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From the Auditor General’s Report 3

Auditor General Leigh Trotman

Auditor General Leigh Trotman

One of the issues that have been a bugbear for the Office Of The Auditor General in recent years has been that of follow-up. This has led to suggestions from a concerned Barbadian public that the Auditor General has really been a toothless tiger.

However, Leigh Trotman has been relentless in his reporting from year to year on the issues, as well as the action taken or inaction, as the case may be, in response to his reporting.

In Chapter 5 of his 2014 report the Auditor General gives a detailed account of his follow-up actions, as well as reasons for any failure to take action.

He says that of a total of 18 entities requested to provide such information, only 12 had responded as at December 12, 2014, as detailed below.

Ministry of Transport and Works.

Barbados Road Network Infrastructural Improvement Project.

The issue: The commencement of the Barbados Road Network Infrastructural Improvement Project without complete designs and agreed costs contributed to disputes between the ministry and the contracted firm about the total cost of the project.

The ministry claimed that at a meeting held with the firm, an amount of $117 million for Section 1 of the project was agreed on, while the firm claimed that this figure did not include design stage costs and other costs of approximately $9 million. This matter remains unresolved at the time of writing.

Ministry’s response: Please be advised that this matter is currently under judicial consideration in Supreme Court Suit 919 of 2009 between 3S Structural Steel Solutions LLC and the Attorney General.

Barbados Coalition Of Service Industries.

Issue: The report highlighted a number of governance issues relating to the operations of the board, including a lack of evidence that the board approved the annual budget, trade missions and the employment by the agency of members of the board of directors.

It was recommended that there should be specific board approval for large expenditures such as trade missions and financial transactions involving board members.

BCSI’s response: . . . In 2011, the BCSI [Barbados Coalition Of Services Industries] undertook to review its mandate and the tools being used to deliver on that mandate. As a result, many of the policy positions and resulting governance issues have now been updated. As part of that process it was agreed by the board of directors in 2011, that the BCSI would attempt to work alongside agencies who were better equipped to deal with export promotion “beyond the border”, including trade missions, and that the organization would not undertake trade missions at this time until substantial work had been done to bring the domestic market for services up to world-class standards.

As a result of the foregoing, the issue of trade missions, the policy direction behind them and the budgetary allocation assigned to them no longer features in BCSI’s budget or programming activities.

Employment of board members in the BCSI: In June 2011 an executive director was appointed to head the BCSI and the management of the organization now falls under the direction of that office. Clear lines of demarcation have been established between the board of directors and the management of the organization.

There have been no board members employed by the BCSI since this report. Annual external audits have also been conducted by the auditor.

Specific board approval for large transactions: The BCSI now has an administrative system in place where programmes and projects, including budgets, are submitted to the board for approval.

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Barbados Water Authority. Approval was granted for BWA personnel to participate in a Utilities Best Practice United Kingdom Study Tour from July 10 to 17, 2010. A company was paid a total of $31,500 for coordinating and facilitating the tour. Tickets valued at $10,708.03 were also purchased from a travel agency.

At the time of the review there was no evidence provided to show that the tour took place or that these funds were ever recovered.

Authority’s response: Board approval was given at the meeting of Thursday, May 13, 2010, for [three individuals] to attend a training attachment and study tour in the United Kingdom from July 10 to 17, 2010. [The company] which was facilitating the tour [was paid] $31,500.00. Airfare totaling $10,708 was paid to the [travel agency]. Allowances of USD$440.00 and USD$605.00 were paid to [an individual].

The tour was eventually cancelled. The records show that [one individual] has not refunded the allowances paid to him. There is no evidence to suggest that the [company which facilitated the tour] has refunded the fees of $31,500.00 and efforts to contact them proved futile since their phone contact information went out of service.

The airline has made it clear that it is not its policy to give refunds but might have given consideration to using the money for future bookings within a year; but this was never utilized.

Issue: Goods ordered from a firm totalling BDS$462,786.26 were paid for but not delivered. No due diligence was conducted on this firm which is based in the United States.

Authority’s response: Suppliers that are engaged by the BWA through the tender process are required to submit a certificate of incorporation and a list of directors. All other suppliers will receive a document detailing BWA’s requirement called Supplier Guidelines. They are to be submitted to the Audit And Finance Committee for Approval and then to the board for authorization.

