Call for tougher checks on children's allowance claims

The Auditor General has called on the Social Security Department to improve controls over the issue of children's allowance.

In a mid-year report on the public accounts 2005, the Auditor General said that no physical investigations were being carried out by the department to confirm whether custody of children and the composition of the household were in accordance with what was declared by applicants claiming children's allowance.

The department lacked verification of the income declared by beneficiaries for children's allowance purposes with their income declarations for tax purposes.

No investigations were being carried out by the department to identify whether any pre-tax profits registered by companies were included in the income declared by shareholders who were beneficiaries of children's allowance.

The Auditor General said that out of a sample of 85 applications, 24 per cent of the beneficiaries were found to have been overpaid during the period under review and another five per cent underpaid.

It found that foreigners, including individuals enjoying refugee status, who were eligible for children's allowance had to have their households recorded in SABS (the system which administers social benefits). It was common practice for such individuals to be identified with a fictitious identification number.

"This practice poses a threat to the security of the system as fictitious households can potentially be set up," the Auditor General warned.

Among various recommendations, the Auditor General suggested that the financial year for social benefits should be based on a calendar year in order to facilitate the exchange of information with the Inland Revenue Department or create a direct live link to the beneficiary's declared income.

This would also reduce the risk of under-declaration of income and reduce the time needed for data to be keyed in.

The internal control system also needed to be enhanced to be better able to detect and prevent errors on time. Personnel needed to be well trained before being assigned duties and the assessment and verification of fresh claims and changes to rates should be carried out by two different pools of people.

Verification should be carried out periodically for as long as the benefit was given.

The Auditor General noted that the management had concurred with most of the findings. It said that the Social Security Department had considered shifting the benefit year to the calendar year but that had not been considered viable for technical and legal reasons.

These problems were, however, addressed recently and the department was conducting an exercise to assess the advantages and disadvantages of the proposal. The department was also considering obtaining access to other sources of information and preliminary investigations were being made with inland revenue income declarations after authorisation was obtained from the beneficiaries.

A number of the reported mistaken payments were said by the department to have been identified retrospectively.

The department acknowledged the risk in having a fictitious ID number for the identification of certain individuals, but this was described as the best way to deal with such situations. It said the creation of a household was verified by two officials. The department is liaising with the Public Registry to establish a direct link to the common database.

The department is also compiling a procedures manual for all line sections to reduce inconsistencies.

The information database was being enhanced, a data warehousing project was underway and SABS was being improved.

In other parts of its report, the Audit Office said the Industrial and Employment Relations Department lack a proper enforcement mechanism to recoup arrears. In particular, no form of security or guarantee was requested by the government from applicants on the granting of loans under the self employed loan incentive scheme. The aim of the scheme was to assist individuals to start a business.

Furthermore, any form of checking with records held by the Inland Revenue Department and the Social Security Department in respect of the financial situation, employment and welfare state of defaulters could not be carried out as such access was currently not legally possible.

Audits of salaries at the law courts and within the Ministry of Education, Youth and Employment revealed weak controls over attendance and overtime records. Medical certificates could not always be found to cover sickness absence.

An audit carried out at the Bio Medical Engineering Stores located at Karin Grech Hospital revealed discrepancies between stock records and physical stocks. Details such as the unit cost and supplier particulars of various items are either incorrectly recorded or had not been inputted in the stock control system.