MPM Expenditure Audit Cheque Payment Draft

NATIONAL SOLID WASTE MANAGEMENT AUTHORITY
MPM EXPENDITURE AUDIT CHEQUE PAYMENTS
CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Draft report for Discussion purpose
INTERNAL AUDIT DEPARTMENT
1.0
APRIL 2014
INTRODUCTION
This audit was performed in accordance with the annual audit plan for the
Financial Year 2013/14. The purpose of the audit was to examine and
evaluate the adequacy and effectiveness of the system of internal control
over the payment process
1.1
Objectives and Scope

The objectives of the audit were to determine whether:
1. A schedule of payment approval and cheque signing limits authorities
exists, to ensure proper preparation authorization and approval for
payment processing;
2. Bank Transfer and Cheque signing is restricted to authorized
Manager/Executive;
3. Payments made to suppliers/contractors are legitimate with the required
procurement documents;
4. Payees are the authorized persons and expenditure correctly classified and
posted to the relevant general ledger accounts;
5. All expenditure vouchers are supported by the appropriate
invoices/supporting documents and evidence seen that goods/services are
received/rendered in a satisfactorily manner;
6. Adequate procedures are in place for processing cheque requests and
prohibit cheques from routinely being returned by the payee or the bank;
7. Cheques were delivered to the bonafide payees or authorized agents and
written acknowledgement secured.
1.2
Audit Approach
a.
b.
Interviewing of relevant officers;

Examination of documentation/records.
Internal Audit Department
April 2014
Page 2

1.3
Auditor Assigned
The audit was conducted by Auditors Karen Watson, Doranie Sergeant and
assistant auditor Jelisa Barnett supervised by the Audit Manager .
1.4
APPROVED BY
Vashti Wilson,
Internal Audit Manager
3.0
AUDIT REPORT
Cheque payment vouchers along with supporting documents, encashed
cheques, cheque transaction listing, general ledger extracts and cheque
disbursement registers were examined for periods between April 2012 and
March 2014.
For discretionary reasons the names of individuals, contractors and companies
are not included in the report; instead NCC, TCC or TRN numbers were
substituted. The information can be provided if it becomes necessary.
3.1
Failure to present essential records

Criteria
Section 148(1) of The Financial Administration and Audit Act (The Financial
Management Regulations 2011) states Accounting Officers or heads of
departments shall ensure that internal audit has access to all books , records,
documents, files, working papers, reports, plans whether held physically or
electronically and any other relevant material for the purpose of carry out an
audit.
Audit Observations
The system of internal control relating to record management was weak as the
posting, filing, and storage of accounting data along with other relevant
April 2014
Page 3

supporting documents /information was inadequate and did not allow for
prompt retrieval of document and accurate accounting data.
MPM Accounting Units fail to present to Audit following records/documents
requested both verbally and in writing.
1.
2782 vouchers totaling $410,686,269.83 which were missing from the

batches received for payments made by cheques during the period April
2012 to March 2014;
2.
Journals vouchers for bank transfers to substantiate expense totaling

153,711,165.61 seen posted to the General Ledger.
Audit was therefore unable to examine the above vouchers to determine

whether::
The appropriate supporting documents and evidence that goods/services

were received/rendered in a satisfactorily manner were in place; and
They were properly prepared, authorized and approved before payment.
See Appendix A for a comprehensive list of documents requested and not
received.
Implication
Breach of Section 148(1) the Financial Management Regulations 2011
Recommendation
The Regional Operations Manager, Financial Accountant and Accountant are
reminded that they are charged with the responsibility of ensuring that
guidelines issued by the Ministry of Finance are implemented and an effective
system of internal control exists. Hence:
1. All payment vouchers and other documents not presented should be
accounted for.
2. The requirement of the MOF&P circular#6 dated 28/3/2000 which state
that if impropriety is suspected regarding the missing payment vouchers,
the matter should be reported to the Auditor general and the Financial
Secretary be Comply with.
April 2014
Page 4

Management Response
Regional Operations Manager
Financial Accountant
Accountant (MPM)
3.2
Vehicle Maintenance----Garage 97 Hagley Park Road

