Mar 23, 2016 News Comments Off on Forensic audit report finds…Sharma presides over massive corruption at GEA
By Kiana Wilburg
The Fuel Marking Division of Guyana Energy Agency (GEA) has been found to be a haven for corruption of all sorts due to frail internal control systems.
This was concluded by the forensic audit report prepared by Nigel Hinds Financial Services.
In fact, auditors stressed that the abuse of and non compliance with the rules and regulations of the programme is closely linked to high levels of fuel smuggling.
The auditors also took issue with the polygraph testing. They emphasized that evidence shows that the controversial polygraph testing, was failed by the Head of Fuel Marking, William Holder, in September 2010.
However, he was never sent off the job, while 30 others who failed the test were sent packing.
The auditors found a virtually non-existent validation of the fuel marking process for imported bulk fuel. They also found a very weak internal control system for fuel marking concentrates and the absence of adequate monitoring of the Trawlers Association vessels.
All these create wide-ranging opportunities for fuel smuggling, the report said.
The auditors said that this resulted in GRA and GEA’s ineffectiveness to monitor fuel imports.
The forensic auditors have recommended “strong disciplinary action” for CEO, Dr. Mahender Sharma. They accused him of poor management.
The forensic auditors during the investigation of this crucial division of the GEA found various loopholes which allowed for negligence and even corruption.
For instance, the forensic audit report on GEA noted that Narissa Samuels, Senior Marking Officer, and George Jaundoo, Head of Marking Section, are responsible for the receipt, custody, distributing and reconciling of the fuel marker concentrates. Auditors do not support this arrangement.
The auditors however believe that the programme which accounts for an average of $330M a year requires proper security and stronger arrangements for checks and balances. They said that the current arrangement only undermines the effectiveness of internal control system for the Fuel Marking Services Division.
They noted, too, that the concern of an apparent compromise in the internal control procedures for the management of the Fuel Marking Concentrate is echoed in various reports by Mr. Valmiki Ramtahal, GEA’s Internal Auditor.
“GEA’s Internal Auditor noted in his report that there was substantial loss of marker concentrates as a result of spillage.
“When our team asked whether there were any records to account for the spillage of fuel marker concentrates, Mr. Jaundoo said that the amount relating to spillage incidents is insignificant.
“Therefore, no records of spillage are kept by the Fuel Marking Services Division,” the auditors noted.
In this regard, the auditors highlighted the agreement between Authentix (an oil company) and Guyana Marking Services. Part of that agreement states that Authentix will be responsible for the employment of both a full time operations auditor and a part time liaison officer.
However, Khushie Narine is the only employee of Authentix here in Guyana. The forensic auditors in this instance noted a lack of integration between the inventory records for the marker concentrate and the accounting system.
Furthermore, it said that the finance division has no involvement in the reconciliation of fuel marking concentrate inventory.
“From interviewing Mr. Jaundoo and Mr. Narine, we are concerned that both of them had a positive attitude towards their extensive work hours when they do not receive overtime pay.
“Both individuals stated that working an average of 60 hours a week is normal. Another concern is the occurrence of having a GEA staff fill in for Mr. Narine (Authentix Representative) rather than another Authentix representative,” said the auditors.
They added, “Inventory reconciliation of all the stock of GEA is not done on a regular basis. Our investigations revealed that the physical verification of inventory items of the GEA is done every six months. It is a concern, as to why physical counts of inventory are done so infrequently.
“The longer the time period between inventory reconciliation dates, the more difficult it is to fully investigate any discrepancies and to balance the books.”
What also worried the forensic auditors is that prior to 2015, there is no records that the Fuel Marking Services Division asked the Association of Trawlers and Seafood Operators, to provide approved Guyana Revenue Authority (GRA) Custom forms, before duty free markers are dispensed from GEA stores to mark the fuel.
They found that the Guyana Association of Trawler Owners and Seafood Operators or the trawlers’ operators, prior to 2015 only made a verbal request instead of a notification to the GRA and GEA at least 24 hours in advance of the estimated time of arrival of the authorized importing vessel.
The auditors said this therefore, compromised the ability of the GEA management to provide proper monitoring and accounting procedures to comply with the agreement between GEA and the Trawlers Association.
According to the auditors, GEA failed to provide evidence that the Agency was authorized to prepare financial statements separately for its Fuel Marking division.
However, financial statements for the Fuel Marking Division from its set up in 2003 were always prepared by GEA and audited by the Audit Office separately from the audited Financial Statements of GEA.
Based on discussions with Dr. Sharma, the forensic auditors said that investigations prove that Fuel Marking is simply a division of GEA.
They stressed that there is no legal basis to have separate audited financial statements for GEA divisions within GEA.
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