The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Auditor-General has been “impeded” in his efforts to scrutinise the Government’s spending, resulting in civil servants escaping accountability for “loss or wastage” of taxpayer monies.

The warning was contained in the Auditor-General’s report for the 2012-2013 fiscal year, which accused unnamed civil servants of “a lack of co-operation” with his Office’s audit efforts - actions that amount to breaking the law.

The report, which covers the current Christie administration’s first year in office, also reveals that the Auditor-General’s Office is under-staffed by some 43 per cent.

Terrance Bastian warns this is making it increasingly difficult for his office to exercise proper scrutiny over the Government’s accounts, especially given that the latter’s size continues to expand to an estimated $1.944 billion in (like-for-like) recurrent spending in the upcoming 2015-2016 Budget year.

“A matter of concern exists in regards to obtaining access to audit information/documents within some government departments/ministries,” the Auditor-General’s report, tabled in Parliament last week, warns.

“Some public officials appeared unaware of the provision of the Financial Administration and Audit Act, which entitles the Office of the Auditor-General (OAG) to have access to all books, records, returns and reports related to government accounts.

“As a result, the work of the Office of the Auditor-General was impeded in some cases due to the lack of co-operation by officials of the various ministries and departments.”

Mr Bastian and his office did not identify the guilty civil servants or departments/ministries by name. However, the 2012-2013 report says the Ministry of Tourism failed to produce a list of supplier contracts despite being asked to do so.

Not slow to warn of the implications, the Auditor-General’s report added: “Some public offices [officials] are not being held accountable for their actions, which results in loss or wastage of government funds.

“The belief of public accountability is generally construed as the obligation to answer for the discharge of responsibilities entrusted to government officials/workers.

“When accountability is present, an organisation operates more efficiently, effectively and economically. In addition, the environment is more conducive to positive growth.”

The contents of the Auditor-General’s report, while unlikely to surprise many observers, go to the heart of the increasing demands for greater accountability and transparency in how the Government manages its fiscal affairs.

The report’s publication also coincides with exploratory private sector discussions about forming a new organisation dedicated to tackling these issues, the Organisation for Responsible Governance.

Tribune Business can reveal that business community leaders are in initial talks over whether to create such an organisation, which would effectively pick up where the Coalition for Responsible Taxation appears to have left off.

“It’s very much in its infancy,” one source, speaking on condition of anonymity, said of the proposed Organisation for Responsible Governance.

Another added: “There’s some discussions about it, but it’s too early to say whether it’s going to get formed. There’s a number of cursory conversations about it.

“There’s no agreement to form and incorporate, and do that with some legal framework. There are a number of people definitely interested in doing it, and I’m one of the people who has been contacted about it and involved in the early discussions. It’s just an idea at this point.”

These talks are occurring at a time when demands for better governance appear to be reaching an all-time high. Calls for greater accountability and transparency in how the Government manages taxpayer funds surged as a result of Value-Added Tax’s (VAT) implementation, and have yet to ease up against a backdrop of missteps by the Christie administration that have eroded many Bahamians’ trust in government.

A Freedom of Information Act is also high on the agenda, and could become increasingly important given the growing inability of the Auditor-General’s Office to scrutinise an ever-growing government.

“The Office of the Auditor-General continues to operate with minimal staff,” the 2012-2013 report said. “A number of staff have retired, and there has not been any replacement.

“With the increase in government operations to approximately $1.8 billion, there is a great need to increase and upgrade staff.”

The Auditor-General’s report says the office, which effectively acts as the Government’s internal auditor, is operating with just 45 staff - almost 50 per cent below the 78 that Mr Bastian deems necessary.

The Auditor-General himself then suggested that the Government implement a real-time, integrated financial management system - covering the entire public sector - as a way to boost accountability in the way it manages the people’s money.

“A fully functioning Integrated Financial Management System (IFMIS) can improve governance by providing real-time financial information that financial and other managers can use to administer programmes effectively, formulate budgets and manage resources,” the Auditor-General’s report says.

“Sound IFMIS’s can help the Government gain effective control over their finances, and also enhance transparency and accountability, reducing political discretion and act as a deterrent to corruption and fraud.”

But, already anticipating internal resistance to such a move, the Auditor-General’s report says: “Implementing successful IFMIS is paved with difficulties, such as resistance from the bureaucracies involved, and lack of decision-making from top-level civil servants.”

Still, the Auditor-General’s 2012-2013 report said an IFMIS would give “timely, accurate and consistent data” for the Government’s management and Budget decision-making.

It would also provide “a complete audit trail”; support government-wide and ministry-level policy decisions; and give information for budget planning and reporting.

Finally, such an integrated system would generate “greater financial control and reduce opportunities for discretion in the use of public funds”.

The recommendations by Mr Bastian and his office echo those contained in the recent report by the International Monetary Fund’s (IMF) Caribbean affiliate, CARTAC, on whether the Bahamas should implement so-called ‘Fiscal Rules’.

The Caribbean Regional Technical Assistance Centre (CARTAC), in its March 2015 ‘discussion paper’, lambasted the “lack of quality data” produced by the Government’s own financial management and reporting systems.

It suggested these deficiencies would prevent the successful implementation of any so-called Fiscal Rules or similar legislation now.

CARTAC, as revealed by Tribune Business, warned that the Bahamas would see its credibility “quickly destroyed” if it attempted to impose so-called ‘fiscal rules’ in the near term because the Government’s financial management systems will be unable to cope.

It also lambasted “the slow pace of reform” in government accounting and information systems.