Motor Vehicle repairs and maintenance cost for 2013/2014 have increase by
100% from $16 million in the financial year 2012/2013 to over $33 million
This cost did not include expenses for Fuel.
Examination of payments vouchers relating to the procurement of goods and
services for the garage revealed the following:
3.2.1 Lack of Segregation

The internal controls at Hagley Park Garage must be strengthened, in the area
of procurement and payment of items for the garage. There was clear evidence
of a lack of segregation of duties in the process. The following observations
were made:
1. The Public Cleansing Administrator currently ;
Prepares and signs on the purchase requisitions, purchase orders
and Procurement Reporting Form;
He is the contact person between the garage and the suppliers.
This is detailed in the Request for Tender document;
Collects the suppliers cheque evidence by the signature in the
payment disbursement book;
Collects the goods from the suppliers from time to time; and
Occupies office space with the store clerk.
2. The Store Clerk currently
Receive goods purchase either from suppliers or person who collects;
prepares the goods receival note;
performs safekeeping and distribution of goods; and
Updates the inventory stock records.
Audit noted that the stock records were not updated at the end of the
financial 31st March 2014.
April 2014
Page 5

Implications
The lack of separation of duties could result in unauthorized purchase and
payment, undetected.
Recommendation
The Regional Operations Manager must improve the internal controls by
ensuring that there is segregation of duties. Hence:
A service requisition must only be prepared from a service order (job

order) and the job order number must be recorded on the requisition at
all times for transparency and audit trail.
The officer involved in the preparation and signing of procurement

documents should not also collect suppliers cheque and the items
purchase.
The custodian and issuer of store items should not also receive the good
and prepare the GRN. The GRN should be prepare and handover to the
store clerk along with the items by another officer this will minimize
collusion. This officer should not be involved in preparing procurement
documents or have contact with the supplier.
Management Response
3.2.2
Splitting of Purchase to bypass procurement process

The Ministry of Finance circular#16 dated 14/5/2012 stipulates that for
contract in the range of $500,000.00 to $1.5million, limited tender should
be used with quotations received from three suppliers.
Audit findings
April 2014
Page 6

On the 10/12/2013 three computer boxes for compactor trucks were
repaired by Cornwall Auto Supplies at a total cost of $931,656.00. Audit
noted that:
1.
Three separate purchase orders were drawn to Cornwall Auto, each

for $310,552.00
2.
The Procurement Reporting Forms stated direct contracting as the

method used since the amount was below $500,000.
3.
The Purchase Orders were Zero Rated by the Inland Revenue

Department; However MPM paid $931,656.00 the unit cost of
$792,900 plus GCT of $138,756
.
The Public Cleansing Administrator prepares and signs the
purchase requisitions, purchase orders and Procurement Reporting
Form; and collects the cheque for these purchases.
4.
5.
No job order, invoices or goods receival notes for the items were seen
to support the payment
Implications
1.
2.
Circumventing the GOJ procurement process when three

purchase orders were used to split the procurement.
The lack of separation of duties, increase control weakness and
may result in unauthorized transaction.
Recommendations
The Regional Operations Manager should ensure that:
1.
The GOJ Procurement Process is adhered to at all times and not
circumvented. Therefore for the purchases which are above
$500,000.00 the limited tender process should be used.
2.
The duties assigned to the Public Cleansing Administrator should

allow for segregation duties, in order to strengthen the internal
controls and allow for transparency. ( see recommendation at 3.2.1
above) In addition this officer should be required to present the
missing invoices.
The Regional Operations Manager, Financial Accountant and
Accountant must ensure that:
April 2014
Page 7

3.
The goods recival note and the invoice which represent the
supporting documents for such payments, are attached to the
expenditure voucher at all times; and
4.
Cornwall Supplies Limited should be contacted with the aim of

recovering the sum of $138,756.00 paid for GCT. Because the
purchase orders were zero rated, Cornwall would not be required to
pay over the GCT to Inland Revenue.
Ministry of Finance circular#14 dated 2/12/2011 clearly outlined
the procedure to follow whenever there is a case of overpayment.
The Corporate Service Director and Administration & Procurement

