Wed | Nov 25, 2020

Nigel Clarke | Integration of Audit Commission has nothing to do with performance

Published:Friday | June 7, 2019 | 12:00 AM

I write in response to the article titled ‘Axe to fall on Audit Commission – State watchdog’s fate tied to rising concerns over underperformance’, which appeared in The Sunday Gleaner on May 26, 2019. In the eyes of your readers, the assumptions in the article could be seen to impugn the reputation of the good men and women who were attached to the Audit Commission who have done nothing but serve their country.

The functions of the Audit Commission are being integrated into the Ministry of Finance and the Public Service and, like the integration of other public bodies, including the Road Maintenance Fund, The National Council on Drug Abuse and the PetroCaribe Fund, among others, this has nothing to do with performance.

By way of background, the Audit Commission was first established on April 12, 2005, as a body charged with the responsibility for ensuring the continued effectiveness of audit committees by monitoring their performance against the appropriate regulation. In 2009, the commission was enacted as a body corporate (given public company status) under the Financial Administration and Audit (FAA) Act.

The commission was reconstituted on July 1, 2011, with six members duly appointed by the governor general, with the solicitor general or his designate being an ex officio member.

The policy on the Categorisation and rationalisation of public bodies, approved by Cabinet in October 2016, details a principle-based approach to manage the number of public bodies and facilitate improved operational efficiencies.

The Audit Commission, like other public bodies, was assessed against the principles outlined in this policy. The Audit Commission was non-income-generating, fully funded by the Budget and had no regulatory responsibilities. While its functions are necessary, they could be carried out in the ministry without the complications associated with body corporate status. As such, the decision was made to reintegrate the functions of the Audit Commission into the Ministry of Finance and the public Service (MOFPS).

DETERMINED TO BE THE BEST UNIT

The Internal Audit Directorate (IAD) of the Ministry of Finance and the Public Service was determined to be the best unit to undertake the previous functions of the Audit Commission. The IAD has, as one of its primary responsibilities, the establishment and maintenance of auditing policies and standards for the internal audit function in central government, and its function is similar to the Office of the Comptroller General in Canada. In considering whether integration was a viable option, the functions of the IAD and the Audit Commission were reviewed and substantial areas of overlap were found to have existed.

The article also speculated about responsibilities of the Audit Commission in respect of governance issues that have arisen at a particular public body. It is useful to recall that the Audit Commission had no authority with respect to public bodies. Its focus is central government.

Furthermore, the Audit Commission had no authority to apply sanctions or to give instruction to internal auditors in central government. The commission was expected to use moral suasion to achieve compliance with the rules. It is the Ministry of Finance and the Public Service which has the authority to apply surcharges for breaches of the Financial Administration and Audit Act, on the recommendation of the Auditor General, and to create and implement operational policies to ensure more efficient and effective provision of service.

The rationalisation of public bodies, according to objective criteria, is a necessary exercise that will continue. We trust that the above clarifies the matter and your readers will be better informed as a result.

Dr Nigel Clarke, DPhil, is the minister of finance and the public service and MP for St Andrew North Western. Email feedback to columns@gleanerjm.com.