Introduction
When this series began several weeks ago – this is its fifth and final column, – its focus was a review of the report on the Public Accounts of Guyana, the ministries, departments and regions for 2008. It could not however ignore news about the work of the Public Accounts Committee (the PAC) or the acrimonious exchange between the current chairperson of the Public Accounts Committee and the Minister of Finance Dr. Ashni Singh.
One of the principal functions of the PAC is the oversight of the Audit Office and the review of that office’s annual reports: reports that are always late, are often incomplete and consistently raise more questions than answers. The Committee is one of, if not the only committee of the National Assembly that is chaired by the parliamentary opposition although the PPP/C has a majority on the Committee. Since 2006, five of its members are from the PPP/C, three from the PNCR and one from the AFC. Unfortunately, it is rare that all the opposition MPs attend the same meeting so the government almost invariably enjoys an overwhelming majority at the meetings.
Earlier this week the current chairperson of the Committee, Ms. Volda Lawrence found herself the object of the Finance Minister’s tongue-lashing after she was quoted in a report in the Kaieteur News complaining about the late tabling of the Treasury Memorandum on the reports for the years 2004 and 2005. Apparently the document had been lodged with the Parliament Office which Ms. Lawrence could, but did not verify. Recognising that this was one of the few occasions since his appointment on which the Ministry of Finance met the deadline for any of its parliamentary or statutory obligations, Dr. Ashni Singh went to town on the hapless Ms. Lawrence.
Backlog
Dr. Singh should not have been so harsh – in her capacity as chairperson of the PAC, Ms. Lawrence does no harm to the reputation of his Ministry and government for proper financial management. To be fair, she inherited a backlog problem and as we recall from last week, the PAC did not complete its review and issue its report on the 2002 and 2003 accounts until January 2008. Forget for a moment that it took another ten months before the Ministry of Finance issued its Treasury Memorandum. But timeliness is not its only problem for the PAC. It is evident from its own reports and the responses it evinces from the Finance Secretary that the effectiveness of the PAC and the quality of its reports are not what they used to be.
Not one of the nine members of the Committee has any training or experience in accounting or auditing and incredibly its three advisers are persons whose work it oversees – the Auditor General [ag.], (Mr. Deodat Sharma), the Finance Secretary (Mr. Neermal Rekha), and the Accountant General [ag.] Mr. George Abrams.
Standard governance procedures permit committees access to independent professional advice such as attorneys at law, engineers and accountants. But at the highest level in the land, that is not considered a good idea. For example, there is no evidence that the PAC ever thought of approaching the Ministry of Legal Affairs on any legal issues such as the practice with regard to presidential control of the lottery funds or the non-establishment of the Public Procurement Commission.
Meaningful advice
To the extent that the Committee notes the recurring practice about the lottery funds, it accepts the weak statement from the Ministry of Finance that it is awaiting a policy decision on the matter. Who from, the Minister of Finance or Cabinet, and why does it take more than ten years for such a decision to be made? The obvious fact that the interpretation of the Constitution and the financial statute is a matter for a legal opinion and, if necessary, a ruling by the court, seems to have escaped the PAC. In the process, the President is allowed to continue this practice more than ten years after it was first challenged as unconstitutional and unlawful by then Auditor General Anand Goolsarran. Failure to seek a position on this has permitted the spending of more than $2.5 billion without constitutional authority or parliamentary approval.
The work of the PAC is not an easy one. It is tedious, time-consuming and technical. It effectively oversees the receipt, expenditure and accounting for billions of dollars annually. Its members should be aware of and understand the financial provisions of the Constitution, key legislation such as the Fiscal Management and Accountability Act, the Procurement Act, the Audit Act and the revenue laws. Its secretarial support is mainly administrative help from the Parliament Office and the minutes of the Committee reflect procedures and proceedings that seem archaic.
Attendance failure
The demands on the members of the PAC are sometimes quite formidable. In the second fortnight of June 2004, the Committee met on six occasions, rushing to catch-up with its own backlog even as it is criticised by one of its “advisers” for being responsible for the delays in the accounting cycle. Its difficulties are made no easier by its politicisation, the absence of access to relevant expertise and having as its three advisers – rather than as resource persons – some of the very persons responsible for the poor level of financial management in the country.
Several years ago, Mr. Stanley Ming PNC member of the PAC, had lamented the committee’s ineffectiveness and apparently had stopped attending meetings of the Committee as a mark of protest. But attendance is a wider problem. The attendance record of the members of the Committee at the ten meetings held between June 14 and to July 26, 2004 was as follows:
Cyril Belgrave – 8; Indra Chandarpal – 8; Pauline Sukhai, Komal Chand and Winston Murray – 6 each; Volda Lawrence – 5; Lance Carberry – 3; Donald Ramotar – 2 and Stanley Ming – 0. This works out at an attendance of 60% for the PPP and 28% for the PNC, numbers that eloquently speak for themselves and about the Committee. The minutes of the PAC including the attendance of its members are available but are never publicized. Perhaps those who boast of the effectiveness of the PAC will pause to consider how seriously its members take their obligations in their financial oversight function. It was not unusual in 2004 for attendance to be three, with six of the persons absent, either with or without excuse or occasionally “with leave.” That the PNCR has allowed this situation to develop and worsen is an indictment of that party and an explanation and apology are owed to the public.
