Consolidated Fund not reconciled since 1987
Overdraft a great concern - Goolsarran
June 4, 2002
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Internal control of government spending from the Consolidated Fund remains unsatisfactory despite efforts to rectify this.
The Consolidated Fund, held at the Bank of Guyana, is the government's revenue and expenditure account. But this account has not been properly written up since 1987, the last year prior to the ten-year gap in financial reporting.
The Accountant General has explained to the Auditor General as reflected in his report on the public accounts for 2000 that the data processing of the government's transactions prior to 1987 was done using a mainframe computer. However, that computer had developed problems in 1987 and stored data could not have been retrieved. Since then, the processing of the government's transactions was done manually.
The report noted that entries were made relevant to 1987 on capital and current receipts and expenditure and preliminary work had begun to reconstruct the transactions for the 1988-91 period and to use audited figures between 1992-2000 to update the accounts. But Goolsarran is urging that the process be accelerated.
He said that despite the Consolidated Fund being the single most important account of the government, it has not been reconciled since February 1988, an unsatisfactory feature highlighted in his previous reports. Goolsarran said reconciliation of bank accounts with the related cashbooks and ledger accounts was one of the basic elements of internal control and failure to do so can lead to the perpetration of "serious irregularities without detection".
He noted that efforts have been made to reconcile the monthly transactions of the Consolidated Fund with effect from January 1994 but pointed out that this could not be relied upon as the bank account balance was not being reconciled with the cashbook balance.
Goolsarran also cited a number of unsatisfactory features of the reconciliation statements including it being handwritten and in a foolscap book, which did not allow for copies to be forwarded to the secretary to the treasury or himself in keeping with circular instructions; the reconciliation being prepared by an accounts clerk 11 and there being no evidence of checking and certification by senior officers; and entries in the cash book relating to revenue and other receipts were not made in the relevant month but several months later.
He said that the reconciliation should have been the responsibility of a senior official of the Accountant General's Department and that an officer of at least the level of a chief accountant should reconcile the account and have this checked and certified by a higher official. The reconciliation should then be forwarded to himself and the secretary to the treasury. He also advised that attempts be made to establish a cashbook balance for the Consolidated Fund since it is unacceptable to have a situation where the balance of such an important account unknown.
Further, Goolsarran said that the traditional approach of reconciling bank accounts should be adopted, but because this was not done since 1988, there is likely to be an unreconciled difference in the reconciliation statement. He said that the difference will be reduced if not eliminated over a six-month period since cheques become stale-dated after this period and are no longer valid. At the end of the six months, he said, the cashbook can then be adjusted to take account of any remaining difference.
The Auditor General also noted with "great concern" the continued overdrawn nature of the Consolidated Fund, mainly as a result of the failure to reconcile the various government accounts and to pay over sums due to the fund. At the end of 2000, the account was overdrawn by$54.2 billion. Over 1995 to 2000, the overdraft on the Consolidated Fund increased by $31.8 billion.
But despite the overdraft on the account, the balance on the Consolidated Fund was positive at $22.1 billion at the end of 2000, and this compares favourably with previous years. Goolsarran said that in the absence of the reconciliation of the vast majority of the accounts, the positive balance of $22.1 billion is the best available estimate of the cash position of the government at the end of 2000.