I REFER to the Auditor-General’s Report 2007.

So much is said and written every year about wastage and mismanagement of public funds but little is done to prevent them from recurring. The people’s anger and frustration are justified as it is their money that has gone down the drain.

Let’s not point fingers at any one or any department for the irregularities and wrongdoings but look at the government’s financial administration system in the context of responsibility and accountability, especially to see if there are weaknesses that can be corrected.

At the outset, let us remind ourselves of the caution administered by H.R. Hickling, the last British solicitor-general, in his book, Introduction to the Federal Constitution, published in 1957. He quoted a Chinese proverb: “Public money is like holy water, everyone helps himself to it.”

Once Parliament approves the Supply Bill, the finance minister signs the general warrant, which is relayed by the Treasury to controlling officers, authorising them to incur expenditure. In so doing, they must comply with Treasury instructions and other circulars.

The Treasury instructions lay down the procedures that must be complied with in obtaining supplies and services.

Now, who are these controlling officers? They are the secretaries-general of ministries and certain heads of department.

By the time they become controlling officers, they would have served the government for more than 25 years. During this period, they would have attended management and professional courses.

At these courses, they are trained and retrained on public administration, including financial management. Some of them have master’s degrees and even doctorates.

So they are well equipped to shoulder the responsibilities entrusted to them. They know that they are accountable not only for what they have done but also for what they have failed to do.

Under the Financial Procedure Act 1957, controlling officers are accountable to Parliament through their ministers for each financial transaction under their head of expenditure.

The normal practice is that controlling officers delegate their authority to officers below them, trusting that they will comply with Treasury instructions in carrying out their duties.

They are aware that delegation is not abdication. Yet most of them do not monitor the performance of the officers concerned. If they had done so, they would have detected discrepancies and malpractice at an early stage and loss of public funds could be avoided.

The auditor-general’s officers conduct two types of auditing: compliance audit to verify whether rules and regulations are adhered to and management audit to make sure that programmes and projects undertaken are effective, economical and efficient.

Upon completion of the audit, the auditor calls on the controlling officer to alert him of flaws in financial transactions or misappropriation of funds.

The auditor follows up with a report in writing, highlighting all those aspects which require the controlling officer’s attention.

The controlling officer is given time to reply to the audit queries and to follow up with remedial measures. The auditor-general only highlights those queries which are not answered despite reminders or given evasive replies.

Most controlling officers do not take audit reports seriously. They pass the reports to their deputies, who pass the task to their juniors.

Most ministries have internal audit teams under the charge of controlling officers. Internal audit is an important tool for management. But irregularities highlighted in their reports are seldom given the due attention they deserve.

If each controlling officer has complied with the canons of financial administration and viewed audit reports as wake-up calls, then cases of financial impropriety, fraud and corrupt practices will not occur to the extent that they do now.

It is obvious from the forgoing that the financial management system is adequate but it is human failure that has contributed to this deplorable state of affairs.

So the controlling officers should be held accountable for the financial fiasco.

Hauling them up before the Public Accounts Committee in the past has not brought any tangible results.

All cases of fraud and shady transactions should be reported to the Anti-Corruption Agency.

S. SUNDARESON, Petaling Jaya

Source: NST – September 5, 2008