By: Musa S. Sheriff
London based audit firm Ernst & Young LLP auditors has discovered that Gambia Ports Authority (GPA) has never performed a Fixed Asset verification exercise, revealing GPA relied on DT (an Accounting firm based in the Gambia) in 2011/2012 to perform the last known verification exercise as part of the revaluation of GPA’s Fixed Assets.
Ernst & Young LLP conducted a special audit of seven state-owned enterprises (SOEs) of the government of The Gambia, namely; (GNPC, GCAA, NAWEC, GPA, SSHFC, GAMTEL and GAMCEL).
The final of the auditor’s report of August 19, 2019 and signed by Maryam Hussain, Partner for and on behalf of Ernst & Young LLP revealed that the details of each of the seven SOEs’ audit findings contained in the 445-page report has been submitted to the Finance Minister, Mambury Njie, by the UK auditing firm since August 2019.
“The GPA Accounting Policy of 2012 places the responsibility for performing a Fixed Asset verification on the Internal Audit and Estate departments. The non-performance of timely asset verification poses a risk of GPA incorrectly stating its Fixed Assets,” revealed Ernst & Young LLP.
Ernst & Young LLP added: “As at December 31, 2017, GPA has a positive net assets position of GMD 2.7b (USD 56.7m), which is constituted predominantly by a Fixed Asset balance of GMD 2.1b (USD 44m), which represented 53% of total Assets and borrowings (both long and short term) totaling GMD 1.1b (USD 23m) representing 88% of total liabilities value.
GPA’s Balance Sheet highlighted that Net Assets increased by 8% from GMD 2.5m (USD 57,592) in 2016 to GMD 2.7b (USD 56.7m) in 2017. The drivers of this increment include additional Fixed Assets purchased and additional loan facilities obtained in 2017.”
The auditors identified eight assets that have been demolished and/or were no longer operational, but were still included in the 2017 Asset Register. The value of the eight assets amounts to GMD 89m (USD 1.9m), with demolished buildings accounting for 44% thereof GMD 39,768m (USD 828,367).
The recognition of non-existent assets is inconsistent with the asset recognition criteria set out by International Accounting Standards.
Ernst & Young LLP also revealed that it was recommended that GPA removes assets that have been demolished or are nonoperational from its Register to properly reflect GPA’s Fixed Assets position and consider performing a revaluation exercise to properly restate the carrying value of its Fixed Assets.
Ernst & Young LLP added that this is important to ensure that the Asset valuation in the Balance Sheet is a true representation of the fair value of the Assets.
According to Ernst & Young LLP, based on discussion with GPA’s Finance team and review of investment directives EY noted that four out of five of GPA’s investments were mandated through Executive Directives from the previous government (i.e. all except the Trust Bank Limited investment).
Ernst & Young LLP added that none of these investments were performing as at the end of December 2017, saying that the non-performing nature of these investments has necessitated a 75% provision for impairment on the investments’ cost. These impairments have a significant impact on GPA’s profit and loss position.
“GPA does not have a documented investment policy as recommended by International Accounting best practices. Investments made by GPA are currently impaired based on management’s discretion. It is recommended that GPA documents a policy that defines the types of investments permitted, approving authority, investment management procedure and impairment approach.
GPA grants waivers on rent and other charges incurred by consignees for the handling and storage of containers. The consignee may request a percentage waiver from the Managing Director, and the Managing Director may, at his discretion, grant a waiver on the charges. The waiver granted (based on public holidays or long-standing relationship) is noted on the delivery order by the Managing Director and the rating office will recalculate the payable amount. In the event of a waiver on any class of dues/fees, the delivery note will contain such approvals from GPA’s Management,” Ernst & Young LLP pointed out.
The auditors recommend GPA should adopt a waiver policy stipulating the criteria for award of waivers in order to prevent abuse of the waiver process and possible loss of revenue. In addition, GPA management should consider recording the invoice amount and the discount allowed or waiver on its accounting system for transparency.
During the course of the audit it was discovered that GPA’s management were instructed by the Office of the President to commit expenditure that did not have a direct benefit for GPA.
The auditors noted some procurement irregularities that staff members are circumventing the procurement process by signing for products as “received” on the departmental requisition form when, in fact, the goods or services have not been provided. By circumventing the process, GPA may incur a loss as payment is made without receiving the goods/services.