Manager should provide formal guidance to the various Departments on
the procurement process. This should include periodic review to ensure
that the dictates of the Procurement guidelines are followed.
Management Response
Accountant (MPM)
Corporate Service Director
Administration & Procurement Manager
3.2.3
The misuse of Purchase Order

Criteria
The FAA Act regulations 40 stated that where a service is undertaken by a private
person, firm or other private enterprise the price and other terms and condition of the
service shall be clearly understood and agreed upon prior to implementation and
shall be in writing.
The Ministry of Finance circular#36 dated November 9, 2012 also outlined the
importance and usage of a Purchase order. It states that the Purchase order is a
document sent by the buyer to a supplier or vendor, authorizing the supply of goods or
service.
April 2014
Page 8

Audit Findings
MPM was operating contrary to government regulation as purchase
requisitions and purchase orders were seen prepared on or after the date of
invoice, and on the date of payment.
1. The reference number of suppliers invoice and delivery note was not
seen on a number of purchase order..
The following are examples:

Date
Cheque#
7/1/2014
1023095
Amoun
t
Payee
TRN#
346,500. Kevin
Thompson
Trn#
108481905
24/12/2013
1023072
18/3/2014
1023350
300,000. Andrean
Larmond
Trn#
120-358-115
568,820. Stewart
Industrial
Trn#000081-841
Purpose
Invoice Date
Purchase
Order Date
Purchase
Requisition
Date
Provide
backhoe
service on
the 21, 23,
24, 27 &
28/12/2013
To clean
roadway
20, 27 and
31/12/2013
#031766
31/12/2013
#003049
dated
31/12/2013
8/12/2013
031763
24/12/2013
003046
23/12/2013
Repair burnt
out battery
terminal
412608
22/8/2013
030439
27/2/2014
6128
27/2/2014
Implication
1. Breach of the FAA Act regarding the purchase of good/service; and
2. The entitys money could be misappropriated without detection when
Purchase Order is prepared and dated six months after invoiced
received, resulting in financial loss to entity.
Recommendation
The Regional Operations Manager, Financial Accountant and Accountant
should ensure that:
April 2014
Page 9

2. The FAA Act and GOJ procurement guideline are adhered to. Hence at
all times Purchase Orders must be prepared prior to, the
commencement of services and payment for goods;
3. In instances where emergency procurement is necessary, the relevant
documents must be prepared promptly and in place before the work
is completed or goods received; and payment made; and
4. The suppliers invoice and delivery note is clearly marked with the
reference number and date of the purchase order for transparency
and audit trail.
Management Response
Accountant MPM
3.2.4
Inadequate Supporting Documents

Criteria
The FAA Act Instruction 5.3 (clearly states that Each payment of public
money must be supported by a Payment Voucher or a claim which
incorporates details required for a Payment Voucher. (Point 8) The
supporting bills/invoices should be stamped paid.
Audit Findings
MPM was operating contrary to government instructions as noted in the
under-mentioned findings:
1.
The majority of Cash on delivery (C.O.D) payments examined for

motor vehicle repairs and maintenance were not supported by the
requisite invoice or goods receival note; hence audit was unable to
determine whether MPM had actually received the goods/services
paid for.
A sample of 20 payment vouchers were examined, and 18 were not
supported by the requisite invoices and Goods receival notes. The 18
payments amounted to $3,209,392.92
April 2014
Page 10

