‘Internal Audit' may serve to cover up

corruption

For years, the political opposition has been critical of the fact that some Government Ministries have been slow to act when it comes to complying with the recommendations of the Auditor General in relation to financial irregularities. The Ministry of Finance established last year, an internal auditing department to ensure compliance by Ministries with the said recommendations. While just a few of the opposition members believe that the move is a commendable one, some question whether the division while being under the wings of the Ministry of Finance would be allowed to operate without interference. It is also feared that the Internal Auditing Division may only serve to protect weak systems that encourage corruption. Last week, Leader of the Alliance For Change (AFC), Khemraj Ramjattan, explained that while the Ministry of Finance would have made this move, with seemingly good intentions, he is very much opposed to the “internal auditing system” which is housed in the Ministry of Finance. The Minister of Finance, Dr. Ashni Singh, during his 2014 budget speech, explained that their internal audit capability continues to be strengthened with a high level oversight committee, the Internal Audit Division. The centralized internal audit staff will be tasked with reviewing findings in the Audit Office’s annual report and following-up with Government Agencies to ensure compliance with the relevant laws and regulations. Year after year, the Auditor General highlights certain financial irregularities in his annual reports and only some are complied with.  It is a pattern that has even worried Speaker of the National Assembly, Raphael Trotman, who said that such behaviour would only undermine the democracy of the country if it is not corrected. Auditor General Deodat Sharma said that he does not have the power to make Ministries comply with his recommendations. He said that his office serves as the watchdog of the national purse while ensuring that the money allocated to any sector is not wasted, but spent wisely. Under the Audit Act, he has the power to obtain information, evidence, inspect bank accounts and access premises. He insists that nowhere in the Audit Act does it give him the power to make agencies comply with his recommendations. The Auditor General said that for the first time, in his 2012 report, he outlined how many recommendations were applied and how many were not. He said that this is a critical area and as such he hopes that it is given the strictest of attention. Part of that report he referred to said that in relation to the 350 recommendations made in the 2011 Report, 245 were in relation to generalized areas. There were 105 overpayments on construction works and related issues. At the time of reporting in September 2013,  some 50  percent of the 245 recommendations that were in relation to generalized areas were cleared while 11, or five per cent, were partially dealt with. Sharma insisted that while these irregularities have been highlighted, they are being taken seriously by the relevant Ministries, despite what his findings are, and that the relevant Ministries are making every effort to correct their systems. There were also instances where the Auditor General discovered during audits that his findings would be in stark contrast to the reports of the internal auditors of some Ministries. He had suggested some time in 2003 that measures be taken to strengthen financial management and compliance with his recommendations, hence the establishment of the Internal Audit Division. The Internal Audit Division, a 14-member “system-corrector” is geared towards bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes by various ministries and budgetary agencies.  It monitors and ensures compliance with procedures and laws. When there is room for improvement, the Division makes recommendations for enhancing processes, policies and procedures. Another important question, raised by opposition members is whether the Division will make a difference when it comes to the improving and ensuring the level of compliance with the AG’s recommendations. On the question as to whether this “watchdog” will make a difference when it comes to the Auditor General’s report for 2013 which is expected to be out in a matter of months, Ramjattan said, “I am against any other parallel system that will be largely governed by the Ministry of Finance. It must be independent. The Constitution does not mandate parallel intermediate audit interventions.” The Member of Parliament continued, “If there is found to be a problem then all the necessary resources should be provided to the Auditor General so that he can carry out the functions as the guard of the national purse. “To now go give a parallel audit mechanism to these budget agencies might not be in the best interest because I rather suspect that government is going to treat these auditors like they did in other instances where auditors were sacked for exposing corruption… we must have one strong audit department which is going to be professionally strong enough to give very independent and professional opinions and strong enough to ensure its recommendations are complied with.”