Auditor general concerned inmates’ accounts could be used for illegal activity

The Office of the Auditor General found in its review of the Bahamas Department of Correctional Services (BDCS) that the institution is susceptible to money laundering and other illegal activity due to the absence of a cap on the amount of cash that can be placed on inmates’ accounts, among other inconsistencies in procedures that were recommended to be corrected. 

The auditor general also found in its report, tabled in the House of Assembly yesterday, that the BDCS had been paying value-added tax (VAT) on zero-rated items and has been possibly overspending on bread for the prison, posting a bill of $400,000 per year for its 2,558 inmates.

In regard to the concerns related to inmates’ accounts, the auditor general explained that at the time of the review for the period July 1, 2014 to June 30, 2019, there was no limit on the deposits being left for individuals’ commissaries.

“If individuals are allowed to have large sums of monies deposited to their account (without declaration of source of funds), this may leave the entity susceptible to money laundering or other illegal activity,” the report states.

It was, therefore, recommended that the BDCS implement a cap on the amounts that can be deposited and maintained on the accounts.

The auditor general also recommended to the prison administration that it may find baking its own bread a more cost efficient solution to paying almost half a million dollars per year for bread.

“The BDCS may be spending more than necessary on food items,” noted the report.

“We recommend that management carry out a cost analysis to determine the benefit of buying versus making bread by the prison staff and inmates.”

The review also found inconsistencies with value-added tax (VAT) payments, noting that management must “review invoices to ensure VAT is not paid on items that are zero-rated”.

The auditor general added that the prison has not consistently charged to the VAT expense account, but charged to an item’s expense account.

“This will cause inaccurate accounting records, as the expense account will be overstated and the VAT expense account will be understated,” the report noted.

“Management should ensure that postings are reviewed and the correct amounts are posted to the expense and VAT expense account.”

The Auditor General’s team also found inconsistencies with expense allocations; inventory counts; absence of proper signatures; procurement; and reconciliation of bank account balances and inmate account balances, among other things.

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