The Department of Tourism can get better internal performance and an improved ability to demonstrate its effectiveness through better policy communication and planning, a management control systems (MCS) audit has revealed.

Government Auditor Larry Dennis in his MCS audit of the vital Government Department to May said that administrative matters in need of particular attention are the European agent's contract and unnecessarily large balances in the overseas bank account.

Other problems were unveiled, but in the overseas offices, security over cheques received and inefficient computer systems are the main concerns.

In the report taken to Parliament, it is highlighted that there have been expenditures incurred and initiatives begun that conflict with the Department's own policies governing cruise ships, hotel phasing and chartered flights, without senior level authorisation.

The Tourism Department, in a formal response, agreed with a recommendation from the auditor that their five year plan needs better clarification.

But the report raised concern that more detailed plans were needed to provide better guidance to its various managers, and real measurements on how effective the plans are.

A weakness was highlighted in how the Department administers the longstanding contract for the provision of sales and marketing services in the UK and continental Europe. And while the contract has not been put out to tender since 1995, the same firm has had the agency for 12 years.

In the 1996-97 year, that agent was paid more than $3 million, of which $1 million was for fees and administration, and the balance for marketing costs.

But the audit exposed difficulties in determining the appropriateness of many expenses.

The Department agreed that contract administration could be better improved, but it said the recommendation failed to point out sustained growth from the region over the last ten years.

Meanwhile, the financing of the overseas' bank accounts, it has been agreed, does not constitute effective cash management. In the ten months to January, the balances averaged $980,000, creating interest paid by the Government for this sum of some $45,000.

The auditor called for better control over expenditures in the Department's overseas officers, after examination of just a sample of transactions revealed a number of instances of non-compliance with Tourism's North America Employee Handbook rules.

In one instance, an employee received an advance of $10,000 for relocation, and a year later had not accounted for its use. When this was drawn to the attention of management, the employee reimbursed $7,000.

The Department has now agreed with the auditor that expenses should be required to be accounted for within one month.

Travel agents apply to Tourism for Bermuda familiarisation trips. But the $279-cheques they submit with their applications are not immediately banked, but remain in office filing cabinets.

Up to 1,000 such cheques could be on hand at any one time, some for as long as two months.

The report warns: "This practice is a significant security risk and is contrary to the Government's financial control instructions.'' It adds: "This state of affairs creates a risk that cheques will be lost, or stolen and cashed, with a consequent and substantial liability accruing to the Government of Bermuda.'' But the Department responded: "The regional offices are reluctant to change their practices for handling travel agents' cheques. Cashing them when they are received could lead agents to believe that their trips are confirmed, as well as creating administrative problems with the large volume of reimbursement cheques. "The Department is keen to maintain a positive relationship with these travel agents. The Department will work with the accountant general for a solution that will satisfy both security and public relations concerns, and will also ensure that insurance coverage is in place.'' Another pressing concern highlighted by the auditor involves computer systems and data control. Tourism's regional offices process their financial transactions on three different computer systems, each of which produces data that are incompatible with the others, and with the central system used by all Government departments.

At the time of the audit, there was an unreconciled difference of more than $76,000 between the accounts receivable balances on the two systems used by the New York regional office.

The other regional offices process their information on a third computer system which is incompatible with the New York systems. This is not conducive, observed Mr. Dennis, to the New York office carrying out its coordination responsibilities in an efficient manner.

He continued: "The three computer systems are all relatively old. In some respects, their functionality and reliability have degraded, and there is uncertainty about whether they are all year 2000 compliant. One of the systems is no longer supported by a supplier.

"Together the systems are marginally reliable and contribute to duplicated functions and other clerical inefficiencies.'' Larry Dennis GOVERNMENT GVT BUSINESS BUC