Expenses fiddles likely on MoD payroll system

A report by the National Audit Office this week criticises...

A report by the National Audit Office this week criticises an Oracle-based pay system which allows service personnel to make claims for expenses and allowances without adequate controls or documentary proof.

Edward Leigh, chairman of the House of Commons' Public Accounts Committee, said the Ministry of Defence's Joint Personnel Administration (JPA) system is "not fit for purpose" and is "open to fraud".

But a National Audit Office (NAO) official told Computer Weekly that the problems are more to do with inadequacies in the design of the system and mistakes made by service personnel when using the system, than faults with the technology.

The NAO found that of about £800m paid in expenses and allowances in 2008/9, about £130m represented overpayments that had not been justified. "Service personnel are able to submit their own expenses claims and payment is normally made without further checks," said the NAO.

There is an "absence of adequate input controls over the processing of military pay, allowances and expenses," said the NAO. The MoD's Defence Fraud Analysis Unit has reported a growth in suspected fiddling of payments via the JPA system.

The level of errors in expenses, allowances and specialist pay is "material to the account and therefore I have qualified my regularity opinion in this respect", said Amyas Morse, the comptroller and auditor general.

Auditors were even unable to discover how many service personnel, particularly reserves, are on the payroll.

The MoD told the NAO that it plans to introduce "some input checks" this month which should help spot any fiddling of allowances and expenses. But Morse said he did not believe this will be enough to reduce error to the necessary extent.

Problems with JPA system

In May 2009, the MoD produced internally a "Stocktake" report on the JPA system which told of the "key gaps between what the JPA system was intended to deliver and what the system actually delivers".

Key problems identified in the Stocktake included:

  • Complexity. The base Oracle system has 400 extensions which enhance the off-the-shelf functionality, and it is still subject to "continuous change".
  • Key users who are building their own parallel systems, or taking other action to "compensate for weaknesses in the JPA system", said the NAO.
  • User frustration at the lack of immediate access to JPA terminals. "Inadequate access undermines a key part of the vision for the JPA system" which was for service personnel to have responsibility for their own data, said the NAO report.
  • Reserve Forces not having access to the system because it was not designed for their use.
  • Poor data quality. Complex rules for claiming expenses, allowances and pay need to be simplified further, otherwise errors will continue. A change in culture is needed to simplify working practices.
  • Poor management information on where people are, their nationality and annual leave, which makes it difficult for the MoD to monitor spending and pinpoint potential errors. The Stocktake report proposed replacing the current management information tool Discoverer with Oracle OBIEE+.

Creating potential reliability issues

Separately, the NAO has expressed concern that the MoD is rolling out more applications onto the department's main IT platform, the Defence Information Infrastructure, "without the necessary associated development of IT capacity". This could hit the reliability of the JPA system, said the NAO.

The JPA system is supplied by EDS and is based on Oracle's Human Resources Management System. It is ambitious because it melds many of the different pay structures, pensions, allowances and expenses of the three armed services. Its use requires the bringing together of working practices in the RAF, Navy and Army. The application is due to be moved onto Oracle Fusion as support for the existing system is due to end sometime after 2012, once Oracle has completed its product switch to Fusion.

A decision to upgrade to Fusion will need to be taken by mid-2010, but no information is available on how a switch to Fusion would be funded and managed, said the NAO.

A spokeswoman for Hewlett-Packard, which has acquired EDS, made no comment on the report except to say that the NAO's qualification of the MoD's accounts "does not relate to the JPA IT systems but to the overall process".

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