Tue | Jul 16, 2019

Editorial | External auditors of the AGD not a bad idea

Published:Wednesday | June 19, 2019 | 12:43 AM

Nigel Clarke is right about the ‘untidy’ situation in which the finance ministry and the Auditor General’s Department (AGD) have the responsibility for auditing each other’s accounts, and his wish, to find a way around the conundrum. As he attends the issue, Dr Clarke may also find it useful to extend the conversation to broaden the reform of the agency’s governance arrangements to bring them in line with today’s standards.

The auditor general is the Government’s chief auditor, a position established by the Constitution and insulated from political interference. Once appointed, an auditor general serves until retirement at age 60, although his or her service can be extended by five years, to age 65 years. Apart from the age requirement, he or she may be removed only for medical unfitness, or misbehaviour, which has to be proved before a tribunal chaired by a judge from a Commonwealth jurisdiction.

This newspaper believes that this insulation by tenure and the absence of direct political oversight of the office are essential, especially in a small island whose politicians are notorious for their tendency to meddle. The independence the system allows is reflected in the high quality, and fearlessness, of the department’s output over several decades under several auditors general, including the incumbent, Pamela Monroe Ellis.

But power and responsibility demands accountability, of which the government MP, Everald Warmington, believes there is insufficient. Mrs Monroe Ellis’ department is most directly accountable to Parliament, to which it sends its reports. But its relationship to the legislature, though, is largely perfunctory. The auditor general more frequently attends Parliament to answer some committee’s questions caused by a report tabled by the department, rather than to report on her work.

Mr Warmington’s concern is not, apparently, with this oversight arrangement. Rather, it’s about the failure of the finance ministry to table, as required by the Constitution, annual audits of the accounts of the AGD.

Dr Clarke, the finance minister, tabled two recently for the 2016-17 and 2017-18 fiscal years.

Apparently, these were the first to be sent to Parliament in perhaps two decades. Why this hasn’t happened is not clear. But it isn’t the fault of the AGD. The Constitution expressly gives those responsibilities, for auditing the agency and reporting the findings to Parliament, to the finance minister.

VALID POINT

Dr Clarke, however, has a valid point about the untidiness that the framers of the Constitution bequeathed to the finance minister/ministry and the AGD, by having them looking over each other’s shoulders, which wasn’t the intent. Somebody had to review the AGD’s accounts. It fell to the finance minister.

But conducting audits isn’t a core function of the finance ministry, which would more usefully spend its time formulating and implementing policies for the efficient functioning of the economy and the effective management of the fiscal accounts.

The minister should, therefore, move ahead with his proposal for legislative authority, probably by way of amendments to the Financial and Administration and Audit Act, allowing him to use external auditors to review the accounts of the AGD, if this can be accommodated without an amendment to Section 122(4) of the Constitution.

On the wider matter of accountability, Mr Clarke might recall our invitation four months ago for him to look at the United Kingdom’s accountability arrangements, in place since the early 2000s, for their equivalent to the AGD. A nine-member commission of the Commons has oversight for the National Accounting Office (NOA). That parliamentary group sets the NOA’s budget, oversees its performance and appoints external auditors. The commission also appoints five non-executive members of NOA’s nine-member board, which provides advice to the agency.

Making such changes in Jamaica would likely require constitutional amendments. And there may be questions of whether such adjustments would be relevant or advisable. That is a conversation worth having.