Accounts of Neighbourhood Democratic Councils (NDC) are in total disarray as 80% of them have not been audited for the last five years and columnist Anand Goolsarran has pilloried the audit office over the delinquency.
In columns in Stabroek News on Monday and last week, Goolsarran also pointed out that the Linden municipality has not been audited for 28 years and also took aim at the Ministry of Local Government over this state of affairs.
Goolsarran, a former long-serving auditor general, noted that according to the 2012 Auditor General’s report, 52 NDCs, representing 80 per cent of the total number, did not have audited accounts for the last five years. Eighteen of these entities have “also never produced audited accounts since they were established in 1994, i.e. for 19 years!” He said this is despite the fact that NDCs receive significant amounts of money from the Treasury in addition to the rates and taxes being collected from local residents. For example, he pointed out that 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, Goolsarran said that most of the entities had submitted financial statements for audit several years at a time. Some statements however had to be returned for corrections while for others, the audits were either being planned or were being finalised.
Goolsarran, whose tenure as Auditor General would have also encompassed the period of delinquency, noted that the 2012 Auditor General’s report issued on 30 September 2013 stated that of the 294 sets of financial statements with 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 finished and the related reports issued.
He asked what had happened to the audit of 173 statements (i.e. 221 minus 48) which were carried over 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!” Goolsarran declared.
He said the situation paints another unflattering picture of the operations of the Audit Office whose mission statement commits it to promoting good governance, transparency and improved public accountability, through 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”, Goolsarran urged.
The Ministry of Local Government has not said much about the backed up accounts of local organs and the lack of accountability although it is deeply involved in the removal of existing NDCs for non-performance and the installing of hand-picked replacements.
Goolsarran had also examined the state of affairs as it relates to the six municipalities. He noted that the Linden Town Council was 28 years in arrears in relation to its accounts, the New Amsterdam Town Council 16 years, the Rose Hall Town Council 14 years and the Anna Regina Town Council 13 years. The Corriverton Town Council was backed up by 11 years while the Georgetown City Council was eight years in arrears.
This, he noted, works out to an average of 15 years’ arrears in financial reporting and auditing. In these circumstances, residents who pay their rates and taxes have no way of knowing how their payments are being utilised. This is on top of significant contributions being made from the Treasury.
He said that according to the Auditor General’s 2012 report to the National Assembly, the Audit Office received 73 sets of financial statements from the municipalities of which 33 were returned because they were incomplete.
Said Goolsarran: “There was also no indication as to how long these statements were with the Audit Office and why several years were allowed to be submitted at the same time. The normal practice is for financial statements to be submitted for audit one year at a time since if there are errors that affect the closing balances, they will also affect the opening balances for the next year. The failure to ensure that this is so will result in subsequent years being returned for correction if such errors are found.
“The question is: Who is responsible for this highly unsatisfactory state of affairs? To begin with, significant sums of money are released every year through the budget process to assist these municipalities financially, especially in relation to their capital programmes. For example, $65 million was paid out to the six municipalities in 2012. One would therefore expect that our Parliamentarians would demand proper accountability for funds previously allocated before approving new sums for the municipalities. Regrettably, this has not been the case, and it is evident that financial accountability is not one of our strong points”, Goolsarran argued.
He said it is also clear that the municipalities are not treating the issue of financial accountability seriously. Indeed, he pointed out that the law requires financial statements to be submitted for audit within four months of the close of the financial year.
“Although some submissions were made, it is clear that they not were done within the deadline since multiple years were submitted at the same time. In addition, municipalities have a duty to follow up with the Audit Office to ensure that: the audits are expedited; the related reports are issued; and the Minister of Local Government is informed of any difficulties so that he can apprise the National Assembly”, Goolsarran said.
He asserted that the Auditor General has to accept some blame for this state of affairs.
“He should not have accepted financial statements for several years at the same time. That apart, if he has resource constraints to execute these audits, the Auditor General has a duty to request additional resources via the Public Accounts Committee. Alternatively, he could engage the services of chartered accountants in public practice to assist him. It is evident that the Audit Office has been paying passing interest when it comes to ensuring financial accountability of the six municipalities”, Goolsarran declared.
The former Auditor General noted the importance of holding local government elections.
“The prospect of holding local government elections this year would be a welcome development notwithstanding that there were missed opportunities on six consecutive occasions in 1997, 2000, 2003, 2006, 2009 and 2012, to allow citizens to elect their representatives. One hopes that the USAID Project on leadership and democracy will proceed smoothly since a significant component of it relates to preparing citizens for this indispensable aspect of a truly democratic system of governance, transparency and accountability”, Goolsarran said.
