Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697639243094.pdf (Bahamas)
DEPARTMENT OF THE AUDITOR GENERAL P. O.

BOX N-3027 NASSAU, BAHAMAS Phone Nos.

242-322-2521/323-8939/326-6015 Fax Number.

242-322-6420 Reference No…………………………… DAG/T.3/2013/219 The Honourable Speaker Mr. Kendal Major House of Assembly Nassau, Bahamas Dear Sir: May 21, 2015 In accordance with Article 136(4) of The Constitution of The Commonwealth of The Bahamas, I have the honour to submit my report on the audit of the accounts of The Government of The Bahamas for the year ended June 30, 2013.
Sincerely, _____________________ Terrance S. Bastian (Mr.) Auditor General TSB/slt-h _____________________________________________________________________ Report of the Auditor General 2012-2013 2 _____________________________________________________________________ Report of the Auditor General 2012-2013 3 _____________________________________________________________________ Report of the Auditor General 2012-2013 4 ACKNOWLEDGEMENT AND APPRECIATION Special thanks are extended to staff members of the Office of the Auditor General (OAG) for their dedication to duty and loyalty during the year.
As a result of their efforts and commitment, the Auditor General was able to fulfill his statutory obligation.

Sincere thanks and appreciation is also extended to all persons in the various Ministries and Departments for their co-operation and courtesies extended to the Auditor General and staff.
Appreciation also goes to The Caribbean Organization of Supreme Audit Institutions (CAROSAI), the INTOSAI Development Initiative (IDI) and The Bahamas Public Service Training Centre for their respective assistance in the further training of our staff.

_____________________________________________________________________ Report of the Auditor General 2012-2013 5 AUDITOR GENERAL’S CONCERN 1.

The following issues remained a concern to the Office of the Auditor General.

Staffing 2.
Staffing 2.

The Office of the Auditor General continues to operate with minimal staff.

A number of staff has retired and there has not been any replacement.

3.

With the increase in Government operations to approximately $1.8 Billion, there is a great need to increase and up-grade staff.

Access to Audit Information 4. information/documents within A matter of concern exists in regards to obtaining access to some government audit departments/ministries.
Some Pubic Officials appeared unaware of the provision of the Financial Administration and Audit Act, which entitles the Office of the Auditor General (OAG) to have access to all books, records, returns and reports related to Government accounts.

As a result, the work of the OAG was impeded in some cases due to the lack of co- operation by Officials of various Ministries and Departments.

Public Accountability 5.

6.


Some public offices are not being held accountable for their actions, which result in loss or wastage of government funds.

The belief of public accountability is generally construed as the obligation to answer for the discharge of responsibilities entrusted When accountability is present, an organization operates more officials/workers.
government to _____________________________________________________________________ Report of the Auditor General 2012-2013 6 efficiently, effectively and economically.

In addition, the environment is more conducive to positive growth.
Implementing on Integrated Financial Management Information System (IFMIS) 7. improve governance by providing A fully functioning Integrated Financial Management System (IFMIS) can real-time financial information that financial and other managers can use to administer programs effectively, formulate budgets, and manage the government gain effective control over their finances and also enhance transparency and accountability, reducing political discretion and acting as a deterrent to corruption and fraud.
IFMIS can help resources.

Sound 8.

Implementing successful IFMIS is paved with difficulties, such as resistance from the bureaucracies involved; and lack of decision-making from the top level civil servants.

Understanding IFMIS 9. information system (IFMIS), A financial management information system, or integrated financial management is an information system that tracks financial events and summarizes financial information.
In its basic form, an IFMIS is little more than an accounting system configured to operate according to the needs and specifications of the environment in which it is installed.

10.

Generally, the term “IFMIS” refers to the use of information and communications technology in financial operations to support management and budget decisions, fiduciary responsibilities, and the preparation of financial reports and statements.
In the government realm, IFMIS refers more specifically to the financial management (PFM) computerization of public to processes, accounting and reporting, with the help of an integrated from budget preparation and execution _____________________________________________________________________ Report of the Auditor General 2012-2013 7 system for financial management of line ministries, spending agencies and other public sector operations.

What It Does 11.
What It Does 11.

An IFMIS stores, organizes and makes access to financial information easy.

It not only stores all the financial information relating to current and past years’ spending, but also stores the approved budgets for these years, details on inflows and outflows of funds, as well as complete inventories of financial asset (e.g., equipment, land and buildings) and liabilities (debt).

12.
A more comprehensive, well integrated system will: Provide timely, accurate, and consistent data for management and budget decision-making; Support government-wide as well as agency-level policy decisions; Integrate budget and budget execution data, allowing greater financial control and reducing opportunities for discretion in the use of public funds; Provide information for budget planning, analysis and government-wide reporting Facilitate financial statement preparation; and Provide a complete audit trail to facilitate audits.
13.

By recording information into an integrated system that uses common values, IFMIS users can access the system and extract the specific information they require to carry out different functions and tasks.
All manner of reports can be generated; balance sheets, sources and uses of funds, cost reports, returns on investment, aging of receivables and payables, cash flow projections, budget variances, and _____________________________________________________________________ Report of the Auditor General 2012-2013 8 performance reports of all types.

Some systems have libraries consisting of hundreds of standard reports.
Managers can use this information for a variety of purposes: to plan and formulate budgets; examine results against budgets and plans; manage cash balances; track the status of debts and receivable; monitor the use of fixed assets; monitor the performance of specific departments or units; and make revisions and adjustments as necessary _____________________________________________________________________ Report of the Auditor General 2012-2013 9 _____________________________________________________________________ Report of the Auditor General 2012-2013 10 Report of the Auditor General Table of Contents PART I PART I PART I PART I LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL ACKNOWLEDGEMENT AND APPRECIATION ACKNOWLEDGEMENT AND APPRECIATION ACKNOWLEDGEMENT AND APPRECIATION ACKNOWLEDGEMENT AND APPRECIATION AUDITOR GENERAL’S CONCERN AUDITOR GENERAL’S CONCERN AUDITOR GENERAL’S CONCERN AUDITOR GENERAL’S CONCERN SECTIONS SECTIONS SECTIONS SECTIONS SECTION ONE SECTION ONE SECTION ONE SECTION ONE PAGE NOS.
PAGE NOS.

PAGE NOS.

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ons……………………………………………….

Constitutional Provisions……………………………………………….

Constitutional Provisi ons……………………………………………….

ons……………………………………………….
Constitutional Provisi Constitutional Provisi 11113333 SECTION TWO SECTION TWO SECTION TWO SECTION TWO nt Accounting Policies…… Audit approach and Significant Accounting Policies…… Audit approach and Significa nt Accounting Policies…… nt Accounting Policies…… Audit approach and Significa Audit approach and Significa 17171717 SECTION THREE SECTION THREE SECTION THREE SECTION THREE sonnel………………………………………… Administration and Personnel………………………………………… Administration and Per sonnel………………………………………… sonnel………………………………………… Administration and Per Administration and Per 21212121 SECTION F SECTION FOUROUROUROUR SECTION F SECTION F its………………………………………………………………….
ign Audits………………………………………………………………….

Foreign Aud Fore its………………………………………………………………….

its………………………………………………………………….
ign Aud ign Aud ForeFore 29292929 SECTION FIVE SECTION FIVE SECTION FIVE SECTION FIVE ………………………………………………………………… Confiscated Assets………………………………………………… Confiscated Assets……………… ………………………………… ………………………………… Confiscated Assets……………… Confiscated Assets……………… 35353535 SECTION SIX SECTION SIX SECTION SIX SECTION SIX ative Programme……………………………….. 52 Weeks Job Initiative Programme……………………………….. 52 Weeks Job Initi ative Programme……………………………….. ative Programme……………………………….. 52 Weeks Job Initi 52 Weeks Job Initi 39393939 SECTION SEVEN SECTION SEVEN SECTION SEVEN SECTION SEVEN ………………………………………… Revenue & Expenditure Audits………………………………………… Revenue & Expenditure Audits ………………………………………… ………………………………………… Revenue & Expenditure Audits Revenue & Expenditure Audits 57575757 SECTION EIGHT SECTION EIGHT SECTION EIGHT SECTION EIGHT ms Department………………………………………………… amas Customs Department……………………………………… BahBahBahBahamas Custo ms Department……………………………………… ms Department……………………………………… amas Custo amas Custo 85858585 SECTION NINE SECTION NINE SECTION NINE SECTION NINE partment..………………………………………………… Post Office Department..………………………………………………… Post Office De partment..………………………………………………… partment..………………………………………………… Post Office De Post Office De 93939393 SECTION TEN SECTION TEN SECTION TEN SECTION TEN ……………………………………………………………………….
Pension……………………………………………………………………………….

Pension……… ……………………………………………………………………….

……………………………………………………………………….
Pension……… Pension……… 99999999 SECTION ELEVEN SECTION ELEVEN SECTION ELEVEN SECTION ELEVEN Freeport…………………………………………………………………………… Freeport…………………………………………………………………………… Freeport…………………………………………………………………………… Freeport…………………………………………………………………………… 103103103103 SECTION TWELVE SECTION TWELVE SECTION TWELVE SECTION TWELVE nds…………………………………………………………………… Family Islands…………………………………………………………………… Family Isla nds…………………………………………………………………… nds…………………………………………………………………… Family Isla Family Isla SECTION THIRTEEN THIRTEEN SECTION THIRTEEN THIRTEEN SECTION SECTION Accounts………………………………………………… Treasury Finallll Accounts………………………………………………… Treasury Fina Accounts………………………………………………… Accounts………………………………………………… Treasury Fina Treasury Fina 107107107107 113113113113 ………………………………………………… Audit Certificate……………………………………………………………… Audit Certificate…………… ………………………………………………… ………………………………………………… Audit Certificate…………… Audit Certificate…………… 119119119119 _____________________________________________________________________ Report of the Auditor General 2012-2013 11 Report of the Auditor General Table of Contents ANNEX PART II Balance Sheet – Consolidated Fund...……….……………………….. Annex 1 Statement of Revenue & Expenditure…………….…………………… Annex 2 Statement of Cash Flow………………………………………………….. Annex 3 Statement of Consolidated Fund (Current Account)..….………… Annex 4 Statement of Consolidated Fund (Capital Account)..…………… Annex 5 Notes to the Financial Statements…………………………………..… Annex 6 Statement of Public Debt……………………………………………….
Annex 7 Graphs of Revenue & Expenditure…………………………………… Annex 8 Statement of Financial Assets & Current Liabilities – (Deposit Fund Account)……………………………………………….. Annex 9 Schedule of Cash Movement in Deposit Fund by Account Categories………………………………………………………………… Annex 10 Statement of Contingent Liabilities………………………………….. Annex 11 _____________________________________________________________________ Report of the Auditor General 2012-2013 12 Constitutional Provisions Constitutional Provisions Constitutional Provisions Constitutional Provisions _____________________________________________________________________ Report of the Auditor General 2012-2013 13 Chapter 1 Chapter 1 Chapter 1 Chapter 1 _____________________________________________________________________ Report of the Auditor General 2012-2013 14 SECTION ONE CONSTITUTIONAL PROVISIONS Establishment of Office: 1.01 Article 136(1) of The Constitution states: “There shall be an Auditor General whose office shall be a public office.” Mandate: 1.02 Article 136(3) of The Constitution provides: “The accounts of the supreme Court, the Senate, the House of Assembly, all departments and offices of the Government (but excluding the Department of the Auditor General), the Public Service Commission, the Judicial and Legal Service Commission, the Police Service Commission and all Magistrates’ courts shall, at least once in every year, be audited and reported on by the Auditor General who, with his subordinate staff, shall at all times be entitled to have access to all books,
 records, returns and reports relating to such accounts.” Reporting: 1.03 Article 136(4) of The Constitution states: “The Auditor General shall submit his reports under paragraph (3) of this Article without undue delay to the Speaker (or, if the office of Speaker is vacant or the Speaker is for any reason unable to perform the functions of his office, to the Deputy Speaker) who shall cause _____________________________________________________________________ Report of the Auditor General 2012-2013 15 them to be laid before the House of Assembly without undue delay.” Independence: 1.04 Article 136(5) of The Constitution provides: “In the exercise of his functions under the provisions of paragraphs (3) and (4) of this Article, the Auditor General shall not be subject to the direction or control of any other person or authority.” _____________________________________________________________________ Report of the Auditor General 2012-2013 16 Audit Approach & Significant Audit Approach & Significant Audit Approach & Significant Audit Approach & Significant Accounting Policies Accounting Policies Accounting Policies Accounting Policies _____________________________________________________________________ Report of the Auditor General 2012-2013 17 Chapter 2 Chapter 2 Chapter 2 Chapter 2 _____________________________________________________________________ Report of the Auditor General 2012-2013 18 SECTION TWO AUDIT APPROACH & SIGNIFICANT ACCOUNTING POLICIES Audit Approach
 2.01 2.02 In order to express a professional opinion on the financial statements of the Government of the Commonwealth of The Bahamas, audits are carried out in accordance with and Generally International Standards of Auditing and each audit is designed to provide assurance as to the propriety of the Government’s financial transactions and the accuracy of its accounting records.
Accepted Standards Auditing The audit of all Ministries and Departments includes a general review of the accounting procedures and systems of internal control, together with such tests of the records and supporting documents as are considered necessary.

regulations, Compliance with statutes, directives and administrative requirements is also tested.

