Ensuring transparency and accountability of audit

Waliul Huq Khandker The other day this scribe was glancing through annual reports of some important government organisations which he could not read earlier due to other preoccupations. At one stage he came across an article dealing with cost and gains of audit done by various audit directorates under the supervision of the Office of the Comptroller and Auditor General of Bangladesh. It mentioned that in the year 2010, Tk 76170 million was deposited with the government treasury against Tk 618.5 million spent for conducting audit. It means that in the monetary value the benefit was Tk 123 against the cost of Tk l.0. In 2009, the figure was 1:122. The performance is quite impressive. The latest figure was not available right at the moment. But the difference will not be that much. This performance should be viewed keeping in mind also that apart from the quantified amount of money mentioned above it has an un-quantified deterrent effect on prevention of recurrence of such irregularities which plays a very important role in ensuring transparency and accountability effectively. With this background a review of the state of audit reports discussed by the Public Accounts Committee of Parliament (PAC), implementation of its recommendations and settlement of outstanding audit observations raised by various audit directorates deserve attention. Previously the number of audit reports awaiting discussion by PAC was quite large. The ninth parliament has discussed about 262 audit reports thereby substantially clearing the backlog. At present 78 audit reports are outstanding. The position can be improved further in near future, provided the momentum can be maintained in the coming days. But the rate of implementation of PAC recommendations is not satisfactory. According to the recommendations in the Third Report on Implementation of PAC, only 44 out of 195 ones have been implemented and 151 remain still outstanding. Unless quick implementation of recommendations is ensured, the intention of ensuring discipline, transparency and accountability in financial management will be frustrated, because a lot of time has already elapsed by the time the reports are placed before PAC and further delay will be a great bottleneck to safeguarding public money. To address the problem the Ministry of Finance should fix a date, by which implementation will be mandatory on the part of the concerned ministries. In other words effective follow-up of implementation status must be ensured to make audit fruitful. According to one report up to June 30, 2013, about 869 thousand audit observations are outstanding and the total amount involved is about Tk 5,309.89 billion (530,989 crore). This includes observations as old as 1971-72. The possibility of inaccuracy of the number for various reasons cannot be ruled out. However, considering all aspects even after exclusion of a half of the number and the amount, the balance remaining will be alarming. If proper attention is not given right now, efforts put for identifying and pinpointing the irregularities will be fruitless and the amount spent for this purpose will be wasted. It should be remembered that the financial and other irregularities detected 10 years ago were committed further 2-3 years back and as such these are actually 12-13 years old. Since these could not be settled during this long period in the usual way of examining broad-sheet replies, something different needs to be tried at least on a trial basis. This will be in addition to the present bipartite and tripartite meetings. The following procedure may be run on a trial basis initially for a period of three years to test its effectiveness: i) Ageing of outstanding audit observations related to various organisation subordinate to the ministry concerned may be done by the concerned audit directorate and these may be divided into two groups: i) one group consisting of audit observations of less than 10 years old and ii) the other group consisting of ordinary observations but excluding serious observations like misappropriation of money, defalcation, fraud, forgery etc 10 years old and above. For dealing with observations 10 years old and above, the concerned ministry will form a committee consisting of representatives of the ministry and the head of the department concerned. The committee will review broad-sheet replies of the auditee, hold hearings if necessary, take decisions and send quarterly status reports regarding settlement to the Audit Directorate. The decision of the committee will be final except in exceptional cases identified during review of status reports by Audit Directorates. The format of the status report should have the approval of the office of the Comptroller and Auditor General to ensure check and balance and maintain uniformity in reporting. ii) Though the procedure mentioned above has some deficiency, this or any other new procedure has to be tried on a test basis, because the present one is not achieving the desired result as evident from the alarming number of outstanding observations that have built up over the years. The expected advantage of the proposed procedure will be that the audit directorates will be relieved of the routine file work involved in processing broad-sheet replies of very old ordinary observations. This will allow them to concentrate on more recent observations and other important work. Another expected benefit will be that the ministry will have the obligation of settling audit objections of its own subordinate offices which will be a step forward in the direction of self-criticism regarding own financial lapses thereby ensuring transparency and accountability in a better way. iii) However, observations relating to the ministry itself will have to be handled by the audit directorate concerned. iv) Audit directorates will mainly concentrate on settlement of new audit observations, which are less than 10 years old and serious observations above 10 years in the way it is being done now. Last but not the least, the important point is that the audit directorates should also take appropriate measures not to raise silly objections on petty matters, guard against insignificant procedural mistakes and repetition of the same type of objections year after year etc. The number of objections is already more than what they can handle properly. Only gross irregularities should be highlighted. Otherwise, one day the directorates may start feeling suffocated with the build-up of their own audit objections. Introduction of steps as outlined above will add momentum to the implementation rate of PAC recommendations and reduce outstanding audit observations fast. As a result, two great obstacles blocking the way of quality audit will be removed. The writer is former Deputy Comptroller and Auditor General (Senior) of the Office of the Comptroller and Auditor General of Bangladesh. [email protected]