Missing’ LPRC US9m

“Former Managing Directors, Edwin M. Snowe and Harry A. Greaves, Comptrollers, Siaka Sheriff, John Linberg and Rajan Labote should be made to properly account for the total amount of US$8,527,337.00 withdrawn from the entity’s account at LBDI for the financial year ended 31 December 2006.

Former Managing Director Edwin M. Snowe and former Comptroller Siaka Sheriff are being held to account for US$56,138.00 for withdrawals made from LPRC’s account held with LBDI between January 14, 2006 to 2007 for which they failed to account.

“Former Managing Director Harry A. Greaves, former Comptrollers, Rajan Labonte and Kamau Lizwelicha should be made to also adequately account for the unrecorded withdrawals amounting to US$1,669,569.65,” the audit, one of the last that former Auditor General John Morlu conducted and released, concluded.

Responding, Mr. Greaves said on 23 December 2009: “As stated earlier, when the Quick Book accounting system crashed in April 2008, the 2006 general ledger was lost. The internal control system in place at the time required that all expenditure from the company’s bank accounts be supported by payment vouchers.

“In the absence of the general ledger the most practical alternative method of verifying the authenticity of the US$9,474,543 summarized in your schedule would be to trace the individual transactions making up that total to the respective payment vouchers and their supporting documentation.

“The responsibility for filing and safeguarding such records rested with the Accounting Department which was headed by a GEMAP Financial Controller throughout this period.”

But the AG contended:  “While Management agreed with the risk, they did not address how the recommendations would be handled; I, therefore, reiterate my previous recommendations. I have also modified the recommendations to hold responsible the Comptrollers (Siaka Sheriff, John Linberg, and Rajan Labonte) for the General Ledger and supporting documents. I maintain all my recommendations with the modification to hold the Comptroller accountable,” the AG then said in comments on the audit.

After scrutiny of Cash Flow Statement, here are excerpts from the audit: I analyzed the bank statement of LPRC (LBDI: A/c #02215/110963/02) for the periods ended 31 December 2006 and 2007 to reconcile the total cash expended to the general ledger in order to verify the accuracy of the amounts reported in LPRC’s financial statements for the two financial periods.

For the period ended 31 December 2006, a total of US$9,474,543.00 was withdrawn from LPRC bank account. It is instructive to note that payments in the tune of US$114,668.00 as Board remuneration for the period 2006 as indicated in Table 12A and US$832,538.00 indicated in Paragraph 354 as payments to vendors to liquidate accounts payable in 2006 were made from this account, thus leaving a material variance of US$8,527,337.00. However, of the US$8,527,337.00, US$56,138.00 and US$8,471,199.00 respectively remain unaccounted for by both Snowe and Greaves’ Administrations.

Auditors said they could not determine whether the total amount was duly accounted for, due to Management failure to produce general ledger or other documentation in lieu of the general ledger for the financial year 2006, on grounds that the Corporation experienced system crash on 15 April 2008. Management further asserted that there were no backups from which the lost information could be retrieved.

As a result, audit said they could not determine whether the figures quoted in the financial statements are reliable as there is no alternative means by which they could trace the transactions from the bank statement to the financial statements.

The amounts withdrawn from the bank account in 2006 are summarized in the table below:

The AG, moreover, said: I noted from the reconciliation of bank statements to general ledger for the financial year ended 31 December 2007 that a total amount of US$1,669,569.65 withdrawn from LPRC’s account at LBDI was not recorded in the general ledger which depicted that monies withdrawn from the entity’s bank account were not duly accounted for by means of adequate documentation.

This material weakness is the result of Management’s failure to establish adequate internal controls over accounting records and financial reporting in ensuring that monitoring of accounting and reporting functions occur regularly and in a timely manner. I provided details of the anomalies noted in the attached Appendix ‘I’.

Table 17: Summary of Amounts withdrawn from LPRC’s LBDI Bank Account (2006)  Risk

LPRC management’s failure to provide the general ledger for the financial year 2006 to enable me validate the assertions made in the financial statements denied assurance on the certainty and thus the reliability of the financial statements.

I have reviewed the unsigned financial statements of LPRC for the period under review. I checked the accuracy and completeness of the LPRC financial statements for 2006 and 2007 by reference to the respective period’s Cash Flow Statement.

I noted that there were significant deviations, implying that the Income Statements and Balance Sheets for 2006 and 2007 were not reliable, leaving Omissions not considered in the Cash Flow Statement to give the actual financial position of LPRC, thus making GOL and the Board to make uninformed decisions about LPRC.