Sun | Oct 2, 2022

Auditor general raps UDC for loose management

Published:Wednesday | August 10, 2022 | 12:09 AM

The Urban Development Corporation (UDC) has failed to fully implement a raft of recommendations by Auditor General Pamela Monroe Ellis in her 2012 audit of the public body.

In a 2022 performance audit of the UDC tabled in Parliament last Friday, Monroe Ellis indicated that the company was still struggling to get its house in order in relation to the collection of rent and lease receivables.

Ten years ago, the auditor general urged the UDC to manage more efficiently the collection of rent and lease receivables by ensuring strict adherence to its collection policy.

Monroe Ellis had suggested to the UDC that it prepare and serve the required reminder and demand notices on delinquent tenants. She had also advised that the legal unit should be proactive and aggressive in collecting rent and lease receivables.

The UDC implemented its receivables policy and initiated legal action against delinquent tenants. However, Monroe Ellis reported in her latest audit that the trend of rental arrears continued.

Rental arrears over 120 days amounted to $467.5 million, representing 81 per cent of aged receivables as at June 2022. This compares with 76 per cent, or $148 million, that was outstanding for more than 120 days in the 2012 performance audit report.

The 2012 audit had also urged the UDC to develop and implement a proactive and effective anti-squatting policy. However, Monroe Ellis reported that the UDC is awaiting the approval of the National Squatter Management blueprint to guide the development of a policy of its own.

The Ministry of Economic Growth and Job Creation has said that the second draft of the proposed policy has been submitted to Cabinet for review.

Preliminary results from a national squatter survey in 2019 showed that about 20 per cent of the Jamaican population still live illegally in settlements.

Statutory deductions

Another important recommendation by the auditor general in her 2012 report that the UDC has failed to implement is the payment of all statutory deductions to the relevant agencies in accordance with the law.

While the UDC has paid over NIS, NHT, and HEART statutory deductions, the corporation has withheld education and income tax against liabilities owed by the Government of Jamaica.

Of the 16 recommendations from the auditor general’s 2012 report, the UDC implemented six, partially implemented a similar number, and did not carry out four.

Among the recommendations implemented was the effective strengthening by UDC of its enterprise risk management framework through the development of a risk management manual and staffing of its risk unit.

The UDC continued to fall short in terms of strict compliance with the law and reporting requirements under the Public Bodies Management and Accountability (PBMA) Act.

Up to June 2022, the UDC did not present annual reports and audited financial statements for the last three years, 2018-19 to 2020-21.

“UDC’s failure to consistently prepare and submit to the minister, annual reports, and audited financial statements for tabling in the House of Representatives, limited oversight of UDC’s operational and financial performance, by Parliament and the portfolio Ministry of Economic Growth and Job Creation,” the auditor general said.

She also noted that it was not evident that the portfolio ministry requested the submission of outstanding annual reports and audited financial statements.

The auditor general also reported that the Government owed UDC $7.23 billion, which represents outstanding compensation for lands transferred to the National Road Operating and Constructing Company Limited (NROCC).

She said that the transfer related to a Cabinet decision in June 2015 to provide lands for the development of hotels, housing, and other facilities as a condition of the 50-year concession agreement between the Government and NROCC.

A review of UDC records by Monroe Ellis showed that the value of lands transferred to NROCC currently stands at $9.36 billion, for which the Ministry of Finance and the Public Service has provided compensation totalling $2.13 billion.

Contrary to its estate management policy and exemptions outlined in the Government’s divestment policy, the auditor general reported that the UDC divested three properties below market value. Further, the corporation experienced cost overruns, losses, and additional costs totalling $156.39 million due mainly to poor planning, lack of adequate monitoring, and scoping of contracts.