Auditor Raps Govít
By Candia Dames
The newly released Auditor Generalís Report shows that in the most recent year for which the study is available, public accounts were in such poor state that the auditor general was unable to certify them.
"As a result of my examination, I now report that due to un-reconciled accounts, which include inactive bank account that remain on the books, I cannot attest to the completeness and fairness of cash and bank balances, investments, and receivables," wrote Auditor General Terrance S. Bastian.
"Because of the fundamental importance, and the material effect of these accounts, as described in the preceding paragraph, on the statements of account, I am unable to certify that the Final Accounts of the Government of the Commonwealth of The Bahamas present a true and fair view of the state of affairs of the year ended June 30, 2003."
Under the Financial Administration and Audit Act 1973, it is the responsibility of the auditor general to examine and certify the governmentís financial statements.
The accounts of the Bahamas are presented to parliament annually and contain among other information the details of revenue, recurrent and capital expenditure, the public debt and the contingent liabilities of the government, as well as detailed revenue by category and detailed expenditure.
But the most recent report raises serious questions about inconsistencies in many government agencies and departments.
For instance, it says that an examination of the Junkanoo bleacher contracts awarded during the 2002/2003 Junkanoo season revealed that three contracts were not signed by the contracting parties.
The three contacts in question were awarded in the amounts of $1,800 each.
"Although photocopies of the unpaid cheque were seen on file - we were unable to confirm whether the cheque were cashed because the originals and the bank statement were not made available," the report said.
The auditor general recommends an explanation as to why the contracts in question were not signed; copies of the original cheque and the bank statement.
The report added that based on documentation from the Ministry of Youth, Sports and Culture, it appears that the contract for rental of the bleachers did not receive Cabinet approval before an agreement was signed between the ministry and Towers Scaffold Services INC.
Section 58 of the Financial Regulations states that "All awarded contracts for supplies, works and services requires by the government for amounts in excess of $250,000 shall be made by the Cabinet."
The report said that the records at the ministry show that an agreement with Towers Scaffold Services INC. was executed on October 28, 2002.
However, approval by Cabinet for the venture was noted on November 28, 2002.
"We have requested relevant copies of Cabinet conclusions which do not seem to be forthcoming. Therefore, we relied on information from files at the Ministry of Youth, Sports and Culture," the report said.
The auditor general analyzed the budget for the 2002/2003 Junkanoo parades and compared the same with the actual amounts.
"We noted that revenue for ticket sales was estimated at $2.1 million, but only $695,000 was realized," the report said. "In addition, other contributions were estimated at $325,000, but only $107,954 was received.
The actual government contribution amounted to $981,065 compared to the $350,000 budgeted."
The report added that on the other hand, miscellaneous expenses were budgeted at $583,145 and $514,380.53 was expended. Also, it was reported that advertising was projected at $328,450, but this too fell short by $295,209.80.
The auditor general recommends that for future years, the budgetary process should be more realistic; a more detailed marketing strategy be put in place; and Junkanoo organizers conduct market surveys so that the reaction to new initiatives would be more realistically determined.
"It is obvious that revenue estimates were grossly overstated," the report said. "While marketing is not an exact science, we believe that the Junkanoo organizers must review as many scenarios as possible when preparing the budget."
The report also points to unrecorded deposits as they relate to the sale of Junkanoo tickets that year.
"At the time of our examination, $15,200 for Internet ticket sales were not recorded in the cashbook," the report said. "In addition, there were numerous other deposits where the nature of the transactions could not be determined due to insufficient information."
It added, "We recommend that all revenue collected be deposited in the bank and recorded in the cashbook promptly. Also, all transactions should be supported with sufficient details so as to clearly identify its source and nature."
The report noted that the approximate cost of rental and shipping of bleachers was $1,240,000.
Tower Events International SRL informed the Department of the Auditor General that the approximate selling price of the seats which were used for the 2002/2003 Junkanoo parades would have been between $6.5 and $7 million, the report said.
The Ministry of Youth, Sports and Culture was not the only government agency where concerns were raised.
At the Department of Immigration, the report said during the audit it was observed that no cashbook was being maintained.
"We recommend that a cashbook be instituted in accordance with Section 134 of the Financial Regulations 1975," the report said.
While reviewing the accounting process, it was noted that when revenue is turned over to the accounting officer by the cashier, no receipt is issued to acknowledge the cash exchange and shortages exist in the amount of $14,805.14.
The auditor general recommends that there be documented verifiable evidence of exchange of funds from the cashier to the accounting officer.
The report also recommends a thorough investigation be conducted to determine further the extent and reason for the shortages. It said that every effort should be made to recover the amount of $14,805.14 from the cashier as a matter of urgency.
The report said that while examining the cash edit listing to the underlying accounting records, the auditor general observed that entries totaling $227,894.19 appeared as "void".
In many instances, the report said, there were no attachments to support the void or cancelled receipts.
"At the time of the review, we were not given the assurance that all voids that appeared on the cash edit listing were legitimate," the report said.
Shortly after coming to office and throughout his term so far, Prime Minister Perry Christie has continued to raise concerns about the failure of various government departments to reconcile their accounts.
He has said that while his administration does not want to raise taxes, it has been focused on ensuring that revenue loopholes are tightened up.
Itís unclear whether the situation that prevailed in 2002/2003 has been improved, as there has not been any report from the auditor general to cover any fiscal years that followed.