Reports emanating from the Office of the Presidency indicated that several persons have had their contracts terminated for blogging and fictitious letter-writing in the print media on behalf of the then ruling party. These persons were paid by the Office of the Presidency, the National Communications Network (NCN) and the Government Information Agency (GINA) to engage in character assassinations and personal vilifications of persons who offered even the slightest criticisms of the Government. It has long been suspected that this was a State-sponsored act, as casual reading of the Guyana Chronicle and the bloggers’ section of the Stabroek News would suggest.
This column vehemently condemns this most despicable, morally depraved and unconscionable, indeed criminal act, and believes that it is not enough to terminate the contracts of these persons. Those responsible for hiring these persons, for authorizing payment and for allowing the State print media to be used to publicise venomous attacks on innocent people, using taxpayers’ funds, should also be held to account and their services also terminated. In addition, 
the accounting officers of the Ministry of the Presidency, NCN and GINA should be held personally liable for causing violations of various sections of the Fiscal Management and Accountability Act to take place: Section 11 – Improper use of public resources; Section 12 – Certifying improper payments; Section 49 – Liability for loss of public moneys; and Section 76 – Liability for loss of public property. Further, a forensic audit should be commissioned immediately to ascertain how long this misuse of public resources has been taking place; the extent of the misuse; and the officials responsible. Appropriate recommendations should also be made to avoid a recurrence.
Forensic auditing
Since the new Administration took up office three weeks ago, there has been much talk about conducting forensic audits of certain problem-plagued State institutions, such as NICIL, the Guyana Revenue Authority, Guyana Geology and Mines Commission, the Guyana Forestry Commission and the Guyana Sugar Corporation. Recently, the Minister of Finance is reported to have stated that: (a) some 30 agencies have been identified for such audits; (b) preparations were being made for the commencement of the audits once the Cabinet gave its greenlight; and (c) a special team of “highly qualified and competent” officials was being assembled. The President had indicated that local expertise would be used for this exercise.
Numerous definitions abound for what constitutes forensic auditing. In simple terms, it is a critical review of the operations of an entity in the light of allegations of mismanagement, fraud or other corrupt behaviour, especially on the part of key officials of the entity. The review is carried out to ascertain the truth or otherwise of the allegations. Once reasonable evidence is uncovered in support of the allegations, it is the duty of the forensic auditor to seek out the more detailed evidence that could be used in a court of law in support of the prosecution of the person(s) involved. In addition, the forensic auditor is expected to make appropriate recommendations to avoid a recurrence of the identified deviations from established norms, rules, regulations and/or legislative requirements.
Not all forensic audits involve the investigation of mismanagement, fraud or other corrupt behaviour. For example, the directors of a private company may have a disagreement over the company’s valuation of its assets and liabilities for the purpose of settling the entitlement of a retiring director who is a major shareholder. In this case, a forensic auditor or forensic accountant (the term is used interchangeably) may be hired to carry out such valuation. A similar procedure may be followed in relation to divorce proceedings.
The procedures to be followed in the conduct of a forensic audit are no different from those of a financial audit. However, the objectives are different. In the case of the financial audit, the objective is the expression of an opinion on the fair presentation of the financial statements of an entity. The objective of a forensic audit, on the other hand, is to be able to draw reasonable conclusions about the truth or otherwise of allegations of mismanagement, fraud or other corrupt behaviour. Where the forensic auditor has found such evidence to support the allegations, he/she moves into an investigative mode and tries to ascertain the nature of the mismanagement, fraud or other corrupt behaviour, its cause and its implications for the organization. The forensic auditor then tries to quantify the extent of the irregularity or deviation, identifies the persons responsible and makes recommendations for not only the prosecution of those responsible but also importantly for putting in place measures to avoid a recurrence.
Perhaps the most important aspect of forensic auditing relates to having a clearly defined and articulated set of terms of reference setting out the exact scope of work to be undertaken, the estimated timeframe involved, and the reporting arrangements. The terms of reference facilitates the effective planning of the audit and aids in its smooth execution so as to arrive at the relevant conclusions.
The first task of the forensic auditor is to gather as much background information as possible about the entity during a preliminary study since understanding the entity and its operations is a perquisite for developing a sound audit plan, for executing a cost-effective and quality audit and for the timely reporting of the results. Indeed, a carefully crafted audit plan, properly executed, is likely to produce a good outcome, having regard to the terms of reference for the engagement. As such, adequate time and effort must be devoted to the planning of the assignment.
The execution of the forensic audit is also no different from that of the financial audit. However, forensic audits are far more challenging in their approach and require the exercise of the highest degree of rigour, professionalism and care. The forensic auditor is required to bring to bear on the assignment the best of his/her investigative skills since various ways are often used to conceal fraudulent practices. He/she has to display that “sixth” sense, meaning that on the surface everything may appear to be in order as regards a particular transaction, but the forensic auditor has an inner feeling that something is wrong with it. When this happens, he/she probes the transaction until all his/her doubts have been adequately addressed. In other words, the forensic auditor is required to display a greater degree of professional skepticism, compared with a financial auditor.
The reporting requirements for a forensic audit do not require the expression of opinion on a set of financial statements. Rather, the report speaks to the terms of reference that defines the scope of the assignment, and outlines the methodology used in the gathering of the evidence, including the list of documents/reports reviewed and the list of officials interviewed. The most important aspect of the report relates to the findings and recommendations which are written in a logical and methodological way, usually using the reporting framework of criteria (what should be), condition (what has happened), cause, effect, conclusions and recommendations. There may be several annexes which provide greater detail relative to the findings and recommendations. It would also be necessary for an executive summary to be prepared in such a manner that it can be read as a stand-alone document. It is in effect a précis of the full report. Needless to mention, the timely issuing of the report is crucial to the whole exercise.
Forensic auditing and the Audit Office
It is indeed regrettable that the Audit Office will not be involved in the conduct of these audits, as confirmed by the Auditor General. This was perhaps because the Office has been providing external audit services of these and other State institutions, and invariably, “clean” audit reports have been issued over the years in respect of these entities, despite evidence to the contrary. One recalls that in respect of NICIL, following a motion from the National Assembly directing the Minister of Finance to, among others, ensure that the accounts of the entity are brought up-to-date, the Auditor General signed off on nine years of accounts (2002-2010), all in less than one month, while his reports for the first four years were issued on the same day!
It should be said forthrightly that the Auditor General lacks the technical and professional competence to head such an important oversight body, and under his watch the independence and professionalism of that Office have been severely compromised and eroded, exacerbated by the serious conflict of interest that existed prior to 11 May 2015. In short, the work of the Audit Office lacks not only credibility but also quality, as casual reading of the Auditor General’s reports would suggest.
It is for the new Administration to take appropriate measures to restore the Audit Office to its former glory of the being the “foremost institution of the State in promoting good governance, transparency and greater public accountability through the execution of cost-effective and high quality audits”.
The Audit Office must enjoy the highest credibility in the eyes of the public, since it is looked upon as the watchdog of public accountability and the eyes and ears of the taxpaying public. Any lesser arrangement undermines an effective system of public accountability, good governance and transparency.
To be continued –
