Wednesday, August 27, 2008

Finance minister tasked to guide media on Auditor General’s report

Finance minister tasked to guide media on Auditor General’s report

Posted By Staff On August 25, 2008 @ 5:06 am In News | 8 Comments

President Bharrat Jagdeo has tasked the Minister of Finance Dr Ashni Singh to explain to the media how to interpret the Auditor General’s report on government accounts, saying that there is a great deal of illiteracy in the treatment of financial matters.

And the President has said too that the proceeds of the lotto funds not being placed into the Consolidated Fund has always been a question of a technical issue rather than one of accountability because the lotto proceeds are audited, too, but separately by the Auditor General.

He told the media at a press conference on Thursday at the Office of the President that it was not an issue of how the money is spent but it was just a technical issue on whether the lotto funds should be transferred to the Consolidated Fund and spent from there.

“What happens now, I think, is that they transfer a part of it to the Consolidated Fund. If there is a $50 million project, the sum required is transferred to the Consolidated Fund,” he said. He said that the lotto funds are placed in a separate account outside of the Consolidated Fund under provisions of the country’s financial laws.

On the other hand, in an earlier press conference held by the PNCR on Thursday, Winston Murray, PNCR-1G MP and member of the Public Accounts Committee to which the Auditor General is accountable, addressed the media on the lotto funds.

He noted that the Auditor General’s report indicated that the sum of $2.95 billion (US$47.5m) was paid over to the government as the people’s share from the lotteries over the period 1996-2006 “in open and unashamed violation of Article 216 of the Guyana Constitution this money has not been paid into the Consolidated Fund. All of this money has been deposited into special bank account No. 3119 under the control of the Minister of Finance.”

As a result none of the expenditure from this account has ever been approved by the National Assembly. While the Auditor General has reported that the projects on which these monies were spent were subject to audit, the PNCR maintains that such a procedure could not be a substitute for upholding the requirements of the constitution.

On the coverage of the Auditor General’s Report, Jagdeo said the media gave the impression that there are billions of dollars in dormant accounts waiting to be spent when that was not the case.

He also said that an advance of a billion dollars could be outstanding on December 31 of any given year and if the report is being written in January or February of the following year even though the advance would have been cleared in January or February, even before the report was written, the advance would be still part of the report for the previous year because that was the position at December 31. “So when you say that billions of dollars in advances are outstanding it could just be a timing difference,” he said.

There may be cases where there may be corruption, the President said, agreeing that where there are cases of corruption people should face the full brunt of the law. However, he said that where persons were ascribing corrupt motives to some of the transactions found in the reports, it might simply be because of a lag in time during the financial transactions.

When several billions of dollars lying in dormant accounts are spoken about, he said, “this is not real cash. It is not money to be spent. It is a book entry. It is not money that you can transfer to the government and the government spends in that fiscal year… It is just an accounting entry. To say that billions are lying in dormant accounts create the impression there is money to be spent and the government is not transferring it because of some corrupt motive.”

He contended that when the PPP/C took office there were billions of dollars in hundreds of dormant accounts in the Central Bank. “These accounts weren’t closed and we had a long process when we took office to clean that up. It is not real money.

There is a difference between accounting dollar and an economic dollar…. huge difference. The Auditor General deals with the accounting dollar and the Finance Ministry deals with the economic dollar,” he explained. In the meantime, Murray told the media at a press conference Thursday morning that there was a number of inactive bank accounts with large sums of money in them (over $7.9b). The Auditor General expressed the opinion that such accounts should be closed and the balances transferred to the Consolidated Fund. Murray stated that the PNCR is aware that in many instances the Accountant General had ordered such accounts closed and the funds transferred. For many years now this has not been done.

Murray said that the Head of the Presidential Secretariat, Dr Roger Luncheon has since been reported as saying that the problem with such accounts was that they went back to the pre-1992 era and there were therefore difficulties in reconciling such accounts. “This is the typical knee jerk reaction from the Government. When something cannot be properly explained blame it on the PNC,” Murray said.

The recommendation to close inactive accounts, he said, does not remove the need for reconciliation but simply ensures that balances in those accounts are not available for misuse or abuse - hence the recommendation to transfer to the Cons-olidated Fund and that this is a matter that has been unattended for many years now.

Noting that it was out of concern for transparency that the government has sought to table the reports to the National Assembly and not to the Minister of Finance as was done previously, Jagdeo said that the Auditor General reports directly to Public Accounts Committee which is chaired by the parliamentary opposition.

Many of the issues raised and for which there are responses could be cleared up in the response from the various government ministries, departments and entities.

Nevertheless, he said that the government was very happy that the issues were coming out in the public and hopefully they would stimulate a proper technical discussion on accountability and not an anecdotal newspaper-like discussion.

He said that since the PPP/C took office, each year there has been audited reports, the powers of the Auditor General has been extended to audit public enterprises, as well as privatization proceeds.

Jagdeo said that he sees the audit report as a tool for better management because they could identify some of the problems associated with accountability.

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