Cost Recovery Audit conducted in ethical and professional manner

Dec 17, 2022 Letters

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DEAR EDITOR,

Recently there has been a series of articles in the news concerning the audit of Exxon Mobil’s claimed cost. Most notably, these articles are purported to be based on interviews done with Messrs. Christopher Ram, Ramon Gaskin, and Elton Lowe.
Let me assure all and sundry that the Cost Recovery audit is being conducted in an ethical and professional manner in accordance with the guidelines and practices outlined in the Council of Petroleum Accountants Societies (COPAS).
While I believe Christopher Ram, (a lawyer, and Chartered Accountant) who is also a friend is duly qualified to make comments about the ongoing audit, I’m not aware of any similar qualifications that allow Messrs. Gaskin (Economist), and Lowe(Economist) to speak with the same authority on the subject. After all, Auditing is a profession that requires certificationand should be respected as such.
Regardless of qualifications, the comments attributed to these gentlemen are simpletruisms devoid of any critical analysis. In fact, the arguments put forth can be classified as strawman arguments, lacking in both scholarship and sophistication. A straw man is when you attribute a weak argumentnever made by your opponent to him or her, and then proceed to knock it down simply to score cheap points.
Let’s examine the comments attributed toeach of thesegentlemen on the subject of the audit.
First, here is Mr. Gaskin from the article entitled “Government must conduct thorough audits of Exxon Mobil’s bills”. “What we need is a proper audit, a serious audit of the affairs of Exxon”. Not what they call checking the bills”.
In my many years as an auditor, I’ve never seen a scope that allows an auditor to audit “the affairs” of any company as suggested by Mr. Gaskin. If Mr. Gaskin has come across this in the many audits he claims to have performed, he should cite such cases.
Moreover, how does Mr. Gaskin know the audit is not proper and serious (albeit in very vague terms)? Whom did he consult to arrive at this conclusion? Finally, where did Mr. Gaskin get the idea that we are just checking bills?
These unserious assertions and made-up claims by Mr. Gaskin demonstrate a profound lack of understanding of the audit process. Nonetheless, Mr. Gaskin proceeds to attack the straw man he created. He simplymakes a statement in one breath and then attackshis own statement in the other breath.
In this case, he is both the protagonist and the antagonist in the drama. This alone should be of concern to the discerning. Thispattern would be repeated in most of the arguments put forth by these fine gentlemen.
Mr. Lowe is quoted as saying, “ Failure to properly audit Exxon is a dereliction of duty.”
Thisis stating the obvious and offers no serious assessment or analysis of the subject. This Statement by Mr. Lowe rings hollow and adds nothing to the discourse. On the other hand, if Mr. Lowe has evidence that someone is “failing to properly audit Exxon’s books” he should produce such evidence. Nevertheless, Mr. Lowe continues”That is a recipe for disaster and no government would receive a bill for US$ 7 billion and not check to see whether the prices it is being charged are reasonable and competitive.
Once again a trite statement. Mr. Lowe is simply stating that which is self-evident. The question that should be asked of Lowe is, what evidencedoes he have that the audit team is NOT checking for reasonableness and competitiveness?A simple phone call by Mr. Lowe could have better enlightened him about the process being undertaken. Instead, he seeks refuge in platitudes and trite statements that undermine the seriousness of his comments.
Regarding Christopher Ram, it is common knowledge that Chris was part of the local consortium team which was formed to conduct the audit of Exxon Mobil. I think it only fair for Kaieteur news to ask the noble Chris why he withdrew from the consortium.
At any rate here is Ram’s, straw man taken directly from the article entitled -”Guyana headingdown a dangerous road if auditors think they must merely check Exxon’s bills”.
The article goes on to state”Chartered Account Christopher Ram believes that Guyana is on a dangerous path if auditors believe that they are merely required to check United States (U.S.) oil giant ExxonMobil’s expenses to verify some US $7.3B in expenditure for the period 2018-2020. Notice the placement of the word “if” in Ram’s stated premise. It means the entire argument is conditional. It is based on a condition that may or may not exist. In other words, it’s a straw man
Further, how does Ram know what the auditors believe? As far as I know, we have never discussed our approach and methodology privately with Ram or publicly. Ram continues “Mr. Haynes is dead right about the audit being undertaken under the PSA but is totally wrong about the scope of the audit. It is not only about costs but about the entire financial operations of the 2016 Agreement.
On this point, there is a clear difference in interpretation. I do not believe that the scope of the audit encompasses the entire financial operations of the 2016 Agreement as stated by Mr. Ram
Editor I end on this note.The approach and methodology of the audit have never been discussed publicly; the draft report or the audit findings have not beenreleased; therefore,let’s all takea deep breath, keep our powder dry, and wait to have a meaningful exchange after the audit report is released.
Floyd Haynes
Certified Fraud Examiner

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