Every system of public accountability should embrace the following: (a) every act or action is done openly according to law and prudent judgment; (b) every actor is responsible for his or her action; (c) every act is documented and reported publicly; (d) every act or action is subject to independent, professional, non-partisan audit review and public reporting of the results; and (d) where the review shows that purposeful error has been made, prompt corrective action, including punishment where appropriate, is taken.
Former US Ambassador James Michel
Responding to a comment I had made that the members of the recently established Bid Protest Committee lack expertise and experience in procurement matters, the Minister of Finance is reported to have equated the Committee to a jury and indicated that there was no need to have such background. However, section 53(4) of the Procurement Act requires such persons to be to be professionals who are particularly competent in the field of procurement. Their appointment therefore did not satisfy the requirement of the law and raises the important question as to the basis of their selection. This is particularly so since the decision of the Committee is final and binding, in contrast to the Procurement Commission whose decision can be appealed to the Public Procurement Appellate Tribunal with further appeal to the Court of Appeal. The issue is therefore not one “nitpicking” but of non-compliance with the law.
Last week, we witnessed the harsh and brutal public reaction from the Minister to the latest report of the Auditor General, reminiscent somewhat of the “Dolphin Scam” which precipitated my premature departure from the Audit Office in December 2004. By any stretch of imagination, such an outburst from the Minister was uncalled for since the Auditor General was merely discharging his constitutional responsibilities in relation to the audit of the public accounts and reporting the results to the Legislature via the Speaker. He did not go public on his report, and it was the media that had access to the report once it was laid in the National Assembly.
I was on the receiving end of the Minister’s rage and outbursts on several occasions. Readers will recall that I had commented on the 50% increase in the salaries of Ministers only to be greeted with verbal abuse from the Minister in the presence of the Bank of Guyana Governor and other officials. I was falsely accused of pitching the Auditor General’s salary to the level of the Chancellor of the Judiciary whereas the Audit Act 2004, of which I was the architect, equates it with that of Chief Justice. I understand that since then the Chief Justice’s salary has been equated with that of the Chancellor and has been made tax-free, with the Auditor General piggy-backing on this arrangement. I was nowhere in position of authority when this happened!
On another occasion, I had made a statement in relation to the apparent lack of a serious commitment to address the results of the forensic audits. The Minister reacted publicly in a very demeaning and derogatory manner by describing me as “so-called anti-corruption advocate” and someone who “in recent times has set himself up as a transparency and accountability czar”. It would be somewhat of a diversion if I were to describe what happened when the forensic audit report on NICIL was issued.
Today’s article seeks to provide some clarifications in relation to the statements made by the Minister on the Auditor General’s report.
Abuse in the use of the Contingencies Fund
The Minister did not take too kindly the observations of the Auditor General on the continued abuse in the use of the Contingencies Fund. He is reported to have stated that: (a) the Auditor General’s views do not count in law; (b) the law gives him (the Minister) the sole right to determine exigencies; and (c) he does not have to consult with the Auditor General. These are extraordinary statements coming from the Minister.
For starters, the Auditor General never asked that he be first consulted before any withdrawals are made from the Contingencies Fund. The Minister has submitted a statement of receipts and payments of the Contingencies Fund, duly signed by him, to the Auditor General for audit. The Auditor General cannot audit this statement in isolation and without reference to the relevant legislation. Section 41 of the Fiscal Management and Accountability Act reads as follows:
- If the Minister is satisfied that an urgent, unavoidable and unforeseen need for expenditure has arisen –
- for which no moneys have been appropriated or for which the sum appropriated is insufficient;
- for which moneys cannot be reallocated as provided for under the Act; or
- which cannot be deferred without injury to the public interest, he may approve of an advance from the Contingencies Fund advance.
