THE AUDIT OFFICE ALSO HAS BOUNDARIES

Mar 26, 2009 Features / Columnists, Peeping Tom

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Whether it is cricket, drinking or working, knowing your boundaries is important.  A great deal of conflict and controversy will arise because of ignorance of or the inability to stay within one’s boundaries.
Even the Auditor General has his boundaries. Section 4 of that Act provides that “The Auditor General shall be the external auditor of the public accounts of Guyana and, in the discharge of his functions, shall have complete discretion in examining and reporting on the receipt, disbursement, and control of public moneys and on the economy, efficiency and effectiveness in the use of such moneys.”
Section 24 provides for two types of audits to be conducted by the Auditor General. The first of these is what is known as financial compliance audits. Here the Audit Office is required to verify the financial statements of those government bodies, which it is authorized to audit.
In so doing, the Audit Office must ensure that these statements have been properly prepared in accordance with the applicable laws and represent an accurate account of the affairs of the entities concerned.
It is also required to ensure there was compliance with the necessary rules, procedures and internal management controls; and that all monies collected or spent have been applied to the purposes for which they were intended.
The second type of audit which falls under the mandate of the Audit Office is performance and value-for-money audits. The law mandates the Auditor General to ensure that public entities apply their resources economically, efficiently, and wisely.
These powers, however, must be exercised independent of executive direction. Section 5 of the Audit Act unambiguously provides that in the discharge of his functions, the Auditor General shall act independently.
The clear intention of this provision is to prevent the Auditor General from falling under the authority of the executive. And this was one of the reasons why it was so persuasively argued in this column and elsewhere that the Auditor General should not have been part of any multi-agency task force established by the government to investigate public fraud and much more so for the Auditor General to be reporting to the Executive as to the findings of that investigation.
The government has no business inviting the Auditor General to be part of any investigation. It may out of courtesy indicate to the Auditor General that it has stumbled upon an alleged fraud and intends to investigate.
If the Auditor General sees fit, he may order his office to conduct its own audit relating to the alleged fraud, but he should not be part of any government investigation since this conflicts with his constitutional obligation to act independently.
While in the course of an audit, fraud may be detected or intercepted, an audit must clearly be distinguished from a fraud probe. An audit generally examines the financial statements and records to see these are in compliance with laid down rules, regulations and procedures.
An investigation, on the other hand, examines specific acts of alleged wrongdoing or impropriety.
Section 38 of the Audit Act provides that if the Auditor General has reason to believe that an offence was committed, he shall request the Director of Public Prosecutions and the Commissioner of Police to take appropriate action and prosecute the offender if necessary.
The Auditor General thus limits himself to auditing and not to criminal investigations or prosecutions.
While the Auditor General has the power to inspect the bank account of any person where there is belief that monies belonging to a public entity have been fraudulently or wrongfully paid into such person’s account, a warrant from the Court’s is first required before this can be exercised.
These are important constraints on the powers of the Auditor General to ensure that the wide powers he enjoys are not abused.
The Audit Act also empowers the Auditor General to conduct special audits and at his discretion he can prepare special reports when such audits are completed.
Since the Auditor General has responsibility for conducting value-for-money audits, it is expected that he would avail himself of this option of carrying out these performance and value-for-money audits.
Certainly, he should consider whether the government is obtaining value for money in relation to advertisements placed in the Guyana Times. He should also conduct special audits to determine whether value for money was obtained in respect to the leasing of the Sanata Complex.
He should carry out special audits into the disposal of public properties after millions were spent renovating these assets. In addition, a special audit consistent with Section 26 of the Audit Act should take place in respect to the procurement of drugs within the health sector so as to ascertain whether the recommendations of the last Audit Report are being observed in the breach.
These are only some of the suggested areas of audit. Mr Auditor General, there are many, many more and we are prepared to bring these to your attention and to the public’s attention.

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