Premier Reinstates Minister Hickey

NLIS 4
Executive Council
January 8, 2007
Premier Reinstates Minister Hickey

The Honourable Danny Williams, Premier of Newfoundland and Labrador, announced today that effective immediately John Hickey, Member of the House of Assembly for Lake Melville, will resume his full Cabinet responsibilities. The Premier said he made the decision after reviewing the circumstances that led to some instances of double billing in Minister Hickey�s constituency claims.

"I am so pleased to welcome Minister Hickey back into Cabinet," said Premier Williams. "Effective immediately Minister Hickey will resume his full Cabinet portfolio and related responsibilities. I regret that he had to step aside last week, but under the circumstances it was the prudent thing to do. However, I reviewed the circumstances surrounding the Auditor General�s findings into some double billing, and I am confident that there was no intentional wrong doing. As such, I am pleased that Minister Hickey is back where he belongs."

The Premier reiterated his belief that while MHAs are responsible for their constituency claims, this situation also arose out of very poor book keeping practices in the House of Assembly.

"I take the findings of the AG very seriously, however, in my opinion these double billing circumstances very much appear to be the result of carelessness, poor book keeping and most significantly, a serious lack of processes and controls in the House of Assembly," added the Premier. "Indeed, upon further reflection and after reviewing the information this weekend, I am more convinced than ever that this is the case."

Today the Premier also released information which was presented to him by government officials regarding the general practices of accounting in the House of Assembly. The Premier requested the briefing from officials so as to ascertain how double billing could occur and what steps were necessary to ensure safeguards against future occurrences.

"We had in the House of Assembly a system and individuals that on one hand assured members and their assistants that compliance and accuracy checks were being carried out to protect them, but in reality it was not happening," said the Premier. "I have heard several instances of MHAs telling the same story; the individual in charge of the book keeping at the House of Assembly gave absolute assurances that any mistakes or errors would be identified and corrected. Indeed, the note prepared for me which I am releasing today states very clearly that �The role of the Administrative group within the House of Assembly in regard to MHA expense claims is to review MHA claims and certify that they are accurate and compliant with the rules as specified by the IEC.� Unfortunately, the systems and controls to allow this happen were not in place."

The premier said several changes have taken place to fix the system and he is hopeful that all proper processes will be put into place immediately so that confidence in the system is fully restored. Though he has no control over the operation of the House of Assembly, the Premier has also suggested to the Speaker of the House of Assembly that no further constituency-related cheques are issued from the House until safeguards are in place and prove efficient.

Following is the briefing note released today by the Premier.

-30-

Media contact:
Elizabeth Matthews
Director of Communications
Office of the Premier
709-729-3960, 351-1227
elizabethmatthews@gov.nl.ca

NOTE TO EDITORS:

In the Briefing Note attached, please note there is a minor wording change under the section entitled: "How could the double-billing practice occur after July 2006?" This change was not reflected in the information which was passed out at this morning�s news conference. The information contained is accurate.

Briefing Note:

Financial Controls in the House of Assembly and the Office of the Controller General

How have the controls changed since mid-2004 when the Auditor general was re-invited into the House of Assembly?

The attached table describes these changes. In summary, the controls within the House of Assembly did not change until July 2006. The OCG made recommendations to the House for new controls in December 2004 but they were not implemented.

What is the role of the Administrative group within the House of Assembly in regard to MHA expense claims?

To review MHA claims and certify that they are accurate and compliant with the rules as specified by the IEC. Similar to finance divisions within line Departments, the Administrative Group in the House is the primary body responsible for ensuring proper compliance.

What is the role of the OCG in relation to MHA expense claims?

To issue cheques based on valid expense claims that have been properly reviewed and checked within the House of Assembly. The OCG does not perform a comprehensive review of every claim (whether from the House or a department). While it ensures that 100% of claims are properly signed, it only performs spot checks on basic compliance issues such as ensuring receipts match the claim form. If the spot checks raise a question, the question is pursued until a change is made or a satisfactory answer is received. The value of the spot check process is similar to an audit sample � it is an extra screen to help improve compliance practices. It is not designed to duplicate the review processes within the House or line departments.

