2.37 Inland Fish and Game Licences. Introduction 1997 $ 1, , , , , ,102

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1 Introduction Te Wildlife Division of te Department of Environment and Conservation is responsible for te administration of inland fis and game licences. Te Division is located in Corner Brook on te Province's west coast. Te Wildlife Regulations under te Wildlife Act proibit te taking of inland fis and game except under licence. Tese inland fis and game licences are available to te public from approximately 800 vendors trougout te Province as well as troug Government Service Centres operated by te Department of Government Services. Wile te Division as overall responsibility for licensing, te Government Service Centres, troug an informal arrangement wit te Division, distribute licences to vendors, receive payments from vendors for licences sold, and collect unsold licences from vendors for forwarding to te Wildlife Division. Figure 1 sows inland fis and game licence revenue (excluding te big game draw) recorded by te Wildlife Division for te last 8 years. Figure 1 Inland Fis and Game Licences Revenue (excluding te big game draw) Years Ended 31 Marc ($000) Year Revenue 1997 $ 1, , , , , ,102 Source: Public Accounts Auditor General of Newfoundland and Labrador 547

2 Scope and Objectives We completed our review of inland fis and game licences in Marc Our review covered te period April 1996 to Marc 2004 and included licences sold troug vendor outlets and Government Service Centres. Our review did not include licences available troug te Wildlife Division's big game licence draw as tey are not sold troug vendor outlets or Government Service Centres. Our objective was to determine weter controls existed relating to te administration of inland fis and game licences and weter licence fees due to te Province are properly accounted for and collected from vendors on a timely basis. Conclusion Te Wildlife Division of te Department of Environment and Conservation is responsible for te administration of inland fis and game licences in te Province. Wile te Division as overall responsibility for licensing, te Government Service Centres of te Department of Government Services, troug an arrangement wit te Division, distribute licences to vendors, receive payments from vendors for licences sold, and collect unsold licences from vendors for forwarding to te Division. Over te eigt years covered by our review, weaknesses in control ave existed over te administration of inland fis and game licences. As well, licence fees due to te Province during tat time ave not been properly accounted for and amounts due from vendors ave not been collected on a timely basis. Wile te Division as recently made some progress in dealing wit tese issues, I am concerned tey ad not been dealt wit for suc a significant period of time. I note tat over tis eigt year period, bot my Office and te Office of te Comptroller General ave recommended several times tat action be taken to address issues suc as te increasing receivable balance, weaknesses in controls over receivables, and te absence of reliable information. Our current review indicated tat: documented policies and procedures were not in place to address te administration of inland fis and game licences, and tose informal policies wic were in place were not always followed; licences were not issued in accordance wit existing Departmental policy in tat licences were issued to vendors wit overdue accounts; 548 Auditor General of Newfoundland and Labrador

3 responsibilities and accountabilities for te Government Service Centres were not documented; weaknesses in controls over recording accounts receivable from vendors ave resulted in te Department being unable to determine accurate receivable balances for collection purposes; information on vendors and te details of te number and type of licences sold from year to year as not been maintained to enable te Department to appropriately monitor licence activity; and collection activity as been minimal and in June 2003, due in part to te lack of information supporting accounts receivable balances, te Department wrote off $130,000 in receivables. Effective 1 April 2004, Government implemented a prepayment system for issuing licences and directed te Department of Environment and Conservation to report back on te results of tis cange. Findings and Recommendations Te Wildlife Division of te Department of Environment and Conservation is responsible for inland fis and game licences in te Province; owever, te Department as not always been responsible for tis Division. In February 2001, te Division was transferred from te Department of Forest Resources and Agrifoods to te Department of Tourism, Culture and Recreation. In June 2001, it was relocated from te Department's St. Jon's office to its Corner Brook office. Furtermore, in February 2004 it was announced tat te Division would be transferred to te Department of Environment and Conservation and remain in Corner Brook. Our review of te policies, systems and processes in place over inland fis and game licences indicated tat te Division does not ave adequate controls in place relating to te administration of inland fis and game licences, tat licence fees due to te Province ave not been properly accounted for, and tat amounts due from vendors ave not been collected on a timely basis. Detailed findings are as follows. Basis for Issuing Licences to Vendors At te time of our review, licences were issued to vendors on a consignment basis, wit payment to be made by vendors only wen licences are sold. Any unsold licences are to be returned by te vendors at te end of te season. Auditor General of Newfoundland and Labrador 549

