Despite completing examination of 2021 NRF financials, Auditor General says office still not equipped to audit oil sector

Sep 21, 2022 News

Kaieteur News – While his office has completed its examination of the 2021 financial statements of the Natural Resource Fund (NRF), Auditor General Deodat Sharma has said that the audit office is still not equipped to look into matters of the Oil and Gas Sector.

Auditor General, Deodat Sharma

Speaking to members of the media on the sidelines of the handing over ceremony of the 2021 audit report held at Parliament Building on Monday, Sharma noted that audit office is working currently to build capacity with regard to matters of the oil sector.

He said as part of efforts to build capacity, the audit office is seeking the expertise of the Canadian Auditing and Accountability Foundation (CAAF).

“The Audit Office has been planning for our role in the Oil and Gas Sector. Apart from staff being previously trained in the extractive industries, training is ongoing to build capacity in this sector. Further members of the Performance Audit Section, with help from CAAF, are also being trained on how to conduct performance audits in the oil and gas sector,” Sharma revealed.

In responding to criticisms from a civil society group over his examination of the 2021 audit of the NRF financial statements, he said the audit was merely to examine the money that was placed in the NRF.

“We look strictly at the part where the money went into the lift but the part where you have the money, how much we’re supposed to get out there and if we are to determine are we getting the right [sum], that part, it would mean that I would have to employ a lot of engineers, consultants to do that aspect of it. In my 2023 budget, we are going to work towards strengthening the work to go that way… So yes, it is a new area; it is a new challenge.”

Responding further, Sharma noted that while his office is responsible for audits, it is the mandate of the Guyana Revenue Authority (GRA) to indicate whether the taxes are paid in full.

“In terms of the GRA, there are several people doing several different things, and if you check Newfoundland and how the auditors do the audit, they look at the entity. So, they let the entity, like the Ministry of Natural Resources, that is in charge, they do all the checking and balancing, Guyana Revenue Authority, GEA, etc., and we audit that process,” the Auditor General said.

He went on to say, “I can audit that because I have engineers working with me and I can strengthen the section by getting more engineers, which I discussed with the Public Accounts Commitment.”

At present, the Auditor General said that his office does not have specialists on the ground to determine issues like whether the oil is mixed with water or whether Guyana is getting the correct amount of oil per lift and at the correct price.

On Sunday, this publication carried a report in which civil society group, Article 13, expressed grave concern about the Government as well as Sharma’s non-compliance with the NRF legislation.

The group explained that it carried out a review of the financial statements of the Natural Resource Fund for the year ended December 31, 2021 and comparative information for 2020.

‘Article 13’ said that it found that the Auditor General did not conduct his audit in a manner that is compliant with the requirements of the NRF law.

‘Article 13’ pointed out too that Guyana agreed via the 2016 Stabroek Block Production Sharing Agreement (PSA) to pay income taxes for Exxon and its partners.

Those taxes are to be paid from revenues earned for the sale of Guyana’s share of profit oil. Those deposits are made into the NRF account. The group noted that these taxes which ought to be paid over were not, yet the Auditor General in his review, gave it a clean bill of health.

The civil society body said “…It was inappropriate and incorrect for the Auditor General to issue a clean audit opinion on the financial statements of the Fund for either or both years (2020 and 2021).”

Therefore, Article 13 on the foregoing grounds called on the Auditor General to withdraw his statements and re-issue his opinion on the financial statements for non-compliance with the law. “We understand that such a step, though unusual, was done by the Audit Office before and that, in any case, that it is a professional requirement where a previously issued report is subsequently found to have been inappropriately issued,” the group stated.