How could the double-billing practice occur between 2004 and 2006?

The reasons are: 1) lack of controls and proper review procedures within the House (see table attached); and 2) inadequate rules to limit the types of eligible documents to support a claim. It is noteworthy that the OCG does not provide a comprehensive review of every claim as this responsibility is primarily within the House Administrative Group. It is also noteworthy that the audit by the Auditor General for 2004/05 and 2005/06 did not detect the double-billing. It is hard to detect without a forensic audit.

How could the double-billing practice occur after July 2006?

Despite improved controls and review within the House, a receipt submitted on one date and a cancelled cheque (or other such document) submitted on a different date can evade detection because of the high volume of similar claims, especially for donations and restaurant receipts. IEC policy allows for multiple types of receipts to be treated as valid for claims and, while this practice is justifiable in some circumstances, it facilitates double-billing. This problem can be addressed through greater procedural controls or changing the rules regarding allowable documentation.

In July 2006 the House staff proposed that restaurant claims only be based on itemized restaurant bills plus proof of payment, but the IEC decided to permit one or the other. (Based on this week�s events, the Speaker has written all MHAs to implement the earlier proposed reform, along with a requirement for receipts related to donations, and a requirement that all receipts be originals.)

Have steps been taken to detect double-billing in the future?

Yes. Since late December 2006 the House Administrative Group has adopted a new procedure to review older expense claims to see if new receipts or cancelled cheques had been previously claimed. This reform, combined with the restaurant receipt reform noted above, is likely to address all double-billing problems.

Are the current controls and procedures in the House and the OCG appropriate?

The House officials confirm that administrative review procedures for compliance with IEC rules are observed consistently. These rules are under review by Chief Justice Green. If the rules are changed, compliance checks will occur according to the new rules. The officials in the Department of Finance and the House believe the current controls are appropriate. The double-billing could not have been detected without the forensic audit, and new controls are in now place (subject to IEC ratification) for that issue.

	Claim Preparation	Review in HOA	Data Entry in HOA	OCG
Pre-June 2004	- prepared by MHA or MHA Assistant - signed by MHA	- claim forms and supporting documentation should have been reviewed for accuracy and compliance by a HOA clerical person, reviewed again by a financial manager or senior clerical person, and signed off by both. - in practice, Bill Murray was the only reviewer and he signed off in both signature blocks on the claim form	- data entry in the Financial Management System should have been done by a clerical person, and then reviewed and approved by a senior clerical person or manager. - In practice, Bill Murray did the data entry and then asked one of 3 or 4 clerical people throughout the HOA to make an approval entry in the computer system (without the appropriate reviews and checks) so that the system would process the payment.	- during this time period the OCG received the claim forms only, no receipts, and was asked to issue cheques. - OCG staff reviewed 100% top ensure the right signatures were in place. - Spot checking was done to ensure HST calculations were done correctly - Other compliance spot checks were not possible due to lack of documentation
June 2004 to July 2006	Same	Same	Same	- claims were accompanied by receipts - OCG staff reviewed 100% to ensure the right signatures were in place, and performed spot checks for transactional compliance (e.g., receipts matching claims, originals rather than photocopies) - Questions arising during spot checks were raised with Bill Murray and answers would be provided by Bill Murray, sometimes after checking with HOA)
July 2006 to present	- new claim form similar to line departments - requires more detail - some training provided to MHAs on how to complete claims	- two reviews by two persons always done, with two signatures - more scrutiny of appropriateness of receipts - Note: in late-December 2006 the HOA administrative staff began retroactive reviews of claims to ensure against double-billing	- data entry and approval performed consistently by two separate people and the approval is not done until the appropriate review requirements are completed.	same

2007 01 08 2:45 p.m.

All material copyright the Government of Newfoundland and Labrador. No unauthorized copying or redeployment permitted. The Government assumes no responsibility for the accuracy of any material deployed on an unauthorized server.
Disclaimer/Copyright/Privacy Statement