Summary of Significant Accounting Policies 2.03 2.04 Financial statements are prepared on the modified cash basis of accounting.
The modified cash basis of accounting combines elements of the two major accounting methods, the cash method and the accrual method.

The cash method recognizes income when it is received and expenses when they are paid for, whereas the accrual method recognizes income when it is earned and expenses when they are incurred.
_____________________________________________________________________ Report of the Auditor General 2012-2013 19 2.05 2.06 2.07 2.08 The recording of government transactions fall into three main categories – Recurrent Revenue, Recurrent Expenditure and Capital Expenditure.

Liabilities are recognized in the form of Advances, Treasury Bills and proceeds from Loans and are recorded issued.

at the face value of the debt Discounts, commission and other related expenses are treated as period costs.
The general resources of the Consolidated Fund are used for the retirement of debt with only two Sinking Funds (Harcourt Malcolm Loan and the $50m Stock Issure 1997 – 2005) being maintained.

instrument Contingent liabilities of the Government consist of guarantees by the Government in respect of loans raised by Government-owned from Corporations.

sources private A non-contributory pension plan covering all public officers is provided by the Government in accordance with the Pension Act and its amendments.
_____________________________________________________________________ Report of the Auditor General 2012-2013 20 Administration & Personnel Administration & Personnel Administration & Personnel Administration & Personnel _____________________________________________________________________ Report of the Auditor General 2012-2013 21 Chapter 3 Chapter 3 Chapter 3 Chapter 3 _____________________________________________________________________ Report of the Auditor General 2012-2013 22 SECTION THREE ADMINISTRATION & PERSONNEL 3.01 The fiscal year 2012/2013 heralded the eighty-eighth (88th) year of the existence and operation of the Office of the Auditor General in executing its mandate as stipulated in Article 136 of the Constitution of The Bahamas Acting Appointment 3.02 Mr. Roger Forbes Mrs. Portia Barnett Mrs. Portia Barnett Mr. Roger Forbes Mr. Roger Forbes Mr. Roger Forbes Ms. Carolyn Patton Mrs. Portia Barnett - - - - - - - - Acted as Auditor General for the period July 16 – August 4, 2012.
Acted as Auditor General for the Period August 12 – 18 August, 2012.

Acted as Auditor General for the period August 20 – September 14, 2012.

Acted as Auditor General for the period November 4 - 10, 2012.

Acted as Auditor General for the period November, 18 – 24, 2012.

Acted as Auditor General for the period December 5 – 6, 2012.

Acted as Auditor General for the period March 16 - 22, 2013.

Acted as Auditor General for the period April 2 - 5, 2013.
Ms. Carolyn Patton - Acted as Auditor General for the _____________________________________________________________________ Report of the Auditor General 2012-2013 23 period April 23 - 27, 2013.

Mrs. Portia Barnett Mrs. Portia Barnett - - Acted as Auditor General for the period May 14 - 18, 2013.

Acted as Auditor General for the period June 2 - 5, 2013.
Retired 3.03 Christine Outten - Retired from the Public Service as an Assistant Accounting & Audit Officer from December 30, 2012. effect with Lawrence Paul Accounting & Audit Officer IV Cynthia Rolle Deputy Auditor General - - Retired from the Public Service with effect from December, 30 2012.

Retired from the Public Service with effect from February 4, 2013.
Unpaid Leave 3.04 John Pinder - Accounting & Audit Officer Unpaid Leave with effect from October 2002 as President of The Bahamas Public Service Union.
Local Training Administered To Staff During the Year 3.05 Constitution Reform - National Insurance Policies - On Industrial Injuries and Pension Training Body/Trainer Bahamas Public Services Union Bahamas Public Services Union _____________________________________________________________________ Report of the Auditor General 2012-2013 24 Building an Enterprise Approach to Risk Governance & IT.
Mitigating Risk, Support Development & Ensuring Accountability 3.06 International Meetings CARICOM Audit Committee Meeting of External Auditors 63rd Meeting of INTOSAI Governing Board IX Congress of CAROSAI General Conference CARTAC –Internal Audit & Controls - - - - - - Sixth Meeting of CARICOM - Secretariat Audit Committee Institute of Internal Auditors Risks Bahamas Chapter Bahamas Institute of Chartered Accountants Training Body/Trainer CARICOM Audit Committee Georgetown, Guyana International Organization of Supreme Audit Institutions (INTOSAI) Chengdu, China Caribbean Organization of Supreme Audit Institutions (CAROSAI) Trinidad Caribbean Regional & Technical Assistance Centre (CARTAC) St. Kitts & Nevis Caribbean Regional & Technical Assistance Centre (CARTAC) Georgetown, Guyana International Workshop on Public Financial Management - Inter-American Development IFMIS Coordinators Washington, DC Bank, for _____________________________________________________________________ Report of the Auditor General 2012-2013 25 3.07 The Office of the Auditor General’s staff composition as at June 30, 2013 is as follows: Number of Staff Authorized Vacancy Post Administration Auditor General Sr. Deputy Auditor General Deputy Auditor General Assistant Auditor General Audit Accounting & Audit Officer II Accounting & Audit Officer III Accounting & Audit Officer IV Assistant Accounting & Audit Officer Trainee Accounting & Audit Officer Chief Audit Clerk Chief Clerk Senior Audit Clerk Senior Clerk Support Staff Executive
 Officer Office Manager III Janitress Total 45 78 0 1 0 1 0 5 8 5 11 2 -1 1 1 -1 0 0 33 _____________________________________________________________________ Report of the Auditor General 2012-2013 26 3.08 Total expenditure for the fiscal year ended June 30, 2013 compared with expenditure for 2011/2012 are as follows: 2012/2013 Estimated Expenditure 2012/2013 Actual Expenditure 2011/2012 Actual Expenditure Personal Emoluments/Allowances $ 1,705,348.00 $ 1,595,902.00 $ 1,698,024.00 Other Charges $ 224,392.00 $ 163,612.00 $ 183,058.00 Items Not Repeated $ 85,888.00 $ 51,782.00 $ 53,415.00 Total $ 2,015,628.00 $ 1,811,296.00 $ 1,934,497.00 _____________________________________________________________________ Report of the Auditor General 2012-2013 27 2012/2013 Actual Expenditure Items Not Repeated 6% Other Charges 9% Personal Emoluments/Allowances 85% Personal Emoluments/Allowances Other Charges Items Not Repeated 3.09 At the end of the fiscal year, the compliment of staff members were as follows: Districts Exuma New Providence Grand Bahama Eleuthera Abaco Total Nos.
2 30 7 3 2 45 % 5 67 16 7 5 100% _____________________________________________________________________ Report of the Auditor General 2012-2013 28 Regional Staff Assignment Eleuthera 7% Abaco 5% Exuma 5% Grand Bahama 16% New Providence 67% Exuma New Providence Grand Bahama Eleuthera Abaco Foreign Audits Foreign Audits Foreign Audits Foreign Audits _____________________________________________________________________ Report of the Auditor General 2012-2013 29 Chapter 4 Chapter 4 Chapter 4 Chapter 4 _____________________________________________________________________ Report of the Auditor General 2012-2013 30 SECTION FOUR FOREIGN AUDITS THE BAHAMAS EMBASSY Havana, Cuba 4.01 The audit on the Commonwealth of The Bahamas, Havana, Cuba was conducted during the week of August 6, 2013. the accounts of the Embassy of 4.02 The Ambassador Alma Adams assumed office in January 2013.
The former Ambassador Vernon Burrows demitted office in August 2012.

The office in the interim was administered by the First Secretary/Consul and Head of Chancery Mr. Eugene Newry for the period September 2012 to December 2012.

_____________________________________________________________________ Report of the Auditor General 2012-2013 31 4.03 The staff complement at the time was twenty-six (26), consisting of four (4) Bahamians and twenty-two (22) locally employed persons.
It was noted that twelve (12) employees were hired through the Cuban Employment Agency and ten (10) were hired directly by the Embassy.

Some of these employees are on the shift system, and they facilitate the Embassy and the Ambassador’s Residence.

4.04 The Embassy maintains two (2) bank accounts; namely Revenue Account and Operational Account (CUC).

Two (2) authorized signatures are necessary for the processing of cheques.
4.05 Revenue is collected from three (3) main sources: visas, passports and legalization of documents.

The records show that revenue collected and remitted to Ministry of Foreign Affairs (MFA) headquarters during the fiscal year 2011 to 2012 showed an increase of 1.8% while the fiscal year 2012 to 2013 showed a decrease of 23.55%.

4.06 The ability of the Embassy to withdraw US dollars from the US$ Revenue Account was discontinued 2013.
The reason for the decision was not seen in the documentation on the banking file.

As a result of this, the Embassy is presented with the challenge to remit revenue in the appropriate currency to the MFA for deposit into the Consolidated Fund.

Presently, the Embassy utilizes a method that is unconventional to remit revenue for deposit into the Consolidated Fund.

This matter needs to be addressed by the Ministry with urgency.

4.07 A fire occurred at the Ambassador’s Residence on August 9, 2013.
An inspection was carried out on August 10, 2013 and it was discovered that the fire and smoke had significantly damaged the maid’s quarters inclusive of the bathroom and the adjoining garage.

Remittance of Revenue _____________________________________________________________________ Report of the Auditor General 2012-2013 32 4.08 During our audit of revenue records, we noted that revenue was allowed to accumulate for an inordinate period.
These funds related to revenue collected for consular services provided since the Embassy was established.

4.09 Further, all the source documents were not available to verify the revenue.

4.10 We recommended to accumulate for such inordinate periods before being remitted to MFA.

revenue not be allowed that Wire Transfers 4.11 While tracing the wire transfers to the underlying accounting records, we noted that funds wired to the Embassy are facilitated through our High Commission Office in Canada.
The service charges and exchange fees are exorbitant.

As a result, the value of the transfer for the deposit to the Operational Account from the MFA is lessened significantly.

The fiscal period under review shows that the total transferred to was $621,079.60 and $18,217.62; hence the net deposit was $602,861.98.
total charges amounted the 4.12 We recommended that the budget allocation for the Embassy take into consideration the variances in amounts remitted for operational expenses as a result of service charges and exchange fees.

Further, management should address the method utilized in remitting of funds for the operational account, so as to minimize the cost involved.
Entertainment Allowance 4.13 The issue of entertainment allowance still remains a “grey” area and there are no formalized guidelines to distinguish official from personal entertainment.

Diplomatic officers receive entertainment allowance on a quarterly basis from the mission upon authorization from the Ministry of Foreign Affairs.
_____________________________________________________________________ Report of the Auditor General 2012-2013 33 As result of our review of these expenses we relied on the integrity of the officers concerned.

4.14 We recommended that the MFA specify guidelines that would facilitate the auditing process of the entertainment allowance and the accounting of expenditure for the same.

Maintenance of Buildings 4.15 The Embassy office and official residence is rented from Grupo Palco.
The lease agreement (contract) for the office and residence expired on June 30, 2013.

We requested a copy of the new lease agreement, but none was provided at the time of the review.

We were informed that major repairs to the office and residence are the responsibility of Grupo Palco (Landlord).

Every year there is a 3% rent increase for the Embassy and Residence.

Insurance 4.16 Currently, the furniture and other assets at the Embassy and residence are not insured against fire, flood or theft.
4.17 We recommended that management address the issue of insurance coverage for the furniture and other assets at the Embassy and Residence as a matter or urgency.

Security 4.18 We observed during our audit that cameras at The Bahamas Embassy are installed but were not operational at the time of _____________________________________________________________________ Report of the Auditor General 2012-2013 34 our audit.

We view the security at the Embassy with great concern.
4.19 We recommended that measures be taken to strengthen the security at the Embassy to include a Bahamian male from the armed forces.
Confiscated Assets Confiscated Assets Confiscated Assets Confiscated Assets _____________________________________________________________________ Report of the Auditor General 2012-2013 35 Chapter 5 Chapter 5 Chapter 5 Chapter 5 _____________________________________________________________________ Report of the Auditor General 2012-2013 36 SECTION FIVE CONFISCATED ASSETS 5.01 In our opinion, the Confiscated Assets Fund is being operated in accordance with the Proceeds of Crime Act 2000, the Financial Administration and Audit Act 1973/2010, and the Financial Regulations 1975; and that the statements of accounts present fairly, and in all material respects, the financial position of the Fund as at June 30, 2013.
The balance of the Fund as at June 30, 2013 was $1,478,334.00.
_____________________________________________________________________ Report of the Auditor General 2012-2013 37 _____________________________________________________________________ Report of the Auditor General 2012-2013 38 52 Weeks Job 52 Weeks Job 52 Weeks Job 52 Weeks Job Initiative Programme Initiative Programme Initiative Programme Initiative Programme _____________________________________________________________________ Report of the Auditor General 2012-2013 39 Chapter 6 Chapter 6 Chapter 6 Chapter 6 _____________________________________________________________________ Report of the Auditor General 2012-2013 40 SECTION SIX 52 WEEKS JOB INITIATIVE PROGRAMME 6.01 In the Bahamas as elsewhere in the world, governments are economically challenged to stimulate their economies, to be seen to be more responsive to the needs of its citizenry and to provide opportunities to address unemployment.
6.02 Cabinet Conclusion ICO (27) (11) 17 dated July 5, 2011 approved the establishment of a National Job Readiness and Training Programme to address these concerns and invited the Ministers of Labour and Social Development, and Youth, Sports and Culture along with the Minister of State in the Ministry of Finance, to launch the programme in July 2011.
6.03 This initiative was designed and geared towards providing unemployed persons with the job exposure, experience and _____________________________________________________________________ Report of the Auditor General 2012-2013 41 skills development for a period not to exceed fifty-two (52) weeks.

