Those unused accounting modules…Inefficient manual system led to numerous financial discrepancies –PAC Chairman

Jun 10, 2014 News

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The Public Accounts Committee (PAC) has finally concluded its examination of the 2010 and 2011 Auditor General Reports. Some committee members have said that while they have noted many financial discrepancies by various ministries, it could have been avoided if the two modules belonging to the Integrated Financial Management and Accounting System (IFMAS) were used.

The IFMAS system was designed with seven aspects — the Appropriation, Expenditure, General Ledger, Budget Preparation & Reporting System (BPRS), Purchasing, Revenue and Asset & Inventory Modules.
The Purchasing and Asset and Inventory Modules are the ones that have not been implemented for over ten years.
Without the two modules in use, Chartered Accountant Christopher Ram said that this facilitates a lack of transparency and accountability.
He observed that former President Bharrat Jagdeo, under whose watch the system was put in place, was not known for his respect for transparency and accountability.
The unimplemented Purchasing Module seeks to provide the ability to create purchase requisitions and purchase order with self-creating commitments to reserve the necessary funds, provide the ability to record the receipts and return of goods and automatically update the purchase order to reflect the transactions, complete integration with the payment process to reflect payment for goods ordered and received, and provide the ability to create an asset record when goods are received.
The unimplemented Inventory/Assets Module seeks to provide the ability to create inventory and asset entries when entering a new record based on the requisitions; provide the ability to have automatic stock ordering when the system hits a user-defined reorder point; provide the ability for tracking issues and receipts; provide the ability to enter receipts for deliveries to stores via the Purchasing Module; provide the ability to make adjustments to reflect inventory average and shortages and provide the ability to provide queries and reports on current inventory, stock activity and receiving reports.
Chairman of the PAC, Carl Greenidge said, “If you have an accounting system, and there are missing modules, you are supposed to have “effective” alternatives in place. There would be a manual system in place. However, we have seen in a number of cases, numerous flaws in this system as it stands. The whole purpose of the advent of the electronic system is to reduce the risk of discrepancies taking place.”
The Parliamentarian added, “The Committee of course would want such a system in place (IFMAS). And I want to make this point especially clear for the Accountant General, that he should not feel that in the absence of the two IFMAS modules, he is excused. Whatever manual systems you have in place is supposed to be properly managed.
“There are big discrepancies in the reports that have arisen because those modules are not in place. On to this point, we don’t have a full explanation as to why it is not in place. We are not sure whether it is not in place because of the Accountant General or the Minister of Finance but we will certainly pursue this.”
While President, Donald Ramotar and Minister within the Ministry of Finance, Juan Edghill, hold firm to the effectiveness of their “manual systems, the auditor general reports reveal a different “truth”. It exposes the weaknesses of the manual alternative.
A look at the Ministry of Public Works reveals the weakness of the manual system. The 2012 AG report cited a discrepancy highlighted in 2011 in relation to a Toyota Carina AT 192 vehicle, PJJ 3886, which remains unresolved.
The Ministry acquired the vehicle on November 3, 2004. The vehicle was bought for use by the Construction Manager of the Chinese Construction Company that had executed works on the International Conference Centre, which was funded through a grant from the People’s Republic of China.
The vehicle was subsequently sold to a private individual for $1.24M even though evidence indicated that the Ministry had full ownership.
Without producing evidence to the contrary, a senior functionary within the Ministry on June 5, 2012 gave credence to the sale and advised the Head of Budget Agency to facilitate the transfer of the property.
Even though the transfer has been held in abeyance, the whereabouts of the vehicle was unknown to the Ministry and from all appearances, was released into the custody of the purchaser since July 2009.
In the case of the Ministry of Education, the AG report for 2012 said that the Ministry had still not taken steps to account for its expenditure, in that for the period under review, 20 payment vouchers for expenditure totaling $2.393M were not presented for audit examination.
As a result, it could not be determined the propriety of the payments made and whether value was received for the sums expended. A total of 11 payment vouchers for expenditure totaling $11.511M also remained outstanding for the year 2011.
As for the Ministry of Health, specifically, the AG report said that at the time of reporting, outstanding deliveries for the year 2011 totaled $59.835M, following the receipt of pharmaceuticals and other medical supplies.
The position remained the same for 2008, in that the Ministry is still to provide evidence to support deliveries valued at $79.262M.
With the aforementioned examples highlighted, some financial analysts have opined that the Ministry of Finance should be ashamed to say that their alternatives are effective and should really reconsider its statement that millions in assets and consumables are not going untraced.
It is clear that the manual systems cannot adequately keep track of government assets and expenditure until it’s almost too late.
However, if the two vital IFMAS modules were implemented, there would be immediate tracking of discrepancies.

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