Business Page – June 16th, 2002

Draft National Audit Act in Circulation 


The 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.

In 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 the Government.

Yet 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.

Critical issues

In 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.

The 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.

Appointment and Staffing

The 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  Assembly.

To 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.

The 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 its rules.


Continuing 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.

The 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.

The 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.

Powers of the Auditor General

The 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.

He 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.

These 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.

The 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.

Financing and Audit

Any 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 the PAC.

The 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.

For 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.


This 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.

The 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.

Despite 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.

Next week: Review of DDL’s Annual Report