GMC Audit finds…Review by AG’s office was compromised by former Finance Min.’s wife
The forensic audit conducted into the Guyana Marketing Corporation (GMC) has unearthed a nest of
Former Minister of Finance, Dr. Ashni Singh
improperly recorded basic expenses, which were sent to the Auditor General’s (AG) office. In turn, the AG office did not pick up these discrepancies.
However, in circumstances similar to the National Industrial and Commercial Investment Limited (NICIL) forensic audit, the auditor has red flagged the presence of the wife of then Minister of Finance Dr. Ashni Singh-— Gitanjali Singh-— in the AG’s office as an Audit Manager and Director.
The auditor, Saykar Boodhoo, stated that this can be construed as compromising the AG office’s work since GMC, a satellite agency, ultimately receives most of its funding as a budget subvention at the discretion of the Minister of Finance, who is in charge of all government expenditure.
“The Audited Financial Statements were not conducted by an independent AG office,” the auditor observed. “During the audits of the 2012, 2013 and 2014 financial statements of GMC, Mrs. G. Singh, the wife of the then Minister of Finance, Dr. Ashni Singh, was one of the most senior audit management personnel within the Audit Office of Guyana.”
“In her capacity as a Senior Audit Manager/Director, Mrs. Singh would be responsible for the supervision and development of audit managers and audit staff subordinated to her (essentially everybody in the office other than the Auditor General).”
The auditor stated that by virtue of her relationship to the Finance Minister, Mrs. Singh had compromised the independence of the Audit Office of Guyana. He added that since Dr. Ashni Singh’s promotion to Minister of Finance, the Auditor General should have been aware of the conflict of interest.
“The AG should have informed the then President of Guyana, the newly appointed Minister of Finance as well as the Minister of Finance’s wife who was employed by the Audit Office of Guyana of the (conflict).”
The auditor made it pellucidly clear that either the Minister or his wife should have been asked to step down from their position and seek employment elsewhere.
Discrepancies
The discrepancies which the auditor flagged in his report speak of instances of transactions being improperly recorded by the Accountant. The auditor stated that the contracted auditors failed to flag these instances of incorrect recording during the 2012, 2013 and 2014 audits.
Similarly, the auditor stated that the Audit Office of Guyana failed to identify these instances of improper accounting practices at GMC. Some of these infractions included accrued vacation expenses, gratuity payable and other expenses not being accrued at year end.
The forensic auditor stated that audited financial statements were found to differ from GMC’s expenses, payables and prepaid expenses since they were understated in the audited financial statements. Also noted were two instances in 2014 where construction costs were listed as expenditure instead of being capitalized.
“A payment of $1,066,500, paid to E & A Consultants in relation to the construction of the new processing plant to be constructed at the CJIA (Consultant agreement is for $9,360,000) and two payments totaling $1,312,802 paid to Joshi Construction and Transportation Establishment (Agreement is for $3,617,990) for the Rehabilitation of the Central Packaging Facility at Sophia should have been capitalized.”
“In 2010, the auditor mentioned instances of unrecorded liabilities in the 2010 GMC Management Letter Comments. However it appears that the recommendation was never implemented.”
Management response
GMC’s management responded to the red flag raised about E&A consultants. According to management, advice came from the External Auditor to treat this transaction as expenditure.
“Similarly, for the Rehabilitation of Pack House, the External Auditor advised that the expense be treated as Expenditure rather than capitalized asset since the building is a leasehold building.”
Recommendations
In response, the forensic auditor made it clear that this was poor advice, if indeed it came from the external auditor.
With regard to the infractions which were let through, the auditor recommended that Government reviews the professional education and training of the Auditor General and “Determine if he is a fit and proper person to hold such a highly revered position of professional integrity and character.”
“The required qualifications, experience, training and professional affiliations of the AG’s position should be reviewed and updated in accordance to similar positions held in other Caribbean Community (CARICOM) and Commonwealth countries.”
The auditor added that such a review must be in accordance with professional and ethical standards as issued by professional accounting standard boards, such as “The International Accounting Standards Board, the American Institute of Certified Public Accountants and the Government Accounting Standards Board of the US.”
It is not the first time that Singh’s presence in the audit office has been deemed as controversial. Transparency International Guyana Incorporated (TIGI) has always raised concerns about this situation.
Recently, the forensic audit into NICIL highlighted that former Minister Singh, as Chairman of the Board of Directors, insisted that the audit be done by the audit office, while his spouse was an Audit Director. The audit noted that this was a serious conflict of interest.
The former administration had previously defended the situation, when concerns were raised. Instead, they had chalked it up to the machinations of the then opposition.