Draft National Audit Act in Circulation
important role of the Auditor General
as part of the wider issue of governance in the country
was recognised in the constitutional review which preceded the 2001
General Elections. A major change in that process was the decision to give
effect to the independence of the Office of the Auditor General (Office or
AG) by removing any reporting responsibility to the Minister of Finance and
placing it directly to the Speaker of the National Assembly. The basis of
that policy is that since the Office is primarily responsible for evaluating
critically on the financial transactions of the executive branch of the
government for which the Minister of Finance bears responsibility, it would
be inappropriate for him to report to the Minister.
the United States of America the General Accounting Office has earned the
accolade of defender of the public interest for its bold and imaginative
reports, the savings its work has brought to taxpayers and the independence
and courage it has demonstrated in making what we would consider unthinkable
demands of the Administration, even taking it to court as in the case of
Enron. The constitutional arrangements in Guyana and those of the USA may
have significant differences. In the USA the principle of the separation of
powers among the executive, the legislative and the judiciary is very well
established while under our Westminster-style model only the independence of
the judiciary and certain other bodies including the Office of the Auditor
General and the Ombudsman seems to be beyond doubt. With so many of our
legislators holding executive positions at the pleasure of the President and
the party, by no stretch can the National Assembly be considered
independent. The fact that the Member of Parliament responsible for
parliamentary affairs falls under the Office of the Executive President is
as clear a statement as possible of the interpretation and expectations of
there is a reasonable assumption in the Draft that the Public Accounts
Committee (PAC) of the National Assembly (NA) enjoys some independence,
having as it does members of the opposition parties in the Assembly. The
Standing Orders of the NA provide for the appointment of the PAC and for its
chairperson to be drawn from the members of the opposition parties. From all
accounts the Office of the Auditor General enjoys the confidence of the PAC
with which it seems to have a good working relationship. On the other hand,
it would be unusual for the Office to have more than a mutually respectful
relationship with the governing party which would normally see it as best as
a legal requirement and otherwise as intrusive and meddlesome.
addition to the issue of independence which has always plagued it, some
other critical issues facing the Office include the adequacy of resources
and the scope of its authority to examine and pronounce on expenditure
before they are incurred such as in the tender process. It is not clear from
the draft whether the Office has such an authority but it does appear that
the other issues are addressed while recognising some of the realities of
the domestic situation. For example, it provides that the final selection of
the Auditor General rests with the Executive President. This Page has noted
in earlier articles that meaningful changes in the Act will also require
changes in the Standing Orders which currently do not reflect the new
constitutional position. It is unlikely that this will be considered in
light of the current impasse between the two major parties so the draft,
even when it is finally passed into law, will still leave a number of major
issues to be resolved.
purposes of the Act as set out in the Preamble are to ensure greater
government accountability for the receipt, disbursement, and control of
public moneys; to promote greater economy, efficiency, and effectiveness in
the use of such money by conferring independent corporate status on the
Office of the Auditor General; to consolidate into one piece of legislation
all aspects of the responsibilities and authority of the Auditor General; to
repeal and replace the relevant sections of the Financial Administration and
Audit Act; and to strengthen Parliamentary oversight over the work of the OAG.
Act provides for a three-stage process of appointment of the holder of the
position and for his/her qualifications. The process begins with the PAC
which selects and submits to the President a shortlist of three candidates
from which the President nominates one and forwards that name for
ratification to the National Assembly. It does not appear that the National
Assembly has any discretion in the matter and the only justification for the
need of ratification is the appearance of the involvement of the National
qualify for appointment the candidate must be a citizen of Guyana and hold a
degree in accounting, finance, law, economics or other appropriate fields
and should be a member of a recognised accounting or other professional
body. This seems to suggest that the holder does not need to be a
professionally qualified accountant which is strange since he/she will be
required to sign audit opinions. In this connection it is worth noting as
well that employment with the OAG is deemed to meet the requirements for a
practicing certificate issued by the Institute of Chartered Accountants of
Guyana Act 1991.
