There were two recent news items that are worthy of commentary from this Column since they have implications for the state of public procurement. The first relates to the acquisition of a “riot water cannon truck” in 2010 to be used for crowd control during the 2011 General and Regional Elections.
On two separate occasions the equipment was found to be ineffective and unfit for the purpose for which it was acquired, resulting in the forensic auditors concluding that the acquisition did not represent value for money. The audit report is to be found on the website of the Ministry of Finance.
The former Minister of Affairs contended that he had consulted the Commissioner of Police who had advised on the purchase. Unfortunately, the latter is no longer with us, but the records indicating what advice was given should be available. Among the other issues of concern are: the merit in the decision to acquire a used vehicle, as opposed to a new one; the selection of the supplier; the terms of payment; the testing of the vehicle immediately after it arrived in the country and before the warranty period expired – all of which appeared not to have been given serious consideration.
Since the acquisition represents a loss of public funds, the Fiscal Management and Accountability Act provides for sanctions to be imposed on the responsible officers. Section 49 (1) of the Act states that if a loss of public moneys should occur and, at the time of that loss, a Minister or official has caused or contributed to that loss through misconduct or through deliberate or serious disregard of reasonable standards of care, that Minister or official shall be personally liable to the Government for the amount of the loss.
The other news item relates to Cabinet’s approval of the acquisition of $420 million worth of urea fertiliser without any form of tendering. The Guyana Rice Development Board (GRDB) is handling the purchase but was yet to issue a promised statement on the matter. As a statutory body, the GRDB is expected to have its own procurement rules that mirror those of the Procurement Act. The acquisition of fertilisers will under normal circumstances require public tendering, and therefore we await an explanation from the GRDB before commenting further on the matter.
In last week’s article, we highlighted the procedures for the issuing of practice certificates from the Institute of Chartered Accountants of Guyana (ICAG) and the difficulties some accountants working in industry and government face after demitting office. We stated that of the 80 members registered with the ICAG, only about 20 are in possession of practice certificates. In reality, there are less than a dozen chartered accounting firms in existence since the larger firms have more than one chartered accountant holding practice certificates in their employ. We also noted the statement of the ICAG that its membership has been affected by migration. While this may be true, there are hundreds of accountants who would have met the requirements for membership but who have chosen not to do so.
Compare the Guyana situation with what prevails in other jurisdictions in the Caribbean. The Institute of Chartered Accountants of Trinidad and Tobago (ICATT) has 1,391 registered members, and there are 95 chartered accounting firms, some of which having as many as eleven Chartered Accountants as partners. In Barbados, the Institute of Chartered Accountants of Barbados (ICAB) has 887 registered members of which 171 hold practice certificates. The Institute of Chartered Accountants of Jamaica (ICAJ) has a larger membership with 1,971 registered members, of which 185 are Chartered Accountants in public practice.
Unlike Guyana, Trinidad and Tobago, and Barbados which have their own Institute of Chartered Accountants’ Acts, Jamaica’s accounting profession is regulated by the Public Accountancy Act.
Granting of practice certificates in
Guyana
In Guyana, a practicing certificate is issued to any member who, after becoming a member of the Institute, or of any registered body, or of any body with objects similar to those of the Institute, has served continuously for at least two years in the office or offices of one or more practising members of the Institute or of any registered body or of such other body.
As a transitional arrangement, the Minister may, after consultation with the Institute, authorise by instrument in writing, any person to be appointed as an auditor of companies if that person in the opinion of the Minister is suitably qualified for such an appointment: (a) by reason of his/her knowledge and experience; and (b) was in practice in Guyana as an auditor at the commencement of the Act. However, an application for such an authorisation must be made to the Minister within 12 months of the commencement of the Act.
Granting of practice certificates
in Trinidad and Tobago
The requirements for a practice certificate are similar to those of Guyana. However, the Council of the ICATT has discretion to approve as Supervising Principal such other practising member of a Registered Society or such Society with objects similar to ICATT’S as Council may from time to time approve in regulations.
Granting of practice certificates in
Barbados
The general requirement for the issue of practice certificate in Barbados is 30 months’ experience in the office of a Chartered Accountant in public practice. However, the Council of the ICAB has absolute discretion to permit any member to occasionally engage in public practice where his/her fees for the work undertaken do not exceed a certain amount. In this case, a temporary practice certificate is issued.
There are two classes of practice certificates: general and specialty. Where a general practice certificate is issued, there is no limitation. In the case of a specialty practice certificate, there is restriction to one or more fields in areas of accountancy. There is also provision for a member to engage in public practice in association with a non-member, whether by way of partnership or as a director, shareholder or member of a body corporate of which the non-member is also a director, shareholder or member, or by any other means.
Granting of practice certificates in
Jamaica
The requirement for a practice certificate in Jamaica is 30 months’ practical experience in the office of a Chartered Accountant in public practice. In addition, as of January 1, 2002, members applying for a practising certificate must have passed Paper 3.1 – Audit and Assurance Services, of Part 3 of the ICAJ/ACCA joint examination scheme, or an equivalent paper.
Granting of practice certificates in the
United States
In the United States, the general requirement for a licence to practice is at least two years of public accounting experience. The licence is granted by the State Board of Accountancy and not the Association of Certified Public Accountants (AICPA). Many States, however, accept non-public accounting experience, such as employment in industry and government, but the experience requirements are usually higher. There are two systems in place: the one-tier system which grants a licence when both the qualification and experience requirements are fully met; and the two-tier system whereby a licence is granted upon meeting the qualification requirements.
The way forward for Guyana
The ICAG needs to put in place mechanisms that will provide an incentive for professionally qualified accountants who serve in industry and government to become members. The annual subscription fee is $25,000, and unless the employer meets this cost, most of these accountants may not wish to join the Institute since there are no discernable benefits to be derived.
In an effort to stem the flow of migration of professionally qualified accountants, the Institute needs to revisit the criteria for the grant of practice certificates to provide its Council with some degree of flexibility to issue such certificates to persons who, in its opinion, are qualified and experienced enough to serve as Chartered Accountants in public practice. This will also provide accountants living abroad with an incentive to return and serve. In addition, it will afford an opportunity for many of our distinguished accountants of yesteryear who have retired from employment in industry and government and who are willing and able to share knowledge, skills and expertise.
From its very inception, the ICAG has been under the control of Chartered Accountants in public practice. While it is constrained in the grant of practice certificates, the ICAG Act has not been amended since it was passed some 25 years ago, despite enormous changes in accounting/auditing practice over these years. Perhaps, it may be appropriate to adopt the United States model by having an independent body responsible for the issuing of practice certificates.
On a final note, in 1993 the Financial Administration and Audit Act was amended to preclude the Audit Office from engaging Chartered Accountants in public practice to undertake audits on its behalf for more than six consecutive years. In addition, they are prohibited from rendering consulting, taxation or other related services for entities for which they serve as auditors. In the light of the Enron and WorldCom accounting scandals, the United States has found it necessary to make appropriate legislative amendments to strengthen the independence of the external audit function as it relates to publicly traded companies by prohibiting external auditors from rendering non-audit services. At the same time, the role of the internal auditors has been strengthened. Internal auditors are now required to express an opinion on the quality and effectiveness of the internal control systems in place. It is time that Guyana wakes up to this new reality before it is too late!
