TR]~ASURY MEMORANDUM

ON

f\

TREASURY MEWlIORANDUM DETAILING RESPONSESTO THE REPt)RT OF THE PUUBLIC ACCOUNTS

COMMITTEEOF TilE NATIONAL ASSEMBLY

THE PUEILIC ACCOUNTS OF GUYANA

FOR THE YEARS

2007 to 2008

FHNANCESECRETARYM][NISTRY OF FINANCE

,TREASURY MEMORANDUM

TO: The Speaker and.Members of the National Assembly

FROM: Finance Secretary, Ministry of Finance

DATE: August 25,2011

FILE NO: FS 60/1/1

SUBJECT: Treasury Memorandum Pursuant to Resolution No. 158/2011 dated 17th

June, 2011 of the National Assembly on the Public Accounts of Guyana forthe years 2007 and 2008.

1. INTRODUCTION

1.1 This Treasury Memorandum details Government's comments on, and actions thatGovemment has taken or intends to undertake in response to, the report of the PublicAccounts Committee on the Public Accounts of Guyana for the year's 2007 and 2008.

1.2 The issues will follow the same format in which they were presented in the Report ofthe Public Accounts Committee for the years 2007 and 2008, as specified in the samethree (3) broad categories:

i. General Problems Observed in Government Financial Management;ii, The Public Accounts Statements;iii Specific issues relating to Budget Agencies (Ministries, Departments and

Regions).

1.3 The Ministry of Finance has always recognised that many of the issues raised by theAuditor General in his reports, as well as the concerns highlighted in the reports ofthe Public Accounts Committee of the National Assembly, can be reduced through:i. The use of prudent financial management policies;ii. Improved Information Technology;iii. Closer monitoring of the activities within the agencies through the conduct of

frequent inspecti us; andiv. The conduct of ongoing training programmes.

1.4 Govemment continues to emphasise the need for a modem public financemanagement system and to this end 2003 saw accelerated impetus with respect totransforming the financial management landscape, by repealing several sections ofthe Financial Administration and Audit Act (FAAA), and enacting the FiscalManagement and Accountability Act (FMAA) 2003, the Procurement Act 2003, the

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Audit Act 2004 and the respective accompanying regulations, all of which combinedcontributed to improved management of our scare resources.

1.5 Additionally, in support of this modemisation process Government introduced theIntegrated Financial Management and Accountability System (IFMAS) whichassisted in further transforming the financial management architecture of the PublicSector, but more specifically the Central Govemment Agencies, as it facilitated theintroduction and utilisation of a single bank account for all Central Governmenttransactions, as well as the automation of financial systems.

1.6 This modernisation process resulted in the automation of:i. The budget implementation and control processes with respect to the

release of funds;11. The payroll processes via an interface (Smart Stream and eFinancials -

I '1 I' .) !)l 1 " 1 " !. -".',: ".'

Free Balance);" .' I ' " : ' ' :,', I

111. The preparation and approval of vouchers;IV. The preparation and printing of cheques;v. Cheque signatures; ,vi. The system security; andvii. The production ofthe Consolidated Financial Statements.

Collectively these improvements have allowed for more timely and improvedactiVities~n'[elati:dn~o:', ,'j I"! •• ,',1:' ,I. "!i ",,:', ' Ii

• The decision making processes;• The execution of programmes;• The processing of transactions;• The preparation and completion of the Consolidated Financial Statements;

and• The continued implementation of financial best practices.

1.7 Further, as financial systems become more modernised, the need for improvement inthe management and control of these systems becomes vital to the successfuloperation of such systems. It is in light of this fact that improvement in the area ofintemal control has gained significant prominence resulting in Governmentassiduously working towards the establishment of an internal audit division within theMinistry of Finance, which will revamp and strengthen what was previously knownas the Inspectorate Division.

1.8 Given that the transformation of our financial management system is ongoing, it isimperative that capacity is not only developed but also maintained, as well as the BestPractices previously and currently being implemented remaining consistent. As suchregular training programmes have been designed and are continuously beingdelivered in an effort to support and enable the efficient and effective functioning ofall Budget Agencies (Ministries, Departments and Regions). Training programmescontinuously being conducted include:i. BudgetPreparation;

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11. Regulatory Framework for Public Financial Management;111. Payments and Receipts Processes;IV. Public Officers financial roles and responsibilities;v. Bank Reconciliation; andVI. Vouchers Examinations.

