| The Author is from SAI-Bangladesh. He presently working as Senior Finance Controller, Bangladesg Nave. |
Another financial year has already begun. Much talked about and well thought out objectives of eradication of poverty, enhancement of education level and ensuring better health are set. Attention of the public is focused on how task of development would take place with less foreign borrowing but with more local resources. To make effective development that ensures better life to the people it is imperative that committed resources are collected. As such the agencies engaged in that task are incessantly asked by the authority to gear up their action and move fast to reach the target.
A sub editorial in an esteemed national daily revealed that the monthly target of revenue collection for the month of July has been set at Tk. I thousand 5 hundred 28 crore. But the receipt has been 1 thousand 4 hundred 31 crore. The balance 90 crore remains un recovered though the monthly target has been set at 4 hundred crore less than the average monthly target of the fiscal year. Of the many reasons for non-recovery may be improper assessment or absence of good number of client beyond the tax net. If a strong internal audit is in place, and it is in the estimation stage and the advice given by audit were adhered to in the estimation and assessment of revenues, collection of revenue and their recording could give a better picture. One example of direct contribution of audit is found in the report of the auditor general of Canada's April 2002 publication. It revealed that under 'fairness provisions', the Canada Customs and revenue Agency waived or cancelled $185.3 million in interest and penalties. But audit opined that the agency does not record the amounts waived in interest and penalties and the reasons for waiving them is still a concern. Some eminent scholars' claim that audit can really contribute in the GDP growth is proven by this type of reports.
The concept of productive administration may be thought of at this stage. In order to make an administration productive assessment of what has been achieved and what went wrong needs to be frequently done. In simpler term it can be stated as a work of constant comparison between what is done with what has to be done in order to determine what is to be done. Present day audit can help administration in that task. Before we explain how audit can do that some background information are needed.
The present day audit reports often speak not good of executives rather there is a tendency to highlight only failure. Little attempt has been taken by the audit to identify the reasons for such failure. It only mentions about non compliance of probity and propriety. The executive has seldom sought the help of audit to mitigate their inadequacies. Audit has also not come forward because of the non response of the auditee to what has been told by audit. As a result, amount involving 15000 crore for audit objections remains outstanding since independence.
Reasons for such attitude can be ascertained by analyzing the socio economic perspective of the period when the objections were raised. In the early fifties the country was in a state of restlessness due to direct threat on its culture by the foreign rulers. The question of financial discipline was of less concern to those who spent the money and more concern of indiscipline to those who ill spent the money.
Again in the sixties when more money was infused in the economy, the share of Bangladesh though quite negligible, the accounts keepers and the users of those monies did pay attention to how the money was to be exhausted than to why the money was to be spent. The audit objections remained the same. In the late sixties when the question of liberation war became prominent the spenders of government money again closed their eyes and ear to what audit was showing or it raised.
Even after independence when millions of taka started coming to the country the audit raised objections, made observations on how the government money was spent and how the financial irregularities were perpetuated but little has been adhered to by the auditees. This resulted in corrupt financial administration.
It is undeniable that audit as we practice in the country is not adequate to cater to the demands of time. The clients complain about the inadequacy of the information and evidence in the audit reports. The members of Public Accounts Committee also expressed dissatisfaction about the quality and contents of the reports. The donor agencies, development partners often raise the question on the effectiveness of audit itself.
Over the years the budget has been inflated; the expense has risen in all heads of accounts. Audit in its manifold ways can help the spender of scanty resources where to put more and where less would not be harmful. Examples of developing countries reveal that the advisory roles of audit not only helps minimizing the wastage but also I restructuring the plan of the government where needed.
Everyday issues which draw attention of the public are all about corruption, embezzlement and wastage of government money in all forms of irregularity, malpractice or white elephant purchase. People are conscious of what is happening with the money and want to know more about how best those are utilized. The international agencies are calling us corrupt; they are citing examples to prove their statements. Obvious reason for such comments is the non-accounting of the thousands of dollars that have come to the country and non-conspicuous result out of spending from that fund. The question is where the money has gone.
Practice of fraud is common all over the world. Enron or WorldCom are cases of fraudulent practice. Question of ethics has cropped up as a sequel. Audit seems to have brought to the forefront the question of accountability. Better audit means better accountability. The process of better audit is not difficult or cumbersome rather simple and straight. How the money is spent, why the money is spent, what is the benefit accruing out of such expenditure? Better audit will find answer to all these questions So long audit was confined to the first question with little or no emphasis on the other two numbers. The results of the findings of audit are reflected in financial audit reports. These reports are not complete in their format and contents; especially they are not sufficient to provide information to the management to take decision, say, for economy of expenditure, efficiency in performance or effectiveness of programs. The same old objections are repeated, the same old language is used, same old jargon used and same old reply is sought. Time passes, the executives are changed, the policy makers are gone, and the objections remain unsettled and even lose significance.
Now the premise is set, the reasons established, an elaborate route map is to be developed. Let's start with the purpose of audit. The objective and plan for audit are to determine whether the expenditure of the government have achieved the result. The question that becomes pertinent is what are the criteria on which achievement of result would be fixed? The project proforma or program files may state the criteria to be followed in audit. But it does not speak how the targets have been set; neither does it tell how the criteria would be met. If we consider the targets well set can we determine whether they have been set judiciously or in exact manner? For example the purpose of providing educational grant to non-government schools is to bring more students to academic institutions, spread educational facilities to every nook and comer of the country. But without ascertaining the area that would be covered by grant receiving schools and commitment of those running the schools, it is undeniable that such sanction of grant would only mean spending tax payers money for a noble cause without result.
Since modem day audit brings auditee and auditor on the same plank in determining plans and subsequent clearance, it is imperative that both posses a clear and complete knowledge of the organization that is being audited. At all the stages of audit, that is, from planning, examination to report writing the auditee needs to be involved. One reason for non-compliance of the audit objections or observation is the non-involvement of auditee in the audit process. Such proposition may seem ridiculous to many who believe that audit is something quite pious and un- touchable. If we believe that the money of the government is something not be amassed by a few and that everybody is accountable for what he possesses on behalf of the government then the user and overseeing agency may both work together to find out the right way and ascertain what goes wrong in the system.
If we look at some countries around we may find that in spite of political or geographical problems their financial discipline remains commendable because of the ever alert system of overseeing agency. The agencies engaged in revenue collection or tax administration are not failing in their duty, audit remains aware of what is happening in financial administration, provides information to make necessary adjustment where needed. To keep the ball rolling in the positive direction it is imperative that the audit should be relied upon. In our country the Wheat scam could be early detected if proper audit were carried out not only of the storehouses but also on what had been stored.
If auditees are involved in the audit process the nature of audit and the style of reporting would be more meaningful. The incumbent would be more aware of what they are doing and what they would do in the future. A change of mindset is needed at this point. Instead of looking at the auditors as inimical and the auditees as guilty of misdeed all the time both auditor and auditee can act together for the betterment of financial administration which is very much needed at this time of resource constraints.
The time has come for performance audit, you call it executive audit, you name it management audit, you call it results based audit, you mention it as a value for money audit. In whatever name you call it the purpose is to establish accountable administration and effective governance.