AG report a repetition of chronic ailments

Oct 24, 2012 News

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By Investigator
The Auditor General’s Report of Fiscal year ended December 31, 2011 brings a boring but important repetition to a chronic ailing system of accountability in Guyana. For the past decade – or at least within the statute of limitations – the Auditor General has issued a qualified opinion due to limitation in scope. To the non-accountants, this simply means that the auditors were not presented with sufficient information to conduct their audit – and that they were severely limited in scope and therefore prevented from conducting the audit fully.
It would appear as though the Government of Guyana did nothing to improve its ability to account for the use of public funds over all these years.
The litany of breaches is glaring in almost every area of spending. From the abuse of the procurement process in which one company receives over 80 per cent of total orders, to the mismanagement of accounts and the mismanagement of contracts. These are the facts that are presented by the Auditor General who, as said before, was limited.
There is a possibility, albeit small that had the audit not been limited in scope, a better and unqualified opinion would have been issued. This would have obviously relieved the government of the burden of proof on charges of corruption and mismanagement. The Government is not doing itself any favours by its inability to keep proper records and system of accounting.
The Auditor General’s Report called, once again, for the set-up of the Procurement Commission.  One must note that in the absence of this commission, contracts and tenders continue to be awarded to a very small group of companies.
The Accounting Body in Guyana must take some responsibility for allowing its members to conduct audits on private companies that are in complete breach of national policies. The Accounting Body would be shocked at the breach of Generally Acceptable Accounting Practices by some of these favoured companies who create a slew of wholly and partly owned subsidiaries that benefit from Government contracts and tenders.
There is nothing stopping a company from creating subsidiaries, but one must question the fairness of pricing and cost-transfers that are designed to avoid taxes. This is the other side of the large awards handed out by the government.
The Auditor General’s Report also showed that 70 per cent – 80 per cent of Government’s contracts and procurement tenders are awarded to one or two companies. There have been numerous newspaper reports on these companies who “win” the contracts based on “prequalification”.
The AG’s Report also showed that contracts were not fully performed or supplied, leading to the conclusion that the Government is (in addition to breaching all the rules), funding these companies so that they could constantly “pre-qualify” for ongoing and upcoming projects.
The GRA was also pointed out for breaches. Seized goods were destroyed willy-nilly, creating a direct loss to the Treasury. It was unclear as to who benefited from the Permits for Immediate Delivery (PID) and the GRA should disclose these, since the AG’s Report noted the number of PIDs that were unprocessed.
The Value Added Tax (VAT) bank accounts were not reconciled, or if reconciled, were not presented to the AG. This is a worrying breach, since the bank reconciliation is important to proper process.
The AG Report highlighted problems in the Ministries and Parliamentary offices. Contractor projects were not managed properly, even through millions of dollars were spent on capital works. The Georgetown Public Hospital Corporation obviously has serious management problems, since it is unable to account for a number of items while purchasing 80 per cent of total procurement from one company which over the past years failed to deliver on time or would deliver a year later.
The entire Health sector seemed to have suffered the same mismanagement as well as bias toward one supplier, as the Ministry procured more than 80 per cent of supplies from one company – for which millions of dollars of supplies are still outstanding since 2008.
The Auditor General’s office is obviously not exercising its powers to ensure proper auditing. It is a basic expectation of the public to have the government account for the use of the public funds. The AG’s office has a lot of powers, according to the constitution. However, the office of the AG continues to be one of an acting appointment which limits the freedom of the incumbent actor.
With more than a decade of limiting the scope of the Auditor General, one must ponder on the penalties that can be brought to bear on the guilty parties. The Government continues to make the same mistakes over and over, whether by accident or design – and Guyana continues to look bad in the eyes of the international bodies.
Surely there must be some action that can be taken by the relevant bodies or by parliament. Unless action is taken, the continuous qualification of audit reports becomes mere verbiage, buried in the pages of history, while the Government will remain unable or unwilling to account for the public purse.

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