Give more powers to Auditor General

SUNDAY, JUNE 26, 2016

The first recorded evidence in Sri Lanka’s history of an Auditor General dates back to 1779 when Cecil Smith was appointed just three years after British occupation of the Maritime Provinces. The modern incarnation of the Auditor General’s Department was shaped by the constitutions of 1931, 1947 and 1972.

For more than 200 years, therefore, Government spending has been formally scrutinised by the office of the Auditor General. Thousands of reports have been churned out, although their timing was not always ideal. The annual accounts of corporations were often tabled in Parliament many years late—so late that J.R. Jayewardene once called it “a waste of time and a waste of tongue” to discuss them since the boards and ministers had changed. As shareholders, the people were short-changed.

Performance has improved. Where many other Government institutions have floundered in the conduct of their assigned duties, the Auditor General’s Department has done remarkably well. Its reports reveal a mind-blowing litany of financial abuses, waste, fraud and other misappropriations of funds, the like of which would have caused many a private sector company to go under immediately.

Yet, the Government plunges on regardless. The Auditor General’s reports are examined by the Committee on Public Enterprises (COPE) and the Public Accounts Committee (PAC) which are two parliamentary bodies. But, for the most part, there is little impact. Their findings are released, chewed on briefly—usually by media chasing the day's headlines—and promptly set aside to gather the proverbial dust.

Such “flavor du jour” treatment is wholly untenable. Revelations in the reports of the Auditor General, COPE or PAC are so critical that they require, not only deep study, but immediate action and accountability. Failure can have, and has had, disastrous consequences.

For instance, long before the infamous Value Added Tax (VAT) tax scam climaxed into a racket of enormous proportions, the Auditor General’s Department had sounded a shrill warning. Its officials had repeatedly alerted the authorities to irregularities in the relevant accounts of the Department of Inland Revenue, to no avail. What had started out as relatively small culminated in a 3.57 billion rupee scandal, one of the costliest frauds in South Asia.

Scores of other abuses have been documented by the Department using international principles of public auditing. Unlike some of the more recent teams set up to investigate financial crimes, the Auditor General has delivered results efficiently, scientifically and, within reason, on time. Had the Department’s word been taken seriously, the State’s accounts would today be in much better condition.

The recklessness with which our monies are administered should give the public raging nightmares. One report of the Auditor General revealed, for instance, that accounting deficiencies and management inefficiencies at the Employees’ Provident Fund (EPF) had resulted in failure to credit millions of rupees into members’ accounts. Another said that poor investment choices resulted in the EFP losing more than Rs. 11 billion by the end of 2013. This is a fraction of what successive inquiries by the Auditor General have found. It should no longer shock us that our life savings are in fickle hands.

Alarmingly, there is seldom any action taken on the findings of the Auditor General’s Department. This is chiefly because it lacks the teeth, the legal backing, to enforce its recommendations. Depending on the goodwill of successive Governments to follow the Auditor General’s advice has patently not worked. And, so, a new National Audit Bill was envisaged to fix the loopholes.

The law has been in drafting since the early 2000s. Maithripala Sirisena made it one of his main election pledges, vowing to have it passed in Parliament by March 19, 2015. That promise was broken. A National Audit Commission was appointed in October but has no power till the legislation is enacted. Right now, we are just paying to maintain an office.

In recent weeks, the National Audit Bill has come up for discussion again and is due to come up before Cabinet again, possibly next week. In April, the draft (which the public are yet to see) was handed over to a Cabinet subcommittee with a view to watering it down. This includes key clauses allowing the Auditor General to impose a “surcharge” on the Chief Accounting Officer of errant Government institutions; in other words, to recover monies lost through bad accounting practices, etc. At present, he is empowered to issue such directives on State universities, higher education institutions, provincial councils and local Government bodies. But even these are mostly ignored.

The Auditor General has openly urged the Government to preserve the clauses on surcharges. The Department’s unions piled onto the streets in protest against attempts to dilute the law. The Cabinet subcommittee has done the opposite. It has taken out the entire section because it “does not recognise the rules of natural justice”.

Nothing is further from the truth. The Bill provided for an accused to show cause before a tri-member committee of two Commissioners of the Audit Commission and a third party. The accused could choose to take the matter before the Court of Appeal, and thereon to the Supreme Court, in the event he was dissatisfied with the process.

Combined with the loosening of several other clauses, the National Audit Bill is now in danger of being passed with a great deal of grandstanding but little impactful content. Ironically, the country would have Ministry Secretaries to thank for it. As Chief Accounting Officers, they have opposed moves to hold them accountable for financial abuses in their respective institutions, particularly as they are also servant to powerful politicians who “force” them to misuse funds for selfish, personal objectives.

This should not be the public’s concern. For too long has their tax money been frittered away with little regard to financial norms and regulations. To now have a toothless law foisted upon them would add insult to injury. This Government is being led into the unacceptable habit of thinning down well-intentioned legislation for shortsighted gains. The same happened with the 19th Amendment which was diluted on the floor of Parliament under pressure by the pro-Rajapaksa group.

Take, also, the Right to Information Bill which was passed in Parliament this week and is awaiting the Speaker's signature to become law. Here, the Joint Opposition prevailed to insert some helpful stipulations into the RTI bill. For instance, the RTI Commission now has listed powers to take action against information officers who are duty-bound to provide permissible information under RTI. But this does not detract from the fact that the RTI Commission no longer has significant reach envisaged in the original draft.

This practice has to stop. A fully-armed Auditor General’s Department is vital to the financial well being of our public institutions. Many parts of the world are moving forward in the right direction. Sri Lanka must follow suit. The Government must not take one step forward only to leap several steps back. No. 08, Hunupitiya Cross Road, Colombo 02. P.O. Box 1136, Colombo editor@sundaytimes.wnl.lk - 2331276 news@sundaytimes.wnl.lk - 2479332, 2328889, 2331276 features@sundaytimes.wnl.lk - 2479312, 2328889,2331276 pictures@sundaytimes.wnl.lk - 2479323, 2479315 sports@sundaytimes.wnl.lk - 2479311 bt@sundaytimes.wnl.lk - 2479319 funtimes@sundaytimes.wnl.lk - 2479337, 2331276 2479540, 2479579, 2479725 2479629, 2477628, 2459725