The 2008 Auditor General Report: No change – part 1

There is a certain ritual undertaken annually that has many purposes and effects – to placate the international gods and domestic audience with evidence of accountability and transparency in the country’s accounting for the billions spent annually by the government in our name; to meet in form if not in substance the financial reporting obligations under the constitution, the Audit Act and the Fiscal Management and Accountability Act; to excite the press; and finally titillate the public. The ritual is over the publication of the Auditor General Report or, to give it its full name, the Report of the Auditor General on the Public Accounts of Guyana and on the accounts of the Ministries/Departments/Regions for the Year ended XXXX.

The initiation of the ritual takes place several months after its constitutionally due date which is nine months after the end of the year; is done in the glare of publicity with a hand-over of the first copy (?) of the report to the Speaker of the National Assembly; is prolonged over several weeks by the national dailies seeking to fill in news voids; and is revived sometimes years later when the Public Accounts Committee remembers its obligations to review the report.

Standard fare
Expect the officiating high priest to make noises about the abuse of the Contingencies Fund; splitting of contracts to by-pass the Procurement Act; huge sums of money belonging to the Consolidated Fund being left lying idle, dangerously unsupervised; presidential misuse of the Lotto Funds and other public monies; several billions of dollars controlled unlawfully by ministries and departments whose recordkeeping is as good as that of the proverbial cake shop; and stores and assets records not being properly maintained.

Even Business Page participates in the ritual although with about the same level of enthusiasm as that of the youth being forced to attend catechism classes; its interest long dissipated; its respect for the report, its authorship, its contents and its value having progressively diminished since the unceremonious departure of Mr Anand Goolsarran, former Auditor General who almost single-handedly brought back the report after a black hole from 1980 to 1991 when there was no national reporting.

For year to year nothing changes and the discerning reader of the report will notice that it is made up substantially of prior year matters which have not been resolved. While the government finds new ways to spend taxpayers’ money, the national audit office seems to be using the same old audit approach. The report seems to be constrained by restrictions and blinkers, particularly on areas most vulnerable to abuse such privatisation deals; the increasingly blatant use of NICIL to transact government business outside of the law; contract splitting; the abuse of constitutional arrangements for the proper accounting of funds; the spending habits of the President and some of his ministers; and poor accounting all around.

Dr Anand Goolsarran
The authorship is characterised by inadequate numbers and suitably unqualified or conflicted persons with an unhealthy connection to the government whose financial probity and management it is supposed to attest to. Long forgotten are the days when the Stabroek News could write of Dr Goolsarran:

“Now it seems, and is, a huge blessing — and a minor miracle — that we have an Auditor General who is actually doing his job of general auditing. He is exerting pressure to turn a new leaf in dealing with financial reporting in 1992, to tackle quite separately the backlogged financial reporting for ten years, and to exercise his powers of audit over divestment deals. And he is not, thank heavens, afraid to publicise his concerns. All that he is doing is, quite simply, fundamental to good order in the body politic. Let us watch with the greatest care what happens. If obstacles are not put in his way, if feet are not interminably dragged, then it may be we are really in a new era of cleaner more efficient, less corrupt government. But if… well, let us wait and see.”

Stabroek News’s concerns about the sustainability of miracles, no matter how small, seem to have been vindicated. We now have a most compliant Audit Office where the head is summoned by a political functionary and “invited” to carry out an audit/investigation completely outside of his constitutional and statutory mandate. This is the same ministry and the same audit office that cannot give us the report of the 2007 World Cup accounts and which have had difficulties relating to the Contingencies Fund. The Audit Office is woefully short of the right quality and number of staff but can now respond to a request to carry out an audit using resources that it does not have and to produce a report that unless it is highly critical of the cricket administration, would be seen as a cover-up.

No wonder then that the departure of Goolsarran – who has now earned a PhD in Business Administration from the Robert Kennedy College in Switzerland – has led to a progressively deteriorating situation in which not even a fire at a government ministry under a cloud of suspicion attracts more than perfunctory attention.

Issues that strike
It does not seem that any useful purpose would be served by an exhaustive examination of the 2008 report which was dated March 31, 2010, six months after it ought to have been submitted. Instead I will deal in today’s and the next Business Page only with a few striking issues arising from the report.

1. Remissions by the Guyana Revenue Authority

According to the report, remissions by the GRA in 2008 amounted to an unbelievable $70 billion of which $64B was for companies. This compares with $21B in 2006, an increase of 200%, and a mere $6B in 2006. By contrast, corporation tax collected in 2008 was $17B. You would expect some kind of relationship between remissions and GDP, which in 2008 increased by 3.1% and in 2007 by 5.4%.

2. Moneys that should properly go to the consolidated fund are being held in “Static Accounts”

These include $4.8B held in a handful of accounts of which the following are the more prominent:

a. “The amount of $2.617 billion shown on account N2 201360 was in respect of the Government of Guyana and the International Development Association (IDA) loan agreement, which was signed in January 2003, for Poverty Reduction Support Credit. The Loan provided for (a) investments in human capital under the health and education sectors; (b) strengthening of public institutions and improvement of governance; (c) expansion and improvement in the provision of basic services under the water sector; and (d) broad-based job-generating economic growth.” This entire amount earmarked for poverty reduction credit has been lying idle for more than seven years while we take credit for a loan scheme for single mothers initiated by a commercial bank.

b. In terms of age, the account that stands out is account # 200920 with a balance of $127 million. This account was set up sixteen years ago to meet certain expenditure related to the purchase and installation of Wartsilla engines.

c. A ‘grow match’ of this account is “Account # 201110, also established in 1994 through the transfer of $2.1 billion from the Consolidated Fund to establish an Infrastructural Development Fund (IDF). From the IDF, it is understood, that Wartsilla engines were purchased for Anna Regina and Wakenaam. In addition, this account was used to meet counterpart expenditure relating to an IDB loan to the electricity sector. There has been no movement on this account for more than twelve years.

d. Despite all the weaknesses in the country’s financial systems, there is an amount of $173M lying in an account ‘Financial Sector Reform Programme’ for the past four years. An amount of $2.2B was spent from this account in 2005 but it is unclear where that money went.

3. Mystery fire at Health Ministry

On July 17, 2009 a fire of mysterious origin destroyed the main office buildings of the Ministry of Health that housed its Central Accounting Unit and the storage area for financial and other records. The fire destroyed a significant amount of the ministry’s accounting records, while others became water soaked in the aftermath.

In next week’s column we will consider whether any attempt was made to co-operate with the auditors.

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