Lack of accountability exposed
I wonder how many of us actually read the Reports of the Auditor-General? I know I seldom do. But my frustration with what I perceive to be the longstanding, inefficient administration of our government finally persuaded me to pick up the most recent Report of the Auditor-General on the Consolidated Fund of the Bermuda Government, for years the 2013 to 2016.
As the report is a lengthy 343 pages, I will just focus mostly on the section entitled “Matters of Special Importance”, which is standard in every Auditor-General’s report. As the title suggests, this part of the report highlights a number of serious concerns within the financial workings of government and I will share just a few:
• Government’s financial statements do not (and have not) consolidated the results of all of its funded organisations. Therefore, the public are not provided with full disclosure regarding the total accumulated deficit or surplus of the Government.
• Lack of long-term plans for reducing the annual/accumulated deficits and debt, or for the drastically unfunded liability of our major pension plans, or for reducing the substantial level of taxpayer indebtedness, all of which continue to grow unsustainably.
• There are failures to comply with established Financial Instructions and related rules, often without consequence.
• There are inadequate procedures over bank reconciliations and a continuing lack of supporting documentation for payments made.
• Overspending by government ministries and departments without consequence.
If we look at the various Auditor-General reports over the past ten years, you will note that the concerns expressed in the “Matters of Special Importance” sections are almost identical and relate to the (lack of) accuracy and timely financial reporting information and the inefficiency and weak accounting procedures that exist in some areas of the administration process. Even as far back as 2007, the Auditor-General of the day, Larry Dennis, listed under “Special Matters” the importance of having complete and consolidated financials, as has every successive Auditor-General to date. In fact, Mr Dennis called for this in 1992, as he acknowledged that we are bound by the standard of accounting principles of the Chartered Accountant Institutes of Bermuda and Canada, which recommend preparing consolidated financials.
Looking at the administration “mechanics” for government, the management structure of the Public Service and Civil Service consists of the following:
1, The Head of the Civil Service, who reports to the Premier and is co-chairman of the Civil Service Executive.
2, The Civil Service Executive, comprising mainly permanent secretaries that report to the Head of the Civil Service, which is responsible for the implementation of policies set by Cabinet and the day-to-day management and efficient operation of their individual ministries.
3, The Public Service Commission, an independent and politically neutral body reporting directly to the Governor, which is responsible for performance appraisals, assessments and selection, advertising and vacancies, appointments, promotions, and discipline appeals relating to the Public Service With the combined scrutiny of the above Public Service and Civil Service management structure, one would think the administration of our government should be running as efficiently as a well-oiled machine. But it is not. And far from it.
So where is the breakdown? Why are Auditor-General “errors and omissions” reports being produced, year after year, regardless of which party/government sits in “the Big House”?
Why does each successive Auditor-General lament the same concerns over and over again? Is anyone within the senior ranks of the Civil Service charged with implementing changes to the identified, flawed procedures in an effort to remedy the deficiencies noted in the Auditor-General’s report?
Does the Minister of Finance sit with the Head of the Civil Service and formulate a plan based on the recommendations of every Auditor-General’s report?
If so, does the Head of the Civil Service then meet with the Civil Service executive team to give them a timeline to make procedural changes within their individual ministries?
If so, is there then any follow-up by the Head of the Civil Service or the Civil Service executive or the Public Service Commission to ensure adherence to the Auditor-General’s recommendations?
If so, if disciplinary action is then necessary, is it ever imposed? Is the Public Service Commission conducting its (required) annual performance appraisals of all senior public officers?
In 2007, this was Auditor-General Larry Dennis’s recommendation, after multiple years of being required to either qualify or deny the audits of various government entities:
“When failure to provide documentation to verify expenditures is pervasive and significant, professional auditing standards require that I deny an opinion on the entity’s financial statements. I believe that the management of the entity should be held responsible for being unable to account appropriately for the stewardship of the public funds entrusted to them. If this situation continues over a number of years, serious concerns of the competence and integrity of management are brought into question. In my view, in such a situation, the Chief Executive Officer and/or the Chief Financial Officer (or in Civil Service parlance, the Accounting Officer) should face progressive sanctions, eventually culminating in demotion or even dismissal from the Civil Service. The promoting of such individuals away from the problem, or transferring them laterally to another entity, should not be an option.”
Why is accountability so elusive within the Civil Service? Yes, it’s an obvious question. But the answer is also obvious because in 2013, the Sage report gave it to us.