Auditor-General Morlu wants Big Bucks to
An Analysis of the Auditor-General’s Proposal to the Legislature
By Ruel Francis Dempster
By Ruel Francis Dempster
It is my sincere hope that the numerous Liberians in whom our nation has invested hundreds of thousand of dollars in training, especially in the areas of finance and management, will not fall short of the expectation to weigh in on this landmark development – The establishment of a functional Supreme Auditing Institution for Liberia.
Being one of the beneficiaries of Liberian Government scholarships, I feel it duty bound to make this provocative presentation to stimulate public debate and provide critical input needed to streamline and strengthen the Morlu document. Hence, this critique is my meager contribution to the ongoing dialogue on Good Governance, Economic Reform and Search for a New Direction in Liberia. It is my view that these observations and comments will spur reaction with good intentions; thereby provoking thoughts which will reach the “powers that be” prior to finalization of the review process and endorsement of AG Morlu’s submission.
In Mr. Morlu’s “Dossier” to the Liberian Legislature, he requests emergency funding of USD $2.2 million to: jumpstart his Commission and get it situated in an appropriate facility, audit various aspects of the pending proposed national budget to ensure accuracy and comprehensiveness as well as audit the government’s revenue stream; and commence his fight to “ Restore Liberia’s Humanity.” He has also proposed a budget of USD $6.6 million – 13.7 times the size of his current budget of $481,057- for fiscal 2007/08. Additionally, he has submitted an amendment to the Act establishing the General Auditing Commission in which he is proposing: a maximum of two consecutive terms of nine (9) years for the new AG; to increase the scope of operation of the GAC to include performing certain management functions which ought to be delegated to other institutions of government . He wants to cover a scope of work spanning beyond basic auditing of governmental institutions and corporations with government interests and assisting in setting standards. One of the anticipated functions of this Commission is to monitor government entities; to see whether these entities are implementing approved programs efficiently, effectively and economically within the confines of budgetary appropriations. Is this what we expect of our General Auditing Commission? I see the Commission more as an auditing institution. General management oversight in government should be provided by another appropriate institution of Government. Morlu is right for trying to step in here. He certainly has created the awareness that there is a vacuum. Unfortunately, we should not be trying to create another super institution. Let the GAC audit to ensure compliance and proper financial management. Morlu is also striving to achieve full autonomy for his Commission as enshrined in the constitution. His Commission must be autonomous.
The Morlu document, I believe, is overly ambitious and not very realistic. In this document Morlu states that his Commission is mandated by law: “To restore public confidence in government, again; To reassure and win the confidence of Liberia’s international partners, the international community and other stakeholders, that the country now has a robust functioning entity to fight its three cancerous enemies –fraud, waste and abuse; To help the National Legislature provide oversight of public finances, programs and activities as well as measure government’s performance for yearly appraisal; To serve as an accountability arm of government to monitor government entities; to see whether these entities are implementing approved programs effectively, efficiently and economically within the confines of budgetary appropriations.” I do not question that these objectives need to be accomplished. But, not necessarily by the GAC. Which institution would be appropriate to undertake these tasks? “The aim of audit is to reveal deviations from acceptable standards and violations of the principles of legality, efficiency, effectiveness and economy of financial management early enough to make it possible to take corrective action in individual cases, to make those accountable accept responsibility, to obtain compensation, or to take steps to prevent – or at least render more difficult- such breaches.” Given our structure and culture, there should be delegation of authority to other institutions which will provide checks and balances in Government. Let the GAC stick to auditing and assist in other functions such as setting standards; and not perform regular monitoring functions as a mandate. To achieve this, The overall structure of government needs to be reviewed with the aim of providing the framework for the establishment of strategic plan of action aimed at achieving the desired goals of government. What does government want to achieve and how does government plan to achieve those goals? We might probably want to consider expanding the functions of the Bureau of Budget to include that of Management. Presently, no institution has the responsibility of performing this function in government.
On the size of funds being requested by Mr. Morlu, we note that, despite the need for and importance of the GAC, a request for funds must rank in order of priority. Liberia’s competing demands for its scarce resources available must be considered . There are the needs for Health, Education, Roads and Security outlined in the Johnson-Sirleaf Government Poverty Reduction Strategy Paper, which have to be met.. How much funding will government allocate to those areas; vis-à-vis the GAC? Who makes this determination? Can funding be made in isolation of the National Budget? Hence, in my view, there isn’t any more qualified institution than the National Budget Committee to analyze the GAC’s budget at this point in time. The GAC is in fact a member of the National Budget Committee. I do not believe that the National Legislature (The Institution with the power of the purse for Liberia) has the institutional competence to execute that function effectively now.
On the issue of term, why does the AG want nine (9) years? Most Liberians are not comfortable with the nine year terms of a certain institution of Government as it is. Nine years is just too long to await a change if one isn’t performing. I would proposed that the AG be appointed for a five year term with possibility of two additional five year terms.
