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Auditor’s ongoing concerns on concessions bungle

Oct 16, 2013
Communities and Social Inclusion Minister Tony Piccolo

Communities and Social Inclusion Minister Tony Piccolo

The Auditor-General has taken another swipe at the State Government’s bungled concessions payment system and its cost to the public purse.

Its the fifth successive year that the State’s financial watchdog has slammed delays and failures in the system that controls the payment of concessions on energy and water bills and other government rebates.

“This ongoing system development has resulted in additional cost to the taxpayer with little benefit being realised to date (including the anticipated benefit of effective financial management of concession outlays),” the Auditor-General’s annual report says.

“This is a consequence of significant delays in its implementation and operation.

“The past five annual audits have commented on the Department’s inability to comprehensively reconcile concession payments made with client details maintained on departmental databases.”

The report confirms InDaily’s investigation into the multi-million dollar cost of the Department of Communities and Social Inclusion’s CASIS project – a computer system meant to provide effective management and financial control of service providers and eligible customer concessions.

The project started out in 2009 as a $600,000 proposal to deliver a financial control system by 2010.

It blew out to more than $3.7 million and is yet to be delivered in full functioning capacity.

“From 2009-10, specific comment has been made in each Annual Report on the anticipated implementation of the CASIS system,” the Auditor’s report notes.

“The Department in April 2009 approved the engagement of the system developer at a development cost of $600,000 for planned implementation in 2009-10.

“As documented by the Department the development timeline was not achieved.

“The Department approved the continuing engagement of the system developer in November 2012 to complete the development and implementation of the system to manage concessions as required until December 2013 at a revised cost of $3.72 million.

“It is a matter of concern that the system is not yet operational.”

The Auditor General’s report shows auditors made further inquiries after InDaily’s report in July that the developer had one into liquidation.

“In response to Audit inquiry of the Department in August 2013 regarding the status of the system development, the Department advised actual expenditure to 30 June 2013 on the system development was $3.71 million and a further $780 000 is estimated to be required to complete the system development.”

The original contract was terminated with a final actual cost of $3.16 million and new contractual arrangements were being pursued to achieve completion of system development and to provide support and hosting of the system through to 30 June 2014.

The report’s figures are at odds with assurances given by the Minister for Communities’s office to InDaily in August.

On 31 July InDaily reported the Minister’s official response that: “Total expenditure was $3.62 million. A contract is currently being finalised between DCSI and DMI.The value of the remaining work under this arrangement is forecast at $65,000 covering the period through to December 2013.”

The Auditor-General’s report shows the failed contract expense at $3.70 million ($90,000 higher) and additional expenses at $780,000 ($715,000 higher).

The Auditor-General also uncovered ongoing errors during a random testing of an interim program to monitor concession payments.

“Audit reviewed the interim controls the Department has implemented to minimise the risk of concessions being provided to ineligible customers prior to reimbursing the South Australian Water Corporation, RevenueSA and energy retailers for concessions provided.

“These include random sampling of concession payments in each billing cycle.

“The results of the review indicate that these controls have identified transactions for correction. “Audit recommended that the Department continue to pursue a mechanism to match individual concession payments to current records of eligibility.”

Last financial year DCSI administered $155 million worth of concessions for water, sewer and council rates, electricity, transport charges and various levies.

More than $600 million worth of concessions have been paid in the last five years using the flawed computer systems with an estimated 21 per cent of those concessions paid to ineligible account holders.

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