4/4/92 Vol 2 of the Minister of Trade and Industry on the findings of the First Report of the Public Administration and Appropriations Committee on Examination into the Current Expenditure of Ministries and Departments under three (3) Sub-Heads: Current Transfers and Subsidies, Development Programme- Consolidated Fund and the Infrastructure Development Fund. SPECIFIC ISSUES Based on the written submission, the Committee highlighted specific issues in respect of the Ministry of Trade and Industry on page forty-nine (49) of the Report: Within the Ministry s system for detecting and preventing fraud, a distinction between fraud and error was not identified; The Ministry indicated that regular checks were undertaken by Internal Audit which would allow for early detection of fraud; The Internal Audit Unit was expected to provide analyses, appraisals and recommendations to ensure the transparent accountability of the Ministry. The Internal Auditor would examine and verify the subventions and other payments made to entities on a quarterly basis; Within the Ministry, there were two distinct units for Project Management and Monitoring and Evaluation and As at February 2016, there were no releases of expenditure under IDF. SPECIFIC RECOMMENDATIONS In respect of the above, the following specific recommendations were made to the Ministry of Trade and Industry on pages 49-50 of the Report:
Specific Recommendation 1: Ministry of Trade and Industry should: Take immediate steps to implement a fraud policy, this policy should include mechanisms for distinguishing between fraud and error Widen the Internal Audit Scope to include: o Analysis of strengths, weaknesses and threats; o Identification and assessment of risk; o Identification of conflicts of interest; and o Evaluation of the achievement of economy, efficiency and effectiveness in service delivery : Under the current system of auditing, the Internal Audit Unit identifies all discrepancies as errors. However, the Ministry of Trade and Industry stands ready to be informed by the proposed mechanism referred to on page 17 of the Report to identify and prevent fraud within the Public Sector. The recommendation that this Ministry take steps to implement a fraud policy including mechanisms for distinguishing between fraud and error will be addressed in consultation with the relevant agencies and departments under the Ministry of Finance. In this regard, the Ministry has commenced an investigation on best practices in respect of fraud with a view to developing a fraud policy. The Ministry also supports the recommendation to broaden the scope of Audit as, inter-alia, Situational Analysis and Risk Management are critical inputs into informed decision-making and an overall improvement in governance is of paramount importance. This initiative will be beneficial to the Ministry as it would lead to enhanced accountability and also improvements in the quality of output. However, the Internal Audit Unit would have to be strengthened and training would be necessary in order to meet the requirements as stated above. The Ministry will liaise closely with the Ministry of Finance and its relevant agencies in this respect. 2
The issue of identifying and treating with conflicts of interest is being addressed at the divisional level whereby all Heads have been mandated to provide written responses to the Permanent Secretary on areas of possible conflict of interest and to elicit same from staff within their Divisions. The Ministry of Trade and Industry has taken account of the need for evaluation of the achievement of the economy, and the efficiency and effectiveness of service delivery. The current Strategic Plan of the Ministry of Trade and Industry 2016-2020 places emphasis on improving the operational efficiency of the Ministry which includes improving the quality and timeliness of delivery of services to all stakeholders with built in mechanisms for monitoring and evaluating same. Specific Recommendation 2: Ensure that both the Project Management and Monitoring and Evaluation Units are fully staffed and that the regular training is undertaken to boost the capacity of the Units. The Monitoring and Evaluation (M&E) Unit is staffed with three (3) officers. Officers continually undergo training to upgrade skills. During the period 2011-2015, officers benefitted from a 4-year training programme mounted by international consultants GOPA Worldwide Consultants. Training included developing planning tools, building M&E frameworks and conducting evaluation exercises. The Project Management Unit comprises four (4) positions and is seventy-five percent (75%) staffed. The post of Project Manager is currently vacant. Officers continually undergo training to upgrade skills, including project management training. In respect of the finding of the Public Administration and Appropriations Committee that no expenditure was made as of February 2016 under the Infrastructure Development Fund (IDF), Evolving Technologies and Enterprise Development Company Limited (eteck) and the Single Electronic Window (SEW) were the main beneficiaries of IDF funding. Drawdowns were delayed in this area due to the time taken to award contracts. Additionally, 3
funds are released only when work is completed and invoices are submitted. Once the work commenced, expenditure continued in 2016 according to budget. GENERAL RECOMMENDATIONS The Committee also made general comments and recommendations on pages fifteen (15) to twenty-one (21) of the Report. 1. INTERNAL AUDIT General Recommendations The Head of the Public Service develop a training programme to strengthen the Internal Audit function throughout the Public Service, which must include continuous training to ensure knowledge and practices remain up-to-date with International Financial Reporting Standards (IFRS)/IPSAS Consideration may be given to the use of the resources of the Treasury and the Auditor General to assist with the delivery of the programme. Through the strengthening of Internal Audit departments, many issues can be rectified in a timely manner. Records will be properly maintained, issues will be identified and dealt with and there will also be a higher sense of accountability, transparency and value for money. The Public Service Commission and the Chief Personnel Officer review the job descriptions and the terms and conditions of employment for all levels of Internal Audit staff, with the objective of making Internal Audit a professional stream in the Public Service. The Public Service Commission and the Chief Personnel Officer take all the requisite steps to fill all vacant positions after the review mentioned above, in a timely manner; and The Public Service Commission and the Chief Personnel Officer must devise and implement retention strategies to minimize loss of Internal Audit personnel in the Public Sector. 4
