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Part Six – Corporate Governance - INSPORTS

52 Auditor General’s Department Special Audits - March 2017

INSPORTS not maintaining proper accounting records for payables

6.18 INSPORTS has in place the requisite payment / journal voucher and receipt books to

account for expenditure and income earned. Funds lodged into, and expenses made from, designated bank accounts, were reconciled on a monthly basis, with Cash Book maintained by INSPORTS. Ledgers should also be maintained detailing current and non- current assets, amounts owed (liabilities) and capital/reserves held by INSPORTS. However, weaknesses in the maintenance of accounting records at INSPORTS prevented us from analysing the Institute’s outstanding payables and statutory returns. For example, INSPORTS failed to present a schedule of aged payables and outstanding statutory payments despite repeated requests. This information should be maintained by INSPORTS and form part of the standard accounting and financial records.

6.19 The lack of proper controls of financial management, including maintenance of

accounting records has contributed to INSPORTS inability to prepare financial reports to enable preparation of audited financial statements for the last 23 years. The absence of audited financial statements prevented the Board from benefiting from a formal review to provide assurance of the accuracy of the reported revenues and expenditure.

Supporting documentation for payments was insufficient

6.20 We reviewed a sample of 321 payment vouchers for the purchase of goods and services

over the three-year period March 2013 to May 2014 totalling $7.5 million. We were unable to sufficiently verify 116 payments totalling $2.03 million, which underscores the deficiencies in controls previously identified. We observed that 79 of these payments, totalling $1.2 million, were reportedly made to individuals for services provided at sporting events, such as security, rental of equipment, work at sports programme and field maintenance. However, these payments were only supported either by personal bills or letters signed by the sports coordinators/officers requesting payments. We were unable to determine the validity of the payments as the letters and bills were not presented with requisite information .

6.21 For example, a payment of $35,000 was made to an individual to provide security

services at INSPORTS Primary School Championships. However, the personal bill, supporting the payment described the nature of the service as, “to provide security service for seven (7) games at different venues at $5,000 five thousand each.” Details of the date, time and venues of the seven games were not provided. The payment was not supported with evidence of an attendance schedule to verify that the service was provided on a given date. Therefore, we were not able to determine the seven games for which the payments were made.

6.22 We also found that payments of $7,500 were being made to three employees of

INSPORTS on a weekly basis for the production of identification cards for sporting

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Part Six – Corporate Governance - INSPORTS

53 Auditor General’s Department Special Audits - March 2017

events. Evidence of formal arrangements for this additional remuneration for the production of identification cards was not presented for review. The payments were made on the basis of letters from an Officer, which stated the nature of the payment as, “assistance with the ID production for ALL INSPORTS related activities.” The three

individuals were paid sums totalling $180,000 between March and April 2013. Our sample did not include a review of payments made during 2015-16, as INSPORTS did not present the requested vouchers.

Poor inventory management over purchased and donated sporting gears

6.23 INSPORTS provided data, which shows that over the period, April 2012 and October 2015, the Institute purchased sporting gears valuing $12 million for distribution to various sports clubs, schools and other community organisations. The Institute noted that it also received sponsorship in the form of sporting gears from corporate Jamaica. However, INSPORTS was unable to state the quantum of donated items, as there was no inventory management system to account for the receipt, storage and distribution of these items. This is in breach of MoFPS Circular No. 12 dated August 7, 2001, which requires the maintenance of proper stores records for recording the purchase and issuing of all stock.

6.24 We also observed that sporting items such as baseball and sports gears were

haphazardly stored in a room referred to as ‘the stores’. INSPORTS did not provide details of the type, amount and value of the sporting gears stored in the room. The manner in which the sporting gears were stored prevented us from conducting a complete count. The absence of proper records may prevent INSPORTS from identifying incidents of theft or misappropriation. We also noted that INSPORTS did not have in place, a system to account for all tickets distributed to patrons for admission to sporting events held at the National Stadium.

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6

NATIONAL INSURANCE SCHEME ............................................................................................................................. 85

CANADIAN FARM WORK PROGRAMME (CFWP) ..................................................................................................... 87

HEADS 4100, 4100A & 4100B – Ministry of Education (MOE) and Agencies .............................................................. 91

MINISTRY’S HEAD OFFICE ........................................................................................................................................ 91

SHORTWOOD TEACHERS’ COLLEGE ........................................................................................................................ 95

ST JOSEPH’S TEACHERS’ COLLEGE ........................................................................................................................... 96

COUNCIL OF COMMUNITY COLLEGES OF JAMAICA (CCCJ) ..................................................................................... 98

JAMAICAN FOUNDATION FOR LIFELONG LEARNING (JFLL) ..................................................................................... 98

