AUDITORS were unable to verify the financial statements of the Jamaica Agricultural Commodities Regulatory Authority (JACRA) for its first year of operation, after missing records and documents left significant gaps in the financial history of the agencies merged to form the entity.

The findings were detailed in a Ministry Paper tabled in Parliament last Tuesday, supported by disclosures in the JACRA’s 2018/2019 annual report following its establishment on January 1, 2018.

The audit was conducted by KPMG, which said it was unable to obtain sufficient, appropriate audit evidence to form an opinion on JACRA’s financial statements.

JACRA was created as part of a major Government reform to consolidate oversight of Jamaica’s key agricultural commodities under a single regulator. The merger combined the Coffee Industry Board, the Cocoa Industry Board, regulatory functions of the Coconut Industry Board, and the Export Division of the then Ministry of Industry, Commerce, Agriculture and Fisheries.

However, while the reform was intended to strengthen regulation and modernise the sector, the new authority inherited deep-rooted weaknesses in financial management from the entities it absorbed with the lack of audit evidence stemming largely from gaps in the financial records of the legacy commodity boards.

No audited financial statements were available for the former Coffee Industry Board for the four-year period between 2013/2014 and 2016/2017, while similar gaps existed for the Cocoa Industry Board for the 2015/2016 and 2016/2017 financial years. These deficiencies meant that JACRA effectively began operations without a complete and verifiable financial baseline for the assets and liabilities it inherited.

The situation was compounded by the reported destruction of critical documentation in a flood on September 9, 2016.

According to the Ministry Paper, the loss of these records significantly weakened the audit trail required to substantiate financial transactions and balances carried forward into JACRA’s accounts.

JACRA’s annual report provides additional context, noting that regulatory body was formed after nearly a decade of policy development and consultation aimed at restructuring the governance of the agricultural commodities sector.

The merger process, which began in 2012, was intended to separate commercial activities from regulatory oversight, and create a unified body responsible for standards, certification, licensing and industry development.

JACRA is overseen by a board of directors made up of representatives of the commodity sectors and the Government. The board monitors how the agency operates, ensures funds are properly managed, and sets its overall direction.

Supporting the board are several sub-committees, including a finance, audit and insurance committee, as well as committees responsible for governance, production, research and marketing.

These structures are designed to strengthen accountability and ensure that key decisions relating to finances and operation are subject to oversight.