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Page 86 of 93

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

EXPOSURE

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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June 10, 2021


Page 26

- 25 - Prepared by Policy Development Unit, Public Sector Modernization Division

The “agencification that has accompanied the evolution of government in Jamaica over the past

two decades compounds and confounds the role of the Permanent Secretary. This is further

exacerbated by the lack of clarity of the PS roles in relation to these entities, and yet s/he is the

accounting officer, which makes the PS accountable. These agencies are in the form of executive

agencies and diverse public bodies. The role of the PS for oversight in either EAs or public

bodies more generally, is limited not only by authority, but also by technical, resource and

institutional capacity to oversee a diverse set of entities.

(i) Executive Agencies

The only reference to the PS in The Executive Agencies Act is in the evaluation of the Chief

Executive Officer. While the Executive Agency Act (Article 10) specifies that the PS shall review

(and report in writing to the Minister) the performance of CEOs, the CEO reports to the Portfolio

Minister directly, and Framework documents, Performance Agreements, Corporate Plans and

Annual Business Plans do not fall within the formal purview of the reporting relationship to the

PS. Regarding the CEOs Performance Agreements, the PS is required to review performance, but

is not a party to establishing the Performance Agreements. 4 In the case of the National Works

Agency/Ministry of Transport and Works a Memorandum of Understanding has been signed by

both entities, formalizing a relationship whereby performance can be reasonably assessed.

The relationship between Permanent Secretaries and Executive Agencies may have further

entwined the PS through possible membership on Advisory Boards that fall under their purview.

In preserving the autonomy of the CEO, there should be an effort to allow CEOs to manage and

the PS relationship should be limited in EAs to performance evaluation. There is also the possible

conflict of interest which may also occur by virtue of the PS evaluating decisions in which s/he

may have participated.

Recommendations:

(a) Permanent Secretaries shall be party in determining the performance agreement of CEOs

of Executive Agencies. This relationship shall be formalized in the Performance

Agreement, and the PS shall sign along with the portfolio Minister and CEO. This

signing of the Performance Agreement by the PS is not a substitute for the Minister‟s

responsibility but is simply a technical aid to allow for adequate appraisal of performance.

(b) The practice whereby Permanent Secretaries sit on Advisory Boards under their portfolio

shall be disallowed. However, a PS can name a Ministry representative to sit on such

Boards, and is eligible to sit on other Boards that do not fall under his/her direct oversight.

(c) CEOs of Executive Agencies shall be required to provide to their portfolio PS, all

documentation (framework documents, corporate and business plans, annual reports) so

that s/he can adequately fulfill his/her role in the evaluation process.

(ii) Public Bodies

4 The Ministry of Transport and Works and the National Works Agency have resolved this discrepancy through the

creation of a Memorandum of Understanding where the Permanent Secretary signs in the name of the MHTWW; the

CEO signs in the name of the NWA; the Chairman signs in the name of the Road Maintenance Fund. This model is

generally appropriate: the utilization of an MOU. In fact I will suggest a possible use for the relationship of Cabinet

Secretary, Permanent Secretary and Minister for Performance Agreements.

...
June 10, 2021


Page 37

- 36 - Prepared by Policy Development Unit, Public Sector Modernization Division

Ministry of Finance and the Public Service

CEOs/Agencies must be compliant with the framework within which they operate and are held

accountable for such compliance by the Executive Agency Monitoring Unit of the Ministry of

Finance & the Public Service which monitors performance of the EA. The Unit also signs off on

the performance reports of EAs before incentive payments can be awarded. Additionally the CEO

is accountable for:

 Compliance with the FAA, Financial Instructions for Executive Agencies and can

be surcharged if in breach of required procedures

 Compliance with other relevant legislation

 Obtaining approvals for certain activities from the Ministry (hiring of staff)

Office of the Services Commission

Must ensure that the guidelines and procedures given by the OSC/PSC are adhered to and that

delegated authority (HR actions-staffing, appointment, promotion, transfer, training etc), is

managed appropriately.

5.5 Performance Management and Evaluation

While the CEO is accountable to the Minister for performance, the Permanent Secretary is

required, under Article 10 of the Act, to review and report in writing to the Minister on the

performance of the CEO. According to the draft report Strengthening Accountability Report, in

most cases 10

“it is only the Minister who is party to establishing the performance agreement”,

which creates difficulties because the accountability documents that are inputs into the process

(framework documents, performance agreements, corporate plans and business plans) “do not fall

within the formal purview of the reporting relationship of the Permanent Secretary”. 11

A broad

interpretation of the requirement to review and report on performance, would suggest that it is

incumbent upon the Permanent Secretary to request this documentation and to undertake the

activities needed to monitor performance. Interviews indicated that there is a new circular

requiring Permanent Secretaries to sign off on KPIs but this requirement is not widely known.

