Introduction
I extend sincere apologies to readers for the unavoidable non-appearance of this column last week. To help you to pick up from where the column left off two weeks ago, let us recap the essential features of the recent reports on the government’s financial statements which have been the focus of this series. Over the past few years the reports have mainly repeated prior years’ problems which continue from year to year. In fact, more than half the issues raised in 2008 were in respect of such occurrences. Another feature is the imbalance in the attention paid to issues of minor importance at the expense of really critical matters.
In the previous instalment we noted how the Audit Office spent more time discussing Gecom and its expired Baygon than was spent on the Office of the President, the Ministry of Finance and the Office of the Prime Minister combined. And reproducing all the minute details of the results of an investigation in Region 4 involving the procurement of such items as Christmas decorations for $160,500 and refreshments for $159,180; and how the Audit Office was diverted from reporting on the 2005 Flood accounts and the 2007 World Cup accounts which are its constitutional duty, to being summoned to address Cricket Board issues which are none of its business.
Exceptions
There are some matters which never seem to attract attention. They include the absence of any proper accounting by the Office of the President of moneys paid to and spent by that Office; the creative accounting for overseas travel because such expenditure comes from disparate sources; the employment of persons in one entity such as the “Letter Writing Unit” who are paid by another entity; the absence of line items for some expenditure such as Cabinet Outreach that is consequently not determinable; and the abuse of the system of contract employees which in many cases account for a huge percentage of the persons on the payroll of ministries and departments. It used to be the case where salaries were a fixed cost based on approved staff establishment. Now it is based on the whims and fancy of those who have political control of the ministries and departments.
The Lotto Funds continue to be abused and no doubt used to finance some of the things being carried out from the Office of the President on behalf of the government. Money will still be readily available to dish out under discretionary programmes such as the President’s Youth Initiative without a paper trail to anyone, including certain favoured sports or to buy support from certain communities. One hopes in vain for the Audit Office as the nation’s watchdog to help it stop the abuses.
More than a contradiction
The Audit Office has simply ignored the goings-on at the pool of new unaccounted funds at the government owned and controlled NICIL. With the Lotto not providing sufficient funds, NICIL is now the vehicle of convenience to do – outside the purview of the Auditor Office – odd jobs of road building, contract awarding and now hotel company incorporator. While the deputy CEO of NICIL Ms Marcia Nadir-Sharma was prepared to assail Robert Badal of Guyana Stockfeeds Ltd about governance at Stockfeeds, she comfortably holds the office of Corporate Secretary of NICIL, a company that does not file an annual return under the Companies Act or has held an annual general meeting for around two decades. These governance and legal abominations are not considered fit for consideration by the Audit Office.
It would be paying a compliment to call the Audit Report a contradiction. It is much worse. Yet, the requirement of the Audit Act for that Office to be audited annually has not been met, a fault that has to be placed at the doorstep of the Public Accounts Committee rather than that of the Audit Office. Nor has the Audit Office ever met its obligation under the Investment Act, 2004 to carry out annually a process audit of the incentives granted by the government under section 2 of the Income Tax (In Aid of Industry) Act and to report on this to the National Assembly within six months after the end of each year. It failed to do so even when information comes to its attention as was the case of the unlawful concessions granted to the Ramroop group by the President’s Cabinet under the same law.
Occasionally some matters of interest arise that force a more than perfunctory effort by the Audit Office. An example was the mystery fire at the Ministry of Health, one of the very bad and serial offenders when it comes to public accountability.
Another is when the Office is forced to take up some issue that had already reached the press, such as the misappropriation of revenue at the GRA in 2008 or the wildlife scam when dolphins and anteaters were exported in 2003 from the now environmentally sensitive and conservation conscious Office of the President. The nature of the sums involved and the frequency may have changed but the parties and the players have not.
Staffing
While the report reflects an elementary level of auditing, there is no urgency to address the serious staff shortage in the Audit Office. Despite a vacancy of close to one hundred, the Office augmented its statutory audit capability by less than a dozen for the entire year, and predicts without any hint of embarrassment that it will have its full complement of staff nearly three years hence. This should be music to the ears of the government which is unlikely to want auditors, no matter how friendly, poring over the expense vouchers for spending abuses that accompany national elections in Guyana.
