GEORGETOWN, Guyana (CMC) — The Guyana Revenue Authority (GRA) has defended its decision regarding the prolonged delay in releasing the findings of an audit that allegedly found more than US$200 million in questionable claims.

“It is therefore mischievous and misleading to intimate that the Government of Guyana has not been actively pursuing closure of the audit and, by extension, the necessary adjustments to the Cost Bank,” the GRA said as it denied a Stabroek News newspaper report which had suggested that the Government was hiding the report.

“It is also reckless and unnecessarily inciting for a known and reputable news outlet to feature and quote a leaked and unvalidated document, without seeking a response from the responsible parties,” the GRA said, calling for “responsible journalism” while saying that it was continuing to “play its role in spite of its scarce resources in ensuring that Guyana receives its fair share of profit petroleum and taxes”.

“That report has been with the staff of the ministry and with the GRA and all their technical people for the last several years. Nobody is hiding the report,” Vice-President Bharrat Jagdeo said in reference to the 2021 IHS Markit audit report.

Jagdeo told reporters that if the ExxonMobil-controlled Esso Exploration and Production Guyana Limited (EEGPL) could not provide additional information, there would have to be an adjustment to profit oil.

Stabroek News had reported last weekend that the audit found that cost claims from 1999 to 2017 amounting to US$34,346,312 are ineligible and US$180,065,682 have no documentation, taking the total to US$214,411,994.

In a lengthy statement issued here, the GRA Commissioner Godfrey Statia said given the views expressed in the newspaper article “it is behooving of the revenue authority to apprise the public of the efforts made and progress realised to date, in substantiating the contractors’ expenditure claims for the Stabroek Block…while at the same time putting to rest any claim that the intention is to keep the report hidden”.

He said that in November 2019 the Guyana Government entered into a contractual arrangement with IHS Markit (IHSM) for the provision of consultancy services to execute the country’s inaugural cost recovery audit.

He said the audit scope entailed the examination all pre-contract costs and all exploration and development costs as at December 31, 2017.

The GRA commissioner said that given the paucity of resources nationally, several agencies collaborated to form Guyana’s audit team, including the GRA and the Guyana Geology and Mines and Commission (GGMC). However, the Auditor General’s Office, which was also requested to have its team be a part of the audit, declined to do so.

“The Guyanese representatives were expected to shadow and understudy the IHSM experts during the course of the audit in an effort to facilitate transfer of knowledge and technical ‘know-how’ and generally, to build capacity to conduct cost oil audits locally. They were also expected to jointly execute the audit with IHSM,” Statia said, adding that in keeping with the agreement with the UK-based IHSM, there “were three distinct reports which were delineated as deliverables, these were, the Initial Audit Report, the Intermediate Audit Report and the Final Audit Report”.

He said a period of intense auditing followed, which led to the development of various detailed audit reports, and on July 31, 2020, IHSM submitted a compiled report which it referred to as the ‘Final Audit Report’, along with the reports for each work stream.

“However, the Guyana Revenue Authority noted that there was a breach of contractual terms, as well as audit standards and good practices when IHSM attempted to by-pass the Interim Audit Report requirement,” Statia said.

He said that IHSM was told that “a Final Audit Report cannot be compiled until the contractor (or Esso Exploration and Production Guyana Limited, in their capacity as the operator, of the Stabroek Block) is issued with a ‘Written Report’…

“This means that the contractor, in accordance with the stipulations of the PSA and audit standards, must be allowed to respond to the ‘Written Report’ or Draft Audit Report. The response of the auditee, along with the additional evidential material provided, must be taken into consideration whilst compiling the Final Audit Report.”

Statia said the GRA pointed out that it was its firm opinion that a Final Audit Report should only be issued after the auditee is given an opportunity to officially respond to the initial findings of the draft report.

“Thereafter their response(s) along with the evidential material submitted should be considered prior to drafting a Final Audit Report. As in the law of equity where “he who asserts must prove”, similarly the auditee has a “right to be heard”.

He said thereafter, two iterations of the ‘Audit Report’ were issued by IHSM between July, 2020 and November, 2020.

He said the GRA reviewed the respective reports, submitting official comments and in particular, in early 2021, it penned its concerns to IHSM regarding “major deficiencies that recurred throughout its report”.

According to the GRA commissioner there was a lack of recommendations in the report; failure to refer to industry standards and good practices for specific findings, inaccuracies as it relates to analysing and reviewing the financials as well as general inconsistencies and deficiencies.

The report also failed to “adopt suggestions and recommendations, as well as, address concerns emanating from Government of Guyana representatives.

“The GRA further advised that the foregoing, in its opinion, had significant adverse effects on the quality of the report and its ability to attain the desired outcomes of arresting unsound financial practises on the part of the contractor and improving Governmental controls.”