Interview: ‘Orders from above’ should not justify abuse of funds – Biraro

Last Week, Auditor General Obadiah Biraro, presented his 2011/12 audit report to Parliament, which highlighted a significant improvement in management of public finances, with entities that obtained clean audit opinions increasing to 37 in the latest current report. The New Times’ James Karuhanga sat down with him for an exclusive interview. The AG said, among others, that the issue of ‘orders from above’ should not justify abuse of public funds. Below are the excerpts:TNT: In your latest report, you noted significant achievements in public finance management. Lawmakers lauded the news. What, according to you, are the most important achievements?AG: My starting point would be, really, to salute all who participated in the financial management of the country, not only in the last 12 months but the last, say, 10 years, for the improvements. What does this improvement mean? It means that there is a law of the land which was put in place in September 12, 2006, and definitely it was good for society. People have embraced that law, slowly by slowly. Abiding by it was not simple, say, due to human capacity deficiency. In the last, say, three years, people are getting to own up– to know that they need to present to the public, in terms of financial statement, what they have done, so as to be able to give proof for value for money, that is, verification of duty of trust.There are three things that the constitution requires an accounting officer to do. First is that all that money approved by Parliament in the budget is used only for the priorities as embedded in the Finance Law. Second, is that there is no wasteful expenditure and third is that there is no embezzlement or any tendencies of embezzlement. So, for any public accounting officer to achieve that, you need the services of the Auditor General – the supreme audit institution of the land. And therefore, on our part, we are very happy that increasingly, people are getting to know, the necessity of this duty of trust – an accounting official trusted by the government, and by extension, trusted by the people of Rwanda. TNT: How is the latest picture on the issue of wasteful expenditure in public institutions? AG: The picture is so positive. And I am using those words deliberately, because, for example, last time [year] wasteful expenditure was Rwf1.6 billion. This time around, it is Rwf850 million. And even the institutions that were involved can be enumerated. It is not that they are 100. No! They are few. Therefore, that is a positive trend. Then, on embezzlement, last year, we had Rwf657 million embezzled, especially in the local government area. They said, ‘we can recover this money!’ this year, we found that they had not recovered even 10 per cent but they are still convincing [us] that they can recover it. However, notably, the money we suspect to have been embezzled this time around is Rwf22.8 million, an indication that people are starting to understand their responsibility.TNT: In your report, there are what you call unqualified and qualified audit opinions. Can you shed light on this? AG: Qualified, first of all, means that it is a bad opinion, in plain words. Unqualified means that I have no reservations regarding the financial activities of the organisation. And, there was a time it was not possible to tell anyone about it! Today, we can tell them and they understand. Not only do they understand, but they are fighting for it. TNT: You report that recommendations were implemented at 60%, unlike in the past…AG: Yes, on average. And let me clarify. Why does the Auditor General have to worry so much about the implementation of the recommendations? It is required by law, but, most importantly, the best practice – the integrity of this accounting officer who is entrusted with public resources. Implementation of those recommendations contributes to the possibility of ever getting an unqualified or clean audit opinion. When we have this percentage going up, it means the clean audit report is getting, greatly, in sight. Some lawmakers and law enforcement agencies are tending to criminalise failure to implement those recommendations. Therefore, it seems that there is some common understanding as to the importance of the same.TNT: Is the issue of lack of capacity still acknowledged as an impediment to proper management of public finances? AG: Yes it is still a concern. I told parliament that supreme audit institutions in the United Kingdom have been in place since 1860 and those of the Netherlands, since 1814, but they are still tussling with these things. For this one of Rwanda which is not yet 15 years old, I think we should acknowledge the improvement and continue pushing people to hold on to their responsibilities. TNT: With these achievements, what do you note to be the major challenges?AG: The constraints are, as I said, capacity. In the last six months of 2012, I went around the countryside – I would invite accounting officers for every district, and you find that from the questions that they ask, at district level, they really still have a problem, mainly a problem of supervision. Time immemorial, the accounting system in public accountability is not a simple job. There must be some kind of policing element administratively – supervision, ‘prepared by, reviewed by, approved by’. Those elements are not yet in place. In parliament, I told [MPs] that of late, you have corporate services, are you sure the deputy director general knows what the chief of corporate services should be doing? That is a grey area. It [corporate services] is a very important position that has come up of late, but people generally do not understand what they should be doing. TNT: Do you see things changing for the better in the near future?AG: Change will be there because that is a crusade we