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Defence Department paying bills twice

The Defence Department's cheque is in the mail -- twice.

Canadian Press March 19, 2000

Federal auditors have discovered at least three cases in which the military paid the same bill two times, to the tune of more than $1.9 million.

And an investigation into the incidents has exposed flaws in the military's financial reporting system, which is supposed to guard against duplicate payments.

Documents detailing the errors were obtained under the Access to Information Act.

The most recent case involved duplicate cheques each issued for almost $590,000 to an unidentified vendor in April last year.

One cheque was sent from Ottawa, the other from Montreal. One of the cheques was cashed immediately but the vendor held on to the second for four months before auditors retrieved and voided it.

No public money was lost and the auditors found no evidence of fraud within the Defence Department.

But the investigation did determine clerks could easily bypass a computer-generated warning that a duplicate payment was being made.

A second case from October 1998 involved doubled-up cheques for more than $1.3 million to another vendor whose name was deleted from the released documents.

Auditors found the second, manually produced cheque was rushed out because the company "was experiencing cash-flow problems and had indicated a serious risk of being petitioned into bankruptcy."

The firm quickly returned the first cheque uncashed as agreed and no public money was lost.

But the subsequent investigation again found that clerks could too readily override safeguards against duplicate payments.

A military spokesperson said last week the system still allows doubled-up cheques to be sent out.

A third case involves the purchase of an $18,000 Honda tractor for Canadian Forces Base Comox, B.C., on Vancouver Island.

The base accidentally sent a cheque made out to the wrong vendor in August 1998 and the company quickly cashed the cheque.

On discovering the error, the Defence Department paid the correct vendor and has since been unable to recover the money from the first company, identified only as a British Columbia firm.

http://www.canoe.ca/LondonNews/06_n3.html

-- (Dee360Degree@aol.com), March 19, 2000