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Shaw calls for forensic audit of Whitehouse
Stewart agrees with Shaw's call for Whitehouse forensic auditBalford Henry, Observer writer
Wednesday, May 16, 2007
The Public Accounts Committee (PAC) of the House of Representatives seemed headed in opposite directions yesterday, in terms of producing a report on its review of the Sandals Whitehouse Hotel US$43-million overrun.
Government member K D Knight felt that the report should not only state that there is no evidence of personal gain on the part of public officers involved in the controversial project, but should expand to state that there is no evidence of corruption.
But Opposition spokesman on finance and the public service, Audley Shaw, hit back that unless the report demanded a financial audit, as well as a forensic financial audit, it could not reach either conclusion.
Shaw said that the financial audit was needed to determine whether proper internal controls were established and followed and, if not, what are the implications, while the forensic financial audit would determine whether fraud was involved in the overrun.
Yesterday, Sandals chairman Gordon 'Butch' Stewart agreed with Shaw.
"Audley Shaw is absolutely right," said Stewart, who is also chairman of the Observer. "The audit report that was submitted was nothing more than politically motivated. Anyone that questions the air-conditioning system at Sandals Whitehouse, even though we had nothing to do with the actual design, is talking hogwash.
"One need not go any further than Antigua where we are spending our own money on furniture, décor and landscaping that far exceeds what was done at Whitehouse to get an indication of the kind of expenditure involved. To support value for money, a forensic audit should have required the bills of quantities to be re-priced at their prevailing market rates. Market checks should have been made to verify the accuracy of measurements including a detailed examination and re-pricing of all subcontractors' final accounts."
The stand-off over the draft report produced by Auditor-General Adrian Strachan, assisted by the committee's secretary Rosemarie Johnson, led to a split down the political line and raised the possibility of two separate reports from either side. This will be decided when the committee meets again next Tuesday.
The main bone of contention was the inclusion, as one of the conclusions, of a paragraph which read that, "there was no finding of personal gain on the part of any of the public officers concerned in this matter".
Shaw pointed out that Contractor-General Greg Christie had recommended that the auditor-general be asked to do a financial audit of the project.
He said that the audits that have already been done were either from a contractor's or architectural perspective, but none had been done from an accounting perspective.
"I believe that our examination here would be totally incomplete without such an exercise being carried out - a proper financial audit and a proper forensic audit," Shaw insisted.
Knight responded that Shaw's proposal "cannot happen".
Knight said that although the proposal mirrored that of the contractor general's, "I think that we cannot go down that road".
He said that if the PAC was to report that it could not answer the questions it had been posed after six months of hearings, it would have been a colossal waste of time and money.
His government colleague, John Junor, said that he was not prepared to put people's character in the balance, pending the findings of a financial audit.
"I want to indicate in the strongest possible terms, I cannot sit here and see the taxpayers waste another set of money dealing with this report for what, I am going to state, is as far as I am concerned a political process," he said.
Strachan said he doubted whether his office could identify any information that is likely to take the process substantially further. He said that both the Contractor-General's Office and the forensic team were better equipped than the Auditor-General Department's staff to do an audit.
"I doubt very much that an audit by my officers at this time would add much to what we have already been aware of," Strachan said.
Deputy financial secretary Robert Martin, who represents the Ministry of Finance on the PAC, said that annual audits are required of public firms. The audits, he added, give an opinion as to whether management has complied with the required standards.
He said that it was on the basis of their qualification, which would state whether there were breaches of internal control and policy, that the ministry could follow up with a fuller audit.
But Shaw noted that there has been no financial audit done of Sandals Whitehouse.
"So, a financial audit is necessary, and I am not prepared to support any recommendation that excludes the need for a proper financial audit and a forensic financial audit," Shaw insisted.
He said that he accepted the auditor-general's response that he did not have the resources to do an audit and suggested that another source be found.
Eventually, the committee agreed to meet again next Tuesday to look at the areas of agreement and disagreement as well as the proposed recommendations in the draft report. But at the end of yesterday's meeting it seems very likely that there could be a majority report from Government members and a minority report from Opposition members, unless Shaw relents.