2.
Payment of $268,868.04 was made to Real Oil Jamaica Limited on

cheque#1019751 dated September 5, 2013 for the purchase of 16
batteries.
Only 14 batteries were received resulting in an over payment of
$38,085.10 to Real Oil Jamaica for two batteries. A credit memo
was not seen on file, neither any evidence that MPM attempt to
collect the remaining goods or cash.
3. Audit also was unable to determine how MPM satisfied itself as to the
quality of services provided by supplier as it relates to repairs to
vehicles since certification was not seen re satisfactory quality of
service provided. the following are examples
DATE
CHEQUE#
PAYEE
AMOUNT
2/7/2014
1023222-
GENERAL DIESEL
SUCCESSORS
187,600.00
2/7/2014
1023211
GENESIS PROACTIVE
LTD.
149,564.04
2/7/2014
1023212
16,300.00
2/19/2014
102322
GENESIS PROACTIVE
LTD
GENESIS PROACTIVE
LTD
3/18/2014
1023351-
DR. GLASS LIMITED
195,250.00
11,120.00
ISUZU GARBAGE
TRUCK LIC#: 30-4081
Repair trunions no
invoice seen
TO REPAIR SUZUKI
JIMMY LIC# 203219
Repair no invoice seen
TO REPAIR SUZUKI
JIMMY LIC#: 203219REAPIR DONE TO Unit
licence#303154/ no
invoice seen
GLASS FOR LANDFILL
MANAGER VITARA
No invoice seen
Implication
Accuracy of payments cannot be validated when there are no supporting
invoices or goods receival note and no evidence seen to confirm that
service was performed; and
Possibility exists for duplication of payment when there is delay in
presenting invoices to Accounts.
April 2014
Page 11

Recommendation
The Regional Operations Manager, Financial Accountant along with the
Accountant need to ensure that the dictates of the FAA Act Instruction
5.3 is adhered hence:
1. In cases where cash on delivery payments are made, the invoice and
goods received note should be returned by the designated officer to
the accountant immediately after the purchase.
2. The officers responsible should be asked to present the invoices
identified above, and provide evidence that the goods/services were
received;
3. The overpayment of $38, 085.10 must be recovered from the supplier.
Management Response
Accountant (MPM)
3.3
Incorrect rates paid for meal and travelling allowance.

Criteria
The Ministry of Finance circular#19 dated 1/9/2009 stipulates that:
The rate for taxi allowance is $550.00 per occasion however for
distances to Spanish Town, Portmore and in the rural areas which is
15 kilometer or more from base, the rate is $900.00
Refreshment allowance which is payable on weekend is $1,000.00
Audit Observation
1. An employee TRN #100271227 received 6 payment totaling
$32,400.00 for meal allowance, but all relevant vouchers were not
presented.
Examination of the two payment vouchers presented revealed that the
officer received payment of $1100.00 for three (3) Saturdays worked
instead of the correct rate of $1000.00 resulting in overpayment of
$300.
April 2014
Page 12

2. An employee (Trn # 114-749-060) whose address was stated as
Kingston received $1800.00 per trip for taxi fare instead of the stated
amount of $1100.00. Payment totaling $88,200.00 was made to him
during the reviewed period, but all relevant vouchers were not
presented
Examination of the payment made on the 6/12/2013 vide
cheque#1022933 revealed that inclusive of $25,200.00 was payment
for 9 days @ 1800.00= 16,200.00 however his entitlement should
have been $9900.00 overpayment of $6,300.00.
.
Implication
Non- adherence to government guidelines resulted in overpayment to the
two employees.
Recommendation
The Regional Operations Manager, Financial Accountant and the
Accountant should:
1. put controls in place to verify the accuracy of employee allowance
claims based on the government approved rates; and
2. Ensure that payment vouchers for all payments made to the two
employees are located and examined for accuracy
3. The full amount overpaid including the $6,600 identified above is
recovered from the employees.
Management Response
Accountant (MPM)
3.4
Lack of adequate payment verification control

Criteria
The FAA instruction 5.4 states that the signature of the officer authorized
to certify the voucher for payment is a guarantee of the accuracy of every
detail on the voucher.
April 2014
Page 13

Audit Findings
Authorized Officers did not always exercise due care when certifying
payment vouchers relating to salary remittance:
1. During examination of the cheque payment vouchers audit observe
two occasions of overpayment totaling $245,104.93. The amounts
paid exceeded the amount on payroll print-out The details as follows:
Company
National
Housing
Trust
ISP Finance
Services
Limited
TOTAL
Remittance
Chequ date
2/9/2013
Cheq#102274
0
8/7/2013
Cheq#102260
5
Amount Paid
Date Recovered
285,859.86
Amount
Overpaid
145,104.93
933,861.96
100,000.00
21/8/2013
Cheq#1022694
29/10/2013
cheq#1022882
$245,104.93
Although the $245,104.93 was recovered this findings continues to

highlight clear evidence of a lack of internal control in respect of
validation control payments made by the entity
In addition a payment of $36,553.89 was made on the 7/1/2014 to
Guardian Life limited vide RTGS system payment. Examination of the
supporting documents revealed that the total sum was $35,212.25,
difference of $1,341.61. No evidence was seen of this amount being
recovered
Implication
Weak internal control for the payment validation process resulted in
overpayment. It is possible therefore for unidentified overpayment to remain
undetected.
April 2014
Page 14

