CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD Draft report for Discussion purpose

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD Draft report for Discussion purpose

NATIONAL SOLID WASTE MANAGEMENT AUTHORITY

MPM EXPENDITURE AUDIT CHEQUE PAYMENTS

INTERNAL AUDIT DEPARTMENT

APRIL 2014

1.0 INTRODUCTIONThis audit was performed in accordance with the annual audit plan for the Financial Year 2013/14. The purpose of the audit was to examine and evaluate the adequacy and effectiveness of the system of internal control over the payment process

1.1 Objectives and Scope The objectives of the audit were to determine whether:

1. A schedule of payment approval and cheque signing limits authorities exists, to ensure proper preparation authorization and approval for payment processing;

2. Bank Transfer and Cheque signing is restricted to authorized Manager/Executive;

3. Payments made to suppliers/contractors are legitimate with the required procurement documents;

4. Payees are the authorized persons and expenditure correctly classified and posted to the relevant general ledger accounts;

5. All expenditure vouchers are supported by the appropriate invoices/supporting documents and evidence seen that goods/services are received/rendered in a satisfactorily manner;

6. Adequate procedures are in place for processing cheque requests and prohibit cheques from routinely being returned by the payee or the bank; 7. Cheques were delivered to the bonafide payees or authorized agents and written acknowledgement secured. 1.2 Audit Approacha. Interviewing of relevant officers;

b. Examination of documentation/records.

1.3 Auditor AssignedThe audit was conducted by Auditors Karen Watson, Doranie Sergeant and assistant auditor Jelisa Barnett supervised by the Audit Manager.1.4 APPROVED BY

Vashti Wilson,

Internal Audit Manager3.0AUDIT REPORT

Cheque payment vouchers along with supporting documents, encashed cheques, cheque transaction listing, general ledger extracts and cheque disbursement registers were examined for periods between April 2012 and March 2014. For discretionary reasons the names of individuals, contractors and companies are not included in the report; instead NCC, TCC or TRN numbers were substituted. The information can be provided if it becomes necessary.3.1Failure to present essential records

Criteria

Section 148(1) of The Financial Administration and Audit Act (The Financial Management Regulations 2011) states Accounting Officers or heads of departments shall ensure that internal audit has access to all books , records, documents, files, working papers, reports, plans whether held physically or electronically and any other relevant material for the purpose of carry out an audit.

Audit Observations

The system of internal control relating to record management was weak as the posting, filing, and storage of accounting data along with other relevant supporting documents /information was inadequate and did not allow for prompt retrieval of document and accurate accounting data.

MPM Accounting Units fail to present to Audit following records/documents requested both verbally and in writing.1. 2782 vouchers totaling $410,686,269.83 which were missing from the batches received for payments made by cheques during the period April 2012 to March 2014;2. Journals vouchers for bank transfers to substantiate expense totaling 153,711,165.61 seen posted to the General Ledger. Audit was therefore unable to examine the above vouchers to determine whether::

The appropriate supporting documents and evidence that goods/services were received/rendered in a satisfactorily manner were in place; and They were properly prepared, authorized and approved before payment.See Appendix A for a comprehensive list of documents requested and not received.ImplicationBreach of Section 148(1) the Financial Management Regulations 2011Recommendation

The Regional Operations Manager, Financial Accountant and Accountant are reminded that they are charged with the responsibility of ensuring that guidelines issued by the Ministry of Finance are implemented and an effective system of internal control exists. Hence:1. All payment vouchers and other documents not presented should be accounted for. 2. The requirement of the MOF&P circular#6 dated 28/3/2000 which state that if impropriety is suspected regarding the missing payment vouchers, the matter should be reported to the Auditor general and the Financial Secretary be Comply with. Management Response

Regional Operations ManagerFinancial AccountantAccountant (MPM)3.2Vehicle Maintenance----Garage 97 Hagley Park RoadMotor Vehicle repairs and maintenance cost for 2013/2014 have increase by 100% from $16 million in the financial year 2012/2013 to over $33 million This cost did not include expenses for Fuel. Examination of payments vouchers relating to the procurement of goods and services for the garage revealed the following:3.2.1

