Last week, we began a discussion of the Auditor General’s 2014 report which was laid in the National Assembly two Thursdays ago. It was referred to the Public Accounts Committee (PAC) for detailed consideration. However, the PAC is yet to meet under the 11th Parliament and has its work cut out since its last report was in respect of 2009. Because of the backlogged situation, the PAC had to combine its examination for the years 2010 and 2011. It is not clear what stage the PAC is at and how soon the report will be finalized. With 2010 and 2011 out of the way, the PAC still has to carry out its examination for the years 2012, 2013 and 2014. That’s a tall order.
After finalizing its examination of the 2010-2011 public accounts, the PAC may wish to consider examining the most recent audited public accounts i.e. 2014, since timeliness is indispensable to any form of accountability and more so, public accountability. The PAC could allocate a month for continuous examination of these accounts before proceeding with the backlogged years. Given the situation we are in, if the PAC examines the public accounts in chronological order, the problem with the backlogged years will not be resolved because each year that elapses is a year that is added to the backlogged situation.
Under the Westminster system of government which we inherited, it has been the convention for the PAC to be chaired by a member of the political Opposition, usually a former senior Minister of the Government. Media reports indicate that former President Bharrat Jagdeo and current Opposition Leader, will be chairing the PAC. If this is true, it will be an unprecedented occurrence.
That apart, when there is a change in government, this convention poses some degree of difficulty and requires a high degree of political maturity and putting the national interest ahead of narrow partisan interest. In this regard, the words of the late Sir Harold Wilson, one-time Chairman of the UK PAC (1959-1963) and former British Prime Minister, are a solemn reminder to the members of our new PAC in terms of how they should view their responsibilities:
The essential fact is that this Committee is a Committee of the House responsible to the House as a whole, and is not the battleground for party faction…I believe it is true to say that the authority of the Committee is greatly enhanced by its unanimous character and I hope the complete objectivity of its report. It is fair to say that many Honourable Members of both parties have made great endeavours and sometimes sacrificed personal views to ensure that this shall be so.
We also need to be reminded of our past experience. When the PAC began its examination of the 1992 public accounts, the Chairman took an extremely defensive position since the greater part of 1992 was under the Administration of which he was part. The Chairman sought to discredit my report and vigorously challenged my findings. Instead of Accounting Officers being asked to explain themselves, I was put on trial, so much so that I declined to attend further meetings of the PAC. In the following year when virtually the same findings were presented in my report, there was a complete reversal of the Chairman’s attitude towards my report, as the PAC reports for 1992 and 1993 would substantiate. I recall having stated that the extent of the remission of customs duty and other taxes was in the order of approximately 80% of the total current revenue. The Chairman took the position that: (a) I was challenging the authority of the Minister of Finance to grant fiscal concessions; (b) the granting of concessions was a matter of policy; and (c) it was not within my remit to review policy. Today, it is a requirement of the law that an assessment of the remission of revenues be done, though the current Auditor General is yet to get his act together to report on this important area.
Revisiting the Auditor General’s opinion on the public accounts
The 2014 public accounts did not include the Schedule of Issuance and Extinguishment of all Loans. This is a significant omission which should have been picked up by the Auditor General. At the end of 2013, this statement reflected a balance of $7.937 billion, of which the Guyana Power and Light alone accounted for $6.953 billion.
As indicated in last week’s column, none of the 12 statements comprising the public accounts was given a “clean bill of health”. Eight statements were qualified because of a limitation in scope and/or uncertainties of a material nature, while 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. However, little consideration appears to have been given in relation to the quantification of the discrepancies and/or deficiencies in terms of assessing materiality and their effect on the financial statements. It is not enough to state in the audit opinion that the accounts are qualified, or a disclaimer of opinion has been issued, because of the observations contained in the relevant sections of the report.
Receipts and Payments of the Consolidated Fund: The only comment that would have an impact on this statement was in relation to the valuation and accounting for gifts received by some Ministries. Even so, any omission would not have a material impact. One has to be careful in not trying to “copy and paste” was written in previous years, as each year has to be evaluated on its own merits and from a fresh perspective.