Recommendation
The Regional Operations Manager and the Accountant need to ensure that
Internal controls are strengthened to verify the accuracy of invoice and

payment voucher before payment is made, in order to avoid such
overpayment in future; and
The sum of $1,341.61 is recovered from Guardian life.
Management Response
Accountant (MPM)
3.5
Constituency Development Fund (CDF) payments

The CDF account BNS #801500 is maintained by the Parks and Garden
Department and is the account from which payments relating to work done re
Constituency Development is made.
During the examination of the payment vouchers received Audit noted that
December 19-20, 2013 payments totaling $10,985,000.00 was made from
MPM account NCB#231038345: $4,050,000.00 vide cheques and
$6,935,000.00 through RTGS transfers.
No vouchers were presented for the payment made through RTGS nor any
intercompany transfer seen between Parks Department and MPM
Implication
The possibility for duplication in payments exist when payments are made
from different bank accounts and entities
Difficulty in reconciliation of expenditure under the Constituency
Development Fund
Recommendation
April 2014
Page 15

The Regional Operations Manager and Director of Finance should ensure that:
there is consistency in the accounting for the CDF fund hence, payment
relating to the fund should be paid from the applicable account BNS
#801500, to allow for timely and accurate reconciliation.

The RTGS vouchers relating to CDF are presented, and the general ledger
accurately updated with these transactions.
Management Response
Director of Finance
3.6
Payment made on behalf of NSWMA

Payments amounting to $2,722,078.06 were made during the period
21/12/2013 to 27/1/2014 on behalf of NSWMA. Audit noted that:
MPM Cheque were utilized to make these payments from their recurrent
account.
The cheques were posted to the MPM Ledger;
The Payment vouchers were for NSWMA.
Audit could not verify whether the general ledger was adjusted to correctly
reflect the transactions. It was noted that the bank reconciliation was not up
to date
Implication
Internal control weakness and poor accounting practice highlighted in this
observation. Overstating of MPM expenditure in the General Ledger resulted .
Recommendation
The Regional Operations Manager and the Director of Finance and Financial
Accountant should ensure that:
1. The accounting records is updated to accurately reflect the transaction in
terms of the entity and the related general ledger accounts
April 2014
Page 16

2. The management of the entities affairs and public funds is in keeping with
proper accounting practices to provide accuracy, transparency, and
accountability
Management Response
Director of Finance
Payment for Christmas Work
Audit noted the following:
1. Direct payments of $ 4,295,000.00 were seen made by MPM for Christmas
project.
Although the payments may be justifiable, audit was unable to examine and
validate the payments, sine the vouchers, supporting bills along with cashed
cheques #1023008-1023046 &1023087 drawn 20-21/12/2013 were not
presented although requested. See Appenixattached
2. Christmas project was also seen paid by MPM on behalf of NSWMA/Parks &
Gardens for $5,041,750. Vouchers for these payments were prepared and
stored by NSWMA, but cheques were seen posted to MPM general ledger.
See Appendix.. attached
Implication
Failure to present payment vouchers and supporting documents is a Breach of
Section 148(1) the Financial Management Regulations 2011 and could conceal
irregularity
Recommendation
The Regional Operations Manager and the Accountant are reminded as outlined
by the Financial Management Regulations 2011 that Accounting Officers or
heads of departments shall ensure that internal audit has access to all books ,
records etc.; hence documents relating to the above must be presented.
April 2014
Page 17

