Admitting that the Office of the Auditor General does not currently have the capacity to conduct performance audit of the Oil and Gas Sector, Auditor General, Deodat Sharma on Monday said expertise in that area is being acquired with the support of the Canadian Auditing and Accountability Foundation (CAAF).
“The Audit Office has been planning for our role in the Oil and Gas Sector. Apart from staff being previously trained in the extractive industries, training is ongoing to build capacity in this sector. Further members of the Performance Audit Section, with help from CAAF, are also being trained on how to conduct performance audits in the oil and gas sector,” the Auditor General said on Monday.
He made the comments just after presenting the the Auditor General’s report on the Public Accounts of Guyana for 2021 as well as five Performance Audit Reports to the Speaker of the National Assembly.
Last week, Article 13 – a civil society organization – accused the Audit Office of failing to audit the 2021 financial statements of the Natural Resources Fund in accordance with the Natural Resource Fund Act of 2021.
It said based on comparative analysis done by local and international professional accountants, taxes paid by the Natural Resources Minister, Vickram Bharrat, on behalf of Esso, Hess and CNOOC under the 2016 Petroleum Agreement, were not properly accounted for.
“The financial statements of the NRF for the year 2021, and comparative for 2020, show no withdrawals were made from the Fund for the taxes payable by the oil companies for the year 2020, estimated at more than G$20 billion. It was therefore, inappropriate and incorrect for the Auditor General to issue a “clean” audit opinion on the financial statements of the Fund for either or both years,” Audit 13 contended.
But on the side-lines of the handing over ceremony on Monday, the Auditor General told News Source that his office merely conducted an audit of the finances injected into the Natural Resources Fund in 2021 for the oil lifts as it does not currently have the capacity to delve further.
In 2021, Guyana had a total of five oil lifts from the Liza Destiny Floating Production, Storage and Offloading (FPSO) vessel in the Stabroek Block, amounting to approximately 5.1 million barrels of high-quality Liza crude. As such, US$357.2M from government’s share of profit oil, and US$52 million from royalties were placed into the Natural Resources Fund for 2021.
“There was an opinion issued but we look strictly at the part where the money that went into the lift but the part where you have the money, how much we’re supposed to get out there and are we getting the right [amount], that part, it would mean that I would have to employment a lot of engineers, consultants to do that aspect of it,” the Auditor General explained.
Positing that financial provisions are being catered for in the 2023 Budget, he said in 2023, the Audit Office would me moving to acquire petroleum engineers and consultants to facilitate the process.
Pressed for answers with regards to the taxes ‘paid,’ Mr. Sharma said the Guyana Revenue Authority (GRA) would have to indicate whether the taxes were paid in full.
“So yes, it is a new area, it is a new challenge. In terms of the article with the GRA, there are several people doing several different things, and if you check Newfoundland and how the auditors do the audit, they look at the entity. So, they let the entity, like the Ministry of Natural Resources, that is in charge, they do all the checking and balancing, Guyana Revenue Authority, GEA, etc and we audit that process,” the Auditor General explained.
He explained further that his Office, for the first time in 2022, is auditing the finances withdrawn from the Natural Resources Fund and placed into the Consolidated Fund for the facilitation of a number of programmes and projects such as the construction of schools and roads.
“I can audit that because I have engineers working with me and I can strengthen the section by getting more engineers, which I discussed with the Public Accounts Commitment,” Mr Sharma said, while reminding that his Office does not have specialists on the ground to determine whether the oil is mixed with water or whether Guyana is getting the correct amount of oil per lift and the correct price.
However, he said that capacity is being built.