Institution of failed processes, says damning 2011 audit of COB

As of Wednesday, October 14, 2015

By RASHAD ROLLE

Tribune Staff Reporter

rrolle@tribunemedia.net

AS the College of the Bahamas prepares to transition into a university, a recent draft audit report paints a damning image of its internal control processes and accounting procedures.

In January of this year, the accounting firm Baker Tilly Gomez (BTG) completed COB’s audit for the year ending June 30, 2011, the results of which they documented in a letter sent to the institution’s board of directors. The document - a ‘Management Letter of the College of the Bahamas’ – paints a picture of an institution that has often failed to implement processes ensuring the full protection of its assets and the existence of accurate, up-to-date financial information.

Since COB is behind in its audits, reports for subsequent years are not yet available. A copy of the 2011 draft audit was leaked to this newspaper.

The Tribune revealed recently that the college has been unable to draw down on a $16.1m loan from the Caribbean Development Bank (CDB) within the last year because it has failed to meet one of the CDB’s conditions, which is that it be up to date with its audits.

This failure also puts COB in contravention of the College of the Bahamas Act.

The 36-page document obtained by The Tribune lists a litany of faults found in COB’s internal control processes and procedures, ranging from failures to conduct timely bank reconciliation procedures to failure to adequately train staff.

One practice by the college, the report noted, could have even resulted in theft.

“When a payment that is made incorrectly, such as $3,500 is keyed instead of $350, the supervisor deletes the entry and the correct entry is then made,” the report says, adding: “This could result in entries being deleted after cash is received and could result in theft…We recommend that a reversing entry be made of -$3,500 and the correct amount of $350 be keyed in. This will provide a proper paper trail.”

With respect to financial statements, the report described instances where inaccurate bookkeeping resulted in overstatements and understatements of certain accounts to the tune of hundreds of thousands of dollars.

With regard to funds allocated for restricted purposes, auditors were unable to “trace back how the balances (were) allocated” and how the funds were used.

“The college amalgamates cash related to restricted funds into short-term and long-term deposits, without including balances held in current account nor segregating other deposits for specific purposes not related to restricted balances,” the report said.

Auditors, therefore, recommended that the college maintain its accounting records in a way “that demonstrates that the funds are received and used in accordance with the principle and objective” of donors.

The report also said that inaccurate bank reconciliations resulted “in misstatements in cash at banks carried in prior years’ financial statements,” leading to inappropriate financial reporting in the past.

Regarding one particular account - a clearing account - the report said: “...(It) was not reconciled at the end of the year. Same account was not reconciled in prior years, as a result accounts payable and accrued expenses were overstated by a total of $773,192 due to duplicated postings in the inventory and expenses modules.”

Due to accounting errors, the report noted: “The provision for promotions was understated by a total of $689,006 for the years ended June 30, 2007 to 2009 and understated by $2,302 for the year ended June 30, 2010.”

The report also noted that COB does not have an “established practice” of conducting physical count and inspection of its fixed assets, and that it may not have met the accounting standard of testing potential impairment of property and equipment.

The report said that the value of inventories at the end of the period in question may have also been over or understated as no counting of physical inventories at the end of the year were observed.

While COB’s organisation chart has an internal audit position, according to the report the college does not have an internal audit function in place, depriving the institution of a “critical” area that would regularly provide information about the functioning of its internal controls.

Among other things, BTG recommended that staff be trained to better understand the “nature of transactions and balances recorded in certain general ledger accounts,” as it sometimes took auditors “substantial time and discussions with several individuals to gain an understanding of the nature and reason for transactions in certain general ledger accounts. The individuals responsible for posting to the accounts were not always clear as to the nature of the account and the flow of transactions.”

The report said this could have resulted in discrepancies and delays leading to financial statement errors.

BTG also described encountering problems trying to receive documents for their report from COB in a timely manner.

“We experienced delays in receiving schedules and documents requested during the audit,” the report said. “Although the initial requests were made at the start of the audit, schedules and documents were not delivered in accordance with the timeline initially agreed upon. Additionally, numerous schedules often did not agree with the balances in the general ledger and had to be returned to the college for correction. On several occasions, the audit team was assured that the requested documents were in the audit room, which was often not the case. Considerable time was lost reviewing inaccurate schedules and following up with the college in order to obtain the required support to complete required audit procedures.”