Auditor General has complete authority to employ, train, pay, promote,
reward and dismiss staff except that appointments of and/ or adverse actions
relating to senior level positions have to be ratified by the PAC. The
employees in the Office of the Auditor General are considered to be in an
excepted service i.e. they are not part of the public service or subject to
a 1993 amendment to the Financial Administration and Audit Act, the Auditor
General may engage the services of specially qualified individuals or firms
and chartered accounting firms in public practice to serve on a contract
basis for limited audit engagements including those required as part of
agreements with international organisations.
Act provides for the authority to contract to chartered accounting firms to
provide external audit services, conduct evaluations, and to review programs
and projects for public sector entities, to be vested
solely with the Auditor General.
However, in contracting with technical experts and chartered
accountants from private firms, the Auditor General must follow detailed
guidelines and consult with a review committee comprised of the Secretary of
the Treasury, a representative of the Institute of Chartered Accountants of
Guyana (who is not in private practice), the Head of the Department of
Management Studies at the University of Guyana, and the Accountant General
to make the award.
Act places emphasis on fraud investigation and requires the Auditor General
to establish within the Office a Special Investigations Unit for which it
may engage persons specially trained to investigate fraud and corruption.
The Auditor General may refer the findings of any such investigations to the
Police and appropriate judicial authorities.
of the Auditor General
Auditor General has access at all reasonable times to the documents of the
entity being audited and may require a public entity (defined to include all
central and local government bodies and entities and all bodies and entities
in which the State has a controlling interest) or any person employed by the
public entity to produce a document in the entity’s or person’s custody,
care or control and to provide the Auditor General with information or an
explanation about any information.
may also require information from persons who are not members, employees or
office holders of the public entities require persons to give evidence,
either orally or in writing and to examine the bank records of any person he
believes that the money belonging to a public entity has been fraudulently
or wrongfully paid into such person’s account.
of course are subject to the need to obtain the necessary authority such as
a warrant in the case where he/ she seeks access to bank records. Under
Section 47 of the Draft, where any person commits an offence or obstructs,
hinders or resists the Auditor General or refuses to comply with a lawful
requirement or makes false or misleading statements, the Auditor General may
request the Director of Public Prosecutions to take appropriate action.
penalties set out in Section 49 are fines of up to $200,000 and or
imprisonment for a term up to five years in the case of a person and in the
case of an organisation, to a fine of up to $400,000. There is no separate
penalty for continuing offences.
revenue earned by the Office must be paid into the Consolidated Fund. A
Draft of the annual plan and detailed budget of the Office must be submitted
to the PAC at least 90 days before the beginning of the financial year. The
PAC has 60 days from the receipt of the plan and budget to review them and
to provide comments for consideration by the Auditor General. Following
consideration of those comments, the AG finalises the Plan for approval by
Auditor General is required to submit on a quarterly basis to the Public
Accounts Committee, a report on the performance and operation of the Office
and annually a copy of an Annual Performance and Financial Audit Report with
respect to the Office.
the first time in the history of this country, the Office of the Auditor
General will itself be subject to an independent audit by auditors appointed
by the Public Accounts Committee. Surprisingly, the Draft provides that the
award of the audit may go to an international firm.
is revolutionary legislation, but substantially enhances accountability and
transparency and should allow for better value for taxpayers’ money.
Audits of the Government Accounts however, still seem to over emphasise
expenditure rather than revenue, although the procedures manual referred to
in the Act may address this apparent deficiency.
September 30 deadline for reporting seems too long while the emphasis on the
overall public accounts rather than by ministries, departments and regions
may do a disservice to those industries, departments and regions which
really deserve a clean opinion. We had noted earlier that passage of this
new Audit Act is a condition entered into by the Government and how quickly
it moves to deal with this is an important indicator of how seriously it is
prepared to treat with matters relating to the audits of its transactions
and the broader issues of accountability, transparency and good governance.
the need to move quickly however, the government must immediately announce
the availability of this Draft and circulate it to relevant groups in the
society for their consideration. Business Page looks forward with interest
to the early passage of this path-breaking legislation.
week: Review of DDL’s Annual Report