Follow-up bugbear for Auditor General
Continued from: From the Auditor General’s Report 3.
Rural Development Commission.
Issue: In 2006, the RDC had indicated it would conduct an impact assessment on the first ten years of the scheme’s operations to determine how successful it was in achieving its objectives.
The management of the commission again indicated that a social impact assessment was to be conducted. The commission also indicated that it was proposed that the study be conducted by the Social Sciences Faculty of the UWI Cave Hill Campus.
Entity’s response: The commission regrets to inform you that the study has not been
conducted. It appears as though due to the change in administration the matter was lost
Since your correspondence, contact has been made with the University of
the West Indies which had expressed an interest in conducting the study and, an appointment was set up to meet with the relevant authority at the University to discuss some details.
The deputy director attended the meeting but no one showed up after waiting for an hour, and no apologies were tendered.
In 2006, the commission did not have the capacity it has now in terms of human resources. We are therefore confident that we can undertake this task and we believe that the cost will be considerably less. The process will start as soon as possible and we shall submit the information as promised once it becomes available.
Samuel Jackman Prescod Polytechnic.
Issue: It was noted in the 2011 report that the valuation of $5,126,996 used for the insurance of the Polytechnic’s equipment was based on the cost of the equipment held by the institution when it initially moved to its present location in 1982. This valuation is therefore outdated, as equipment would have been purchased and disposed of
It should be noted that a request was made for a list of equipment insured for the financial years 2008/2009 and 2009/2010, but Samuel Jackman Prescod Polytechnic (SJPP) personnel indicated that no such list was kept.
The buildings insured by the SJPP were located at Wildey, St Michael, and Lot C, The Pine, St Michael. These buildings were insured for $28 million and $1.85 million, respectively.
It was queried how the sum insured of $28 million was derived and whether valuations were done on the buildings in the last four years. Personnel of the SJPP could not determine when the last valuation was done or how the sum insured was derived.
It was recommended that SJPP conduct an assessment of the values used to insure its property and equipment and, where appropriate, take relevant steps to ensure that properties were adequately insured.
Entity’s response: Please note that in response to issues in your report, the management
of the Samuel Jackman Prescod Polytechnic has instructed relevant officers to build an Asset Register and they have started the process. This has been met by setbacks since some of the equipment is more than 40 years old, and no records exist to indicate their purchase price and hence current value. However this process is ongoing and should be completed in this financial year.
Added to the above [some] obsolete equipment has been removed from the workshops and a list submitted to the Ministry of Finance with a request for their critical involvement in the writing-off process. They visited the institution on one occasion but have not returned, resultingin the process being far from completed.
The impact of this action resulted in workshops being overcrowded with obsolete equipment, and some corridors blocked with rotting machines.
Our records show that a valuation review was suggested in 2001 by Lynch Insurance Brokers, but this was not implemented.
Given the financial environment in which the institution now exists, we have been unable to solicit funds for the services of a valuer to assess the value of our buildings.
Barbados Vocational Training Board.
Issue: According to the Occupational Training Act, one of the functions of the board is “to protect and promote the welfare of apprentices”. Hence, as part of its duties, the inspectorate is required, with respect to each apprenticeship, to visit the employer’s site every three months, as well as to monitor the progress of the apprentice, the performance of the employer, assess any challenges faced, and make any needed recommendations.
The inspectorate is required to complete a form for each visit conducted. This form is signed and dated by the inspector, and placed on the apprentice’s file.
Of the 95 files examined, 57 did not contain the forms indicating that visits were conducted. In cases where there were visits, these were conducted on an ad hoc basis rather than every three months, as required.
It should also be noted that of the above sample, 12 apprentices were certified, but no evidence was on file to indicate that visits were carried out.
Entity’s response: The Director of Training has held several structured meetings with the inspectorate where he read and reviewed with them the specifics of the Auditor General’s Report. These meetings also discussed and developed strategies for enhancing related procedures, including accountability measures.
