Audit shows CRA Employees Misusing Charge Cards :CRA SOTW
Alan Baggett
This week’s Tax Tale goes hand-in-hand with last week’s CRA SOTW –
unclaimed income: http://groups.google.com/group/can.taxes/browse_thread/thread/9c9034f4cb9181e6#
If CRA employees are using CRA credit cards for personal use, then
shouldn’t they be taxed on any benefits they receive? You would think
so. But, as usual, it appears that Canada’s tax laws apply only to
Canadians and not politicians or CRA employees.
Revenue Canada employees misusing charge cards: audit
Updated Sun. Nov. 9 2008 1:53 PM ET - The Canadian Press
OTTAWA -- Employees at Canada's tax agency have been abusing
government credit cards, using them to buy retirement gifts, flowers,
greeting cards -- even to make charitable donations.
And some of the abuses are so serious that the agency launched several
investigations into potential frauds.
A litany of problems is cited in a June 2008 audit of the 1,704
MasterCards issued to workers at the Canada Revenue Agency. The cards
were used to buy more than $55 million of goods and services in the
year ending March 31, 2008.
"Key controls tested at the time of the review were not functioning
properly to ensure compliance," the auditors warned.
The report is the latest in a series of federal probes since the
mid-1990s that have found rule-breaking and abuse of credit cards in
various departments.
Such cards were first approved in 1991 for use by all federal
departments, and have proliferated from the first 2,000 issued across
government in 1992. MasterCard is one of several authorized card
suppliers.
By 2005, there were 35,600 such cards, used to purchase more than $600
million annually in goods and services. A few cards have high credit
limits, up to $1.5 million in some cases.
At the Canada Revenue Agency, auditors examined a sample of 115 active
credit cards -- and found that 12 of them were held by people who no
longer worked for the agency. At least three of these rogue cards had
been used to buy goods and services together worth $576.50.
The number of cards held by ex-employees -- about 10 per cent in the
sample -- suggests there were about 170 rogue cards at the time of the
audit.
Another sampling of 128 credit-card purchases found "critical"
problems with more than a quarter of them, including missing invoices
and lack of approvals.
The auditors also found a series of specifically prohibited purchases,
including flower deliveries, greeting cards and retirement gifts.
There were also prohibited credit card-based donations to charities --
just as the agency is clamping down on the charities sector for
potential abuses of the rules.
"A few transactions presented a high risk of fraud and were reported
to management for appropriate action," the report added.
"The Internal Affairs and Fraud Prevention Division . . . have
initiated investigations."
A spokeswoman for the agency said the auditors turned over three files
to the fraud squad, although in two cases investigations had already
been launched and were concluded. The third file is still under
investigation.
But Beatrice Fenelon declined to provide further details, including
whether charges were laid.
"The Privacy Act prohibits the Canada Revenue Agency from disclosing
personal information about its employees," Fenelon said in an email.
She also said the transactions where MasterCards were used after an
employee left the agency were fully authorized, as the order was
placed shortly before the employee's departure, and the goods were for
government business.
Fenelon added that an online registration system was created in July
2007 to guard against fraud and abuse, and that no cards are now held
by non-employees.
In 2007-2008, the agency used MasterCards for almost 190,000
transactions -- and received rebates worth $490,800 through bulk-buy
deals with suppliers, one of the key advantages to using so-called
acquisition cards. The cards also cut down on paperwork.
The audit's troubling findings follow on the heels of Auditor General
Sheila Fraser's report to Parliament in May 2007 that cited "lapses in
the control and review of (credit card) transactions."
Fraser warned, for example, that departments were failing to cancel
the cards of employees who left government -- the very problem
uncovered at Canada Revenue Agency more than a year later.
Investigations at other departments have found similar problems.
A 2004 audit at Fisheries and Oceans found that cards were "being used
as personal credit cards by a significant number of employees."
Almost half the transactions in a cross-country sample at DFO had
nothing to do with government business, the auditors found.
Another audit at Environment Canada the same year also found employees
using their cards for personal purchases.
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