Lack of Segregation

The internal controls at Hagley Park Garage must be strengthened, in the area of procurement and payment of items for the garage. There was clear evidence of a lack of segregation of duties in the process. The following observations were made:1. The Public Cleansing Administrator currently ; Prepares and signs on the purchase requisitions, purchase orders and Procurement Reporting Form; He is the contact person between the garage and the suppliers. This is detailed in the Request for Tender document; Collects the suppliers cheque evidence by the signature in the payment disbursement book; Collects the goods from the suppliers from time to time; and Occupies office space with the store clerk.2. The Store Clerk currently

Receive goods purchase either from suppliers or person who collects; prepares the goods receival note; performs safekeeping and distribution of goods; and Updates the inventory stock records. Audit noted that the stock records were not updated at the end of the financial 31st March 2014.Implications

The lack of separation of duties could result in unauthorized purchase and payment, undetected.RecommendationThe Regional Operations Manager must improve the internal controls by ensuring that there is segregation of duties. Hence: A service requisition must only be prepared from a service order (job order) and the job order number must be recorded on the requisition at all times for transparency and audit trail.

The officer involved in the preparation and signing of procurement documents should not also collect suppliers cheque and the items purchase. The custodian and issuer of store items should not also receive the good and prepare the GRN. The GRN should be prepare and handover to the store clerk along with the items by another officer this will minimize collusion. This officer should not be involved in preparing procurement documents or have contact with the supplier.Management Response

Regional Operations Manager

3.2.2 Splitting of Purchase to bypass procurement processThe Ministry of Finance circular#16 dated 14/5/2012 stipulates that for contract in the range of $500,000.00 to $1.5million, limited tender should be used with quotations received from three suppliers.

Audit findings On the 10/12/2013 three computer boxes for compactor trucks were repaired by Cornwall Auto Supplies at a total cost of $931,656.00. Audit noted that:

1. Three separate purchase orders were drawn to Cornwall Auto, each for $310,552.002. The Procurement Reporting Forms stated direct contracting as the method used since the amount was below $500,000.

3. The Purchase Orders were Zero Rated by the Inland Revenue Department; However MPM paid $931,656.00 the unit cost of $792,900 plus GCT of $138,756

. 4. The Public Cleansing Administrator prepares and signs the purchase requisitions, purchase orders and Procurement Reporting Form; and collects the cheque for these purchases.

5. No job order, invoices or goods receival notes for the items were seen to support the payment

Implications

1. Circumventing the GOJ procurement process when three purchase orders were used to split the procurement. 2. The lack of separation of duties, increase control weakness and may result in unauthorized transaction.

RecommendationsThe Regional Operations Manager should ensure that:1. The GOJ Procurement Process is adhered to at all times and not circumvented. Therefore for the purchases which are above $500,000.00 the limited tender process should be used.

2. The duties assigned to the Public Cleansing Administrator should allow for segregation duties, in order to strengthen the internal controls and allow for transparency. ( see recommendation at 3.2.1 above) In addition this officer should be required to present the missing invoices.

The Regional Operations Manager, Financial Accountant and Accountant must ensure that:3. The goods recival note and the invoice which represent the supporting documents for such payments, are attached to the expenditure voucher at all times; and4. Cornwall Supplies Limited should be contacted with the aim of recovering the sum of $138,756.00 paid for GCT. Because the purchase orders were zero rated, Cornwall would not be required to pay over the GCT to Inland Revenue. Ministry of Finance circular#14 dated 2/12/2011 clearly outlined the procedure to follow whenever there is a case of overpayment.The Corporate Service Director and Administration & Procurement Manager should provide formal guidance to the various Departments on the procurement process. This should include periodic review to ensure that the dictates of the Procurement guidelines are followed.Management Response

Regional Operations ManagerFinancial AccountantAccountant (MPM)

Corporate Service Director

Administration & Procurement Manager3.2.3 The misuse of Purchase Order

Criteria

The FAA Act regulations 40 stated that where a service is undertaken by a private person, firm or other private enterprise the price and other terms and condition of the service shall be clearly understood and agreed upon prior to implementation and shall be in writing.