Issue: On quotation 1027916 dated June 11, 2010, the amount quoted for the supply of goods was BDS$61,200. However, the payment was made for US$61,200.

Authority’s response: The BWA has written and emailed the supplier requesting a refund of the overpayment. Secondly, the BWA is pursuing legal action against the supplier on this matter and others.

Issue: The majority of goods ordered from another firm which totalled BDS$351,086.59 were paid for but not delivered.

Authority’s response: The BWA has written and emailed the supplier requesting a refund of the overpayment. Secondly, the BWA is pursuing legal action against the supplier on this matter and others.

Issue: The majority of goods ordered from another firm which totalled BDS$351,086.59 were paid for but not delivered.

Authority’s response: The BWA has written and emailed the supplier requesting a refund of the overpayment. Secondly, the BWA is pursuing legal action against the

supplier on this matter and others.

Issue: Potable water pipes are sourced and stored at The Belle without protective end cap plugs or wrappings in the open environment. When these pipes are exposed to the elements, they lose their colour and the interior becomes brittle and disintegrates.

Authority’s response: The BWA has purchased filter fabric which protects the PVC pipe from UV rays.

Issue: Adequate levels of materials were not always kept in stock for the daily functioning of work crews.

Authority’s response: The BWA has engaged a supplier to provide one year’s supply of pipes and fittings which is to be shipped quarterly. Hence, a continuous supply of materials should ensure adequate stock levels.

Secondly, the BWA has established an inventory management protocol that is being implemented. The BWA has established minimum stock levels that crews are to carry to minimize the practice of stockpiling.

Thirdly, the BWA has established procedures to replenish stock based on items used on the job card up to the maximum level. This will help to manage usage and minimize

excessive drawdowns on stock levels. Fourthly, BWA has put in place cycle counting for critical stock items.

Issue: The BWA was unable to replace all of the mains listed for replacement in the budgets for the years 2007 to 2010. BWA personnel identified three factors as constraints to the execution of its mains replacement programme. These were finances, late arrival of material and the methods of excavation. It was recommended that BWA should seek to remove the constraints that prevent it from replacing mains in timely manner.

Authority’s response: None was provided.

Issue: BWA personnel indicated that leak detection activity was only conducted when there were problems such as low water levels and complaints by the public of low water pressure. The reason given for this is the lack of equipment and manpower.

Personnel are of the view that the equipment should be permanently attached to the mains. However, because BWA is not in possession of sufficient quantities of this specialized equipment, it has to be moved to various locations when necessary.

BWA relies mainly on the public to alert it of leaks when the evidence of the leak comes to the surface. This method is not the most effective means of detecting leaks, since some leaks may not surface in a timely manner and others may not surface at all.

It was recommended that BWA should improve its leak detection capabilities.

Authority’s response: None was provided.

Issue: A major impact of the leaks is unaccounted-for (non-revenue) water. This is water that is pumped by the BWA, but which cannot be accounted for as being used by customers. There is a cost for this water that is lost, such as the pumping costs for which no revenue is obtained.

In addition, for an island that is deemed water-scarce, the loss of water after extraction by the BWA should be reduced to a minimum. There are also material and labour costs for repairing the leaks and flushing the mains in the case of water discolouration. It is important, therefore, for BWA to reduce the level of unaccounted-for water. It was recommended that the quantity of unaccounted-for water be reduced to acceptable levels.

Authority’s response: The Barbados Water Authority is addressing the reduction in non-revenue water (NRW) by engaging in the following programmes:

(a) The BWA, in keeping with industry practice, has divided the distribution areas of the island into 25 district metered areas (DMA) with the view of measuring the volume of water delivered to each DMA and comparing that figure with the summed readings taken from the meters of all of the customers in each of the DMAs. This will allow for an improvement in the method of calculating the NRW which is now done on an islandwide basis and not at the district or sub-District level.

(b) The BWA has geo-referenced all of its services so that an accurate picture of those services which are in each DMA may be ascertained and from this an accurate picture of the volume delivered through service meters to the customers can be calculated. This computation will be computerized when the Customer Information System (CIS) is upgraded.

(c) The BWA has also conducted the change-out of a number of bulk meters at the pumping stations and will be continuing this process under one of the procurements of the IDB-funded programme. This programme is intended to bring about the accurate measurement of the volumes of water leaving the stations and repumping stations, and will therefore lead to greater accuracy in the determination of the levels of NRW.

