National Insurance Fund flagged for unauthorised $187M transfer
An internal audit report of the Ministry of Labour and Social Security has revealed that $187 million was transferred from the National Insurance Fund (NIF) to one of the fund’s entities without the prior approval of the NIF Board or the permanent secretary.
The sum was transferred to the Resort Management Company Limited between February 12 and June 29, 2017.
Auditor General Pamela Monroe Ellis said that significant weaknesses were highlighted in the management and execution of the renovation, refurbishing and subsequent operations of the Melia Braco Village Resort, owned by the NIF.
The NIF is funded by national insurance contributions.
Government pensions and other benefits under the National Insurance Scheme (NIS) are paid from the Fund.
In response to the findings, the ministry said that since the internal audit report, it has implemented new procedures to prevent a recurrence.
This includes a requirement for the advisory board and/or the permanent secretary to approve all transfers from the fund to the resort company.
The annual report of the auditor general also pointed to weaknesses in the system of control over the management of journal entries that expose the fund to financial losses.
The NIF has been instructed to strengthen the system of controls over the processing of journal entries to minimise the risk of illegitimate and unauthorised transactions that could lead to financial losses to the fund.
Monroe Ellis reported that a review by her department showed that 425 journal vouchers with transactions amounting to $49 billion bore no evidence that they were reviewed and authorised by the responsible officers.
Further, 234 journal vouchers representing pension expenses totalling $24 billion were not supported by the appropriate source documents.
Of this amount, $23 billion was not authorised.
As a result, the auditor general said she could not determine whether the expenses were legitimate and constituted a proper charge on the fund.
In its response, the NIF said it accepts that there was a weakness and advised that subsequent to the period under review, management has implemented new controls to prevent a recurrence.
The auditor general recommended that management should implement proper systems of control over the administration of the fund to prevent financial loss.
She said that management should also ensure compliance with the government’s financial reporting framework and guidelines.
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