The Sports and Art Development Fund of the former Ministry of Culture, Youth and Sport was not properly managed and millions of dollars were not adequately accounted for, according to the forensic audit report on the entity.
“It should be noted clearly from the observations made…that there is enough evidence to substantiate that the Ministry failed to maintain critical accounting records, along with the establishment and maintenance of a reliable internal control structure to support the administration of the Fund. Coupled with its inability to manage its records, the Ministry failed to account and/or to provide for a proper degree of accountability for the stewardship of the fund for the period under review 1 January, 2012 to 31 May, 2015 and therefore, did not provide a reliable basis to report that there was transparency and accountability,” the report by forensic auditor Lester Bowen said.
The audit covered the period from January 2015 to May 2015 and was commissioned by the APNU+AFC government to ascertain whether there was value for money in the use of the Fund, the accuracy of record keeping and the degree of accountability. The Sports and Art Development Fund was established by the PPP/C government in 2007 and $100 million was to be allocated annually to it.
The report, seen by Stabroek News, was submitted to the Ministry of Finance on September 16th and highlighted a number of accounting discrepancies and made a series of recommendations.
It noted that for 2012, the approved budgetary estimates for the Fund was $100 million but Cabinet approved $106.4 million. For 2013, $100 million was approved in the budgetary estimates but the Ministry could only submit four Cabinet approvals for projects amounting to $10 million. In 2014, $100 million was budgeted for the Fund but Cabinet approvals for projects amounted to $116 million. For 2015 up to May, there was no approved budgetary estimates and there was Cabinet approval for $3 million that was expended.
The report noted that for 2012, the now Ministry of Education, Department of Culture, Youth and Sports failed to present for audit examination, a register in relation to expenditure being met from the Fund. As a result, the total number of expenditure vouchers which recorded the total expenditure for the year could not be determined.
A request was made for the payment vouchers and 249 expenditure vouchers in the sum of $200,490,625 were presented for audit. However, on the examination of the vouchers, only 210 with a value of $76,649,977 were determined as being related to the Fund. It could not be determined whether, the other 39 vouchers totaling $123,840,648 representing expenditure showed any relation to the Fund, the report said.
“It should be noted therefore, that in the absence of the register then, the total amount expended from the Fund for the year 2012 could not be accurately be (ascertained),” the report said.
In a response on September 15, the Ministry said that $96.7 million was spent from the Fund for 2012 and the difference that was not utilised was returned to the Consolidated Fund.
However, the auditor pointed out that a schedule showing the breakdown of the expenditure for the Fund presented on September 8 showed the total expended as $99,706,408 with the Ministry saying that the unspent amount was returned to the Consolidated Fund for which unlike deposits, a receipt is not normally issued.
Among a number of issues, the report said that a system was not put in place and maintained to track payments made in accordance with Cabinet approvals for the period and therefore the expenditure incurred could not be verified. A schedule showing the breakdown of expenditure for the Fund was provided but the report pointed out that while the Ministry made expenditures amounting to $99.7 million, after repeated requests, 209 payment vouchers were presented representing a total expenditure of $53.5 million. The remaining unpresented payment vouchers amounting to $46.1 million were not presented.
“As a result, the accuracy and the validity of the amounts paid could not be determined since in the absence of the unpresented vouchers, there is no supporting documentation in support of the payments,” the report said.
For 2013, 197 expenditure vouchers amounting to $155.9 million were presented but without the register. Upon examination, it was found that only 96 vouchers to the value of $15m represented payment for expenditure related to the Fund and 101 vouchers totaling $139.9 million showed no relation. The ministry subsequently explained that the unrelated vouchers related to payments that fall under the same line item.
The ministry subsequently presented the register for 2013 and it recorded payment vouchers representing expenditure for the year totaling $99.7 million. The auditor noted that payments related to the Fund were made from Special Project Account No. 01626004000 which received funding from various agencies such as UNICEF, UNFPA, Digicel, Republic Bank and the Guyana Lotteries Commission and the total expenditure paid from the Account for sports and art development could not be determined.