The Ministry of Finance circular#36 dated November 9, 2012 also outlined the importance and usage of a Purchase order. It states that the Purchase order is a document sent by the buyer to a supplier or vendor, authorizing the supply of goods or service.Audit Findings

MPM was operating contrary to government regulation as purchase requisitions and purchase orders were seen prepared on or after the date of invoice, and on the date of payment. 1. The reference number of suppliers invoice and delivery note was not seen on a number of purchase order.. The following are examples:

DateCheque#AmountPayee

TRN#PurposeInvoice DatePurchase Order DatePurchase Requisition Date

7/1/20141023095346,500.

Kevin Thompson

Trn#

108481905Provide backhoe service on the 21, 23, 24, 27 & 28/12/2013 20, 27 and 31/12/2013#031766 31/12/2013#003049 dated 31/12/2013

24/12/20131023072300,000.

Andrean Larmond

Trn#

120-358-115To clean roadway8/12/2013031763

24/12/2013003046

23/12/2013

18/3/20141023350568,820. Stewart Industrial

Trn#000-081-841Repair burnt out battery terminal412608

22/8/2013030439

27/2/20146128

27/2/2014

Implication

1. Breach of the FAA Act regarding the purchase of good/service; and

2. The entitys money could be misappropriated without detection when Purchase Order is prepared and dated six months after invoiced received, resulting in financial loss to entity.

Recommendation

The Regional Operations Manager, Financial Accountant and Accountant should ensure that:

2. The FAA Act and GOJ procurement guideline are adhered to. Hence at all times Purchase Orders must be prepared prior to, the commencement of services and payment for goods;

3. In instances where emergency procurement is necessary, the relevant documents must be prepared promptly and in place before the work is completed or goods received; and payment made; and4. The suppliers invoice and delivery note is clearly marked with the reference number and date of the purchase order for transparency and audit trail. Management Response

Regional Operations ManagerFinancial AccountantAccountant MPM

3.2.4 Inadequate Supporting DocumentsCriteria

The FAA Act Instruction 5.3 (clearly states that Each payment of public money must be supported by a Payment Voucher or a claim which incorporates details required for a Payment Voucher. (Point 8) The supporting bills/invoices should be stamped paid.

Audit Findings

MPM was operating contrary to government instructions as noted in the under-mentioned findings:1. The majority of Cash on delivery (C.O.D) payments examined for motor vehicle repairs and maintenance were not supported by the requisite invoice or goods receival note; hence audit was unable to determine whether MPM had actually received the goods/services paid for.A sample of 20 payment vouchers were examined, and 18 were not supported by the requisite invoices and Goods receival notes. The 18 payments amounted to $3,209,392.92 2. Payment of $268,868.04 was made to Real Oil Jamaica Limited on cheque#1019751 dated September 5, 2013 for the purchase of 16 batteries.

Only 14 batteries were received resulting in an over payment of $38,085.10 to Real Oil Jamaica for two batteries. A credit memo was not seen on file, neither any evidence that MPM attempt to collect the remaining goods or cash.3. Audit also was unable to determine how MPM satisfied itself as to the quality of services provided by supplier as it relates to repairs to vehicles since certification was not seen re satisfactory quality of service provided. the following are examplesDATECHEQUE#PAYEEAMOUNT

2/7/20141023222-GENERAL DIESEL SUCCESSORS187,600.00ISUZU GARBAGE TRUCK LIC#: 30-4081

Repair trunions no invoice seen

2/7/20141023211GENESIS PROACTIVE LTD.149,564.04TO REPAIR SUZUKI JIMMY LIC# 203219 Repair no invoice seen

2/7/20141023212GENESIS PROACTIVE LTD16,300.00TO REPAIR SUZUKI JIMMY LIC#: 203219-

2/19/2014102322GENESIS PROACTIVE LTD195,250.00REAPIR DONE TO Unit licence#303154/ no invoice seen

3/18/20141023351-DR. GLASS LIMITED11,120.00GLASS FOR LANDFILL MANAGER VITARA

No invoice seen

Implication

Accuracy of payments cannot be validated when there are no supporting invoices or goods receival note and no evidence seen to confirm that service was performed; andPossibility exists for duplication of payment when there is delay in presenting invoices to Accounts.Recommendation