CEOs have said that the level of involvement of the Permanent Secretary in monitoring their

performance varies. All are required to submit regular reports to their Minister; some indicated

they submitted reports to, and had regular meetings with, the Permanent Secretary. Variations in

the levels of contact may be partly explained by differences in responsibility delegated by the

Minister to the Permanent Secretaries or by management style of the Permanent Secretary.

Clarity around the role of the Permanent Secretary in monitoring and assessing performance is

currently being done through the EA Regulations.

10

In the case of the Ministry of Transport and Works and the National Works Agency a Memorandum of

Understanding has been created in which is signed by the Permanent Secretary, the CEO of the national Works

Agency and the Chairman of the Road Maintenance Fund. 11

Strengthening the Accountability Framework for the Public Sector in Jamaica, pg 17, paragraph 3.21

...
June 10, 2021


Page 175

APPENDIX “A”

OUTSTANDING APPROPRIATION ACCOUNTS AS AT DECEMBER 2010 IN RESPECT OF FINANCIAL YEARS 2005/2006 TO 2009/2010

Key:

√ – Outstanding

AUDITOR GENERAL’S DEPARTMENT 2010

HEAD MINISTRY/DEPARTMENT OUTSTANDING APPROPRIATION ACCOUNTS

2005/2006 2006/2007 2007/2008 2008/2009 2009/2010

5900 Ministry of Energy, Mining and Telecommunications

5900A Ministry of Energy, Mining and Telecommunications

5900B Ministry of Energy, Mining and Telecommunications

6300A Ministry of Water and Housing √

6300B Ministry of Water and Housing √

6500A Ministry of Transport and Works

6500B Ministry of Transport and Works

6650 National Works Agency √ √ √ √

7200 Ministry of Local Government and Environment

7200A Ministry of Local Government and Environment

7200B Ministry of Local Government and Environment

7248 National Environment and Planning Agency (NEPA)

TOTAL 1 4 10 13 25

Outstanding for 2008/2009 2 3 15 29 -

Outstanding for 2007/2008 2 5 50 - -

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June 10, 2021


Page 14

14 | P a g e

Part Three

Corporate Governance

3.1 Corporate Governance are principles, systems and processes which ensures that organization are direct, control, manage and in an efficient and effective manners. The GOJ+Corporate+Governance+%0AFramework+for+Public+Bodies">GOJ Corporate Governance Framework for Public Bodies revised dated October 2012 outlined the principles that govern the operations of Public entities. 3.2 Our audit revealed the absence of board approved policies and procedures to guide and direct the processes and operations as well as non-compliance with government regulations. CMI did not adhere to the corporate governance initiatives outlined in the PBMA Act, CMI Act and the Cabinet approved Corporate Governance and Accountability frameworks.

CMI Board did not develop a Charter or evaluate Board members

3.3 GOJ’s Corporate Governance Framework for Public Bodies states that each Board must have a Board Charter which defines the roles and responsibilities of the Board including its responsibilities for corporate governance and its code of ethics. At the time of the audit, CMI had not adopted a charter. Failure by the Board to adopt a charter may impair its own understanding of the Boards role and responsibilities. CMI responded in November 2015 that a draft has been submitted to the Permanent Secretary in the Ministry of Transport, works and Housing for approval. 3.4 The said framework in Recommendation 7 (Role of the Chairperson) states that the role of the chairperson of a public entity should include authorizing and overseeing the execution of the annual, performance evaluation of the entire Board, and individual members. However, for the period March 2012 to July 2015, no performance evaluation of the Board and its members were conducted.

CMI Board approved acquisition of laptops for its members

3.5 Contrary to Ministry of Finance policy, CMI Board approved the purchase of 13 computer tablets for Board members at a cost of $317,500. This is in breach Ministry of Finance and the Public Service Circular No. 1 dated January 15, 2007. Section 3 (b) of the said Circular states that board members are only entitled to board fees and reimbursed of travelling expense directly related to their attendance at board meeting . No Bonding for Employees in receipt of Scholarship 3.6 We noted that seven employees received scholarship totalling $3.7 million for which no bonding agreements were executed. This practice breached the Government of Jamaica Bonding Policy, which stipulates that once an employee receives award training; the cost of training is regarded as a loan and the individual as a borrower. The policy further states that the minimum award that required bonding

...
June 10, 2021


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