Introduction
Last Thursday, President Donald Ramotar swore in Mr Deodat Sharma as the country’s Auditor General. The good news is that one long-acting appointment has been brought to an end – Mr Sharma had been acting in the position of Auditor General for seven years. But that is where the positive ends. The real story is not the confirmation itself, although that raises some serious questions about how the country’s finances are supervised and overseen. It was the fact that the confirmation was done largely by stealth and without any prior announcement. The Constitution gives the power of general supervision over the Audit Office to the Public Accounts Committee, a key parliamentary body. Yet, the President did not think it courteous let alone necessary to inform or invite the Chairman of the PAC to the swearing in.
Our Constitution requires the President to appoint the Auditor General acting in accordance with the advice of the Public Service Commission. We should be able to assume that Mr Ramotar would have had the advice of the PSC chaired by Mr Carville Duncan, but how the PSC made that decision can only be speculated on. Indeed, such is the state of governance in this country that citizens are in the dark not only about the membership of the PSC but whether its life has not expired.
The position of the Auditor General is key not only to accountability and transparency but to democracy and good governance as well. It is no surprise then that politicians often have difficulties with auditors who take their office and work too seriously, as we saw during the Hoyte presidency with the assertive Dr Anand Goolsarran. Compliant and friendly auditors however are welcome and, as in the case of Patrick Farnum and now Deodat Sharma, politicians will do all they can to secure and prolong compliant auditors’ stay in the position where they cannot help but underperform, as they are expected to do. For some citizens, this is simply a fact of political life while for others it is a tragedy that harms the country’s development and promotes corruption and lack of transparency.
Most important office?
The leading jurist and academic writer in India D D Basu has described the position of [Comptroller and] Auditor General in his recent magnum opus as the most important office under the constitution of that country. Even higher than that of a judge or the Chief Justice against whose decisions a person who feels wronged could appeal. The position of the Auditor General is different; he is subject to the direction and control of no one. Unlike the auditor of a company, he does not have to answer to any shareholder. No one – not even the Public Accounts Committee – can challenge him on his ‘judgment‘ on choosing to audit – or as is more likely in Mr Sharma’s case – not to audit a particular item of income or expenditure, on government compliance with the law or with respect to its execution of a statutory duty. The auditor is guaranteed access to books, records and persons as he thinks necessary, but he alone decides whether and how he exercises that right.
The Auditor General is required to audit the public accounts of Guyana and of all officers and authorities in the country. In many significant respects the incumbent has fallen down badly in the discharge of his duties. He has never once reported on the accounts of the Cheddi Jagan International Airport Corporation. He does not report on the National Frequency Management Unit whose revenues may be funding the salaries of persons in offices whose budgets were cut by the National Assembly. Some audits have not been done for decades.
Idiocy
The Audit Office seems immune to the idiocy of a response from the Finance Ministry that a shortfall of $5.2 billion could explain the non-receipt of $14 billion of Norwegian money. During Sharma’s tenure at the helm, the country no longer gets an accurate report on the audits that are more than five years in arrears. Rather, what we do get is a dangerous misrepresentation of the facts.
No longer does the Audit Office report on the tax concessions that Dr Ashni Singh grants with doubtful authority or questionable validity. The Audit Office is derelict in its obligation to prepare and submit to the National Assembly a report of the concessions granted under the Income Tax (In Aid of Industry) Act and it has abandoned its duty to report on the Cricket World Cup 2007, accounting for Carifesta and the Flood money.
The Auditor General is required to audit the accounts of all government companies. To do so he requires a professional accounting qualification and membership of the national accounting body. Because he does not possess the former he cannot get the latter.
Mr Sharma has consistently compromised his independence by his subservience to the Office of the President and the Ministry of Finance. His report looks the other way in matters of substance, illegalities and improprieties. He accepts a most self-serving opinion from a PPP/C Attorney General that the Lottery proceeds do not belong to the Consolidated Fund. But he ignores informed opinion on NICIL and the billions it reaps from the Government which are not brought into the public accounts. He even forgot that just a few months ago he could not say how $30 billion dollars held in Government accounts was shifted around but not accounted for in the Consolidated Fund. So this huge sum goes unexplained. And since once the report passes through a Public Accounts Committee which has no access to independent professional advice, the matter is dead and forgotten, a burden on taxpayers.