Management Response
The Regional Operations Manager
The Accountant ( MPM)
Payment for Special Project
It was noted that $4,810,983.25 was expended from the MPM Recurrent account
for Special Project. This included payment for clearing and cleaning of open lots
using backhoes, labour and the carting of debris to the landfill.
The following weakness were identified during examination of the payment
vouchers:
1. Similarities were seen between invoices submitted by two different payees,
inaddition one payees TRN #120406071 is the same as an employee in MPM
The similarities between invoices were:
Invoices and daily work sheet appeared to have been taken from the
same book as the numbers on invoices and the work sheets attached to
different cheques were in sequential order.
The handwriting on the invoices appeared to have being written by the
same person although services were performed at different location
throughout Kingston.
The signature of one of the Payee which was affixed to the invoice and
work sheets did not correspond with the payee named on the payment
voucher as the first initial differ.
The daily work sheet did not have the signature of representative from
MPM affixed verifying that the work was performed;
The signature seen on the invoices did not always correspond with the
signature affixed to the cheque disbursement book nor to the reverse of
the cash cheque
2. Purchase requisitions and purchase Orders were all prepared after
services were rendered, based on the invoice date and cheques drawn
date
3. The daily work sheets were not signed by MPM representative who were
present at the time when the work was effected instead invoices were stamped
Goods/services received satisfactorily with the signature of the Regional
Administrator affixed.
April 2014
Page 18

4. Not all vouchers were received for examination although requested. Attached
at appendix is the list of payment extracted from the general ledger.
Implication
Failure to implement adequate internal verification control in the accounting
process will provide opportunity for unauthorized activities.
Recommendation
The Director of Finance, Regional Operational Manager and financial
Accountant must
1. Address the control weaknesses identified in the Validation of invoices and
supporting documents as noted in findings,
2. Ensure Certification of goods received and service rendered is carried out by
an officer at the point of delivery. The reason for certification by the officer
mentioned should be determined
3. Determine whether the employee and the contracted payee with the identical
TRN is the same individual, and address this matter immediately, as conflict
of interest would be evident.
Management Response
Director of Finance
3.7
No Supporting invoice for payments

Audit Findings
Contrary to, the FAA Act instruction 5.3, cheques were drawn and disbursed
without the appropriate supporting documents.
1. Payments totaling $345,645.00 was made to two suppliers for meals
provided at the Riverton Landfill during a fire in March 2014. Audit saw no
supporting invoice or goods receival note to confirm that the stated meals
were received. The details as follows:
DATE
3/19/201
4
CHEQUE#
00001023352
PAYEE
HOSANG BROTHERS' ENTERPRISE
April 2014
AMOUNT
72,180.00
Page 19

3/21/201
4
3/21/201
4
3/25/201
4
3/25/201
4
00000102336
4
00000102336
5
00000102336
800000102336
9-
JEAN MILLER
29,500.00
HOSANG BROTHERS ENTERPRISE
52,975.00
HOSANG BROTHERS ENTERPRISE
169,740.00
JEAN MILLER
21,250.00
$345,645.00
TOTAL
2.
70 other payment totaling $7,929,617.41 were not supported by invoice or

goods receival note. Although the payments may be justifiable, the
weaknesses identified are clear evidence of a lack of internal control over
the payment process, which exposes the entity to irregularity.
3. Copy invoice#5042 dated 23/1/2014 was used to support a payment of

$311,639.00 made on the 13/3/2014 to A & L Transport& Tours vide
cheque#1023286 for hydraulic oil purchase.
The payment contravene the Ministry of Finance circular#11 dated
16/3/2010 which outlines that payment should only be made on the
original of supporting document. In exceptional case, the acceptance of
duplicate may be allowed by way of an honor certificate, duly prepare and
signed.
4. An advance of $21,600.00 was seen made to a employee # 810 being
expense for I.D pictures and police records for 6 crew members, the requisite
invoice was not attached to the payment voucher.
Implication
Weak internal control, poor supervision of accounting activities, as well as
ignorance regarding the requirements of the MOFP, could cause erroneous
and unauthorized payments to be undetected,
Recommendation
The Regional Operations Manager, Director of Finance, Financial Accountant
and Accountant must ensure that:
1. The supporting invoices valuing $8,608,501.41 are located and attached
to the payment vouchers. The responsible officer must be required to
provide the invoice. This is in compliance with the FAA Act and MOFP
circular # 11d/d16/3/2010.
April 2014
Page 20