Meetings are ongoing with the inspectorate, who have been making progress in bringing the forms up to date.
Issue: In ensuring that the Apprenticeship Programme complies with the act and its regulations, the board requires the inspectorate to maintain a file for each apprenticeship. This file enables the inspectorate to assess whether the apprentice has acquired the vocational skill and has passed the relevant courses for certification to be awarded. When this information is not available, the apprentice cannot be appropriately assessed and hence the process for certification is impeded.
This was evident with 48 apprentices who were not certified because there was insufficient evidence (training records) on file to determine whether they could be certified.
As part of its duties, the inspectorate is required to maintain and update the apprentice files with the appropriate training records. Based on the audit findings, the inspectorate had failed in this regard. According to an internal review “this failing on the part of the inspectors to keep records up to date was noted from as far back as 1990”.
It should also be noted that the lack of supervision over the work of the inspectorate was also a contributing factor. No evidence was seen to indicate that action was taken by management to address the issue.
Entity’s response: The officers now ensure that every form for each apprentice is on file,
and that data required from the SJPP for each apprentice is obtained and filed.
Registration Department. It was noted that at various courts, fines were imposed but the relevant warrants were not issued to the defendants. A review of the warrants from various years showed that fines totalling $2,458,400 from 61 cases, remained outstanding.
It was recommended that the system of the issuance and follow-up of outstanding warrants be addressed.
Entity’s Response: Action taken to address the issue:
The department is cognisant of the delay in the issuance of warrants as it
relates to Holetown Magistrates’ Court. In an effort to comply the following action was taken.
A clerical officer was assigned in 2012 to update the order book.
Order books from Holetown Magistrates Court are currently being facilitated at District A Magistrates’ Court to assist in the updating of records. Officers are currently working to ensure that warrants to be issued for 2014 are processed in a timely manner in addition to giving priority to the backlog.
Status and impact of action taken:
District E Magistrates’ Courts, Holetown, are each staffed by a legal assistant and one clerical officer, with one clerical officer assigned to court duties. The exigencies of the daily operations of the courts are such that staff is frequently unable to update the order book in a timely manner.
Staff is deployed to areas that require immediate attention such as the payment of maintenance and the collection of fees and fines.
Further, recent retrenchment of officers in the public service has placed a greater burden on the courts and negates any previous efforts made to bring the orders books up to date.
Operations at magistrates’ courts are largely manual and the department is working assiduously to computerize some aspects of the operations, thereby promoting greater efficiency in the court system.
Ministry of Agriculture, Food, Fisheries and Water Resources.
Issue: A construction company was hired by the Ministry in November, 2005, to remodel 13 stalls near the Speightstown Bus Terminal for an agreed sum of $72,804.90. By July, 2006, this firm had been paid $91,610.64 which included a variation of $18,805.74. It should be noted that towards the end of December, 2007, the contractor had commenced work on only six of the 13 stalls. There was therefore no basis for the entire contract price being paid.
Synopsis of entity’s response: The ministry indicated that the status of the issue remained the same as indicated in the Auditor General’s Report for 2011. In that report, the ministry indicated that the Solicitor General had requested further information but that the ministry had not responded since it was facing challenges in determining the percentage of work left unfinished, due to deterioration in the work previously undertaken.
Issue: The ministry awarded a contract to a construction company to repair the roof of the building housing the Veterinary Laboratory and the Animal Nutrition Unit for the sum of $98,679.78 VAT inclusive. This contract was due to commence on August 12, 2004, and the date of completion should have been March 30, 2005. Clause 2 of the agreement stated that there should be no variation of the price unless agreed to by both parties in writing and signed on their behalf.
However, at the start of the project the contractor submitted a variation for $89,867.14 for the removal and carting away of the existing roof, resulting in a project cost of $188,546.
Synopsis of entity’s response: The ministry indicated that the status of this issue remained the same as indicated in the Auditor General’s Report for 2009.
