After assessing how the Government of Montserrat manages it’s vehicles and other capital assets, the Office of the Auditor General is recommending a speedy upgrade to electric vehicles and an increase in funding for maintenance.
The office presented its report entitled Government of Montserrat’s Use of Capital Assets: Vehicles and Police Boats to the Legislative Assembly on October 27th, 2020.
Background: The Ministry of Finance & Economic Management oversees the assets across the public service. Each year, departments and ministries provide their proposals and requests for spending, and these are evaluated and ranked against the Cabinet’s Policy Agenda and other criteria. Funds are then allocated across departments, programmes and projects according to their urgency and priority, subject to the total available budget for the year.
Key Findings:
(1) Good governance overall. There is adequate oversight of strategic planning, budgeting, and capital assets. Actual spending is kept strictly in line with actual revenues. This contributes to SDP Goals #1 & #4.
(2) Cash-based accounting and little/no reporting of capital assets. We found that departments’ records were incomplete for purchases, operating costs, and uses and outcomes of capital assets. Departments make no provision for the depreciation and accumulated amortisation of capital assets.
(3) GOM has no reserves/insurance for most assets. GOM’s has no external insurance for most of its capital assets. There are no funds/reserves to support the Government’s policy of self-insuring.
(4) Over 90% of vehicles are over five years old and inefficient. The current fleet has vehicles dating as far back as 30-plus years. The Montserrat Energy Policy aims at 100% renewable energy by year 2030. However, all of the vehicles in the public service still use fossil fuels, except one electric car bought in 2019.
(5) Excellent maintenance-schedule exists for vehicles, but it is under-funded. All of the Departments that we surveyed praised the diligence of the PWD’s Plant Hire and Mechanical Workshop in collecting public vehicles for regular service and maintenance. However, inadequate funding for maintenance, parts, and timely replacement of vehicles increases the cost of repairs and leads to frequent downtime.
(6) Poor co-operation by some departments. There was failure of the PWD’s Plant Hire and Mechanical Workshop and the Marine Unit to provide anything requested for this audit.
Key Recommendations:
(1) Increase the funding for maintenance to meet residents’ needs and rising health & safety standards.
(2) Adopt accrual-based accounting and comprehensive reporting of capital assets.
(3) Steadily transition from fossil fuels to renewable energy.
(4) Increase the incentives for renewable energy and for electric vehicles.
(5) Fund self-insurance; develop funds for buying/replacing capital assets.
The full audit report highlights several other findings and recommendations. Their implementation will bring significant improvements in the funding of the Small Capital Asset Fund, timely maintenance of assets, and better service to the public.
10-30-20-PERFORMANCE AUDIT – GOM’S USE OF CAPITAL ASSETS – BOATS & VEHICLES September 2020
