Business Page December 2nd, 2001

Public Accounting and Accountability


Last week we reviewed the Report of the Public Accounts Committee on the accounts of the Auditor General (AG) for the year 1995-1998 and commented on some of the more worrying findings of the AG during those years in relation to financial management by the various ministries and departments of the Government. Today, in the second of this three-part article, we continue that review and look at some other significant areas that drew adverse comments from the AG.

Tendering Procedures

Justifiably, this is an area of legitimate concern for several reasons: the vast sums spent annually on contracts awarded to private contractors financed out of government revenues and loans require that the country receive proper value for money; every level of society must be concerned at the quality of work done by some of these contractors including the Charity Wharf, roads, bridges and buildings that require re-work sometimes within months of their completion; and finally for years the AG has been drawing attention to these failures and there have been repeated calls in and out of Parliament for a complete re-organisation of the operations of the Central Tender Board to reflect membership from outside the Public Service e.g. the professional engineering bodies, trade unions, the Consumers' Association and the University of Guyana.

Several years ago, with the assistance of consultants, draft legislation on public procurement was prepared and the issue was also addressed by the Constitutional Reform Commission. In his 1999 Report, the AG noted that at the time of the audit, despite an assurance that this would be done, there was no evidence of action taken to reform the tendering procedures by way of legislation. No doubt, with no action taken since that time, the AG will again report on the lack of progress. Here are some of the specific cases reported on by the AG in his 1999 Report:

1.     The tender documents relating to the award of a significant number of contracts by the Central Tender Board (CTB) were not made available during the course of the audit. The minutes kept of meetings held were also found to be deficient. As a result, the basis of the award of these contracts could not be determined. The reasons advanced by the manager of the CTB for the state of affairs were as tenuous if not as ludicrous as those offered by The Public Accounts Committee for the late consideration of the AG's Reports for 1995-8. The manager of the CTB attributed this state of affairs to (a) the fire which destroyed the Ministry of Finance Building in 1998 (b) the lack of a computerised database and (c) resource constraints, having regard to the large number of contracts required to be adjudicated upon. The Auditor General is clearly a patient person for he would be fully aware that copies of the relevant documents would have been available elsewhere.

2.     Simplistic ploys utilised by ministries and departments include the absence of a system of competitive bidding and numerous instances of contract splitting to avoid adjudication of the Central Tender Board. In particular the minutes of the meetings of the GDF Departmental Tender Board did not make reference to other bidders or the basis of the award of the contracts, raising doubts as to whether a system of competitive bidding was followed before contracts were awarded.

3.     In one particular case, the Guyana Defence Force awarded five contracts valued at $4.3Mn. to the same contractor on the same day for work of the same description. The GDF must understand that no one, however powerful, is above the law. Numerous cases of contract-splitting were also reported at the Supreme Court of Judicature and the high-spending Ministry of Public Works. Another ploy is the award of contracts to low-balling bidders and the subsequent payment of huge sums as variations. At the Ministry of Home Affairs no vouchers and supporting documents were produced to substantiate payments totaling $171.6Mn, and $48Mn. in the case of the Ministry of Education. At this Ministry there were three BCM accounts without authority and no supporting documents were produced to verify the transactions relating to those accounts.

Walking on the edge of the law

The Report indicates that the manipulation of the voted provisions at several Ministries to exhaust the budgetary allocations is more a rule than an exception and several instances were noted where cheques were drawn in January 2000 but were backdated to December 31, 1999 in complete violation of Section 36 of the FAA Act which provides that all appropriations lapse on the 31 December and unexpended balances are to be surrendered to the Consolidated Fund. A number of statutory bodies in receipt of subventions were also significantly in arrears in terms of financial reporting.

A related issue raised by the AG is the non-compliance with the statutory requirement that all unspent amounts released to the Ministries, Regions and Departments be refunded into the Consolidated Fund at the end of the year. According to the Auditor General 'the main reason for this most unsatisfactory state of affairs, indeed a serious breach of the Law, was the general failure to effect reconciliation of the bank accounts so as to be able to establish accurate balances at the end of the year for the purpose of effecting such transfers'.

Even the IDB has been fingered for criticism in the Report. The Auditor General points out that contrary to the legal requirement that the balance on the Agriculture Research Project Account be paid into the Consolidated Fund, the IDB signed a Memorandum of Understanding with the government and the Bank of Guyana that the funds be retained in the Account.During 1997, five amounts totaling $1.107Bn. were withdrawn from the account to meet expenditure relating to road rehabilitation but contrary to the MOU no amounts were paid over to the Consolidated Fund.

In December 1997, quite incredibly, the IDB approved the 'temporary transfer' of US$2Mn. to facilitate the rehabilitation of the Georgetown Roads which as the Auditor general noted was not an IDB project. Up to the time of his Report in November 2000, 'this temporary transfer' had not been reimbursed.

Surely the IDB owes the people of Guyana an explanation for its conduct particularly given that the transactions would be associated with general elections held that year.

Contributions to local organisations

The AG reports that payments totaling $266.9Mn.were made in respect of departments within the Ministry of Finance and therefore ought to have been accounted for in the ordinary manner of categorisation. These include $16.4Mn.for BASS, $10.7Mn.for COMU, $55Mn. for CANU, $84Mn. for the long defunct State Secretariat and $58Mn. for the Statistical Bureau. The Government must be aware of concerns about the legality of some of these bodies and recognise that by these allocations it is actually reinforcing those concerns.


It is clear that the national accounts are in a serious state and that taxpayers do not get value for money. Considerably greater efforts need to be demonstrated by the government, Parliament and the Public Accounts Committee for anyone to take them seriously. Grave as the findings are, the Auditor General noted for our benefit that his Report should not be relied upon to reflect the results of a comprehensive review of the financial operations of the Government. He considers such a review desirable and indeed sees this as the "intention of the Law'. However, in view of the depleting staffing situation in the Audit Office, that Office could adopt only a selective approach in view of the timeframe within which it has to report to the National Assembly.

There is no question that the government, probably more than any other employer in Guyana is faced with the losing battle of recruiting and retaining adequate numbers of suitably qualified staff. The ministries, departments and agencies need such staff not only to perform routine accounting functions but also to facilitate proper internal controls and the execution of the internal audit functions in these bodies. As the AG points out the absence of internal audit departments in large ministries continue to militate against an effective system of internal control and has contributed significantly over the years to the deterioration in financial management at both the ministry and central levels.

Next week we will make specific recommendations to address at least some of the problems.