The Regional Operations Manager, Financial Accountant along with the Accountant need to ensure that the dictates of the FAA Act Instruction 5.3 is adhered hence:

1. In cases where cash on delivery payments are made, the invoice and goods received note should be returned by the designated officer to the accountant immediately after the purchase. 2. The officers responsible should be asked to present the invoices identified above, and provide evidence that the goods/services were received;3. The overpayment of $38, 085.10 must be recovered from the supplier.Management Response

Regional Operations Manager

Financial Accountant

Accountant (MPM)

3.3

Incorrect rates paid for meal and travelling allowance. CriteriaThe Ministry of Finance circular#19 dated 1/9/2009 stipulates that:

The rate for taxi allowance is $550.00 per occasion however for distances to Spanish Town, Portmore and in the rural areas which is 15 kilometer or more from base, the rate is $900.00

Refreshment allowance which is payable on weekend is $1,000.00

Audit Observation

1. An employee TRN #100271227 received 6 payment totaling $32,400.00 for meal allowance, but all relevant vouchers were not presented. Examination of the two payment vouchers presented revealed that the officer received payment of $1100.00 for three (3) Saturdays worked instead of the correct rate of $1000.00 resulting in overpayment of $300.2. An employee (Trn # 114-749-060) whose address was stated as Kingston received $1800.00 per trip for taxi fare instead of the stated amount of $1100.00. Payment totaling $88,200.00 was made to him during the reviewed period, but all relevant vouchers were not presented

Examination of the payment made on the 6/12/2013 vide cheque#1022933 revealed that inclusive of $25,200.00 was payment for 9 days @ 1800.00= 16,200.00 however his entitlement should have been $9900.00 overpayment of $6,300.00..Implication

Non- adherence to government guidelines resulted in overpayment to the two employees.

Recommendation

The Regional Operations Manager, Financial Accountant and the Accountant should:1. put controls in place to verify the accuracy of employee allowance claims based on the government approved rates; and2. Ensure that payment vouchers for all payments made to the two employees are located and examined for accuracy3. The full amount overpaid including the $6,600 identified above is recovered from the employees.Management Response

Financial Accountant

Regional Operations Manager

Accountant (MPM)

3.4 Lack of adequate payment verification control Criteria

The FAA instruction 5.4 states that the signature of the officer authorized to certify the voucher for payment is a guarantee of the accuracy of every detail on the voucher.

Audit Findings

Authorized Officers did not always exercise due care when certifying payment vouchers relating to salary remittance: 1. During examination of the cheque payment vouchers audit observe two occasions of overpayment totaling $245,104.93. The amounts paid exceeded the amount on payroll print-out The details as follows: CompanyRemittance Chequ dateAmount PaidAmount OverpaidDate Recovered

National Housing Trust2/9/2013 Cheq#1022740285,859.86145,104.9329/10/2013 cheq#1022882

ISP Finance Services Limited8/7/2013

Cheq#1022605933,861.96100,000.0021/8/2013

Cheq#1022694

TOTAL$245,104.93

Although the $245,104.93 was recovered this findings continues to highlight clear evidence of a lack of internal control in respect of validation control payments made by the entity In addition a payment of $36,553.89 was made on the 7/1/2014 to Guardian Life limited vide RTGS system payment. Examination of the supporting documents revealed that the total sum was $35,212.25, difference of $1,341.61. No evidence was seen of this amount being recovered

Implication

Weak internal control for the payment validation process resulted in overpayment. It is possible therefore for unidentified overpayment to remain undetected.Recommendation

The Regional Operations Manager and the Accountant need to ensure that Internal controls are strengthened to verify the accuracy of invoice and payment voucher before payment is made, in order to avoid such overpayment in future; and.

The sum of $1,341.61 is recovered from Guardian life.

Management Response

Regional Operations Manager

Accountant (MPM)3.5 Constituency Development Fund (CDF) payments

The CDF account BNS #801500 is maintained by the Parks and Garden Department and is the account from which payments relating to work done re Constituency Development is made.

During the examination of the payment vouchers received Audit noted that December 19-20, 2013 payments totaling $10,985,000.00 was made from MPM account NCB#231038345: $4,050,000.00 vide cheques and $6,935,000.00 through RTGS transfers.