To this end, a Job Readiness Unit was established in the Ministry of Finance, which assumed direct oversight for the entire programme.
6.04 Over sixteen thousand (16,000) persons throughout The Bahamas enrolled in the programme and four thousand one hundred (4,100) persons were selected to participate.

The programme commenced in New Providence in September 2011.

However, the first Family Island group started October 2011 in Grand Bahama, followed by Abaco and subsequently in the other islands.

6.05 The Ministry of Finance in Grand Bahama initially managed the programme.
The Office of the Prime Minister in Grand Bahama eventually assigned the management of the initiative to the Ministry of Grand Bahama.

The programme in the other Family Islands was managed by the Island Administrators with the exception of Exuma where the Ministry of Finance (Exuma Office) managed the initiative.
6.06 Participants received a weekly stipend of Two Hundred and Ten dollars ($210.00) with the exception of entrants from the Bahamas Technical and Vocational Institute (BTVI) who received a weekly stipend of One Hundred and Fifty dollars ($150.00).

6.07 The programme ended in Grand Bahama on April 5, 2013 and in New Providence on April 12, 2013 at the Public Hospital Authority (PHA).
6.08 As a result of the programme, two hundred thirty nine (239) persons were permanently hired by companies where they were engaged.

Financial Allocation 6.09 The overall programme funding was $48 million and was allotted as follows: _____________________________________________________________________ Report of the Auditor General 2012-2013 42 (i) $25 million provided in the 2011/2012 budget and supplementary funding of $23 million approved in June 2012.
Programme Enrollment 6.10 We noted that the Ministry of Finance maintained a database of persons engaged in New Providence only.

This file provided the names of persons employed, place of employment, assigned group and their positions.

We were not provided with a compiled listing of all participants engaged in New Providence, Grand Bahama and the Family Islands.
6.11 For future initiatives, we recommended that a single database be compiled of persons who participated in the programme along with a complete profile that should also include the personal details, national insurance number, qualifications, special skills and duration in the programme for appropriate evaluation.

Response – Ministry of Finance (MOF) 6.12 “With respect to “not being provided with a complied listing of all participants engaged in New Providence”.
The complete listing of participants for New Providence managed by the Budget Unit was previously issued dated February 28, 2013.

Also attached is a recently received listing for Public Hospital Authority.

We have requested a complete listing from the Ministry and the Department of Education to date we are not in receipt of the same.” 6.13 The auditors confirmed receipt of the listing as indicated above for New Providence only.
Family Islands _____________________________________________________________________ Report of the Auditor General 2012-2013 43 Berry Islands 6.14 During the course of the audit examination, it was observed that a voucher/cheque in the amount of $65,386.44 was processed in the name of an officer from the Ministry of Finance.

6.15 We discovered that this cheque was issued for the Job Readiness Programme in the Berry Islands and a review of the GL System confirmed the same.
The Ministry advised that participants in that community were not paid for six (6) weeks and the Administrator at the time was not available to issue cheques for the period concerned.

In light of the above situation, a cheque was issued by the Treasury Department in the officer’s name and subsequently cashed by the officer.

Payments were made by personnel from the Ministry of Finance directly to participants in the Berry Islands.
6.16 For future programmes when transactions of the above nature that adequate are undertaken, documentation be maintained to ensure transparency; and that disbursement of funds are remitted by the Treasury Department directly to the Family Island District and not in an officer’s name.
recommended is it Response – MOF General Comment – Family Islands 6.17 “I was as it was put “exclusively” responsible for advising the Treasury Department and the Family Islands Administrators of the amounts of persons to be hired under the job initiative programme for each Family Island.

The Treasury would have also received instructions on the amounts provided for salaries of for NIB contributions.
This information was also conveyed to each the Family employment contract was also provided to each Administrator.

the amount provided Island Administrator.

these persons and sample copy of A _____________________________________________________________________ Report of the Auditor General 2012-2013 44 6.18 The Administrators were “exclusively” responsible for the selection and placement of the participants.

I might add that this was the same process used during the six month job initiative programme”.
6.19 6.20 Cat Island In the Cat Island District, it was observed that in some instances, salaries were paid via direct bank deposits at the Bank of the Bahamas in Cat Island.

In other instances, salaries were paid by way of individual cheques.

However, we also noted that salaries were paid directly to the Administrator on behalf of the employees.

sub-vouchers It was further observed that these payment vouchers made reference to the ‘attached sub-voucher’.
However, the required that employees received their salaries) were not attached.

We requested the same but we were advised that they could not be found.

As a result, we could not verify the payments made to the participants.
signatures verifying (with 6.21 In an effort to promote transparency and accountability, we recommended that the Administrator provide an explanation as to why it was necessary for the salaries to be made payable to the Administrator as apposed to the bank or directly to the individuals.

6.22 During the course of our audit, we reviewed payment vouchers which were paid for the supervision of the 52 Weeks Programme in Cat Island.
to supervise 6.23 The then Administrator explained that these persons were hired the programme.

the participants However, Ministry of Finance advised that the policies in place for New Providence also applied to the Family Islands and as such, no business entity was entitled to receive any payments.
in _____________________________________________________________________ Report of the Auditor General 2012-2013 45 6.24 For future initiatives such as this, it is recommended that standardized policies and procedures be establish in both New Providence and the Family Islands.

Response – MOF 6.25 “Administrators were provided the standard contract for employment.

When the instructions were sent out it was very specific as to the number of persons to be employed.
At no time did the Ministry of Finance authorize the hiring of companies” Eleuthera 6.26 In the North Eleuthera district, it was discovered that a participant enrolled in the programme but voluntarily left, as they obtained full employment with another company.

Their last day of employment was February 9, 2012; however, they continued to receive cheques for the period February to April 2012 which totaled $2,210.91.

6.27 They were formally requested to return the funds.
At the time of our audit there was no evidence that these funds were reimbursed.

6.28 We recommended that appropriate action be taken to have the outstanding amounts collected and brought to account and evidence be submitted to the auditors for scrutiny.

Grand Bahama 6.29 During our audit examination of the records: (a) We could not verify that the companies where the individuals were assigned were legitimate companies.
A high percentage of the time sheets had only a signature and no official company stamp.

_____________________________________________________________________ Report of the Auditor General 2012-2013 46 (b) No documentation was on file to verify that inspections were carried out by the Ministries responsible for the programme to ensure that participating companies were legitimate and participants worked for the hours paid.
6.30 We recommended that proper records be maintained, safeguarded and presented for audit inspection.

6.31 In addition, it is recommended for future programmes that surprise inspections are carried out to ensure legitimacy of companies and that those enrolled in the programme actually worked for the periods paid.

Response – MOF 6.32 “To the best of our knowledge the companies listed where individuals were assigned in New Providence were legitimate companies i.e.
emails, letterhead and contract information.

6.33 It was noted in the audit document that no official inspection was conducted.

While there was no legitimate inspection, the Budget Unit made every effort to maintain weekly contact with a large percentage of the companies.

In addition, the including: Audit Unit was provided with documents timesheets, terminations and resignation”.

6.34 The auditors were not provided with a listing of uncollected cheques returned to the Public Treasury for cancellation.
We could not confirm that the journal entries of returned cheques represented a complete listing.

_____________________________________________________________________ Report of the Auditor General 2012-2013 47 6.35 We recommended that a detailed listing of uncollected cheques be provided for audit scrutiny.

Response – Treasury Department 6.36 “The auditors were provided with a listing of uncollected cheques and the corresponding Journal Vouchers # 5 verifying that the funds were returned to account”.
6.37 The auditors confirmed receipt of the listing of uncollected cheques for New Providence.

However, our concern is related to Grand Bahama.

Abaco 6.38 In the Central Abaco district, it was discovered that forty five (45) participants were paid a total of $302,591.80 without the required employment contracts.

Neither the Administrator nor the Treasury Department had contracts for these persons.
6.39 We are therefore recommending that: (i) An explanation be provided to show how it was possible the for required/supporting employment contract; forty-five (45) persons to be paid without (ii) Evidence be provided to confirm that these persons actually worked for the periods presented.

Programme Monitoring – Family Islands 6.40 We noted that the Ministry of Finance conveyed instructions to the Public Treasury to transfer monies to the Family Islands districts based on their initial budget allocation.
These allocations were usually remitted in monthly installments.

The the overall auditors were unable to confirm whether _____________________________________________________________________ Report of the Auditor General 2012-2013 48 disbursements in those communities exceeded the approved allocations.

6.41 Additionally, the auditors observed that: (a) The Ministry of Finance did not require Administrators to submit monthly or quarterly expenditure reports.
(b) Up to the time of our audit examination, we were unable to confirm whether unused funds were returned to the Public Treasury; neither were we able to verify that overall total expended for the Family Islands districts.

We have requested the Ministry of Finance to provide the above information.

(c) for There were no clearly defined parameters programme monitoring in the Family Islands.
We noted that Administrators provided limited information on how the programme was administered in their communities and the initiative’s impact in their respective districts.

6.42 It is therefore recommended that: (a) (b) (c) For future initiatives, the responsible agency incorporate Island requirement as a programme Administrators submit periodic expenditure and progress reports.
that Family The Ministry provide a detailed account of the amounts expended and Treasury Department in each Family Island district where the job readiness programme was administered.

returned funds the to impact of The Ministry request Administrators to submit a report of the overall their communities, outlining the number of persons who as a received permanent initiative result of employment or acquired additional job skills.
this programme job the in _____________________________________________________________________ Report of the Auditor General 2012-2013 49 Internals Controls 6.43 Internal controls for the operation of the 52 Weeks Programme were severely deficient.

From the onset of the programme, the insufficiency and absence of key controls created an environment highly vulnerable to the occurrence of fraud.
6.44 We identified internal control weaknesses including: (a) (b) The Ministry of Finance did not undertake any onsite inspections of participating business entities to determine their legitimacy.

They did not verify whether business entities enrolled in the programme had a current business license or if their national insurance contributions were current.

This exposed the possibility that some entities were operating illegally and uncollected revenue may be due to the Government and the Board.
(c) The Ministry did not adequately maintain accounting records of the payments made and we were not provided with evidence that monthly expenditure reports and reconciliations were prepared.

(d) Although, expenditures relating to the job initiative were generally paid from item number 021-3191999-11, we observed instances where other items were used to pay commitments for the job initiative.
Tracking expenditures was a cumbersome exercise and as result this increased inaccurate the reporting and budgetary inefficiencies.

risk of understating expenditures, (e) The Budget Section at the Ministry assumed direct responsibility for managing the entire programme.

This responsibility coupled with the Sections existing duties and their inexperience in this area, made it more difficult for this Unit to efficiently and effectively execute this reality created the potential for assignment.
This _____________________________________________________________________ Report of the Auditor General 2012-2013 50 additional risks associated with manpower shortages, inadequate monitoring procedures and overall lack of independence in programme execution.

(f) There were no standardized operating procedures in place.

The Ministry did not provide Island Administrators and the programme coordinators in Grand Bahama with a procedural manual to be governed by.
We noted that there were no stated policies for sick or maternity leave.

It was observed that persons in New Providence were granted unpaid maternity leave.

The auditors were informed that this was not permitted in Grand Bahama.

These situations resulted in inconsistencies in managing the initiative.
6.45 Additionally, we observed the following concerns that significantly impacted the overall programme management: (A) Cancelled Cheques During our analysis of cancelled cheques Providence we noted that: in New (a) The total representing cancelled cheques was $1,383,831.20 which included amounts for the periods indicated below: 2011 / 2012 2012 / 2013 $594,734.09 $789,097.11 (b) Included in the period 2012/2013 was an amount for $155,797.32 representing cancelled cheques for the Teacher’s Aide Programme.
In reviewing the exchange of emails between personnel at the _____________________________________________________________________ Report of the Auditor General 2012-2013 51 Department of Education and the Ministry of Finance we noted that: (i) (ii) (iii) Some Aides had cancelled cheques representing 8, 12, 17, 18, 22, 23, 42, 43, 44, or 49 consecutive pay periods (weekly cheques).

Four (4) Aides each had cancelled cheques representing 50 consecutive pay periods.
It was further noted that no adjustments were made to the weekly payrolls for the pay periods concerned.

Response – MOF 6.46 “The following provides justifications for the large volume of cancelled cheques: 6.47 There was a delay in providing the Budget Unit with the attendance registers which outlines resignation, termination, sick leave and absenteeism from the participating companies.

Once the information was received immediate corrective measures was taken to make the necessary adjustments i.e.
cancelled cheques.

6.48 During the early stages of the programme, participants were employed almost immediately and cheques were prepared simultaneously.

As the programme progressed, the placement of participants became more challenging the decision was made to advise the Treasury Department to print cheques upon placement of participants.

Particular groups five and seven”.


Response – Treasury Department 6.49 “The Ministry of Finance informed us that all information pertaining to the Teachers Aides would be sent to us from the _____________________________________________________________________ Report of the Auditor General 2012-2013 52 We received completed Department of Education.

Spreadsheet every week with the participants’ names indicating that they were to be paid.
We were not aware that the Teacher’s Aides had either not reported to work or had missed several weeks.

This had only become known when the department of Education returned all the cheques at the end of the programme”.

