Auditors for state agencies should make fraud detection a priority

Auditors for state agencies should make fraud detection a priority – Chris Ram

Jun 16, 2016 News

The forensic audits which were launched by the coalition administration have revealed that weaknesses in various levels of governance under the PPP bred unbelievable scales of corruption.

Chartered Accountant, Chris Ram

And while sweeping action is yet to be seen for the financial transgressions which have been unearthed, some critics like Chartered Accountant Chris Ram, remain hopeful that the necessary action will be taken by the Government.
Significantly, Ram told Kaieteur News that in the parliamentary debate on the Fiscal Management and Accountability Act, a commitment was made for an effective Internal Audit function in each budgetary agency.
In light of the forensic audit findings, the Chartered Accountant strongly believes that this must now be treated as urgent and a principal function of such an office should be fraud detection.
The Attorney-at-Law said that he is not only hopeful that action will be taken in cases of fraud, but in respect to all acts of impropriety; weaknesses in systems and procedures; unrestricted discretionary expenditure; management and Cabinet overrides and the role of politicians in financial decisions.
Ram said that action should also be taken in areas where it was found that a lack of independence of Permanent Secretaries and Regional Executive Officers existed.
Executive Member of the Working People’s Alliance (WPA) Dr. David Hinds also shared his view on the need for action to be taken with regard to the findings of the forensic audits.
In an interview with Kaieteur News, Dr. Hinds opined, “I cannot believe the government would do nothing about the audits.” He said that Government’s inaction would be a politically suicidal move. “I think they are erring on the side of caution,” he added.
Dr. Hinds said that this is understandable given the PPP’s drumbeat about witch-hunting and the fact that the Coalition would need votes from the PPP’s traditional constituency if it’s going to prevail at the next elections.
But over-caution, the activist said, could eventually lead to inaction and this could cost the Coalition support in its core base. He said that in such an instance, the government finds itself between a rock and a hard place.
The University professor said that in politics, the first question is always—”How is this going to affect our chances at the poll?”
To this question, Dr. Hinds said that realistically, the government has to weigh this very carefully.
He noted, “Unfortunately, political morality is always very low on the pecking order for governments and political parties. But if little or nothing is done, that will amount to a political victory for the PPP.”
He added, “They could argue that they are vindicated because the government could not pin anything on them. Note, the Opposition Leader, Bharrat Jagdeo keeps repeating the mantra—If you find corruption charge the people. And former President Donald Ramotar on the other hand keeps saying that the government is going after PPP people.”
Hinds said that whether these two positions are coordinated or not, they amount to a kind of circling of the issue by the PPP, which then pushes the government into a corner.
The WPA Executive Member explained that the other consequence of inaction is the continued institutionalization of corruption. He opined that those involved from top to bottom, in and out of government, would read that as weakness on the part of government.
Dr. Hinds said that he would propose the establishment of an independent Anti-Corruption body to study these audits and recommend the needed action to the President and the State Asset Recovery Unit (SARU). He stressed that the Cabinet should not be deciding on the action that should be taken.
Dr. Hinds further asserted that such a body should be broad-based and not overstaffed with lawyers. He said that it should include people of moral standing in the society who are concerned about stamping out public corruption.
Simultaneously, he said that the process of empowering SARU should be high priority. He emphasized that it should be speeded up. Dr. Hinds opined that if that route is taken, it partially frees up the process from overt partisan considerations
While the WPA Executive Member holds this view, Public Security Minister, Khemraj Ramjattan, said that the Board members of various entities will have the opportunity to decide the course of action that will be taken on the damning findings of the forensic audits launched by the APNU/AFC administration.
He believes that it is important for the Boards not to be left out of the equation, and for them to have a say in what is the way forward on prosecution and administrative decisions that need to be taken.
It was in May that the Granger-led administration began expending some $133M of taxpayers’ dollars on 45 of the 50 forensic audits to ascertain how the assets of the state were sold, disposed of or transferred under the previous administration.
The remaining five audits were sponsored by the Inter-American Development Bank (IDB).
Several audits were also launched in July while others started in later weeks. While the report on NICIL has been completed for months now, criminal proceedings are still to take shape. Those on the Environmental Protection Agency (EPA) and the National Frequency Management Unit (NFMU) have been completed for a longer period.