” the auditors wrote.
Of contracts put to competitive bidding, only 63 percent had established evaluation criteria, with only 53 percent indicating that all bids were fully evaluated.
The audit also found there were “very limited guidance materials” for the use of government-issue credit cards for purchases under $10,000, with which staff spent over $3 million in 2019–20.
“There are no documented processes associated with tracking, monitoring, and cancellation of acquisition cards,” the report said. “As such, it is unclear who is responsible for these activities or if these activities are being effectively undertaken.”
Similar to the random check on contract files, the audit team found “exceptions and inconsistencies” in the credit card transactions.
“Specifically, out of the 148 files tested, expenditure initiation and commitment authority was provided by an individual without delegated authority for seven (7) transactions, was not provided or unreadable for 17 transactions, and was provided after the purchase was made for nine (9) transactions,” said the auditors.
In four cases, all records “had either been lost or destroyed.”
