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Auditor General’s Report Highlights Systemic Failure

Auditor General’s Report Highlights Systemic Failure
June 21
12:39 2019

Thursday, June 20, 2019

The Auditor General’s preliminary annual report on the government’s 2014/2015 fiscal year, which was circulated in the media this week, highlights a number of glaring issues including poor management and file keeping as well as continued dysfunction in government ministries and departments. The Auditor General’s report also notes that for years, the audit office has highlighted the same types of problems and frustrations in each new report but nothing has been done to address the pressing oversight issues.

Auditor General Dorothy Bradley, in her report, noted that the matters outlined “ought to present serious concerns for the Ministry of Finance,” adding that many financial statements presented for audit were extremely late and in some instances were not reliable. The report also noted that government’s ministries and departments along with the Accountant General’s Department do not have internal auditors, which would ensure that internal control processes are operating effectively on a daily basis. “The absence of such an important component to the governance structure presents significant challenge to External Auditors,” the AG’s report said.

The report also focuses on the shortcomings of the Public Accounts Committee (PAC), an oversight entity intended to objectively assess government’s spending of public funds but which has functioned as a political rubber-stamp. “…it is expected that PAC work closely with the Office of the Auditor General. This relationship is an immediate means for the exposure of waste, mismanagement and corruption, but not yet realized,” the Auditor General wrote. It noted that the composition of PAC, which is comprised of majority government appointments, continues to be debated. “This office maintains its view that for the PAC to become effective, structural change is essential. In some countries the PAC consists of backbenchers. Other compositions are made up of private citizens from auditing and accounting professions”.

The AG’s office also says it is of the firm view that the Accountant General’s Department requires immediate restructuring aligned with the role and responsibilities of the department. “The Department does not have the capacity to undertake the daily demands. The Treasury operations require strict and continuous monitoring of its financial activities and controls. Therefore, competencies in areas such as banking, finance, accounting and management require strengthening,” the report highlighted. The report also said that most of the information presented in the statements from the Accountant General’s office were not accurate.

In her report, the Auditor General points out that for the financial year under review, the government’s expenditure saw over $90 million in excess of approved estimates, noting that “…it would appear that payments made for a portion of public debt/interest were not budgeted in the approved estimates”. It also noted that the statements of assets and liabilities, including the balance in the Consolidated Revenue Fund were not reconciled, making the audited findings ‘material’. “Cash at the Treasury and Sub Treasuries indicated cash at $16,632,810.80. The pay-in process at the Sub Treasuries does not make possible the holding of large volumes of cash and cheques. As a result, the figure stated is not correct and material to the financial statement, therefore, those accounts require immediate reconciliations”. The audit also found that several commercial bank balances differed from the corresponding Smart Stream balances, noting “…it would appear that transactions were not posted”, with the Accountant General confirming that the reconciliations were not up to date.

The report also observed that there is legislation for two police related funds, the Police Welfare Fund and the Police Trust Fund, neither of which have a savings bank account. It said the only savings account it found was for a Police Reward Fund, for which no regulations exist. “Further examination revealed that all monies collected from police officers, whether for disciplinary fines, other fines, the one-day deduction from all police officers’ salaries, are all being placed in the Police Reward Fund,” it went on to note.

The Auditor General’s report also highlights a deficiency in government ministries and departments in providing statements of arrears revenue, money owed to the government. “No arrears revenue statement for financial year 2014-15 was presented from the Accountant General to the Auditor General for auditing along with the 2014/15 Financial Statements”. The Office of the Auditor General then conducted field visits to some ministries and departments to gather what information they could. “In addition, we found that the Ministry of Natural Resources and Agriculture, Lands and Survey Departments did not make a submission,” the report expounded.

“Arrears of Revenue were poorly managed. It was evident that the government was not in a position to realize its outstanding arrears due to accounting officers’ negligence,” the report stated bluntly. The report also said that the government’s system of managing public debt through its Commonwealth Secretariat Debt Recording and Management System could not reconcile records between the Ministry of Finance, the Accountant General and the Central Bank. “Ten loans had different opening and closing balances that were seen between the CS-DRM report and the financial statements,” it said.

PAC Chairman, Julius Espat, told the Reporter that the Auditor-General’s latest report points to a systemic breakdown which needs to be addressed immediately. Unfortunately, he said, this government has proven unwilling to make the critical changes that will ensure proper spending of public funds. He added that knowing his statements would be touted as political, the only way to make those critical changes is to elect a new government as the current administration has shown a refusal to make the structural changes that would improve oversight and accountability of government.

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