— GCCI president urges auditors

GUYANA’S efforts to safeguard the economy against money-laundering is commendable, President of the Georgetown Chamber of Commerce and Industry (GCCI) Deodat Indar said, even as he encouraged internal auditors to pay keen attention to evolving risks which may have negative impacts on the commercial sector.

Speaking to reporters on the sideline of the Institute of Internal Auditors Guyana Chapter (IIAG) workshop at Regency Suites on Wednesday, Indar said though there may be teething problems in the implementation of Anti-Money Laundering and Countering the Financing of Terrorism Legislation, the country is on the right path.
“We have to ride the storm,” the GCCI president posited, noting that some countries like Trinidad and Tobago are in their advanced stage of implementing the recommendations of the Financial Action Task Force (FATF) and the Caribbean Financial Action Task Force (CFATF).

“I believe that Guyana is on a right track and it is a form of deterrence from financial risk that companies can suffer,” he posited.
However, Indar, who is a certified general accountant and internal auditor, said auditors must step up to the challenge and detect instances of money-laundering, even at the level of legitimate commercial entities that may have come into contact with laundered money unknowingly.

“An example would be: If a person is laundering money and they decide to buy your goods as a legitimate company, they are bringing laundered money into the system, because they are bringing it through a legitimate company that goes through a legitimate bank account. Auditors need to detect that,” he explained.
Major emphasis, he said, must be placed on the screening of customers and their trend of accessing the products and or services being offered. If there is a significant leap in the request of a particular service or product, “eyebrows” should be raised, he posited.

KEEP ABREAST
Meanwhile, while delivering the feature address at the IIAG forum, the GGCI president said internal auditors should keep abreast with developments locally and internationally, in order to effectively execute their mandate.
Indar said no longer compliance checks and efficiency of systems are the audit of universe, noting that the COSO Model requires that internal auditors audit strategy to determine how effective a company is.

“It makes no sense to have a strong, robust internal system and you are suffering competitively and can face closure; we as internal auditors must be cognisant of failures such as Kodak, Block Buster and many others and be vigilant of changes in industry and advise on adopting relevant strategies to mitigate.
Examining some broad risk areas in the economy, the GCCI president pointed out that Guyana’s economy grew by 2.2 per cent for the first half of 2017, noting that while this is positive growth, a reality check has given a different story.

“It seems different from the reality; most sectors are feeling some downturn… rice production grew by 31 per cent over 2016 due to rising acreage sown by farmers. Rice is now exported to Mexico and 15,000 mt are expected to be exported to Cuba in the second half of the year,” he pointed out.

However, he said sugar production was down by mid-year by 12.4 per cent, while crops grew by 2.5 per cent. Livestock contracted by 10.9 per cent, the fisheries industry expanded by 33.2 per cent, while forestry contracted by 18.2 per cent. Mining and quarry contracted, while the services and manufacturing sector experienced growth.
“So there is a lot of information to digest, which ever sector you are operating in, examine the risk. If you are evaluating diversification initiatives, be mindful of the overall performance, since some industries are performing better than some,” Indar said as he cautioned the internal auditors.

“Once a high-level macro-economic analysis is being done, the internal risk, threats, opportunities in the market must also be examined to address the gaps in revenue and profits,he added.”

CAREFUL EXAMINATION
“One must examine the financial sector and non-performing loans carefully as this is a clear reflection of the state and performance of the real sectors. A closer look at the reports of commercial banks can tell you that some sectors are defaulting, such as agriculture and real estate. Other financial institutions has rice as a heavy non-performer,” he stated.
Pointing to the IMF Staff Report on Guyana (June 2017), Indar said it was clearly stated that the non-performing loan ratio rose to 12.9 per cent of total loans at December 2016, up from 11.5 per cent at the end of 2015.

“This represents a serious problem; banks will start to tighten lending which is not good news for the private sector and households,” he stated.
Meanwhile, IIAG President Goorwantie Davie Kaladeen explained that the seminar is the first of three under this chapter which commenced its work on June 2017.

During the two-day forum, major focus is being placed on evolving risks, ethics and governance, financial auditing, inventory and stores management. The sessions, Kaladeen noted, will be facilitated by Indar, Ramesh Persaud, Harry Parmesar and Chateram Ramdihal.
Turning her attention to the performance of the chapter, Kaladeen noted that the Guyana Chapter has come a long way with its membership increasing from 25 in 2011 to 80 in 2017.

“We have also been able to maintain Gold Status for the last seven consecutive years under four past presidents – Mr. John Seeram (2010/2011), Mr. Deodat Indar (2011-201 4), Mr. Jaigopaul Ram (2014-2016) and Ms. Jaishree Lam (2016-2017). We will strive to continue that path and aim for Platinum in 2020,” she said.

She added: “In our certification effort we have to date seven members who are certified internal auditors, one certified government auditing professional and six members who were accredited with the Certified Risk Management Assurance Certification.”
The Institute of Internal Auditors is a global professional association with over 185, 000 members in more than 190 countries around the world. In Guyana, the IIAG chapter was founded 15 years ago as a chapter of the North American global body. After some years of inactiveness, it was resuscitated in 2009.