Last week’s article completed our “stock-take” on where we stood in terms of public financial management. We gave a favourable assessment of the seven months’ efforts by the new Administration on this front, considering the state of affairs it inherited following the 11 May national and regional elections, and the efforts it has made so far. Two areas have, however, shown little or no progress: (a) the establishment of the Procurement Commission; and (b) ensuring the effective functioning of the Integrity Commission. Last month, the Parliament Office had publicly advertised for interested persons/organisations to nominate individuals to serve on the Commission. However, the response was below expectation, as few names were put forward. It is now left to the Public Accounts Committee (PAC) to conclude the exercise by identifying five persons who in its opinion are best suited to serve on the Commission. The names of these individuals have to be presented to the National Assembly for ratification by two-thirds majority after which the President makes the appointment.
Guyana is a signatory to the Inter-American Convention against Corruption and the United Nations Convention against Corruption. Both conventions require us to take concrete measures to minimize the extent to which corruption is perceived to exist among politicians and senior bureaucrats. This is done through, among others, annual declarations of assets and liabilities to an independent body comprising technically and professionally competent persons. These persons scrutinize the returns and probe any inconsistencies with observable lifestyles as well as any unexplained increase in wealth. In Guyana, that body is the Integrity Commission whose performance over the years has been a major source of disappointment. The first Commissioners, appointed in 1999, had lacked the desired technical/professional competence, and although the Integrity Commission Act provides for the engagement of persons with such skills and competence to assist the Commission, no action was taken in this regard. To compound matters, in 2006 Bishop George resigned as Chairman. Since then there has been no replacement, and no meetings were held for want of a quorum. Meanwhile, the returns of those who have chosen to make annual financial declarations remain substantially unattended and are left to gather dust.
Scrutiny of the budgets of constitutional agencies
The Assembly recently approved of the 2016 budget for 16 constitutional agencies: Audit Office of Guyana; Parliament Office; Director of Public Prosecutions; Leader of the Opposition; Ethnic Relations Commission; Guyana Elections Commission; Human Rights Commission; Indigenous Peoples Commission; Judicial Service Commission; Office of the Ombudsman; Rights of the Child Commission; Public/Police Service Commission; Public Service Appellate Tribunal; Supreme Court of Judicature; Teaching Service Commission; and Women and Gender Equality Commission. The approval took place ahead of the National Budget which is expected to be presented to the Assembly in a few days’ time.
This was the first time that the Assembly considered the budgets of constitutional agencies separately, necessitated by legislation that was recently passed to provide for their financial autonomy. These agencies are independent of the Executive in terms of their functioning, and therefore it would be inappropriate for the latter to determine the level of financial resources needed to effectively discharge their responsibilities. For example, Article 223 of the Constitution provides for the Auditor General, in the exercise of his functions, not to be subject to direction or control of any person or authority.
Financial independence, however, does not imply that constitutional agencies should be allowed to determine their budgets without reference to the considerations that are taken into account in the preparation of the National Budget. In particular, the proposed overall expenditure in the National Budget must of necessity take in account: (a) revenues that are expected to be garnered and collected; (b) the extent to which there is likely to be a budget deficit; and (c) if there is to be a deficit, the quantum of such deficit. If the cumulative expenditure proposals exceed the overall ceiling of expenditure set, then all budget and constitutional agencies will have to revisit their proposals, with appropriate guidance from the Ministry of Finance. Of course, the National Budget will have to reflect the priorities of the Government.
It is against this background that one must view Minister Jordan’s decision to propose reduced budgets for the Audit Office and the other constitutional agencies. It was not an attempt to starve these agencies of financial resources. Rather, it is one of distributing limited resources in the most equitable manner, having regard to the quantum of funds earmarked as well as the Government’s priorities for the fiscal year in question. This principle is applied to the proposed budgets of all Ministries, Departments and Regions, except that negotiations with Budget Agencies take place at the level of the Ministry of Finance prior to the finalization of the National Budget and its presentation in the Assembly. However, with the passing of legislation to give financial autonomy to constitutional agencies, the above practice ceases to apply to these agencies. As a result, an alternative mechanism had to be found to deal with their budgets. It is unprecedented territory since previously only the emoluments of holders of constitutional offices were voted on by the Assembly. The situation is now different in that all constitutional agencies are no longer Budget Agencies, and are allocated block sums to be used at the discretion of these agencies in the discharge of their mandates.
Procedures for the approval of the Audit Office’s budget
The Audit Act of 2004 prescribes the procedures to be followed in relation to the Audit Office’s budgetary allocations. Section 40 (1) states that “the expenditure of the Audit Office shall, in accordance with Article 222A(a) of the Constitution, be financed as a direct charge on the Consolidated Fund, determined as a lump sum by way of an annual subvention approved by the National Assembly after review and approval of the Audit Office’s budget as a part of the process of the determination of the national budget”. In addition, Section 40 (2) states that for the removal of doubt, at an appropriate time within the timetable established by the Minister for the preparation of the annual budget proposal, the following procedures must be followed:
(a) The Auditor General shall prepare, in accordance with the rules, procedures and guidelines set out in the Budget Circular, and submit to the PAC a proposed budget for the Audit Office, including work plans and programmes;
The PAC shall review the budget submission and provide comments for consideration by the Auditor General;
After considering comments from the PAC, the Auditor General shall revise the budget submission and re-submit it to the PAC for endorsement;
The PAC shall forward the revised budget submission, together with its comments thereon, to the Minister for consideration and inclusion in the annual budget proposal; and
The Minister shall include in the annual budget proposal a subvention for the Audit Office within the allocations of the Parliament Office to be voted on by the National Assembly.
Item (e) is no longer applicable because of the recent the amendment to the Fiscal Management and Accountability (FMA) Act.
The expenditures of all constitutional agencies are now a direct charge on the Consolidated Fund and are therefore not subject to voting by the Assembly. However, there must be some form of scrutiny of their proposed budgets by a sub-committee of the Assembly to ensure, among others, alignment with and priorities of the National Budget, having regard to the quantum of funds available. In the case of the Audit Office, those procedures are embedded in the Act, as outlined above. It is the PAC that has to approve of the Audit Office’s budget, and to the extent that the above procedures are followed, the Assembly ought not to engage in any debate and approval of that office’s budget. That this has happened represents an anomaly, and it is not clear whether the above procedures were fully followed.
As regards the other constitutional agencies, there is no enabling legislation that requires a sub-committee of the Assembly to review and approve of their budgets. In the circumstances, it would be appropriate for the PAC to perform that role. One hopes that in the next budget cycle, there will be no debate and approval in the Assembly as they relate to constitutional agencies. Rather, any such debate and approval should be confined to the PAC whose membership mirrors that of the Assembly as a whole. The question as to who in the Assembly should defend the Audit Office’s budget, or any other constitutional agency for that matter, will also no longer arise.
Financial reporting and audit of constitutional agencies
Since constitutional agencies are no longer Budget Agencies, they are not required to prepare appropriation accounts in the same way that a Ministry, Department or Region does. In the case of the Audit Office, the PAC appoints an independent auditor to audit and report on the financial statements, accounts, and other information relating to the performance of the Audit Office. However, there is no such provision as it relates to the other constitutional agencies.
While it is understandable that the Auditor General cannot audit the accounts of his office, one would expect that he would do so for the other constitutional agencies. In this regard, with effect from 2016, these agencies in collaboration with the Auditor General must determine the form and content of financial reporting. The Auditor General will in turn decide whether these audited accounts, along with his reports on them, will be tabled in the Assembly as stand-alone reports or whether they would be incorporated in a separate section in his report to Parliament.