Expenditure from the Consolidated Fund compared with the Estimates: The Auditor General reported that five Ministries incurred expenditure totalling $1.119 billion in excess of what was approved by Parliament. This was due to the excess expenditure that the then Minister of Finance had caused to be incurred. In a previous article, I pointed out that the Minister erred in the interpretation of Article 218 (3) (b) which states that “If in respect of any financial year, it is found that any moneys have been expended for any purpose in excess of the amount appropriated for that purpose by the Appropriation Act or for the purpose for which no amount has been appropriated by that Act, …a statement of excess…shall be laid before the National Assembly…” The Minister had laid a statement of excess covering the above amount but the Assembly declined to approve of it because it had specifically disapproved of the proposed expenditure when the original Estimates were presented in the Assembly. The Court has since ruled that the Minister violated Article 218 (3) (b) by authorizing withdrawals from the Consolidated Fund without Parliamentary approval. It would be interesting to learn how the PAC will deal with this matter.
Statement of Statutory Expenditure: There was no adverse comment by the Auditor General in relation to this statement. Despite this, he issued a qualified opinion on this statement!
Receipts and Payments of the Contingencies Fund: The Auditor General referred to previous abuse of the use of the Contingencies Fund but has indicated that there was an improvement, resulting in only nine advances not meeting the criteria for the grant of advances from the Fund. He also stated that a total of 66 advances amounting to $3.240 billion covering the period 2011 to 2014 remained outstanding since the Assembly did not approve of the related Supplementary Estimates to clear these advances. It is unclear how this matter will be resolved. The Auditor General, however, did not indicate what impact these observations had on the balance of the Contingencies Fund nor was there any disclosure of the balance on this Fund.
Financial Reports of the Deposit Fund: The Auditor General has disclaimed his opinion on this statement because of a number of issues he has raised, mainly due to the gap in financial reporting for the period 1982 to 1995. A significant item relating to the type of deposits is an item labelled “Miscellaneous” with a balance of $4.937 billion for which no details were provided. Other deposits relate to the Dependants’ Pension Fund and four Sugar Industry Funds. In terms of advances given, the most significant items is in respect of the Guyana Gold Board which had an outstanding advance of $8.650 billion; and advances to statutory bodies amounting to $1.554 billion. These and other matters relating to the Deposit Fund need to be addressed urgently at the level of the Ministry of Finance.
Current Assets and Liabilities of the Government: The Auditor General’s two concerns are: the absence of reconciliation of a number of Government bank accounts; and a difference of $529 million when compared with the Public Debt Statement which the Ministry explained. Despite this, the Auditor General disclaimed his opinion of the statement of Current Assets and Liabilities of the Government!
Statement of the Public Debt: The only finding was that the Public Debt Register was not properly written up and could not be relied on. As a result, the Auditor General has issued a qualified opinion on the statement. However, it is not clear what alternative audit procedures were adopted in order to verify the amounts shown in the statement.
Statement of Contingent Liabilities: There were only two items in the Statement of Contingent Liabilities: amounts of US$46,934 and US$191,807 owed by Guyana Transport Services Ltd. and Guyana Telecommunications Corporations respectively to overseas agencies. Both of these corporations are no longer in existence, and the recommendation was that these liabilities be transferred to the Public Debt. Since no action was taken in relation to the recommendation, the Auditor General disclaimed his opinion on the statement. A more appropriate opinion would have been on based on a disagreement and not a disclaimer.
Statement of Government Guarantees: This statement covers the same two items shown in the Statement of Contingent Liabilities for which the Auditor General gave a disclaimer of opinion. The fact, however, remains that the Government had guaranteed the loans to the two entities involved, and therefore nothing is wrong with the statement.
Appropriation Accounts of Heads of Budget Agencies: The Auditor General has qualified his opinion on all the Appropriation Accounts of Ministries, Departments and Agencies because of his comments in the relevant sections of his report. However, a review of his comments, especially as regards smaller Ministries and Department, would suggest that not all the accounts should have been qualified. A notable example was Office of the Prime Minister for which there were no adverse comments.
Receipts and Disbursements by Heads of Budget Agencies: Except for the Guyana Revenue Authority and the Ministry of Finance, there were no comments in relation to collection of revenues and paying over of same to the Treasury. Despite this, the Auditor General qualified his opinion on the whole range of statements comprising Receipts and Disbursements by Budget Agencies.
