Our last two articles dealt with the Integrity Commis-sion, its proposed amendment and revision of the Code of Conduct. One aspect of the proposed Code relates to removal from office for contravening any of the provisions of the Code. The authority for such removal rests with the President in the case of Vice-Presidents and Ministers, and the Minister of State in the case of other persons in public life. I can see nothing wrong with the President’s involvement which, it must be observed, does not cover other Members of Parliament. Perhaps, the Speaker of the National Assembly could be tasked with this responsibility as it relates to these persons.
Other persons in public life are either public servants or officials aof public corporations, statutory bodies or other entities in which controlling interest vests in the State. It would therefore be more appropriate for the relevant Service Commissions (Judicial, Public, Teaching and Police) and the respective boards to take the necessary action whenever there is a breach of the Code. In any event, the Act stipulates that any violation of the Code will result, on summary conviction, in imprisonment of between six months and one year in addition to a fine of $25,000. A person who is convicted under the Act is likely to be automatically disqualified from holding public office.
Today, we examine the constitutional and legislative requirements regarding the budgets of constitutional agencies.
Third Schedule of the Constitution
This schedule lists seven agencies whose expenditures are a direct charge to the Consolidated Fund, unlike budget agencies whose expenditures are met from funds approved by Parliament via the annual Estimates of Revenue and Expenditure prepared by the Minister of Finance. These agencies are: Ethnic Relations Commis-sion, Human Rights Commission, Women and Gender Equality Commission, Indigenous Peoples’ Commis-sion, Rights of the Child Commission, Judiciary, and the Office of the Auditor General. The Fiscal Management and Accountability (Amendment) Act 2015 adds another eight entities to the above list by no longer categorizing them as budget agencies. These are: Public Service Commission, Police Service Commission, Teaching Service Commission, Public Service Appellate Tribunal, Supreme Court of Judicature, Office of the Ombudsman, Parliament Office and Guyana Elections Commission.
Independence of constitutional agencies
Article 222A of the Constitution states that in order to assure the independence of the constitutional agencies, the expenditures of the seven agencies referred to above, shall be financed as a direct charge on the Consolidated Fund, determined as a lump sum by way of an annual subvention approved by the National Assembly after review and approval of the entity’s annual budget as part of the process of determination of the national budget. These entities are required to “manage their subventions in such manner as they deem fit for the efficient discharge of their functions, subject only to conformity with the financial practices and procedures approved by the National Assembly to ensure accountability”, including the requirement to pay over to the Consolidated Fund all revenues.
FMA (Amendment) Act 2015
The amendments to the FMA Act were passed in the National Assembly on 20 July 2015 and assented to by the President on 5 August 2015. According to the explanatory memorandum, the purpose is to establish the financial independence of certain constitutional entities by providing for lump sum payments to be made to these entities. In this way, the entities are freed “from the automatic obligations of Budgetary Agencies and the discretionary powers exercised by the Minister of Finance over Budgetary Agencies, which obligations compromise their independence which they are intended to have as contemplated by the Constitution”.
Section 54(1) of the Act is amended to include “or allocations to Constitutional agencies” after the words “statutory expenditures” while three new sections have been added to Section 80. Section 80A states that Section 80 shall apply to the constitutional agencies except as otherwise provided by the law establishing the agency. This requirement relates to annual financial reporting and audit, and the laying of the related report in the National Assembly, within six months of the close of the financial year.
Section 80B requires the budgetary proposals of constitutional agencies to be submitted prior to the commencement of the financial year to the Clerk of the Assembly, copied to the Speaker and the Minister of Finance. The format of the proposals is to be determined by the head of agency in consultation with the Minister. The Clerk shall ensure that the proposals are submitted to the Assembly as presented, except for the Audit Office whose proposals are presented to the Assembly via the Chairperson of the Public Accounts Committee. For his part, the Minister is required to submit his comments and any recommendations, limited to the overall proposals rather than individual items, in sufficient time to enable the Assembly to consider them.
Once approved by Assembly, the allocations of constitutional agencies are included as subventions to constitutional agencies under the Estimates of Revenue and Expenditure for the Public Sector, reflecting: (a) programme and agency description; (b) budget for the previous year; and (c) budget for the current year. The approved annual budget of a constitutional agency shall not be altered without the prior approval of the Assembly. In addition, disbursements are made as a lump sum by the end of the month following the month in which the appropriation is approved, unlike budget agencies where disbursements are made monthly based on allotments approved by the Minister.
