WINNIPEG – Manitoba Auditor General Norm Ricard today released his report Forensic Audits – a volume which contains the results of 3 separate forensic audits. Forensic audits typically involve examining risks, concerns or allegations of fraud, or other illegal or unethical conduct. The report includes a total of 18 recommendations.
The 3 audits include:
- Pharmacare: Special Audit of Financial Irregularities and Controls
- Thompson District Office: Special Audit of Missing Licences and Cash Management Practices
- Rural Municipality of De Salaberry: Audit of Financial Irregularities.
In the Pharmacare audit, the Auditor General looked at the drug benefit program’s manual claims process, and the transactions processed by a former employee. The audit found the former employee processed over $236,000 in suspicious payments over several years. The individual was able to do this because of gaps in internal controls, including no supervision, weak or no support documentation and few automated controls. Ricard recommended Manitoba Health forward the findings to Civil Legal Services.
“Sadly, issues around the lack of support documentation are not unusual findings for my Office. This audit highlights, yet again, the critical importance of setting appropriate documentation standards for specific transaction types and in ensuring compliance through supervision,” said Ricard.
In the second audit, the Auditor General examined the processes for depositing and managing cash at the Department of Sustainable Development’s Thompson District Office. Various licences and permits are sold at these district offices, including hunting licences, angling licences, timber permits and provincial park passes. The audit found a number of irregularities that suggest funds were misappropriated. The amount misappropriated could not be estimated because of weak documentation. The audit found several internal control gaps which increased the risk of funds being misappropriated. These gaps included no risk assessments, no segregation of duties, no periodic inventory counts and improperly completed forms.
“The findings in this report highlight what can occur in weak control environments and why risk assessments, and more specifically fraud exposure evaluations, are so very important,” said Ricard.
The Pharmacare and Thompson District Office audits stemmed from Special Audit requests. Special Audits refer to audits undertaken pursuant to Section 16 of the Auditor General Act, which permits cabinet, the Minister of Finance or the Public Accounts Committee to request an audit.
In the third audit (RM of De Salaberry), the Auditor General examined 5 allegations related to financial irregularities. The audit found $33,000 in unsupported credit card transactions were made over a period of more than 4 years, and that project management services were not tendered, as required by policy. The Auditor General could not conclude on the allegation that not all donations at a fundraising event were deposited, as there was no way to assess completeness of the cash donations recorded on the summary listing.
“Unrecorded cash donations is a significant risk for most cash-based fundraising events”, said Ricard. “The process used at the event for collecting cash donations was highly susceptible to this risk.”
The RM of De Salaberry audit stemmed from a concern received through the Office’s citizen concerns line.
Ricard encouraged Manitobans – and especially public servants – to utilize the Auditor General’s confidential citizen concerns line to report suspected fraud within the provincial government, or suspected mismanagement or misuse of provincial assets. “We are interested in what you have to say,” said Ricard. “All allegations or concerns received will be given serious consideration for further audit or investigatory work.”
Citizen concerns can be made by calling 204.945.3351 or emailing firstname.lastname@example.org.
To view the Forensic Audits report, please visit our Audit Reports page.