1.9 Future Initiatives

Some of the improvements targeted include:• The expansion and maintenance of connectivity to all Central Govemment

Agencies;• Continuous reliability of and accessibility to the system by all Budget Agencies• Full automation of the reconciliation process; and• Implementation of additional modules within Integrated Financial Management

and Accountability System (IFMAS) along with upgrading as appropriate.

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2. GENERAL PROBLEMS OBSERVED IN GOVERNMENT FINANCIALMANAGEMENT

2.1 Public Procurement Commission

The establishment of the Public Procurement Commission is subject to thesubmission of and agreement on nominees by the parliamentary political parties.

2.2 Overpayment to contractors

The following steps were taken by a number of Agencies to reduce if not eliminatethe occurrence of over payments to contractors:1) Employment of engineers and the establishment f field audit units, which serve

to provide the necessary teclmical 'capabilities;2) Technical staff are required to submit a detailed report 'before signing off on

works;3) Officers have been advised that appropriate action would be taken resulting in

persons being surcharged in the event of overpayments to contractors.

These steps have resulted in improvement in this area as is recorded by the PublicAccounts Committee (PAC) in its 2007 and 2008 report

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2.3 Non-Clearance of Advances

This process is ongoing and officers have been advised that all advances should becleared in a timely manner.

2.4 Breach of Tender Board Procedures and splitting of contracts

The National Procurement and Tender Administration Board (NPTAB) continues toeducate as well as advise Agencies regarding Tender Board Regulations, with specificattention being given to the issue of contract splitting. In addition the NationalProcurement and Tender Administration Board (NPTAB) continues to remindAgencies of the consequence/penalties as prescribed under the Act for non-compliance with the provisions of the Procurement Act and its Regulations.

2.5 Refusal to refund monies to the Consolidated Fund by Budget Agencies(MinistrieslDepartmentslRegions)

The label "Refusal to refund monies to the Consolidated Fund" misrepresents thecase, as the funds to which it refers are actually still in the Consolidated Fund becauseall expenditure via Inter-departmental Warrants (IDW's) are charged directly to thesource of funds.

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Circularised instructions continue to be issued to all Agencies so as to ensure thatfinancial returns are submitted in a timely manner with respect to Inter-departmentalWarrants.Outstanding Police Reports2.6The matter has been raised with the relevant authorities and the importance of moretimely responses to police matters has been emphasised,

2.7 Non-submission of Financial Statements by Snbvention Agencies

Considerable progress has been made in reducing the backlog regarding thesubmission of financial statements to Parliament. With respect to those Agencieswhich fall under the direct control of a Ministry/Department, it should be noted thatall those financial transactions form part of the Audit Office's audit of the PublicACCOWltSof that particular Ministry/Department. These are up to date given the factthat the Auditor General has been successful in submitting to Parliament AuditReports within the stipulated timeline,

2.8 Lack of maintenance of log books

A Finance Circular has been issued to all Heads of Budget Agencies reminding themof their obligations with respect to the maintenance of log books for motor vehiclesand inventory of all vehicles, plant and equipment.

2.9 Non-compliance with the stipulated timeframe for the clearance of chequeorders.

The Ministry of Finance has instituted administrative systems, which include thewithholding of any further issuance of cheque orders.' This system has seen positiveresults through the efforts made by several agencies, as reflected in the comments ofthe Public ACCOWltSCommittee (PAC) 2007 and 2008 Report.

2.10 Capital expenditure being met from current allocationI .. , ' I

The Fiscal Ma'nagement and Accountability Act (FMAA) is quite specific as to thedistinction between current and capital expenditure, Efforts are being made by theAgencies to operate within the parameters of the capital profile and steps continue tobe taken to ensure compliance in this regard.

2.11 Wrongful payment of salaries and consequential deductions paid to agencies

All personnel departments within Budget Agencies are continually being urged to bemore proactive in ensuring that all payroll changes/amendments are done in a timelymanner. In addition, Agencies have been able to obtain refunds from both the GuyanaRevenue Authority (GRA) and the National Insurance Scheme (NIS) uponverification ot these: payments. Also tile Ministry of Finance has implemented a

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system which allows Agencies to formally request that all deduction cheques issuedin respect of the Guyana Revenue Authority and the National Insurance Scheme becancelled, in instances where overpayments are detected, and new cheques issued toreflect the amended sums due to those agencies.

