Special Audit Report on Caribbean Maritime University (CMU) - December 2019
The special audit report on Caribbean Maritime University revealed unsatisfactory HR practices, poor governance, deficiencies in oversight, procurement breaches, and mismanagement of contracts. Issues included inconsistent HR practices, unapproved emoluments, infrequent council meetings, and inadequate oversight by the portfolio ministry. Procurement breaches, including direct contracting instead of competitive bidding, and construction project mismanagement were also highlighted.
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SPECIAL AUDIT REPORT CARIBBEAN MARITIME UNIVERSITY (CMU) AUDITOR GENERAL S DEPARTMENT DECEMBER 2019
What We Found Unsatisfactory HR Practices Failure to adhere to HR Policy. Inconsistent HR Practices. Unapproved emoluments. Poor Governance Infrequent Council meetings Inadequate oversight by portfolio ministry Transactions not related to CMU s core business Procurement Breaches Direct contracting utilized instead of competitive bidding Full value not received for contracts Onerous costs related to contracts
Rationale: To ascertain whether CMUs operational activities, governance & monitoring framework were consistent with the principles of good financial management. Governance Practices & Oversight Procurement & Contracts Management Human Resource Management Practices Accounting Practices
Governance Practices and Oversight Oversight Deficiencies by Council Oversight weaknesses by Portfolio Ministry The Portfolio Ministry failed to request copies of minutes from CMU Council meetings; No internal auditor engaged; Minutes of meetings of CMU Council were not submitted to the Portfolio Ministry by the Council in breach of the GOJ Accountability Framework for Senior Officers; No independent audit of CMU by Portfolio Ministries. Annual and half yearly reports were not faithfully submitted by CMU to respective Permanent Secretaries.
Procurement and Contracts Management Lunch Suppliers Total of $46.7M paid to 15 lunch suppliers over a 12 month period under the Technology Advancement Programme (TAP) and Career Advancement Youth Employment Solution (CAPYES) programmes. 9 of the 15 lunch providers exceeded the allowable threshold of $1.5M for direct contracting, based on GoJ Procurement Guidelines. Computer Equipment $10.6 million paid to a supplier for computer equipment and other peripheral items without a formal contract or provision of warranty. No evidence of the fixed assets in CMU s inventory records; assets could not be identified by the AuGD. Project Management CMU incurred demurrage charges of $33M related to purchase of sandwich panels, as CMU failed to return the shipping line s containers as scheduled. The building project remains at foundation stage after approximately two years.
Construction of Block E CMU took a decision to construct a new student block at an estimated cost of $701.8M without adequate source of funding. CMU provided no evidence that the Council considered the feasibility of the project or that given the cost, sought Cabinet s approval. CMU was unable to indicate the basis on which five companies were pre- selected to supply the sandwich panels for use in the construction. Logistic Company 1 was selected as the supplier of the sandwich panels, although it was non- responsive, having submitted its bid after the deadline. Further, the company was incorporated in February 2018, the same month that CMU invited bids for the procurement opportunity. Logistic Company 1 attached the quotes of the other bidders with its submissions although we found no evidence that the four bidders authorized Logistic Company 1 to submit the bids on their behalf.
Construction of Block E Status as at October 2019
Accounting Practices Poor Accounting Practices $145M representing a portion of funds disbursed by MoEYI for salaries, deposited to JMITF account . Unapproved accounts Off the books transactions Bank withdrawals without supporting documentation Unauthorized officers conducting RTGS transactions Unsupported Payments totaling J$332.9M and US$293,445 5 Bank Accounts not disclosed by CMU were not reflected in CMU s general ledger. Chairman of Finance Committee was a signatory to all CMU s accounts in contravention of Section 5 of the FAA Act Instructions 2017 Payee 7 received $24.9M during the period April to October 2018 from CMU through its canteen and trust fund bank accounts for which there was no support.
Human Resource Management Practices CMU did not obtain MoFPS approval for the 466 employees on its payroll who were paid an aggregate annual basic salary was $676.8M; We only saw evidence where MoFPS approved travelling allowances for 25 officers in July 2010. Unapproved Emoluments & Benefits CMU paid $2M for close protection services for the minister on weekends; however we saw no evidence that the Commissioner of Police approved the engagement of the officers who were substantially engaged to the JCF. No evidence of basis for payment of close protection officers
Engagement of Consultant CMU s President approved the engagement of overseas-based Consultant for US$155,000 for 24 months without local competitive tender to enable best price; No cost-benefit analysis to inform decision to engage consultant; No evidence of sponsorship received by CMU from Consultant s efforts; Value for Money Donations Consultant paid $13.95M without evidence of work done; Information received directly from the donors revealed that they had no knowledge or collaboration with the consultant. No evidence that the input of CMU Council was sought in arriving at the decision. Travelling allowance of U$12,038 paid without documentation to support expenses.
Auditor Generals Recommendations The Permanent Secretary should ensure the establishment of an appropriate arrangement to effectively monitor CMU in keeping with the GoJ Accountability Framework. CMU s Council should establish robust internal control & risk management systems to reduce the risk of losses and regulatory breaches. CMU s Council should strengthen project and contract management systems to ensure appropriate due diligence is conducted prior to procurement and execution of projects. CMU s Council should immediately review CMU s procurement practices to accord with GOJ procurement Guidelines
Recommendations contd. CMU must improve its asset/ records management system to ensure that items acquired are systematically registered and verified. The Trustees of JMITF should review relevance of the Trust fund with a view to winding up its operations. The Permanent Secretary should investigate allegations outlined in the overseas press regarding the President s international award to make a determination regarding recovery of sums expended by CMU. CMU should review circumstances surrounding the reimbursement of US10,000 to President to ensure refund was appropriate.