JAMAICA LIBRARY SERVICE (JLS) ............................................................................................................................. 98

HEADS 4200, 4200A, 4200B – Ministry of Health (MOH) and Agencies ...................................................................... 99

MINISTRY’S HEAD OFFICE ........................................................................................................................................ 99

PESTICIDES CONTROL AUTHORITY (PCA) ................................................................................................................ 99

HEAD 4235-GOVERNMENT CHEMIST ...................................................................................................................... 99

SOUTHEAST REGIONAL HEALTH AUTHORITY (SRHA) .............................................................................................. 99

WESTERN REGIONAL HEALTH AUTHORITY ............................................................................................................ 100

ST. JOSEPH’S HOSPITAL ......................................................................................................................................... 100

NORTHEAST REGIONAL HEALTH AUTHORITY (NRHA) ........................................................................................... 101

NURSING COUNCIL OF JAMAICA (NCJ) .................................................................................................................. 102

PHARMACY COUNCIL OF JAMAICA ....................................................................................................................... 103

GOLDEN AGE HOME (GAH) ................................................................................................................................... 103

NATIONAL COUNCIL ON DRUG ABUSE (CDA">NCDA) ..................................................................................................... 103

Head 4251- CHILD DEVELOPMENT AGENCY (CDA) .............................................................................................. 104

HEADS 4500, 4500A & 4500B – Ministry of Youth and Culture (MYC) and Agencies ................................................ 105

INSTITUTE OF JAMAICA (IOJ) ................................................................................................................................. 105

JAMAICA NATIONAL HERITAGE TRUST (JNHT) ...................................................................................................... 105

NATIONAL GALLERY OF JAMAICA (NGJ) ............................................................................................................... 105

NATIONAL LIBRARY OF JAMAICA (NLJ) .................................................................................................................. 106

HEAD 5100 – Ministry of Agriculture & Fisheries (MAF) and Agencies ..................................................................... 107

HEAD 5600, 5600A, 5600B – Ministry of Science, Technology, Energy & Mining (MSTEM) and Agencies ............... 109

MINES AND GEOLOGY DIVISION ........................................................................................................................... 109

HEAD 5300, 5300A, 5300B - MINISTRY OF INDUSTRY, INVESTMENT AND COMMERCE ........................................... 110

ANTI-DUMPING & SUBSIDIES COMMISSION (ADSC) ............................................................................................. 110

HEAD 5639 – POST AND TELECOMMUNICATIONS DEPARTMENT ........................................................................ 111

HEAD 6700 – MINISTRY OF WATER, LAND, ENVIRONMENT AND CLIMATE CHANGE ............................................... 113

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Section 2:

Executive Summary

Summary makes recommendations as to the corrective measures which should be pursued.

2.1.4 The Committee therefore plays a critical role in helping to ensure that

appropriate action is taken on the findings of the Auditor General. During the period March to December 2012, the Committee examined the Auditor General’s Annual Report for the financial year 2010-2011 as well as other special and performance audit reports. Scope of the Audit

2.1.5 The AuGD’s major aim is promoting accountability, transparency and efficiency in government operations. This will necessitate a change in stewardship and how public officials manage government resources. Our subsequent recommendations are aimed at providing management with information to enable them to address weaknesses and improve their systems.

2.1.6 The audits of most Ministries, Departments, Executive Agencies and public bodies for the 2011-2012 financial year consisted of examinations, inquiries and investigations to enable assessment of the adequacy of the systems of internal control over the major areas of revenue and expenditure. It also included obtaining the information and explanations considered necessary for certifying financial statements submitted. Additional audit emphasis was applied to those areas of governmental activity where the internal control was weak, others which had been prone to problems in the past, new programmes and areas of general public interest. Follow-up work was also done to ascertain what action had been taken on previous audit observations and recommendations.

2.1.7 Several programmes and projects were selected for special audits aimed at assessing whether adequate planning had been done, proper management control systems instituted and whether the programmes and projects were achieving their intended objectives. A number of performance and information systems audits were also conducted during the course of the year. The computer systems were audited to determine whether they were proving to be effective management tools. In all instances a risk based audit methodology was applied. The overriding intent of the audits was to contribute to improvement in the management of the public sector and to promote savings for the taxpayers.

Contents of this Report

2.1.8 This report summarizes several matters of concern emanating from our 2011-

2012 review. More detailed comments on the points mentioned, and recommendations as to the corrective measures considered necessary, were communicated to Accounting Officers, Principal Receivers of Revenue and other heads of agencies by way of audit queries, reports, and other memoranda. Where appropriate the comments and reactions of those officers to my findings are indicated.

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