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TABLE OF CONTENTS SUMMARY ........................................................................................................................................................ 4

Key Findings .............................................................................................................................................. 4

RECOMMENDATION ................................................................................................................................. 5

PART ONE ........................................................................................................................................................ 6

INTRODUCTION ................................................................................................................................................. 6

Background ............................................................................................................................................... 6

Vision Statement ....................................................................................................................................... 6

Mission Statement .................................................................................................................................... 6

Objectives ................................................................................................................................................. 7

Audit Scope and Methodology ................................................................................................................. 7

PART TWO ....................................................................................................................................................... 8

OPERATIONS ..................................................................................................................................................... 8

CMI did not conduct resource audit to ascertain impact of planned increased enrolment .................... 8

CMI did not have an approved policy to manage the receivables portfolio ............................................ 9

CMI’s strategy does not address the steady decline in core marine education ..................................... 10

CMI did not have an adequate complement of lecturers for its core Marine programmes .................. 10

CMI engaged 253 adjunct lecturers without the required MOF approval ............................................. 11

Table 4 - Part time Adjunct Lecturers fee claims .................................................................................... 12

One in three CMI‘s cadets did not gain seafarer experience .................................................................. 12

PART THREE ................................................................................................................................................... 14

CORPORATE GOVERNANCE ................................................................................................................................ 14

CMI Board did not develop a Charter or evaluate Board members ....................................................... 14

CMI Board approved acquisition of laptops for its members ................................................................. 14

CMI did not always safeguard its assets ................................................................................................. 15

Unapproved Bank overdraft ................................................................................................................... 15

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Audit Observations and Recommendations

Auditor General’s Department – Annual Report – 2007/2008 62

HEAD 4300 MINISTRY OF INFORMATION, CULTURE, YOUTH AND SPORT

JAMAICA CULTURAL DEVELOPMENT COMMISSION

264. The audit of the financial transactions and accounting records of the Commission for the year under review revealed the following shortcomings: Outstanding Financial Statements 265. Audited financial statements for the years 1998/1999 to 2007/2008 were not submitted to Parliament in contravention of the Commission’s Act and the Public Bodies Management and Accountability Act. It was noted that the financial statements for 1998/1999 and 1999/2000 were submitted to the portfolio ministry in March 2008. Strict compliance with the relevant Acts was recommended. Internal Control Weaknesses 266. Deficiencies were noted in the controls exercised over fixed assets, procurement of goods and services, staff loans, cash management, blank cheques and fuel advance cards. There was also the need to strengthen the Internal Audit Unit. The Commission was advised that these weaknesses could contribute to the loss of public resources. Management advised that measures were being implemented to correct the weaknesses identified. Overpayments 267. Five (5) officers were overpaid salaries totalling $172,025. Up to the date of this report $100,310 remained outstanding. Overdraft Charges 268. The Commission continued to operate an unapproved bank overdraft facility and incurred overdraft charges totalling $923,089 during the financial years 2003/2004 to 2007/2008. The entity was advised to improve the cash management function.

NATIONAL GALLERY OF JAMAICA 269. The audit of the financial transactions and accounting records of the National Gallery of Jamaica revealed the following deficiencies:

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stands at $300,000 and the applicable period of bond would range from 2-5 years. In addition, we noted that six of the seven employees pursued post graduate studies have outstanding tuition fees amounting to $4.37 million as at end-July 2015. 3.7 Further, we found that CMI did not have a system in place to monitor beneficiaries to ensure compliance with the terms of the scholarships. Our review of 25 beneficiaries revealed that 12 awardees who received scholarship valued at $3.57 million obtained Grade Point Average (GPA) that was below the required 2.5. We also noted that four of the 12 beneficiaries continued to receive scholarship benefits amounting to $1.7 million in subsequent school years despite not achieving the required 2.5 GPA.

CMI did not always safeguard its assets

3.8 In March 2014, a student met in an accident while driving one of the entity’s motor vehicles. CMI records indicated that the vehicle was insured for $3.45 million and was assigned to a Senior Lecturer. Further, the police report revealed that while the vehicle was licensed to carry 7 passengers, it was noted that, 9 persons were in the vehicle. We noted from the dealer report to the insurance company that the vehicle has sustained major structural damages, and it will not be economical to be repaired; therefore, it was recommended that the vehicle be treated as a loss. However, up to the date of reporting CMI has not indicated whether the insurance company has accepted liability to replace the vehicle. Further, no evidence was provided that disciplinary action was taken against the officer. Contrary to Ministry of Finance motor vehicle accident procedures5, CMI did not report the accident to the Attorney General, Financial Secretary and the Auditor General.

Unapproved Bank overdraft

3.9 We found that the two bank accounts operated by CMI were overdrawn in four instances during March 2015 and incurred interest charges totalling $24,465. There was no evidence that Ministry of Finance and Planning approval was obtained to use the overdraft facility. This implies a lack of prudent cash management which has resulted in increased un-budgeted expenditure for the Institute.