No vouchers were presented for the payment made through RTGS nor any intercompany transfer seen between Parks Department and MPM

Implication

The possibility for duplication in payments exist when payments are made from different bank accounts and entities

Difficulty in reconciliation of expenditure under the Constituency Development FundRecommendation

The Regional Operations Manager and Director of Finance should ensure that: there is consistency in the accounting for the CDF fund hence, payment relating to the fund should be paid from the applicable account BNS #801500, to allow for timely and accurate reconciliation.

The RTGS vouchers relating to CDF are presented, and the general ledger accurately updated with these transactions.Management Response

Regional Operations Manager

Director of Finance

3.6 Payment made on behalf of NSWMA

Payments amounting to $2,722,078.06 were made during the period 21/12/2013 to 27/1/2014 on behalf of NSWMA. Audit noted that:

MPM Cheque were utilized to make these payments from their recurrent account. The cheques were posted to the MPM Ledger; The Payment vouchers were for NSWMA. Audit could not verify whether the general ledger was adjusted to correctly reflect the transactions. It was noted that the bank reconciliation was not up to dateImplication

Internal control weakness and poor accounting practice highlighted in this observation. Overstating of MPM expenditure in the General Ledger resulted.

Recommendation

The Regional Operations Manager and the Director of Finance and Financial Accountant should ensure that:1. The accounting records is updated to accurately reflect the transaction in terms of the entity and the related general ledger accounts 2. The management of the entities affairs and public funds is in keeping with proper accounting practices to provide accuracy, transparency, and accountability

Management ResponseRegional Operations Manager

Director of Finance

Financial AccountantPayment for Christmas WorkAudit noted the following:1. Direct payments of $ 4,295,000.00 were seen made by MPM for Christmas project.

Although the payments may be justifiable, audit was unable to examine and validate the payments, sine the vouchers, supporting bills along with cashed cheques #1023008-1023046 &1023087 drawn 20-21/12/2013 were not presented although requested. See Appenixattached2. Christmas project was also seen paid by MPM on behalf of NSWMA/Parks & Gardens for $5,041,750. Vouchers for these payments were prepared and stored by NSWMA, but cheques were seen posted to MPM general ledger. See Appendix.. attachedImplication

Failure to present payment vouchers and supporting documents is a Breach of Section 148(1) the Financial Management Regulations 2011 and could conceal irregularity

Recommendation

The Regional Operations Manager and the Accountant are reminded as outlined by the Financial Management Regulations 2011 that Accounting Officers or heads of departments shall ensure that internal audit has access to all books , records etc.; hence documents relating to the above must be presented.Management Response

The Regional Operations Manager

The Accountant ( MPM)

Payment for Special Project

It was noted that $4,810,983.25 was expended from the MPM Recurrent account for Special Project. This included payment for clearing and cleaning of open lots using backhoes, labour and the carting of debris to the landfill.

The following weakness were identified during examination of the payment vouchers:1. Similarities were seen between invoices submitted by two different payees, inaddition one payees TRN #120406071 is the same as an employee in MPMThe similarities between invoices were:

Invoices and daily work sheet appeared to have been taken from the same book as the numbers on invoices and the work sheets attached to different cheques were in sequential order.

The handwriting on the invoices appeared to have being written by the same person although services were performed at different location throughout Kingston.

The signature of one of the Payee which was affixed to the invoice and work sheets did not correspond with the payee named on the payment voucher as the first initial differ.

The daily work sheet did not have the signature of representative from MPM affixed verifying that the work was performed; The signature seen on the invoices did not always correspond with the signature affixed to the cheque disbursement book nor to the reverse of the cash cheque2. Purchase requisitions and purchase Orders were all prepared after services were rendered, based on the invoice date and cheques drawn date3. The daily work sheets were not signed by MPM representative who were present at the time when the work was effected instead invoices were stamped Goods/services received satisfactorily with the signature of the Regional Administrator affixed.4. Not all vouchers were received for examination although requested. Attached at appendix is the list of payment extracted from the general ledger.

