Today, we take a closer look at the Audit Office to ascertain what might have contributed to the above-mentioned assessment.
Historical background to the Audit Office
Guyana inherited its system of state audit from the British who established a Colonial Audit Department in 1884. In 1938, it was re-designated Colonial Audit Service, then Overseas Audit Service in 1954. The Financial Administration and Audit Ordinance of 1961 provided for the audit of the public accounts and for the duties and powers of the Director of Audit (now Auditor General). On the attainment of Independence, the Guyana Constitution was promulgated. Article 116 gave due recognition to the office and functions of the Auditor General. Following the revision of the Constitution, the current reference is now Article 223.
During 1991 to 2005, the Audit Office undertook several reform initiatives. In 1991, much to the dislike of the Government, it enforced the constitutional provision that in the exercise of his duties, the Auditor General is not under the direction and control of any person or authority. Previously, the Audit Office was considered a government department with reporting relations to the Minister of Finance. Responding to media enquiries and holding press briefings also became a regular feature, a practice that was unprecedented.
Job specifications and descriptions were amended to give due recognition to additional training and experience for the purpose of appointment and promotion. Previously, promotion was based on seniority, defined as years of service in a particular position. Because of this initiative, the Audit Office had at one time boasted a staff profile that included four chartered accountants and dozens of graduates from the University of Guyana. At the same time, a rigorous system of internal training was implemented to cater for those who were unable to attend the University.
In 1993, the FAA Act was amended to extend the mandate of the Auditor General to the audit of all public corporations and other state-owned/controlled entities. Previously, his mandate was viewed only in terms of the audit of central and local government. The amendment made the Auditor General the external auditor of the public sector, which was in keeping with the international best practice.
Further revisions were made by way of the Constitutional Amendment Act of 2001. These include:
– Direct reporting to the National Assembly via the Speaker instead of the Minister of Finance to enhance the Audit Office’s independence from the Executive;
– A clearer definition of the public accounts to include all public bodies in which the State has controlling interest as well as all foreign-funded projects whether by way of grants or loans; and
– The Public Accounts Committee (PAC) to exercise general supervision over the functioning of the Audit Office and to provide for the Office’s own accountability to the Legislature.
The promulgation of the FMA Act 2003 saw the repeal of the financial administration section of the FAA Act, leaving the audit section intact. The Audit Office took the opportunity to draft a new Audit Act to effect improvements consistent with international best practice and to incorporate the 2001 constitutional amendment, especially as regards delinking the Audit Office from the Public Service and the supervisory role of the PAC. In April 2004, the National Assembly passed the Audit Act 2004, which became operational in April 2005.
Since the early 1990s, the Audit Office has been benefitting significantly from institutional strengthening funded by the World Bank and the Inter-American Development Bank. In addition, many officers attended training courses in the UK, Canada, the US and India through the generosity of these countries’ national audit offices. These forms of assistance continue to this day.
Evaluation of the Audit Office’s Effectiveness
Given all the reform initiatives undertaken over the years as well as attempts at institutional strengthening, the question is: Why is there still a limitation in the effectiveness in the work of the Audit Office, as described in the Human Rights Report?
The functioning of the Audit Office is based on the British model whereby the Auditor General is viewed in a somewhat narrow sense as the external auditor of the public sector in the same way a chartered accounting firm is viewed in the case of a company. The Audit Office, however, has the secondary mandate of undertaking some investigative work as well as performance-related studies, though much depends on the availability of staff members with the requisite skills and training. Given the existing staffing, the Audit Office is barely able to carry out the minimum necessary to fulfill its primary role of auditing the public accounts and expressing an opinion on them.
During the course of the Audit Office’s preliminary and final audits, deficiencies and/or discrepancies are reported to the client in a management letter. The Auditor General has an additional reporting responsibility to the National Assembly on matters that in his judgment are material to warrant the Assembly’s attention. He, however, has no power to force the Government to act on his findings and recommendations, and it is for the PAC to do so. Even so, the PAC can only make recommendations in its report, and the Government responds in a Treasury Memorandum indicating what actions it has taken or proposes to take in relation to the PAC’s recommendations. The PAC is still deliberating on the audited public accounts for 2010. The situation was worse in previous years, though some credit should be given to the current PAC for reducing the backlog.
Given this situation, it would take several years before the Treasury Memorandum is issued, by which time the time the recommendations are overtaken by time, hence the recurring discrepancies being repeated. In addition, a review of past Treasury Memoranda indicated that the responses tended to be vague and generalized. One can then quite justifiably ask: Why do accounting officers not act on the Auditor General’s findings/recommendations immediately after the report is issued? The answer seems to be that there is no pressure to do so, as addressing deficiencies in our public financial management systems is a priority of the Administration.
With the passing of the Audit Act 2004, job specifications and descriptions were further revised, and the emoluments offered were commensurate with the revised specifications and were comparable with those of the private sector. This meant that only those officers who met the job requirements could be appointed or promoted. There was provision for: (a) those who did not meet the eligibility criteria and who were unable to upgrade their skills; and (b) those who have not been performing satisfactorily over the years, to be referred to the Public Service Commission for re-assignment. Once this action was taken, the intention was to advertise publicly for the vacant positions. However, the entire staff was absorbed into the new Audit Office created by the Act. The result was that those officers who did not meet the new job requirements enjoyed windfall gains in terms of emoluments.
The new arrangements provide for the PAC to ratify senior appointments in the Audit Office. Last year, 11 officers’ names went to the PAC for ratification of their appointments. The PAC was concerned that most of these persons did not meet the job requirements.
However, in the absence of one member from the Opposition, the Government side had the majority, and pushed for a vote on the matter. This action saw the ratification of appointments of these officers.
Instead of top quality audits being performed with high-level findings and recommendations, the Auditor General’s report resembles the results of a routine internal audit with superficial findings recycled year after year. They look more like a cut and paste of the previous year’s reports, with updated figures. Perhaps, the only exception is the use of the “clipboard” approach introduced in 1996 to carry out physical verification of works executed. There is hardly any new initiatives reflected in the reports.
The continued acting appointment for seven years of the Auditor General was a source of concern, given the need for the Audit Office to be insulated from the Executive. The Administration was, however, very comfortable for this arrangement to continue. Only when it was realized that the incumbent was about to reach age 55 (the retirement age in his substantive position) that he was hurriedly confirmed in the position, thereby extending his appointment for another ten years. Many knowledgeable persons have criticized the appointment since: (a) the Auditor General is not a professionally qualified accountant; (b) the Companies Act requires him to be so qualified, bearing in mind that there are many state-owned companies; (c) he is required to supervise the work of chartered accountants undertaking assignments on his behalf; and (d) he is required to provide effective and motivational leadership to his staff so that they can rise to their highest level of potential.
All the above actions, as well as the lack of actions in some cases, militate against the effectiveness of the work of the Audit Office, and have contributed to the assessment given in the Guyana 2012 Human Rights Report.