5 Ministry of Finance Circular No. 16 Motor Vehicle Accident Procedures (June 10, 2013)

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Special Audit Report Caribbean Maritime University (CMU) Page 2

December 2019

Table of Contents

EXECUTIVE SUMMARY ........................................................................................................................................... 10

WHAT WE FOUND ............................................................................................................................................................................................. 10

GOVERNANCE AND OPERATIONS MANAGEMENT ............................................................................................................................................ 10 PROCUREMENT AND CONTRACTS MANAGEMENT ........................................................................................................................................... 12

PART ONE .............................................................................................................................................................. 14

INTRODUCTION .................................................................................................................................................................................................. 14 Background .......................................................................................................................................................... 14 Rationale for the Audit ......................................................................................................................................... 14

PART TWO ............................................................................................................................................................. 16

GOVERNANCE AND RESOURCE MANAGEMENT ............................................................................................................................................... 16 LIMITED OVERSIGHT OF CMU BY SUCCESSIVE PORTFOLIO MINISTRIES ......................................................................................................... 17 SOURCE: INFORMATION PROVIDED BY CMU ....................................................................................................................... 17 LIMITED OVERSIGHT BY CMU’S COUNCIL AND MANAGEMENT ..................................................................................................................... 18

PART THREE ........................................................................................................................................................... 22

PROCUREMENT AND CONTRACTS MANAGEMENT ........................................................................................................................................... 22 PROCUREMENT AND PROJECT MANAGEMENT PRACTICES UNDERMINED VALUE FOR MONEY OBJECTIVE ...................................................... 23

Universal Service Fund –CMU Programmes ......................................................................................................... 25 Career Advancement Programme ........................................................................................................................ 28 Caribbean Maritime University (CMU) - Construction Works .............................................................................. 29

CMU EXPANSION PROJECT (BLOCK E) ............................................................................................................................... 30

PART FOUR ............................................................................................................................................................ 38

ACCOUNTS MANAGEMENT ............................................................................................................................................................................... 38 EXPENDITURE UNDER THE JAMAICA MARITIME INSTITUTE TRUST FUND ....................................................................................................... 38 ACQUISITIONS OF SOLAR PANELS ..................................................................................................................................................................... 41

UNAPPROVED BANK ACCOUNTS ....................................................................................................................................................................... 42 UNSUPPORTED BANK WITHDRAWALS TOTALLING J$9.6 MILLION AND US$223,112 .................................................................. 43 DIRECT DEPOSITS OF $268 MILLION MADE TO OFF THE BOOKS ACCOUNTS ................................................................................................... 44 CANTEEN ACCOUNTS USED FOR NON-CANTEEN RELATED TRANSACTIONS ....................................................................................................... 45

PART FIVE .............................................................................................................................................................. 50

HR PRACTICES AND RESOURCE MANAGEMENT .............................................................................................................................................. 50 ENGAGEMENT OF CONSULTANTS, ADVISORS AND KEY EMPLOYEES ............................................................................................................... 51 MANAGEMENT’S OVERRIDE OF CMU’S INTERNAL CONTROL SYSTEM ............................................................................................................ 59 OVERLAPPING PAYMENTS MADE FOR ACCOMMODATION FOR EXECUTIVE DIRECTOR.................................................................................... 61 UNAPPROVED EMOLUMENTS & BENEFITS ....................................................................................................................................................... 63

APPENDICES .......................................................................................................................................................... 70

Appendix I General Principles of Good Governance in Public Procurement to attain Value for Money ............... 70 Appendix II Feasibility Assessment ....................................................................................................................... 71 Appendix III Payments to Logistics Company 2 for computers and other equipment .......................................... 72

Appendix IV Payments Made from JMITF Bank Account ..................................................................................... 73 Appendix V - JMITF Payments: No Supporting Documents provided ................................................................. 75 Appendix VI Overseas Consultant Deliverables .................................................................................................... 76

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Part Four Accounts Management

Special Audit Report Caribbean Maritime University (CMU) Page 42

December 2019

CMU Bank Accounts

Unapproved Bank Accounts

4.13 Our review of the accounting and other records revealed that five bank accounts not disclosed by

CMU, were not reflected in the general ledger (Table 15). We also identified that CMU did not seek

approval to open these bank accounts as required by the MoFPS in its circular dated September 26, 2016.

Table 13 Analysis of Source and Use of Funds (2018-19)

Account Source of funding $ Major use of funds

CAP MoEYI /CMU Main A/C & Tuition A/C

14,826,092.97 salary for instructors and lunch

CAPYES HEART, CMU Main A/C & Tuition A/C

58,113,236.63 salary for instructors and lunch

Absorptive Capacity CMU Main Account 1,065,000.00 Operational expenses

Canteen Account 1 CMU Main A/C & Tuition A/C 119,336,189.06 Tuckshop Purchases and operational expenses

Canteen Account 2 Tuition A/C 129,477,289.13 Payments not related to core business

Grand Total 322,817,807.79

Source: AuGD’s Analysis of CMU bank accounts

4.14 Section 5.5 of the FAA Act Instructions 2017, also stipulates that Heads of Departments, Chairmen

of Boards and Chief Executive Officers may open and operate official bank accounts with the approval of

the Financial Secretary (Figure 5). The instructions also require that signatories must not include temporary

officers, Board Chairmen, Board Members or any officer who by virtue of the nature of his/her function(s)

compromises the system of internal control. We observed that the Chairman of the Finance Committee

was a signatory to all of the University’s accounts in contravention of the Financial Instructions.

Figure 5 GoJ Signatories as authorized by MOFPS

Source: MoFPS circular dated September 26, 2016

4.15 Based on our review of CMU’s canteen bank accounts and the other accounts, we noted that CMU

did not establish groups for signatories and authorization limits with the banks when opening the accounts.

Authorization is a control activity designed to ensure events or transactions are initiated and executed by

those designated by management. Management should ensure that the conditions and terms of

authorizations are clearly documented and communicated and that significant transactions are approved

and executed only by persons acting within the scope of their authority.

Group A (Senior Management)

Accounting Officer

Chief Executive Officer

Head of Entity

Principal

Group B (Treasury)

Principal Finance Officer

Director of Finance

Financial Controller

Bursar

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