Several Government Ministries, including the Ministry of Finance, lack documentation to justify multi-million dollar expenses, the Auditor General’s Report on Trinidad and Tobago’s public accounts for Government’s financial year 2013 (October 1, 2012 to September 30, 2013) has shown.
The worst offenders were the Ministry of Environment and Water Resources, the Ministry of Science and Technology, and the Ministry of Foreign Affairs.
Not only did the Ministry of Environment and Water Resources fail to provide documents to support three payments totalling $266,569,000, it was not transparent with documents or answers to questions asked by the Auditor General.
The Ministry of Science and Technology failed to provide documents to the Auditor General for $19.3 million.
“In contravention of the Auditor General’s right of access to documents on demand, critical records/documents such aas project files, contracts, bills, quotations, completion certificates, progress reports or status reports were not produced for audit. As a result, the validity of payments made totalling $19,300,000 on nine projects, the status of completion of each and adherence to relevant terms and conditions could not be ascertained,” the report noted.
The Ministry of Foreign Affairs failed to provide documents for 40 vouchers for contract employees valued at $6.1 million.
The report, dated April 29, 2014 and signed by Auditor General Sharon Ottley, also raised concerns about overpayments by ministries, lack of documentation to support contracted workers by the state and lack of proper accounting management by officers in charge of protecting the public purse.
There was also failure in many instances to respond to requests for more expenditure information, the Auditor General’s report stated.
The state of internal audit functions in the Ministries and Departments “remains a matter of grave concern as in prior years”, noted Ottley in her annual report.
She noted that the examination of records and documents showed that in many instances there was non-compliance with financial instructions, financial regulations and other financial directives while reports on appropriation accounts did not match what was produced for examination during the audit.
“The audit revealed numerous instances at various Ministries/Departments where Financial Regulations and Instructions as discussed at paragraph 1.6 continue to be disregarded. A pervasive need was identified for training of staff of Ministries and Departments in accounting regulations and procedures with a view to enhancing accountability and good governance,” she said.
She noted that there are examples of “weaknesses in the system of internal control, as well as non-compliance with legislative requirements and/or financial directives” and a general lack of proper maintenance of the relevant subsidiary books and records.
“There were numerous instances were documents were requested for audit purposes were not produced. This represents a serious breach both of the Auditor General’s constitutional and legal right to access to all documents relating to the Public Accounts and of financial and accountability requirements,” she noted.
Payments to contact employees, from information received from 28 permanent secretaries, totaled $415,836,835.32. That sum was paid to 3,450 persons employed in contract positions during the financial year ended September 30, 2013.
“The audit highlighted that duly executed contracts were not produced for several of those officers and as such the various terms of engagement could not be verified,” it said.
The Trinidad and Tobago Police Service had the most contracted workers with 547; the Ministry of National Security with 423; the Ministry of Health with 391; and the Ministry of Finance and Economy with 321.
“As in the prior year, the examination of contract employment revealed that in many instances, terms and conditions approved by the Chief Personnel Officer (CPO) and/or signed contracts were not seen. In response to the observations raised accounting officers have indicated that matters are with the personnel department for action,” the report said. (See Table 1)
During the period 2009 to 2013, Government spent $2.2 billion in inventory.
But there were also cases of theft and losses reported.
For the financial year 2013, there were 42 cases of thefts and losses of state property totaling $301,408.10. There were 23 cases under $5,000 for a total value of $38,180.49 and 19 cases in excess of $5,000 totalling $263,227.61.
The Ministry of Education had 16 cases under $5,000 totalling $27,275. and nine cases totaling $74,790.85.
The Ministry of Food Production had four cases of theft totaling $126,785.85.
Signed lease agreements were not produced for audit for certain properties for which rental payments were made.
The Ministry of the Attorney General did not provide leases for five properties that had amounted to monthly rentals of $961,745.00.
The Environmental Commission did not provide a lease for its offices, which had been $106,777.50 and reduced to $66,527.50.
The Ministry of Tobago Development did not provide leases for four properties amounting to $596,103.65 a month.