4 Figure 2 Te vendors sell licences for varying amounts set under te Wildlife Regulations and are entitled to add a $3 carge to te licence fee. Figure 2 sows te licence fees by type of licence along wit revenue generated for te year ended 31 Marc Inland Fis and Game Licences Licence Fees and Revenue (excluding te big game draw) 31 Marc 2004 Small Game Salmon Species Type of Licence Licence Fee Revenue Caribou (only Labrador) Trout Black Bear Resident Non Resident - Canadian Non Resident - Alien Trapper Resident - Individual Resident - Family Non Resident - Individual Non Resident - Family Resident Non Resident Non Resident - Individual Non Resident - Family Resident (Application) Resident (Labrador) Non Resident $ 413, , , , ,708 Total $1,101,788 Note: Licences sold by vendors or Government Service Centres are subject to an additional $3.00 carge at te time of sale. It is important tat te Division ave documented policies and procedures in place to address te administration of inland fis and game licences. Suc policies and procedures would be expected to address: te issuance of licences to vendors; te identification, recording and collection of receivables from vendors; te identification of te number and type of licences sold; te rate of licence returns and use of information collected; and te return of unsold licences by vendors. Tis is especially true given te consignment basis used in issuing licences to vendors, were te vendor is responsible for te sale of licenses on bealf of Government. 550 Auditor General of Newfoundland and Labrador

5 For example, if te Division does not ave policies and procedures in place to ensure tat vendors return unsold licences, te Division cannot ensure it is receiving all of te monies from te vendors. Our review indicated tat documented policies and procedures were not in place to address te administration of inland fis and game licences. Furtermore, te informal policies, suc as not issuing new licences to delinquent vendors and recording te details of licences issued to eac vendor, wile tey exist, are not always followed. It was noted tat in te past, te Division as considered canging from a consignment basis to a prepayment basis of issuing licences. Te prepayment basis would require te vendor to pay for all licences up front, wit any unsold licences being returned for refund. In a report dated November 1996, te Office of te Comptroller General recommended tat te ten Department of Forest Resources and Agrifoods move to a prepayment system and cease consignment sales. Wit te implementation of tis recommendation, te Office of te Comptroller General anticipated increased operational efficiencies as well as increased revenues. Tis would result in large part from vendor receivables being minimized due to te advance payment requirement under a prepayment basis. In April 1997, te Department of Forest Resources and Agrifoods decided to move to te prepayment basis for issuing licences, and te Wildlife Division informed vendors tat licences would be available on tat basis from te Government Service Centres. However, less tan two weeks before te intended implementation date of 20 May 1997, te Minister of Forest Resources and Agrifoods reversed tis decision and decided to keep te sales on a consignment basis. On 12 May 1997, te Wildlife Division informed vendors tat licences would be available on consignment. Effective 1 April 2004, Government implemented a prepayment system for issuing licences and directed te Department of Environment and Conservation to report back on te results of tis cange. Departmental Responsibilities Relating to Licences In 1997, te ten Department of Government Services and Lands became responsible for distributing licences to vendors, receiving payments from vendors for licences sold, and collecting unsold licences from vendors for forwarding to te Wildlife Division. Te Wildlife Division in turn was responsible for printing te licences, approving new vendors, maintaining te vendor listing, recording information on licence transactions received from te Department of Government Services and Lands, and maintaining licence information. Auditor General of Newfoundland and Labrador 551

