Nov 27, 2022 News
By Kiana Wilburg
Kaieteur News – Financial Analyst and Certified Accountant, Floyd Haynes has sought to assure the public that the audit of costs incurred by ExxonMobil in the Stabroek Block is not a forensic audit or a witch hunt.
During an interview on Kaieteur Radio’s Programme, Guyana’s Oil and You, Haynes said that he is disappointed with the degree of misrepresentation in the press that overshadows the auditing process.
That discussion focused in part on the US$751,000 contract that was awarded earlier this year to VHE Consulting, a registered partnership between Ramdihal & Haynes Inc, Eclisar Financial, and Vitality Accounting & Consultancy Inc. The local consortium was supported by International firms— SGS and Martindale Consultants for the ‘Cost Recovery Audit and Validation of the Government of Guyana’s Profit Oil Share’.
The auditor said that some stakeholders are of the view that a forensic audit is being undertaken but this was not the case.
He explained that,
Contrarily, a cost recovery audit is being done pursuant to the parameters of the 2016 Production Share Agreement (PSA) governing the Stabroek Block.
Haynes said that Guyanese can rest assured that no stone was left unturned by Auditors involved in the examination of ExxonMobil’s costs incurred in the Stabroek Block.
Following the contract award, Haynes who is a Partner at Ramdihal & Haynes Inc. said he observed several misconceptions being peddled in some sections of the media. The Business Professor said he felt it prudent to set the record straight on these matters.
He pointed to the inaccurate statements about the costs being reviewed by the Auditors while noting that approximately US$7.3B incurred by Exxon from 2018 to 2020 is being audited and not US$9B as reported by the media. This includes costs incurred for the Liza One and Liza Two Projects which are currently producing over 360,000 barrels of oil per day.
Additionally, Haynes said concerns were raised relating to the date of execution of works. He explained that while the contract was awarded in March, the audit started in July following the receipt of the commencement of work order from Government.
Though the Auditors are but a few weeks outside of the stipulated four-month deadline, Haynes guaranteed that work is still on schedule and should conclude in a week’s time. The Auditor noted that an interim report will be issued in the first week of December to government.
“Lots of people said it couldn’t be done and it has been…We’re on schedule and we will deliver and then the Government will decide whether they want to make that public or not,” expressed Haynes.
Meanwhile, Haynes reiterated that the audit was not a witch hunt or a “Got You!” exercise. “You cannot convict someone without a trial and no serious professional will litigate something this complex in the news media without first having seen the audit or looking at the costs or any of those things. I think it’s reckless and rather irresponsible…”
Haynes added, “I can assure our Guyanese that no stone will be left unturned, we will look at everything and we are doing this on behalf of the government and ultimately on behalf of the Guyanese people but at the same time we don’t walk into an audit assuming that the company is guilty.”
THE AUDITING PROCESS
The Certified Accountant was keen to share his experience working on the audit. He said it involved the receipt of a Joint Audit Data Exchange (JADE) report. This report contains all of Exxon’s costs claimed as part of their cost recovery and according to Haynes contains tens of thousands of lines of transactions.
Haynes said there is no Auditor in the world that can sit down and go through all of it. In fact, he said no audit is ever done that way. Haynes said Auditors take a representative sample, rather, a scientific sample of the costs incurred. He said that sample is based on a number of things.
“It could be high risk areas that you think have potential for exposure based on past experience or based on having done work in the industry before. So you take a sample of those, you look at it closely and then you ask for corroboration or additional information on those types of things and that’s what we did,” said the Auditor.
He added, “Out of that you will have findings, you will write up your report, and give it to the Government, from there, the Government will engage Exxon in some kind of a discussion, it will go back and forth, and we will probably go back and then produce a final report. That’s kind of the process in a broad way.”
Haynes said he always knew the level of complexity would be high. “But having done lots of audits before, I think this one takes the cake in terms of the degree of complexity. These spreadsheets you’re looking at are so huge you have to run pivot tables, you’ve got to chop it in slices and dices.”
Haynes said the greatest takeaway for him, is understanding that this kind of work really requires a high level of expertise in order to be able to perform. He said Guyana does not have this.
The Fraud Examiner believes that the partnership with the international consortium will help in providing the knowledge transfer that will, over time, allow locals to eventually conduct similar audits. He said too that he has developed a healthy appreciation for the amount of effort that must go into such exercises.
OUTSTANDING AUDIT REPORT
IHS Market, a British firm, was contracted back in 2019 to audit over US$460M in costs incurred by Exxon. The bills are supposedly for exploration and administrative costs incurred prior to oil being discovered in 2015. It was also responsible for auditing a portion of costs incurred from 2015 to 2017 but there has been no official confirmation of what this amount is.
Government has also not given a definitive statement on the status of this exercise.
President Irfaan Ali has since pledged to make these reports public, in keeping with his desire for transparency and accountability in the oil and gas sector.
VP Jagdeo words exposing him
Feb 07, 2023SportsMax – A maiden Test double hundred from Tagenarine Chanderpaul and a 12th Test century from captain Kraigg Brathwaite have put the West Indies in an excellent position after day three of...
Feb 07, 2023
Feb 07, 2023
Feb 07, 2023
Feb 07, 2023
Feb 07, 2023
Kaieteur News – The suggestion that rice and gold are sectors that are in crisis is a fear-mongering tactic. While... more
By Sir Ronald Sanders Kaieteur News – (The writer is Antigua and Barbuda’s Ambassador to the United States of America... more
Freedom of speech is our core value at Kaieteur News. If the letter/e-mail you sent was not published, and you believe that its contents were not libellous, let us know, please contact us by phone or email.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]