AuGD flags three agencies, recommends $1.7b surcharge

Auditor General Pamela Monroe Ellis has recommended that a surcharge be imposed on the principals of two public bodies for the loss and destruction of government assets while the leadership of a third agency has been cited for a failure to collect revenue.

The Surcharge Review Committee of the Auditor General’s Department (AuGD) received four cases for consideration for January to December 2022 and recommended that three of the cases be referred to Financial Secretary Darlene Morrison for action.

Those identified for a surcharge are the Firearm Licensing Authority (FLA), in the sum of $1.05 million; the National Environment and Planning Agency (NEPA), for $250,000; and the Portland Municipal Corporation, in the sum of $1.67 billion.

The financial secretary has the discretion to impose any amount for a surcharge, but cannot exceed the sum recommended by the auditor general.

The auditor general reported that $4.2 million paid by the FLA to seven officers for gratuity payments was not subjected to income tax in keeping with the Income Tax Act and related guidelines.

“The failure of the FLA to deduct income tax from gratuity paid to the seven officers resulted in overpayments totalling $1,049,990.63. The FLA earns income from licence and related fees and does not receive financial support from the Consolidated Fund,” the auditor general said.

Monroe Ellis said that the officer(s) alleged to be responsible for the deficiency/loss are CEO Shane Dalling and the director of finance and administration.

The surcharge matter was submitted to the committee on February 22, 2022, and it deliberated on the case on March 11, 2022.

The auditor general said that the documents submitted were reviewed, and it was observed that the officers received full gratuity pay even though the FLA was fully aware of the guidance issued by the Interpretations, Rulings & Opinions Committee and received a written directive from Tax Administration Jamaica advising how gratuity paid from self-financing entities should be treated.

In the case of NEPA, the auditor general said that the agency was unable to account for eight of nine Samsung tablets for distribution to designated schools under the NEPA National Schools Environment Club Programme.

According to Monroe Ellis, the officers alleged to be responsible for the deficiency/loss at the agency are the manager, facilities and operations; the inventory clerk; and the public education and community outreach officer.

NEPA purchased nine Samsung tablets and three laptop computers for $468,749.98. However, the auditor general reported that the items were not recorded in NEPA’s inventory records upon receipt even though the invoice was stamped “goods received satisfactorily”.

According to the auditor general, the tablets were recorded as being delivered to the public education and community outreach officer.

“However, there was no signature to confirm whether the officer received the items. The items [were] considered missing over four months later during a search of the inventory room by the inventory clerk after queries from a supervisor,” the auditor general said.

The chief executive officer and the chief financial officer at the Portland Municipal Corporation could be facing a surcharge for the loss or destruction of government assets.

At a meeting between AuGD auditors and officials from the Portland Municipal Corporation on April 16, 2022, the audit team was informed that the records for financial years 2010-2011 and 2011-2012 were damaged, owing to water exposure. However, there was no record of the report to the auditor general regarding the incident.

In the absence of any record of a report being submitted to the auditor general about the loss or destruction/damage of the documents, the transactions captured in the financial statements would be deemed unlawful and treated as a loss as set out in the Financial Administration and Audit Act, the auditor general said.

Legal basis for $1.67-billion surcharge recommendation against Portland Municipal Corporation leadership

It is a requirement for ministries, departments and agencies to report a loss or destruction of any government property to the Auditor General’s Department, according to Section 27 of the Financial Administration and Audit Act, which states:

Section 27(1): Where any voucher or other document in respect of the receipt or payment of public money, has been lost or destroyed, or is defective in any respect, the accounting officer concerned shall forthwith report the matter to the auditor general for investigation.

S27(2): Where, as a result of such investigation, the auditor general is satisfied that the relevant transaction is otherwise in order, he shall notify the accounting officer accordingly and shall issue in respect of that transaction, an authority under his hand – (a) for the transaction to stand charged in the account in the case of a missing voucher or other document; or (b) for such voucher or other document to be accepted where it is found to be defective.

S27(3): Where the auditor general is not satisfied that the relevant transaction is in order, such transaction shall be deemed to be unlawful and shall be treated as a loss as referred to in Section 20(1)(c).