6 Our review indicated tat tere was no written agreement or memorandum of understanding between te two parties to outline teir respective responsibilities and accountabilities. As a result of not aving a written agreement, tere were a number of operational issues wic te two departments ad to resolve. Examples of tese issues include te timely distribution of licences to te Government Service Centre staff, updating te vendor listing, and sending vendor order forms to te appropriate individuals. Licence Information Our review indicated tat information on vendors and details of te number and type of licences sold from year to year as not been maintained to enable te Division to monitor inland fis and game licence activity. Te Wildlife Information Management System (WIMS) was developed for te Wildlife Division in 1994 to keep track of vendor activity and licence statistics. However, te system was only used until In 1997 te Wildlife Division developed a form for use by te Government Service Centres. Tis form was to be used to record details of licences issued to vendors to serve as input for te WIMS for monitoring licence activity and for recording accounts receivable from vendors. However, te information from tese forms was never entered into WIMS due to a reduction in staff at te Wildlife Division. In 1999, te Department's Accounting Division started to input te forms into a Simply Accounting software package in an attempt to ave information on amounts receivable. Licence Receivables Figure 3 sows te total accounts receivable for inland fis and game licences for te last eigt years, along wit te related allowance for doubtful accounts balance and total licence revenue. 552 Auditor General of Newfoundland and Labrador

7 Figure 3 Inland Fis and Game Licences Accounts Receivable, Allowance for Doubtful Accounts, and Revenue Years Ended 31 Marc ($000 s) Allowance Year Accounts Receivable For Doubtful Accounts Revenue 1997 $ 27 $ 0 $ 1, , , , , , , ,102 Source: Public Accounts 1 Based on estimates provided by te Department of Forest Resources and Agrifoods From 1997 to 2001, te Department could not provide information on te details of amounts receivable from vendors. As a result, te Department ad to provide te Government Accounting Division wit estimates for use in te Public Accounts of te Province. Starting for te 2002 year, te Department provided more detailed information. In past management letters to te Department of Forest Resources and Agrifoods and subsequently to te Department of Tourism, Culture and Recreation, related to our audit of te Public Accounts of te Province, we raised te issue of te increasing accounts receivable balance for inland fis and game licences. We also noted weaknesses in controls over receivables and reliability of information. Improvements were recommended in te record keeping, reconciliation, reporting and collection of accounts receivable related to inland fis and game licences. Auditor General of Newfoundland and Labrador 553

8 As well, in February 1999, te Office of te Comptroller General released a report on its review of small and big game licences. It was noted in te report tat tere were serious deficiencies in te accounting procedures and controls over te small game licensing system, including te following: te accounts receivable balances for 1997 and 1998 ad not been determined; te licensing system ad financial and accounting capabilities tat were not being used and te system ad not been updated since 1997; and te roles and responsibilities of te two departments ad not been clearly defined. Our current review indicated tat many of te same weakness existed as we and te Office of te Comptroller General ad identified previously. In particular: Tere was an absence of policies and procedures relating to te recording and collection of licence fee receivables tat would assist te Wildlife Division in properly accounting for and collecting amounts due from vendors. Tere are no documented policies, but Departmental officials indicate tat tey are following Government-wide policies related to accounts receivable collection suc as issuing past due notices at 30 and 60 days. Te Wildlife Division did not utilize Government's accounting system to track receivables. Instead, in 1999, te Accounting Division started to record receivable balances using its own accounting software. However, te receivables recorded were considered unreliable to te point were Accounting Division officials indicated tat prior to te fiscal years wen older accounts ad been reconciled, tey were reluctant to proceed wit collections. As a result, collection activity as been minimal. 554 Auditor General of Newfoundland and Labrador

