GMC audit sees signs of ‘slush funds’ for agri ministry officials

A forensic audit into the operations of the Guyana Marketing Corporation (GMC) has uncovered the inappropriate transfer of money from the Ministry of Agriculture (MOA) and attempts to conceal what it was to be used for.

According to the audit report, which was dispatched to the Minister of Finance last month, the money which represented the unused portion of budgetary allocations for the Ministry was sent to the GMC to be used later by senior MOA officials as “slush funds”.

The audit was conducted by Saykar A. Boodhoo for the period January 1, 2012 to May 31, 2015.

The 64-page report said that the GMC incorrectly recorded financial transactions of the Ministry as the GMC’s activities.

It said that over the years the GMC has received funds from the Ministry (with significant increases over the years) and has recorded these funds as Government Grants in the GMC’s general ledger and audited financial statements.

“These funds are merely agency type transactions between the MOA and GMC. There are no grant letters or grant agreements from MOA showing how these funds are to be spent and what GMC’s responsibilities or deliverables are in relation to the funds”, it said.

The report said that “it appears that MOA has been deliberately forwarding these funds to GMC to circumvent financial accountability at the Ministry of Agriculture”. It said that the money appeared to be slush funds for two ministry officials as the unused funds would have to be returned each year.

“The income and expense should not be recorded on GMC books as GMC does not have discretion or ownership over these funds and as such are not income and expenses to GMC”, it was noted.

The report said that during discussions with senior officials at the GMC the auditor was told that the GMC is directed verbally by an official of the Agriculture Ministry as to how the funds are to be expended.

“There is no written documentation that would accompany the funds”, the audit report said adding that “it appears that GMC’s responsibility is only to manage the accounting aspects of these MOA projects. As such GMC is only providing the cheque cutting and administrative aspects of the projects for the MOA”.

In the report it was recommended that GMC’s Management write the MOA and convey that “these funds are not GMC’s revenue and expenses”. It was recommended that the relevant official should be informed as to the proper accounting for the funds and the related expenses. The GMC should record the funds from the MOA as a balance sheet general ledger asset and liability account, it said, adding that as funds are expended the asset and liability general ledger accounts should be reduced accordingly.

It was also recommended that monthly expense reports should be forwarded to the Permanent Secretary of the MOA for recording of the expenses on the MOA’s books.

No revenue or expenses should be recorded in GMC’s general ledger or financial statements, the report said.

In response to the finding, the GMC management said that cheques that are received from the MOA are usually written in the name of Guyana Marketing Corporation and not the Ministry of Agriculture. A spreadsheet is usually kept with transactions requested by the Ministry of Agriculture for the expending of the Ministry’s funds.

The auditor has described what was taking place as unusual.

“It would be very unusual for the Ministry of Agriculture to write cheques to itself in the name of the Ministry of Agriculture. Management needs to understand that a grant has to be in the form of a written agreement that will stipulate the policies and underlying conditions of the grantor that defines the responsibilities of the grantee”.



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