Implication

Failure to implement adequate internal verification control in the accounting process will provide opportunity for unauthorized activities.Recommendation

The Director of Finance, Regional Operational Manager and financial Accountant must 1. Address the control weaknesses identified in the Validation of invoices and supporting documents as noted in findings,

2. Ensure Certification of goods received and service rendered is carried out by an officer at the point of delivery. The reason for certification by the officer mentioned should be determined3. Determine whether the employee and the contracted payee with the identical TRN is the same individual, and address this matter immediately, as conflict of interest would be evident.

Management Response

Director of Finance

Regional Operations ManagerFinancial Accountant3.7 No Supporting invoice for payments

Audit Findings

Contrary to, the FAA Act instruction 5.3, cheques were drawn and disbursed without the appropriate supporting documents. 1. Payments totaling $345,645.00 was made to two suppliers for meals provided at the Riverton Landfill during a fire in March 2014. Audit saw no supporting invoice or goods receival note to confirm that the stated meals were received. The details as follows:DATECHEQUE#PAYEEAMOUNT

3/19/201400001023352HOSANG BROTHERS' ENTERPRISE72,180.00

3/21/2014000001023364JEAN MILLER29,500.00

3/21/2014000001023365HOSANG BROTHERS ENTERPRISE52,975.00

3/25/2014000001023368-HOSANG BROTHERS ENTERPRISE169,740.00

3/25/2014000001023369-JEAN MILLER21,250.00

TOTAL$345,645.00

2. 70 other payment totaling $7,929,617.41 were not supported by invoice or goods receival note. Although the payments may be justifiable, the weaknesses identified are clear evidence of a lack of internal control over the payment process, which exposes the entity to irregularity.

3. Copy invoice#5042 dated 23/1/2014 was used to support a payment of $311,639.00 made on the 13/3/2014 to A & L Transport& Tours vide cheque#1023286 for hydraulic oil purchase. The payment contravene the Ministry of Finance circular#11 dated 16/3/2010 which outlines that payment should only be made on the original of supporting document. In exceptional case, the acceptance of duplicate may be allowed by way of an honor certificate, duly prepare and signed.4.An advance of $21,600.00 was seen made to a employee # 810 being expense for I.D pictures and police records for 6 crew members, the requisite invoice was not attached to the payment voucher.ImplicationWeak internal control, poor supervision of accounting activities, as well as ignorance regarding the requirements of the MOFP, could cause erroneous and unauthorized payments to be undetected,

Recommendation

The Regional Operations Manager, Director of Finance, Financial Accountant and Accountant must ensure that:

1. The supporting invoices valuing $8,608,501.41 are located and attached to the payment vouchers. The responsible officer must be required to provide the invoice. This is in compliance with the FAA Act and MOFP circular # 11d/d16/3/2010.

2. The payment process is strengthened. Hence a checklist of the verification controls necessary for validating the supporting invoice and document before preparation of payment voucher and effecting payment is provided to the accounting staff.Management Response

Director of Finance

Regional Operations ManagerFinancial AccountantAccountant MPM

3.8Inadequate Control over Cheque Disbursement

Examination of the disbursement register, revealed several occasions where:

1. cheques were collected and signed for by individuals other than the payee, and No written letter was seen authorizing the bearer to collect cheques on behalf of the respective payees; and

2. The signatures on the payees invoices and the signatures in the disbursement register were not identical. Examples of these payments are shown below:Payee TRNCheque #Cheque DateAmount $

TRN # 108-481-905102304923/12/1373,000

TRN # 108-481-905102304920/12/13211,500

TRN # 108-481-90510230497/1/14346,500

TRN# 120-406-071102315422/1/14179,200

TRN# 120-406-071102304723/12/13212,000

Implication Failure to obtained written instructions, in instances when cheque is not disbursed to payee may result in disbursement to unauthorized individuals. This could result in financial loss to the entity.

RecommendationThe Regional Operations Manager and the Accountant should ensure that:

1. All cheques are signed for and dated by the authorized payees2.Where representatives are used written instructions are obtained granting such authority to collect cheque on behalf of the payee3.Proper identification is provided by the payee and their repesentive when collecting Management Response

Regional Operations Manager

Accountant MPM3.9Inadequate Filing and storage of Payment Vouchers

The filing system currently in place was also a matter of concern as audit noted:

1. Payment/expenditure vouchers were filed in carton boxes according to the type of payment and not in cheque number although, the practice is to used cheque number to identify vouchers;

2. Remittances and other payments were observed loosely placed in boxes beside and behind the accounting clerks desk on the floor. These payment vouchers were also not filed in any order; and3. More than one file jacket was maintained for vouchers with the same cheque sequence, and these were not in any order.Implication

Lack of control over the filing and storage of payment vouchers may aid in removal and destruction of records and concealing unauthorized transactions.