9 After te accounts ad been reconciled in Marc 2003, a process wic took almost six years, te Department identified a total receivable of approximately $1.1 million. As a result of furter analysis of tis $1.1 million receivable, it was determined tat $333,000 was outstanding for greater tan 120 days. Te Department as been analyzing tis old receivable and as determined tat at 31 December 2003, $60,000 is considered collectable, $90,000 of accounts ave been sent to te Department of Justice for recovery efforts, $139,000 is considered uncollectible and as been written off, and te remaining accounts are still under review. Accounting Division officials indicated tat reports from te accounting software in use by te Division since 1999 are not adequate for monitoring accounts receivable from vendors. However, if te appropriate due dates were used wen entering vendor receivables for licences issued, te relevant receivables balance report could be produced. For example, departmental staff indicate tat a manual reconciliation is necessary to produce an aged receivables listing. Departmental staff must examine eac vendor account individually to determine te type of licence outstanding and to determine te age of te receivable based on te related season closing date. We found tat tere was no support for tese manual reconciliations on file at te Department. Forms developed by te Accounting Division in 2001 and used for recording licences issued by te Government Service Centres were not always returned to te Division. Tese forms are used as a basis for recording accounts receivable from vendors in te Department's accounting system. As a result of not receiving all of te forms, receivable information was not available for recording in te accounting system. Issuance of New Licences Te Department as a policy wic proibits te issuance of a licence to a vendor wit an outstanding receivable; owever, te Department as not complied wit its own policy in tat licences are issued to vendors wit overdue accounts. We reviewed te details of vendor accounts up to 31 December We found tat, contrary to te Department s policy, a total of 25 vendors wit overdue accounts totalling approximately $40,000 as of 31 Marc 2003 were subsequently issued licences for te season. Auditor General of Newfoundland and Labrador 555

10 In September 2003, te Department of Tourism, Culture and Recreation commenced te practice of issuing a memo to te Department of Government Services and Lands listing wic vendors sould not be given new licences because tey ad overdue accounts. Our review indicated tat te listing provided to te Department of Government Services and Lands was not accurate in tat only 27 of te 60 vendors wit overdue accounts were included. Recommendations Te Department sould ensure tat: policies and procedures are developed, communicated and followed relating to te administration of inland fis and game licences; responsibilities and accountabilities for te Government Service Centres are documented; information is maintained on licence activity and accounts receivable from vendors; and licences are only issued in accordance wit Departmental policy. Department s Response Te Department agrees tat te recommendations noted would ave ad some impact on te Small Games Licensing System; owever, te main problem wit te system was te lack of dedicated uman resources to maintain te system and initiate collection efforts. In September 2001, wen te system was anded over to te Department of Tourism, Culture and Recreation, te accounting records ad not been properly maintained and a substantial portion of te documentation required to bring te system up-to-date was not available. Altoug te Department did make significant progress in reconciling te accounts and collecting outstanding amounts, it was too little too late and te end result was te write-off of $130,000 and an anticipated write-off of at least anoter $150, Auditor General of Newfoundland and Labrador

11 As indicated in your report, effective 1 April 2004, te prepayment system was implemented. Tis will eliminate te possibility of unpaid or outstanding accounts. As of te beginning of November 2004, te Department of Government Services as been instructed to forward all order/refund requests to te Inland Fis and Wildlife Division. Te Financial and General Operations Division as forwarded te forms wic relate to all transactions since 1 April Te Inland Fis and Wildlife Division will begin to sort tese documents in an appropriate manner in order to determine te number, type and revenue per license sales/issue wit te intent of aving tis data entered directly into te SMG system. Requests for refunds will be approved and forwarded to te Financial and General Operations Division in te same manner as tose processed for te Big Game fees. Te Inland Fis and Wildlife Division is in te process of updating te Operational Procedures Document to reflect tese adjustments prior to distribution to te appropriate Divisions and Departments. Auditor General of Newfoundland and Labrador 557

12 558 Auditor General of Newfoundland and Labrador