CMU to miss report deadline due to auditing delay

OFFICIALS of the Caribbean Maritime University (CMU) were again put in the hot seat at the Public Accounts Committee (PAC) meeting yesterday, as discussions centred on outstanding audited financial statements for the institution.

Deputy principal of the CMU Professor Ibrahim Ajaguna explained that the university will not be able to deliver on its promise to submit the reports, which are outstanding for the years 2015/16-2018/19, by May 31, as the independent auditors have indicated that there are delays.

The committee was continuing its discussions on the findings of the auditor general's special audit report, which went to Parliament in December 2019.

The audit was undertaken in response to public concerns of malpractice at CMU. According to the report, what the team found were issues of poor governance and accounts management, infrequent council meetings, inadequate oversight by portfolio ministries, transactions not related to CMU's core business, direct contracting instead of competitive bidding, onerous costs related to contracts, and inconsistent human resource practices.

“Although CMU submitted its corporate plans, the university did not faithfully submit its annual and half yearly reports to the respective permanent secretaries and portfolio ministers. The last annual report [2013-2014] was prepared and submitted to the Ministry of Transport and Mining in September 2016. Additionally, the last audited financial statement was prepared for the 2014-15 financial year; the university is yet to prepare audited financial statements for 2015-16 to 2018-19,” the verification of the audit findings, which are now before the PAC, said.

Professor Ajaguna explained that the university is unable to meet the May target as the external auditors, Ernst & Young, had indicated that they were awaiting the auditor general's report. He said initially the auditors had indicated a timeline to submit the independent reports, but, unfortunately, after going through the auditor general's report, they have requested additional information.

PAC Chairman Mark Golding pointed out that the report has been in the public for months, and can therefore no longer be a basis for the delay of the financial statements for the reports.

Ajaguna said the CMU council is equally concerned, and has held a series of meetings with Ernst & Young, but “we are still where we are, but I think they are near completion of the 2015-2016 audit,” he said.

Acting permanent secretary in the education ministry, Dr Grace McLean told the committee that she has never seen a situation of this nature.

She said one of the issues the external auditors had in 2019 was the inability of the team to access the information required by the auditor general and other investigative bodies.

Auditor General Pamela Monroe Ellis offered a possible explanation for the hold-up, pointing to some of the challenges her team faced in the probe, which could also pose challenges for other auditors.

“As an example, a common exercise that is undertaken for a financial statement audit is that you will send a bank confirmation to all the banks for the bank accounts listed by the agency, we did that initially… what we found out, and I suspect this is what has caused a problem for the auditors, is that not all the bank accounts were revealed to us,” she outlined, noting that her team had learnt about the CMU's 22 bank accounts mentioned in the special report by other means.

“...For example, if CMU revealed to us that they have a bank account at a financial institution that is in New Kingston, the confirmation will go to New Kingston, but there may be bank accounts held at other locations for that bank, but those will not be revealed. The financial statement auditors Ernst & Young, having gone through the report, will realise that there is information that they did not know, that, as auditors, they will have to form an opinion on, so I suspect that they are now requesting that information. And my understanding is that there isn't supporting documentation for all the transactions, and that is also going to present a challenge to the auditor,” Monroe Ellis asserted.

According to the auditor general's report, between April and October 2019, the CMU's council convened 11 meetings, but had met only 12 times in three years between April 2016 and March 2019.

In its response, the CMU said the new council is now in place and arrangements are being made for the first meeting to be held, and that the council will form the subcommittees and schedule all meetings.