Slackness at JUTC

} else {

A performance review of the State-owned Jamaica Urban Transit Company (JUTC) by the Office of the Auditor General has uncovered a free-for-all costing Jamaican taxpayers billions of dollars with no oversight by its parent ministry.

The report, tabled in Parliament on Tuesday, showed weaknesses in the JUTC’s governance practices and internal control environment, which were manifested by a lack of financial transparency; breaches of the human resource policy; minimal adherence to Government guidelines, including procurement law and guidelines; and limited accountability by JUTC’s leadership.

In the 2017/18 fiscal year, the JUTC had audited operating losses of $7.2 billion, with estimated losses of $8.1 billion for last year.

But the report from Auditor General Pamela Monroe Ellis charged that the inefficiencies at the bus company were to be blamed for much of the losses.

Among the major findings by Monroe Ellis was that the JUTC’s board of directors failed to implement the necessary internal controls to protect the financial resources of the company.

“Accordingly, poor human resource management (HRM) practices and weak financial management resulted in unbudgeted or unapproved expenditures,” said Monroe Ellis.

“We identified breaches and issues related to procurement and inventory management and multiple instances of [HRM] irregularities that were not addressed by the board, in accordance with the Risk Management Framework. For example, we found that [the] JUTC had an unapproved staff capacity costing an accumulated $1.15 billion that was not leveraged for operational efficiency,” added Monroe Ellis as she noted that this was over the period 2014 to 2019 and was in breach of the Ministry of Finance’s guidelines.

“Further, we found no evidence that the unapproved staff created value by enhancing operational efficiency and improving service delivery. Of note, the unapproved positions included 145 staff, as at July 2019, that were permanently employed, while the remainder related to temporary contracts.

“In June 2020, JUTC indicated that as at May 2020, the number of permanently employed staff in unapproved posts was 92,” said Monroe Ellis.

The report further noted that the JUTC’s management exceeded the overtime budget by $728.6 million, despite excess staff capacity.

“A review of the overtime claims for the two years, 2017/18 to 2018/19, revealed that drivers and mechanics accounted for the top 15 highest overtime claims for the Spanish Town and Ashenheim [depots].

“Furthermore, these overtime claims ranged between 71 per cent and 182 per cent of some employees’ annual salaries, with overtime hours ranging from 1,200 hours to a high of 2,200 hours annually (18 – 83 hours for a fortnight). Consequently, the JUTC exceeded its operational overtime hour’s percentage strategic target by an average of 5.8 per cent annually and incurred costs totalling $1.71 billion, which exceeded the budgeted amount by $728.6 million or 74 per cent between 2014/15 and 2018/19,” Monroe Ellis noted.

The board of the bus company also came in for criticisms from Monroe Ellis as she noted that it failed to implement recommendations of the Internal Audit Committee.

“Despite regular meetings of the board and sub-committees, breaches identified by the risk manager and recommendations of the internal auditor were either ignored or not adequately addressed, which heightened the risk of financial losses,” said Monroe Ellis.

The Ministry of Transport also faced criticisms from the auditor general as she noted that it did not ensure that the JUTC board adhered to the Risk Management Framework to protect the interest of the company.

We found no instance where the board was held accountable by the ministry for breaches of Government guidelines.

“For example, the board breached the Government’s motor vehicle guidelines when it authorised car rental payments of US$2,400 monthly, effective May 20, 2016, for a car utilised by the acting managing director without approval from the [Ministry of Finance].

“This resulted in total charges of $1.2 million for 114 calendar days. The Revised Comprehensive Motor Vehicle Policy for the Public Sector Circular # 8 (2003) requires that, except in the case of emergency, no ministry, department or individual shall enter into a contract for the hireage of a motor vehicle, whether through the Hire Fund Scheme, private rental agency or private individual without the specific permission of the Ministry of Finance and Planning.

“Further, the circular states that each hireage case will be considered on its own merit and that officers found in breach will be liable to surcharge up to the amount of any unauthorised expenditure so incurred. Of note, a similar breach was identified in a previous report of the Ministry of Transport, Works and Housing, dated March 6, 2012, against the advice of the Ministry of Finance and the Public Service,” said Monroe Ellis.

The auditor general also slammed the ministry for not conducting annual performance reviews of the JUTC board as required under the rules and bashed the bus company for its fleet management system.

The management of the JUTC was also called out for its employment practices and the ineffectiveness of its maintenance programme.

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