Government has advertised for an internationally recognised auditing firm to provide consultancy services for a cost-recovery audit and validation of this country’s profit share from the agreement Guyana shares with ExxonMobil and partners over the last two years.
Local firms with the requisite skills, qualifications, and experience, are also encouraged to apply. And wherever necessary, the eligible partnership that exists between a local and international firm that can perform these tasks should be express-ed in an application. It is made clear that the firm must also provide on-the-job training for designated locals as Guyana seeks to build capacity in the oil & gas sector.
With funding for the project (part of sub-component B.1) taken from the US$20 million World Bank loan agreed to in 2018, the scope of works for the selected company will also see staff of the Ministry of Natural Resources, Guyana Revenue Authority, Office of the Auditor General, and other agencies, trained during the four-month period of June 2021 to September 2021.
However, the Ministry did not state how much of the US$20 million will go towards this project
“The objective of the assignment is to conduct an audit of the recoverable contract costs as determined by the Petroleum Agreement (PA), taking into consideration Accounting good practices, International Accounting Standards, as well as Auditing Procedures and Standards. The assignment will include the validation of the Government’s share of profit oil for the period under review; while providing on-the-job training to the staff of the Guyana Revenue Authority (GRA), the Office of the Auditor General (OAG), and the Ministry of Natural Resources (MNR) [and other agencies as directed by the Government of Guyana] on the audit process,” the notice advertised on the Ministry of Natural Resources’ website states. (https://nre.gov.gy/2021/04/01/ consulting-services-for-cost-recovery-audit-and-validation-of-the-government-of-guyanas-profit-oil-share/)
The Ministry of Natural Resources stated that the scope of works encompasses auditing, examining and verifying all available documentation and records necessary for charges and credits relating to the Contractor’s activities under the applicable PA for the period January, 2018 to December, 2020.
This requires the selected firm to conduct a pre-audit analysis and to revise an effective Audit Plan inclusive of an appropriate methodology.
“Pursuant to the Government’s audit rights under the PA, the Consultant, working together with a designated joint MNR/GRA/OAG team, coordinated by the MNR and GRA, will audit, examine and verify all available documentation and records necessary for charges and credits relating to the Contractor’s activities under the applicable PA for the period January, 2018 to December, 2020; this includes all books of accounts, accounting entries, material records and inventories, vouchers, payrolls, invoices and any other relevant documents.
“More specifically, the consultant will be responsible for: Conducting a pre-audit analysis, devising an effective Audit Plan inclusive of an appropriate methodology, executing the Audit in adherence to the provisions of the PA, applicable laws, regulations, and procedures, as well as International Good practices and Standards to: i. Ensure that costs are legitimate and are in compliance with the terms of the PA; ii. Verify whether costs have been accurately assigned to the cost category and classified/ categorized in compliance with the terms of the PA,” it adds. This means the chosen firm must authenticate and substantiate costs, including a comprehensive evaluation of expenditure, expenditure processes and cost allocation, and determine if costs are eligible for cost recovery.
It must also provide a valid basis and a complete written audit finding to justify the disqualification/disallowance of costs and determine whether transactions between related parties were done at arm’s length, and prices were established in accordance with arm’s length principle.
The requirements for the firm are strict as the one chosen must have extensive experience in contract compliance review, joint-venture audits, auditing petroleum costs under production sharing contracts, and other petroleum agreements and their fiscal implications.
The Consultant must also “have completed at least three (3) similar assignments during the past five years, and is required to disclose any potential conflicts of interest arising out of other assignments.”
“Where the Consultant currently represents any party or potential stakeholders that would create a conflict of interest or to the extent any conflict of interest would or could arise in the future, the Consultant shall detail any measures that may be required to avoid such conflicts of interest in connection with the implementation of this assignment,” the Terms of Reference (TOR) states.
In 2019, the World Bank approved a US$20 million loan for a Guyana Petroleum Resources Governance and Management project.
The Ministry of Finance had said that government, recognising the risks associated with being a new oil & gas producer, negotiated the loan to address governance and management risks from inadequate policy, legal and regulatory frameworks, and institutional capacity.
But in 2020, German non-profit environmental and human rights organisation, Urgewald, criticised the World Bank’s decision to fund technical assistance for Guyana’s preparation for the oil & gas sector using a contractor whose clientele includes ExxonMobil. The criticism followed the announcement that Hunton Andrews Kurth LLP and Cameron and Shepherd, the oldest law firm in Guyana, which has among its partners, Senior Counsel Ralph Ramkarran, had been awarded the contract to the tune of some US$1.2 million for providing advice on the oil & gas industry.
The TOR states that the consultant “shall be required to keep confidential all information received, gathered, or communicated, directly or indirectly, from relevant authorities, agencies, ministries, the World Bank, or other stakeholders as well as all copies or analyses that the Consultant has made, or that have been made by third parties, on the basis of such information (collectively, the Material).”
However, the confidentiality obligations shall not apply to information already in the public domain.
“The consultancy team will be required to agree and sign a Non-Disclosure Agreement on all working tasks for the Government of Guyana. All reports and work products from the Consultant will be only delivered to specifically designated representatives within the government of Guyana,” the TOR added.