Latest information is that the only professionally qualified person in the Audit Office is the wife of the Finance Minister while the de jure head of the Audit Office has no capacity or hope of being confirmed in the position. The consequence is that several persons in line cannot be confirmed, and there is widespread frustration and low morale among staff.
Qualification and disclaimer
The consequent low technical standard of work reflected in the report explains why despite the egregious cases of abuse, improper accounting and “unauditability” of major transactions involving the Contingencies Fund and the Consolidated Fund, the report on those funds is a mere qualification rather than an outright denial of an opinion, another word for which is a disclaimer.
In the case of the latter, the auditor is effectively saying that s/he really cannot be sure about these accounts, or that a transaction or group of transactions is of a sufficiently significant value that they bring into question the whole set of accounts.
To put this into perspective, the report actually issues such a disclaimer in respect of the Deposit Fund and the Schedule of Government Guarantees to which it devotes in the body of the report, five and two paragraphs respectively!
On the other hand, the report considers less significant and not warranting a similar report the Consolidated Fund and the Contingencies Fund which it states “continued to be abused.” More than a third ($1.573 billion) of the funds drawn out of the Contingencies Fund in 2008, much of it in breach of the Fiscal Management and Accountability Act, had not been cleared at the end of the year. Very conveniently, the Minister of Finance was able to clear these with a stroke of the parliamentary pen in January 2009. By the time of the 2009 audit these would have been lost in the system.
Guyana Book of Records
And here are some of the identified deficiencies with the Consolidated Fund which did not too excite the authors of the report:
$7.868 billion held in special accounts; $10.980 billion held in the bank accounts of “Other” ministries and departments; forty-two inactive accounts with overdrawn balances of $681 million; and the overdrawing of the old Consolidated Fund bank account by $46.866 billion at December 31, 2008. This is on top of the several amounts not deposited into the Consolidated Fund but unlawfully spent by the Office of the President and NICIL, and the failure to account for US$679,756 (G$140.8 million) disbursed by the UNDP to “various Government agencies.” It is presumed that the UNDP does not care too much whether its money is properly accounted for.
Concerning the Deposit Fund, readers might be interested to know that Audit Office could not establish the accuracy of $1.388 billion shown as deposits held for investments on behalf of the Sugar Industry Labour Welfare Fund, the Sugar Industry Rehabilitation Fund and the Sugar Industry Stabilisation Fund. Now if there are investments there should be income, but the report fails to say anything about the income accruing to these entities. It tells us however that the Welfare Fund was last audited in 1999 while the other two entities were last audited thirty years ago. That would qualify them for entry in the Guyana Book of Records with the National Science Research Council (1982) providing stiff competition! The absurdity goes on. The unnamed head of the responsible Budget Agency tells the Auditor General “that this is information to be disclosed in the entity’s submission to the Public Accounts [sic]” to which the Audit Office recommends that the head of the budget agency “take urgent steps to have these entities bring their accounts up to date.” A conversation between the auditor and his client can hardly become more farcical.
Welfare and pension schemes not being audited
I compared the 2003 report with that of 2008 and noted, among other things, that despite a critical comment in the 2003 report about delays in the audit of some of the entities under the Office of the President (OP), the Guyana Energy Agency, the Institute of Science and Technology and the Guyana Lands and Surveys Commission were only able to conclude one year’s audit in the five years since 2003. Other OP-controlled entities with audits several years in arrears are GINA (2003) and the Integrity Commission and GO-Invest (both 2005).
Other entities with audits several years in arrears include the Sugar Industry and Labour Welfare Fund – presumably not the same as the Sugar Industry Welfare Fund mentioned in connection with the Deposit Fund – 1997; University of Guyana Pension Scheme (1994); Guyana Relief Council (1994); President’s College (2001); and the National Sports Commission (2004) and the National Museum (1996) which come under the Ministry of Culture and Sports.
Page 220 tells us that the last audit completed for the Guyana Post Office (sic) was for 1999, eleven years ago as a result of which it received a disclaimer of an opinion. The Chairman of this entity is the Head of the Ethnic Relations Commission Bishop Juan Edghill.
Next week we will look at how the government has been dealing with issues raised in the audit reports.