Thursday, January 22, 2009

Auditor-General's authority to undertake "forensic" audit of Customs officials questionable

Kaieteur News Letter to the Editor, Thursday 22 January 2009

Auditor-General's authority to undertake "forensic" audit of Customs
officials questionable
January 22, 2009 | By knews |
Filed Under Letters

Dear Editor,
In this letter, I will seek to conflate two issues involving the President
and the Auditor-General (ag.), Mr. Deodat Sharma, which, taken together,
convinces me that neither of them understands key provisions of the
Constitution or the Audit Act 2004, hardly a trivial issue.
My conclusion is based firstly on a report in the SN of January 13, 2009
under the caption, "Customs workers facing forensic audit as bribery probe
widens", in which Mr. Sharma is quoted as saying that the process of a
forensic audit into the assets of employees at the Customs and Trade
Administration (CTA) needs to be thorough since, "President Bharrat Jagdeo
would expect nothing less". The second is also an article in the same
newspaper of January 20, 2009, in which, questioned about the commissioning
of a report into the related Customs bribery probe, President Jagdeo is
reported as saying that this particular report was "a bit different than the
routine annual audit," while Mr. Sharma said it was "unlike regular reports
from his Office."
Regarding the first issue, both the President and Mr. Sharma need to be
reminded that the Constitution makes the Audit Office "not subject to the
control or direction of any person or authority." It goes without saying
that that includes the President.
The Audit Act 2004 provides for two types of audit - financial and
compliance audits, and performance and value-for-money audits {under Section
24 (1)} while Section 24 (2) provides the scope of work and broad
methodology for the two types. Section 25 of the Act sets a deadline of
September 30 for submission of the Auditor-General's report on the
consolidated financial statements and accounts of budget agencies, while
Section 26 provides that "During the year, the Auditor General may choose to
conduct special audits, and at his discretion prepare special reports when
such audits are completed."
Where the Auditor-General and the President fall into error, with the
President saying it was a debating point, is the scope of Section 28, which
provides as follows: "The Auditor General shall (note, not may), in
accordance with article 223 of the Constitution, submit his reports to the
Speaker of the National Assembly, who shall cause them to be laid before the
Assembly." That section refers to all reports; and "whether it goes through
the Speaker or Minister of Finance," as the President said, is more than
semantics or a procedural issue. It is the result of a constitutional
amendment designed to strengthen the independence of the Audit Office, so
that he reports not to the Executive but to the National Assembly. Sadly,
neither President Jagdeo nor Mr. Sharma seems to appreciate the distinction.
To any reasonable person, it must be clear that, together, the Constitution
and the Audit Act make the issuing of instructions by the President to the
Auditor General to undertake an investigation into the Fidelity fraud
allegations, to carry out so-called forensic audits of the assets of the
employees of the CTA and the submission of reports by the AG to the
President, unconstitutional and unlawful.
After the sterling work done by his predecessor, Mr. Anand Goolsarran FCCA,
MBA, Mr. Sharma is allowing President Jagdeo to bring the Audit Office into
disrepute, and it only takes a legal action by any officer called upon to
submit to Mr. Sharma's "forensic audit" to have the whole process thrown
out. In no country but Guyana would the head of the State Audit, with
responsibility to audit often complex transactions in excess of two hundred
billion dollars, not hold a professional accounting qualification. One of
the reasons for such a requirement is that the holder is subject to a
professional code of conduct regulating the quality of his work and the
integrity and independence he displays. Unfettered by such professional
obligations, Mr. Sharma can therefore be as cavalier as he wants to be,
unexposed to professional disciplinary sanction, assured of political
It is not that Mr. Sharma has time on his hand, or no work to do. In a
review of the Report of the Auditor General on the public accounts for the
year 2006, carried in SN Business Pages of August 24, 31 and September 7,
2008, I pointed out some glaring weaknesses - errors of omission and
commission of a professional nature in the work of his Office. Perhaps a few
examples drawn from those columns would suffice. The full articles are
available on the SN website, or at
1. That the report did not mention the failure by the Privatisation
Unit/NICIL to account for hundreds of millions of dollars, a fundamental
breach of the constitution that ranks and rankles with the infamous Lotto
2. $6.513 billion advanced from the Dependants Pension Fund Deposit Fund
at December 31, 2006 not being substantiated while the old Consolidated Fund
bank account NO 400 had not been reconciled since 1988;
3. The failure by the Audit Office to report on the financial statements
of entities in which the Government has a controlling interest;
4. Non-reporting of the hundreds of millions of Flood funds, which Mr.
Sharma had promised more than three years ago;
5. No report on concessions granted under the Investment Act, 2004,
including the illegal concessions granted to Queens Atlantic Investment
Inc., the saga of 2008;
6. No audit report on World Cup Cricket, even as another cricket spending
spree is planned next year.
The Guyanese public is accustomed to being misled by fancy-sounding but
uninformed statements by public officials, some of which confuse even
lawyers of the main opposition parties. The statement about forensic audit
falls in that category, when looked at against the quality of work referred
to above, and the persistent failure by the Audit Office to carry out its
mandate. Mr. Sharma, it seems, prefers to dabble in matters improperly
referred to him by the President, while neglecting his constitutional and
statutory responsibilities, such as his report for 2007 on the public
accounts, already overdue by several months, and any value-for-money audits.
The Minister of Finance is a former Deputy Auditor-General who served under
Mr. Goolsarran, and the Government must therefore be aware of the several
professional and personnel limitations of the Audit Office and those who
control it. But since the Government transacts business involving billions
of dollars, often outside the norms of proper accounting, the Constitution
and the Financial Management and Audit Act, it is unlikely that it would
like strong and independent oversight of such spending. So, really, it is
convenient to the Government to have someone like Mr. Sharma heading the
Audit Office. That convenience is greater by having the wife of the Senior
Minister of Finance employed as the only professionally qualified accountant
in the Audit Office. By definition, principle and practice, she is not
independent, and it is absolutely incompatible for her to be in the Audit
Office while her husband is the Minister of Finance.
To allow such serious farce in the Audit Office, in my view, shows contempt
for the people of our bleeding country. All the talk of forensic audit is
meaningless. On top of all of this, the Parliamentary oversight body, the
Public Accounts Committee, seems completely out of its depth. Do Guyanese
really deserve this?
I will deal with the President's uninformed and misguided call for "MP's to
declare assets within two weeks or face the courts" in a later
Chris Ram

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