The City of Hamilton had a bigger problem with double payments to suppliers than it thought.

The Hamilton Spectator has identified more than a dozen double payments worth about $80,000 that had previously not come to light.

Another $30,000 in suspected duplicate payments to an oil company would raise the total found in the small sample checked to $110,000.

The payments were made in 2000 and 2001.

And city staff don't know if the money was repaid. Nor can they ensure that duplicate payments can ever be eliminated.

The amounts are not large in relation to the city's nearly billion dollar annual budget. But with 100,000 payments being made every year, they raise questions about how often double payments are made.

The city says there have been several causes of duplicate payments:

* Hurried introduction of a new computerized financial system in preparation for the year 2000.

* Inconsistent procedures used in the first year of the new amalgamated city in 2001. For example, some staff kept ordering from the same suppliers they always had, without getting proper purchasing orders filled out.

* Continued turnover among accounts-payable staff. Only one of nine employees who process payments has been on the job for more than two years.

* Ordinary human errors such as processing a job twice, first when the work is completed and later when the invoice comes in.

Councillor Larry Di Ianni says the problems have to be stamped out.

"I don't think there is any tolerance for errors," he said. "We don't have enough money to pay for some things once, let alone twice."

Duplicate payments first came to light last month when it was learned the city sent double cheques to a company owned by city councillor Murray Ferguson.

The general manager of finance investigated and reported to councillors that he had uncovered $50,000 in double payments made on two dates in 2001 and 2002. Joe Rinaldo said as far as he knew, that was the extent of the problem, which he blamed on computer glitches.

But the overpayments identified by The Spectator are above and beyond those Rinaldo talked about.

The newspaper reviewed electronic records extracted from the city's computerized payment system. They were released under Freedom of Information legislation.

After identifying hundreds of possible overpayments, The Spectator provided the city with a sample for further review. Staff in the accounts payable department found that most were not actually duplicates but more than a dozen double payments did turn up.

The largest were two cheques for $17,171.77 sent to Integrated Cable Systems of Scarborough in August 2000. According to the city, the mistake was only caught once the cheques had been mailed. The extra payment was returned and cancelled. Integrated Cable refused comment yesterday.

In another case, there weren't any extra cheques. Instead, an electrical and mechanical contracting firm was paid double what it should have been, $21,000 instead of $10,500.

The error was caused by a data entry mistake.

Changes to the computer system made since then should prevent this particular problem from happening again.

Rick Male, director of financial services, says his staff are trying to figure out if the money was ever recovered or credited back by the supplier.

A similar detective exercise is underway on three possible duplicated payments to an oil company. They range from $9,056 to $10,500 each and are dated in 2000 and 2001.

Male and Rinaldo say extensive manual and computer checks already exist to prevent most double payments, and only so much more can be done. Nonetheless, Male's staff have started a review of the computer system to see if other improvements can be made.

Rinaldo says a balance must be found between security and efficiency. Too much security would mean large numbers of legitimate payments would be held up by extra automated computer checks.

Male says to catch all of the obvious errors could require a doubling of staff and cost $250,000 or more.

That could cost more than the duplicate payments that would be prevented. Double cheques are still rare, and even more so for large amounts because more documentation is required before payments are made, he said.

But Di Ianni says the city must be equipped to catch its errors.

"I am not satisfied to learn that in an organization of this size you have to expect some ... double payments. We have a lot of work to do."

Hamilton Spectator

-- Anonymous, February 25, 2003