Auditor general’s report: Widespread misuse of government funds in the Local Government offices on various Family Islands

Report: Widespread misuse of public money in local govt

By KRYSTEL ROLLE
Guardian Staff Reporter
krystel@nasguard.com




The recently tabled auditor general’s report reveals the widespread misuse of government funds in the Local Government offices on various Family Islands. The report — which covers the period between July 1, 2008 to June 30, 2009 — details a lack of accountability or audit trails in the recurrent accounts in many of the local government offices.

According to the report, as it relates to revenue in the Central Andros District, “the practice of omitting the general receipt references for clinic fees, character references and gun licenses from the cashbook did not leave a good audit trail and impeded the process of verifying the actual amounts collected.”

The auditor general also found several inconsistencies as it relates to the recurrent expenditure account. “We noted that payments were made to repair the old school building at Blanket Sound,” said the report, which was tabled in the House of Assembly on Monday. “During our site inspection we could not verify where any work was done to the old building.”

Additionally, the report revealed that payments were made for plumbing, supplies, building materials, painting supplies and sundry items but no justification was given for the items purchased and the related projects were not indicated.

The report also revealed that money was spent out of the local government’s reserve account in that district without any evidence of approval from the minister responsible, as is the requirement.

In the Cat Island District, the report detailed that some payment vouchers were discovered but were not supported with bills or receipts. Similarly in North Eleuthera, the report indicates that the description of works given and supporting documentation was inadequate for payment vouches. “In other cases, the vouchers were not approved by the island administrator; neither was the account numbers to which the transactions were to be charged provided,” the report said.

In Harbour Island, the report noted that unspent budgetary funds were not returned to the Public Treasury at the end of fiscal years as mandated from 2004.

In Spanish Wells, the auditor general report indicated that monthly payments were made for the upkeep of public grounds, roads, harbor and dock, however evidence of competitive bidding was not provided and the agreements setting forth the conditions for works undertaken were not produced for audit review.

The same conclusion was made in Central Eleuthera.

The report states that during a scrutiny of payment vouchers and contract, the scope of work was not included and bids were not attached. In the Exuma District it was noted that adequate information and supporting documents were not attached or indicated on vouchers to justify the charges made against budget items. “We also noted that some checks were written to the administrator rather than suppliers,” the report said. “Some vouchers related to school repairs and to the district superintendent’s office were charged against line items that do not exist.”

A review of the Social Services Department in Mayaguana revealed that some people who were receiving food coupons were gainfully employed as was seen on a monthly National Insurance contribution schedule and monthly upkeep payments.

“In our view, the present system in place for the delivery of food assistance lacked transparency and accountability,” the report said.

“In our opinion, pubic funds were disbursed without regard for economy, efficiency, transparency and accountability. Internal controls need to be strengthened to ensure efficiency and effectiveness of the operation.”

The report calls for an overhaul of many of the practices of the local government offices.

It also seeks clarifications or accounting in cases where money was spent but no evidence of the work was acknowledged.

4/20/2011

thenassauguardian

Bahamas Blog International

Minister of Youth, Sports and Housing Neville Wisdom, under whose portfolio Junkanoo fell before the February Cabinet reshuffle, disputed a portion of the Auditor General most recent report

Minister Disputes Audit

 

 

 

 

By Candia Dames

Nassau, Bahamas

12 May 2006

 

 

 

Minister of Youth, Sports and Housing Neville Wisdom, under whose portfolio Junkanoo fell before the February Cabinet reshuffle, disputed a portion of the Auditor General's most recent report on Thursday as it related to the controversial 2002 million-dollar Junkanoo bleacher contract.

 

As reported by the Bahama Journal, the Auditor General said that based on documentation from the then Ministry of Youth, Sports and Culture it appears that the contract for rental of the bleachers did not receive Cabinet approval before an agreement was signed between the ministry and Towers Scaffold Services INC.

 

But the minister said this is not so.

 

"The Cabinet approved the bleacher contract," he indicated. Mr. Wisdom said the contract was approved before it was signed.

 

The Auditor General noted that Section 58 of the Financial Regulations states that the Cabinet shall make all contracts for supplies, works and services required by the government for amounts in excess of $250,000.

 

But the report said that based on documentation from the ministry, the ministry entered an agreement with Towers Scaffold Services INC. on October 28, 2002. However, approval for the venture was noted on November 28, 2002.

