Same script, other cast
I recently used this space to discuss the concept of governance within our society, which should be to the benefit of national stakeholders from Government to the general public. The issuing of the Auditor General’s Report has seemingly brought this issue to the fore again and continues to leave many questions unanswered and a great level of frustration in many quarters.
It is important that the public understands the financial and even social effects of a system of public sector management that leaves much to be desired in the use of taxpayers’ funds. I don’t expect a perfect financial management system in any entity (public or private), but neither do I lay blame at the feet of accounting officers and sacrifice them for what it’s worth. The issues highlighted by the Auditor General are deeper and to my mind illustrate an attitude, approach and maybe even a flawed methodology to the business of the state that can no longer be allowed to take root.
The level of financial management required obtains regardless of political party and the political affiliations (if any) of public officers. The 2013 Report Of The Auditor General has highlighted the following key issues:
1. Ineffective systems to capture and/or verify financial transactions across ministries and departments. The high incidence of supporting evidence and documentation missing, lack of approval for transactions is unbelievable and unacceptable; gross inability to ascertain and verify liabilities and assets. What then is our true financial and economic position as a country?
2. Poor financial reporting. In an effort to improve the standard of financial reporting within the public sector and across Government departments, the Ministry of Finance agreed to the adoption of International Public Sector Accounting Standards (IPSAS), and in 2008 specifically adopted an accruals basis of accounting to be in full use of 2012. Unfortunately, this has not been fully achieved in several departments and prevents full consolidation and reporting of Government’s finances.
In the asbsence of this, it is hard to know the full extent of Government’s liabilities and its assets. When will this be achieved? Why hasn’t this been achieved despite all the training and meetings?
3. Apparent disregard for financial management rules and regulations. The observations within the report clearly illustrate a level of disregard for financial management rules and regulations at all levels of Government departments that cannot be sustained.
This disregard is even more catastrophic where the basic expectations of a system are not being fulfilled – (regular bank reconciliations, supporting documentation, obtaining three quotes prior to selecting vendors).
Additionally, the report also outlines incidences of funds being transferred to state enterprises without correct parliamentary approval. Even new agencies like the Constituency Councils have fallen into the existing rut of poor reporting practices and this is grossly unacceptable.
4. Exploitation of poor financial management systems by members of the public –– where financial systems are poor, third parties, the public, vendors all benefit intentionally or unintentionally from errors like double payments and overpayments. However, it then is also clear that the lack of robust financial systems is not confined to Government, but is an issue across the private sector and individual vendors as well. It’s tantamount to financial rape. But at whose expense?
5. Increased financial costs and losses to Government and the Treasury. Poor financial management leads to leakage of funds from the system where vendors are paid twice and there are erroneous tax refunds, and so on, and ultimately to increased costs of borrowing to close cash flow gaps.
The interpretation of this report by readers will of course be guided by their knowledge of public sector management, its systems and any intimate interaction they have had with Government and its agencies. I am well aware of systems that exist but here are my ongoing concerns:
1. What is the level of detailed training given to all public officers at time of employment and beyond by public officers experienced in the correct procedures?
2. To what extent are all levels of staff within Government departments aware of the provisions of the financial rules and regulations and the financial management and audit rules?
3. Who is responsible on a daily basis for the financial management of Government transactions across ministries and deparments? Is it the permanent secretaries? If so, how engaged and interested are they?
4. Are there clear disciplinary procedures for public sector staff and officials at all levels to address these financial management issues, especially where there is blatant disregard for rules and the concerns highlighted by the Auditor General remain unattended to?
5. Are our Annual Estimates based on the outputs of this so challenged system?
I find it hard to believe otherwise. We as taxpayers must demand a higher level of public sector management from all concerned. These issues highlight a need for more responsibility by a wider cross section of the public sector and not just our politicians, Cabinet ministers or Parlimentarians. Poor financial management means more taxes and levies, longer waits for tax and other refunds for us as citizens.
There now seems to be monthly calls and suggestions for new taxes, levies, fees and so on on households and individuals. Let us manage what we have first and close all loopholes and gaps in the system before we suggest taxation as a measure to further fund our inefficiencies and deficiencies in the management of our public sector affairs.
I am aware that the Institute of Chartered Accountants of Barbados (ICAB) has worked with Government and continues to do so through its public sector committee on a range of issues that seek to improve the level of public sector financial reporting in Barbados.
1. ICAB has met and worked with the Accountant General, Auditor General and Ministry of Finance on these issues and reiterated the urgency of a better standard and quality of reporting and management on an annual basis.
2. ICAB has engaged consultants and trainers to conduct seminars on the public sector accounting standards and other aspects of Government accounting and this will continue.
3. ICAB has made an appeal for the better staffing of the Audit Office to improve and facilitate more expansive and detailed work.
The lack of urgent action over the years on the Auditor General’s reporting these and similar deficiencies is just another aspect of our poor governance that has led to citizens having less faith in our elected officials and our overall system of governance. The public need clear demonstration that their tax dollars are working to their benefit and not being used withoutthe benefit of proper oversight.
Many departments refused to respond to request of the Audit Office, others demonstrated little urgency in their responses to the issues raised. This cannot continue on an annual basis. The Auditor General has fulfilled his mandate, will all others with responsibility in this process do the same?