Last week, we began a discussion of what should be our priorities for the New Year in terms of governance, transparency and accountability. We felt that the amendments to the Anti-Money Laundering Act should be given the highest priority since if these amendments are not approved before the end of the month, Guyana will be faced with sanctions for not having legislation in place that conforms to the standard recommendations used to evaluate countries’ efforts to combat money laundering and terrorist financing. We expressed the hope that the Select Committee of the National Assembly will expedite its work and there is political consensus on the outcome.
We looked at the issue of local government elections and indicated that an essential ingredient of local democracy is the holding of periodic elections to enable local residents to decide who they wish to be in charge of their affairs. It is regrettable that since 1994, there have been no local government elections although the law requires such elections to be held every three years. We pointed to the situation of the Georgetown City Council where: (a) garbage that poses a serious health risk keeps piling up; and (b) drains and canals are not being desilted to free them from weeds and garbage, resulting in the flooding of the city whenever it rains even for a few hours.
A related issue is the financial accountability of local government organs. We noted that in respect of the six municipalities, there have been no audited accounts for on average 15 years although these entities are in receipt for large sums from the Treasury in addition to the collection of rates taxes from residents.
Today, we continue our discussion on the priorities for the New Year.
Financial accountability of the NDC
Financial accountability of the Neighbourhood Democratic Councils (NDCs) is in a complete state of disarray, worse than that of the municipalities. The following shows the status as at 1 September 2013 for NDCs that are five years in arrears in financial reporting and audit.
In total, 52 NDCs, representing 80 per cent of NDCs, did not have audited accounts for the last five years of which 18 entities have also never produced audited accounts since they were established in 1994, i.e. for 19 years! This is despite the fact that, as in the case of municipalities, NDCs are in receipt of significant amounts of money from the Treasury, not to mention rates and taxes being collected from local residents. For example, the 65 NDCs received a total of $195.5 million in 2012 from budgetary allocations approved by Parliament.
According to the Audit Office’s records, most of the entities had submitted financial statements for audit several years. However, some statements had to be returned for corrections while for others, the audits were either being planned or were being finalised. The 2012 Auditor General’s report issued on 30 September 2013 stated that of the 294 sets of financial statements in the possession of the Audit Office as at 30 September 2011, 221 statements were audited as of December 2011 but the related reports had not been issued. However, no audits were finalized in 2011 while for 2012, 48 audits were completed and the related reports issued.
So the question is: what happened to the audit of 173 statements (i.e. 221 minus 48) carried forward to 2012 that were completed and were “being finalized”? Why should there be this overwhelming and undue delay in completing the audits of NDCs when the financial statements comprise merely a statement of receipts and payments? A dedicated auditor with access to the cash book, vouchers and bank statements will take less than a day to complete the audit!
The above analysis paints yet another sorrowful picture of the functioning of the Audit Office whose mission statement states, among others, that the Audit Office is committed to promoting good governance, including openness, transparency and improved public accountability, through the execution of high quality audits and the timely reporting of the results. This was the mission that was handed down by the Auditor General’s predecessor. It is time the Audit Office takes stock of itself and ensure that appropriate measures are in place to lift standards of efficiency and effectiveness consistent with its mission statement. The Ministry of Local Government should play a greater monitoring role in ensuring the timely and proper accountability of NDCs. After all, there are two subject Ministers as well as two former Ministers acting as advisors to oversee the work of the Ministry. Parliamentarians must also demand proper accountability for funds previously given to the NDCs before new funds are allocated.
Estimates of Revenue and Expenditure for 2014
The Minister of Finance has until 31 March to prepare and lay before the National Assembly the Estimates of Revenue and Expenditure for 2014. Given the present configuration of the National Assembly and in order to ensure the smooth passage of the estimates, commonsense would dictate that there should be meaningful consultations with the combined Opposition during the preparation of the estimates. However, such consultations have so far not taken place, and from all appearances, we are heading for a third consecutive year of serious disagreements over allocations for government programmes and projects, and possible budget cuts.
In 2012, the Assembly voted down several items of proposed expenditure where in its opinion satisfactory explanations were not provided. This prompted the Government to mount a legal challenge to the Assembly’s decision on the grounds that: (a) it was unconstitutional for the Assembly to amend the budget as presented; and (b) the Assembly could either approve or reject the budget, but not reduce it. In his preliminary ruling, the Chief Justice upheld the Government’s position but suggested that, in view of the new configuration in the Assembly and in order to overcome any disagreement, it would be appropriate for the Minister to rework the budget instead of the Assembly.
The Chief Justice did not grant any relief since the Government had amended the Appropriation Bill to reflect the reduction in the budget. The amended Bill was passed by the Assembly and assented to by the President, and therefore the Court could not invalidate such actions. However, the Minister could withdraw sums from the Consolidated Fund to restore the budget of the Ethnic Relations Commission which is a constitutional body. In no other situations did the Court rule that sums over and above what was contained in the Appropriation Act could be withdrawn from the Consolidated Fund to restore the budget as presented. Only an Appropriation Act can authorize the Minister to make withdrawals from the Consolidated Fund.
The Government, apparently misinterpreting the Chief Justice’s ruling, went ahead and withdrew funds from the Consolidated Fund in an attempt to restore the original 2012 budget. When the Government sought to regularize the expenditure, the National Assembly once again voted against certain items. The Assembly did not approve of excess expenditure totalling $571.627 million incurred in the first half of the year while for the second half of 2012, the anticipated shortfalls in expenditure totalling $1.225 billion did not find favour with the Assembly. In relation to the latter amount, the Government would have withdrawn funds from the Consolidated Fund to meet the related expenditure. Therefore, the total unauthorized expenditure for 2012 would amount to $1.797 billion, a significant blemish in the history of public accountability in Guyana. The same scenario has played out in 2013, the details of which will be dealt with in a later column.
One sincerely hopes that there will not be a repetition of what happened in 2012 and 2013 when the 2014 Estimates of Revenue and Expenditure are presented in the National Assembly. It is not too late for there to be meaningful consultations with the combined Opposition so that the budget as presented will enjoy smooth passage. One looks forward to a healthy debate on the budget and not to “a fish market scene”, once described by the late Attorney General, Doodnauth Singh in his farewell speech in the National Assembly. In April 2012, I attended the budget debate, and the scene was one of outright hostility, shouting, booing and heckling. Such behaviour in the highest forum of our land is unbecoming of our elected representatives and is unprecedented in my years of association with the National Assembly, first as Deputy Auditor General, then Auditor General. I have since not returned to the Assembly to listen to another debate.
To be continued –
