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submit the accounts within the prescribed period denied Parliament and the MoFPS timely information in executing their oversight responsibilities of assessing the use of public funds as well as to guide the reviews and approval of subsequent budgets. 3.2.95 The MLSS advised that the delays were due to technical issues experienced with the Government Financial Management System that was implemented in February 2019 as well as staff shortages. The Ministry also indicated that recruitment has started and discussions are being held with the MOFPS to resolve the technical issues. Weaknesses in Internal Control Systems 3.2.96 Our audit of the eight mentioned Appropriation Accounts disclosed that MLSS’s review process failed to identify breaches and other material errors in the statements submitted for certification. Consequently, we were unable to certify these statements as they contained material errors. Override of established budgetary controls 3.2.97 Despite previous audit reports, the MLSS operated contrary to the stipulated GOJ guideline when it exceeded approved budgetary allocation for Object 21: Compensation of Employees on 19 occasions by a total of $75.58 million. In addition, the MLSS did not present the requisite virement approvals for the reallocation of appropriated funds totalling $128.08 million, to facilitate excess expenditure on Capital B projects for the FY 2013/14, 2015/2016 and 2016/2017 and $1.099 million on the 2014/15 Recurrent Account. Also, for the financial years 2015/16 and 2016/17, MLSS recorded expenditure totalling $41.06 million on six activities for which there were no approved budgetary provisions. 3.2.98 Further, MLSS did not obtain the requisite approval to reallocate budgeted funds of $323.18 million for Capital B Head and $269.272 million for Recurrent. The Accounting Officer granted the approval three and four year respectively, after the expenditure was incurred. The GoJ Virement Policy does not permit the Accounting Officer to reallocate voted funds to, from and within Object 21- Employees Compensation, public investment projects and reallocate expenditure to any service, programme or activity that is not provided for by an Appropriation Act. 3.2.99 MLSS’s continuous override of established budgetary controls not only undermined the GoJ oversight accountability process but also increases the risk of budgets overruns. 3.2.100 The MLSS advised that changes in the GOJ’s Virement Policy resulted in the non-approval of virement. Non-submission of supporting documents to verify expenditure 3.2.101 MLSS’s did not comply with the regularity requirement to submit journal vouchers and supporting documents to substantiate adjustments of $9.7 million in the accounts. As such we were unable to authenticate whether these are proper charges on the public purse. 3.2.102 The MLSS assured us that efforts are being made to locate the journal vouchers for audit. Recommendation

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Head 68000: Ministry of Transport and Mining ISSUE/CONCERNS FINANCIAL


Resource Management

3.2.162 The audit of the accounting records and financial transactions of the Ministry+%0Aof+Transport">Ministry of Transport and Mining (MTM) revealed the following areas of concern: Inadequate Controls over Fixed Assets 3.2.163 The Ministry did not have an effective system of control over the management of fixed assets as required by the relevant guidelines. We were unable to verify the existence of twenty computers costing approximately $1.9 million, which were purchased by the Ministry for the Island Traffic Authority. Despite repeated requests, they were not presented for examination. Additionally, there was no evidence that the ITA had received these computers. Weaknesses in the Monitoring of Advances 3.2.164 There was a high risk of expenditure being misstated in the MTM’s accounts due to the absence of an effective system to ensure that all departmental advances are cleared in a timely manner. We identified outstanding advances of approximately $645.9 million relating to the 2016/2017 financial year. Consequently, expenditure may be understated by this amount. Unapproved Excess Expenditure 3.2.165 Our review of the Appropriation Account of the Ministry of Transport and Mining revealed that the Ministry’s actual expenditure for the financial year 2015/2016 exceeded its approved budget by approximately $99.9 million. Of this amount, approximately $33.4 million related to excess expenditure under Object 21 - Compensation of Employees. 3.2.166 Additionally, our review of the Appropriation Accounts of the former Ministry+%0Aof+Transport">Ministry of Transport, Works and Housing (Head 6500 and 6500B) revealed that the Ministry’s actual expenditure under six of its activities exceeded its approved budget for the financial year 2015/2016 by approximately $68.9 million. Of this amount, approximately $5.3 million related to excess expenditure under Object 21 - Compensation of Employees and $63.6 million related to physical infrastructure projects. 3.2.167 The Accounting Officer was advised to obtain the requisite approvals for the excess expenditures and ensure that going forward all expenditure remain within the approved budget and comply with the Financial Instructions. Discrepancies in Accounting for Appropriations-In-Aid 3.2.168 The actual Appropriations-in-aid (AIA) expenditure for Head 6500 (Ministry+%0Aof+Transport">Ministry of Transport, Works and Housing) exceeded the approved budget by approximately $102.9 million while the AIA collected by the Toll Road Authority was understated by $961,631 for the 2015/2016 financial year. Additionally, we were unable to verify AIA expenditure amounting to approximately $201.2 million for the 2015/2016 financial

$1.9 million $645.9 million $99.9 million $68.9 million

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Final Report Page 29

3.3.2 Organisational structure

The AuGD is centralised in the capital city of Kingston where it has its own office facilities. It has no sub-national offices.

The AuGD is led by the Auditor General. It is directly supported by a secretariat and, as per 2015, the internal oversight unit (IOU). The IOU consists of two sub-divisions: quality assurance and internal audit. The complete organogram of the AuGD is included in Annex 3.

Two audit divisions headed by a distinct Deputy Auditor General (DAG):

- Assurance Audit: composed of a Compliance Audit Unit, a Financial Audit Unit and an Information Technology Audit Unit;

- Performance Audit.

In addition, the organisation structure holds a division responsible for the conduct of Economic Assessment. This Division is created in 2015 and reports verification of economic data used by the Ministry of Finance in the fiscal planning.

Finally, a Corporate Services division covering Finance & Accounts, Corporate planning and Public Education, Human Resources & Administration and Information Technology.

3.3.3 The AuGD’s resources

Table 5 shows the Budget of the AuGD in the fiscal year 2015-16.

Table 5 AuGD Estimates and Actuals, 2015-2016 in Jamaican Dollars

Category Estimates Actuals % of total

Compensation of employees 374,177,000 327,986,631 69,7 %

Travel Expense & Subsistence 59,256,000 69,020,151 14,7 %

Rental of Property & Machinery 41,900,000 42,585,908 9,0 %

Utilities and Communication 2,990,000 2,110,422 0,4 %

Use of Goods and Services 36,279,000 25,636,999 5,4 %

Awards & Social Assistance 1,500,000 427,200 0,1 %

Grants & Contributions 181,000.00 180,921 0,0 %

Capital Goods 12,331,000. 2,770,870 0,6 %

Total 528,614,000 470,719,106 100,0 %

Nearly 70 % of the total budget is spent on staff salaries. The AuGD has an approved establishment of 210 employees of which 79 per cent of staff are operational auditors, 17 per cent work for corporate services and 4 per cent is executive management.

June 10, 2021