World Bank seeks to have its project accounts audited by private firms

by Gitanjali Singh
Stabroek News
June 14, 1999

The Auditor General's department is once again under attack, this time from the World Bank which is seeking to have the auditing of its project accounts contracted out to private firms.

World Bank Director, Orsalia Kalantzopoulos, wants the El Nino Emergency Assistance Project contracted out and told Finance Minister, Bharrat Jagdeo, in a recent letter that the audit office cannot produce timely audits of a satisfactory quality for the Bank's projects.

"On many occasions in the recent past, we have discussed our shared concern that many of the audit reports of operations financed by the International Development Association (IDA) prepared by the Auditor General's Office were late or of unsatisfactory quality," Kalantzopoulos told Jagdeo.

She suggested that steps be taken to provide institutional strengthening for the audit office and in the interim, private firms be hired to conduct the audit on IDA projects.

The move to replace the audit office as the auditors of the IDB projects is not new but was renewed after Auditor General, Anand Goolsarran, withdrew his opinion on the Essequibo Coast Road financial statements.

Goolsarran and Jagdeo clashed publicly last October on increased financial support for the audit office with Jagdeo contending that that office was no more important than any other public department. Jagdeo also stated that the World Bank was more open to private firms auditing its accounts.

However, Goolsarran had countered that such a move would be a breach of the constitution as it was his office which was the auditor of all public accounts, under which category an IDA project account would also fall.

Contacted last week for a comment on this new development, Goolsarran declined.

The New Nation, a PNC publication, last week highlighted the issue, contending that Jagdeo and the World Bank were moving to weaken the Auditor General's powers.

It is understood that the genesis of the problem lies in the inherent belief of the World Bank that the private auditing firms would best suit its needs, a view which received reinforcement from a bad start in its relationship with the audit office.

The IDA accounts handled by the audit office are the Public Administration Project, GUYWA, Infrastructure Rehabilitation Project, Financial Sector and Business Environment and the El Nino Emergency Assistance Programme.

However, some three years ago when the Ministry of Finance which was behind in preparing the accounts asked the audit office to help with the IDA accounts, it advised that this be done as an income statement on commercial lines. But the World Bank did not take kindly to this and was brutal in its attack on the audit office. It contended that its guidelines had not been followed, although these guidelines had not been available to the audit office at the time.

Since then, the audit office, Stabroek News was told, had meticulously followed the guidelines of the World Bank which still found reasons to fault the office's work.

But a year ago, this newspaper understands, the bickering stopped, until Goolsarran withdrew his opinion on the Essequibo Coast Road project accounts earlier this year, when it resurfaced again.

The World Bank immediately took steps to remove the El Nino Emergency Assistance project from the audit office and wrote Jagdeo to this effect.

However, Stabroek News has learnt that Goolsarran objected to the agreement reached between Jagdeo and the World Bank. In response to that objection, Kalantzapoulos wrote Jagdeo on March 12.

Her letter, obtained by this newspaper, pointed to difficulties faced by the bank in discharging its "fiduciary responsibility" to IDA shareholders if the bank did not have timely and satisfactory audit reports.

She said no doubt the government faced a similar situation when it could not ensure that public funds, including monies borrowed from the IDA, were used with due regard to efficiency and for the purposes intended.

"In addition, the lack of adequate financial accountability at the project level which is reflected as unsatisfactory ratings during project implementation, has negative consequences on performance based IDA allocations to Guyana," Kalantzapoulos stated.

She said that it behoved Guyana and the IDA to take steps to correct the situation. She concluded that currently, the audit office was not in a position to produce timely and high quality audit reports and supported the strengthening of that office.

But, she said, this could not be achieved overnight and said that while the Bank intended to provide support for this strengthening, there was need to hire private firms to carry out audits on behalf of Goolsarran's office.

Kalantzapoulos said she hoped this was found realistic and feasible by the government and if not, asked that an alternative be proposed. She also restated the need to hire a private firm for the El Nino project.

This letter was copied to Goolsarran and Terrie O'Leary. This newspaper understands that Goolsarran has not replied but is following up on the matter.

Stabroek News has learnt that in order for the audit office to produce audited statements in a timely fashion, the project execution units of the various projects have to submit these accounts on time.

A page from:
Guyana: Land of Six Peoples