During the 2012 Standing Financial Committee (SFC) deliberations it was the time for the Internal Audit Department (IAD) and representing the agency was its Deputy Director (DDIA) Mrs. Dorea Maduro-Corea.

Third district representative Julian Fraser RA, asked the DDIA to explain the functions of the Department, to which she said the functions of the Department were to primarily provide appraisals to Government agencies with regards to their functions, operations and recent assessments they may have had. Mrs. Maduro-Corea told Hon. Fraser that a twofold approach was used where sometimes they responded to request made by different agencies, or sometimes they organized audits based on assessments performed by the Internal Audit Department.

The Member of the second district J. Alvin Christopher asked the DDIA to define the difference between the Internal Audit Department and the Auditor General/Audit Department, to which the DDIA replied that there was a distinct difference between the two agencies; she explained to the SFC that the Audit Department focused on the financial statements of the Government of the Virgin Islands, whereas the Internal Audit Department focused on the operations, systems and risk of the different Departments within the Government.

The Deputy Director of the Internal Audit Department further told the SFC committee appointed by the House of Assembly to Examine the 2012 Draft Budget Estimates that the question was also two fold and added that most of the audit activities were requests from the different Government agencies, but most of the audits which were carried out, were based on risk assessments conducted by the IAD where they went into the field to examine the operations of different agencies. She further added that the requests were discussed with the different Heads of Department before the Department was audited.

The Minister for Health and Social Development Ronnie W. Skelton queried which agency conducted audits on the Ministry of Finance (MOF). The Financial Secretary (FS) Neil Smith replied that the IAD could audit the MOF, but there was also the Audit Department. Minister Skelton clarified that the IAD would audit the other Departments, but the audit department would audit the MOF. The FS stated that for transparency purposes, yes. The FS added that he had no qualms about the MOF being investigated and stated that he had previously requested an audit. Minister Skelton informed that a Department could not investigate itself. Honourable Fraser agreed.

List of departments Audited by the Internal Audit Department

The member for the third district asked the DDIA for a list of the projects that has been audited for the past two years, to which she responded that in 2011 the departments that were audited were, Her Majesty’s Prison, the Department of Human Resources Salary Division and Petty Contracts. Minister Skelton interjected and inquired whether all petty contracts had been audited. The DDIA replied that some were randomly selected for auditing.

The DDIA continued with her list that included the Work Permit Exemption Programme, the Royal Virgin Islands Police Force Training, Department of Youth Affairs and Sports, Contributions to Overseas Organization, Human Resources Disciplinary Action and the House of Assembly Assistance Grants.

Debate on a perfect petty contract, is there one? What is a petty contract? The former Minister for Communications and Works Hon. Fraser, referred to the auditing of the petty contracts process and enquired how the processes changed; whether it was the selection of the contractor or perhaps the requirements of the contractor for qualification.

Mr. Simba Todman Internal Auditor III with the IAD responded and told the SFC that to audit a petty contract, they examined the administration from the inception of the project to the close of the project; this included the process of awarding contracts, the monitoring of the projects and whether PWD had the necessary capacity to monitor the volume of contracts produced by the Government and so forth. Mr. Todman also added that they also examined the process of closing off petty contracts where the work was just signed off on and the quality of work being produced on the contracts.

Honourable Fraser then asked what would be considered the “perfect petty contract”. The third district representative explained that he knew the requirements for a contract being issued from the PWD and said once a contractor was selected, they had to produce a trade license and a certificate of good standing from Inland Revenue and Social Security, then the contract is let.

Mr. Todman replied that he was unable to “define a perfect petty contract and was unsure that one even existed”. To this Fraser enquired what the IAD looked for when identifying a questionable or ideal contract. Mr. Todam replied that some red flags included a lack of transparency in the awarding process to the contractor; as it related to the good standing certificates, upon investigation, it was discovered that the contractor owed arrears to the Inland Revenue and the basis of what good standing certificates were being issued. He said some outstanding taxes for some contractors dated back to 1988 and so forth.

Honourable Fraser noted that those facts were known and the Inland Revenue knew about the arrears before they issued the good standing with conditions.

Meanwhile, Minister Skelton asked Mr. Fraser for his definition of a petty contract. The Member for the third replied that it was a contract that did not require competitive bidding. However, the member for the second district J. Alvin Christopher provided the definition of a petty contract being under $100,000.00 and the contactor providing evidence that he has all the requirements to be able to complete the job. Mr. Christopher told the SFC that once that was done, it was issued to the contractor by whatever process that the Government deemed fit and how they were selected were based on a government policy, which, if the Government wanted to change, then they could do so.

Fraser added that in the case of the PWD, they prepared a Bill of Quantities at a set price which the contractor is forced to accept. The member for the second district enquired how the IAD determined the cost of the work for petty contracts and whether they had a qualified person in the Department to do so, or whether they depended solely on the PWD. Mr. Todman admitted that in the past they depended solely on the PWD and had steered clear on quantifying the Bill of Qualities since they lacked the capacities within the Department to undertake such reviews.

Minister Skelton noted that the IAD had a lot of confidence in the PWD to produce transparent and not translucent petty contracts. Second district representative Christopher said the PWD was supposed to guide the Government in terms of the contracts as the Director of PWD was the technical advisor to the Minister for Communications and Works.