$47B of mismanaged in Old Consolidated Fund

Apr 19, 2010 News

“The Consolidated Fund is the single most important account of the country” –Anand Goolsarran, Auditor General 1992.
When Goolsarran prepared his audit report of the Public Accounts in 1992, he noted that the last time the ledgers relating to the Consolidated Fund had been written up was 1987 while the last reconciliation actually took place in 1988.
He commented in that 1992 report that, “the importance of having reconciled accounts and ledgers could not be over-emphasised since a failure to observe these safeguards could lead to the perpetration of serious irregularities without detection.”
At that time it was the first audit of the Public Accounts in almost a decade.
The Public accounts had been left unaudited between 1982 and 1991.
In the 1992 audit report, the Consolidated Fund Account held at Bank of Guyana (BOG) was reported to be in overdraft by some $26.8B.
According to that report, the state of the account differed when the statements were compared to the actual cashbooks.
The statements reflected the fact that some $21.136B had been paid into the Consolidated Fund but $29.723B paid out.
Compared to the actual cash book however, it was discovered that the sum of $58.664B had actually been paid into the fund and $65.563 paid out of it.
These figures added up to give a difference of approximately $36B, until it was noted that the redemption of previously issued Treasury Bills was not taken into account in the preparation of the statements.
Sixteen years later, in the audit report of 2008, the current Auditor General was still calling for the Old Consolidated Fund Account to be reconciled, the overdraft cancelled and the account closed.
At the close of 2008, the overdraft on the Fund stood at $46,866B.
When the current Acting Auditor General, Deodat Sharma, was questioned about the necessary measures to be taken to address what is basically this debt of $47B, he said that outside of addressing those active and inactive accounts which merit closure and an accompanying transfer of funds there also needs to be the generation of new revenue to balance the account.
Asked about the option of writing it off, he pointed out that there still exists a need for funds to cover the balance, someone has to suffer the loss.”
Writing this off would imply servicing it out of the Public Debt of some $47B, passed on to the tax payers of Guyana.
In 2004, the Integrated Financial Management and Accounting System (IFMAS) was implemented in a move that would let revenue collection and payments from Government agencies become part of an interlinked system that could be easily monitored and related across agencies – adding greatly to the ease of the audit process.
The software required that all accounts be reconciled or balanced and since that was not a possibility with the Consolidated Fund, a decision was therefore taken to create a New Consolidated Fund with $5B taken from the old Consolidated Fund.
The New Consolidated fund held at BOG therefore started off at a known balance, however, at the end of 2004, the Auditor General’s report also outlined discrepancies in the management of that Fund as well.
According to the report, for 2004, it was found that the account had not been named in accordance with the Fiscal Management and Accountability Act and was also not reconciled. The report stated, “The account was not reconciled for the period under review (2004) and at the time of reporting, no attempts were made to undertake this important exercise.”
Meanwhile, the Old Consolidated Fund had been forced some $5B further into overdraft.
Over the years, from the audit in 1992 to 2008, the overdraft on the Old Consolidated Fund has been displaying both negative and positive variance.
At the close of 2001, it was $63.726B, having increased by $41.269B over a six year period.
In 2002, the overdraft decreased by $18.271B as a result of unspent balances for 1998 through 2000 being refunded to the Consolidated Fund in 2002.
According to the current Auditor General, the withholding of unspent balances by agencies is a serious contributory factor to a number of discrepancies in the state of the affairs of these accounts.
He also noted in the 2005 report that the Old Consolidated Fund “… continued to be overdrawn mainly to the failure of Heads of Budget Agencies to reconcile the various active and inactive Government Bank Accounts and to pay over sums due to the fund.”

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$47B of mismanaged in Old Consolidated Fund

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