Issue: The renovation to the roof of the Oistins’ Fish Market was originally contracted to cost $883,888.16 VAT inclusive. This project had cost overruns of nearly 100 per cent, bringing the total cost of construction to$1,687,112.44. The variations originated with the contractor and did not have the approval or agreement of the ministry.
The ministry paid a consultant $84,355.62 to oversee this project but there was no evidence that the consultant approved any claims for the roof. In a project of this magnitude the claims from the contractor should be first evaluated by the project consultant, who would determine the value of the work submitted and certify for payment.
It is however not clear on what basis the excess payment was approved.
Synopsis of entity’s response:
The Ministry indicated that the status of this issue remained the same as
indicated in the Auditor General’s Report for 2011. In that Report, it was
stated that the Ministry was unable to source any additional information to pursue the matter any further.
Issue: On February 28, 2005, a construction company was hired to carry out renovations and extensions to the old Griffith’s Reliance Pharmacy Building, Palmetto Square, Bridgetown, for the sum of $2,504,012.80 VAT inclusive. As part of this arrangement the contractor was required to secure a performance bond.
The performance bond is generally obtained by way of security with a bank or an insurance company, and it provides the Government with recourse to recover damages if there is poor workmanship or breach of contract. This performance bond is obtained at the contractor’s expense, and should be in place at the start of the project.
There was never an executed performance bond. In a most unusual occurrence, it was observed that the contractor claimed expenses pertaining to the performance bond and funds were actually paid by the ministry in this regard. The contractor also claimed additional expenses for insurance of the building site, although this was the contractor’s responsibility. This contractor received $12,500 for performance bond expenses and $20,000 for insurance, to which he was not entitled.
Synopsis of entity’s response: The ministry indicated that the status of this issue remained the same as indicated in the Auditor General’s Report for 2009.
Entity’s general response to the four issues: Owing to the lapse of time, the Solicitor General’s prior involvement and past ministry responses, it is unclear what future steps the ministry can undertake.
Agencies for which no follow-up responses were obtained. There were a number of state agencies that did not respond to our request for information on the status of past audit issues. These entities and the issues which were highlighted in previous reports are as follows:
Barbados Investment & Development Corporation.
Issue: A subsidiary of the Barbados Investment & Development Corporation had contracted a firm to construct two buildings at the Newton Business Park Complex for $18.5 million. The contract was brought to an end in March, 2007, after poor quality work had been discovered.
It should also be noted that the full contracted price was paid to the contractor although the work on the buildings was not completed. The BIDC commissioned an independent consultant who determined that there were defects in the work and indicated that the cost to correct and complete the work was in excess of $7 million.
Inland Revenue Department.
Issue: Some taxpayers who were overpaid returned the monies to the Inland Revenue Department where it was collected and deposited into the bank. The monies deposited were $73,066.86 less than what had been received.
Monies received from taxpayers are redeposited into the department’s refund bank account. This money should be returned to the Treasury since it was not used for the purpose intended, that is, refunds.
It was recommended that the department investigate the shortfall of $73,066.86 between monies received and deposited and take corrective action to prevent a recurrence, and that the monies collected from taxpayers for overpayment be paid into the Consolidated Fund.
Corporate Affairs And Intellectual Property Office.
Issue: An application for adjudication was made in July, 2004, by a company which was desirous of transferring 25,000,000 shares in a commercial bank to another bank. In this regard an advance payment of $3,806,250 in respect of Property Transfer Tax was made in July 2004.
The valuation of the shares was carried out in August, 2006, when they were valued at $2.10 each. This valuation resulted in additional Property Transfer Tax and Stamp Duty payable to the Government. This matter remains unresolved.
Issue: Although arrival and departure information may entered into a computerized database at the department, a common identifier for tracking each person entering and exiting the country was not assigned. This was one of the factors which made it challenging to provide relevant statistics on persons in the island without relevant permission.
The Data Processing Officer stated that some persons travelled on multiple passports and different names, and could therefore enter the country using one passport, but exit using another. In such cases, the system would not match the departure information to the arrival information.
