John Simmonds, head of the Jamaica Defence Force.THE JAMAICA Defence Force (JDF) has been asked to explain why about $23 million representing proceeds of the sale of aircraft that should have been deposited to a Jamaican Government account in the United States, was not put in that account.
Auditor-General Adrian Strachan, in his annual report for the financial year ended March 2001 and tabled in Parliament last month, indicated that the agent for the JDF, in disobeying the order to lodge the funds, acted contrary to the instructions of Cabinet.
Mr. Strachan said that in 1998, Cabinet approved the sale of certain aircraft owned by the JDF, which came under the purview of the then Ministry of National Security and Justice. Cabinet also instructed that the net proceeds of the sale be deposited in an account held by the Jamaican Consulate in Miami, Florida and used to defray the cost of repairs of other aircraft and to upgrade the aircraft hangar.
However, an audit of the related transactions disclosed that contrary to the Cabinet directive, US$320,065 (about J$15 million) of the net proceeds of the sale "has not been paid over by the agent to the Consulate in Miami," said the Auditor-General's report.
In addition, the report said, adequate supporting documents were not made available to substantiate "related disposal costs of US$169,393 (about J$8 million). Mr. Strachan said "the JDF was asked to attend to these matters."
The Auditor-General also reported that examination of the JDF's accounts uncovered deficiencies in the controls exercised over blank cheques, the cheque signing machine, stock and salary controls, and in the recovery of the cost of private telephone calls.
"Reconciliation of the bank accounts also continued to be in serious arrears," said Mr. Strachan, noting that "these weaknesses could contribute to the loss of public resources." He said the JDF advised that steps were being taken to correct those deficiencies.
Regarding the National Security and Justice Ministry itself, Mr. Strachan said interest charges totalling $829,223 were incurred on bank overdrafts for which Ministry of Finance approval was not seen.
He said the Ministry of National Security and Justice advised that the overdrafts were due to inadequate and/or late provision of funds by the Ministry of Finance to meet the payment of salaries for police personnel.
According to Mr. Strachan, the bank reconciliation statements of the Ministry of National Security and Justice also disclosed numerous discrepancies dating as far back as 1989. Here again, the Auditor-General noted that "failure to resolve these outstanding issues could lead to the loss of public funds."
For the Resident Magistrate's court, Mr. Strachan said audits of six court offices for the year under review disclosed the need for improvements in the maintenance of cash books, value books, receipt book registers, bailiff records and the cheques stock record. "It was recommended that the relevant records be kept and checked in the manner prescribed by the regulations," the Auditor General said.
At the same time, he said there was no indication that $79,000 in fines collected and lodged in May 2000 had been credited to the relevant bank account "up to the time of my audit." The Ministry has been asked to investigate the matter, but the report did not disclose the names of the court offices in question.
Mr. Strachan also detected weaknesses in the Correctional Services Production Company (COSPROD) - an agency of the Correctional Services Department - that was formed just over seven years ago to engage inmates in meaningful activities. In addition to the financial statements being outstanding since 1996, the records showed long outstanding receivables of about $1.5 million for goods sold on credit, the Auditor-General said. Revenues collected were often used to meet expenditure instead of being lodged to the bank account as required by COSPROD's accounting manual and the financial instructions, he said.
