Financial Services Commission Special Audit Report 2023 Findings
The Financial Services Commission (FSC) underwent a special audit in response to allegations of human resources and procurement malpractices. Key findings included positions created without approval, vacancies filled without advertisement, and other concerning practices. Detailed assessments were conducted to determine policy breaches and mismanagement. The FSC's adherence to government policies was evaluated, and corrective actions were recommended based on the audit findings.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. Download presentation by click this link. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
E N D
Presentation Transcript
Financial Services Commission Human Resources and Procurement Procedures Special Audit Report 2023 December 28
ROLES & FUNCTIONS OF THE FINANCIAL SERVICES COMMISSION The FSC is empowered to protect customers of financial services by supervising and regulating prescribed financial institutions in the areas of insurance, securities and pensions; thereby fostering integrity, stability and health of the financial sector. This includes taking such steps as are necessary to ensure that appropriate standards of conduct and performance are maintained in the prescribed financial institutions, in accordance with the FSC Act and any other relevant Acts. The agency currently supervises the insurance, the private pensions, and the securities industries.
AUDIT RATIONALE & OBJECTIVE 3 THIS SPECIAL AUDITWASUNDERTAKENINRESPONSETO ALLEGATIONSOF HUMAN RESOURCESAND PROCUREMENT PROCEDURESMALPRACTICESATTHE FSC. THEAUDITSOUGHTTODETERMINE: Assess whether there were breaches in the approved policies and procedures of the FSC to the extent that the allegations could be substantiated. Assess whether special consideration was being given to any connected party as it relates to staff recruited or promoted, as well as contractors selected.
ALLEGATIONS ALLEGATIONS 4 i. Posts created without the approval of Ministry of Finance and the Public Service (MOFPS). ii. Vacancies filled without being advertised. iii. Friends and related persons being placed in positions for which they are not qualified. iv. $150M loss on International Organization of Securities Commissions (IOSCO) conference. v. $160M spent on training over 4 years to include overseas trips that were not authorised by the Ministry of Finance and the Public Service (MoFPS). vi. Payment to a contractor without evidence of work done. vii.Faulty disciplinary procedures to victimise unfavoured persons.
KEY FINDINGS 1 REGARDINGPOSTSBEINGCREATEDWITHOUTTHE APPROVALOFTHE MOFPS : Whereas 71 positions costing $363.3 million per annum were not on the Ministry s List of Established Posts , we found no evidence that FSC sought to circumvent Government policy. Following a post-audit conducted by MoFPS, the FSC was requested to prepare a detailed justification to enable the Ministry s approval to regularise the positions. Regarding any follow-up action, the MoFPS indicated to the AuGD, that no further action was taken since receipt of the FSC s response to the post audit, and that the matter would be further reviewed as the contents are quite legal and not confined to the FSC .
KEY FINDINGS 2 REGARDINGVACANCIESFILLEDWITHOUTBEINGADVERTISED We saw instances where officers were either employed, promoted without the positions being advertised or being interviewed. Though the practice accorded with the Public Service Regulations (3.1.16), it was not explicitly stated in FSC s Human Resource Management manual. The FSC indicated its intention to amend its HR policy to address any ambiguities that may apply with respect to the role of interviews in the recruitment process and that since 2021, the Commission has advertised and conducted interviews for all vacant positions . We saw no evidence to substantiate the allegation that friends and related persons were being placed in positions for which they are not qualified.
KEY FINDINGS 3 - Regarding allegations of excessive expenditures: ALLEGATION: $160 MILLIONSPENTONTRAININGANDOVERSEAS TRAVELIN 4 YEARS It was alleged that senior officials made frequent overseas trips disguised as official FSC business and that these were undertaken without the permission or knowledge of the MoFPS in contravention of Circular No. 16, File No. 27/026. Based on information gleaned from the invitations received and other correspondence related to the events, we saw no instance where the travel was not related to the respective officer s work at the FSC. Further, email correspondence corroborated that the travels related to official business of the FSC.
KEY FINDINGS 3 (CONTD) - Regarding allegations of excessive expenditures: ALLEGATION: $150 MILLIONLOSSON IOSC CONFERENCE IN 2017 FSC s2017/18 audited financial statements revealed that total revenue earned from the conference was $155.401 million while expenses amounted to $319.047 million resulting in a loss of $163.646 million. Board minutes for July 2017 indicated that matters relating to the IOSCO Conference were discussed and the Board agreed that there were missteps in the management of the contracting and other arrangements relating to the conference but that in the interest of maintaining Jamaica s reputation, efforts will be made to make the conference a success.
KEY FINDINGS 3 (Contd) - Regarding allegations of excessive expenditures: FSC DIDNOTRECOVER $4.76 MILLIONPAIDINSTATUTORY OBLIGATIONSFORFORMER ED FSC did not demonstrate proper fiduciary responsibility when it accepted liability for the payment of $4.76 million in the statutory obligations of a former Executive Director. This was in a context where FSC did not withhold statutory payments of $4.76 million from separation payments of $11.1 million to the former ED, but as instructed by the Board Chairman, opted to classify the $4.76 million as ex-gratia payments. The FSC also paid the ED an amount of US$1,000 on the instruction of the chairman for which there was no evidence that both payments were brought to the attention of the Board.
KEY FINDINGS 3 (Contd) - Regarding allegations of excessive expenditures: CONSULTANTPAID US$28,000 WITHOUTA TOR ANDAPPROVED CONTRACT A former executive director of FSC, engaged a consultant from February 2015 to September 2015. FSC paid the consultant US$28,000.00 but did not have any TOR in place to govern payments to the consultant. We saw no documentation indicating the nature of the services to be provided, as required by the GOJ Procurement Guidelines. The former ED subsequently asked the Board to approve the contract of $23 million for payment of invoices already submitted. However, the chairman disagreed with the payment as the contract was not presented to the Board for approval . On March 9, 2016, the Board directed the former ED to have the consultant revise the invoices so that the paperwork stands up to scrutiny . We saw invoices totalling US$28,000.00 and a formal request to the bank on June 10, 2016, for a draft in the similar amount to be paid to the consultant. The FSC did not provide a response to this finding.
RECOMMENDATION RECOMMENDATION The FSC should seek to resolve with the The FSC should seek to resolve with the Ministry of Finance and the Public Service, Ministry of Finance and the Public Service, outstanding matters related to its outstanding matters related to its establishment and recruitment practices and establishment and recruitment practices and improve transparency in its HR processes. improve transparency in its HR processes.
WHAT SHOULD BE DONE WHAT SHOULD BE DONE 12 The FSC should seek to recover the overpayment The FSC should seek to recover the overpayment of $4.76 million in statutory obligations. of $4.76 million in statutory obligations.