While it is true that our international partners want to see greater accountability and transparency in government, who do they expect to ensure same? They are not looking up only to the GAC. There are a few stakeholders in this process. They all have key roles to play. All three branches of government must be strengthened in order to achieve the desired level of accountability and transparency. What good is a GAC without a sound and effective Judicial System, Legislative Budget Office, and prosecutorial system? Mr. Morlu says he can not rely on the Ministry of Justice (MOJ) to prosecute individuals caught in the audit web. Wow! While the MOJ has shortcomings, like all other institutions of government, we need to develop its capacity. Prosecution is one of the reasons why the MOJ was established. Mr. Morlu also says he can not submit to the voucher process of the government of Liberia. Sitting before the Minister of Finance, the Budget Director, the Minister of State and other members of the National Budget Committee to justify his budget is out of the question –says Morlu. He wants to deal directly with the President and the Legislature. Who monitors the GAC? Which institution outside of the Executive has the professional competence of assessing the Morlu budget? The magnitude of this task requires the input of very seasoned professionals.
The Morlu document claims that the GOL took away 66% of its resources during this fiscal year and is requesting immediate replacement. Can this allegation be substantiated? The UN Panel of Experts Report submitted in December 2006 did state that the GAC Recast Budget was reduced to 1/3 of its original appropriation in FY 05/06 and “ the functioning of the office has been bally affected. Is this true? Did that exercise have any bearing on the current fiscal year? Wasn’t the UN Panel of Experts just trying to make a point (very weak!)? This reduction applied to the last quarter of the Fiscal Year 05/06 and had no impact on the Agency’s existing budget. I have no doubt that the Bureau of the Budget could easily justify the reduction in the General Auditing Commission’s Recast budget for fiscal 05/06. Why did the UN Report even mention an issue of the nature which has been rectified by Government (The 06/07 budget of the GAC was increased by approximately 7% over its 05/06 appropriation)? This gave the AG a weak limb on which to piggyback. There was no need to quote the UN report in his presentation to the Legislature. The GAC itself has its own merits and had no need to ride on the weak UN Panel claim.
The AG document says that the GAC is independent and cannot be subjected to any voucher system. Now, what is the stipulation of the Revenue and Finance law of Liberia as it relates to disbursement of funds? All funds must be disbursed through the voucher system, is what I remembered from my training in GOL Financial Management 101. There have been other creative practices over the years. However, those practices may not have been legal. Maybe, this is a good opportunity to have the statutes changed to make such practices legal. The AG wants GOL to provide additional funding of $2.2 million before the end of the current fiscal period and $6.6 million in July for the next fiscal year. These are not “peanuts disbursements,” given the size of the Liberia’s budget. Hence, the budget must be well combed and considered in line with competing priorities. In budgeting, you allocate resources based on priorities. How does Auditing rank in order of priorities in the Johnson-Sirleaf Government?
In a probe of the Morlu budget presentation, I did not come across allocation for power supply for the 215 computers being requested. It appears that 80 % of the employees will have access to computers in year one. This doesn’t seem very realistic for Liberia. Even if some of the computers will be used for training purposes, the requested quantity is overstated. Is the cost for electrical power supply being anticipated? Is there room/provision for back-up power supply? It appears that communication as outlined in the budget did not take into consideration telephone services. Is this an oversight? Also, does Liberia have the pool of human resources from which to hire the desired number of auditors in year one? I note that cost of at least USD $500,000 is being anticipated for repair of a potential office space. Has there been a decision on the designated structure (The old Executive Mansion or the old Planning Ministry)? Could we have estimates without knowing which structure is earmarked? Will we offer the contract for bids? What is the anticipated timeframe for this proposed project? How will that affect the level of funding in year one? Don’t we need to scale back on staffing in year one, since we might not have the required manpower available? If we did, how will that affect the budget? A phased in program for hiring of auditors should be considered. We might also want to tap into the ECOWAS market to help the manpower shortfall in the interim. We must also realistically re-program operations at the GAC with the view to maximize return on investment. After year one (Fiscal 07/08), performance results will encouraged additional funding of the auditing process. Hence, it might be advisable to strategize along these lines.
Let me conclude with the following recommendations extracted from the initial draft of a more thorough paper which I am preparing.
1. That the proposed scope of work and authority of
the GAC be thoroughly reviewed. That input is sought
from Liberian and non-Liberian experts.
2. That a more realistic and revised budget be prepared for submission to Government.
3. That a team of financial and management experts from the Diaspora be constituted to review the Morlu proposal and proceed to Liberia to face the Legislature and provide an input prior to legislative approval of the document.
4. That a select number of governmental institutions and missions be earmarked for audit in year one. I would suggest that we focus on those institutions with propensity for greatest returns, or could cause the greatest damage by not being audited. In this regard, I do support the UN Panel’s recommendations as contained in Section 4 of the AG’s Immediate Action Items.
5. That a select number of established local accounting firms be contracted to assist in conducting audits in year one.
6. That the GAC utilizes the next two months to revise its plan while testing auditing methodology.
7. That capable certified Liberian accountants in the Diaspora be contacted to assist in planning and execution in year one.
8. Those efforts are made to recruit auditors from neighboring countries to provide a temporary bridge in the manpower gap.
9. That the tenure of the Auditor General be no more than five years (Instead of nine as proposed) with options of no more that two additional successive terms.
10. That the National Budget Committee be involved in the current exercise. By protocol of the past, the AG is a member of the National Budget Committee
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