NLA breakdown creates $450-million risk exposure
The Auditor General’s Department has pinpointed delays in reconciliation of bank accounts, long-standing accounts receivables, and advances at the National Land Agency (NLA) that have led to risk exposure to the Government totalling just over $450.21 million.
The deficiency was identified in the Auditor General Department’s 2021 annual report laid in the House of Representatives on Tuesday. The report details the department’s examinations of the Government’s accounts up to March 31, 2021, along with the performance of the Auditor General’s Department from December 2020 to November 2021, and all audits conducted up to November 2021.
The audit of the land agency’s financial statements for the period April 1, 2011 to March 31, 2019 brought to the surface matters of poor management over accounting and financial operational processes, where there was a general lack of supervisory review of the agency’s accounting and financial processes, resulting in unreconciled account balances for the period, according to the Auditor General’s Department.
The agency said the draft financial statements had numerous errors as a result and was returned to the NLA for correction in February 2021, but the corrected statements have not been submitted.
“NLA has since indicated that the Final Accounts Unit is faced with chronic staffing challenges, as such, additional staff was engaged on a temporary basis to assist in completing the financial statements,” the report said.
The report noted the efforts made to reconcile estate management accounts up to August 2021, but emphasised that bank reconciliation statements should be prepared monthly to minimise the risk of undetected errors and irregularities in the NLA’s banking transactions.
“This is in a context where the March 2012 reconciliation statements for three bank accounts were prepared, December 2019, 91 months after the prescribed time frame for preparation. GoJ guidelines stipulate that bank accounts should be reconciled monthly,” Auditor General Pamela Monroe Ellis insisted. These issues accounted for risk exposure of over $333 million.
At the same time, the NLA has also been cautioned about not having an effective system in place to reduce the risk of financial loss from uncollected revenue, with aged accounts receivables and advances which saw debt of approximately $26.7 million uncollected for up to seven years.
The government auditors further outlined: “Additionally, we identified variances of $3.4 million between the accounting records and financial statements for the periods under review. We saw no evidence that NLA’s receivable/debt collection management was guided by a collection policy. Further, in keeping with the accounting standards, we found no evidence that NLA conducted periodic assessment to determine the collectability of these outstanding amounts. As a result of NLA’s tardiness there were uncleared advances for up to seven years, with a remaining balance of $21.03 million at March 2019. Also, NLA did not obtain the requisite supporting documents to clear staff advances totalling $69.21 million as at March 2019.”
Monroe Ellis said the NLA has since advised that several of these advances relate to small, routine expenses for ongoing projects that will have to remain open until the projects are completed, but did not present the requested information to validate this explanation.
“This breakdown in NLA’s control environment over the management of public resources exposes the agency to financial losses and erroneous financial information to its stakeholders,” the auditor general said.
The agency has advised that it has started the process of conducting a thorough review of its accounting and financial operations to correct past deficiencies and prevent reoccurrence.