 

Asked to explain this, Minister Wisdom said that oftentimes Cabinet conclusions do not come out immediately when decisions are made. He suggested that this might be the case as it relates to the Junkanoo bleacher contract, although he was not sure.

 

The report also said that an examination of smaller Junkanoo bleacher contracts awarded during the 2002/2003 season revealed that the contracting parties did not sign three contracts.

 

The three contracts, the report said, were awarded in the amounts of $1,800 each.

 

To this, Minister Wisdom said, "I know absolutely nothing about that."

 

He promised to give a more detailed response after reviewing the Auditor General's Report, which was released in very limited numbers.

 

Chairman of the Public Accounts Committee Brent Symonette, who is the Member of Parliament for Montagu, has continued to ask the government to provide each member of the committee with a copy of the report so that it can meet.

 

Mr. Symonette made his most recent request on the floor of the House on Wednesday evening.

 

The other members of the committee are Lucaya MP Neko Grant (FNM); Long Island MP Larry Cartwright (FNM); Cat Island, Rum Cay and San Salvador MP Philip "Brave" Davis (PLP); and St. Thomas More MP Frank Smith (PLP).

 

Mr. Symonette told the Bahama Journal on Thursday that it's sad that the government has not been able to come up with five copies of the report for the members of the committee.

 

He said that when the committee meets it will call officials of the various ministries in for questioning.

 

He said the permanent secretary of the former Ministry of Youth, Sports and Culture will be among those called.

 

"We're going to ask for various contracts and ask when they were executed," Mr. Symonette said.

 

Asked whether the Auditor General's report that the ministry violated the financial regulations concerned him, he said, "It concerns me a lot."

 

"The auditor general asked the government to verify the information and the government failed to do so, and the auditor noted it," Mr. Symonette added.

 

"This is a very fundamental issue. [Minister Wisdom] never should have signed this contract without approval."

 

The auditor general said that relevant Cabinet conclusions regarding the Junkanoo arrangements were not forthcoming. Therefore, he relied on information from files at the ministry. The report was tabled in the House of Assembly several days ago.

 

After the million-dollar contract was executed to rent the bleachers, Minister Wisdom faced a firestorm in the House of Assembly over the arrangements.

 

At one point, he informed that, "Yes, a million dollars is being invested, but the return anticipated from the exercise is $3 million."

 

But the auditor general noted that the revenue for ticket sales was estimated at $2.1 million, but only $695,000 was realized.

 

The auditor general recommended that for future years the budgetary process should be "more realistic".

 

During the Junkanoo bleacher contract debacle, the Bahama Journal reported that a draft report from the accounting firm Deloitte & Touche had put losses to the Bahamian taxpayers at $1,189,562 during the Junkanoo season in question.

 

Amid criticisms from opposition forces, Minister Wisdom consistently denied that his ministry executed the bleacher contract without first getting the necessary approval from Cabinet.

 

With the newly released Auditor General's Report resurrecting the controversy, it's likely that he will face further questions about the contract.

 

Prime Minister Perry Christie now has ministerial responsibility for the Junkanoo parades, which come under the Culture portfolio.

The Bahamas Auditor General, Terrance S. Bastian is Unable to Certify Public Accounts

Auditor Raps Gov't

 

 

 

By Candia Dames

Nassau, The Bahamas

11 May 2006

 

 

The newly released Auditor General's Report shows that in the most recent year for which the study is available, public accounts were in such poor state that the auditor general was unable to certify them.

 

"As a result of my examination, I now report that due to un-reconciled accounts, which include inactive bank account that remain on the books, I cannot attest to the completeness and fairness of cash and bank balances, investments, and receivables," wrote Auditor General Terrance S. Bastian.

 

"Because of the fundamental importance, and the material effect of these accounts, as described in the preceding paragraph, on the statements of account, I am unable to certify that the Final Accounts of the Government of the Commonwealth of The Bahamas present a true and fair view of the state of affairs of the year ended June 30, 2003."

 

Under the Financial Administration and Audit Act 1973, it is the responsibility of the auditor general to examine and certify the government's financial statements.

 

The accounts of the Bahamas are presented to parliament annually and contain among other information the details of revenue, recurrent and capital expenditure, the public debt and the contingent liabilities of the government, as well as detailed revenue by category and detailed expenditure.

 

But the most recent report raises serious questions about inconsistencies in many government agencies and departments.

