PAC flays ministry over neglected local government accounting

The Ministry of Local Government came under fire during yesterday’s Public Accounts Committee (PAC) meeting for the local democratic organs that have neglected to submit their financial statements to be scrutinised by the Auditor General’s Office for several years.

Around 22 Neighbourhood Democratic Councils (NDCs) have reportedly never been audited and the ministry is blaming the situation on staff shortages and inefficiencies.

According to the Auditor General’s 2010 report, municipalities and NDCs are required make up their yearly accounts no later than four months after the end of each financial year and submit them for auditing in accordance with the Municipal and District Council Act.

However, Auditor General Deodat Sharma said several of the councils were found to be in violation of the legal requirement, rendering them unable to account for the expenditure of millions of taxpayers’ dollars.

In particular, the Georgetown municipality, which has been flagged for financial irregularities recently, had not been audited since 2004, while the NDC for the North West District had not been audited since 1994.

Questions were raised as to whether the financial documents for this NDC as well as its fellow transgressors were still in existence to facilitate an eventual audit.

Collin Croal
Collin Croal

Local Government Ministry Permanent Secretary (PS) Collin Croal said measures have been put in place to accumulate the financial records for the unaudited years, but he admitted that the ministry is facing serious challenges locating many of them. He also said that through re-prioritising, the ministry is currently engaged in works to regularise the backlog that exists. But not much progress has been made.

It should be noted that in addition to revenue generated through tax collections and other sources, each NDC is granted a $3 million subvention by government to supplement maintenance and other works. The municipalities of Georgetown, Linden, New Amsterdam, Anna Regina, Corriverton and Rose Hall received $20 million, $10 million, $10 million, $9 million, $8 million, and $8 million, respectively.

PPP/C MP Manzoor Nadir wasted no time in inquiring why this practice was allowed to persist indefinitely and he suggested that the subvention usually given to the local governing bodies for development works be used to facilitate the updating of their financial systems until it is brought to an acceptable level.

Nadir asked if the ministry was not mandated to ensure that the various municipalities and NDCs submit the necessary financial documents by the stipulated times.

The Auditor General said that the law required the ministry ensure that these records were submitted, which was confirmed by Croal.

Despite this response, APNU MP Jaipaul Sharma suggested that the Auditor General’s Office may have had the ability to take some amount of action, and inquired why a letter had not been sent to Croal as well as the regional organs concerning the breaches.

The Auditor General explained that his office had in fact sent yearly letters to the PS, who was responsible for contacting the local government organs. Croal said that the lapses occurred as a result of a shortage of the requisite staff as well as a shortage of trained staff.

Not satisfied with the response, MP Sharma asked when the problems were identified, considering that they had obviously existed for more than eight years. Although he did not say when the issue was identified, Croal did say that actions were undertaken mid-last year to address the problem. He said that high employee turnover rates at regional governing organs are largely responsible for the continuity of the issue, but the ministry is currently working to address it.

He also said that the ministry has sought and attained staff to fill the needed positions, and has embarked on a process of continuous training to ensure that staff remains competent. He added that employees who were and still are not complying with regulations will be dealt with.

APNU MP and former PAC chairman Volda Lawrence referred to the promises as inadequate, while stating that the ministry had made similar promises before, yet the Auditor General’s reports continues to show no improvement year after year.

PPP/C MP Odinga Lumumba also dismissed the ministry’s efforts as inadequate, and commented on the ministry’s tardiness in formulating solutions to problems which have existed for several years. He even suggested that actions, such as withholding of salaries, be taken against the relevant ministry officials for their laxness in ensuring that municipalities and NDCs submit their financial records. He also reiterated Nadir’s suggestion that subvention funds be used for the updating of the bodies’ financial statements.

Lawrence, however, disagreed with this suggestion, claiming that while she supports punitive measures towards the transgressing agency, she does not support any actions that would also negatively impact the innocent constituents of the areas. “It is the ministry that has to be dealt with, the people should not have to suffer,” said Lawrence.

Continuing the offensive, PAC Chairman Carl Greenidge chastised Croal for the long period of inaction on the matter and urged him to set out in writing what actions the ministry plans to take to seriously address the issue and when it intends to implement those measures. Also commenting on the long period of inactivity was MP Sharma, who opined that if something was done earlier to address the issue the situation would not be as bad as it is.

He further pointed out that the lack of financial statements also made telling if the NDCs would have returned unused subvention funds to the consolidated fund at the end of the year, and inquired how many of the transgressing local governing bodies were Interim Management Committees (IMCs).

Nadir immediately tried to disallow this question, questioning its necessity. He suggested that such questions are unnecessary and may sideline the “real” work the PAC exists to carry out. He added that the questions asked by Sharma were moving outside the mandate and the boundaries of the PAC.
This however, was rebuffed by Greenidge, who citied Standing Order 82 and said that the responsibility of the committee includes finding the answers to the questions asked by Sharma.

This information, as well as the timeline of addressing the gross backlogs, is to be submitted to the PAC in two weeks’ time.

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