Audit Office responsible for certifying GEA’s financial reporting – Anand Goolsarran

Oct 03, 2013 News

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…Auditor General to review GEA financial records

Although, the Audit Office has been preparing the audited reports of the Guyana Energy Agency (GEA), it will now be reviewing financial statements and other documents of that entity to determine if indeed there has been a violation of the International Financial Reporting Standards (IFRS).
GEA prepares its accounts in accordance with IFRS.

But, Anand Goolsarran, former Auditor General, believes that the Audit Office should bear some responsibility for certifying GEA’s accounts that do not confirm to IFRS, in particular the recognition as revenue the proceeds from the sale of petroleum products under the PetroCaribe Agreement between the Governments of Guyana and Venezuela.
According to Goolsarran, Auditor General Deodat Sharma has to take personal responsibility for the signing off on accounts that do not confirm to general accepted accounting practice. He said that the Auditor General is required to personally review the financial statements of an entity as well as the findings arising out of the audit, before issuing his opinion.
This is especially so since the Audit Office has serious staff constraints in terms of professional and technical competence.
The former Auditor General made those comments in light of GEA’s faulty accounting practices highlighted by Chartered Accountant Christopher Ram on his website, chrisram.net.
Ram said that with poor accounting practices; non-tabling of accounts in the National Assembly for more than 12 years; and no names of members of the Board of Directors, the GEA headed by Mahender Sharma, in 2012 was responsible for US$350M of the nation’s transactions.
However, weeks after promising to provide the names of the Directors of GEA, Prime Minister Samuel Hinds published in the Official Gazette the members. According to the Official Gazette of September 28, 2013, Doorga Persaud will serve as Chairman of the Board of Directors of the GEA while Finance Secretary, Nermal Rekha, will serve as the Vice-Chairman.
The other members of the board include the GEA’s, Chief Executive Officer (CEO) Mahender Sharma, Elwyn Marshall, Clinton Williams, Badrie Persaud and People’s National Congress Reform Executive Member, Lance Carberry.
The records indicate that audited financial statements and not annual reports were tabled in the National Assembly for years up to 2009. And, according to GEA’s 2012 activities, the audits for the years 2010 and 2011 have been completed, but these have not been tabled
In addition, GEA is an agent of the state with responsibility for the contractual arrangements with Venezuela to supply Guyana with crude oil, refined oil products and Liquid Propane Gas (LPG).

But its income statement shows as income the moneys it receives from the oil companies and then shows the related payments to Venezuela and the Ministry of Finance as “Office and Administration Cost.”
Goolsarran had said that the 2012 National Estimates showed the following budget figures for GEA: revenue – $40.7M; expenditure – $99.3M and a Government subsidy of $58.6M to meet the shortfall. The Estimates therefore did not recognize the US$350M fuel transaction under the PetroCaribe agreement and did not anticipate the above accounting treatment.
Despite this, the 2009 audited accounts of GEA showed $14.398 billion as revenue from receipts from oil companies and corresponding office and administration expenses totaling $14.424 billion. The latter figure represents a bit of comingling with real office and administration expenses.
According to Ram, “Deodat Sharma, the Auditor General, who signed off the audit report for the years 2003 – 2009 claims that the accounts have been prepared in accordance with International Financial Reporting Standards! Those accounts would have been rejected by any self-respecting accounting technician.”
“Mr. Deodat Sharma should be thankful that he is not qualified to be a member of the Institute of Chartered Accountants.”
According to Sharma, he was unable to look at the comments by Christopher Ram about GEA since he was working on the Auditor General Report 2012, which he had to present to the Speaker of the National Assembly, Raphael Trotman.
However, he indicated that he would be reviewing the financial records of GEA in relation to the comments made by Ram. Sharma emphasized he is not responsible for presenting annual reports to the National Assembly but prepare the audited reports.
Sam Hinds in a letter to the press had said, “Whether an Annual Report, or just an Audited Financial Statement, is to be tabled in the National Assembly we maintain that Section 30 of the Guyana Energy Agency Act speaks to Audited Financial Statements. Further, that section prescribes that the Minister determines what level of detail any other report accompanying same should include. For those who are really interested in learning what the GEA is doing, there is a lot of information provided throughout the year on the GEA website, various press releases and press conferences, our Budget presentations, and also in GEA appearances before the relevant sector committees of the National Assembly,” he noted.

 

 

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