2.12 Non-adherence to Stores Regulation

The establishment and operationalisation of the Internal Audit Section within theMinistry of Finance will assist in further strengthening the current system of internalcontrols through its continual monitoring of storekeeping practices.

Heads of Budget Agencies have been advised to ensure that there is compliance inthis regard.

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3. THE PUBLIC ACCOUNTS STATEMENTS

3.1 The unavailability of certain key records in the required sequential order posed severeconstraints on the ability of the Accountant General's Department to reconcile the oldConsolidated Fund Bank Account relating to the period dating back to 1982.

Despite this set back, cash books were reconstructed for the sole purpose ofreconciling the monthly transactions as they occurred at the bank and the accountlevel. It was through this alternative process that a closing balance was established atthe end of December 2003, thereby identifying the opening balance for the newConsolidated Fund Bank Account.

3.2 A system has been put in place to verify the receipt of gifts and grants received byagencies with a view improving the accuracy of records, as well as identifying thoseagencies that are in default, so that disciplinary action can be instituted.

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4. SPECIFIC ISSUES RELATING TO BUDGET AGENCIES (MINISTRIES,DEPARTMENTS AND REGIONS)

Office of the President

4.1 The Administration of the Office of the President took appropriate measures to havefinancial statements submitted to the Auditor General's Department for examination.

The following table shows the status of the audits of the Agencies.

ENTITY YEAR OF REMARKS

LAST ,i AUDIT

I ! ' I , .

: REPORT !

National Parks 2006 Audit work completed for 2007 to 2010 Financial

Commission Statements were submitted to the Auditor General

Guyana Office 2008 2009 Financial Statement was submitted to the

for InvestmentI

Auditor General and the 2010 Financial StatementI I

I ! ' I pas been prepared but not yet submitted, to theAuditor 'Ge~eral '

Environmental 2009 2010Financial Statement is currently being prepared

Protection ' ,

AgencyGuyana Energy 2006 Financial statements up to 2009 were submitted to

Agency Auditor General and 2010 Financial Statement is

currently being prepared.

Institute of 2002 2003 and 2004 Financial Statements are with the

Applied Science Auditor General to be finalised. 2005 to 2010 draft

& Technology Financial Statements ave been prepared but are

awaiting finalisation for 2003 and 2004 before

submission.

Integrity 2008 2009 and 2010 Financial Statements have already

Commission been submitted to the Auditor General

Guyana Lands 200S Audit work competed for 2006 and 2007. 2008 and

& Survey 2009 draft Financial Statements are almost

Commission completed.

National 2006 2007 Financial Statement is now being audited. 2008

Communication to 2010 Financial Statements submitted to Auditor

Network General

Government 2004 Audit work completed for 2005 to 2006. Financial

Information Statements submitted for 2007 to 2010.

Agency

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Ministry of Finance

4.2 With reference to The issue regarding the funding of operations of the State PlanningSecretariat (SPS) and the Customs Anti Narcotic Unit (CANU) from Chart ofAccount - Subsidies and Contributions to Local Organisations, it should be noted thatthis matter continues to engage active consideration.

4.3 The management of the Lottery Fund is executed in accordance with the Laws ofGUYaIlaand is subject to audit by the Audit Office of GUYaIla

4.4 The Customs and Trade Administration has addressed the concems raised by thePublic Accounts Committee as it relates to the process for the requisition, collection,and distribution of the receipts. The following has been instituted;

(a) A Register of Controlled Forms is now maintained to record the stock of receiptbooks received from the stores and subsequently issued to the Revenue AccountingUIUt.

(b) The door lock to the room in which the receipt books are stored has since beenchanged, for security reasons.

(c) The practice of borrowing and sharing of receipt books has been regularised, ascontrol mechanisms are now in place.

(d) A used and unused register has also been introduced to track usage by individualcashiers.

Ministry of Foreign Affairs

4.5 With respect to the issue of untimely remittances, the Ministry of Finance earlier thisyear (2011) took a decision to provide quarterly releases to the Ministry of ForeignAffairs to facilitate timely dispatch to the various missions.

4.6 All missions are now in compliance with the directive to remit revenues directly to theConsolidated Fund in a timely manner.