The Auditor General noted that overpayments continue to be a major concern since they result in time and other resources being spent on accounting, recovery, reporting and auditing as well as, at times, emotional factors involved in the recovery process.
The report noted that a comparison of information presented in the Notes to the Appropriation Accounts of Ministries/Departments with the records of the Auditor General’s Department revealed that with respect to certain Ministries/Departments reports were not received in the Auditor General’s Department in several instances. A number of cases were also noted where the information presented in the Appropriation Accounts differed from that reported to the Auditor General.
(See Table 2)
Ministry of Finance and the Economy
• From a sample of 211 vouchers examined, evidence was not seen that in four Divisions, quotations were obtained for the purchase of items on the ‘open market’ in 44 instances with a total value of $1,790,178.36. This contravenes Financial Regulation (Stores) 31 as well as Central Tenders Board Circular Memorandum CTB: 4/2/6 Vol. 1 dated July 26, 2004.
• During the period reviewed of October 2012 to March 2013, amounts totalling $3,555,541.55 were paid to one provider for security services ($1,389,065.05) and for janitorial services ($2,166,496.50). Contract agreements were not seen. These payments also exceeded the Permanent Secretary’s authorised expenditure limit of $1,000,000. The approval of the Central Tenders Board for the provision of these services was not seen.
• From a sample of 15 vouchers selected for Other Contracted Services, two vouchers totalling $974,625 were not supported by original invoices.
• Financial Instruction 108(4) which requires the Accounting Officer to “personally countersign vouchers covering transactions affected in previous years” was not seen to be followed in five instances for payments to one provider totalling $3,357,224.33.
Customs and Excise Division
• Two cheques dated September 25, 2013 and which totalled $795,000 for the purchase of three motor vehicles were seen on hand during the audit exercise in December 2013. The voucher was signed indicating receipt of the vehicles. However, there was no evidence that the vehicles had been received and taken into inventory. There was therefore a breach of Financial Regulation 71(1). In the circumstances these cheques should have been cancelled at the end of the financial year 30th September, 2013.
The following documents requested for audit purposes were not provided:
1.Vouchers for the months of January 2013 and September 2013 in respect to expenditure totalling $7,950,543.80;
2. Thirty-four vouchers totalling $5,814,577.66 from the sample selected for testing; schedules of accounts for five vouchers totalling $3,921,914.65, and
3.Cabinet approval for the execution of the project titled Infrastructure Upgrade of the Container Examination Station (CES) at Port of Spain.
The non-production of documents for audit not only breaches Financial Instruction 43 and Financial Regulation 8(l) but denies the Auditor General’s legal and constitutional right of access.
Ministry of Food Production
• A review of a sample of 15 payments totalling $251,781.51 for Materials and Supplies revealed that proper procurement procedures were not followed in that Bonded Contractors were not used where applicable, neither were 3 quotations obtained for ‘open market’ purchases.
• Inventory records show that 290 vehicles are owned by the Ministry; however Vehicle Registers necessary to record the existence, location and status of vehicles were not seen to exist either at the Head Office or at 3 of the 11 outstations sampled.
• Two amounts of $14,250 were seen to be paid to one supplier on two different invoices for the same service performed on the same date.
• A Register of Contracts as required by Financial Regulation 129 (1) was not produced. As a result, the completeness of information relating to contracts not yet completed at Note 2.l ii shown as $946,599.50 could not be verified.
Ministry of Health
• A review of a sample of 34 payments totalling $135,332,981.58 revealed that invoices were not committed in the Vote Book as required by Financial Regulations 66 and 67 to allow for prudent cash management.
• From the sample reviewed, one payment voucher for $1,290,167.14 was not provided for audit.
• Documents required to verify the validity of expenditure of $770,611 for optometry equipment were not produced for audit.
• During a physical verification exercise, it was noted that 21 items valued at $197,163.82 from a sample of 51 items purchased during the year did not bear marks of identification as Government property in accordance with Financial Regulation (Stores) 55.
Ministry of Transport
• Documents to support a payment of $13,000,000 shown as Contribution towards Deficit on Coastal Steamers were not produced.