B. Segregation of Duties 6.50 It was noted that little segregation of duties was maintained within the programme.
In New Providence, the Ministry was responsible for conveying weekly instructions to the Public Treasury for adjustments to the payroll with the exception to the components managed by the Bahamas Vocational Technical Institute (BTVI) and the Public Hospital Authority (PHA).

6.51 Weekly cheque distribution was managed within the Unit with the exception of cheques for Teacher’s Aide (issued by the Department of Education).
Uncollected cheques were retained by the Unit and then forwarded to the Treasury Department for cancellation.

These conditions in addition to creating potential opportunities for the occurrence of fraud resulted also in risk factors related to cheques issuance and crowd control.

It was noted that on a given Friday at the Ministry of Finance premises large numbers of persons convened to collect their cheques.
We also learnt that on Fridays at the Royal Bank of Canada in Freeport, bank personnel were overwhelmed with persons seeking to cash their weekly cheques, as there is only one branch in Grand Bahama.

The Bank recommended that persons be paid by direct salary deposit.
C. Direct Deposit - Salaries 6.52 When the programme commenced in September 2011, we noted that no arrangements were in place to implement _____________________________________________________________________ Report of the Auditor General 2012-2013 53 direct deposit.

We later observed in December 2011, that the Ministry of Finance communicated with Royal Bank and the necessary information was completed and submitted to the Treasury Department to institute direct deposit.
The Ministry informed the auditors that they forwarded to the Treasury Department the required documentation to commence direct deposit, but they were not certain why this process was never implemented.

Response – Treasury Department there were unresolved 6.53 “According to information recently received, the Treasury Department advised that direct salary deposits were not implemented as information technology (IT) issues that were not addressed by Royal Bank.
The Ministry of Finance has reported that the Bank has advised that there were no known IT concerns and they have the capacity to institute direct salary deposits for weekly paid future persons and programme”.

is available for any service this Financial Outlay 6.54 We noted that the approved funding for the 52 Weeks Job Readiness and Training Initiative was $48 million.

We observed the following: (a) Expenses were made from other line items.

(b) Accounting records were inadequately maintained.
(c) Lack of monthly expenditure and reconciliation reports.

(d) The total expended for Family Island programmes was not determined as no detailed financial records were provided including the total of unused funds returned to the Treasury Department along with the Cash Books.
_____________________________________________________________________ Report of the Auditor General 2012-2013 54 (e) We noted that no pre-determined amounts were established for the training component and we were not provided with a comprehensive listing of the sessions conducted.
6.55 Based on our analysis of account number 021-3191999-11, for the period July 2011 – May 2013, we confirmed the amounts spent in New Providence, Grand Bahama and Abaco and remitted to the other Family Islands in the table below: GRAND BAHAMA ABACO NEW PROVIDENCE & FAMILY ISLAND TOTAL PERIOD 2011 / 2012 2012 / 2013 TOTAL $ $ 6,908,233.81 2,020,617.60 1,027,826.55 5,122,337.38 3,048,444.15 12,030,571.19 $ $ 15,287,994.98 24,216,846.39 9,159,649.78 15,309,813.71 24,447,644.76 39,526,660.10 6.56 Inclusive of the overall disbursements from the above account and expenditures the overall from other disbursements amounted to approximately $41 million.
items line 6.57 It is recommended that the Ministry provided a detailed accounting of disbursements from other expenditure items relating to this initiative.

6.58 Additionally, Family Island Administrators should fully account for sums received and unused funds should be remitted to the Public Treasury.
6.59 It is also recommended for future initiatives that the Ministry: (i) (ii) Establish an itemized budget for salaries, training and other major components; Ensure that proper accounting records and reports generated in line with existing financial requirements.

_____________________________________________________________________ Report of the Auditor General 2012-2013 55 Conclusion 6.60 We found that there were a number of deficiencies in the overall management and internal controls of the programme.
Based on the Cabinet Conclusion, various segments of the programme were not met; namely, the Ministry did not undertake any performance reviews neither did they establish a skill databank and unemployment register.

6.61 The magnitude and scope of this programme was an ambitious undertaking by the Ministry of Finance.

We feel that the experiences and exposure gained will assist in the effective management of future projects of this nature.
6.62 We discussed the findings of our audit with management at the Ministry of Finance, who agreed to take corrective measures to address the concerns highlighted in our report.

6.63 The actions proposed are as listed: (i) (ii) Ensure that all future programmes of this magnitude are managed by full dedicated staff within the Ministry of Finance or another agency within the Public Service.
Proposed changes to the Financial Administration and Audit Act to avoid large expenditures being funded outside the parameters of the budget (i.e.

improving line transparency with expenditure).

to all below respect the (iii) Commission the writing of a comprehensive procedures manual and implement training courses on financial procedures for all staff within the Ministry of Finance and the Treasury Department.
It is clear that there is not a full understanding of importance of properly documenting and reconciling expenditure approvals.

the (iv) Consult with Royal Bank of Canada to determine what steps are needed to be taken by the Government to _____________________________________________________________________ Report of the Auditor General 2012-2013 56 institute direct deposits for all employees and vendors within the shortest timeframe to minimize the possibility of fraud.
(v) Consider what levels of accountability should rest with the individuals within the Ministry of Finance who had responsibility for managing the programme, and direct actions which should be taken in this respect.
Revenue & Expenditure Revenue & Expenditure Revenue & Expenditure Revenue & Expenditure Audits Audits Audits Audits _____________________________________________________________________ Report of the Auditor General 2012-2013 57 ChaptChaptChaptChapter 7er 7er 7er 7 _____________________________________________________________________ Report of the Auditor General 2012-2013 58 SECTION SEVEN REVENUE & EXPENDITURE Antiquities, Monuments And Museum Corporation Revenue 7.01 According to the trial balances provided by the Antiquities, Monuments and Museum Corporation, the revenue collected consisted of Admission Fee at Fort Charlotte and Fort Fincastle, Gift Shop at the Forts, Rental of Sites (including tent and chairs), donation, grants, licenses and permits and tuck shop as shown in the table below.
REVENUE Sales Gift Shop Sales Books Events (Ft. Charlotte & Collins Complex) Tuck Shop Sales Rental of Equipment Admission Fee – Fort Charlotte Admission Fee – Fort Fincastle Admission Fee – Montagu Admission Fee – Pompey Rental of Facility Rental of Office Accommodation Permits Uncategorized Income Miscellaneous Income Festival TOTAL 0.00 2011/2012 $ 816.00 0.00 11,497.41 1,802.95 2012/2013 $ 900.00 78,301.72 114,547.61 594.00 3,200.00 20,164.28 1,064.95 175,460.00 128,923.50 188,393.00 179,847.00 3,408.00 0.00 4,500.00 11,592.50 3,550.00 809.35 260.00 0.00 510,291.73 473,361.19 0.00 8,563.75 9,378.25 0.00 16,550.00 2,728.65 0.00 16,800.00 DIFFERENCE $ 900.00 36,245.89 -222.00 3,200.00 8,666.87 -738.00 -46,536.50 -8,546.00 3,408.00 -8,563.75 -4,878.25 11,592.50 -13,000.00 -1,919.30 260.00 -16,800.00 -36,930.54 7.02 Total the revenue fiscal year 2012/2013 amounted to $473,361.19, which represented a decrease of $36,930.54 (7.8%) from the $510,291.73 revenue collected in 2011/2012.
The decrease of revenue was due to the reduction of admission fees at Fort Charlotte.

_____________________________________________________________________ Report of the Auditor General 2012-2013 59 7.03 During our review of the admission fees to the Forts, we were informed that the Corporation has an arrangement with the private tour companies to admit tourist into the Forts and they will be billed on a monthly basis.

The amount outstanding from the private tour companies is $334,983.68.
Reminders were sent to the various companies to reflect as such.

7.04 We recommend that management continue its effort to collect the outstanding balance from the Private Tour Companies.

7.05 The Templeton Foundation agreed to give the Corporation $380,000.00 which is to be issued in installments.

The grant was given for the restoration of the slave ship Peter Mowell to be displayed in the center of the Pompey Museum.

To date the corporation has utilized $85,000.00.


However, due to the fire in December 2nd, 2011 that destroyed the Pompey Museum the work was delayed on the restoration process.

As a result, an extension was requested and granted until March 29th, 2015 in order to complete the project.
Ministry of Environment & Housing Corporation Sole Account Lot Deposits 7.06 While examining the Cash Book for the period under review we noted that in some instances funds were collected but were not deposited in a timely manner.

7.07 We recommended that when funds are collected it should not be allowed to accumulate for inordinate periods.
Lot Assignments 7.08 While scrutinizing of the files for rent to own and lot assignees we observed where some Rent to own and lot assigned holders were not adhering to the agreement made between themselves and the Ministry.

At the time of the review the _____________________________________________________________________ Report of the Auditor General 2012-2013 60 amount of $87,813.00 remained outstanding.

There were instances where: (i) (ii) Some assigned lot holders made only one payment since 2009.
Lot holders were sent reminders but no payments were made.

7.09 We recommend that the Ministry pursue the collection of fees that has been outstanding since 2009.

Expenditure 7.10 While reviewing Expenditure files for payments for the period December 2011 to September 2012, we noted that payments in the amount of $500,471.76 were made from the Corporation Sole Account to be reimbursed by the Department of Housing.
These payments facilitated the needs for various work such as house repairs, subdivision road work, Land Clearing, etc.

7.11 Further we noted that these payments were necessary as the supplemental funding requested had not yet been approved.

At the time of review the amount of $500,471.76 was not reimbursed to the Corporation Sole Account.

7.12 We recommend that the $500,471.76 be reimbursed.
Department of Labour General Receipt Books 7.13 While verifying General Receipt Books to the Cash Book we noted that irregularities existed such as: (i) General Receipts issued by the Department of Labour for Notification of Vacancies Fees were not recorded in the Cash Book.

_____________________________________________________________________ Report of the Auditor General 2012-2013 61 (ii) General Receipt Books were not seen or produced for audit’s inspection.
7.14 We view this matter very seriously as it poses a potential risk of theft.

Based on our evaluation and according to the daily revenue intake the processing fees are small, but when added it can have a great effect on the value of the revenue intake.

As the Receipt Books were not produced for audit inspection, the dollar value could not be determined.
7.15 We recommended that the role of Accounts Management be strongly exercised so that at the end of the day all Receipt Books are accounted for as well as recorded in the Cash Book correctly and completely.

Also, to ensure that Revenue recorded agrees with prepared Bank deposits slips.

Cash Book 7.16 During our examining of the Cash Book we noted that on two (2) occasions pages were torn out of the Cash Book, i.e.

August 30th – 31st 2011 and February 7th 2013.


As a result, the dollar value of the receipts could not be determined.

7.17 We recommended that under no circumstances, should pages be torn out of the Cash Book.

We view this action as very serious.

Management should take corrective action as a matter of urgency with the accounts section ensuring that this practice does not happen again, as the Cash Book is a permanent record of the accounting documents.
The reason for this action should be fully explained by the relevant accounting officer.

_____________________________________________________________________ Report of the Auditor General 2012-2013 62 Revenue Family Islands Notification of Vacancies Fees 7.18 According to the figures provided by the Department of Labour the revenue collected for the fiscal years 2012/2013 amounted to $91,950.00 compared to $82,680.00 for the fiscal year 2011/2012 which represents an increase of $9,270.00 or 10 percent.
Bahamas Information Services Department revenue was not 7.19 During our examination of the accounting records we noted that The Bahamas Government Financial System (C.A.

System) in accordance to the Treasury Manual.

Section 8.0 that states, “All agencies must enter revenue collected to the General Ledger on a daily basis.” journalized on 7.20 We recommended that the Department comply with the Treasury procedures for journalizing revenue.
7.21 We were informed during our interview that Revenue Deposits are withheld for a period of three (3) months before being deposited to the bank.

7.22 We recommended that where possible all revenue be deposited to the bank within twenty-four (24) hours or by the next working day.

Cash Book 7.23 We observed that a cash book was not maintained, to record receipts issued for revenue collected.

7.24 We recommended that a Cash Book should be implemented and maintained by the accounts section.
_____________________________________________________________________ Report of the Auditor General 2012-2013 63 Travel and Subsistence Register 7.25 We noted that the Department did not have in place a travel and subsistence register.

As a result it was difficult to verify that all employees who received advances were supported by the expense claims.

There is an increased risk for fraud to occur by not implementing a register.
7.26 We recommended that a Travel and Subsistence Register be implemented and maintained by the accounts department on a monthly basis.

Expenditure Parking Towing Fee 7.27 While scrutinizing a sample of the expenditure accounts we noted that there were instances where payments were made for purchases without prior approval.

7.28 We recommended that the practice of purchasing prior to proper authorization and approval be discontinued.

Water & Sewerage Corporation A/C No.


775-774 7.29 A review of the Water and Sewerage Corporation Account No.

775-774 for the period January 2011 to March 2011 revealed that the Department has a credit balance of ($20,917.20) and an amount overdue as ($20,917.20).

We further observed that the bills was not reconciled and could result in balances not being recorded correctly; and possible over or under payments.
7.30 We recommend that the bills of the Water & Sewerage Corporation be monitored through monthly reconciliations and overdue balances should be investigated.

_____________________________________________________________________ Report of the Auditor General 2012-2013 64 Contract Officers 7.31 Four (4) files for the period under review revealed the following; the contract for an officer ended on March 4, 2012; however, employment continued.
We observed a letter dated April 25, 2013 that indicated his services were no longer required as of August 31, 2013.

