The Auditors are coming!

Apr 02, 2022 Features / Columnists, Peeping Tom

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Kaieteur News – In the past, whenever civil servants heard that the auditors would soon be arriving, there would usually be a spurt of activity to ensure that all the accounts and records were in order. Everyone dreaded to receive a negative audit report. Auditors then were feared and respected.
Later, the practice became common for auditors, from the Auditor General’s Office to be stationed at various government offices to monitor and to audit transactions. Being on site, it was felt, was much better in intercepting fraud and deviations from the financial regulations.
The latter system has not proven effective. Having the Auditor General auditors stationed at government offices, permanently have not had the desired results.
And for the simple reason that the Auditor General is not the internal auditor of government departments. The Audit Office is the external auditor and its principal function is to ensure that the financial statements of government entities have been properly prepared, in accordance with applicable law, and properly present the operations and affairs of the entity concerned.
During the course of an audit, fraud and other financial irregularities may be unearthed but the types of audits, which the Auditor General is mandated to perform, does not guarantee that financial malpractice will be uncovered or intercepted.
It is for this reason that it is much better for the government to have in place strong internal audit departments which, in the case of government Ministries and departments, report directly to the Accountant General. In the case of government corporations which receive public subventions, there is need for stronger internal audit departments which undertake real time audits of transactions and report directly to the respective boards of directors.
In his 2014 Budget Speech, the then Minister of Finance had indicated that efforts were being made to strengthen the country’s internal audit capability through the operations of a high level oversight committee. It is not clear whether this high level committee ever functioned, who were its members and just what it achieved.
The then Minister of Finance also had hinted that a centralised internal audit staff would have reviewed findings in the Audit Office’s annual report and follow-up with government agencies to ensure compliance with the relevant laws and regulations. An Internal Audit Division was said to have been established.
The success of these measures could best be judged by the litany of financial woes and irregularities unearthed each year by the Auditor General’s Office. In effect, the perception remains that the government’s efforts to strengthen its internal auditing capabilities has not led to any appreciable improvement in financial accountability or helped much to root out corruption.
The plans to strengthen the internal audit capabilities of government were doomed to fail. They were aimed primarily at responding to the issues identified in the Report of the Auditor General.
There was a change in government in 2015. The new government also came with a bagful of promises, including one to have the country’s Finance Secretary spearhead a project to review the needs and capacity of each Budget agency in order to implement a proper system of internal audit.
The Coalition government conceded that “few budget agencies, if any at all, can boast a proper system of internal audit that meets the test of competency, independence and professionalism required for the oversight of the spending of hundreds of millions of dollars.” Later, the Coalition government would indicate that its forensic audits pointed to the weakness and, in some instances, the absence of internal audit systems and departments.
Nothing much has changed. It can hardly be said that there is effective oversight of the spending of billions of dollars in public funds by government agencies. In many instances, it is believed that the internal audit departments of government agencies are weak and anaemic.
Special attention should be paid to certain government agencies and corporations, which receive large government subventions. There is a need to strengthen internal audit systems in these entities.
Internal auditing should be decentralised, rather than centralised. Every government Ministry, agency or department should by now have had a full-time and adequately staffed internal audit team, which reports to the Accountant General.
This is one area where professional and permanent staffing should be increased. And there would be no need for as many as 8,000 new jobs.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

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