Guyana Elections Commission

4.7 The Head of Budget Agency has intimated that every effort will be made to avoid arecurrence of this nature. A new system has been put in place as it relates to the rentalof buildings by the Guyana Elections Commission (GECOM). All rentals of buildingsare now done through the Contracting Officer who must obtain approval prior toprocessing aI1Ypayments,

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4.8 The Head of budget Agency, whilst acknowledging the breaches of the StoresRegulations during the reporting period, has since taken steps to have same resolved.

Availability of space continues to plague the Commission in its attempt to streamlinethe stores so as to avoid as much as possible, infringements of the Stores Regulations.The Commission acknowledges the importance and urgency of its streamliningexercise, and as such a stock verification process has commenced and representationis being made for stock identified as being destroyed by the 2006 fire as well asobsolete and expired stock to be written off. Additionally, a special committee hasbeen established to provide the necessary guidance regarding the computerisation ofthe stores which is planned for the near future.

4.9 In relation to the purported losses amounting to $1.845 million, the Head of theBudget Agency indicated that these items were received, however, what was beingquestioned was the authenticity of the supplier. As a result of this the Commissionnow utilises the Departmental Tender Board and the National Tender B031'd forprocurement, while all requests for tenders are widely circulated in the media. It isfelt that this practice will allow for-more open tendering, as well as ensuring that theprequalification requirements are being met

4.10 The Head of Budget Agency shall in future, seek approval for a Ch311gein programmein the event that intended transactions do not confirm to the National Budget CapitalProject Profile approved by the National Assembly. Moreover, any directive from theCommission to make similar purchases will in future require written- documentationto the Head of Budget Agency. "

Ministry of Amerindian Affairs

4.11 With respect to the overpayment of $242,750 for works done to the AmerindianHostel in 2008, both the contractor and the consultant were written and the Agencyawaits responses. However, the Head of the Budget indicated his intention to pursuelegal action in an attempt to resolve this matter.

Ministry of Local Government

4.12 The Ministry of Local Government has desisted from the practice of purchasing fuelon credit effective 2010, as such all purchases are being done on a cash basis.

Ministry of Tourism, Industry and Commerce

4.13 The Ministry will make everyeffort to avoid such protracted time lag betweenpayment and delivery of assets. The generator set has since been uplifted and installedat the Ministry where it is in proper working condition.

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Ministry of Public Works and Communications

4.14 As was reported by the Public Accounts Committee (PAC) Report 2007 and 2008 thismatter is engaging the attention of the COlUtS as the Contractor took legal actionagainst the Ministry and the Attorney General in February, 2010 for moniesoutstanding. The Ministry of Public Works has undertaken to keep the PublicAccounts Committee (PAC) apprised of the progress of this matter.

Ministry of Education

4.15 All regulations and guidelines of the Procurement Act are being observed.

4.16 The Ministry has consulted with the Ministry of Finance and was directed to theMinistry of Human Services and Social Security. This Ministry has requested and isawaiting further details surrounding the developments in the court case initiated bythe Attorney General.

4.17 Notices were dispatched to contractors involved in projects for which overpaymentswere made. Of the $15.774 million in overpayments $8.34 million has been recoveredand efforts are still being made to recoup the outstanding amount.

Ministry of Housing and Water

4.18 The Ministry of Housing and Water is still guided by tile legal opinion issued by theAttorney General concerning the retention of unspent balances against funds providedby the Ministry of Finance for the purpose of Housing Development. According tothe legal opinion provided by the Attorney General concerning the deposit and use offunds/revenue' generated under the provisions of tile Housing Act Chapter 36:20,there is no statutory requirement for the unutilised funds to be refunded to theConsolidated Fund.

Georgetown Public Hospital Corporation (GPHC)

4.19 All regulations and guidelines of the Procurement Act aloebeing observed.

4.20 All revenues collected aloepaid over to the Consolidated Fund.

Ministry of Health

4.21 All regulations and guidelines of the Procurement Act are being observed.

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4.22 The Ministry of Health maintains that the payments were primarily for thereplacement of the solar batteries which became inoperable after the six monthswarranty period as confirmed by the supplier firm Farfan and Mendez. These solarfridges were subsequently dispatched to the following health institutions:1. Region No.1-Moruca Hospital2. Region No.6-Sipiruta and Orealla Health Centres3. Region No.9-Karasabai and Fairview Health CentresWith the new computerised Warehouse Management System, the MaterialsManagement Unit is in a better position to manage its inventory.

