MMA/ADA bought 14 vehicles without authorisation

Forensic audit

he Mahaica-Mahaicony-Abary/Agriculture Development Authority (MMA/ADA) has been operating without adhering to the policies and good practices, purchasing over a dozen vehicles without any authorisation, according to a forensic audit report.

The auditor, TSD Lal and Company, noted while the entity does not have a code or policy on good corporate governance, authority failed to comply with certain areas of the MMA-ADA’s Act. “Policies and good practices were lacking in areas of asset management, inventory management, fuel consumption, lease distribution, rental of premises, etc,” the report added.

In fact, it was pointed out that, “instances were found where vehicles were purchased but no authorisation was seen in the budget or minutes of the meetings of Board members.” This was in reference to the purchase of four vehicles in 2012 and another 10 vehicles in 2013, with no appropriate authorisation.

Moreover, the auditors found that the MMA-ADA’s asset management needs improvement. “Registers were not kept up to date, assets were disposed of with no documented evidence, vehicles were crashed with no proper investigation being done or staff being penalised,” they noted.

The latter case is in relation to the authority’s “Mechanical Manager”, Shilendra Singh, being assigned motor vehicle PSS 2052 which crashed and was extensively damaged. However, no report was forwarded to the Board of Directors and no disciplinary action has been taken to date, as well as no rectification had been done to the vehicle.

According to the auditing company, the Authority may have to bear the cost of replacing/repairing the vehicle; as such, the auditor recommended that all assets should be properly safe-guarded and in the event of an accident and a full investigation and follow up action be undertaken promptly.

On this note, it was also observed that the assets register was not up to date and instances were found where serial numbers, location of assets, assets numbers or labels were missing. Additionally, assets were being transferred between MMA-ADA and the Agriculture Ministry and other Ministries without proper documents or correspondence being sent.

This was highlighted in the case where it was discovered that the Hydromet Office had purchased and stored fuel valued $19,865,486 at MMA locations and the MMA utilised the fuel with no documented authorisation but had reimbursed Hydromet with a vehicle (PRR 2131) costing $8,060,580 in full settlement of this expense.

The auditor pointed out that there was no approval of this transaction even though it was noted that this was a one-off incident. However, the report added too that the fuel may have been misappropriated and so a recommendation was made for inter-authority transactions to have proper approval from relevant authority.

In relation to fuel consumption for the period January 2012 to May 2015, the auditors found that a total of $43,195,943 was spent on vehicles on MMA/ADA assets register, while some 23,982,000 for vehicles not on the MMA/ADA assets register.

TSD Lal and Company believes that the funds for fuel consumed may have been misappropriated and expenses overstated. It was recommended that the Authority should only provide fuel to vehicles that have been approved by the Board of Directors.

This brings the issue of “expenses” to the fore. The auditors noted that MMA/ADA operates a cash basis of accounting, with all revenues collected documented and banked subsequently. In many of the cases, payments were without the relevant documents, such as invoices or quotations being prepared to support the payments as well as payments being made without the relevant authorisation.

One instance was outlined whereby a payment of $3 million was incurred by the authority to one Adesh Rampratop for repairs to motor vehicle PRR 7716, a vehicle designated to former Agriculture Minister, Dr Leslie Ramsammy, and which was not part of the MMA/ADA’s fixed assets register.

“The Authority incurred expenses not belonging to it,” the auditors noted, while recommending that “only goods or services procured for the benefit of the Authority should be paid for.”

Furthermore, the auditing company detailed in the report that there was a strong possibility that the Authority may be losing revenue because of under-valuations of rental property, minimal rent charges and not collecting fees in relation to drainage and irrigation services.

As it relates to rentals, the auditors noted that the Authority did not update the files for tenants regularly and instances were found where agreements were missing. Additionally, it was stated that many agreements that expired were not renewed.

“This may affect the Authority’s claim to rental of these premises. Additionally, it indicated a breakdown of the system of internal controls… For every premise rented, there must be a signed copy of the rental agreement in relation to the premise. Also, the agreement must be updated and filed securely,” the auditors stated.

Moreover, it was disclosed that rent to the tune of $35 million was receivable (owed) and upon investigation, many of the amounts were found to be over one year. This, the auditors said, indicates that the Authority may not be able to recover some of this rent and cast doubt on the ability of the entity to collect moneys from tenants. It was recommended that legal action be taken to recover these amounts.