7.32 We recommended that officers contract are adhered to.

Also, approval for extensions of employment for the period May 5, 2012 to August 31, 2013 be forwarded for our review.

Port Department Revenue - Prince George Dock 7.33 Our analysis revealed that the total revenue collected during the period 2011/2012 and 2012/2013 amounted to $7,020,345.77 and $8,558,899.11 respectively.
This represented an increase of $1,538,553.34 or 21.9% for the fiscal period 2012/2013.

7.34 During our review of the accounts receivable ledger for water usage at the Prince George Dock, we noted that the outstanding amounts totaled $516,542.20 as at June 30, 2013.

7.35 We recommended that management send out reminders on a quarterly basis in an effort to collect all monies owing the government.
7.36 During our review of the dock annual for fees New Providence and Paradise Island, we noted that: i. Uncollected fees up to the June 30, 2013 totalled $896,482.32.

7.37 We recommended that management vigorously pursue the collection of the amounts outstanding; otherwise the penalty, _____________________________________________________________________ Report of the Auditor General 2012-2013 65 as prescribed in Section 40 A (3) of the Port Authorities (Amendment), 2003 should be applied.
7.38 During our review of the dock annual fees Family Islands, we noted that: i. Uncollected $1,624,123.75.

fees up to June 30, 2013 totaled 7.39 We recommended that management vigorously pursue the collection of the amounts outstanding, as prescribed in the Port Department Amendment Act No.

8 Section (3) of the Port Authorities (Amendment).

2003 should be applied.

7.40 During our review of the tug boat fees we noted that the outstanding amount up to June 30, 2013 totaled $367,112.89.
7.41 We recommended that management vigorously pursue the collection of the amounts outstanding, as prescribed in the Port Department Amendment Act No.

8 Section (3) of the Port Authorities (Amendment), 2003 should be applied.

7.42 During our review of the Family Island Administrators files, we noted in many instances that the revenue reports (whether produced monthly, quarterly, bi-annually or annually) were not submitted by the Family Island Administrators.
As a result, we were unable to determine the amount of revenue collected on the Family Island or the amount outstanding.

7.43 We recommend that all Administrators send their revenue report on a timely basis in order to ensure accountability and transparency of the accounts.
Port Department – Potter’s Cay Dock 7.44 During our examination of the accounts at the Potter’s Cay Dock we noted that there is no segregation of duties as one officer incompatible accounting functions as stated in our previous audit report DAG/C.9/1/96 is responsible for many _____________________________________________________________________ Report of the Auditor General 2012-2013 66 query 3.1 dated March 5, 2010.

Management is still aware of the current situation.
7.45 We recommended that an independent officer verifies the revenues collected on a daily basis.

that management ensures 7.46 While reviewing the ledgers for water and pierage for the period June 30, 2013 we noted that $809,298.45 was outstanding as stated in the table below.
DESCRIPTION AMOUNT $ Pierage Fees for Mail and Freight Boats 141,488.96 Water for Mail-Boats and Fishing Vessels 80,962.34 Pierage Fees for Fishing Vessel TOTAL 586,847.15 $809,298.45 7.47 We recommended that management determine whether the revenue is collectible and a decision should be made to address the matter.

7.48 During our examination of the accounting records of the Potter’s Cay Dock revenue reports were not provided for audit review.

7.49 We that recommended available for audit review.
the revenue reports be made 7.50 We were informed that the cashier was not provided with a float to facilitate the collection of revenue at the Port Department Potter’s Cay Dock.

We were also informed by management that a request was made to the Treasurer to address the situation.

At the time of the review the situation had not yet been addressed.

7.51 A fee schedule was provided for containers and booths on the dock.
However, revenues are not being collected due to the _____________________________________________________________________ Report of the Auditor General 2012-2013 67 fact that there is no legislation in place governing the collection of revenue from containers.

We noted during our review, that the Potter’s Cay dock is congested with the containers thus creating a safety hazard in our opinion.

7.52 We recommended that measure be taken to address the matter.
Expenditure 7.53 During our review of the Water and Sewerage Corporation bills for the Port Department, we noted that the cost of water used for the period October 24, 2012 to August 29, 2013 amounted to $501,885.81.

All vessels (Cruise Ships, Mail Boat, Freight Boats, Private Vessels, etc.)

are only charged 0.015 cents per gallon for water consumption for these vessels.
7.54 We recommended that management seek to address the fee structure with a view of increasing the current rate to ensure that the amounts charged and paid are equitably distributed.

Inventory 7.55 We were informed that there is currently no inventory listing for assets.

7.56 We recommended that an inventory listing for assets own by the Department be created and maintained.

Contracts 7.57 Currently a contract does not exist for the cleaning of the Prince George Wharf.
The Wharf is presently being cleaned by the maintenance staff.

The last contract expired on January 31, 2013 an extension was granted for three months up to April 30, 2013.
_____________________________________________________________________ Report of the Auditor General 2012-2013 68 Risk in the Department 7.58 We have audited the accounts of the Port Department and through line staff and interview with management and through observation have determine that the risk at the department is high with regard to the revenue collection as the internal controls are weak.
1) There is great concern in regards to the large amount of revenue that remains outstanding on an annual basis for services provided by the Port Department.

The Port Department is not enforcing the laws (penalties) as prescribed by the Act.

The Department is allowing persons/companies to utilize Port services without paying the required fees.

As a result, the Government continues to lose revenue but has to bear the cost of these services.
2) We were that informed and observed the Port Department is faced with the challenge of shortage of staff.

There is also the challenge of segregation of duties in some areas.

One (1) person is responsible for too many incompatible accounting functions.

There is only one inspector in the department.

Presently, docks (public, private and marinas) are not being inspected.

Also there is a shortage of lighthouse operators on the Family Islands and beach enforcement officers.
As a result a large amount is owed for overtime.

3) Family Island Administrators do not inform the Port Department on the number of permits granted for docks by the Local Government Town Council.

As a result, the audit team was unable to determine the correct amount of revenue that is outstanding.
_____________________________________________________________________ Report of the Auditor General 2012-2013 69 Registrar General’s Department Cash on Hand 7.59 We noted that General Service Workers, Receptionist, Filing Assistant, and a Chief Clerk are still functioning as cashiers as stated in our previous audit report.

7.60 The cashier is a vital position in any Ministry/Department and accordingly we recommended that those who hold such position are properly classified.
Revenue 7.61 We were informed by the Accounts Section that occasionally due to shortage of staff on any given day one of the Accounts personnel will have to perform all of the revenue function including cashing, counting, verifying the end of day total revenue, and writing up of the deposit slip.

7.62 We recommended that segregation of duties be addressed by management to strengthen controls in collecting, verifying and depositing of revenue.
7.63 During the course of our audit we noted that, there was no security personnel at the Registrar General’s Department since December 6, 2012 due to the fact that the contract had expired.

The security contract for the department went back to tender.

There was a great concern about the safety of the staff members because the department collects a large amount of revenue.

However, on April 5, 2013 Dell Security Co. was granted approval for a contract and assumed duty on April 17, 2013.
7.64 We were informed and observed during our review, that an Official Registrar General’s Seal is kept out on the counter by customer service section and that any employee in the section can seal a birth/death certificate and then forward the document for signature.

We view this as a weakness in the _____________________________________________________________________ Report of the Auditor General 2012-2013 70 system, which can lead to unauthorized persons affixing the seal to incomplete documents.
7.65 We recommended that official seals which authenticate documents be properly secured and only the senior officers authorized should apply a seal and sign relevant documents.

the 7.66 While reviewing the process for issuing birth, death and marriage certificates we noted that the Payment for Services Forms provided by the Department are not properly completed in that some forms: Did not have the registration number affixed.
Only have the customer’s last name and/or initial of the first name recorded.

7.67 We recommended that all forms be properly completed with registration number, quantity the customer’s requested and amount to be paid.

This would facilitate a clear audit trail.

full name, 7.68 There are no controls in place for the issuance of the certificates by the births and death section.
Employees will take out the number of certificates they think they would need on a daily basis out of the box and place them in their copier.

There are no checks and balances done at the end of the day on how many certificates were issued, voided and unused.

7.69 We recommended the necessary controls for the issuance of certificates in the section.

that management implement 7.70 The department has in their possession pre-numbered death We observed however, that un-numbered certificates.
certificates were still being utilized at the time of our audit.

7.71 We recommended that management discontinue the issuance of these un-numbered death certificates and that the pre- _____________________________________________________________________ Report of the Auditor General 2012-2013 71 numbered ones be used; adding another level of control to the process of issuing death certificates.
7.72 We observed that voided copies of certificates (birth, death and marriage) are kept in boxes throughout the Birth, Death and Marriage Section.

We were unable to verify/determine at the end of day how many certificates were issued or voided by the authorizing officer(s).

7.73 We recommended that all voided certificates be properly processed by an officer authorized to do so.

This would facilitate an audit trail.


Expenditure 7.74 During our review of the stock of supplies rooms we noted that when supplies are issued it is recorded in a register, dated and signed by the receiving officer.

However, the department does not maintain proper stock register to show when items are received by the department and a running balance of goods remaining after they are received or issued.
7.75 We recommended that the department implement a proper stock register with goods received, issued and a running balance.

Payroll 7.76 During our review we noted that there were nine (9) General Service Worker’s who have been granted contracts and renewal of contracts for five to six (5 - 6) years from as early as January 1, 2007 with the Department.

There remains no directive on whether to have these employees regularized.
7.77 We recommended that the General Service Workers be regularized as soon as possible as stated in our previous report.
_____________________________________________________________________ Report of the Auditor General 2012-2013 72 Birth Certificates 7.78 According to the Birth Certificate Listing provided by the Registrar General’s Department there was a total of 4,098 births registered between the period April 25, 2012 and April 30, 2013 compared to the Princess Margaret Hospital records of 3,993 for the same period.
7.79 While reviewing the births registered for the period April 2012 to April 2013 we noted that: (i) An employee was able to enter a number of birth certificates after being transferred from the MIS Section on March 5, 2012.

During our review the employee was subsequently disabled.

Upon further investigation it was discovered that the Registrar General’s Department has no records of these persons birth being registered with the Department.
(ii) A number of transactions shows that the name and date of birth were duplicated, however, each transaction had a different birth ID number.

We were unable to determine the reason for the duplication.

(iii) A number of infants were registered as: Either Baby Boy or Baby Girl; as a first name for babies born between 2011 and 2012.

 Last names were not indicated instead a period (.)

was inserted.

 First names were not indicated.


This was done in accordance with the Birth and Deaths Registration Act, Chapter 188 Section 15.

(1).

(iv) A number of transactions were seen registered without a date of birth.

_____________________________________________________________________ Report of the Auditor General 2012-2013 73 (v) We were informed that Staff with ultimate access (level 9) would assist in entering births when the section is short staffed.
(vi) Seventy five (75) births were registered by an officer after they were transferred.

There were no records found for these persons in the Data Management Search Section of the department.

Also, we traced a sample of the births certificates to the Passport Office and found that they were issued Passports or Certificate of Identity and others have made application for passports.

At the time of the review this matter was under investigation by the Royal Bahamas Police force.
7.80 Recommendations: (i) Management should have an investigation carried out on the births registered by the employee that was transferred.

(ii) The Department should determine which registered birth is correct and have the duplicate deleted from the system.

that employees exercise due care and attention when entering transactions to avoid such duplication of information.

recommended Also, we (iii) All babies should be registered with at least a first and last name.
We further recommended that the Birth and Deaths Registration Act, Chapter 188 Section 15.

(1) be amended to reflect the same.

This would facilitate a clear audit trail.

(iv) An explanation should be given as to how a person could be registered without a date of birth being entered.

Also, we recommended that the date of birth field be a required field to have a birth registered.
(v) As far as possible management should ensure that staff of the MIS Section are not functioning as registration _____________________________________________________________________ Report of the Auditor General 2012-2013 74 officers.

recommended practice.

We view this with much concern and this that management discourage Search Cards 7.81 During our review of Search Cards for the period April 1, 2012 to April 30, 2013 we noted that: (i) Only Search Cards that are issued are recorded in a register.
We were unable to determine whether search cards are issued out of sequence or unaccounted for.

(ii) In some instances all the necessary documentation which should accompany the application for a Search Card was not found attached however, we noted that Search Cards were issued.

(iii) A number of persons received Search Cards despite the fact that they received a negative letter of Proof of Birth from the Princess Margaret Hospital (PMH).
The negative letter states that PMH “cannot positively certify that the person gave birth to a live baby on the Maternity Ward of the PMH”.

We noted that a Voters Card, School Letter, Baptismal Certificate or Immunization Card was used to obtain the Search Card.

(iv) A number of persons were issued the same Search Card on two (2) different days.

It was noted that, there were no supporting documents found for the second Search Card issued.
(v) Persons born before July 1, 1966 could use a voter’s card in order to receive a Search Card.

However, we noted that persons who did not have a birth certificate and requesting a Search Card were able to obtain a passport and subsequently a voter’s card.

We noted further that the voter’s card was used to secure a Search Card.
_____________________________________________________________________ Report of the Auditor General 2012-2013 75 7.82 We recommended that: (i) Records of all Search Cards be recorded in the register including the ones issued and unused.

This would facilitate a clear audit trail in that all Search Cards would be accounted for.