Ministry of Labour, Human Services and Social Security

4.23 Public Assistance and Old Age Pension booklets are now recorded on bin cards aswell asthestores ledger., All requests fOJ;these booklets from the stores are, done viaInternal Stores Requisitions prepared by the Assistant Chief Probation (ACP) andSocial Services Officer (SSO).

Officers in charge of each administrative district are required to complete requisitionforms for the type and quantity of booklets needed for a specific period. The AssistantChief Probation (ACP) and Social Services Officer (SSO) are guided, whenexamining the requisitions from the district officers for booklets, by distributionlistings prepared by the information teclmology unit within the Ministry of HumanServices. The latter unit is responsible for the maintenance of the Ministry's database.

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A .ledger is maintained by the Assistant Chief Probation (ACP) and Social ServicesOfficer (SSO) to record the relevant particulars of the booklets, including themovement of same.

Ministry of Home Affairs

4.24 With respect to the non-delivery of items the Ministries of Home Affairs and ForeignAffairs continue to collaborate towards the resolution of this problem and thedifficulties being encountered have been communicated to the Auditor General'sOffice.

Ministry of Legal Affairs

4.25 The situation remains the same. The matter is engaging the attention of the Hon.Attomey General and Minister of Legal Affairs who is expected to advise on the wayforward.

4.26 Action was taken to eliminate these practices and to ensure that there is compliancewith the Procurement Act 2003.

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Guyana Defence Force (GDF)

4.27 The Guyana Defence Force continues to report on its inability to reconcile theSalaries Account No. 688-306-0 owing to the absence ofrecords destroyed during theflood.

Responding to the advice of the Accountant General, the Guyana Defence Force paidover the sum of $10,824,080 to the new Consolidated Fund Bank Account viaCheque No. 34-106184. Further action is being contemplated as it relates to theamount of $2,267,023.36 retained in this account to facilitate the drawing of sumsrepresenting unpresented cheques.

4.28 The Adnlinistration has indicated that it will strive to implement better controls andimproved supervision to ensure that policies are strictly adhered to as it relates toexpenditure.

Supreme Court

4.29 The Registrar wrote the Permanent Secretary of the Ministry of Home Affairs videletter dated 2iJ1 May, 2011 requesting information on the status of the cases in theCourts and with the police

Prior to the above, the said matter was taken up with the Deputy Commissioner ofLaw Enforcement at the Criminal Investigation Department (CID) Headquarters inGeorgetown vide letter dated 12th January, 2010. The Commissioner was remindedthat since the findings of the Auditor General in the preceding years as far back as1992, all documentations were forwarded to the Criminal Investigation Department(OLD)'Headquar!ter':h? .facilitate the investigations.

Of the twelve cases mentioned in reports by the Auditor General, three have sincebeen dismissed by the Courts and these are as follows;

Year·199919992000

Magisterial Court/DistrictsW/Demerara Magisterial DistrictGeorgetown Magistrates CourtW/Demerara Magisterial District

Total

Amount$555,000$242,100

$5,466,000$6,263,100

Request for the writing off of the sum of six million, two hundred and sixty threethousand and one hundred dollars ($6,263,100) is currently with the Ministry ofFinance vide letter ated 14th June, 2011.

4.30 The overpayments in relation to the three projects under the Maintenance ofBuildings and Maintenance of Infrastructure amouutingto $441,150 have been

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recovered and paid over to the Bank of Guyana via Deposit Slip No. 34-105509 dated9th June, 2011.

Region 1

4.31 A decision has been taken whereby the Regional Administration will undertake fullresponsibility for the generation and supply of electricity to communities within ForiKaiturna and Moruca. The cost of fuel will be fully budgeted for in the 2012Estimates of Expen iture and Revenue while the revenues garnered through the saleof electricity would be paid over to the Consolidated Fund.

Region 3, ,

4.32 TIle overpayment amounting to $3.528 lTullion in the PAC's report is comprised asfollows: ." I'"" ' . " , i ',' , .; . ! ' .

