(Part II)
Introduction
In my article of 30 July 2010, I discussed the crucial role the Audit Office plays in the public accountability process. I reviewed the Audit Office’s mandate and highlighted the importance of that office’s independence from the Executive whose work it has to evaluate. Independence, however, is not the only criterion to promote the effectiveness and credibility of the Audit Office’s work. It has to be accompanied by a high degree of technical and professional competence as well as a full complement of staff members.
Today’s article continues the discussion by focusing on the staffing situation in the Audit Office as well as its technical and professional competence. Much of the information was extracted from the Audit Office’s website.
Staffing in the Audit Office
According to the Audit Office’s mission statement, the Office aims to ensure that it is staffed with highly skilled and competent staff delivering a high quality service in a cost-efficient and effective manner and by adherence to the most up-to-date auditing practices. Developed in the late 1990s or early 2000s, this is a powerful and worthy statement of intention. As such, it should be foremost in the Audit Office’s consideration of staffing matters and in the conduct of audits.
The authorized staffing is 223 while actual staffing in 2010 was 150, a 33 per cent vacancy rate. The following table shows the staffing situation over the last 20 years:
In 1993, staffing had increased by 16 per cent mainly due to the high profile nature the Audit Office had assumed following the restoration of public accountability and the almost single-handed role it played in the effort. However, the removal of the special salaries resulted in three consecutive years of decline to 129 in 1996. Existing staff were “red circled” while new staff had to be recruited at significantly lower salaries. This two-tiered salary structure affected the morale of the staff, and the Audit Office found it extremely difficult to attract and retain the much-needed skills.
There was a gradual recovery between 1997 and 2002, after which there was a persistent decline so much so that by the end of 2006, the Audit Office had reached its lowest point with a staffing of only 106. This means that the vacancy level had reached a most alarming level of 52 per cent of the authorized staffing.
It was in 2006 that the Audit Office received a significant increase in salaries, yet this year alone recorded the highest decline of 23 per cent in staffing. This is also despite the huge amounts expended by way of technical assistance for institutional strengthening from the World Bank and the Inter-American Development Bank, not to mention the generosity of the governments of the United States, Canada, the UK and India in offering slots to the Audit Office in terms of on-the-job training, a practice that was initiated in the mid-1990s. It is evident that, unlike the period 1994-1996, staff retention in 2006 onwards was dependent on neither the level of remuneration offered nor the Audit Office’s autonomy and flexibility to recruit and promote staff.
The implication of this state of affairs is two-fold. First, the Audit Office is forced to contract out the audits of certain entities to Chartered accountants in public practice at significantly higher costs compared with in-house arrangements. It was in 1993 that the mandate of the Auditor General was extended to the audits of public corporations and other agencies where controlling interest vests with the State, with the clear intention that as far as possible the Audit Office would be rendering a direct audit service.
The second implication of not having the desired complement of staff is that the Audit Office may very well find itself reducing the extent of audit coverage necessary to carry out its essential function of the watchdog of public accountability. A comparative analysis of the Auditor General’s reports for the pre-2004 periods with those of 2004 onwards is likely to yield interesting results in this regard.
In addition, the numerous instances of irregularities disclosed in the media almost on a daily basis forces one to ask the question: Where were the auditors? For example, it is not enough to state in the audit reports of NCN and GINA that a fixed asset register and master and sectional inventories were not maintained. The Audit Office, as the state audit institution, needs to go beyond examining a set of financial statements and carrying out tests as are considered necessary to express an opinion on these statements. Once a “red flag” is identified, as in the case of the above two agencies where internal control was virtually non-existent, that Office is “put on enquiry”, and should therefore probe the matter to the bottom. In short, it should switch into an investigative mode. This is the essential difference between a private sector audit and a state audit.
Technical/professional competence
Prior to 1991, the Audit Office was considered a government department, and public services rules were applicable in relation to all staff matters. Promotion was based on seniority which was defined in terms of years of service rather than on performance and enhanced qualifications. Once a person joined the Audit Office at the entry level, he/she was expected to be promoted to the next higher position if he/she was the most “senior” in his/her existing grade. One could have risen to the position of Deputy Auditor General with little accounting/auditing qualifications. There was therefore an urgent need to “professionalise” the Audit Office to give due recognition to performance and higher levels of training for the purpose of promotion.
It was against this background that the Audit Office developed a building block or hierarchy of qualifications and experience for the purpose of recruiting and promoting staff members. For example, to be appointed Assistant Auditor General, one had to be a professionally qualified accountant, or in lieu of this, a bachelor’s degree in accounting with substantial years of experience as an audit team leader. This prompted several senior officers to enroll on a part-time basis in the degree in accounting programme at the University of Guyana. Given this new focus on higher levels of training, the Audit Office at one stage boasted four professionally qualified accountants among its staff.
Other initiatives included the introduction of detailed audit work papers; a system of audit planning; and careful monitoring of the execution of the audits to ensure quality, timeliness and cost-efficiency.
The Audit Office was in effect transformed into a modern state audit institution, operating in a businesslike manner comparable to a large private auditing firm.
The current situation in terms of technical and professional competence, however, does not appear to be encouraging. There is no substantive Auditor General, and the official acting in the position has been doing so for the past seven years. He is neither a professionally qualified accountant nor someone who is considered an expert with an advanced degree in economics, law, public administration or other related discipline, as envisaged by the Constitution, though not specifically stated.
In addition, during its consideration of a recommendation to approve of the appointment of eleven senior officials in the Audit Office, it was pointed out that several of the officers recommended did not meet the job requirements. Because they were acting in the positions for several years, the PAC had no alternative than to ratify their appointments.
At the middle and lower levels, the Audit Office appears to have staff members with qualifications and experience commensurate with the positions they hold. They either possess certificates from the Audit Office’s Internal Training Programme, are partly qualified accountants, or have completed the accounting technicians’ qualifications or other similar qualifications.
Conclusion
The staffing situation in the Audit Office based on the latest available information leaves much to be desired, despite the offer of competitive salaries. Judging from the quality of its latest report, the Office appears to be struggling to carry out the minimum required to discharge its responsibilities. Citizens need greater assurance that the Audit Office has the capacity to deliver and to hold the Government accountable for the use of resources that truly belong to the taxpaying public.
In terms of technical and professional competence, there are concerns about the quality of the senior management team, given that there is only one professionally qualified accountant and several members do not satisfy the requirements for the positions they hold. As the de facto board for the Audit Office, the Public Accounts Committee has the responsibility for taking the necessary remedial action.
As regards the appointment of a substantive Auditor General, now that the Auditor General (Ag.) is about to reach retirement age in his substantive position, the Public Service Commission needs to get its act together to identify a suitable candidate for appointment by the President. This can be done through public advertisement inviting eligible Guyanese (both local and overseas) to apply for the position.
Several of the developed countries, for example, U.S.A., Canada and the UK, have adopted a policy whereby a new Auditor General is recruited from among the leadership of leading auditing firms in the country. In this way, fresh perspectives, especially the business management approach that is associated with the private sector, are brought to bear on the work of the national audit office. Perhaps, it is time for Guyana to do the same.