In accordance with Section 80C, the official in charge of a constitutional agency is now responsible for preparing and presenting the annual reports and audited financial statements of the agency to the Assembly. Previously, it was the concerned Minister who was responsible for laying the report to the Assembly
According to the Minister, “a new chart of account 6323 was created to facilitate the new categorisation of expenditure allocations and enable ease of tracking of allocations for Constitutional Agencies. Further, a new table was added to the Budget Estimates, namely Details of Constitutional Bodies to provide additional information to the National Assembly and the public”.
Provisions relating to the Audit Office
By Article 223 (5) to (7) of the Consti-tution, the Public Accounts Committee (PAC) may exercise general supervision over the functioning of the office of the Auditor General in accordance with the Rules, Policies and Procedures Manual approved by the PAC.
In accordance with Section 40 of the Audit Act 2004, the expenditure of the Audit Office shall, in accordance with article 222A(a) of the Constitution, be financed as a direct charge on the Consolidated Fund, determined as a lump sum by way of an annual subvention approved by the National Assembly after review and approval of the Audit Office’s budget as a part of the process of the determination of the national budget. Within the timetable established by the Minister for the preparation of the annual budget proposals, the Auditor General shall prepare and submit to the PAC a budget submission for the Audit Office, including work plans and programmes, for the next ensuing fiscal year.
The PAC shall review the budget submission and provide comments for consideration by the Auditor General. After considering the PAC’s comments, the Auditor General shall revise the budget submission and re-submit it to the PAC for endorsement. The PAC shall, no later than ninety days before the commencement of the next ensuing fiscal year, forward the revised budget submission for that year, together with its comments thereon, to the Minister for consideration and inclusion in the annual budget proposal as a subvention for the Audit Office under the allocations of the Parliament Office. In addition, the Auditor General is required to prepare and submit to the PAC quarterly reports on the performance and operations of his office, and a copy of an annual system and financial audit report of his office.
Provisions relating to the Judiciary
With the passing of the FMA (Amendment) Act 2015, the Supreme Court of Judicature is no longer a budget agency, and the procedures outlined in the amendment Act are now applicable to it. In a recent letter to the Editor, the former Attorney General referred to Article 122A (2) of the Constitution providing for all Courts to be administratively autonomous and to be funded by a direct charge upon the Consolidated Fund. He contended that the provisions of the FMA (Amendment) Act 2015 contravene this section of the Constitution. In response, the Minister had the following to say:
… it would be foolhardy to think that any agency seeking funding from the Treasury, could just submit a budget to the Minister of Finance and expect it to be approved in the National Assembly unaltered. If that were possible, then we would not go through the painstaking exercise that attends the annual national budget.
In reality, as is the global norm, the recommended budget by any government, is circumscribed by the available fiscal space guided by the national deficit and debt sustainability targets.
What obtains now, therefore, is a more transparent system where both the request made and the proposed recommendation are shared with the National Assembly, and it is the National Assembly not the Minister of Finance which approves the final allocation to Constitutional Agencies, and has the power to vary these proposals up or down before approval.
Some final thoughts
The model that the Audit Office uses for the approval of its budget is perhaps worthy of serious consideration in respect of all other constitutional agencies. To avoid amendments to their budgets on the floor of the House, these agencies could make their submissions to the PAC which, having considered the comments and recommendations (if any) of the Minister, would request the agencies to make the necessary adjustments to their budgets. This proposal may require a further amendment to the FMA Act.
As regards independent financial reporting and audit, constitutional agencies are yet to comply with the requirements set out at section 80A and 80C of the FMA (Amendment) Act 2015. The Auditor General nevertheless submits the related reports on his office to the PAC, in accordance with the Audit Act 2004. However, it would be desirable for the PAC to table such reports to the National Assembly. Needless to mention, the financial autonomy and independence of constitutional agencies must be accompanied and supported by the highest degree of transparency and accountability to the Legislature and hence the public.
Finally, Section 80C appears to suggest that it is the officer in charge of a constitutional agency who, having prepared the annual report, has to table it, along with the audited accounts, in the National Assembly. However, such a person is not a member of the National Assembly. Perhaps, the PAC Chairman could be vested with this responsibility.