(ii) No Search Card be issued without all the necessary documentation required to receive a search Card and attached to the application form.
(iii) Management pay close attention to applicants and implement stringent policies when other documents are used solely as proof of someone being born in the Bahamas even though the hospital/clinics cannot certify the birth of the individual.

(iv) An explanation be given as to how the same search card could be issued on two separate days as the Search Cards are pre-numbered.

(v) An explanation be given how someone could obtain a passport and subsequently a voter’s card without having a birth certificate.
Human Resources and Management Information Service Section 7.83 During our audit we were informed that a number of employees were transferred for up to 10 months, however, they were not disabled on the Registrar General’s Department system until May 22, 2013.

7.84 There needs to be increased communication between the HR Section and MIS Section by officially informing the MIS section of all transfers or termination in order for the employee to be disabled.
_____________________________________________________________________ Report of the Auditor General 2012-2013 76 Observation 7.85 During our audit we observed that there still is a challenge with storage space and housing of files at No.

50 Shirley Street as indicated in our report DAG/C.9/1/201 dated June 16, 2009 as follows: Highly sensitive records were not adequately stored due to a shortage of storage space.

 Company files were stored in cabinets that were not fireproof.
Deeds and other records are stored on top of filing cabinets or wherever space can be found.

The deeds contain irreplaceable records going back for decades.

7.86 We recommended that every effort be made by management to properly secure the documents.

7.87 We were informed that all Justice of the Peace (JP) documents are kept at the Office of the Attorney General.
The Department has the signature for all Marriage Officers on each of their initial application form that is filed in alphabetical order in filing cabinets.

However, the department does not have signature cards for all JP/Marriage Officers.

7.88 We recommended that all authorized JP/Marriage Officer Signature cards be lodged at the Department of the Registrar General.
_____________________________________________________________________ Report of the Auditor General 2012-2013 77 Real Property Tax 7.89 The outstanding Real Property Taxes for the fiscal year 2012/2013 amounted to $100,236,127.52.

In addition, the cumulative outstanding totaled taxes $490,132,411.25; thus giving a grand total of $590,368,538.77.
for prior years CURRENT AMOUNT PRIOR YEARS CUMULATIVE DESCRIPTION $ $ $ Current Taxes Current Surcharge Taxes Outstanding 83,348,153.46 16,887,974.06 100,236,127.52 336,787,619.88 153,344,791.37 490,132,411.25 420,135,773.34 170,232,765.43 590,368,538.77 7.90 The outstanding amount of $590,368,538.77 is exorbitant; and continues to increase from year to year.

We recommended that immediate measures be implemented, to address the problem of outstanding taxes.
Ministry of Public Service 7.91 There are deficiencies in control as it relates to the ministry’s expenditures.

Overall, the Ministry’s performance has been satisfactory in operating within the confines of the policy and procedure in regards to Ministry of Public Service human resource matters.

However, there is lack of monitoring of information processed via the JD Edwards, the Monthly Payroll Transaction Forms and the Alpha Listing.
Auditors noted that controls surrounding the management and accounting for office rent/lease and insurance premiums are weak.

The accounts area is short staffed and additional accounting officers are needed to facilitate timely accounting and payments.
_____________________________________________________________________ Report of the Auditor General 2012-2013 78 Expenditure Accommodations Unit - Leases lease by 7.92 This unit is responsible for locating and identifying suitable and available office space the government.
for According to officers, after locating an office space, the Ministry of Works and Urban Development (MOWUD) has to first perform a technical assessment of the building to ensure that the physical structure (interior and exterior) is suitable and passes inspection.

The lease agreement also goes to the Attorney General (AG) Office for review.

We noted a number of deficiencies: Currently there are no formal written policies and the unit.
procedures governing However, the auditors noted that the unit is in the process of implementing one.

the operations of This unit is also responsible for ensuring that the leases remain current.

However, there is a significant number of leases that are expired and have been for a number of months.

 Staff of the Unit expressed concerns to the Auditors about the delayed process of securing a rental property for government agencies due to leases not being vetted in a timely manner.
They suggested that an in-house legal consultant be assigned to Ministry of Public Service (MPS).

7.93 The following recommendations were made: Management should ensure that a written policy manual is implemented to ensure that strict guidelines governing the unit are adhered to.

 Management needs to ensure that this unit has the resources (human or otherwise) to have these contracts renewed expeditiously.
_____________________________________________________________________ Report of the Auditor General 2012-2013 79 Management needs to find a legal consultant for Ministry of Public Service (MPS) to help expedite the rental accommodation process and vetting of leases.

Leases and Rental Agreements 7.94 Auditors selected a sample of twenty three (23) rental Rent- the account payments Accommodation).
The following deficiencies were noted: (Office from item Nine (9) of the rental agreements were not on accounts file resulting in a scope limitation.

 In eight (8) cases payments were being made on expired rental agreements.

 None of the files showed that the statement of accounts were reconciled for rental agreements.

 There are lease agreements on file that are not signed and sealed by the Treasurer of The Bahamas.
7.95 The following recommendations were made: All rental agreements should be properly filed for ease of reference and audit trail.

 Management should ensure that new rental agreements are entered into as payments should not be made on expired contracts.

 Statement of accounts should be prepared and reconciled on a monthly basis to ensure that the balances due are accurate.
Management should obtain a valid lease agreement which should be signed and sealed by the appropriate persons.

_____________________________________________________________________ Report of the Auditor General 2012-2013 80 Ministry of Tourism Travel and Subsistence 7.96 Ministry of Tourism (MOT) has a significantly large budget for following control However, auditors noted the travel.

weaknesses: Presently no travel register is maintained.
We were informed that MOT had previously used a database system which crashed about five (5) years ago.

Since then, no record is kept as to the persons travelling, dates, destination, and total cost of travel.

 Auditors noted that travel expense reports are not turned in and are not cleared within the specified twenty one (21) day period.

7.97 The following recommendations were made Management should ensure that a travel register is maintained on a consistent basis.
Additionally, all information pertaining to travel should at all times be posted to the travel register.

 Treasury Procedural Manual 10.5 states travel advances should be accounted for within 21 days of completion of travel.

Management should ensure that persons travelling comply with this procedure.

This policy needs to be strictly enforced for travel expenses.
that Accounting for Contracts and Supplier Payments 7.98 Auditors selected a sample of forty (40) contractual files and two (2) suppliers files.

We reviewed the files (payment vouchers as well as contractual agreements) and noted the following internal control weaknesses: Nine (9) of the files first selected were not received.
_____________________________________________________________________ Report of the Auditor General 2012-2013 81 Auditors reviewed the files and noted that thirty four (34) of the files did not have contractual agreements on them.

 Three (3) of the six (6) contractual agreements received were expired.

7.99 The following recommendations were made: Management should ensure that files are located and made available for auditors review.
Management should ensure that all contracts entered for ease of reference and into are properly accessible to auditors for review.

filed Management should ensure that new contractual agreements are entered into as payments should not be made on expired contracts.

Accounting officers cannot make accurate payments if they are unaware of the terms of the contract.
7.100 There was a lack of supporting documents on the files as follows: Eighteen (18) of the files received did not have the requisite payments vouchers attached.

 Auditors saw no evidence where any of the contractual and suppliers accounts are reconciled.

 Auditors requested a list of all contracts entered into by MOT but never received one.

 Auditors requested the insurance contracts for review but never received them.
_____________________________________________________________________ Report of the Auditor General 2012-2013 82 7.101 The following recommendations were made: Management should ensure that all payment vouchers are placed on files for audit purposes.

 Statement of accounts should be prepared and reconciled on a monthly basis to ensure that the balances due are accurate.

 Management should prepare a contract list to reflect all contracts that MOT has entered into.
This is necessary for proper accounting of contractual obligations and for audit purposes.

 For proper accounting and record-keeping insurance contracts should be properly filed and made available for auditors review.

Accounting for Cheques 7.102 MOT operates five (5) bank accounts in the following currencies: Euro, Pound Sterling, Canadian, Bahamian and US dollars.
Auditors reviewed the bank reconciliation statements for these accounts and noted that none of the accounts with the exception of the Euro and Pound Sterling were up to date as outlined below: The last reconciliation performed for the Bahamian Dollar account was January 2012.

 The last reconciliation performed for the US Dollar account was June 2012 The last reconciliation performed for the Canadian Dollar account was May 2012.
_____________________________________________________________________ Report of the Auditor General 2012-2013 83 7.103 It was recommended that: All bank reconciliations should be properly prepared on a monthly basis (within thirty days).

This is necessary to ensure that the balances on statements are accurate and the general ledger is updated.
Wire Transfers 7.104 Auditors noted that MOT accounts section is still not maintaining a wire transfer (w/t) register even though it was recommended that one is maintained during the last audit conducted in 2011.

Also, as a result of not maintaining a wire transfer book, the total amount of monthly and annual wire transfers could not be determined.
7.105 It was recommended that: All wire transfers should be recorded in a wire transfer book Additionally all disbursement procedures for wire transfers should be documented.

(incoming and outgoing).

Gaming Board Outstanding Taxes for closed Casinos 7.106 The outstanding taxes for closed casinos amounted to approximately fifty (50) million dollars inclusive of the following casinos; Lucayan Beach, Isle of Capri, Ruffin Crystal Palace, Casino at Bahamia and Carnival Leisure Industries.
7.107 We again recommended that a policy decision be made to clear the books of amount owed by the closed casinos.

We consider this matter to be urgent and should be given immediate attention by Ministry of Finance.
_____________________________________________________________________ Report of the Auditor General 2012-2013 84 Bahamas Customs Bahamas Customs Bahamas Customs Bahamas Customs Department Department Department Department ter 8 ChapChapChapChapter 8 ter 8 ter 8 _____________________________________________________________________ Report of the Auditor General 2012-2013 85 _____________________________________________________________________ Report of the Auditor General 2012-2013 86 SECTION EIGHT BAHAMAS CUSTOMS DEPARTMENT 8.01 Under the provision of the Customs Management Act 1976, the Customs Department, a branch of the Ministry of Finance, is responsible for the collection and protection of revenue obtained from General Import Duty and Excise Duties.
The Department is also responsible for collecting, Air & Sea Departure Tax, and other miscellaneous fees.

8.02 According to the figures provided by the Customs Department, the total revenue collected during the fiscal year July 1, 2012 to June 30, 2013 amounted to $771,503,399.62 compared with $742,744,344.68, collected during the fiscal period July 1, 2011 to June 30, 2012, an increase of $28,759,054.94 or approximately (4%).
8.03 An analysis of Actual Revenues collected is presented in the table below: REVENUE ITEM HEAD/ITEM CLASSIFICATION 901/1100 General Import Duties 901/2100 Export Duties 902/1100 Excise Taxes ACTUAL REVENUE ACTUAL REVENUE ACTUAL REVENUE FROM THE GL CUSTOMS CUSTOMS SYSTEM JULY 2012 / 2013 JULY 2011 / 2012 JULY 2012 / 2013 $ 332,022,649.75 $ 329,117,574.85 $ 332,022,649.75 $ 14,397,861.21 $ 16,226,583.87 $ 14,397,861.21 $ 246,180,872.62 $ 244,212,793.96 $ 246,180,872.62 906/1100 Air Departure Tax 906/1200 Sea Departure Tax 906/1300 Pass.
Tax/Pleas.

Craft 906/2100 Pass.
Ticket Tax 907/1100 Stamp Tax - Imports 907/1200 Stamp Tax - Export $ 48,851,375.23 $ 35,761,577.87 $ 48,851,375.23 $ 81,078,954.90 $ 81,629,104.90 $ 81,078,954.90 $ 418,147.00 $ 511,715.00 $ 4 18,147.00 $ 13,741,125.68 $ 30,023.00 $ 13,741,125.68 $ 17,547,258.49 $ 17,561,390.70 $ 17,547,258.49 $ 40,259.03 $ 60,277.08 $ 40,259.03 _____________________________________________________________________ Report of the Auditor General 2012-2013 87 REVENUE ITEM ACTUAL REVENUE ACTUAL REVENUE ACTUAL REVENUE FROM THE GL HEAD/ITEM CUSTOMS CUSTOMS SYSTEM CLASSIFICATION JULY 2012 / 2013 JULY 2011 / 2012 JULY 2012 / 2013 $ 920.00 - $ 920.00 $ 87,902.44 $ 7,750.00 $ 87,902.44 $ 20.00 - $ 20.00 $ 362,605.00 $ 369,885.00 $ 362,605.00 - $ 45.00 - 907/1300 Stamp Tax on Ship Report 907/2100 Stamp Duty - Exports 919/1380 Ship Registration 919/1452 Customs Fines & Forfeitures 919/2112 Dishonored Cheques Surcharge 919/2210 Wreck Goods 919/2220 Customs Storage Fees 919/2221 Warehouse Fees 919/2230 Inspection Fees 919/2231 Overtime 919/2232 Customs Service Charge 919/2240 Container Movement $ 1,500.00 $ 5,847.20 $ 163,691.34 $ 742,891.93 $ 3,975,840.99 $ 845.00 $ 5,431,545.36 919/2241 Customs Container Fee - Freeport 919/2250 Other Customs Charges 919/2251 Bonding Tax 919/2252 Royalties 919/2253 Fishing Permit $ 240,319.25 $ 225,150.08 $ 1,320,254.03 $ 1,261,618.54 $ 15,240.00 - $ 1,500.00 $ 139,812.54 $ 5,847.20 $ 29,861.90 $ 163,691.34 $ 928,934.55 $ 742,891.93 $ 3,632,175.73 $ 3,975,840.99 - $ 845.00 $ 5,397,327.52 $ 5,431,545.36 $
 393,344.25 $ 240,319.25 $ 230,139.24 $ 225,150.08 $ 1,318,006.34 $ 1,320,254.03 $ 1,241,139.34 $ 1,261,618.54 $ 13,320.00 $ 15,240.00 _____________________________________________________________________ Report of the Auditor General 2012-2013 88 REVENUE ITEM HEAD/ITEM CUSTOMS CUSTOMS SYSTEM ACTUAL REVENUE ACTUAL REVENUE ACTUAL REVENUE FROM THE GL JULY 2012 / 2013 JULY 2011 / 2012 JULY 2012 / 2013 CLASSIFICATION 919/2254 Cruising Permit 919/2255 Customs Boarding Fees 919/2260 Transportation Fees 919/2270 Boarding Fees 919/2271 Boarding Fees 919/2280 Customs Processing Fees 919/2290 Environmental Levy 920/1420 Rental of Various Properties TOTAL $ 99,080.00 $ 110,100.00 $ 29,850.00 $ 99,080.00 $ 29,850.00 - $ 711,991.51 $ 2,387,545.00 $ 782,820.00 $ 711,991.51 $ 2,937,806.00 $ 2,387,545.00 $ 59,402.00 - - - - - - $ 59,402.00 - $ 100,836.04 $ 771,503,399.62 $ 100,836.04 $ 100,836.04 $ 771,503,399.62 $ 742,744,344.68 8.04 Actual Revenue Estimates collected for the year 2012/2013 amounted to Total Actual Revenue Estimates $ 771,503,399.62 & GL Systems The total Customs Revenue from comparative (I&E) $ 742,744,344.68 Difference between Actual Rev.
of Prov.