It said that the actual expenditure incurred and or associated with the Sports and Art Development Fund for 2013 or at any given time could not be ascertained.
A schedule showing a breakdown of the expenditure for the Fund was presented and while the total expenditure reported in the register amounted to $99.7 million, the schedule accounted for expenditure totaling $94.2 million, a difference of $5.5 million.
The ministry also reported just over $2 million as being approved for the filming of the film ‘Maira and the Jaguar People’ but the correct amount approved was just over $1 million.
The report pointed out that the ministry made expenditures totaling $99.7 million but only 80 payment vouchers were presented amounting to $27.4 million and 40 payment vouchers representing a value of $66.7 million were not presented. “As a result the accuracy and the validity of the amounts paid could not be determined, since in the absence of the unpresented vouchers there were no supporting documentation in support of the payments,” the report said.
In relation to 2014, a register was presented which recorded expenditure for the year at $99.1 million. Physical checks of the vouchers presented in conjunction with the payment vouchers register revealed that 105 payment vouchers representing payments from the Fund and amounting to $61.8 million were not presented for audit examination.
The report said that as a result, the accuracy and validity of the amounts expended in the sum of $61.8 million representing the missing vouchers could not be verified.
The ministry in responding, said that although Cabinet approved the sum of $116 million, only $96 million was expended in 2014.
The auditor pointed out that the while the register recorded expenditure vouchers representing the total expenditure for 2014 in the sum of $99.1 million, the schedule of expenditure submitted, reported a total expenditure of $96.7 million.
The report also highlighted contracts awarded for works to Castellani House although there was an approved budgetary estimate for Castellani House.
As in the previous years, a system was not in place and maintained to track the payments made in accordance with Cabinet approvals. Therefore, the expenditure incurred for 2014 in accordance with cabinet approvals for the same period could not be verified.
The report highlighted similar issues of not being able to reconcile payments because vouchers were not submitted for 2015.
It recommended that the Ministry should make every effort to put systems in place to ensure that the relevant financial records such as registers, vouchers, cabinet decisions, analysis and schedules of expenditure etc., are kept and maintained in accordance with standard accounting practice and procedures and in keeping with such regulation specified by those regulations and circulars of the government. It also urged that this be done to ensure that such records are properly managed and presented in such order and timeliness to facilitate swift and precise retrieval for users and for the purposes of proper accounting and accountability.
The Ministry should ensure that all payments and or the payments for contracts are properly authorised in accordance with the Procurement Act of 2003 and that all such authority for payment is exhibited on the expenditure payment vouchers and supporting documents, the report said.
It also pointed out that the Department of Culture is in breach of section 18, 20 of the Stores Regulations relevant to the receipt and issue of the steel pans purchased at a value of $3 million which resulted in the items not being properly accounted for.
The report recommended that the Permanent Secretary of the Department of Culture, Youth and Sports of the Ministry of Education take the appropriate action provided for under section 40(2) of the Stores Regulations to investigate and report the matter of the breach in relation to the Steel bands to the Secretary of Finance and to submit recommendations to remedy the situation which if not remedied could in the future result in the loss of Government stores, and to take such measures to prevent such recurrence.
In addition, separate sub-activity codes should be implemented for each sub-activity under each programme for Agency 44, and the expenditure of each sub-activity should be classified under a correct, specified sub-activity code, to allow for proper and separate accounting for expenditure and budget releases, and for the generation of separate exception reports for each sub-activity at any given time, it said.
“Further, systems should be implemented and maintained to track expenditure (payments) made in accordance with Cabinet Approvals. And to ensure that accurate record is maintained and expenditure incurred is accounted for in accordance with approved Funds,” the report recommended.
It also urged that copies of the reports be sent to the Auditor General.