Previously, the firm KPMG conducted audits for COB.

However, BTG noted that a number of recommendations made by KPMG in previous years were never followed by the college.

lkalikl 9 years, 2 months ago

So, what they are really saying is, the government appointed crony who is tasked with overseeing COB's accounts is not doing their job at all. This person should be fired and a real CFO should be appointed, but because our corrupt government outright condones theft from public institutions, as long as the right people are doing the tiefing and they vote the right way, nothing will be done about this. No one will be held accountable and the stink PLP rug will be pulled over yet another national mess and yet another national embarrassment.

Is this really how we want our College/University to be run? Why must everything our government is involved with turn to $%^!? How are we going to save the future of this country if we can't even keep proper books at the College? Don't they have a school of accounting there? Why not involve the school of accounting in the process and let the students work as interns with the accounting department of the college? Fire all the dead wood 'friends, family and lovers' appointees and hire qualified and serious people?

digimagination 9 years, 2 months ago

Et voila! Perfect example of keeping a perfect spreadsheet... on the left nothing is right, and on the right nothing is left!

GrassRoot 9 years, 2 months ago

should be the motto of our country

birdiestrachan 9 years, 2 months ago

Take note that many of the years in this report the PLP was not the Government, I just thought I would point that out, Because of the stink PLP rug statement. Now that they know what the problems are they should make haste to correct the situation. Put some professional people in there who know how to run an accounting system, It is my hope that no one has stolen any money.

GrassRoot 9 years, 2 months ago

who cares. its like with kids. They want to grow up, fine. But stop putting th blame on your parents. If a new government takes over, they take over the good, the bad and the ugly. Tough shit. But then, yes, professional people need to be involved. as we lack a lot of well educated people, maybe we should start hiring ethical people.

Well_mudda_take_sic 9 years, 2 months ago

COB's failure on many fronts is the legacy of the likes of Franky Wilson aka Snake and Alfred Sears. As I've said before, just about everyone knows that a costly degree from COB today is not worth wiping your can with! Even your very worst colleges and universities in Florida are quite capable of producing annual audited financial statements on a timely basis. The dean of COB's business school should be given the boot along with all the members of COB's Council and Administration.

GrassRoot 9 years, 2 months ago

u just sayin that to annoy birdie, right?

TruePeople 9 years, 2 months ago

If you have sense don't enrol in this scam place

JohnBrown 9 years, 2 months ago

When you lay down with dogs you wake up with flees...

GrassRoot 9 years, 2 months ago

University of the Bahamas. Am sure we can make some money as a title mill.

TalRussell 9 years, 2 months ago

Okay Comrades, what in hell are COB teaching their accounting students registered in the following accounting courses: I presume these are not Degree Accredited Courses? I think the Tribune might be publishing fictional stories. You'd have ask if it's the Bank of Bahamaland, or the Ministry of Finance, who are the one's hiring their graduates?
Course Code Course Title
ACCA105 Financial Accounting I
ACCA205 Financial Accounting II
ACCA300 Intermediate Financial Accounting
ACCA305 Intermediate Financial Accounting II
ACCA310 Management Accounting
ACCA313 Cost Accounting
ACCA315 Accounting Theory
ACCA330 Financial Statement Analysis
ACCA412 Advanced Accounting
ACCA413 Fund Accounting
ACCA414 Auditing I
ACCA425 Fraud & Forensic Accounting
ACCA426 Internal Auditing I
ACCA427 Internal Auditing II

GrassRoot 9 years, 2 months ago

well that's the whole point, COB is NOT TEACHING these classes. They only offer them. In ACCA105 you learn how make paper planes. In ACCA 305 you refine your poker skills, ACCA426 no one signs up for, else they will never get a job with the Government. ACCA313 is the only useful class, as they teach you how to account for the child support payments for your out of wedlock kids.

TruePeople 9 years, 2 months ago

lol..... but still.. true jhed

EasternGate 9 years, 2 months ago

And stupid Perry talking about his "legacy". After we kick his ass out in 2017, I doubt any one would even engage him as a featured speaker.