have started together with parliament. I told parliament that now; there are some organisations that I am calling risky – these government business enterprises (GBEs). Whether they are in the health sector—like King Faysal Hospital and Camerwa (drug procurement) – or Onatracom (public transport), EWSA (energy and water utility) or NAEB (National Agriculture Export Development Board), among others, these are high risk organisations. They should actually have been the ones to display a clean audit report before you talk about the districts, because they have the means. So, might there be some mindset problem in those high risk organisations [like] RDB? We have a technical problem. Say, what kind of accounting framework should King Faysal use? Is it the accruals concept?TNT: In Parliament, you noted that despite the significant achievements, there are easily avoidable or addressable factors, and one such factor was lack of proper accounting records, especially for embassies. Please shed more light…AG: By the way, we only covered five because we can’t audit all the 25 embassies. That was a sample enough to shed light on what is happening. Again, we go back to supervision. There are two ministries; the line ministry, the Minister of Foreign Affairs, then the Ministry of Finance, which is the supporting ministry. These two, do not get returned financial reports for the embassies around the world. An embassy is a budget agent – to us, when we say the ministries ‘do not get’ financial returns, it is because we do not see evidence that they got, they analysed, and there was feedback – month one, two, three, four, to twelve.And, some embassies do not really see any reason to employ a sound technically qualified person. It doesn’t require much really. It is just a matter of recording these transactions in the prescribed manner. That gap of supervision causes the gap of capacity and what comes out is chaos.There was Rwf526 million unaccounted for in the Rwandan High Commission in Kampala. But I believe they can even get a student from any one of those universities or part time professional accountancy student, recruit them and they sort out those things.TNT: Any hope the Ministry of Finance now understands the danger here?AG: We have been crusading this for a while now. We can only hope that these things will be understood and corrected. The OAG has been here for more than 10 years, and we raise these things year in year out. But, at the same time, it should not be understood that it is our job to raise these issues. We are just an assurance organisation, giving a helping hand. Independent opinion, fine, but at the same time, augmenting or aiding the responsibility of the financial manager, which is Minecofin, and the budget agencies. Primarily, it is their duty to keep telling the embassies, and whoever else they give money, to mind about accountability.TNT: In public procurement, there is an aspect cropping up of junior procurement officials who apportion blame on their bosses. These technocrats claim to fear for their jobs and will simply succumb to ‘orders from above’… AG: Of course we do not reflect in our reporting, the ‘orders from above’. We don’t know any ‘orders from above’. We only see things as they are reflected in the financial statements. The ‘orders from above’, possibly would feature if we went into a value for money audit because these have got some connotations of qualitative factors which, at times, may be hard to record and get responded to but at least, it is a branch of auditing that can help us to highlight that.Nevertheless, the ‘orders from above’ issue should not arise because every accounting institution in the land – whoever goes to present their budget to the treasury [Minecofin], they are doing so under some law.Then, there is the organic budget law that galvanises all these laws that put us in existence as far as public money is concerned. How can someone accept to do wrong and say that it ‘came from above?’ no, they should not deceive you. Some frictions do take place but I don’t think that someone will be sacked just because they have highlighted a case of bad procurement since procurement is a matter of law, a matter of best practices and management. On this note, I think the issue of ‘orders from above’ should not arise. The law on what we are supposed to do is elaborate enough and the rest is about how we implement it. It is either we are wrong or right. And even if there were ‘orders from above’, we have the public service commission. I am not saying that life is a straight line, but at least there are some basic justice systems anyone can resort to in case of victimisation during the course of discharging their rightful duties. Those are excuses and they should not be entertained.TNT: What’s your take on the public’s perception on your office’s work? AG: It is just a mixed bag of opinions. There are those who are increasingly appreciating our work. I hope one day we shall get to the South African level where the Auditor General charges fees. TNT: Your last message?AG: To those who are part of the 28 per cent, who attained a clean audit opinion, please keep it up, because it is never fixed. It is just based on audit evidence of the year, and never stored in a wardrobe. This office is here to serve them. If anyone wants us to advise on some issues, technical or otherwise, we can. And, the Ministry of Finance is the custodian of public finance management. Let it exercise the supervisory role. There is no short cut. Then we have the Ministry of Local Government and 30 decentralised entities (districts) where a lot of money is going. So, the Ministry of Finance and the Ministry of Local Government ought to get their act together – and we come in when we are required to. We are ready to help them. We shall help them. We have the capacity to help them. But they must come.