Stewart agrees with Shaw's call for Whitehouse forensic auditBalford Henry, Observer writer
Wednesday, May 16, 2007
The Public Accounts Committee (PAC) of the House of Representatives seemed headed in opposite directions yesterday, in terms of producing a report on its review of the Sandals Whitehouse Hotel US$43-million overrun.
Government member K D Knight felt that the report should not only state that there is no evidence of personal gain on the part of public officers involved in the controversial project, but should expand to state that there is no evidence of corruption.
But Opposition spokesman on finance and the public service, Audley Shaw, hit back that unless the report demanded a financial audit, as well as a forensic financial audit, it could not reach either conclusion.
Shaw said that the financial audit was needed to determine whether proper internal controls were established and followed and, if not, what are the implications, while the forensic financial audit would determine whether fraud was involved in the overrun.
Yesterday, Sandals chairman Gordon 'Butch' Stewart agreed with Shaw.
"Audley Shaw is absolutely right," said Stewart, who is also chairman of the Observer. "The audit report that was submitted was nothing more than politically motivated. Anyone that questions the air-conditioning system at Sandals Whitehouse, even though we had nothing to do with the actual design, is talking hogwash.
"One need not go any further than Antigua where we are spending our own money on furniture, décor and landscaping that far exceeds what was done at Whitehouse to get an indication of the kind of expenditure involved. To support value for money, a forensic audit should have required the bills of quantities to be re-priced at their prevailing market rates. Market checks should have been made to verify the accuracy of measurements including a detailed examination and re-pricing of all subcontractors' final accounts."
The stand-off over the draft report produced by Auditor-General Adrian Strachan, assisted by the committee's secretary Rosemarie Johnson, led to a split down the political line and raised the possibility of two separate reports from either side. This will be decided when the committee meets again next Tuesday.
The main bone of contention was the inclusion, as one of the conclusions, of a paragraph which read that, "there was no finding of personal gain on the part of any of the public officers concerned in this matter".
Shaw pointed out that Contractor-General Greg Christie had recommended that the auditor-general be asked to do a financial audit of the project.
He said that the audits that have already been done were either from a contractor's or architectural perspective, but none had been done from an accounting perspective.
"I believe that our examination here would be totally incomplete without such an exercise being carried out - a proper financial audit and a proper forensic audit," Shaw insisted.
Knight responded that Shaw's proposal "cannot happen".
Knight said that although the proposal mirrored that of the contractor general's, "I think that we cannot go down that road".
He said that if the PAC was to report that it could not answer the questions it had been posed after six months of hearings, it would have been a colossal waste of time and money.
His government colleague, John Junor, said that he was not prepared to put people's character in the balance, pending the findings of a financial audit.
"I want to indicate in the strongest possible terms, I cannot sit here and see the taxpayers waste another set of money dealing with this report for what, I am going to state, is as far as I am concerned a political process," he said.
Strachan said he doubted whether his office could identify any information that is likely to take the process substantially further. He said that both the Contractor-General's Office and the forensic team were better equipped than the Auditor-General Department's staff to do an audit.
"I doubt very much that an audit by my officers at this time would add much to what we have already been aware of," Strachan said.
Deputy financial secretary Robert Martin, who represents the Ministry of Finance on the PAC, said that annual audits are required of public firms. The audits, he added, give an opinion as to whether management has complied with the required standards.
He said that it was on the basis of their qualification, which would state whether there were breaches of internal control and policy, that the ministry could follow up with a fuller audit.
But Shaw noted that there has been no financial audit done of Sandals Whitehouse.
"So, a financial audit is necessary, and I am not prepared to support any recommendation that excludes the need for a proper financial audit and a forensic financial audit," Shaw insisted.
He said that he accepted the auditor-general's response that he did not have the resources to do an audit and suggested that another source be found.
Eventually, the committee agreed to meet again next Tuesday to look at the areas of agreement and disagreement as well as the proposed recommendations in the draft report. But at the end of yesterday's meeting it seems very likely that there could be a majority report from Government members and a minority report from Opposition members, unless Shaw relents.
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