Ramotar and Jagdeo
For all the favourable work the Audit Office under Mr Sharma did for his presidency, Mr Bharrat Jagdeo never felt it would be proper to confirm him. Mr Ramotar either has no such reservations or has some other and contrary information which his predecessor did not have. If Mr Sharma’s confirmation helps to protect, secure and act as a cover for the real Auditor General, the wife of the Finance Minister, questions about qualifications, competence and independence are for the birds. As Mr Sharma has threatened, if his wishes come through, those malcontents who expect the oversight of the taxes they pay to be properly executed, will have to wait another eleven years.
The average member of the public can be forgiven for not understanding the ramifications of the situation: inadequate staffing of the right calibre, poor leadership, conflicts of interest, lack of independence, etc. But how does that explain the silent response to President Ramotar’s decision by many key stakeholders, including the accounting and auditing profession? It is tainted with shame. If this is not important, it is hard to think what is.
The 2011 report in brief
Now to return briefly to the to the 2011 report. A couple of years ago, the report spent disproportionate emphasis on Harpic for Gecom – this year a shortage of 1 unit of Marvex Bleach has made the cut under Region 9, an anchor rod for $3,600 in Region 2, a gift of two wheelchairs in Region 3, etc. Surely there must be bigger and more important issues the national auditor should be addressing in a budget of over $160 billion.
The report also repeats in full the special allocation to the police which became a hot topic in the National Assembly. It was the first time in the spending of scores of billions of dollars out of the Contingencies Fund that an audit report signed by Mr Sharma has actually addressed not only whether the conditions for advances from the Contingencies Fund have been met, but whether and how the actual spending was done.
Just two items I thought worthy of note in the report.
NICIL
Paragraph 85 of the report states that the audit of National Industrial and Commercial Investments Limited (NICIL) operations as a company had been completed for the years 2002 to 2010, while the 2011 audit was in progress. Audit reports have been finalised and issued up to 2005, while reports for the years 2006 to 2011 will be issued shortly.
And paragraph 86 states that “With respect to the audit of NICIL’s consolidated financial statements, these have been completed and reports issued up to 2005. Draft consolidated financial statements for the years 2006 to 2010 were submitted and the audits are in progress. The report adds that the completion and issuance [of the reports] is dependent on the finalisation of the audits of individual entities set out in a table.
Well, there must be something wrong with both paragraphs 85 and 86. First paragraph 85. The reports of NICIL that have been tabled are not for the company as the law requires, but are only consolidated accounts. With respect to paragraph 86 none of the companies listed in the table has audits outstanding for 2006 and 2007. In fact, of the thirteen companies, the only one for which a 2008 audit is outstanding is the GNCB – a non-operational company while NCN and Linden Electricity Company are up to date to 2009.
It is quite unacceptable that an audit report could be so patently wrong. But then it has also failed to address the treatment of the $33 billion which the Ministry of Finance has failed to properly account for.
The Guyana Defence Force
One astounding finding is in relation to the Guyana Defence Force which the report noted did not take the necessary steps to secure payment vouchers. The report notes that “at the time of the audit, 2,054 payment vouchers totalling $1.668 billion for expenditure under the current appropriations were not presented for audit examination.” That is more than 25% of the current expenditure for the year and since it is unlikely to be in relation to emoluments, the expenditure not properly accounted for is more than 50%.
Surely between the time of the field work and the preparation of the report, some progress should have been made on locating the vouchers. There was no relevant comment.
Conclusion
Dr Anand Goolsarran, former Auditor General has begun a review of the report in his weekly column. To avoid any duplication and because of the poor quality of the report, the column next week will move to another topic. Given his own association with the Audit Office over several years, I look forward to Dr Goolsarran’s insightful comments.