(d) The BWA has also started the replacement of its service meters since the level of accuracy of the old meters had fallen and this along with a substantial number of stopped meters, served to mask leaks on the customers’ properties and levels of real consumption.

(e) The BWA is scheduled to replace (through the IDB-funded Water And Sanitation Upgrade Project) approximately 49 kilometres of water mains ranging from four inches to 16 in size. The mains included in the programme are some of the mains which are prone to the greatest number of breaks, and therefore leakage, as well as those that give rise to the issue of discoloured water.

(f) The BWA is also in the process of engaging the government of the People’s Republic of China through the China EXIM Bank for a significant loan which will see the large scale replacement of mains, which are known to break frequently and/or contribute significantly to the incidence of discoloured water.

Issue: BWA did not quantify the work carried out to locate the leaks and effect repairs to a West Coast main laid by a private contractor. It was recommended that cost of the works be quantified and that BWA seek to recover the costs incurred in fixing the main.

Authority’s response: Hydrostatic pressure testing was conducted on sections of the main at least 46 times. As a result of the testing, nine faults were identified and corrected.

The labour costs for the testing and repairs approximate to $59,422.54, whereas the material costs incurred in fixing the main approximate to $17,071.50. Cumulatively the labour and material costs approximate to $76,494.04. The BWA has approached the contractor to discuss the deduction of these sums from the retention money.

Issue: As an employer of approximately 800 people, which is a significant number, BWA should have a documented recruitment process that guides its hiring practices. This process would detail the various activities necessary for recruiting employees. When asked about a documented recruitment process, personnel in HRD stated that the process was not documented, but followed customs developed over time. It was recommended that the BWA should document its recruitment policies.

Authority’s response: The Barbados Water Authority has developed a Draft Recruitment, Selection And Promotion Policy document. Included therein is a Recruitment And Employment Code.

This Draft Recruitment And Selection Policy was discussed and approved at the level of management. Following board approval, it will be discussed with the workers’ representative with a view to seeking their agreement for its implementation.

Office Of The Attorney General.

Issue: The actual construction process was plagued with problems which resulted in major delays in the completion of the Police Station at Crab Hill, St Lucy, leading to considerable increase in its costs. The contract for the project was originally $1.4 million, but the final cost was $4 million. The problems with the project included:

1. Incorrect setting out of the building and faulty construction work, with the resulting need for remedial work.

2. Poorly constructed foundation covering 30 per cent of the floor space.

3. Late contractual payments.

4. Backfill material not meeting specification.

The project was brought to an end by the original contractor on two occasions and eventually had to be turned over to a new contractor for completion. The consulting engineers who investigated the project reported that the degree of faulty work was extensive, and their reports suggested in part that there was a poorly constructed foundation. They also reported that regular on-site supervision was not carried out during the course of the work.

Office Of The Attorney General’s response: The matter related to the Crab Hill Police Station has been referred for the advice of the Solicitor General.

Invest Barbados.

Issue: Invest Barbados was not able to assess the effectiveness of its work since there were deficiencies with the performance measures used. For example “new investment” could not be measured; the necessary information was not available to assess “Corporation Tax revenues from international business” and “jobs created”; and “financial services registrations” could not be directly attributable to the agency’s efforts. It was recommended that IB:

Review its performance measures for relevancy and direct linkage to its efforts.

Establish systems to collect data relevant to all of its performance measures such as new companies’ registrations and jobs created as a result of IB’s efforts.

Ensure that data is readily available for the performance measures that it chooses.

Entity’s response: New investment. IB continues to have difficulty in determining new investments by companies as the companies are unwilling to reveal this information and, IB has no legal authority to demand it. IB has however been encouraging the regulatory agencies International Business Unit and BRA, the former Inland Revenue Department, and so on, with the legal authority to collect this information to include this request on their licence application/corporation tax assessment forms. This has not been done to date.

IB has therefore removed this from its performance measures in the interim.

Jobs created. IB can now report on an annual basis on approximate number of jobs in

the international business sector as a result of our annual study on the performance of the international business sector. The more detailed analysis which IB was hoping to commission did not materialised because of budgetary constraints.