• The Overpayment Register necessary to monitor recovery and to determine balances outstanding was not seen to be up to date at the time of audit.
• A formal contract for works valued at $5,651,390 was not provided for audit purposes.
• Payments totalling $211,499 for the Supply and Installation of Emergency Lights were incorrectly charged to this vote. In addition, supporting documents were not provided.
The following documents were also not provided:
• Cabinet approval for amounts totalling $1,530,171.72 paid to three sports ambassadors and Schedules of Accounts for 3 of these payments totalling $557,049.12
• Daily Abstracts of Payments for the period July to September 2013
• Invoices to support 3 payments totalling $82,217.00 to an office supplies company
• Two contracts for security services for which payments of $2,212,712.02 were seen to be made up to August, 2013 to the relevant entities.
As a result of the above observations, related expenditure was not verified.
“Non-production of documents for audit represents a serious breach both of the Auditor General’s constitutional and legal right of access to all documents relating to the Public Accounts and of financial and accountability requirements. Financial Instruction 43 states, “All vouchers, paid cheques and other relevant documents shall on request for audit examination be made available to the Auditor General or his nominee,” the report noted.
“The internal controls were weak in that there was no segregation of duties. One officer was responsible for all aspects of receipts, deposits, payments, purchasing, custody of inventory items and maintenance of accounting and inventory records. Further, evidence of proper oversight by the certifying officer was not seen,” it said.
• Prior approval of the Treasury as required by Financial Regulation 20(2) for a non-permanent, non-pensionable officer to be an authorised signatory to the Mission’s bank account was not produced.
• Bank deposit slips requested for the month of September, 2013 were reported to have been shredded and as a result were not presented.
• Approval from the Minister of Finance was not seen for the variation of established procedures related to non-maintenance of certain records in the transition to online banking.
• Records to support payments such as receipts, debit advices, direct transfers and other transaction slips were not provided.
Ministry of the
and Water Resources
• Documents to support three payments totalling $266,569,000 being Refunds to Water and Sewerage Authority Re Water Improvement Rate were not produced contrary to Financial Regulation 8(l) and the Auditor General’s constitutional and legal right of access to all documents.
• From a sample of five vouchers selected, supporting documents were not seen for two items purchased under Minor Equipment while quotations were not seen for any of the items purchased. Physical verification of items could not be performed due to the absence of the storekeeper on the day of the audit visit.
• A commitment of $546,250 as shown on the Expenditure Statement for Development Programme was not seen to be recorded in the Vote Book. In addition, the Cabinet Minute and other project documents were not produced as requested.
• A review of a sample of 16 vouchers for Other Contracted Services revealed the under-mentioned issues.
• Duplicate payments of $127,006.60 were seen to be paid to one contractor, the second payment being supported mainly by photocopied documents of the first. Evidence of Internal Audit certification was seen on the second voucher.
• The approved spending limit of $50,000.00 was seen to be exceeded for ten payments totalling $6,874,159.21 (for amounts ranging from $261,898.79 to $970,538.18). Authorisation by the accounting officer was not seen.
• Information was not seen to be properly recorded on Schedules of Accounts in accordance with Financial Instruction 27 in several instances. While these were subsequently corrected, it is important to note that proper and timely maintenance of accounting records is a key factor in expenditure control.
Ministry of Science
• In contravention of the Auditor General’s right of access to documents on demand, critical records/documents such as project files, contracts, bills, quotations, completion certificates, progress reports or status reports were not produced for audit. As a result, the validity of payments made totalling $19,300,000 on nine projects, the status of completion of each and adherence to relevant terms and conditions could not be ascertained.
• The Schedule of Accounts relating to an adjustment of a cancelled cheque for $4,000,000 was also not presented.
• Payment vouchers were not seen to be supported by relevant documents such as contract agreements or invoices from contractors.
• Cheque numbers and dates were not disclosed on payment vouchers totalling $2,974,699.75 and the related Schedules of Accounts as required by financial directives.
Consequently the audit trail was adversely affected, the report stated.