Give Auditor-General powers she needs
Well, another year for the acclaimed Throne Speech, and the Opposition's response has occurred, postulated, and gone. And as usual, there were optimistic visions, some more concrete than others, in each speech for us to ruminate on while hoping that the plans presented will substantively change the governmental landscape to assure us of a better financial future going forward. All very nice to contemplate.
Then, there is the sameness, the usual platitudes about preventing corruption, guaranteeing accountability, polite attacks on the other party's platform and the like. Good corporate governance always gets mentioned, one of my favourite buzzwords, used routinely by politicians the world over — to demonstrate that they are serious about “cleaning up government finances”.
Actions, not words
Words are great, but I'm tired of hearing them. Actions are far better. Who is in charge of good corporate governance? What does it really mean?** Cleaning up government finances, making the financial processes ironclad against political interference, undue influence, malfeasance (one of my favourite buzzwords), corruption, and just downright theft. Control of our government's finances is the explicit and implicit mandate of the Accountant-General of Bermuda, monitored and assisted by the Government Internal Audit Department.
The financial watchdog
The highest and final authority on the state of our government's finances emanates from the independent Auditor-General, our eternal financial watchdog. The Auditor's Office is currently responsible for the audit of 55 public-sector organisations including the Consolidated Fund, Government Pension and Health Insurance Funds, and Government Controlled entities such as the Bermuda Hospitals Board, the Bermuda College, the Bermuda Housing Corporation, West End Development Corporation and Parish Councils, etc.
The mandate of the Office of the Auditor-General is provided by the Bermuda Constitution Order 1968 and the Audit Act 1990.
The Auditor-General, although appointed by the Governor of Bermuda, cannot be directed by anyone, including the Governor, Parliament and the Government. The Bermuda Constitution Order and the Audit Act 1990 provides the Auditor-General with the necessary powers and functions including the legal bases to access all government information and the freedom to report on any findings that arise from the audits conducted. The Office is entirely independent.
And our new Auditor-General has set some very specific goals:
• Modernisation of the Audit Act to reflect 21st-century auditing powers.
• Strengthening accountability, integrity and transparency in the public sector and her Office.
• Issuing current audit opinions for each year on time and in line with the Auditor's mandate.
• Continue to support the good work of Internal Audit Department under the direction of Mrs Foy.
• Encourage Government to make producing Consolidated Financial Statements a priority *** to include every single entity that our Government is directly or indirectly responsible for (the Consolidated Fund does not represent the aggregate financial statements of all controlled public authorities and the consolidated fund). The Public Treasury (Administration and Payments) Amendment Act 2014 is the reflection of this mandate. The Amendment Act is not yet in force but it speaks to consolidated financial statements. Our AG's highest priority will be focused in the particular area, so that as we head further into the 21st century, the audited reports of the Bermuda Government will include all facets of its operations. We will know exactly where we stand.
The two highest concerns, in my opinion, are these: modernisation of the Bermuda Audit Act 1990 and finally (after 25 years) the inclusion of all Governmental entities' (55) financial statements in the annual Auditor-General's report.
Modernisation of the Audit Act 1990 must include granting the AG subpoena power — to follow the money! A power that the Auditor-General's office does not currently possess — full legal subpoena power of investigation, discovery, and the right “to follow the money to its original source.” Instead, years after late audits, we have to listen to incessant wrangling (and more money for a Commission of Inquiry) regarding audit findings that could only reveal limited information in accounting for discovery of inappropriate financial behaviour, undue influence, overrides of financial controls, and the like.
Why is this? What century are we in?
Type in Auditor-General subpoena power into the Google search engine. Across the world, this investigative power is granted to Inspectors and Auditors-General as a matter of course. Why isn't Bermuda included in this group? According to Daniel D. Pegarkov, author of National Security Issues in the United States: “Subpoena power is absolutely essential to the discharge of the Inspector and Auditor-General's functions. There are literally thousands of entities in receipt of federal funds, and without these powers to conduct a comprehensive audit, the Inspector and /Auditors-General could have no serious impact on the way these (federal) funds are expended.”
And a quote from the US Inspector General Act of 1978 under Section 5 USC App 6: Authority of Inspector and Auditors General:
“1) to have access to all records, reports, audits, reviews, documents, papers, recommendations, or other material available to the applicable establishment which relate to programs and operations with respect to which that Inspector General has responsibilities under this Act; and (4) to require by subpoena the production of all information, documents, reports, answers, records, accounts, papers, and other data in any medium (including electronically stored information, as well as any tangible thing) and documentary evidence necessary in the performance of the functions assigned by this Act, which subpoena, in the case of contumacy or refusal to obey, shall be enforceable by order of any appropriate United States district court.”
Our new Auditor-General sees audit work as an ongoing mission to continue to provide information about our finances to us.
We tend to forget that most of the money sourced to our government coffers comes from us. We have a perpetual right to know everything about how this money is spent.
We profess to the world that we are a 21st-century world-class international financial centre. Update the Audit Act. Give our Auditor-General all of the powers necessary to continue to provide the superior service that her predecessors gave willingly and confidently to our country.
** Applied Corporate Governance http://www.applied-corporate-governance.com/best-corporate-governance-practice.html
*** Consolidated financial statements for the Bermuda Government have been directly emphasised in audit reports every single year since 1994 under then AG Larry Dennis, then AG Heather Jacobs Matthews, and now, our new AG Heather Stevens-Thomas. Twenty-five years and still no consolidated financial statements. How on earth can we know exactly where our finances stand? Consolidated financial statements are not the same as the Consolidated Fund statements — that do not include all of those other public funds and government controlled entities!
Martha Harris Myron CPA PFS JSM: Masters of Law — International Tax and Financial Services; Pondstraddler* Life™ financial perspectives for Bermuda islanders with multinational families and international connections on the Great Atlantic Pond Contact: email@example.com