Some questions about the 2021 Audit Report

In our previous piece, we summarised how the Public Accounts Committee ought to function. While there is a minority call for the committee to meet, there seems to be quite a lack of understanding of its function. What’s flabbergasting is the call coming from government members and supporters for the committee to call a meeting, as if what’s in the audit reports is flattering.

Let’s look at some of what’s in the last report that we have access to: the Audit Report of 2021. Mind you, though this report covers the books as they were at the end of 2021, the report was only submitted to the Minister of Finance on July 31, 2024 — two and a half years later. This document is 176 pages long.

Advancements to consulates and embassies

Why did the embassy in Toronto need an extra EC$257,541 in 2021? Why did the embassy in Venezuela need an extra EC$342,079? In total, eight embassies and missions were not able to account for their expenses. Quoting the audit report: “The large balances on these accounts have indicated that expenditure of $6,294,651.28 incurred by the offices remained unaccounted for in the Government’s accounts.” The representative at the UN needed an additional $536,439.

Prisons

The report indicated difficulties in properly auditing the prisons as the records were contaminated by rodents. Between July 2016 and June 2019, a total of 174 tyres costing EC$73,469.23 were purchased, apparently for use on prison vehicles. One vehicle — G693 — apparently needed 75 tyres, even though in the previous three years, it only needed 24. The size of the tyres bought was not included in SmartStream.

SmartStream

SmartStream is the government’s accounting system. Why did the Director of Audit keep finding cases where the system doesn’t match financial transactions? For example, why was there an amount of EC$7,677,188.49 received from the CDB in loans not accounted for in this system?  Quoting from the report: “The difference pertains to the loan receipts that were disbursed in 2021 and was not accounted for in SmartStream. This resulted in the understatement of Capital Revenue by $7,677,188.49”.

Another example: “A Disaster Relief Fund Account, with amount of $643,873.88 was shown on the Certificate of Balances from the BOSVG, an increase of $523,698.98 when compared with 2020. However, the amount and account were not reflected in SmartStream.”

What is the issue with keeping this system in sync with financial transactions?

BOSVG Overdraft

Why is the statement from the bank giving one number and government statements giving another number for the overdraft amount at the bank? The bank statement showed an overdraft amount of $38.3 million, and the statement of assets and liabilities said it’s $33.9 million. That’s a difference of $4.3 million. Was the overdraft amount at the bank higher than what the financial statements say?

Cash at the bank

Why was there a difference in the cash amounts listed in the financial statements versus what the bank had listed?

“The Statement showed five Cash Bank Accounts, with balances totalling $1,932,146.94 which are held at the BOSVG. The World Bank Project account with a balance of $1,056,877.00 represented 54.7 percent of the balances. However, the Certificate of Balances from BOSVG has shown a balance of $1,509,155.37 on these accounts, a difference of $422,991.57. Differences were recorded under three accounts. The highest variance of $422,999.97 pertains to the Modern Medical Bank Account and existed since financial year 2019.”

Consolidated Fund

How come the consolidated fund showed a deficit of EC$266 million? What does it mean when there is a deficit in this fund?

Contingency Fund

This fund was established to support unforeseen expenditure. At the end of 2021, the fund had a balance of $27.3 million. It is financed by “one percent (1%) of the VAT chargeable on a taxable supply or taxable import”, and a hotel levy of $8 per night per room.

Why was the fund $3.5 million short at the beginning of 2021? This amount should have been paid in previous years. Why, at the end of 2021, the bank statement for the fund reflected a shortage of nearly $1.5 million that was not deposited into the account? “VAT receipts totalling $13,573,825.05 instead of $14,940,568.80…Climate Resilience Levy receipts of $562,382.08 instead of $682,467.83…”

While the Minister of Finance authorised EC$15 million to be withdrawn from the Fund in 2021, EC$17 million was taken instead, with the explanation that the extra EC$2 million was authorised in 2020. The Director of Audit pointed out that this practice is NOT in keeping with the financial laws of the country. 

EC$183.5 million total was collected from VAT in 2021.

National Debt

Again, the Director of Audit is pointing out discrepancies between what the records say and what is recorded in SmartStream, where loans are being received but not recorded in the system. For instance, EC$3.5 million received from Petrocaribe, but nothing in the system and not reflected in the public debt; and no evidence to indicate that it was being repaid. Another EC$4 million received from local lenders; nothing in SmartStream, causing the national debt to be understated again. These were just two instances.

Special Warrants

Why was special warrant No. 77 of 2019, in the amount of EC$5.9 million, not submitted to Parliament for approval?

Why did the minister of finance approve 123 special warrants, for a total of EC$98 million, and only brought one for EC$15 million to Parliament? “The difference of $83,012,204.64 was not submitted for the approval of the House of Assembly.” Parliament set a limit of EC$35 million for special warrants. Why was this limit not adhered to? Why go over the limit by EC$48 million?

Let’s hope that the Director of Auditor faces less pushback from departments in future audits. Quoting from the report: “Responses to Audit Queries by the ministries and departments remained unsatisfactory. A total of 24 queries were issued to accounting officers and heads of departments in 2021. However, 6 were settled and 18 remained outstanding at the end of the financial year”.

Again, why are members and supporters of the government calling for the Public Accounts Committee to meet is beyond flabbergasting. Is this exposure flattering? In any case, let’s hope this gives a head start to those members on the PAC, who are tasked with providing answers to the chairman, who then must report back to the Parliament the explanation. For anyone who follows closely, some of these matters were brought to the public before by the opposition.

What we presented here were just a few of the highlights. Stay tuned.

Observer

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