Follow-up On Audit Recommendations

The current auditing function appears to be a frustrating exercise in report writing. The Auditor General produces a report which is sent to the Public Accounts Committees (PACs) of the legislature. The PACs conduct their hearings, conduct investigations if necessary, conclude their deliberations and produce yet another report. What happens to the recommendations in the first and second reports? Available evidence shows that audit recommendations are treated with levity by Ministries, Departments and Agencies (MDAs). Despite the provisions of the Financial Regulations 2000, there is hardly a follow-up on the recommendations. This sets the stage for the year after year reoccurrence of the same set of “financial felonies and misdemanours” by MDAs.

The Lima Declaration of Guidelines on Auditing Precepts (adopted at the IX Congress of the International Organisation of Supreme Audit Institutions-INTOSAI) states that the concept and establishment of audit is inherent in public financial administration as the management of public funds represents a trust. Audit is not an end in itself but an indispensable part of a regulatory system whose aim is to reveal deviations from accepted 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 to accept responsibility, to obtain compensation, or to take steps to prevent – or at least render more difficult such breaches.

The last set of requirements on the purpose of audit is generally lacking in the Nigerian audit regime; corrective action appears not to follow individual cases of mismanagement; the Treasury is hardly compensated and those responsible for the violations hardly accept responsibility. This has led to situations of impunity for violations of the laws. Thus, the Nigerian society neither gets guarantees of non repetition, compensation nor have the offenders punished.

Although doubts about the juridical validity of the 1956 Audit Act has been brought to the fore by the fact that it was omitted from the Laws of the Federation of Nigeria 1990, declaring an act or omission an offence without providing sanctions for same makes mockery of legal provisions. It reduces them to mere moral adjurations. In moral societies, such adjurations can have a stronger effect than offences without sanctions in a non moral society like Nigeria. It is the recommendation of this discourse that a new audit regime should clearly provide for sanctions for breaches of the law. Some of the powers to sanction can be vested in the Auditor General of the Federation or the PACs. This power to sanction will not take away the prosecutorial powers of the Attorney-General where severe violations of the criminal and financial laws have been disclosed by audit. The example from the Republic of Ghana is instructive. In s.187 (7) of the Constitution of Ghana, it is stated that the Auditor-General may disallow any item of expenditure which is contrary to law and surcharge the amount of any expenditure disallowed upon the person responsible for incurring or authorizing the expenditure. He may also follow the same procedure in dealing with any sum which has not been duly brought into account, upon the person by whom the sum ought to have been brought into account or the amount of any loss or deficiency upon any person by whose negligence or misconduct the loss or deficiency has been incurred. By subsection (9) of the same section, persons aggrieved by the Auditor-General’s decision to surcharge may appeal to the High Court.

The Constitution of the Republic of Uganda in s. 164 (1) and (2) also offers a guide for auditing and public accountability. It states that the Permanent Secretary or the accounting officer shall be accountable to the legislature for the funds in that ministry or department. Any person holding a political or public office who directs or concurs in the use of public funds contrary to existing regulations shall be accountable for any loss arising from that use and shall be required to make good the loss even if he or she has ceased to hold that office.

The new legal regime should also contemplate that yearly audit reports should have a section dealing with the activities of the MDAs dedicated to remedying defaults observed in previous audit reports. These reports should continue until the Auditor-General or PAC is satisfied with the steps taken in that direction. Other sanctions could include suspension of salaries, demotions and loss of rank, etc, of defaulting staff.

The purpose of establishing the office of the Auditor-General and the respective PACs will be defeated if their reports are left to gather dust on the shelves. Their expenditure of tax payers’ moneys would amount to a waste and would not pass the value for money test if there are no sanctions and implementation mechanisms following audit reports and breaches of the financial regulations and laws continue repetitively.