Two Sugar Industry Funds not audited in 38 years, another in nine years …Auditor General unable to verify $1.1B in deposits

Oct 24, 2018 News

By Kiana Wilburg

It has been over six years since the Sugar Industry Labour Welfare Fund (SILWF) was audited and 38 years since the financial statements of the Sugar Industry Rehabilitation Fund and the Sugar Industry Price Stabilization Fund were subject to any form of assessment.
This was recently revealed by Auditor General, Deodat Sharma in his latest report.
Sharma said that in the absence of the records, he is unable to verify the accuracy of $1.1B as deposits held for investments on behalf of the Sugar Industry Labour Welfare Fund, the Sugar Industry Rehabilitation Fund and the Sugar Industry Price Stabilization Fund.
In response to this state of affairs, the Ministry of Finance said that it is responsibility of the SILWF to furnish such information to the Auditor General, since they have the relevant records in their possession.
The Finance Ministry noted, nonetheless, that it will follow recommendations to verify the deposits held for investment.
FORENSIC AUDIT
When the coalition administration took office in 2015, a forensic audit was launched into the Sugar Industry Labour Welfare Fund. Forensic auditors confirmed that indeed, the last time the Fund was audited was in 2012. They stressed, however, that the report was incomplete, since it did not contain any financial statements. It was therefore considered an incomplete annual report.
Further to this, forensic auditors said that failure by the management to prepare the Fund’s Annual Financial Statements for the years 2012 and beyond, as required by the Fiscal Management and Accountability Act and in compliance with International Financial Reporting Standards, is a critical financial breach.
Auditors said that it is imperative that urgent attention be given to finalizing the respective accounts, and the Annual Financial Statements for the relevant years be prepared, signed by the authorized personnel, and submitted urgently to the Auditor General for audit.
They said that the failure to produce Annual Financial Statements on a timely basis will ultimately affects management, among other stakeholders, in making meaningful decisions.
Significantly, forensic auditors said that the latest audited Financial Statements are at December 31, 2009. They said that management has since completed the 2010 Financial Statements, and is awaiting the Committee’s approval. Also, 2011 draft Financial Statements have been prepared.
The SILWF is funded by levies payable by the Guyana Sugar Corporation (GuySuCo). It is operated and controlled by the Finance Secretary of the Ministry of Finance as the Trustee. The levy presently is $500 per tonne of sugar manufactured and exported. GuySuCo owes the Fund over $2.7B.
The issue of unaudited financial statements is further compounded by the fact that the authorities will have to write off $35M that was misappropriated in 2004. The latest information from the police is that the investigation can no longer be pursued, since the original documents apparently cannot be traced. Also, the officer(s) who dealt with the case, has/have since retired.
Forensic auditors have subsequently recommended that management should obtain authorization from the Finance Secretary of the Ministry of Finance to write off the misappropriated amount, so that the overstated bank balance would be corrected.
It is also the view of forensic auditors that effective financial statements can be put together if the accounting system for the Fund is put in order. In this regard, it was pointed out that management had purchased the ACCPAC accounting software, comprising four modules, from New Technologies Enterprise at a cost of $5.164 million. But more than three years later, it is yet to be operational, with a high volume of accounting work still to be completed for years 2012 to 2014. At present, the manual accounting system is still in use.
It was recommended that a server be purchased to have the software operational and staff trained. But even this was not done, more than 15 months later.

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Two Sugar Industry Funds not audited in 38 years, another in nine years …Auditor General unable to verify $1.1B in deposits

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Two Sugar Industry Funds not audited in 38 years, another in nine years …Auditor General unable to verify $1.1B in deposits

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