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THE PAPER-THIN LINE BETWEEN INEFFICIENT SYSTEMS AND CORRUPTION

THE PAPER-THIN LINE BETWEEN INEFFICIENT SYSTEMS AND CORRUPTION
November 08
16:08 2018

In previous installments of the Business Perspective column we had discussed the effects of corruption. In particular, we have discussed empirical studies that have repeatedly underscored the fact that corruption weighs negatively on economic growth and development. However, at this juncture, it is useful to discuss the institutions that are designed to prevent corruption.

Believe it or not, Belize actually has many anti-corruption systems etched into our laws. These include the Prevention of Corruption Act, which gives life to entities such as the Integrity Commission; the office of the Contractor General; the Auditor General; the Freedom of Information Act; the Finance and Audit Reform Act; the Public Accounts Committee (PAC); and several other mechanisms that have the dual purposes of fighting corruption in the public service while simultaneously encouraging increased efficiency in public spending.

However, over the time, there have been significant concerns raised regarding the efficacy of these institutions in their current form. Let us, for example, look at the Auditor General, whose job, in a nutshell, is to analyze how government spent and managed public funds. While it is our understanding that the audit reports for at least up to Fiscal Year 2013/14 have been completed, but not yet made public; and that the report for 2014/15 is in the works, two things must be noted. The first is that the most recent report that is publically available is for six years ago (FY 2011/12). The second is the fact that the report that is currently being prepared is for financial statements from FY 2014/15—roughly three fiscal years behind.

Building on the second point, certainly it will not escape anyone that we are currently in FY 2018/19. If the present pace of the reporting is maintained, it is likely that we will not be hearing of the FY 2018/19 audit reports being prepared until, at best, FY 2020/21. Let’s put this in perspective. For this fiscal year, the government has raised and collected tax revenues; and, it has spent said revenues. However, the Belizean people would not likely know whether or not our monies have been used appropriately until three years from now.

This three-year wait, however, would not preclude the government from presenting the next fiscal year’s budget (FY 2019/20). Speaking hypothetically, if it is that the government plans to increase taxes for the upcoming budget, it is interesting to note that the Belizean people would be asked to endure another set of increases, without even knowing how the government managed the previous amount of funds that we had given them in FY 2018/19.

Now, the appropriate question that ought to be asked at this juncture is whether or not the delays are within or outside the law. To answer that question, one must first recall that the Auditor General’s Office relies on reports it receives from the Accountant General. Secondly, it is useful to underscore what section 15(1) of the Finance and Audit Reform Act (FARA) has prescribed:

“Within a period of three months after the close of each financial year, the Accountant General shall sign and submit to the Auditor General accounts showing fully the financial position of the Consolidated Revenue Fund and other public funds of Belize on the last day of such financial year.”

There is allowance for extensions for up to an additional three months; however, it is a bit conspicuous that delays of more than two to three years are well beyond what was allowed in the FARA. To address this, the Auditor General has made certain recommendations. Speaking in particular to the speed with which the reports come from the Accountant General’s Officer, the audit report for 2011/12 states:

“I take this opportunity once again, [to] sound the alarm on the following issues related to the stewardship of the Executive as outlined in my previous report.

“The Accountant General has too many responsibilities to effectively monitor financial controls of the government. This set of responsibilities should be assigned to an independent unit that would also monitor the day to day financial activities for all Ministries and Departments.”

The FY 2011/12 report also reiterates the recurring suggestion for internal audit units to be established within the public service. This same proposal could also be found in earlier reports, including the FY 2006/07 report in which the then Auditor General said:

“While I am aware that the Accountant General has made some advances towards training and establishment of an Internal Audit Unit within the Treasury, I need to reiterate that there exists no Internal Audit Units in the public service. There is an urgent need to establish an internal audit unit in every Ministry. That unit would be responsible directly to the Chief Executive Officer, to regularly review the internal control system that exists in the Ministry and to carry out internal audit work on behalf of the Chief Executive Officer.”

Fundamentally, the Auditor General’s Office is an oversight body that is created under Section 120 of the Constitution. However, as the forgoing shows, there are clearly significant administrative and systematic changes that need to be made if this body would be able to ensure efficiency in public spending as well as provide the Belizean people with timely information that is useful in the fight against corruption.

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