Government entities have made virtually no progress on submitting financial records for auditing in recent months, despite Leader of Government Business Kurt Tibbett’s October directive to Chief Financial Officers to get their act together.
The ongoing delay effectively means that government ministries and portfolios have not had any of their spending checked since the PPM Government came to power in 2005.
‘They are now two years and four months late. Two years and four months late!’ Auditor General Dan Duguay said Monday. ‘It’s a sad commentary on our accountability.’
The delay in submitting financial documents for auditing comes after a Compass story in October led Mr. Tibbetts to ask CFO’s to devote every available resource to finalising and submitting late government financial records for auditing.
Mr. Duguay said the public is losing out, as they have no way of knowing whether government entities are spending the money given to them in the way they said they would.
‘While the Public Management and Finance Law gives government entities more authority to spend funds, the trade off was that those entities become more accountable in how they spend their money,’ Mr. Duguay explained.
‘Well we continue to give them money but we don’t have any accountability in terms of what they do with it. That’s a critical aspect in my opinion.
‘Many politicians have talked about accountability but the bottom line is that that financial accountability simply isn’t there.’
Under the PMFL, government ministries and portfolios are required to submit financial statements to the auditor general within two months of the end of the financial year.
After the auditor general’s office audits the statements, they are meant to be sent to the Financial Secretary so an annual government report can be compiled. That report is then meant to be tabled in the LA and made a public document ‘no later than five months and two weeks after the end of each financial year.’
But no annual government report has been produced since the PMFL’s new system of accounting came into effect for the 2004/05 financial year.
The PMFL also requires government companies and statutory authorities to have their financial statements audited before being presented to the LA and made public documents. While some are meeting the PMFL’s timelines for submitting documents for audit, few of these reports have been made public.
With the delay ongoing, legislators are faced with the prospect of voting on spending plans for the 2008/09 financial year without having the year’s worth of previous spending accounted for.
Mr. Duguay said legislators need to demand more accountability before authorising future spending. ‘The legislators need to be more vocal to the civil service and have them explain why financial statements and output statements are not forthcoming.’
Part of the problem is that there are no sanctions under the PMFL for failing to meet timelines, Mr. Duguay said.
Dragging CFO’s before the Public Accounts Committee to explain the delays could be one way of turning the situation around, he believes.
Punishing entities that don’t comply with the law, by denying them further money until the reports are complete, would also drive the point home, he continued.
‘I don’t presume to tell the LA how to deal with this problem but I am becoming increasingly frustrated by the inability of government, as an organisation, to put out basic financial information,’ Mr. Duguay said.
‘The reality is that most of these ministries and portfolios have vastly increased their financial staff resources; they have full-time people that are trained to do this and they’re not getting it done – that’s a real problem.’
The Auditor General’s office have audited and signed off on financial statements from three government entities for the 2004/05 financial year – the Auditor General’s Office (which is externally audited), the Office of the Complaints Commissioner and the Portfolio of Legal Affairs.
Audits on three others, Judicial Administration, the Cabinet Office and the Ministry of Tourism, Environment, Investment and Commerce are due to be finalised in the coming weeks.
But it still leaves financial statements from most of the bigger government entities unfinished.
They include the Portfolio of the Civil Service, the Portfolio of Internal and External Affairs, The former Ministry of Health Services, Agriculture, Aviation and Works, the former Ministry of Planning, Communications, District Administration and Information Technology and the former Ministry of Community Services, Youth, Sports and Gender Affairs.
Mr. Tibbetts has previously pointed out that government financial record keeping was behind schedule when the PPM Government came to power in 2005, but concedes the situation has dragged on too long.
‘The country needs to know what state the Government’s finances are in and only audited reports will give the true picture,’ he said in October 2007.
Financial Secretary Kenneth Jefferson told a Finance Committee meeting in November that the PMFL’s introduction of a new accounting system – and in particular the requirement for output statements – has contributed to the delay.
At the time he forecast that government entities would be in a position to begin tabling annual financial reports by April 2008.
But with successive deadlines having passed for submitting financial statements for audit, Mr. Duguay said it is very unlikely that target would now be met.
Tabling old financial reports causes them to lose relevance, undermining the financial accountability and transparency envisaged under the PMFL, he said.
‘No one wants to see what the financial statements for the Government were in 2004/05 but we’d all probably like to see the Government’s financial statements for last year.
‘Reporting now on 2004/05, everybody says ‘well, what do I care what happened way back then’,’ he said.
‘That’s a shame because we should be vitally interested in how [the Government] is spending our money.’