THERE IS NO NEED FOR A FORENSIC AUDIT

Sep 19, 2015 Features / Columnists, Peeping Tom

The government has announced that a forensic audit will be undertaken on the pension roll. This column had previously called for a verification process of those receiving old-age pensions because the numbers, believed to be in excess of 40,000 seem prohibitively high considering the size of our population and the life expectancy.
It is suspected by this columnist, and also by the late Sheila Holder of the Alliance for Change, that the old-age pension roll was padded. There was never any suggestion that it was deliberately padded by the authorities. But it could have been padded by persons who wanted to enjoy the pension even though they may not have qualified. This would include persons who are resident overseas and who are still finding ways to receive their pension locally.
There is therefore a clear need to have the pension roll verified. But there is no need at this stage for a forensic audit. This is a case of placing the cart before the horse.
What first needs to be established is whether the list is padded. Only when it has been established that the list is padded can a determination be made as to whether it was deliberately done by persons in official positions.
It is a waste of money at this stage to have a forensic audit done. What should have happened was that the government should have hired a qualified statistician. That statistician would have extracted a representative sample from the pension roll of over 42,000 persons. That sample need not be more than 100 persons. The persons undertaking the exercise would have then verified through physical checks and cross- checks with the immigration authorities whether the persons on the sample were eligible for the pension. Based on the numbers of ineligible persons found, the statistician would be able to conclude whether the list is padded.
It is only after this is established that the government should call in the forensic auditors. It may well be that the list is not padded. It may well be that the errors are persons who would have died recently. It may well be that indeed only eligible persons are on the roll and all that is needed is minor sanitization to cater for persons who recently died and need to be taken off the roll. In this case there would be no need to probe further.
If on the other hand, it is concluded that there is padding of the list, then it needs to be established how this padding took place. Were phantoms receiving pensions? In this case, this would have had to involve fraud. Were persons living overseas receiving pension? This also would have involved fraud.
Either way, you do not need forensic auditors. The fees of auditors are fairly high because they are skilled professionals. As such their services should only be employed where it is necessary.
You do not need a forensic auditor to undertake the verification of the pension roll. You just need a good statistician to develop a sample and a few kids just out of school to undertake the verification of the hundred persons in the sample. This is all you need. The government will save millions of dollars.
But it seems as if forensic audits are now the latest fashion in the government. Many had hoped that reducing the VAT would have been the latest fad, but it seems as if the public will have to wait until next year for the miserly one per cent VAT reduction.