KSAMC accounting under scrutiny
The Kingston & St Andrew Municipal Corporation (KSAMC) could not explain to the Auditor General’s Department (AuGD) variances amounting to $389.6 million between accounting records regarding total sums spent on roadworks maintenance activities over the six-year period 2014-2015 and 2019-2020.
In a performance audit report tabled in Parliament on Tuesday, the AuGD said that for the period under review, the KSAMC spent a total of $3.3 billion from Parochial Revenue Fund (PRF) expenditure, of which $3.25 billion was used for roadworks maintenance activities with the remaining $0.05 billion representing administrative costs.
The KSAMC obtains funding for road maintenance from money collected from property taxes and motor vehicle licences paid into the Ministry of Local Government and Rural Development-managed Equalisation Fund and the PRF.
Over the period 2014 to 2020, the ministry allocated $3.7 billion from the PRF.
In its performance audit report, the AuGD said that the KSAMC presented schedules and ledger postings as a means of providing evidence of financial activities regarding parochial roads. However, the corporation could not confirm that the figures reflected in the records were true and could be relied on.
“For instance, KSAMC could not explain the variances cited between its general ledger and subsidiary records, as it related to the PRF expenditures. Our analysis established that there were variances amounting to $389.6 million between accounting records regarding total spent,” the report said.
The performance audit sought to determine whether the KSAMC had in place, adequate internal controls to provide assurance that value for money would be achieved from the funds spent on the rehabilitation and maintenance of parochial roads.
Further analysis of KSAMC’s financial data on the PRF revealed a surplus of receipt in the amount of $400 million over expenditure, which the AuGD said raised concerns regarding the credibility of KSAMC’s accounting records, suggesting that controls were ineffective in ensuring the accuracy of actual amounts received and disbursed.
In its response to the AuGD’s concerns about the accuracy of the PRF records, the KSAMC advised that many PRF payments were incorrectly classified and posted to other accounts and required adjustment. However, the AuGD said that the KSAMC is yet to present the required journal entries to allow for verification of accounting adjustments.
The AuGD also highlighted a number of cases in which the same named roads, with the same work for same value, were reflected either in different months or calendar years. The department said that these observations cast doubt on whether the works were done and the methodology applied by the KSAMC in matching the cost of the roadworks to the approved budget.
For example, in 2017, a section of Highlight View Road in Mona was rehabilitated at a cost of $4.69 million. In August of the same year, the same road was rehabilitated at a cost of $4.69 million.
Similar circumstances applied to Three Views Avenue twice in 2017.
· Budgets were not aligned to annual road maintenance plans for parochial roads.
· KSAMC could not confirm the reliability of its records relating to PRF expenditures as it could not explain the variances between its general ledger and subsidiary records.
· No established guidelines for the prioritization of maintenance activities for parochial roads.
· Routine work programmes did not reflect planned roadworks but works already undertaken.
· Strategic plan for 2014-2018 was still in draft at the time of our audit report.
Other highlights from the report
· KSAMC was limited in its ability to hold staff of the City Engineering Department to account for service delivery given the absence of work plans or performance targets.
· KSAMC failed to maintain critical information on the condition of parochial roads to guide maintenance activities.
· KSAMC inspection activities did not provide assurance that road maintenance work undertaken complied with best practices for quality standards.
· KSAMC monthly work programmes were not reflective of planned roadworks.
· A reduction in preventative and routine road maintenance activities between 2014-2015 to 2016-2017 affected the preservation of adequate road conditions for the public.
· KSAMC’s contracts management system was inadequate in capturing all critical records to facilitate efficiency and transparency.