Estimate & GL System and Actual Revenue Customs Dept.

$ _ 28,759,054.94 8.05 The Actual Customs Revenue collected during the fiscal year 2012/2013 increased compared to the Actual Recurrent Accounts 2011/2012.

For example, Air & Sea Departure Tax and Excise Tax, etc.

Conversely, some collections decreased _____________________________________________________________________ Report of the Auditor General 2012-2013 89 below Recurrent Account figures, for example, Passenger Ticket Tax (906/2100).
8.06 The percentage allocation of actual revenue for July 2012 – June 2013 is as follows: Revenue Item Excise Tax Departure Tax Air & Sea General Import Duties Other Grand Total % Allocations 32% 17% 43% 8% 100% Percentage Allocation Excise Tax Departure Tax Air & Sea General Import Duties Other 8% 43% 32% 17% _____________________________________________________________________ Report of the Auditor General 2012-2013 90 8.07 The breakdown of Revenue collected July 2012 – June 2013 by region is as follows: Fiscal Year July 1, 2012 - June 30, 2013 $ Fiscal Year July 1, 2011 - June 30, 2012 $ $ 636,613,453.28 $ 612,613,453.29 61,018,137.66 77,871,808.68 $ 771,503,399.62 56,638,610.19 73,492,281.20 $742,744,344.68 Name New Providence Grand Bahama Freeport & West End Family Islands Grand Total Air Express 8.08 Continuous audits were conducted during the year, informing the Customs Department of the incorrect rate of duty being applied in some instance.
Queries were raised relating to the aforementioned periodically.

Customs House Entries 8.09 Continuous audits were conducted during the year; the incorrect rate of duty was applied in many instances.

Queries were raised for the period relating to the aforementioned.

Family Island Accounts 8.10 Continuous audits were carried out on the Customs Section at Abaco, Eleuthera, Exuma and Grand Bahama, by our satellite Offices.

Accounts from our ports were audited in Nassau.


Additional surprise audits were carried out.

During our audits for Family Island Accounts the following were observed: A.

Incorrect rates of duty were applied B.

Insufficient warehouse space at some ports of entry _____________________________________________________________________ Report of the Auditor General 2012-2013 91 Incomplete Manifest 8.11 We have conducted examination of incomplete manifest and the following was observed: A.
A large number of bills of lading were released without evidence to suggest duties were collected.

Queries 8.12 During the fiscal year 2012/2013, 728 queries totaling $247,708.71 were raised with the Customs Department.

Of this amount, 439 were satisfactorily resolved which resulted in $148,794.70 being collected.
Port/Station Customs House Gladstone Freight Terminal Family Island Air Express Queries Raised Dollar Value $ Queries Answered 457 $172,969.83 288 Dollar Value $ $103,744.31 175 93 3 728 $ 63,306.34 $ 11,288.71 $ 143.83 $247,708.71 90 60 1 439 $ 36,720.46 $ 8,285.70 $ 44.23 $148,794.70 _____________________________________________________________________ Report of the Auditor General 2012-2013 92 General Post Office General Post Office General Post Office General Post Office Department Department Department Department Chapter 9 Chapter 9 Chapter 9 Chapter 9 _____________________________________________________________________ Report of the Auditor General 2012-2013 93 _____________________________________________________________________ Report of the Auditor General 2012-2013 94 SECTION NINE POST OFFICE DEPARTMENT 9.01 The Post Office Savings Bank (POSB) is governed by the Savings Bank Act of 1936.
The management and control of the bank is the responsibility of the Postmaster General, as mandated by Chapter 302 of the Statute Laws of The Bahamas and its subsidiary legislation, The Savings Bank Rules.

Financial Statements 9.02 We were not presented with nor were we able to verify any figures pertaining to the Post Office Financial Statements, as mandated in Chapter 302 (Section 12) of the Savings Bank Act.
Therefore, as a result of this we were unable to give an opinion on the financial operations of the Savings Bank.

9.03 It is recommended that the Post Office Department produce Financial Statements annually, so as to be in conformity with Chapter 302, Section 12 of the Post Office Savings Bank Act.

Number of Depositors 9.04 During the year the public continued to utilize the services of the Post Office Savings Bank.

As a result, the approximate number of depositors/accounts is 26,619.
This amount can be further broken down into Active and Inactive Accounts.

The amount is as follows: Active Accounts Inactive Accounts - - 17,556 9,063 9.05 We were informed that the dollar value for both the Active and Inactive Accounts could not be determined by the staff of the Post Office Savings Bank.

Further, we were also informed that there are no rules governing when an Active Account becomes Inactive.
_____________________________________________________________________ Report of the Auditor General 2012-2013 95 9.06 It is recommended that: (a) (b) The Post Office Savings Bank staff calculate the value of both the Active and Inactive Accounts in order to facilitate the audit process.

implemented Specific guidelines are to determine when an Active Account with no activity, becomes Inactive; and then becoming dormant.
In addition, it should be determined if Funds should be transferred the Commercial Bank.

to Central Bank as performed in order in Post Office Savings Bank Weaknesses 9.07 As a result of the continuous review of the Post Office Savings Bank Accounts, the following weaknesses were discovered.

1) 2) 3) 4) 5) There is no computerized system with the relevant software the efficient and effective improve to operations of the POSB.
Deposits and Withdrawals are still being transacted with the use of Passbooks as the only source of reference with which to rely.

Numerous accounts were inactive i.e.

approximately 52%.

Lack of periodic checks with regard to the submission of documented and completed accounts from the Family Islands.

Family Island transactions i.e.

Day Sheets are not posted in the Alphabetical Ledgers, therefore it does not show the correct balance of the Clients accounts.
As a result, this causes the Ledger to reflect one balance, and the Customers passbook to show another balance.

_____________________________________________________________________ Report of the Auditor General 2012-2013 96 6) Weak internal controls allows a number of fraudulent activities to go undetected for long periods of time within the Post Office Savings Bank.

7) Interest on accounts were not calculated annually.

No interest was calculated since 2008.


Finally, interest is calculated and posted in the Clients books when they are conducting the Savings Bank Counter, and they request their interest payment.

transactions at 8) The last Financial Statement produced by the Post Office Savings Bank was in 2002.

9.08 There is an urgent need to update and implement an accounting system which would enhance stronger internal controls.

In addition, attention should be given to the weaknesses mentioned above.
_____________________________________________________________________ Report of the Auditor General 2012-2013 97 _____________________________________________________________________ Report of the Auditor General 2012-2013 98 Pensionssss Pension Pension Pension Chapter 10 Chapter 10 Chapter 10 Chapter 10 _____________________________________________________________________ Report of the Auditor General 2012-2013 99 _____________________________________________________________________ Report of the Auditor General 2012-2013 100 SECTION TEN PENSIONS 10.01 To ensure that Pension & Gratuity calculations are in accordance with The Pension Act, and in conformity with the Bahamas Government statutes and directives.
10.02 Judgmentally selected a representative sample of pension files for the above mentioned period, which was tested according to procedures in the Audit Program.

Official Pension & Gratuity judgmentally tested.

The 10.03 During the examination of Official Pension & Gratuity, a representative sample of Official Pension & Gratuity was selected and information and calculation on the Pension & Gratuity certificates were confirmed and verified for accuracy.
These amounts were checked to the General Ledger (GL 671), and the Bahaval systems.

During this period One Hundred & Thirty (130) persons were deleted from the Official Pension register and Three Hundred and Eleven (311) was added to the Official Pension Register.

Approximately $65,000,000.00 was disbursed for Official Pension.

Parliamentary Pension 10.04 We were able to verify and confirm the pensions disbursed for the fiscal year 2012/2013 was approximately $1,521,633.20.
During this period eight (8) Parliamentarians were added to the pay sheet and were three (3) deleted by reason of death.

_____________________________________________________________________ Report of the Auditor General 2012-2013 101 War Veterans & Widows Pension 10.05 While examining pensions for the fiscal year ended 30th June, 2013, $11,761.44 was disbursed which was verified to the Pension Register and the United States (U.S) Draft Register.
Two (2) pensioners were deleted from the register by reason of death.

Presently there are three (3) War Veterans & Widows on the pay-sheet.

Widows & Orphans Pension 10.06 Pension for the year ended 30th June, 2013 was confirmed and verified to the Official Pension Register, and The Widows & Orphans Pension Register.

Approximately $107,894.02 was disbursed for the period.

During the period two (2) persons was deleted from the pay sheet by reason of death.
Presently there are twenty-nine (29) Widows & Orphans pensioners on the pay-sheet.
_____________________________________________________________________ Report of the Auditor General 2012-2013 102 Freeport, Freeport, Freeport, Freeport, Grand Bahama Grand Bahama Grand Bahama Grand Bahama Chapter 11 Chapter 11 Chapter 11 Chapter 11 _____________________________________________________________________ Report of the Auditor General 2012-2013 103 _____________________________________________________________________ Report of the Auditor General 2012-2013 104 SECTION ELEVEN FREEPORT, GRAND BAHAMA Recurrent Revenue 11.01 We continue to note that we are unable to examine the revenue account for STAMP TAX at the boundary because the Treasury Department does not maintain the necessary boundary documents required to ensure the reasonableness Therefore, we are unable to of Stamp Tax collected.
determine that the revenue collected from this tax is accurate.

11.02 We continue to recommend that the applicable boundary documents are retained by Treasury in support for Stamp Tax collected.

Capital Expenditure 11.03 Our examination to ensure accuracy and population completion of Capital Expenditure of $251,068 could not be agreed to Treasury’s Actual Expenditure Detail Reports.
As a result of further audit investigation, Treasury produced Journal Account By Inquiry printouts in support of the following payments: 1.

Two (2) payments totaling $51,350 for hurricane cleanup, charged against Disaster Relief Assistance Fund.

2.

Three (3) payments totaling $9,209 for furniture and equipment, charged against Acquisition of Assets.

3.

Two (2) payments totaling $129,411 for major repairs and maintenance to St. Vincent DePaul School, Ministry of Education 4.
Nine (9) payments totaling $59,098 for expansion and refurbishment of schools, Ministry of Education.

_____________________________________________________________________ Report of the Auditor General 2012-2013 105 5.

A payment of $2,000.00 for clearing of land (Feeder farm roads & land clearing) in East End, Grand Bahama, Department of Agriculture 11.04We continue to recommend that all expenditure is captured by the Treasury’s electronic accounting system.
Hence, posted to the Expenditure Detail Report in a timely manner and true picture of annual in a expenditure.

resulting thereby Conclusion 11.05 The results of this examination were not satisfactory.

11.06 We were not able to attain sufficient evidence that the Expenditure accounts were fairly presented.

Of particular concern was, audit’s inability to access the Treasury’s on-line system to confirm the expenditure balance presented at year- end.
11.07 Treasury must place more emphasis on ensuring that expenditures are legitimately based on supporting documents and checks for mathematical accuracy.

11.08 Accurate expenditure classification is critical to ensure compliance with mandated annual Budget guidelines.

11.09 The awarding of contracts, particularly, contracts that are less than $50,000 must be administered in an objective manner; whereby related parties do not appear to benefit unfairly.
11.10 Implementation of the recommendations made in this report would result in a more favorable outcome during the next audit examination.
_____________________________________________________________________ Report of the Auditor General 2012-2013 106 Family Islands Family Islands Family Islands Family Islands Chapter 12222 Chapter 1 Chapter 1 Chapter 1 _____________________________________________________________________ Report of the Auditor General 2012-2013 107 _____________________________________________________________________ Report of the Auditor General 2012-2013 108 SECTION TWELVE FAMILY ISLAND SECTION Exuma District Central Government Recurrent Account 12.01 It was noted that some payment vouchers did not have to substantiate supporting documents, payment.
The non-attachment of bills/receipts to payment vouchers from established accounting procedures.

i.e.

bills/receipts, is a deviation 12.02 We recommended that due care and attention be exercised during the preparation of payment vouchers to ensure that adequate information and supporting documents are provided to facilitate the audit trail.
12.03 During our examination of payment vouchers, with respect for fuel from the company Lambs Enterprises and Island Services Station, we noted that payment vouchers were voided of details indicating the breakdown of lump sum paid.