CWTentWorks 'i ' ; .:;" ' ,

1. Parika Backdam Nursery School $63,495

Capital Works2. Prior years (2005-2006)3. Buildings(Education)'4. Roads5. Roads

Total

$2,588,000$386,326$423,460$67,000

$3,528,281

With regards to items 1, 3, 4 and 5 efforts aimed at the recovery of overpayments arestill ongoing

With regards to item No.2 the Regional Administration has indicated that greenheartpiles to the value of $2.662 million were confiscated upon the termination of thecontracts awarded for the construction of bridges in Hague and Zeeburg. Theconfiscated piles were utilised after new contracts were awarded for the said bridgesas well as for the completion of other projects in the region. The remaining pileswhich were of substandard quality were removed to the Crane .Stores Compoundwhere from time to time they were also used to effect repairs to other bridges in therice and cane farming areas as a means of assistance to farmers. The cost of pilesutilised on the completion of the two bridges under reference were netted off againstthe contract SlU11S of the new contractors. The cost recovered through the use ofconfiscated piles by the new contractors amounted to $1.159 million. It wasunfortunate that the relevant records, regarding the movement of the piles, were notmaintained by the then Administration.

4.33 The Regional Administration has been able to recover some of its assets given out asloans. Theprocess ofrecovery of the remaining assets will be vigorously pursued.

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4.34 After a thorough investigation by the field auditor and store keeper, it was discoveredthat Intemal Stores Requisitions (ISR) relating to the issuing of lubricants were notbrought to account. This has since been rectified, the balances have been brought upto date and the Auditor General's Department has been so notified.

Region 4

4.35 The Regional Administration has maintained the system which was previouslyimplemented, as was reported in its response to the Public Accounts Committee(PAC) Report of 2006. Thus it continues to effect contract payments on a workscompleted basis. The Regional Engineer has been mandated to be more thoroughduring the final verification of projects.

4.36 The Administration has indicated that it will make every effort as it relates to theverification of projects by the Auditor General.

Region 5

4.37 With respect to non-clearance of cheque orders for 2005 to 2007, sixty two (62)valued at $13.155 million have since been cleared. The balance remaining to becleared is forty (40) cheque orders valued at $4.046 million. The Administration willcontinue to work diligently in order to bring closure to this outstanding matter.

4.38 The Regional Administration has had significant success in the recovery ofoverpayment on contracts as $5.977 million or 73 percent has been recouped. Thetable below provides a summary of those contracts for which recovery ofoverpayment remains an issue, as well as those requiring a complete review involvingthe Auditor General, the Technical Personnel from the Region and the Contractor.

Year Para. No. Description Amount($'000)

2007 478483483483

483

Construct No.8 Secondary SchoolRehab. Of St. John's St. HopetownRehab. Of First Cross St. Bush LotRehab.of Bennet St.- East RosignolRehab. Of First Cross St. WI Rosignol

158847473287102

2008 506 Rehab of Paradise Playfield St.Total

3402,207

With regards to the construction of the No. 8 Secondary School, the RegionalAdministration has been reliably informed that the contractor is now deceased.

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Enquiries revealed that the firm is no longer located at the last known address.Investigations are however continuing.

The contractor engaged in the rehabilitation of the St Jolin' s Street in Hopetown hasbeen written to rega.rding the overpayment on the contract. The contractor who wasout of the country has since on his return, requested a review of the overpayment forthe project.

The Regional Administration still maintains that there was no overpayment on thecontracts regarding the rehabilitation of the First Cross Street - West Rosignol,Bennet Street-East Rosignol, First Cross Street-Bush Lot and Paradise PlayfieldStreet. They have since written the Auditor General to review the findings of theRegional Engineer.

Region 6

4.39 The Regional Administration, acting on the recommendations of the Public AccountsCommittee, wrote theCommissioner of Police whom, has since acknowledged receiptof the letter requesting the investigation. The Region is intent on pursuing this matterwith the Guyana Police Force as .interactionswith the Commander of 'B' Divisionhas already begun.

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4.40 The Regional Administration has indeed taken possession of the low bed which hassince been modified to transport the Region's machinery and equipment.

4.41 The Regional Administration is aware that the Works Department is understaffed andis making every effort to have the requisite staff employed.

Region 9

4.42 A comprehensive exercise was undertaken by the Regional Administration withregards to items of stores reported by the Auditor General as loans from the CentralStores. During the course of that exercise it was discovered that many of the itemslisted as loans were returned to the stores, utilised for force contracts and emergencyworks.

The desks and benches listed as a loan to a private individual was also discovered tohave been deployed to the Amerindian Hostel for use by students writing the nationalexarninations. This has been substantiated by a head teacher within the Region.

In relation to the recovery of the other items on loan, the regional administration has:1) Engaged of officials of the Ministry of Finance for guidance on the way forward;

and

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2) Informedlreminded the Heads of Budget Agencies of the recipient agencies bothverbally and in writing of their responsibility regarding the return of all loaneditems, where they still exist or repayment for those not returned.