Benefit of foresight
One of the advantages of the delays in the work of the PAC ought to be the benefit of foresight since the PAC can test the responses and assurances by the Government on the findings of earlier years against findings on similar matters contained in the reports of the later years.
They do not do this. If they realised the seriousness of this they would probably have asked for at least a part-time accountant or former members of the staff of the Audit Office who could be recruited to provide support for their work.
The audit reports on the accounts for 2003 signed by Mr. Anand Goolsarran and for 2004 signed by Mr. Deodat Sharma tell a story of increasing defects. The 2003 gave a qualified opinion in respect of each of ten accounts and disclaimed or denied an opinion in respect of the Deposit Account held by the Accountant General and outstanding advances made under the Act (sic), presumably the Fiscal Management and Accountability Act, and the Statement of Current Assets and Liabilities of the Government.
For 2004, the report was qualified in respect of seven accounts and an opinion denied in six, including the public debt and the statement of contingent liabilities. This represents deterioration, not an improvement, but nothing in the report of the PAC or the Treasury Memorandum suggests that this point was recognised. What the PAC should have called for in their 2003 report was a time-bound framework to arrest the situation. It failed to do so and so the Treasury Memorandum overlooks these as well. The 2004 report of the Audit Office at paragraph 103 Financial Report on Extra-Budgetary Funds tell us that no funds were created in 2004 but wrongly omits to give an account of the closing balances. The report of the PAC simply records that paragraph 103 was considered but nothing else is said about it.
Weak commitment
Of a more general nature, if the Committee wanted to test the commitment and undertaking given in the 2002/2003 Treasury Memorandum by the Government, all they had to do was turn to the 2008 report in respect of the cash and bank balances. The 2003 and 2004 audit reports recounted major and dangerous failings on accounting for dormant and inactive bank accounts holding billions of dollars of public money; b) failure to reconcile these accounts; and c) statements which are not submitted for audit. Such bank accounts hold tens of billions but have not been reconciled in some cases for more than a decade.
On the question of those very accounts, in 2008 there remained special accounts at the Bank of Guyana with balances of $35.051 billion, up from $21.388 billion in 2003 and $13.552 billion in 2004. The only comment on this by the Auditor General is that “the Head of Budget Agency indicated that these matters are being addressed by the Ministry of Finance.” The banality from the Finance Secretary in the 2004-2005 Treasury Memorandum is to say what the balance on the bank statement means as opposed to what the amounts shown on the cash book mean. Even a housewife knows that but the $35 billion seems to be of no import to the Finance Secretary.
On the issue of the Public Debt, the Treasury Memorandum prepared by one of the advisers simply states that the Auditor General, another adviser, was wrong, without saying what the right figure should be. The PAC does not ask why several entities that have not had an audit for decades or which are not properly constituted continue to receive annual subventions, or why the report of the Ethnic Relations Commission does not contain audited financial statements, or why the Minister of Finance has not been tabling annual reports for NICIL and others. The Treasury Memorandum is similarly silent.
While the PAC and the National Assembly may be comfortable with accepting these absurdities on political grounds, the people of Guyana should demand some kind of respect from those who gouge them with unjustified rates and amounts of taxation.
Conclusion
Throughout the Treasury Memoranda is the absence of cross-references either to the reports of the Auditor General or the Public Accounts Committee and a casualness bordering on contempt which reached its zenith in 2004-2005. The 2004-2005 memorandum ought to be rejected as an insult to the nation. It has succeeded in dealing in fifty-seven paragraphs, many of them containing one-liners, with the shortcomings identified in three thousand paragraphs in the 2004 and 2005 reports by the Auditor General.
Yet, the PAC offers commendations to their advisers, at least one of whom treats it with disdain, another who has failed to deliver on his obligations and another whose office continues to shortchange the nation with under-quality work.
There is clearly a crisis in public financial management in Guyana. Those problems cannot all be identified in a handful of newspaper columns. Public financial management has escaped the attention of the accounting as well as the internal audit bodies. The entire financial management system and its oversight require some kind of review. There needs to be a serious self-examination by the PAC, a genuine commitment by the government to public accountability, a president who respects the constitution and a public and press that are prepared to go beyond sensational headlines.
Next week BP will address the proposed amendments to the NBS Act and the government’s efforts to stifle debate in that entity.