Agricorp audit results released

Wednesday, July 16, 2008

by BETTER FARMING STAFF

Processing a CAIS application through Agricorp costs $530, compared to $730 when the feds administrate it in other provinces. The estimates for processing an application, however, were even lower when Agricorp took over managing CAIS in the fiscal year 2003. At the time the provincial government had estimated that processing an application would cost less than $300.

Another advantage of keeping Agricorp is that information is readily available to the province for use in its programs.

Low cost is one of the few good things that the auditor general had to say about the crown agency’s handling of millions of dollars of farm programs.

In his report, the Auditor General concluded that Agricorp has difficulty adapting to rapid changes caused by substantial growth in the number of farm support programs and a doubling of annual support programs to farmers in recent years. Last fiscal year Agricorp delivered $68 million via 13 farm financial programs.  Five years ago it delivered half that amount of money through only two programs.

The auditor surveyed 100 Agricorp farm customers. Most could not reasonably estimate potential payouts from CAIS Program benefits. More than half said they couldn’t use potential payouts to seek financing because potential returns were so uncertain.

Agricorp is a bargain but it lacks a number of features that would make it more acceptable to its clientele. Applications are so complex that farmers need financial specialists, such as accountants, to fill them out, at an average cost of about $500.
In 2004 processing a file took 58 business days. For the 2006 year, processing turnaround was 92 business days.

Farmers sometimes receive cheques with no indication as to which program the cheque is for. Nor are they able to get access to calculations called “Benchmarks Per Unit,” a provincial average used to determine a farm’s payment if there is been a “structural change” such as an ownership change or an increase or decrease in acreage or number of head of livestock raised.

Fully 60 per cent of farms using CAIS had a structural change factor applied since CAIS came into place in 2003.

Agricorp has no collection policy for overpayments. Overpaid producers owe Agricorp $8.5 million; $1.4 million is owed by producers with files that are now “inactive.”

Farmers who have defaulted on loans under the government-run Commodity Loan Guarantee Program continued to receive payments from Agricorp under CAIS. Internal controls are lacking. An Agricorp employee can change information in a file to benefit himself or a family member, and there is no system in place to prevent the generation of unauthorized payments, although they can be traced later.

Agricorp’s internal audit of its own functions found that more than half of files audited needed to be adjusted. Since fewer than one per cent of files were selected for audit: “the total underpayments and over payments for all applications could be significant,” the Attorney General reported.

The report suggests an expensive computer update may solve Agricorp’s shortcomings. It found that Agricorp’s computer system is very manual intensive. Agricorp proposed improving the CAIS system last year to address shortcomings at a cost of $25.8 million, with the upgrades fully operational by 2012. But Agricorp requires federal and provincial government approval before it can issue a request for proposals. To meet federal government requirements it needs a third party assessment of its business case. “To date,” says the report, “Agricorp has been unable to go ahead with its desired system enhancements.” The auditor general’s solution to achieve the computer update? There needs to be a better federal-provincial cost sharing arrangement to make it work. BF