This column joins the several individuals and organisations, including the diplomatic community, in congratulating the APNU-AFC coalition on winning the 2015 general and regional elections. The citizens of Guyana have spoken, and their wish must be respected and faithfully honoured. Let it be said, democ racy is not a one day affair but must be practised every day over the next five years.
With 49 per cent of the votes cast for the PPP/C, citizens have also chosen it to be an integral part of democratic culture by providing it with the means of ensuring meaningful and constructive participation in the management of the affairs of the State. It is the sincere hope of this column that an atmosphere of goodwill, respect for each other, and indeed compromise, will prevail as we proceed with the onerous task of nation-building for the social and economic benefit of all Guyanese.
Last week, we completed our discussion of six of 15 questions we had posed, the answers to which we believe can form the basis for the commencement of a process aimed improvement. Today, we continue our discussion of the remaining questions.
Revising the accountability cycle
The public accountability cycle involves the following sequence of events:
- Preparation of the Estimates of Revenue and Expenditure and submitting them to
the National Assembly for consideration;
- Approval of the Estimates and the passing of the Appropriation Act;
- Assessment and collection of revenue and the incurrence of expenditure;
- Preparation of the public accounts and submitting them to the Auditor General;
- Auditing of the public accounts and the issuing the Auditor General’s report for
laying in the Assembly;
- Examination of the audited public accounts by the Public Accounts Committee and
the issuing of its report; and
- Issuing of the related Treasury Memorandum by the Ministry of Finance.
It has been the practice to prepare and submit the Estimates at the end of the third month of the fiscal year in question, and after allowing for an additional month for parliamentary debate and possible amendment, the Appropriation Act is passed at the end of the fourth month. This is an unsatisfactory state of affairs that allows for various forms of abuse, as in the case of the unauthorized expenditure of $4.5 billion incurred last year. In addition, the Government has four months after the close of the fiscal year to prepare and submit the public accounts to the Auditor General who in turn has an additional five months to submit his report on these accounts to the Assembly. On the other hand, the PAC has no timeframe within which to complete its examination while the issuance of the Treasury Memorandum is dependent on the completion of the PAC report.
Further, in the consideration of the Estimates, parliamentarians do not have any frame of reference against which they could carry out a critical review and analysis since there are no audited public accounts for the previous fiscal year. At the time of writing, the latest publicly available audited public accounts and the related Auditor General’s report were in respect of 2012 while the last report of the PAC was in respect of 2009!
This column wishes to advocate the following revision of the timeframes for the completion of the various activities of the public accountability cycle:
Activity Deadline
Submission of Estimates of Revenue and Expenditure 15 November
Passing of the Appropriation Act 31 December
Submission of the public accounts to the Auditor General 28 February
Presentation to the Assembly of the audited public accounts &
the Auditor General’s report thereon 30 June
Examination by the PAC and submission of its report to the Assembly 30 September
Issuing of the Treasury Memorandum to the Assembly 31 October
Enhancing accounting skills in government
By and large, there is an absence of suitably qualified and trained persons to execute and manage the accounting operations of Ministries, Departments and Regions. In particular, most of the Permanent Secretaries, who are the accounting officers, do not have the background to enable them to execute their duties in a professional manner. Indeed, contrary to established practices and the concept of neutrality of the Public Service, most of them are political appointees. This is unfortunate and is a significant contributory factor in the deterioration of public financial management over the years.
Years ago, the University of Guyana ran courses leading to the diploma and Bachelor’s degree in accounting. Accounting personnel from Ministries and Departments attended classes in the evening and/or were given generous time-off to do so. The University therefore urgently needs to re-introduce these courses to enable government departments to be staffed with suitably qualified and trained accounting personnel. As regards Permanent Secretaries, it should be made a requirement for them to possess at least the Bachelor’s degree in accounting and five years of relevant experience, and appointments should be made by the Public Service on the basis of merit only, and not by the political directorate.
Introducing internal audit in government
There is no organized system of internal audit throughout the operations of government to, among others, review the effective functioning of systems and procedures on a day-to-day basis and to recommend changes for improvement. In order to appease international funding agencies, an attempt was made to set up a centralized internal audit system, operating out of the Ministry of Finance. As expected, the exercise was a cosmetic one. Larger Ministries need their own full-fledged and dedicated internal audit systems which the new Administration must address with some urgency, as there are obvious benefits to be derived.
Implementing international accounting standards
The present accounting and financial reporting system has been inherited since Colonial times, with little or no modifications over the years, despite significant advances in this field. The cash-based system of accounting continues to be used, despite its severe limitations. Although the Fiscal Management and Accountability Act of 2003 places the responsibility on the Minister of Finance for implementing internationally recognized accounting standards for government, since the passing of the Act no attempt was made to do so.
