Governance: Key to fixing the NSWMA

Not surprisingly, the finger-pointing game is now being played in regard to who was responsible for the last Riverton fire - the CEO, board, or both.

Actually, to this writer, the personalities in this debate are really less important than the conceptual underpinnings necessary to ensure that, going forward, the NSWMA exhibits the improvement necessary to cure the deficiencies publicly disclosed.

Yes, it is clear that the NSWMA's leadership usually reflects personnel that reflect the colour of the party ruing at the time, but let's be honest, that's an international trend that exists even outside Jamaica.

The NSWMA's failure to table audited financial statements and annual reports in Parliament for the past 10 years, questionable management of the nation's solid waste, and manifestly impotent disaster preparedness, are all governance issues that can be addressed requiring more commitment of purpose than resources, though the latter obviously are important.

Management theorists regard governance as the set of relationships between an organisation's management, its board, and its stakeholders. NSWMA's board of directors, therefore, is intended to provide the "umbrella" of governance direction, authority and oversight and in so doing strive to meet the needs and expectations of the organisation's various stakeholders. Possibly one of NSWMA's most important stakeholder, the Jamaican people, was advised by our auditor general that despite the NSWMA Act requiring that the authority keep proper accounts and other records in relation to its functions, and prepare an annual statement of accounts in a form conforming with established accounting principles, regular external audits were not done in compliance with Section 13 of the act. This section stipulates that the audited accounts - together with the annual report - be laid in the House of Representatives and the Senate within six months of the end of each financial year (March 31). Without these external audits, therefore, a key element (as depicted below), of the vital "Assurance' has been absent.

Accordingly, this has led Auditor General Pamela Monroe Elis to point out that inability of the NSWMA to provide timely information on its financial performance will inhibit stakeholders' full understanding of the issues, and prejudice the development of evidence-based strategies. Clearly, succeeding senior management personnel, and the boards that should be cracking the performance whip on them, have not distinguished themselves in this regard - irrespective of which political party has been in power.

lack of effective control

One wonders if the NSWMA had an audit committee on the board, and if so what was their view/reaction on the almost one billion dollars reported in the press spent by the Metropolitan Parks and Markets (MPM) Waste Management Limited, between April 2012 and March 2014, which cannot be properly accounted for, according to an April 2014, internal audit. This report highlighted that NSWMA also dropped the ball on another essential component of good governance - effective control. It was revealed, for example, that more than $875 million could not be accounted for because of an absence of the relevant documentation required under the Financial Administration and Audit Act. This does not augur well for the adequacy and effectiveness of the system of internal controls over the organisation's payment process, and suggest that the system of internal controls relating to record management was weak. Alarmingly, the internal audit report also pointed out, inter alia, that the posting, filing and storage of accounting data, along with other relevant supporting documents and information was inadequate; there was a failure to present essential records; despite several verbal and written requests, the MPM accounting unit failed to present over 2,700 vouchers for more than $410 million; journal vouchers for bank transfers to substantiate expense amounting to almost $154 million, which were posted to the general ledger, could also not be provided; a lack of segregation of duties in the area of procurement and payment of goods; and the splitting of purchases in order to circumvent the required government procurement procedures.

Since the fires occur annually, one wonders what type (if any) of Risk Management under the board's direction, and implemented and executed by the management. Use of risk assessment approaches such as Enterprise Risk Management, is common place in today's modern word in both public-private enterprises in order to provide a framework for management to effectively deal with uncertainty and associated risk such as the Riverton fires.

These methodologies are not new, not beyond our capabilities, and doable despite our resource constraints. Therefore, if the overall governance has appeared weak, the internal controls manifestly deficient, and risk management seemingly non-existent at the NSWMA, then incendiary fiascos will continue to burn in this organisation in more places than just Riverton.

- Collin Greenland is a forensic Accountant. Email feedback to columns@gleanerjm.com or cgreeny.collin@gmail.com.