4.43 Regional Administration has indicated that the Committee was provided with a list ofall outstanding advances up to the period ending 2009, after which the practice ofgranting advances or purposes other than the intended purpose, was discontinued.

The Administration will continue its effort at recovering the outstanding advancesdespite the setback posed by persons whom have since died or migrated.

Region 10

4.44 i) Reaching far flung areas within the Region sometimes necessitates decisions toutilise the services of other governmental as well as non-governmental agencies thattraverse those locations. It is not only a cost saving decision through the utilisation ofresources other than those of the region but sometimes unavoidable. Some of theselocations include Kwalcwani, Ituni, Mabura and Rivers View and which areaccessible only through the use of certain types of mobile equipment. The itemsrequired to be transported to these locations include medical emergencies, schoolsupplies of exercise books and school furniture. The fuel issued to the eighteen (18)vehicles not underthe control of the Regional Administration is directly related tothis type of arrangement. The Administration not only supplied the fuel to facilitatethe transportation of these essential commodities to those far flung locationsmentioned earlier but ensured that the relevant documentation was effected. Suchdocumentation included the vehicle numbers, amount of fuel, distance to be coveredand foremost, that the fuel was issued via an Internal Stores Requisition.

The Regional Administration has since purchased an ambulance for the Kwakwaniand Ituni communities and a canter truck for the delivery of school supplies.

ii) The Region was unable to establish its own bond for the storage of bulk fuel inkeeping with the requirements of the Environmental Protection Agency and theGuyana Fire Authority. As a result of the lack of facilities to store bulk fuel, the latteris paid for and stored at several gas' stations located as far as Kwakwani. TIle fuel isuplifted through the use of Internal Stores Requisitions (ISR) and Stores Slips. Therecords are updated weekly from the Stores Slips as well as Slips' from the gasstations and its reconciliation verified by the designated Field Auditor of Region 10.

iii) This situation evolved as a result of the prepaid fuel arrangement as in (ii) above.Both diesoline and gasoline were paid for at gas stations located across the Region.However there were instances whereby the Region would have exhausted its creditholding in gasoline but has adequate credit in diesoline thus causing the stores toissue instructions to the supplier of fuel to apply a cost conversion. A record of theconversion is mail1wi ned for audit purposes. '

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As of 2010 the various sections within the administration were requested to reviewtheir planning strategies so as to prevent these types of situations from occurring.

4.45 This motor cycle CD 3876 which was recorded as unserviceable up to the year 2006was rehabilitated in 2007 by a Transport Officer recruited by the Region. Same wasutilised by him in the performance of his official duties for a number of months afterwhich it broke down,

4.46 The Administration which relies on the technical department for the execution ofplanned capital projects has since employed two engineers. It also reestablished itsField Audit Department which is now foullystaffed. These initiatives, it is anticipated,would serve to contain/minimise the possibility of overpayments on contracts.

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5. CONCLUSION

This Treasury Memorandum is an integral part of the Govemment's systematic driveand on-going efforts to improve Public Financial Management in general and inparticular, transparency and accountability in the conduct of Government's Business.It provides succinct, but cogent response to the comments, observations andrecommendations that were made in the Report on the Public Accounts by the PublicAccounts Committee for the years 2007 and 2008 which were adopted by NationalAssembly. In preparation of the Government's responses, the opportunity was takento apprise the National Assembly of the significant and substantial improvement toPublic Financial Management in the country that has been achieved since theexamination of the 2007 and 2008 Public Accounts.

As mentioned earlier in this Memorandum and on previous occasions, theintroduction of IFMAS in 2004, the progressive application and use of informationtechnology, and the implementation of training programmes to boost public sectormanagement aI'e initiatives introduced to improve Government accounting andfinancial management. These initiatives have had qualitative impact on accounting,record keeping, preparation of accounts and financial statements, There has been asignificant reduction in the number of queries emanating from the Auditor General'sReport.

It is noteworthy that the level of compliance by the Heads of Budget Agencies,regarding the queries ill the report under review, has been satisfactory. There remainsroom for improvement in some areas. These issues will be addressed as the benefitso~th.e model~u~ation 'pr~cess and the el~ployment of best practices continue t~ accruewithin the public' financial management system.' I I t • IJl I I' ,

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