This situation regarding the absence of up-to-date information on persons staying in the island illegally had developed over time, and showed a major deficiency in the operations of the department. Management of the migration process requires timely and accurate information for decision making. There was an urgent need for corrective action to address this information deficiency.
Issue: There were no facilities in place at the Bridgetown Port or Port St Charles Marina for monitoring the arrival and departure of yachts. The onus was solely on the yacht’s captain to bring the documentation for Immigration officers to check, and then return to Carlisle Bay or Port St Charles Marina, from whence the yacht departs.
Thus, the checking on entry and departure of yachts was dependent on the captain’s integrity to report the vessel’s arrival and departure.
Issue: A sample of 250 applications was examined to ensure compliance with the department’s policies in respect of the issuing of work permits. Overall, 30 per cent of the population sampled was granted work permits without requirements such as:
The application being signed by the employer; Cover letter being signed; Police certificate from the applicant’s homeland; Application being approved by the minister; Complete documentation (in case of a permit for one year).
The system of granting work permits needed to be reviewed to ensure that permits were issued in accordance with the established criteria backed by data showing the shortage of local labour in the particular area.
Issue: In the 2006-2008 period, 2,104 applications for work permits and renewals were not approved by the department. It was not known whether the affected persons had left the island, since the department did not have a systematic policy of carrying out follow-up activity on such persons.
It was recommended that enforcement procedures be integrated with the application process, and the information on newly failed applicants should be promptly passed to Investigation Section for necessary action.
Urban Development Commission.
Issue: In my 2004 report, I had indicated that 82 per cent of the loans under the Housing Loan Programme were in arrears. At that time $2.2 million in loans had been disbursed.
The commission reported that the Housing Loan Programme which involved loans to individuals for house construction had been put on hold indefinitely.
Management of the commission also reported that there continued to be a high loan delinquency with this programme. As a result two officers had been assigned to work directly in the collection of loan payments.
Issue: In 2004 over $4.2 million was disbursed to individuals to assist with the establishment or maintenance of businesses. Many of those persons granted loans made no repayment or provided security for the loans. Letters were sent and calls were made to delinquent clients, but responses were minimal.
The commission indicated that this programme which involved the granting of loans to individuals for business related activity had also been placed on hold and was very unlikely to restart. Some loans had been transferred to debt collectors for necessary recovery.
Issue: Under the Transfer Of Title Programme, UDC assists qualified tenants in urban Barbados to acquire lots under the Tenantries Freehold Purchase Act of 1980. These tenantries consist of over four thousand (4,000) lots. A number of factors such as the slow preparation of conveyances, delays in having lots surveyed, and slow decision making by the Small Holdings Committee, which is responsible for settling disputes between landlords and the UDC, delayed the process.
Management of the commission indicated that it was unaware of what progress had been made in the transfer of titles. However, the Small Holdings Committee had set the price for a number of lots and surveying had started in a number of areas.
Customs & Excise Department. The audit tests revealed that for the financial years 2007-2009 in a sample of 67 vehicles, 41 consigned to individuals, with a customs value of $485,233.39, were seen in the Customs computerized system ASYCUDA ++ as released without the payment of customs duty.
This action would have resulted in a revenue loss of approximately $447,699 in taxes, and would have shown a weakness in the controls established by the department to prevent such activity from occurring.
This matter needed to be thoroughly investigated by the department and appropriate steps taken to avoid a recurrence. Appropriate disciplinary action should have been taken against any officers complicit with this activity.
Issue: The practice of removing apertures from gaming machines allowed the owners to deploy the [gaming machines/video lottery terminals] around Barbados at areas other than hotels and arcades. Normally these video lottery terminals were required to pay an annual licence fee of $15,000.
The effect of removing apertures from these video lottery terminals was unclear in terms of how they were being classified and what annual licence fees should have been paid for them. At the time no licence fees were paid on these machines.
To be continued.