Lydia McCollin - ICAB President.
The Auditor General’s Report 2019 reflects recurring issues on
Government’s financial reporting that we have seen in the past years.
However, through two special audits, it reveals the grave problems of
legal fees paid by certain State-Owned Enterprises (SOEs) and
procurement practices of the Barbados Water Authority for the period
2007-2018.
As an organisation which seeks to promote, foster and maintain the
highest standards of accounting, and which is committed to global best
practices, ICAB is concerned that many of the serious deficiencies
identified are not new, but have been ongoing for several years. These
include errors in the recording of certain financial information, a
lack of appropriate documentation to verify the accuracy of certain
information and the long-outstanding audits of certain SOEs.
Of greater concern, is that no apparent remedial actions appear to
have been taken by the entities in question to address the issues
highlighted in previous Reports of the Auditor General.
These recurring audit issues and the length of time they have remained
unresolved do not demonstrate a commitment to good corporate
governance practices and accountability.
It is unacceptable that basic accounting principles such as the
recording of transactions, recognition of transactions in the correct
period and ledger and bank reconciliations are not being performed,
which have led to the Auditor’s inability to verify amounts submitted
in the Statements of Revenue and Financial Position reported by the
Barbados Revenue Authority. This lack of accurate and timely
information seriously questions the transparency and accountability in
financial management and the trust and reliability over the
information for sound decision making. Barbados is at a critical stage
(worsened by the COVID-19 pandemic) and it is therefore imperative
that information is timely, reliable and trusted to enable Government
to make sound decisions in the best interest of the
public.
Notwithstanding the accounting issues highlighted in this report, it
is must be noted that since their occurrence, Parliament has passed
into law, the new Public Finance Management Act 2019. This new law
imposes higher standards of financial reporting, transparency and accountability
for central government and SOEs. We hope that there will be a full implementation
of the provisions of the Act and that there will be no repeat of these
issues in future audits. Based on the findings in this current report
and the higher standards in the new Public Finance Management Act
2019, it is evident that there is a need for additional training for accounting
officers throughout government. ICAB can support these training needs and has already
made a proposal to the Ministry of Finance outlining how ICAB can
assist.
ICAB is alarmed about the significant departures from best practice in
Corporate Governance revealed in the special audits of procurement of
legal services by certain SOEs and procurement practices of the
Barbados Water Authority. Decisions were made without Board approval
and seemingly not in the public interest. Substantial amounts from
the public purse, funded by Barbadians, were expended or committed,
often with no proof that the relevant services or goods had been
provided. In other cases, while goods and services had been provided,
they were not fit for purpose, there was no competitive bidding
process, and management had not performed proper evaluations.
The failure of Boards of Directors to adhere to legislation, public
procurement and other policies governing the spending of public
finances is a very serious dereliction of fiduciary responsibility by
the Directors of these Boards. It is important that Directors
understand their roles and responsibilities, especially those
responsibilities governed by Laws that hold them personally liable.
ICAB again can
support corporate governance training for the proper functioning of
Boards and has already made a proposal to the Ministry of Finance
outlining how ICAB can assist.
Greater awareness by all Barbadians on these and other national
financial issues is crucial and is an effective means to increase
public accountability and make those who have been entrusted with
public resources answerable to the public that they have sworn to
serve. ICAB’s current public financial education programme will soon
be expanded from its current radio broadcast to include, webinars and
social media posts. The issues highlighted in the Auditor General’s
Report 2019 will be among the many topics covered in the public
financial education series.
ICAB fully supports the recommendations of the Auditor General. The
serious matters identified during the audit of the procurement
practices and reported on in the Auditor General’s Report 2019 require
an urgent response. In the private sector, it is standard practice for
Boards of Directors to set strict deadlines for managers to correct
deficiencies identified by the auditor. ICAB urges Government to do
the same. In addition, legal and/or disciplinary action must be taken
against anyone guilty of wrongdoing such as, misuse and mismanagement
of public funds, and serious breaches of procurement rules. It is
incumbent upon the current Boards of Directors at all SOEs to
implement the necessary controls to prevent a recurrence of the
serious matters identified by the Auditor General. In addition, ICAB
strongly urges government to implement the Integrity in Public Life
Bill, 2018.
ICAB remains strong in its commitment to work with the Government of
Barbados to aid in improving public financial management and corporate
governance, especially in the SOEs. ICAB also fully supports the
important work of the Auditor General and auditors in the private
sector who continue to protect the public interest by ensuring
transparency and accountability in financial and corporate reporting.