Editorial | Local gov’t oversight

It is not only Parliament’s Public Accounts Committee (PAC) that should have an interest in the financial management of Jamaica’s municipal corporations.

So, also, should the Public Administration and Appropriations Committee (PAAC), which, too, should urgently schedule hearings into how the 13 local government authorities have been spending, and accounting for, taxpayers’ money. Indeed, the PAAC is in a better position to do so. For while the PAC generally undertakes retrospective reviews of the financial administration of ministries, departments and agencies, usually on the basis of reports by the auditor general, the PAAC can monitor their operations in real time. The local governments clearly require this kind of oversight.

Unfortunately, these two committees, notwithstanding their recent stirrings, have been too dozy, thus allowing too many critical issues to fall through the cracks, or go unnoticed, for too long. This newspaper is unmoved by the explanations of their chairmen, both from the parliamentary Opposition, of their difficulties in scheduling meetings because of the unavailability of government members. There are, as the saying goes, several ways to skin a cat.

Last week, the PAC’s chairman, the shadow finance minister, Julian Robinson, announced his intention to summon officials from the Ministry of Local Government and Rural Development, which has oversight of municipal authorities, to answer questions about their poor financial record-keeping, or, perhaps, something worse.

This followed the disclosure by Marlon McAdam, the deputy auditor general, that of 44 opinions on the financial statements on the local government bodies issued by his boss, Pamela Monroe Ellis, for the 2022-23 financial year, 38 had disclaimers. That is, the auditor general could not attest to the veracity in 86 per cent of the financial statements for which audits were completed.

OUTSTANDING STATEMENTS

When Ms Monroe Ellis issued her annual report last December, she noted that several parish governments, as well as the city municipality of Portmore, had financial statements outstanding for various years between 2010-11 and 2017-18. The outstanding reports related to over J$10 billion in expenditure and J$5.6 billion in revenue.

At the time of the report, the auditor general had completed 46 audits, of which 22, or around 47 per cent, had disclaimers of various levels because of the inadequacies in documentation.

Unhappily, this newspaper expected, and said so, that those numbers would worsen. For at the time of the review, several financial statements were under scrutiny or were works in progress. Additionally, the auditor general was still awaiting 81 statements requested from the municipal authorities.

At last week’s PAC hearing, Mr McAdam highlighted the difficulty in receiving from the local government authorities the documentation required to certify their accounts.

“This is a serious matter, and as it is now, we have not seen any significant improvement,” he said. “That is why we say that it is a matter that we continue to monitor.”

In the past, the local governments have, in part, blamed their lack of access to the government’s latest financial management software for their failure to keep their financial statements current. They have also blamed the poor storage of, and damage to, paper-based files, as happened in one instance at the Portland Municipal Corporation, involving several million dollars, highlighted in the auditor general’s 2021-22 report.

COMMENCE PROCEEDINGS

Ms Monroe Ellis, in that report, threatened that going forward she would commence proceedings, as allowed under the law, for public servants to face surcharges on sums for which the accounting was improper or inadequate. The PAC should determine whether she has followed through on this decision, and with what effect across the public sector.

However, with respect to local government, it is not only the civil servants of the central ministry who Mr Robinson’s committee should question. While the ministry has broad oversight of the authorities, and has to approve and fund their budgets, each authority is, by law, required to have a chief executive officer (CEO), who is its accounting officer. The CEO reports to the chairman of the elected council. Further, each council has a chief financial officer, whose job is to ensure that the rules and regulations covering how the corporations receive and spend money are adhered to, and that the records are kept in accordance with the rules of accounting.

Mr Robinson should ensure that these officers, too, are at his hearings to account for their stewardships and to say why there is no documentation of billions of dollars of taxpayers’ money that were either received or spent by the local government bodies.

The PAAC’s chairman, Mikael Phillips, must also urgently have them in to account for their procedures and systems to prevent leakages of taxpayers’ resources.

The Local Governance Act obliges the municipal corporations to engage/consult citizens about their budgets before submitting them to the central ministry for approval. That process is usually absent, or at best perfunctory. Mr Phillips’ committee should want to know why, and insist that it is seriously done.

Additionally, the local authorities can appoint non-elected members to their finance committees, which are responsible for the preparation of their budgets and general oversight of the finances. While the ‘outsiders’ may not vote, they can bring expertise to the committee’s deliberations.

The corporations’ CEOs should tell whether independent members are in fact being invited to join these committees and, if so, whether their voices are heard.