Many countries, and most international organisations, have moved away from the cash basis of accounting and have, or are in the process of implementing International Public Sector Accounting Standards (IPSAS). IPSAS is based on full accrual accounting with appropriate modifications to meet the requirements of the public sector. Its implementation will result in improved financial reporting, especially as regards the proper accountability for assets and liabilities, as well as in enhanced transparency and accountability, and indeed credibility in government’s financial reporting. The time has come for Guyana to implement IPSAS.
Reforming our public procurement systems
The Procurement Commission established by the constitutional amendment of 2001 is yet to be activated, despite calls from all quarters for this to be done. The previous Administration refused to activate the Commission because it did not want to relinquish the Cabinet’s role in the procurement process. That role involves offering “no objection” (which in effect constitutes approval) to contracts of $15 million and over. There has therefore been no independent oversight of the procurement process, as envisaged by the constitutional amendment, especially as regards the operations of the National Procurement and Tender Administration (NPTAB).
The Minister of Finance, a key Cabinet member, appoints seven-member board in addition to the Chairman who reports to him. Over the years, the NPTAB has been hard-pressed to make recommendations on the award of contracts that will not find favour with the Minister, and by extension the Cabinet. Indeed, except in one case, it is not publicly known whether the Cabinet has ever objected to the award of a contract. The NPTAB is therefore not considered independent of the Executive, and it is not publicly known when last the members were rotated, in keeping with established practices. One hopes that that the situation will change upon the establishment of the Commission, considering that: (a) approximately $150 billion is expended on public procurement annually; and (b) the extent of allegations of corrupt behaviour in the award of contracts for the procurement of goods/services and the execution of works.
Addressing the limitations in the work of the Audit Office
The work of the Audit Office is severely limited because of resource constraints as well as the absence of suitably qualified and trained personnel. This is despite the fact that since the early 1990s, the Audit Office has been the beneficiary of funding for capacity-building and institutional strengthening. With the appointment of its Head without the requisite qualifications and professional standing, as well as the fact that the Office was plagued by a serious conflict of interest, the previous Administration was able to secure a stranglehold on the Audit Office. As a result, important matters of public interest were overlooked in favour of routine and mundane issues. Indeed, over the last ten years, there has been a significant lowering of the quality of the Auditor General’s report. The new PAC needs to address this issue urgently.
Establishing an anti-corruption agency
It is to our great disappointment that Guyana continues to score poorly on the Corruption Perceptions Index (CPI) since we became part of Transparency International’s assessment in 2005 – second lowest in the Caribbean, except for Haiti. Of recent, Haiti has been making some strides to improve its standing on the CPI. If we continue to remain in a state of denial and do nothing about corruption, whether perceived or real, Haiti is likely to overtake us in the not too distant future. This column is therefore proposing the establishment of an Anti-Corruption Agency with investigative and prosecuting powers and with reporting relationship to the Legislature. This, along with the enactment of whistleblower protection legislation, a fully functioning and resourced Integrity Commission, the activation of the Procurement Commission, and a genuine effort to provide public access to information on government programmes and activities, will significantly enhance our standing on the CPI. Indeed, with sincere commitment and dedication, we have the ability to lead the Caribbean in our fight against corruption.
Complementing the work of the PAC
Given the significant arrears in the work of the PAC as well as the fact that most of its members do not have the expertise in public financial management, it would be appropriate for Guyana to adopt a model similar to that of the United Nations whereby an expert body is charged with the responsibility of reviewing the reports of the Board of Auditors and preparing its own report for consideration by the Fifth Committee of the General Assembly. The Fifth Committee is the equivalent of Guyana’s PAC. As soon as the Auditor General’s report is submitted to the Assembly, this expert body can begin its work, and within three weeks it can produce its report to the PAC. Of course, the PAC will carry out its own way but in a significantly less detailed way so as to concentrate on more important issues. Using this model, within one month after the submission of the expert body’ report, the PAC examination will be completed and the related report along with that of the expert body can be issued to the Assembly.
Monitoring the operations of state-owned/controlled entities, including NDCs
There should be a system of monitoring of the operations of state-owned/controlled entities similar to that which had prevailed under the Hoyte Administration to avoid the problems associated with NICIL, Guyana Geology and Mines Commission and the Guyana Forestry Commission, among others. On several occasions, this column has advocated the resetting of NICIL’s operations to its pre-2002 period where it operated as a small administrative outfit to monitor, among others, revenues derived from public enterprises so that they are promptly collected and paid over to the Consolidated Fund.
Finally, accountability at the local government level has been a source of complete neglect over the years, with both municipalities and Neighbourhood Democratic Councils significantly in arrears in financial reporting and audit. Several of the NDCs have not produced audited accounts since they were established in 1994 which financial reporting of the six municipalities is on average 16 years in arrears. A task force should therefore be set up urgently to address the issue of accountability at the local level immediately after the holding of local government elections.
