It was recently drawn to my attention that I had made a mistake in a number of my articles when making reference to the Public Corporation Act of 1988 and that there was an amendment to the Act which I did not take into account. I immediately went to Parliament Office and obtained a copy of the amendment. And yes, I did make a mistake in my reference to Section 5 (1) dealing with the vesting of property in a new corporation. Amendment 28 of 1990 has inserted the words “or the Minister may by a separate order vest movable and immovable property of the State in any corporation, including an existing corporation”.
While Section 8 the Act dealing with transfers to a corporation was also amended to include “any other person”, this aspect of the amendment did not affect my reference to it in the articles in question since the Minister did not issue a notification under Section 66 (1) to make it applicable to the Government-owned company in question.
Therefore, any reference to Section 8 in my previous writings remains valid unless there was a further amendment to the Act of which I am not aware. The challenge has always been: How do we know when a piece of legislation was amended? For example, the Guyana Revenue Authority (GRA) Act refers to the President appointing the Commissioner-General. The relevant section was amended later to transfer the responsibility to the Minister of Finance. Fortunately, I was able to identify the amendment before putting together the article on the GRA.
It pleases the heart when a mistake is made, and it is acknowledged and corrected. We all make mistakes from time to time, and one has to be careful in not making any derogatory remarks or statements when a mistake is innocently made, as this constitutes an act of sinfulness.
Whether one is a regular church-goer or not, one needs to seek repentance when such remarks are made, especially in an attempt to destroy the credibility of the person making the mistake. This article represents my 173rd under this column, and this is only second mistake of which I am aware!
Submission of the Auditor General’s report
On 30 September, the statutory deadline, the Auditor General submitted to the Speaker of the National Assembly his report on the public accounts for 2014. He was at pains to point out that for a number of years he has met the deadline. However, one has to be careful not to sacrifice quality in preference to timeliness in order to win kudos. The previous Chairman of the Public Accounts Committee (PAC) and other knowledgeable persons have in the past commented on the quality of previous reports. Whether a comprehensive audit has been carried out or not, the public will not know, and one has to be guarded against “cherry-picking” for the purpose of making sensational headlines. This must be avoided at all costs.
The report was submitted at a time when Parliament was in recess, and it was not until last Thursday that it was laid in the Assembly. During my tenure, I would try my best to take advantage to use the intervening period to improve the quality of my report. Where I was not satisfied that enough work was done to justify the findings and conclusions, or if there were gaps in coverage, I would request that additional work be performed. I would also personally be involved in the writing of the report, the last of which was in respect of 2003 issued on 31 December 2004.
The Auditor General’s report for 2013 was presented to the Speaker on 30 September 2014 but never found its way to the National Assembly until 25 June 2015 because of the prorogation and dissolution of Parliament and the holding of elections of 11 May 2015. In anticipation for such a circumstance, the draft Audit Act that I was instrumental in putting together had contained a clause to the effect that if the Auditor General’s report is not presented to the Assembly within 31 days and hence made available to the public, the Auditor General is obliged to release the report to the public. However, this clause never made its way to the final legislation. How unfortunate!
Length of the report
The PAC in the past has commented on the length of the Auditor General’s report which made it tedious and time-consuming to examine, especially when Heads of Budget Agencies were required to give evidence before the PAC. The 2014 report is 303 pages in length, compared with my last report which had 143 pages. The problem appears to be the tendency of reporting on every head, line item and subhead of expenditure (in the case of capital expenditure) whether the results represent a finding or not. When public accountability was restored in 1992, I had found it necessary to adopt this approach to assist legislators and the public at large to understand how the public resources at the disposal of the Executive have been expended.
Given the passage of time and smarting from my experience at the United Nations during the period August 2002-August 2004, I decided to change reporting approach to one of exception reporting, and as a result, the length of the Auditor General’s report for 2003 was cut by half. Regrettably, upon demitting office in December 2004, full reporting was restored. It is relevant to note that the last report of the PAC was in respect of 2009, and in an attempt to bring its work up-to-date, a combined examination of 2010-2011 place took. It therefore means that the PAC would have been four years in arrears in terms of reporting on its examination of the public accounts, using the Auditor General’s report as a convenient reference point.
Auditor General’s opinion on the public accounts
The Auditor General is the external auditor of the public sector and like all external auditors, he is required to express an opinion on the fair presentation of the financial statements submitted to him for audit, including whether they are free of material misstatement due to fraud or error. In the performance of their audits, external auditors follow the International Standards on Auditing. As a member of the International Organisation of Supreme Audit Institutions (INTOSAI), the Auditor General is also required to follow auditing standards promulgated by that body.
There are 12 sets of statements that constitute the public accounts, none of which was given an unqualified opinion i.e. “clean bill of health”. In fact, eight statements were qualified because of the observations contained in the relevant sections of the report. A qualified opinion is normally given if there is a limitation in scope or the external auditor has certain reservations, both of which have a material effect of the financial statements in question. When this happens, the external auditor would state that except for those matters giving rise to the limitation in scope/reservations, the financial statements present fairly in all material respects the results of operations or the financial position of the entity. The Auditor General uses the words “properly presents” instead of “fairly presents” in recognition of the fact that the financial statements of the Government are presented on a cash basis.
In several of my articles, I have bemoaned the fact that our financial management systems were inherited from Colonial times with little or no modifications over the years.
Several countries as well as international organisations have found it necessary to move away from the cash-based system of accounting to one based on accrual accounting. This goes beyond recognising revenue and expenditure when cash is received or is paid out. Accrual accounting recognizes in the entity’s accounts all indebtedness to it as well as all of its liabilities, and there is a full and complete balance sheet showing all assets and liabilities and how they are financed. In relation to the latter, our balance sheet only shows current assets and liabilities and is restricted to cash. Inventories held at the end of the year are not included. There is also no reporting of non-current assets, such as land, buildings, machinery/equipment and motor vehicles.
The Government of Guyana has committed itself to the introduction of International Public Sector Accounting Standards (IPSAS) which is likely to see the fruition of the adoption of accrual accounting or a modified version of it as part of a transition towards full accrual accounting. This column wishes to urge the speedy implementation of IPSAS.
Continuing on with regard to the Auditor General’s opinion on the public accounts, the remaining four statements have been given disclaimers of opinion, meaning that the issues raised were of such a fundamental nature that the Auditor General has been unable to express an opinion on them. The statements are: (a) statement of contingent liabilities; (b) current assets and liabilities of the Government; (c) financial reports of the Deposits Fund; and (d) schedule of Government guarantees.
Since the restoration of financial reporting in 1992, the Auditor General has been issuing these types of opinion every year, yet little or no attempt has been made over the last 23 years to address the issues that give rise to them. We take pride in extolling that we have up-to-date audited accounts of the country but we fail to reflect on the quality of these accounts, as reflected in the Auditor General’s opinions on them; and to take appropriate measures to improve on the quality. In the private sector, the slightest qualification from the external auditors may very well result in a shake-up the management structure of the entity.
Is it any wonder that the Auditor General’s findings keep repeating themselves year after year? These include overpayments to contractors as well as delays and sub-standard works executed; outstanding deliveries of goods paid for; failure to clear advance payments for the supply of goods/services; abuse in the use of the Contingencies Fund; overdraft on the Consolidated Fund and other bank accounts; failure to pay over unspent balances to the Consolidated Fund; and inadequate internal controls.
Next week, we will continue our discussion of the Auditor General’s report for 2014.
