In our article of 5 December 2016, we had indicated that we would discuss the Report of the Public Accounts Committee (PAC) on the country’s accounts for the years 2010-2011. This report was laid in the National Assembly on the same day that the Minister of Finance tabled the 2017 Estimates of Revenue and Expenditure.
It therefore did not attract much attention, as it was overshadowed by events that took place in the Assembly during the last two weeks – the general debate on the budget, followed by the detailed consideration of Estimates.
Given our experience in the past, one does not expect any discussion of the PAC report in the Assembly. This is rather unfortunate, considering that the PAC examination of the public accounts and reporting to the Assembly is an integral part and an important stage in the public accountability cycle.
This cycle begins with the approval of the Estimates, followed by: (a) the execution of the budget; (b) mid-year reporting; (c) annual financial reporting; (d) external review by the Audit Office and reporting to the Legislature; (d) examination by the PAC and reporting back to the Legislature; and (e) the tabling of the Treasury Memorandum in the Assembly setting out what actions the Government has taken or intends to take in relation to the findings and recommendations of the PAC.
The Minister of Finance and his staff at the Ministry expend considerable time and effort spanning a period of at least six months to craft the National Budget and present it to the Assembly for consideration.
Legislators too, spend significant amounts of time reviewing the budget proposals and engaging in a general debate and detailed consideration of it for approximately one month before the Budget is approved.
At the end of the fiscal year, the results of the execution of the Budget are reflected in the report of the Auditor General which is referred to the PAC for detailed examination.
It follows that Legislators ought to pay keen attention to the findings and recommendations of the PAC and the response of the Government via the Treasury Memorandum.
Sadly, this aspect of the accountability process remains very much lacking, and successive National Budgets are crafted without any reference to the independent verification of past performance.
Even the quality of that verification is given lightweight treatment, considering that over the years the Auditor General has had serious reservations about the quality of financial reporting.
For example, in his 2015 report, the Auditor General has issued qualified opinions on seven of the ten statements constituting the Public Accounts because of reservations of a material nature as contained in the relevant sections of his report.
In respect of the remaining three statements, the Auditor General had cause to disclaim his opinion on them because of reservations of a fundamental nature.
None of these concerns to date have been addressed, although we take pride in the knowledge that public accountability has been restored with effect from 1992 and there is now timely financial reporting and audit.
But, are we indifferent to the quality of that reporting, and if not, should we not take urgent measures to bring about improvements and restore our state of accountability to one of respectability? In the private sector, the slightest qualification on the accounts of an organization by the external auditors is likely to result in a shake-up of its management structure.
Lack of timeliness in the presentation of the PAC reports
With the presentation of the Auditor General’s report for 2015 to the Assembly, the PAC is now four years in arrears in its examination of the Public Accounts. In principle, the public accountability cycle for any one fiscal year should end at the time the Estimates for the next fiscal year are being considered. This will allow Legislators to have an important source of reference for consideration of the Estimates.
The following table shows the trend in reporting by the PAC of the Public Accounts over the years:
Year Date laid in the National Assembly Year
Date laid in the National Assembly
1992 September 1995 2002-2003 July 2008
1993 -do- 2004-2005 February 2010
1994 March 2000 2006 November 2010
1995-1998 October 2000 2007-2008 June 2011
1999 March 2004 2009 December 2012
2000-2001 February 2006 2010-2011 November 2016
While it is somewhat understandable that the reports of the PAC for 1992 and 1993 were issued in September 1995, significant delays were experienced from 1994 onwards, with the PAC report for that year being issued six years later. To address the backlog, the PAC was forced to take the unprecedented action of considering several years together: 1995-1998, 2000-2001, 2002-2003, 2004-2005, 2007-2008 and 2010-2011. Despite these efforts, it is still to deliberate on the Public Accounts for the years 2012, 2013, 2014 and 2015. By the time the PAC gets its act together, the findings and recommendations of the Auditor General would have been overtaken by time. Given the struggles we had to endure, indeed the battles that we had to fight, to restore public accountability after a 10-year gap, we must not only guard against any slippages but also continuously strive to effect improvements in our system of public accountability.
Since 1992, the PAC has examined and reported on the Public Accounts in respect of 20 years, that is, it took on average 15 months for the examination of every year’s accounts. At this rate, it will take another five years before the Committee completes its examination of the four years of backlogged accounts by which time another five years will be added to PAC’s backlogged work. This Column has suggested that the PAC examine the 2015 accounts first in order to create the desired effect, bearing in mind that the passage of time erodes the effectiveness of financial reporting. After this is achieved, the backlogged accounts could be dealt with.
The other disappointment is that the PAC does not examine the accounts of public corporations, other agencies in which controlling interest vests in the State, and statutory bodies. In all probability, these entities are in need of greater scrutiny by the Legislature, as the results of the recently completed forensic audits will bear out. In my recent discussion with the PAC Chairman, I raised this matter with
him, and he is amenable to having these accounts examined. The task is, however, enormous but a necessary one and therefore the PAC will have to seriously consider “re-engineering” its approach to the examination of the Public Accounts. There is a model that the United Nations uses which is worthy of serious consideration. It involves having a committee of experts examining these accounts first and submitting the results to the PAC. In this way, there will be no need for the PAC to carry out any detailed examination as it will rely on the work of the committee.
Findings and recommendations of the PAC
The PAC commented that some former Heads of budget agency who were invited to appear before the Committee, did not do so, because they had left the Public Service and might have emigrated. This is a significant setback for the PAC’s work and reinforces the need for more timely examination of the Public Accounts. Other key observations highlighted in the report include
– Accounting officers and engineering staff signing off on incomplete works;
– Overpayments to contractors and suppliers;
– Absence of performance-based gratuity as a means of promoting efficiency;
– Recycling of inefficient accounting officers from one agency to another;
– Performance bonds seldom being used as a guarantee for satisfactory performance by suppliers and contractors;
– Lack of clear guidance on the granting of mobilization advances;
– Undue delays in clearing cheque orders (advanced payments);
– Numerous unresolved prior year matters;
– Audit Office not adequately equipped with engineering skills; and
– Size of the Auditor General’s report and variation in significance of points raised.
The PAC’s comments on the apparent abuse in the use of the Contingencies Fund are of interest:
Some Members of the Committee challenged the term “continual abuse” used by the Auditor General; however other Members of the Committee were not satisfied with the explanation proffered by the Finance Secretary, in trying to justify the approval of advances from the Contingencies Fund. The Auditor General, however, maintained that some of the projects should have been included in the annual expenditure of the agencies; hence his view that the Contingencies Fund was continually being abused.
The above comments of the PAC are somewhat in variance with those contained in the PAC report of 2000-2001:
The abuse of the Contingencies Fund continued unabated despite comment to this effect in previous PAC reports. As required by Section 25 of the FAA Act, this fund should only be used if the proposed expenditure is (a) unforeseen (b) urgent (c) no other provision exists and (d) the expenditure cannot be postponed without injury to the public interest until adequate provision is made by the National Assembly. It follows that the Fund should not be used to cover routine expenditure. Due process must be followed and supplementary appropriations sought where there are inadequate allocations.
In its conclusion of its report on the Public Accounts for 2010-2011, the PAC stated that the fact that no Accounting Officer is on record as being sanctioned for inefficiency, fraud or dereliction of duty, has allowed a culture to grow, as evidenced by the frivolous responses from Accounting Officers in relation to concerns about financial irregularities under their watch. The PAC emphasized the need to revisit the training and selection methods adopted by the Government and to apply weighted sanctions against errant Accounting Officers as a means of reducing leakages.