It is evident that the Contingencies Fund is an emergency fund to be used only in circumstances such as a natural disaster, for example, the 2005 Floods where time did not permit the convening of Parliament to approve of expenditure to address the emergency. The Fund can also be tapped into in situations where Parliament is prorogued or dissolved, subject to satisfying the above-mentioned criteria. While the Minister is the sole authority for making the judgement as to what constitutes an urgent, unavoidable and unforeseen circumstance that warrants access to the Fund, that judgement must be exercised in a responsible matter. It cannot be at variance with what a reasonable person considers to be an emergency. One would not expect that the Minister would access the Fund in circumstances where Parliament can meet to approve of additional funds in the form of a supplementary estimate. Even if Parliament is in recess, it can be recalled to approve of additional funds, if a need arises.
It is against this background that the comments of the Auditor General must be viewed. It is a fact that the Minister accessed the Contingencies Fund without ensuring that all the criteria for the grant of advances were met. It is also a fact that the advances were made to meet routine expenditure. Since the restoration of public accountability in 1992, successive Ministers of Finance have abused the use of the Contingencies Fund with impunity, as it was a more convenient and expedient proposition to access the Fund whenever there was a shortfall in expenditure rather than going back to Parliament to seek supplementary estimates, thereby avoiding any debates as to the justification for additional funding. So why not use the money from the Contingencies Fund, and sometime later request Parliament to give its covering approval to replenish the Fund, in the full knowledge that hardly any questions would be asked, as the money has already been spent!
The Auditor General has made certain observations in relation to the Public Debt. He is entitled to do so as part of the audit of the Statement of the Public Debt duly signed by the Minister and submitted to the Auditor General. Whether his observations are accurate is another matter which is normally dealt with and resolved at the level of the Accountant General. It is wrong to suggest that the Auditor General has no right to comment on the Public debt. It is also equally wrong for the Auditor General not to go through a rigorous procedure to gain acceptance of his findings and recommendations as well as to incorporate in his report the explanations provided.
I have had cause to comment on previous occasions that, while timeliness is desirable, the Auditor General must not sacrifice quality and comprehensiveness of his review to meet the deadline of 30 September in the hope of earning plaudits. It is difficult to imagine that, with a staffing of about 200 comprising mainly junior officers and a weak senior management team, the onerous task of auditing the public accounts and the accounts of Ministries/Departments/Regions can be accomplished within this timeframe. It is therefore not surprising that many of the Auditor General’s findings are being challenged. This also might have accounted for the poor rate of implementation of his recommendations. Notwithstanding this, the ugly spectacle of a public outburst by the Minister, indeed a “feral blast” is a most unwelcome and unhealthy development.
In relation to budgetary matters, it is wrong of the Minister to suggest that the Auditor General was “dabbling in those areas”. The Auditor General would be in default of his responsibility in not telling Parliament how money it has approved has been expended. A critical examination of variances between budgeted expenditure and actual expenditure is an integral part of the Auditor General’s work. Again, we can point to the following statements that were submitted to the Auditor General for audit, duly signed by the Minister: (a) End of year Budget Outcome and Reconciliation Report (Revenue); (b) End of Year Budget Outcome and Reconciliation Report (Expenditure); and (c) Expenditure from the Consolidated Fund compared with the Estimates of Expenditure. Does the Minister expect the Auditor General to give “a blank cheque” in relation to these statements? It is also untrue that in the past the Auditor General did not comment on budgetary matters.
Editing of the Auditor General’s report by Ministry of Finance
The Minister stated that the Auditor General’s report was in the past edited by the Ministry of Finance before being presented to the public. This statement, apart from being untrue, would suggest a fundamental lack of understanding of the audit process. How can there be a situation where the external auditors’ report is subject to editing by the client? Would that not impact adversely on the independence of the external audit function? More specifically, would it not be a violation of the International Standards on Auditing (ISAs) as well as the International Standards of Supreme Audit Institutions (ISSAIs) which the Auditor General uses as a basis for the conduct of his audit? When we restarted the process in 1992, there was never, I repeat never, a time when the Auditor General’s report was edited by the Ministry of Finance. In 1989, when I returned from overseas training, I had bought a “286-clone” computer for personal use but ended up installing it in the Audit Office for official use. The Ministries and Departments would submit draft financial statements and these were processed with the help of the computer and sent back for verification and signatures. The Audit Office has always processed its own reports, though the Auditor General must acknowledge that there is an urgent need for professional review and editing of these reports before they are issued.