Guyana’s financial laws dictate that the Auditor General must conduct performance or value-for-money audits annually on various agencies. But after more than 13 years since the passing of such laws, only four performance audits were conducted, one of which was a follow-up audit.
This was recently pointed out by former Auditor General and Chartered Accountant, Anand Goolsarran.
In his recent writings, Goolsarran recalled that it is Section 24 of the Audit Act of 2004 which actually vests with the Auditor General, Deodat Sharma, the responsibility to conduct performance or value-for-money audits.
In conducting such audits, Goolsarran articulated that the Auditor General is required to examine on an annual basis, the extent to which a public entity is applying its resources and carrying out its activities economically, efficiently and with due regard to ensuring effective internal management control.
Sharma has noted however, that the lack of internal auditing units at the various budget agencies is what may have contributed to the required performance audits not being carried out.
INTERNAL AUDIT UNITS
Goolsarran explained that an internal audit is an integral part of the internal control system of an organization that analyses the strengths and weaknesses of an organization’s internal control systems; evaluates governance arrangements in place; and assesses opportunities and threats to the organization and risk management.
By providing regular feedback in these areas, Goolsarran said that an internal audit renders a valuable service to the organization in facilitating management review and action towards achievement of organizational goals.
The Chartered Accountant pointed out that internal auditing in Government is not only a matter of good governance practice. It is a requirement of the law. In fact, Section 11 of the Fiscal Management and Accountability Act (FMAA) requires heads of budget agencies to maintain an effective internal audit capability within their agencies.
Goolsarran said that in the report on the public accounts for the fiscal year December 31, 2003, Sharma commented that “the absence of internal audit departments in large ministries continued to militate against an effective system of internal control and have contributed significantly over the years to the deterioration in financial management at both the ministerial and central levels”.
Goolsarran said that this comment was repeated verbatim in the Auditor General’s 2004 and 2005 reports, but subsequent reports shied away from any commentary on the functioning of internal audit systems in Government, or rather their absence.
The Chartered Accountant said, “A review of successive reports of the Auditor General reveals that many of the comments are in the nature of internal audit findings. This reinforces the need to have in place an organized system of internal audit throughout the operations of Government…”
Goolsarran said it is not clear what progress has been made so far to have such a decentralized internal audit system in place. Regrettably also, the Auditor General’s report has provided no guidance or commentary on such a fundamental governance and accountability matter.
Though the financial laws of Guyana impose on every budget agency to have strong auditing systems, Finance Minister Winston Jordan has agreed on several occasions that few budget agencies, if any at all, can boast a proper system of internal auditing that meets the test of competence.
Jordan expressed that unfortunately, when the National Audit Office was racked by a crisis of confidence brought about by conflicts of interest, failure to attract a sufficient number of professionally qualified accountants and auditors and weak leadership, the necessary internal audit capacity needed to compensate for those deficiencies and defects in many budget agencies, was regrettably missing.
The Finance Minister stressed that internal auditing has become a factor of the new accountability and control era. He said that the manner in which public sector entities maintain internal control and how they are held accountable has evolved to require more transparency and more accountability from these organizations that spend taxpayer funds.
Jordan emphasized that the role of internal auditing has evolved from an administrative procedure with a focus on compliance, to an important element of good governance. With this in mind, the Finance Minister said that a project will be launched to review the needs and capacity of each budget agency or cluster of budget agencies, so as to implement a proper system of internal auditing.
As for external auditing, Minister Jordan said that the Auditor General’s Office must gear itself to play a bigger role in the new accountability and transparency culture which the coalition Government is seeking to instill.
Jordan said that it must remain true to its mission to “promote good governance including openness, transparency and improved accountability …”
To assist it in achieving its mission, the Finance Minister said that the Audit Office will implement the fourth phase of a project designed to strengthen and modernize its systems, processes and procedures.
More specifically, he said that the project will enhance the efficiency and efficacy of its auditing processes through the use of information technology and institutionalized best practices, knowledge and skills for sustainable operations.
At the Audit Office, he said that staff will be trained to produce higher quality reports, undertake forensic auditing, and investigate and detect fraud, as well as raise the institution’s visibility to ensure the collaboration of its stakeholders.
The Finance Minister said that the objective is to raise awareness about the Audit Office’s roles and functions through the design and implementation of awareness-raising workshops.
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