Financial Services registrations. IB continues to collect information from the regulatory agencies on new registrations. However, given the companies’ process for set up it is very difficult to determine which companies are specifically from IB’s efforts. It is recognized that since the major marketing efforts are carried out by IB, this organization can take most of the credit for the new companies setting up. This performance measure therefore remains as is in IB’s strategic plan.

National Housing Corporation.

Issue: The Audit Office sought to ascertain the method used by the NHC in allocating house lots under its control. This is in light of the fact that the corporation has an applicant wait-list that stretches back to 1990. The audit sampled applications from a number of areas where persons were allocated lots and properties.

Overall, there did not seem to be any consistent manner in the allocation of lots since the rationale for their distribution could not be determined. The length of time an application was made did not appear to significantly impact on one’s chances of obtaining a housing solution.

On some occasions it was on the recommendations of parliamentary representatives of the areas, while on other occasions it was based on allocations of the marketing department or the board. The corporation needs to have a system in place which properly allocates property/lots to applicants, and this system should be communicated to the members of the public.

The availability of an accurate assessment of current and future housing needs is important for strategic decision-making by the Corporation. Presently the wait-list is the principal indicator used to determine the extent of the demand for housing assistance.

It was recommended that:

The corporation needed to have a more accurate list of applicants and those successful in receiving housing solutions.

Its database needed to be updated on a regular basis so that informed decisions could be taken in housing allocations.

The corporation needed to have a policy that clearly outlined to staff and the public, the selection criteria used to allocate housing units to applicants.

Corporation’s response: The Customer Service Department of the corporation provides a listing of applicants who qualify for the corporation’s various projects. This

listing is subject to legal searches to verify that the applicants are first-time property owners and capable of purchasing property from National Housing Corporation.

Subsequently, the information is submitted to the board of directors for consideration and approval.

The corporation commenced a clean-up of its database and this is ongoing.

The corporation recently completed an Institutional Strengthening

Consultancy, which addressed the issue and provided recommendation.

Issue: During the last five years the corporation has offered for sale many lots/properties. However, it has been unable to convey these properties because of vesting issues, namely the transfer of legal title to lands from the Crown to the corporation. The corporation built ten houses at Six Roads, St Philip, on lands for which it had no legal title. Subsequently, the properties were offered for sale in 2005, to applicants who accepted the offer. The occupants signed agreements with the corporation to pay rent, until they could obtain mortgages to pay for their property, at which time the corporation would issue a conveyance vesting the property to them. However, these properties were not conveyed because the corporation did not have legal title.

The corporation found itself in this position partly because it underestimated the time and issues involved in the vesting process. Until these lands are conveyed to the corporation, it will not be able to sell these properties.

Entity’s response: All matters at Six Roads, St Philip, have been resolved.

Additionally, various areas where the corporation was unable to convey title, certificates of compliance have been issued by Town and Country

Development Planning Office (TCDPO).

Issue: Housing constructed under the Condominium Act must conform to certain conditions, and is subject to the approval of the Chief Town Planner. In order to sell housing units constructed under this act, one of the criteria required is the establishment of a management company.

In 2001, the corporation built a number of condominiums at Flat Rock, St George, and Brighton, Black Rock. When the corporation offered these units for sale, it was not in a position to sell them since they had not established a management company as required. These units were built at an average cost of $95,000 each. They were offered for sale to successful applicants who were to occupy them and pay occupancy rent until they acquired a mortgage.

It was recommended that the corporation ensure a management company was required by the Condominium Act, CAP. 224A.

Entity’s response: The matters at Brighton, St Michael and Flat Rock are being reolved by the Corporation’s Technical Department.

The certificates of compliance will be requested once these submissions are approved by Town and Country Development Planning Office (TCDPO).

Thereafter, the corporation’s Legal Department will take the matter forward.

Continued on: Follow-up bugbear for Auditor General.

Also see: From the Auditor General’s Report 1; From the Auditor General’s Report 2; From the Auditor General’s Report 4


2 Responses to From the Auditor General’s Report 3

  1. Elke Hassell
    Elke Hassell March 26, 2015 at 9:48 am

    Reading this is Mindblowing and quite literally UNBELIEVABLE!!!! WTF is going on here with such lackadaisical accounting in these Ministries!!!! This is pathetic.

    • Antonio Cozier
      Antonio Cozier March 26, 2015 at 11:02 am



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