2. The payment process is strengthened. Hence a checklist of the
verification controls necessary for validating the supporting invoice and
document before preparation of payment voucher and effecting payment
is provided to the accounting staff.
Management Response
Director of Finance
Accountant MPM
3.8
Inadequate Control over Cheque Disbursement

Examination of the disbursement register, revealed several occasions where:
1.
2.
cheques were collected and signed for by individuals other than the payee,
and No written letter was seen authorizing the bearer to collect cheques on
behalf of the respective payees; and
The signatures on the payees invoices and the signatures in the
disbursement register were not identical. Examples of these payments are
shown below:
Payee TRN
Cheque
#
Cheque
Date
Amount $
TRN # 108-481-905
TRN # 108-481-905
TRN # 108-481-905
TRN# 120-406-071
TRN# 120-406-071
1023049
1023049
1023049
1023154
1023047
23/12/13
20/12/13
7/1/14
22/1/14
23/12/13
73,000
211,500
346,500
179,200
212,000
Implication
April 2014
Page 21

Failure to obtained written instructions, in instances when cheque is not
disbursed to payee may result in disbursement to unauthorized individuals.
This could result in financial loss to the entity.
Recommendation
The Regional Operations Manager and the Accountant should ensure that:
1.
All cheques are signed for and dated by the authorized payees
2.
Where representatives are used written instructions are obtained

granting such authority to collect cheque on behalf of the payee
3.
Proper identification is provided by the payee and their repesentive when

collecting
Management Response
Accountant MPM
3.9
Inadequate Filing and storage of Payment Vouchers

The filing system currently in place was also a matter of concern as audit noted:
1. Payment/expenditure vouchers were filed in carton boxes according to
the type of payment and not in cheque number although, the practice is
to used cheque number to identify vouchers;
2. Remittances and other payments were observed loosely placed in boxes
beside and behind the accounting clerks desk on the floor. These
payment vouchers were also not filed in any order; and
3. More than one file jacket was maintained for vouchers with the same
cheque sequence, and these were not in any order.
Implication
Lack of control over the filing and storage of payment vouchers may aid in
removal and destruction of records and concealing unauthorized
transactions.
April 2014
Page 22

Loss of government records by deliberate or accidental damage when files
are stored on the floor.
Recommendation
The Regional Operations Manager, Accountant and Regional Administrator
need to ensure that the dictates of the ministry of Finance and Planning is
instituted and adhered to:
1.
Each payment voucher must be filed in ascending order in
chronological manner. Any break in the sequence should be properly
noted.
2.
Payment vouchers should be properly secured in files, with new
volumes open as soon as possible to prevent protrusion. Place in
protective binders to safeguard from damage.
3.
The filing room allows for easy retrieval of document/vouchers.
4.
File and documents should be kept in a raised position from the floor,
as a protective measure from damage by water.
Management Response
Regional Administrator (MPM)
Accountant (MPM)
3.10 Payment Vouchers not uniquely numbered

Criteria
The Ministry of Finance and Planning circular No.6 dated March 28th, 2000 instruction 4.8
states that each payment voucher must have a unique number per financial year and
must be filed in ascending voucher order. A proper notation must be made to explain any
gap or break in the sequence of voucher number.
Audit Findings
MPM was operating contrary to the requirement of the Ministry of Finance and
Planning.
1.
Cheque payment vouchers did not have unique number to identify each
payment; instead the cheque numbers were used as the voucher number,
a non-compliance to MOFP circular 6, instruction 4.8.
April 2014
Page 23

2.
There were numerous gaps and break in the cheque sequence, which was
attributed in many instances to cancelled cheques or change in cheques
sequence. The audit progress was prolonged as it was time consuming to
ascertain the reason for the sequence gaps.
Implication
Failure to implement a unique numbering system could result in the inability to
readily identify unauthorized transaction. As a missing vouchers would not be
easily identified.
Recommendation
The Regional Operations Manager and the Accountant need to ensure that the
dictates of the Ministry of Finance and Planning is implemented and adhered
to, hence each payment voucher must
Have a unique identification number, in terms of financial year

