Overdrawn salaries, inappropriate charges and millions of dollars in overpayments to taxpayers, pensioners and suppliers are just some of the infelicities unveiled in the just released 2013 Auditor General Report.
The report, which was laid in Parliament earlier today, also includes significant evidence of misuse of funds and under-reporting by several leading state agencies.
Auditor General Leigh Trotman has also reported a doubling of the fiscal deficit for the 2012-2013 financial year. The amount as reported by the Treasury was $826.1 million or $490 million greater than was originally budgeted, according to the Auditor General Report.
It said transfers to state enterprises and retiring benefits increased by $215 million. In addition there was a shortage of $226 million in revenue, and these accounted for the majority of the shortfall.
“It should be noted that the deficit was actually higher than stated in the Accountant General’s Report, which did not take into consideration the transfers to state enterprises which were recorded as advances,” the report said.
It also itemized a number outstanding liabilities in need of settlement by the Government. These include $157 million outstanding to landowners, in some cases dating back as far as 20 years, with a total amount of $27.4 million paid out in compensation over the past five years.
Up to 2012, contributions in the amount of $600,000 were also said to be due to the Catastrophe Fund, set up to assist local victims of natural disasters.
Mention is also made of other Government liabilities, including the well publicised debt of the Ministry of Education to the University of the West Indies. This stood at $131,974,893 as at July 31, 2013, but is not reflected in Government’s financial statements for last year, the Auditor General pointed out.
He went on to reveal jaw-dropping evidence of “overdrawn salaries” paid by the Ministry of Education. These totalled $338,735, including one for $80,715. The Auditor General noted that in many instances these overdrawn amounts were not being repaid.
At the Psychiatric Hospital, the problem is said to be one of “inappropriate charges” which the Audit Department said were not directly related to cost of assets under construction. These include payments of $60,025 for accommodation, $30,801 for food supplies and $16,714 for services.
Over at the Ministry of Transport and Works, the issue is one of “overpayments” to suppliers, involving substantial sums.
In one instance, an unnamed financial institution was overpaid by $1,259,023.64 on January 15 last year when the actual amount owed was $6,509.29. The ministry also overpaid another supplier to the tune of $29,375 for supplying a V3F drive module for an elevator while yet another company was paid twice for a photocopier valued at $18,973.14.
In another damning revelation, a contractor employed at the department’s vehicle equipment and workshop section was paid $60,000 over a six month period at a rate of $10,000 a month, despite failing to satisfy the contract.
“It is recommended that the ministry ensures that the necessary work done by consultants is completed before payment is made and before the contract is renewed. The contract should not have been renewed if the stipulations for the previous contract were not fulfilled,” the Auditor General said.
The Ministry of Transport also unreported its liabilities in the amount of $7 million to the Barbados Light & Power Company Limited and a further $869,251 due to construction companies.
The Auditor General also highlighted discrepencies at the Land Tax Department where there was $12 million difference in the revenue figure reported for that department and the amount recorded for it in the Treasury.
Furthermore, the Auditor General noted that the Land Tax Department continued to record its revenue on a cash basis, despite Government’s adoption of the accrual basis, under which revenue from land tax should have been recorded at $136,776,223 –– a material difference of $17,055,715 when compared to the revenue recorded by the department of $119,720,508.
In the case of the National Assistance Board, it was also revealed that the agency had been paying full pensions for 75 employees even though only two should receive such benefits, resulting in overpayments in the amount of $714,298.32 for the year ended March 31, 2012.
In terms of Value Added Tax, refunds totalling $14,063,275.14 should have been paid, but have not yet been.
There were also overpayments to suppliers and staff, as well as numerous instances of “misuse of funds” at the Barbados Licensing Authority, for which “no evidence of further investigation or action taken was seen by the Audit Office”.
This included $7,900 collected by cashiers but not accounted for, and $7,028.85 for services which the department did not receive.
The revenue of the Postal Service was also said to be understated by $939,371.65.
The Auditor General also raised concern about outstanding bank reconciliations for key state agencies such as the Treasury and the Inland Revenue Department, reflecting an inability to detect fraud.
He pointed out that the process of appointments in the Public Service needed to be reformed, and raised a red flag over agencies which were blatantly ignoring Cabinet decisions pertaining to increases in staff.
He also noted that there were many instances of advances to state agencies, without the requisite approval, and late payment of salaries.
Missing contracts also hampered the work of the Audit Department. In one instance a firm in the United States was paid $1.3 million by the Registration Department but there is no contract information available.
The same obtained at the Solid Waste Unit of the Ministry of the Environment, where in excess of $1 million was paid out to various contractors for digging wells and providing other maintenance services, in many instances without the support of valid contracts.
A further $1,376,859 was also paid to a United States-based company for facilities management at the Judicial Centre without any formal contract in place.
Missing data also seemed to be the order of the day, with the majority of state entities failing to complete their financial statements and audit reports on time.
Also very troubling is the level of under-reporting plaguing Government departments, including some one would least expect, such as the Office Of The Ombudsman for which there is no evidence of a renewal of rental lease arrangement for space since 1997.
“This matter needs to be regularized,” the Auditor General said.
He also highlighted the Division of Energy and Telecommunications in the Office Of The Prime Minister where “there are no ledgers maintained by the division to reflect the amounts paid and the balances owing”.
As a result, “the balance reported as outstanding at March 31, 2013, was $2,068,802; however claims totalling $3,669,122.42 were received from retailers.
Government’s Constitency Councils have also fallen short of their financial records and a string of agencies have failed to complete their audit reports in time, including the Welfare Department.
The report also shows that the majority of Government schools are behind on their financial reporting, including the Barbados Community College, which has not been audited for four years, despite its receipt of $80 million in funds voted by Parliament.
The financial statements of the Samuel Jackman Prescod Polytechnic, which receives $100 million, have also been in arrears since 1998, the report shows.
The National Insurance Fund audit is also in arrears. So too are nearly all statutory bodies, as well as the Barbados liaison offices in Toronto and Miami.