GrassRoot 9 years, 2 months ago

he can still write a book and photoshop Obama into the pictures of the launching party. I bet some numberz boyz will buy up the whole issue to make him feel good.

banker 9 years, 2 months ago

Sad. Another wasted opportunity. Just announced that a Jamaican writer, Marlon James has won the Booker Prize for his novel about the Bob Marley shooting in 1976.

We do not have any scholars, and largely because of the education system and COB. Our young men have been socialised to pick up the gun, rather than the pen. We do not have a culture of learning and erudition.

St. Lucia, which is much smaller than the Bahamas has won the Nobel Prize in LIterature with Derek Walcott. ( I was at Ian Strachan's presentation in Nassau where he had a conversation with Walcott). Naipaul has won the Nobel Prize in Literature from Trinidad. Saint-John Perce who was born in Guadeloupe, won the Nobel Prize in Literature. Sir Arthur Lewis, also of St. Lucia has won the Nobel Prize in Economics.

We, as a nation, obviously don't care about learning. Heck, we don't even care about reading and books. Has anyone been to the library on Shirley Street lately? Other peer countries take the initiative. Many parts of the Caribbean have begun in recent years to host literary festivals, including in Trinidad and Tobago the NGC Bocas Lit Fest, in Jamaica the Calabash International Literary Festival, in Barbados Bim Literary Festival, in Dominica the Nature Island Literary Festival and Book Fair, Alliouagana Festival of the word in Montserrat, and the Antigua and Barbuda Literary Festival. Us, we have a festival to get half-naked and dance in the street while the government pays millions to it cronies, using the Carnival festival as its corruption vehicle.

The average Bahamian on the street cannot speak English, never mind write it.

MonkeeDoo 9 years, 2 months ago

It is a shame and a disgrace. It is shame that separates the civilized from the uncivilized.

MonkeeDoo 9 years, 2 months ago

It is a shame and a disgrace. It is shame that separates the civilized from the uncivilized.

Greentea 9 years, 2 months ago

COB has accounting degree is probably one of the strengths of the place. I know many accountants who came through that system, went abroad and realized they were more than prepared to excel. In fact some graduates pass the CPA exam without with their accounting degree in hand. The problems the college is facing has very little to do with the program and everything to do with the culture of the place- which my sources say is toxic. This is a tragedy.

Alex_Charles 9 years, 2 months ago

I'm not surprised at all at the amount of ignorance in this forum. COB has accreditation to the point where other institutions, even European and American ones, are trying to become associated with the college to gain accreditation as well .Too even insinuate that the College is not a reputable institution of learning is beyond asinine. We have scholars at the College who produce the bulk of ALL private research conducted in the COUNTRY. If you didn't know it's because you didn't bother to go looking or even read. The problem with COB is it's very foundation in the COB act. which allows the government to politically appoint whichever crony they so desire. What do you think is the end result? The processes at the college are also archaic, the current president is a dream seller, the financial situation has always been questionable, and politics should never have a place their and the institution needs to be autonomous. I am not speaking as an outsider looking into the institution I speak as a student trying to make something of myself. But halfway through writing this I realize how pointless this is. Those words fall on blind eyes and deaf ears. Instead of fixing something good that we have and make it better we rather tear down and discredit without all the facts, that's not ignorance. That's the Bahamas...

Reality_Check 9 years, 2 months ago

And all of that research you give COB credit for has not done a hill of beans for the Bahamas. We'll no doubt now get COB researching why it can't produce annual audited financial statements on a timely basis......but it's practical real life solutions we Bahamians (and COB) need today.....not more bogus research!

TruePeople 9 years, 2 months ago

bey what arrreeee you talkin about? these are schools in Afghanistan and Antarctica aye ???????? can't be Euro and US....... what we gone teach them? This is how you swindle and steal and don't even cover it up and still get away with it? Thats the only course of value at COB

JohnBrown 9 years, 2 months ago

So, so, what ya gonna do 'bout this prevailing culture of violence, crime and obliteration bro. Alex? Get out! Get out while there is yet time before the Atlantic ocean has completely covered up all of this Bahamas land area by 2050. Then make yourself available armed with the cat-o-nine tail to receive those we now call deities, when they attempt to step of their jets into the land where you reside, and try to used unearned funds to secure new residency.

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