 

For instance, it says that an examination of the Junkanoo bleacher contracts awarded during the 2002/2003 Junkanoo season revealed that three contracts were not signed by the contracting parties.

 

The three contacts in question were awarded in the amounts of $1,800 each.

 

"Although photocopies of the unpaid cheque were seen on file - we were unable to confirm whether the cheque were cashed because the originals and the bank statement were not made available," the report said.

 

The auditor general recommends an explanation as to why the contracts in question were not signed; copies of the original cheque and the bank statement.

 

The report added that based on documentation from the Ministry of Youth, Sports and Culture, it appears that the contract for rental of the bleachers did not receive Cabinet approval before an agreement was signed between the ministry and Towers Scaffold Services INC.

 

Section 58 of the Financial Regulations states that "All awarded contracts for supplies, works and services requires by the government for amounts in excess of $250,000 shall be made by the Cabinet."

 

The report said that the records at the ministry show that an agreement with Towers Scaffold Services INC. was executed on October 28, 2002.

 

However, approval by Cabinet for the venture was noted on November 28, 2002.

 

"We have requested relevant copies of Cabinet conclusions which do not seem to be forthcoming. Therefore, we relied on information from files at the Ministry of Youth, Sports and Culture," the report said.

 

The auditor general analyzed the budget for the 2002/2003 Junkanoo parades and compared the same with the actual amounts.

 

"We noted that revenue for ticket sales was estimated at $2.1 million, but only $695,000 was realized," the report said. "In addition, other contributions were estimated at $325,000, but only $107,954 was received.

 

The actual government contribution amounted to $981,065 compared to the $350,000 budgeted."

 

The report added that on the other hand, miscellaneous expenses were budgeted at $583,145 and $514,380.53 was expended. Also, it was reported that advertising was projected at $328,450, but this too fell short by $295,209.80.

 

The auditor general recommends that for future years, the budgetary process should be more realistic; a more detailed marketing strategy be put in place; and Junkanoo organizers conduct market surveys so that the reaction to new initiatives would be more realistically determined.

 

"It is obvious that revenue estimates were grossly overstated," the report said. "While marketing is not an exact science, we believe that the Junkanoo organizers must review as many scenarios as possible when preparing the budget."

 

The report also points to unrecorded deposits as they relate to the sale of Junkanoo tickets that year.

 

"At the time of our examination, $15,200 for Internet ticket sales were not recorded in the cashbook," the report said. "In addition, there were numerous other deposits where the nature of the transactions could not be determined due to insufficient information."

 

It added, "We recommend that all revenue collected be deposited in the bank and recorded in the cashbook promptly. Also, all transactions should be supported with sufficient details so as to clearly identify its source and nature."

 

The report noted that the approximate cost of rental and shipping of bleachers was $1,240,000.

 

Tower Events International SRL informed the Department of the Auditor General that the approximate selling price of the seats which were used for the 2002/2003 Junkanoo parades would have been between $6.5 and $7 million, the report said.

 

The Ministry of Youth, Sports and Culture was not the only government agency where concerns were raised.

 

At the Department of Immigration, the report said during the audit it was observed that no cashbook was being maintained.

 

"We recommend that a cashbook be instituted in accordance with Section 134 of the Financial Regulations 1975," the report said.

 

While reviewing the accounting process, it was noted that when revenue is turned over to the accounting officer by the cashier, no receipt is issued to acknowledge the cash exchange and shortages exist in the amount of $14,805.14.

 

The auditor general recommends that there be documented verifiable evidence of exchange of funds from the cashier to the accounting officer.

 

The report also recommends a thorough investigation be conducted to determine further the extent and reason for the shortages. It said that every effort should be made to recover the amount of $14,805.14 from the cashier as a matter of urgency.

 

The report said that while examining the cash edit listing to the underlying accounting records, the auditor general observed that entries totaling $227,894.19 appeared as "void".

 

In many instances, the report said, there were no attachments to support the void or cancelled receipts.

 

"At the time of the review, we were not given the assurance that all voids that appeared on the cash edit listing were legitimate," the report said.

 

Shortly after coming to office and throughout his term so far, Prime Minister Perry Christie has continued to raise concerns about the failure of various government departments to reconcile their accounts.

 

He has said that while his administration does not want to raise taxes, it has been focused on ensuring that revenue loopholes are tightened up.

 

It's unclear whether the situation that prevailed in 2002/2003 has been improved, as there has not been any report from the auditor general to cover any fiscal years that followed.