Trillion-dollar accountability crisis

The chronic non-compliance of some ministries and public bodies to fiscal regulatory requirements is hindering the independent assessment of how more than $1.6 trillion allocated to these entities was utilised, raising concerns about transparency, accountability, and whether taxpayers received value for the allocated funds.

Among the violators failing to prepare and submit appropriation accounts are the Ministry of Education and Youth (MoEY), the Ministry of Health and Wellness and the Office of the Prime Minister (OPM).

Auditor General Pamela Monroe Ellis has outlined that for nine fiscal years spanning 2012-13 to 2018-19 and 2021-22 to 2022-23, Parliament approved $902 billion, representing 13.7 per cent of the national Budget, to manage and administer public education in Jamaica. However, for the periods specified, the ministry was found wanting in adhering to the law and good governance practices.

The Financial Administration and Audit (FAA) Act requires the permanent secretary, who is the accounting officer, to prepare and submit to the minister and the auditor general the appropriation accounts four months after the fiscal year.

The appropriation accounts set out the expenditure for the year against the approved budgetary allocation.

The FAA mandates the auditor general to audit the appropriation accounts and give an opinion on whether the money expended has been used for the purpose for which it was approved and check that the expenditure does not exceed the amount authorised.

In her 2023 annual report, Monroe Ellis reported that the education ministry’s failure to submit the appropriation accounts prevented her from making an independent assessment of the ministry’s spending in relation to what was approved.

“This also undermines good governance practice as it denies Parliament, the citizens of Jamaica, and the Ministry of Finance and the Public Service information to hold the management of the MoEY accountable on the use of public resources as well as to guide decisions on future budget approval,” she said.

The accounting officer in the MoEY has since advised that the ministry has taken steps to resolve the outstanding issues by engaging two consultants to aid with the processing of the outstanding issues such as the bank reconciliations and the appropriation accounts backlog, the auditor general said.

The Ministry of Health and Wellness was also featured for its delinquency in submitting appropriation accounts in keeping with the law.

Up to late November 2023, the accounting officer in that ministry had not presented appropriation accounts for financial years 2013-14 to 2022-23.

Over the 10-year period, Parliament approved $695 billion or 9.1 per cent of the national Budget for the management and administration of the public health sector.

The auditor general said that the ministry’s failure to submit the appropriation accounts prevented her from conducting the required independent assessment on spending.

The auditor general added that after the completion of her draft report, the accounting officer submitted 15 of the 22 appropriation accounts for financial years 2013-2014 to 2022-2023, which her department received on December 6, 2023. However, they did not meet the standards for submission.

According to Monroe Ellis, the chief audit executive did not sign off on the appropriation accounts report submitted due to inaccuracies. Further, two of the appropriation accounts were not accompanied by the required statement of explanation for cause of variances.

The auditor general reported that the accounting officer subsequently indicated that going forward, the ministry will adhere to the July 31 deadline each year as stipulated by the FAA Act, starting with financial year 2023-24.

The auditor general urged the health ministry to conform to the law in the submission of the appropriation accounts and to also correct the errors and resubmit the appropriation accounts promptly for certification.

Up to the time of reporting, the auditor general said that six appropriation accounts for the Ministry of Labour and Social Security for financial years 2011-12 to 2012-13 and 2019-20 to 2022-23 were not submitted within the legal timeframe. This, she said, was a serious breach of accountability and transparency.

The failure of the ministry to submit these documents denied the auditor general the opportunity to assess how the $53.44 billion in public funds approved by Parliament over the period have been spent and managed.

She called on the labour and social security ministry to urgently determine the reasons for this delay and establish a reliable system that will ensure the timely preparation and submission of the appropriation accounts in the future.

UNRESOLVED ISSUES

The OPM also found itself in breach of the FAA law as its accounting officer failed to submit three appropriation accounts representing an accumulated budgetary allocation of approximately $12.02 billion.

In her annual report, the auditor general reported that the accounting officer at OPM subsequently indicated that the delay in finalising the appropriation accounts was due to unresolved issues relating to the reallocation of fiscal space within the OPM’s projects budget.

The auditor general was informed that steps were being made to submit the outstanding appropriation accounts by the end of the fourth quarter of fiscal year 2023-24.

The Houses of Parliament also lined up with delinquent ministries and public bodies that found themselves in breach of the FAA legislation.

The accounting officer failed to submit to the auditor general five appropriation accounts representing an accumulated budgetary allocation of approximately $6.06 billion for financial years 2018-19 to 2022-23.

Failure by the administrative leadership of Parliament to prepare and submit appropriation accounts within the time stipulated by law prevents lawmakers from effectively monitoring expenditure from the Consolidated Fund.

The auditor general reported that the management subsequently advised that the outstanding accounts are being prepared and will be submitted as soon as possible.

Following the auditing of the financial statement of the National Works Agency (NWA) for 2021-22, the auditor general said that the agency did not implement an effective system that will improve its cash collection of fees for lab testing.

Monroe Ellis said that this has been the subject of previous audit reports.

According to the auditor general, as at March 31, 2022, the uncollected lab testing fees owed by private entities amounted to $16.26 million. This represented a 6.5 per cent increase over the prior year.

She pointed out that $13.70 million or 84.25 per cent of this amount has been outstanding over nine financial years dating back from 2012-13 to 2020-2021.

Monroe Ellis said the absence of a proper system to recover the cost of services provided by the NWA not only contravenes Section 7.2.1 of the Financial Instructions to Executive Agencies but also, in the context where NWA rendered services prior to billing and collection, the likelihood of the agency recovering the cost of service remains uncertain and the NWA may be financially exposed to the loss of revenue.

The NWA was advised to take the necessary action to recover the long-outstanding aged receivables by aggressively following up with clients and pursue legal avenues where necessary.

Further, the NWA was also encouraged to review the payment terms for services rendered to private entities, to allow for payments or a portion of the sum to be made prior to performing the service.

ANNUAL REPORTS

A review of the submission of annual reports by Government entities to Cabinet as at December 4, 2023, showed some public bodies in a chronic state of delinquency.

Checks by The Sunday Gleaner on the last annual reports sent to Cabinet by some public bodies revealed some startling findings.

The last annual report submitted by the Jamaica National Heritage Trust, an agency of the Ministry of Culture, Gender, Entertainment and Sport, to Cabinet was for 2002-2003.

Cabinet received the 2004-05 annual report from the National Council on Drug Abuse (NCDA) on July 17, 2006. Last November, a bill was passed to subsume the NCDA into the Ministry of Health and Wellness.

The last annual report submitted by the Port Security Corps to Cabinet was for 2007-08. A board member of the Port Security Corps, who asked not to be named, told The Sunday Gleaner that the Ministry of Science, Energy, Telecommunications and Transport is making a concerted effort to ensure that overdue annual reports are completed and submitted to Cabinet.

While not being able to say why there was a backlog of annual reports, the director insisted that the agency and its parent ministry were working to address the problem.

edmond.campbell@gleanerjm.com