Loss of government records by deliberate or accidental damage when files are stored on the floor.

Recommendation

The Regional Operations Manager, Accountant and Regional Administrator need to ensure that the dictates of the ministry of Finance and Planning is instituted and adhered to:

1. Each payment voucher must be filed in ascending order in chronological manner. Any break in the sequence should be properly noted.2. Payment vouchers should be properly secured in files, with new volumes open as soon as possible to prevent protrusion. Place in protective binders to safeguard from damage.

3. The filing room allows for easy retrieval of document/vouchers.

4. File and documents should be kept in a raised position from the floor, as a protective measure from damage by water.

Management Response

Regional Operations ManagerRegional Administrator (MPM)Accountant (MPM)3.10Payment Vouchers not uniquely numbered

Criteria

The Ministry of Finance and Planning circular No.6 dated March 28th, 2000 instruction 4.8 states that each payment voucher must have a unique number per financial year and must be filed in ascending voucher order. A proper notation must be made to explain any gap or break in the sequence of voucher number.

Audit Findings

MPM was operating contrary to the requirement of the Ministry of Finance and Planning.

1. Cheque payment vouchers did not have unique number to identify each payment; instead the cheque numbers were used as the voucher number, a non-compliance to MOFP circular 6, instruction 4.8.2. There were numerous gaps and break in the cheque sequence, which was attributed in many instances to cancelled cheques or change in cheques sequence. The audit progress was prolonged as it was time consuming to ascertain the reason for the sequence gaps.

ImplicationFailure to implement a unique numbering system could result in the inability to readily identify unauthorized transaction. As a missing vouchers would not be easily identified.Recommendation

The Regional Operations Manager and the Accountant need to ensure that the dictates of the Ministry of Finance and Planning is implemented and adhered to, hence each payment voucher must Have a unique identification number, in terms of financial year

Be filed in ascending order in chronological manner. Any break in the sequence should be properly noted.

Management Response

Regional Operations Manager

Accountant (MPM)

3.11 Lack of control over closed off period in the General LedgerAudit noted that there was a lack of control over the closed off periods in the General Ledger, since officers could make adjustments to prior year periods which were previously closed. Audit was told by the I.T manager that adjustments can be done up to a six year period.

Implication

The integrity of the data may be compromised when officers are allowed to make adjustments to financial years already closed .

Recommendation

The Regional Operations Manager, Financial Accountant and the I.T Manager, need to ensure that controls are put in place whereby the at the end of the financial year the general ledger is reconciled and closed off, on a timely basisThat access to make changes to prior year ledger account is restricted and once closed no further entry allowed.

Management Response

Regional Operations Manager

Financial Accountant

I.T Manager

Appendix RECORDS/ DOCUMENTS NOT PRESENTED BY MPMPeriod# Vouchers

Not presentedValue of Transaction $Remarks

April 2012-March 20132467361,658,526.38

Payment vouchers were not included in batch received( cheque payment) NCB account#231038345

April 2013-Dec 201331549,027,743.45Payment vouchers were not included in batch received(cheque payment) NCB account#231038345

December 2013-March 2014405141,643,512.31

Payment vouchers not yet received (RTGS)A/c#93912

Journal Vouchers322,898,119.78Journal and supporting documents not received

TOTAL3,187875,227,901.92

OTHER DOCUMENTS NOT RECEIVED

DocumentsPeriod

Bank Statements

NCB account#231038345

November 2013 to March 2014

BNS bank statements

#939-12April 2012 to March 2014

Encashed Cheques

NCB account#231038345

November 2013 to March 2014

Inventory CardsApril 2012 to March 2014

Motor Vehicle Work Order BooksApril 2012 to March 2014

Goods Receival BooksApril 2012 to March 2014

Internal Audit Department April 2014Page 24