APNU/AFC’s financial mismanagement exposed in 2015 audits

…find overpayments, breaches of laws skyrocketed

Financial mismanagement in the form of skyrocketing overpayments, a failure to adequately expend allotted funds, the continued abuse of the Contingencies Fund and repeated breaches of the financial laws and regulations were the hallmark of the 2015 Auditor General Report—the first such audited accounts of the coalition A Partnership for National Unity/ Alliance for Change (APNU/AFC) Government.

The report was tabled and made public by Speaker of the National Assembly, Dr Barton Scotland, when the House returned from its annual recess on Thursday.
Prepared by the Audit Office of Guyana under the aegis of Auditor General Deodat Sharma, it was found that during 2015, the APNU/AFC Government abused the Contingencies Fund through a total of 11 advances for which the requisite laws did not cater for.
According to Auditor General Sharma, the 11 advances used to abuse the Contingencies Fund amounted to in excess of $600 million with the Guyana Defence Force (GDF) being the biggest recipient of almost $300 million.
On the matter of the APNU/AFC Government breaching the financial laws of Guyana, the Auditor General found that the expenditure of Government was in fact overstated by more than $2.5 billion in respect of 16 ministries due to breaches of the Fiscal Management and Accountability Act.
With regards to the Procurement Act, the Auditor General found that 11 ministries had breached the laws with respect to the appointment of regional tender boards and the basis of awards of contracts, among other breaches.
Furthermore, the Auditor General in his report observed too that more than 50 per cent of the agency’s recommendations to stem the repeated violations had not been implemented.
“Overall, I am concerned with the lack of action towards the implementation of these recommendations; since 56 per cent of the recommendations have not yet been implemented.”
Sharma, in his 2015 Audit report, observed too that “in many instances, recommendations are repeated each year without any appropriate action and as a result, weaknesses and issues that impacted negatively on government’s governance and accountability mechanisms continue to occur.”
Meanwhile, as it relates to the overpayments made by Government, the Auditor General found that “the number of occurrences increased and so did the value of overpayment on contracts, which was $35.7 million in 2015 compared to the $31.3 million in 2014.”
The Auditor General found too that there was a 52 per cent increase in the value of overpayments on net salaries and deductions in 2015 when compared to the previous year.
“There were significant increases in 2015 as it relates to breaches of the relevant legislation, especially the Fiscal Management and Accountability Act and the stores regulations,” according to AG Sharma.
Moreover, It was found that there was significant overpayment on 31 contracts including some $20 million that was overpaid for works. Inclusive of prior year overpayments, the Auditor General found that Government was unable to recover almost $400 million.
“As stated in my 2014 report, this trend continued, coupled with no evidence to suggest disciplinary action of any kind had been meted out to engineering or other staff involved in the assessment of works in progress and the certification of progress payments is of concern and hints at management’s perceived inaction/inability to remedy the current situation.”
Meanwhile as it relates to the financial management of the nation’s coffers with regards to current and capital spending, the Auditor General found that the APNU/AFC regime was unable to effectively manage this task.
The report further detailed that in relation to the collection of funds, there was a shortfall of close to $1 billion in the current revenue while on the Capital returns there was a negative variance of some $5.5 billion, “which were primarily attributed to project loans that were below approved estimates on the account of timing issues in the execution of some projects, delay in implementation of key infrastructure projects.”
On the other hand, in so far as the APNU/AFC Government’s ability to spend its allotted funds, AG Sharman found that with respect to the recurrent expenditure it was unable to execute its mandate coming up short to the tune of some $26 billion.
According to the Auditor General, “this shortfall was mainly due to the $20.3 billion under Public Debt, for servicing of loans which was not utilised; $2.1 billion under GECOM for the hosting of Local Government Elections which was not held (in 2015); and $1.3 billion under the Ministry of Finance; $280 million under the Ministry of the Presidency, and $658.4 million under the Ministry of Health for Activities not fully executed.”
Additionally, as it relates to its capital programme for 2015, the Auditor General found that, much like the admission of the Minister of Finance, Government at mid-2016 was unable to utilise some 50 per cent of its budgetary allocations, a situation which obtained the previous year.
According to the Auditor General, “Central Government failed to achieve their anticipated levels of capital expenditure activities during 2015 with actual capital expenditure being approximately 79 per cent of the approved allotment of $39 billion resulting in a shortfall of $8.4 billion.”
The Auditor General also highlighted that this massive shortfall in spending was attributed primarily to delays in the implementation of key infrastructure projects.
“This unsatisfactory situation resulted in the return of disbursements totalling US$5.3 million equivalent to G$1.1 billion, which was requested by the Inter-American Development Bank (IDB).”
The monies repaid to IDB as a result of the failure of the APNU/AFC Government to implement its projects were directly related to the road network upgrade and the expansion programme and sustainable operation of the electricity sector and improved quality of service project.