Be filed in ascending order in chronological manner. Any break in the
sequence should be properly noted.
Management Response
Accountant (MPM)
3.11
Lack of control over closed off period in the General Ledger
Audit noted that there was a lack of control over the closed off periods in the
General Ledger, since officers could make adjustments to prior year periods
which were previously closed.
Audit was told by the I.T manager that adjustments can be done up to a six
year period.
Implication
The integrity of the data may be compromised when officers are allowed to make
adjustments to financial years already closed .
April 2014
Page 24

Recommendation
The Regional Operations Manager, Financial Accountant and the I.T Manager,
need to ensure that controls are put in place whereby the at the end of the
financial year the general ledger is reconciled and closed off, on a timely basis
That access to make changes to prior year ledger account is restricted and once
closed no further entry allowed.
Management Response
I.T Manager
April 2014
Page 25

Appendix
RECORDS/ DOCUMENTS NOT PRESENTED BY MPM

Period
# Vouchers
Not
presented
2467
Value of Transaction Remarks

$
April 2013-Dec
2013
315
49,027,743.45
December 2013March 2014
405
141,643,512.31
April 2012March 2013
322,898,119.78
Journal
Vouchers
TOTAL
Documents
361,658,526.38
3,187
Payment vouchers
were not included in
batch received( cheque
payment) NCB
account#231038345
Payment vouchers
were not included in
batch received(cheque
payment) NCB
account#231038345
Payment vouchers not
yet received (RTGS)
A/c#93912
Journal and
supporting documents
not received
875,227,901.92
OTHER DOCUMENTS NOT RECEIVED

Period
April 2014
Page 26

Bank Statements
NCB account#231038345
November 2013 to March 2014
BNS bank statements

#939-12
Encashed Cheques
NCB account#231038345
April 2012 to March 2014
Inventory Cards
Motor Vehicle Work Order

Books
Goods Receival Books
April 2014
November 2013 to March 2014
Page 27

MPM Expenditure Audit Cheque Payment Draft

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NATIONAL SOLID WASTE MANAGEMENT AUTHORITY

MPM EXPENDITURE AUDIT CHEQUE PAYMENTS

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Objectives and Scope

Interviewing of relevant officers;

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Failure to present essential records

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

2782 vouchers totaling $410,686,269.83 which were missing from the

Journals vouchers for bank transfers to substantiate expense totaling

Audit was therefore unable to examine the above vouchers to determine

The appropriate supporting documents and evidence that goods/services

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Vehicle Maintenance----Garage 97 Hagley Park Road

3.2.1 Lack of Segregation

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

A service requisition must only be prepared from a service order (job

The officer involved in the preparation and signing of procurement

Splitting of Purchase to bypass procurement process

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Three separate purchase orders were drawn to Cornwall Auto, each

The Procurement Reporting Forms stated direct contracting as the

The Purchase Orders were Zero Rated by the Inland Revenue

Circumventing the GOJ procurement process when three

The duties assigned to the Public Cleansing Administrator should

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Cornwall Supplies Limited should be contacted with the aim of

The Corporate Service Director and Administration & Procurement

The misuse of Purchase Order

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

The following are examples:

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Inadequate Supporting Documents

The majority of Cash on delivery (C.O.D) payments examined for

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Payment of $268,868.04 was made to Real Oil Jamaica Limited on

DR. GLASS LIMITED

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Incorrect rates paid for meal and travelling allowance.

The Ministry of Finance circular#19 dated 1/9/2009 stipulates that:

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Lack of adequate payment verification control

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Although the $245,104.93 was recovered this findings continues to

Internal Audit Department

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

Internal controls are strengthened to verify the accuracy of invoice and

The sum of $1,341.61 is recovered from Guardian life.

Constituency Development Fund (CDF) payments

CHEQUE PAYMENT - MPM WASTE MANAGEMENT LTD

#801500, to allow for timely and accurate reconciliation.

Payment made on behalf of NSWMA

Internal Audit Department