EDITORIAL - Hold government enterprises to account
When a company lists on the Jamaica Stock Exchange, on which more than 50 are listed, it agrees to abide by a significant level of transparency in the conduct of its business. That is a price its majority owners pay for inviting other people to invest in their enterprises: public accountability.
So, within 45 days of the end of each financial quarter, a listed firm has to publish unaudited profit-and-loss statements. Then it has up to 90 days after the end of the financial year to produce audited results for that year. If a company chooses not to produce a separate unaudited financial statement for the fourth quarter, then it has to file its full, audited annual accounts within 60 days.
Additionally, within 120 days of the end of the financial year, that company has to produce an annual report in which the management and directors, in addition to the financial data, offer shareholders an explanation of their stewardship for the foregoing year. Moreover, during the year, the management and board are required to inform shareholders, via the stock exchange, of significant decisions that might materially affect the performance of the company. Government enterprises and other state agencies which consume large chunks of public resources, and whose ultimate shareholders are taxpayers, have no similar regime of strict accountability, or none that is robustly enforced.
TARDY WITH REPORTS
In recent months, this newspaper reviewed the performances of several QUANGOs (quasi non-governmental organisations) and a recurring finding is the absence of up-to-date accounts and/or reports from their governors. Most annual financial statements are years overdue.
Even among the handful of QUANGOs that claim to produce timely annual reports and wave around letters of commendations to prove the point, these reports are, at most, not available to the public, including this news-paper. The excuse is that they have first to be remitted to the appropriate minister for review, who then tables them in Parliament - a process that, on the evidence, assuming the statements of compliance are true, can take years.
But worse, no one in Government wants a change of this system of unaccountability. For instance, several months ago, we formally asked Devon Rowe, the financial secretary, who should be keenly interested in the prudent management of public finances and, therefore, the performance of state enterprises, for the regulations that prevent QUANGOs from making their accounts public before they are tabled in Parliament. We also wanted to know if there were specific time frames for state agencies/enterprises to produce their financial statements. He has not responded. The letter is perhaps stuck in that notorious part of government ministries known as the registry.
There is merit in ministers having the benefit of reviewing the financial statements of companies. But that ought not to translate to locking these reports away from the scrutiny of their real owners, the taxpayers. In any event, an informed minister would be aware, on a continuous basis, of the performance of a QUANGO that falls within his purview and the policies and strategies being pursued by its board and management.
In an effort to fix the identified weaknesses, government agencies should be made to adhere to reporting timetables similar to listed companies. Further, the office of the auditor general, similar to the stock exchange, should be a central repository for their reports. Their boards and managers should be fired for failing to comply.
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