We further observed reflected insufficient information in the Description of Goods/Service column.
that payment documents 12.04 We recommended that due care and attention be exercised during the preparation of payment vouchers to ensure that adequate supporting documents are provided to show the amount or gallons for each vehicle and the date.

Additionally, the license number of the vehicle should be included on the documents.

12.05 When scrutinizing Payment Voucher No.


73 Head 31, Block 10, Line/item 101100 dated May 13, 2013, we noted an amount of $389.98 being payment for two (2) round trip tickets for a Senior Civil Servant and his wife to attend the doctor in Nassau.

At the time of the review we were not certain whether expenses of this nature were permissible.
_____________________________________________________________________ Report of the Auditor General 2012-2013 109 12.06 We recommended that an explanation be given to explain why public funds were expended to finance travel for personal health reasons or the authority be provided for audit review.
North Eleuthera District Upper Bogue, Eleuthera We were 12.07 During our examination, we observed that the Administrator’s office at Upper Bogue, Eleuthera experienced a series of fires beginning on July 2nd 2013 that completely destroyed the building which housed the offices of the Local Government and the Postal Section.

informed that the Administrator’s safe was taken to the Police Station at Governor’s Harbour and was opened without the auditors being present.
We also noted that a fire occurred on April 22nd 2014 that completely destroyed the registers and counterfoils along with other credentials belonging to the Parliamentary Registration Department.

Another fire took place on July 28 2014 destroying various accounting documents, namely the cashbooks and the vote charge books.
12.08 We recommended that the Financial Regulations (Chapter 359) Section 21 Subsection 6 which states that “An accounting officer shall be personally liable for all public moneys and public stores placed under his control,” be adhered to.

In addition, the Ministry of Agriculture, Marine Resources and Local Government should ensure that a police report is obtained and the results submitted to the Office of the Auditor General (OAG) for review.
12.09 During our scrutiny of Local Government accounting records for the period under review we were not provided with all documents.

Those that were examined included the months of February 2013, April 2013, and June 2013.

We were informed by the Administrator that the missing documents were destroyed during the fires.
_____________________________________________________________________ Report of the Auditor General 2012-2013 110 12.10 We recommended that the OAG be provided with the official report by the Administrator on the several fires which occurred in the year 2013/2014.

Also, the Administrator files should be kept in a fire proof cabinet for safe keeping.
12.11 During our scrutiny of Local Government payment vouchers, it was noted that some payment vouchers did not have supporting documents substantiate payments made.

i.e.

bills/receipts, to 12.12 We noted a payment dated February 19, 2013 in the amount of $10,697.24.

This payment was for Local Government contractual workers, which included garbage collection for the Northern main land area, namely from the bridge to Gene Bay and including Black Wood for the month of April 2013.
We observed that the payment voucher was void of cheque number and voucher number.

12.13 We recommended that each voucher bear the cheque numbers and voucher numbers to enable transactions to be charged to the proper account.

12.14 We noted that payment batch vouchers were provided for review for the months of February, April and June 2013.

However, we observed that in some cases batches were void of documents.
12.15 We recommended that the Administrator provide further explanation for the missing documents.

12.16 During our scrutiny of the Local Government bank statement for the period under review, it was noted that a number of cheques were made payable to a clerk in the Local Government office in the amount of $3,700.00.

We could not determine the reason for the payments.

12.17 We recommended that management supply the OAG with the reasons of these payments.
_____________________________________________________________________ Report of the Auditor General 2012-2013 111 12.18 We noted that bank reconciliations were not completed for the Local Government account for the fiscal year July 2012 through June 2013.

12.19 We recommended that bank reconciliation statements be brought up-to-date and maintained on a regular basis.
12.20 In our opinion, the accounts of the Local Government Upper Bogue, North Eleuthera District were not maintained at a satisfactory standard in all respects specifically the non- preparation of bank reconciliation statements for this account.

Internal controls need to be strengthened to ensure efficiency and effectiveness of the financial operations.

Therefore, we could not give assurance the correctness and completeness of the accounts.
to _____________________________________________________________________ Report of the Auditor General 2012-2013 112 Treasury Final Accounts Treasury Final Accounts Treasury Final Accounts Treasury Final Accounts Chapter 13333 Chapter 1 Chapter 1 Chapter 1 _____________________________________________________________________ Report of the Auditor General 2012-2013 113 _____________________________________________________________________ Report of the Auditor General 2012-2013 114 SECTION THIRTEEN TREASURY FINAL ACCOUNTS Bank Reconciliation Un-reconciled Inactive & Dormant Bank 13.01 There are eighteen (18) inactive general ledger bank accounts that remain on Treasury’s books.
The Treasury reported that these accounts can be attributed to incorrect postings and non-cash entries being recorded in Treasury’s cashbook and that these records cannot be corrected due to the deficiencies of the previous manual operated system and the lack of supporting documents.

There are no monies in the commercial banks to these accounts.

13.02 Management reportedly, requested for these accounts to be written-off since 2000 with numerous follow-ups to Ministry of Finance.
To date, no formal action has been taken.

It is hoped that subsequent to the passing of the amendments to the Financial Administration and Audit Act 2010, a decision will be forthcoming.
CASH BOOK BALANCES TO BE WRITTEN OFF Bank Account Numbers 232.790.6 433.109.6 232.795.5 433.117.9 232.800.3 110.199.7 402.436.0 110.201.1 402.438.6 110.202.9 110.204.5 232.790.6 433.113.8 Account Description B$ Consolidated US$ Consolidated B$ Expenditure US$ Expenditure B$ Capital Expenditure B$ Consolidated US$ Consolidated B$ Expenditure US$ Expenditure B$ Capital Expenditure B$ Expenditure B$ Deposit Fund US$ Deposit Fund Book Account Numbers 103.1001 103.1002 103.1003 103.1004 103.1006 103.1104 103.1015 103.1016 103.1017 103.1018 103.1019 103.2001 103.2002 Cash Book Balance $ $5,969,475.91 -3,376,956.25 -24,753,774.49 -2,068,490.89 11,252,011.12 2,309,122.89 1,364,232.60 5,557,636.10 2,689,361.72 2,797,007.52 2,162,583.27 6,496,970.22 936,481.94 _____________________________________________________________________ Report of the Auditor General 2012-2013 115 CASH BOOK BALANCES TO BE WRITTEN OFF Bank Account Numbers 232.791.4 110.200.3 402.437.8 110.203.7 Account Description B$ Deposit Fund B$ Deposit Fund (INC) US$ Deposit Fund (INC) B$ Deposit Fund Expenditure Book Account Numbers 103.2011 103.2014 103.2015 103.2016 Cash Book Balance $ -30,044,699.73 9,160,568.31 168,594.02 5,530,362.83 ($3,849,512.91) 13.03 The Office of the Auditor General (OAG) is of the opinion that the issue has been outstanding for too long and had expected that this would have been resolved during this financial period.
13.04 Treasurer reported that these account balances have been written off in accordance with Section 25 of the Financial Administration and Audit Act 2010 and the Dormant and Inactive Accounts Regulations 2013.

13.05 However, OAG noted that in accordance with the FAA 2010, the Minister of Finance needs to perform certain acts before removal from General Ledger of dormant bank accounts and write off can take place.

13.06 Therefore, OAG documented approving the write offs.
information requested that the Treasurer provide the Minister of Finance from Treasurer’s Response: 13.07 In 2013 the FAA Act 2010 the following sections were amended: i) ii) iii) an amendment to Section 8, insertion of new Part IIA – Public Procurement an amendment to Section 25 by inserting new sub- section (2) which relates to regulation for the removal of dormant book accounts, _____________________________________________________________________ Report of the Auditor General 2012-2013 116 iv) v) repeal of Section 26, amendment to Section 32.
13.08 Regulation relative to item (iii) amendment was also prepared and should have been tabled.

13.09 In checking with the House of Assembly, we were advised that no regulation was tabled, therefore, such regulation will now have to be tabled by the Minister to remedy this oversight.

Dishonored Cheques 13.10 We continue to have concerns with Dishonoured Cheques which has decreased from $20,000,000.00 to approximately $18,000,000.00.

13.11 There should be continuous monitoring of Dishonoured Cheques.
The Statements are being produced on a modified cash basis, therefore, a provision for doubtful accounts should be established.

13.12 Under International Public Sector Accounting Standard (IPSAS) Dishonoured Cheques should be recorded as Accounts Receivable.

Treasurer’s Response: 13.13 The enforcement of controls and directives are the responsibility of the Principal Accounting Officer (i.e.

P.S.

or HoD) of the respective Ministry or Department.


The Treasury continuously sends out circulars regarding the acceptance of certified cheques but such directives are overridden by the Principal Accounting Officers or their designate.

13.14 Some impaired amounts are being written off in this fiscal year.

The respective agencies have been requested to verity their balances so that we can request a further write-off of uncollectible amounts.
_____________________________________________________________________ Report of the Auditor General 2012-2013 117 13.15 Due to the deficiencies of this homegrown system, the data from this subsidiary file will be moved to the Accounts Receivable Module of the Financial Management System which has these features.

Family Island Suspense Accounts 13.16 Family Island Suspense Accounts are not being reconciled in a timely manner.
13.17 We recommended that these accounts be reconciled in a timely manner so that the Financial Position is not materially misstated.

13.18 We also recommended that a proper Accounting System be implemented in the Family Island which can be integrated with the accounting system in New Providence.

This would greatly enhance the accounting for Family Island Transactions.
_____________________________________________________________________ Report of the Auditor General 2012-2013 118 Audit Certificate Audit Certificate Audit Certificate Audit Certificate _____________________________________________________________________ Report of the Auditor General 2012-2013 119 _____________________________________________________________________ Report of the Auditor General 2012-2013 120 AUDIT CERTIFICATE THE FINAL ACCOUNTS OF THE GOVERNMENT OF THE COMMONWEALTH OF THE BAHAMAS FOR THE YEAR ENDED JUNE 30, 2013 In compliance with Section 43 of the Financial Administration and Audit Act, 2010, I have examined the several statements and accounts of the Government of the Commonwealth of The Bahamas as specified under Section 32(3) of the Act.
The Financial Statements are the responsibility of the Treasurer.

My responsibility is to examine and certify the Statements, based on the outcome of my examinations, as required by the Act.

These Financial Statements have been examined in accordance with The Financial Administration and Audit Act, 2010, The Financial Regulations 1975, The International Organization of Supreme Audit Institutions (INTOSAI) Auditing Standards and other auditing procedures as were considered necessary in the circumstances.
As a result of my examination, I now report that due to the continued inclusion of un-reconciled inactive bank accounts, large Suspense account balances and weaknesses in system of Internal Controls related to revenue and expenditure, I cannot attest to the completeness and fairness of Cash and Bank Balances.
Because of the fundamental importance, and the material effect of these accounts as described in the preceding paragraph, on the statements of account, I am unable to certify that the Final Accounts of the Government of the Commonwealth of The Bahamas present a true and fair view of the state of affairs for the year ended June 30, 2013.
_______________________ Terrance S. Bastian (Mr.) Auditor General Nassau, Bahamas November 21, 2014 _____________________________________________________________________ Report of the Auditor General 2012-2013 121 _____________________________________________________________________ Report of the Auditor General 2012-2013 122 AAAAnnnnnexnexnexnex _____________________________________________________________________ Report of the Auditor General 2012-2013 123 _____________________________________________________________________ Report of the Auditor General 2012-2013 124 Report of the Auditor General Table of Contents ANNEX PART II Balance Sheet – Consolidated Fund...……….……………………….. Annex 1 Statement of Revenue & Expenditure…………….…………………… Annex 2 Statement of Cash Flow………………………………………………….. Annex 3 Statement of Consolidated Fund (Current Account)..….………… Annex 4 Statement of Consolidated Fund (Capital Account)..…………… Annex 5 Notes to the Financial Statements…………………………………..… Annex 6 Statement of Public Debt……………………………………………….
Annex 7 Graphs of Revenue & Expenditure…………………………………… Annex 8 Statement of Financial Assets & Current Liabilities – (Deposit Fund Account)……………………………………………….. Annex 9 Schedule of Cash Movement in Deposit Fund by Account Categories………………………………………………………………… Annex 10 Statement of Contingent Liabilities………………………………….. Annex 11 _____________________________________________________________________ Report of the Auditor General 2012-2013 125 _____________________________________________________________________ Report of the Auditor General 2012-2013 126 _____________________________________________________________________ Report of the Auditor General 2012-2013 127 _____________________________________________________________________ Report of the Auditor General 2012-2013 128 _____________________________________________________________________ Report of the Auditor General 2012-2013 129 _____________________________________________________________________ Report of the Auditor General 2012-2013 130 _____________________________________________________________________ Report of the Auditor General 2012-2013 131 _____________________________________________________________________ Report of the Auditor General 2012-2013 132 _____________________________________________________________________ Report of the Auditor General 2012-2013 133 _____________________________________________________________________ Report of the Auditor General 2012-2013 134 _____________________________________________________________________
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