The Ministry of Trade and Industry has a small Internal Audit Unit with a structure comprising posts for an Auditor II, an Auditor I and three (3) Auditing Assistants. With the exception of the Auditor II post, all the positions are currently filled. The Unit is staffed with generally inexperienced officers who are in need of formal training. Together with carrying out administrative functions, the Internal Audit Unit, engages in auditing of internal control processes with a focus on ensuring compliance of internal financial accounting systems with the Financial Laws and Regulations. In this regard, audits are conducted annually, semi-annually quarterly and monthly. Monthly audit reports are submitted to the Permanent Secretary indicating which audits were conducted, issues and problems identified and relevant recommendations made to correct the problems identified. The Ministry of Trade and Industry is in full support of the recommendations listed above to attract, train and retain skilled professionals in the Auditing field. 2. FRAUD General Recommendations: The Ministry of Finance develops and implements a mechanism to: o Identify; and o prevent fraud which is to be applied to all Ministries, Departments, State Enterprises and Statutory Authorities. This will ensure that accountability is maintained. Penalties should be introduced to penalize persons found guilty of committing fraud within Ministries, Departments, State Enterprises and Statutory Authorities. In this respect the Ministry of Trade and Industry fully endorses the recommendation that the Ministry of Finance develop and implement such a mechanism to identify and prevent fraud inclusive of penalties. 5
3. MONITORING AND EVALUATION General Recommendation: Ministries and Departments must familiarize themselves with the National Monitoring and Evaluation Policy of Trinidad and Tobago which outlines the system for monitoring and evaluation during the execution of projects, focusing on accountability, transparency, credibility, objectivity, ethics and utility. The Ministry of Finance and Ministry of Planning and Development must ensure there is a clear distinction between the functions of the Internal Audit Units and the Monitoring and Evaluation Units. Ministry of Planning and Development develops training to ensure the Monitoring and Evaluation Units perform at optimum capacity Ministry of Planning and Development develops Standard Operating Procedures (SOPs) for the Monitoring and Evaluation Units The Ministry of Trade and Industry understands and appreciates the need for a robust M&E system to ensure accountability, and value for money in the use of public funds. In this respect, the Ministry has established a small M&E Unit which currently has a draft M&E policy for the Ministry. This was crafted on the basis of the National Monitoring and Evaluation Policy of Trinidad and Tobago as developed by the Ministry of Planning and Development. The Ministry is in agreement with the recommendations for institutionalizing and improving the function of M&E in the Public Sector. In respect of the recommendation for the development of Standard Operating Procedures (SOPs) for the Monitoring and Evaluation Units, the Ministry of Trade and Industry proposes that the Standard Operating Procedures (SOPs) be prepared by the relevant Ministries where the M&E Units are located, in collaboration with the Ministry of Planning and Development. In addition, the responsibility for ensuring that there is a distinction between M&E and Internal Audit lies with the Public Service Commission and the Chief Personnel Officer and not with the Ministries of Finance and Planning and Development as indicated. 6
5. PROJECT MANAGEMENT General Recommendation: The Ministry of Planning and Development standardizes the project management function across Ministries and Departments. The Ministry may wish to consider identifying existing model Ministries and Departments which can be used as benchmarks. The Ministry of Trade and Industry has fully embraced the concept of project management being required as a specialty skill. In this respect, the Ministry has established a specialized Project Management Unit dedicated to managing and reporting on the Ministry s projects. The IDB-Funded Single Electronic Window project (SEW) is efficiently managed with a full complement of project management skills in the team that achieves established milestones and delivers value for money and can be used as a model of project management efficiency. 6. NON-PROFIT INSTITUTIONS General Recommendations The Ministry of Finance establishes and maintains a register of all Non-Profit Institutions receiving funding from the State including the quantum, the source of funding and the purpose. The register should be made accessible to all Ministries and Departments providing funding to Non-Profit Institutions; The Ministry of Finance develops specific rules for expenditure control in Non- Profit Institutions. These rules should clearly outline the terms and conditions for the release of funds to Non-Profit Institutions and for the accountability for the expenditure of the funds. 7
The Ministry is in agreement with both recommendations. 8. COMMUNICATION BACKBONE Recommendation The Ministry of Public Administration and Communications mandates that all Ministries and Departments utilize the Government Communication Backbone in keeping with the Cabinet Minute. This will assist in producing economies of scale while demonstrating fiscal prudence. The Ministry of Trade and Industry migrated to the Communication Backbone (GovNeTT) in 2010 and currently utilizes the following services of GovNeTT: Active directory Email Services Internet The Trade License Unit (TLU), a satellite office of the Ministry located in Barataria, is connected to Head Office in Port of Spain via GovNeTT. MINISTRY OF TRADE AND INDUSTRY January 25, 2017 8