Financial Times

Making the Auditor General more effective
By Dinesha Matthias
What is the role of the Auditor General?
The public elects the members of parliament to run the country in the most efficient manner. To carry out their duties, ministers appoint officers. My department is responsible for the constitutional mechanism of reporting to parliament on accountability of the departments of government, local authorities, public corporations and business or other undertakings vested in the government under any written law.

Under the audit approach there are three key factors that are looked into: Economy: All transactions should be carried out in the most economical manner, to ensure that human, financial and physical resources are acquired at the best price, at the required quality and quantity, and in the most timely manner.

Efficiency: Under the efficiency aspect, the input: output ratio is the key factor. It is important to use the resources given to achieve the best outcome. Effectiveness: Recording the expenditure and other transactions in the best possible manner, and carrying out instructions and utilizing resources in the most suitable manner are important.

If the resources are used and the objective is not achieved, then the purpose of the exercise is lost. Members of parliament should be aware of the correct picture. Has there been any action taken against corporation chairmen and officers with regard to decisions they have taken while in office? If not, doesn't this give an indication to officers that they can do anything and walk away scot-free?

This statement is correct with regard to the past. Today the role played by the Committee on Public Accounts (CPA) and the Committee on Public Enterprises (COPE) is different. Today COPE and the CPA take strict action against officers who misuse government funds. CPA and COPE have surcharge powers.

That is if they find an officer, in carrying out his duties, has not followed the relevant procedures or government circulars and if that causes a loss to the government, the CPA or COPE is in a position to charge it from the officer responsible. That is, with regard to uncollected revenues, unlawful transactions and over payments the officers responsible will be charged jointly or separately.

The Sri Lanka Development Forum Report speaks about the importance of the role of the Auditor General as a watchdog agency in ensuring better effectiveness and control of public expenditures. What are the recommendations of the World Bank with which the government is preparing a programme of assistance to the department?

In the report it is recommended to have a separate new 'Audit Act'. Under this new Audit Act, the Auditor General's Department will audit public corporations and companies where the state has a holding exceeding 50 percent. It is also authorized to carry out performance and effectiveness audits. Centralised and decentralized office space must be adapted to suit requirements.

The General Treasury coming under the Ministry of Finance decides budgetary resources for the Auditor General's office. Does this mean your office is not fully independent and effective? In other countries there is a separate parliamentary committee, which handles the budget of the Auditor General.

In Sri Lanka the Treasury does budget allocation. The World Bank has recommended that under the new Audit Act a parliamentary committee be set up to deal with the budget of the Auditor General's Department, rather than leave it to the Ministry of Finance.

Recently Power and Energy Minister Karu Jayasuriya in an address to a professional body requested private sector professionals to join hands with the government to ensure good governance. Does your budget constraints prevent you from hiring and assigning competent professional staff?

There are constraints, as the appointment of my staff is done by the secretary to the President. With the new recommendation it is suggested staff policy should be a direct responsibility of the Auditor General and that the Auditor General will have the power to recruit contract staff when deemed necessary. Furthermore, staff will be encouraged to take training in IT and the auditing of computer systems, and rewarded if they do so.

Other options are on-the-job training in the supreme audit institutions of Australia, the United Kingdom and Canada, scholarships to enable staff to acquire qualifications such as Master's degrees in public finance in those countries and increased attention to identifying and meeting staff training needs.

Shouldn't the Auditor General play a more effective role than just issuing reports?
In the past government institutions took years to prepare financial statements. But now there are deadlines for government institutions to present their accounts. Also, in the past we had constraints in printing the audit report, as we were limited in our resources like translators and printing facilities. But now it has been suggested that the Auditor General's reports be printed in-house in order to avoid delays.

urthermore, the audit reports would be made available through a Web site to the general public. The Web site would be up and running within this year and any audit report that is tabled in the parliament would be available through the Web site to the public.

In other countries the office of the Auditor General has recommended various steps to improve the efficiency of motor vehicle registration and the operations of state mail services. What steps have been taken in Sri Lanka in this regard?

In the Sri Lankan context, for the Auditor General's department to make such recommendations we should be professionally competent. Almost all my staff have an accountancy background. To make recommendations we need multi-disciplined staff. Again the budget constraints at present makes that task impossible.

There was an attack on one of your officers, who had been probing financial irregularities at a ministry of the Central Provincial Council. Isn't this incident clear evidence that corrupt persons would go to any extent to conceal their wrongdoings? What steps have been taken to minimise your personnel being exposed to such danger?

My officers and my office are frequently exposed to the threats from low ranked officers of some government institutions and low rank politicians. But this does not stop us from performing our duties to the fullest.

United Motors to import buses?
Mahendra Amarasuriya, Chairman, United Motors Lanka Limited (UMLL) has said that the company also plans to move into the passenger transport industry in addition to its current focus on luxury cars and other vehicles.

He did not give details. Speaking at a media conference last week to announce a joint venture between UMLL and the TVS group in India, Amarasuriya said he saw a brighter economic future in Sri Lanka where today's per capita income of $ 850 would move to $ 2,000 in 10 years time.

Among the other senior management of UMLL present were S.B. Hewage (Deputy Chairman), Anil Wijesinghe (CEO/MD), and Gihan Pilapitiya (GM). Senior management of TVS were R. Dinesh (Executive Director), H.S. Govindi (Vice Chairman International Business), S. Krishnamoorthy (Manager International Operations) and C.P. Gopinath (Manager International Business).

The new partnership between UMLL and TVS India will result in UMLL holding a 50 percent stake in TVS Lanka, which is a long standing subsidiary of VTS Group India. TVS is the largest automotive component group in India with total sales exceeding $ 1.7 billion.

Its business ranges from manufacture and distribution of automotive components, to freight services, textiles, computer peripherals, telecommunication and logistics. TVS Lanka distributes spare parts for Indian vehicles in Sri Lanka and with the new joint venture TVS Lanka becomes the sole distributor of TVS motorcycles.

Amarasuriya said that UMLL was first floated in 1945 as a family concern.
In the 1950s the company was appointed the agents for Mitsubishi and in 1970 it was vested in the government. UMLL is the first state owned company to bere-vested in the former owners in 1979 and to grow up to a model privatized company.

Dinesh of TVS India said that it too was a family concern started in 1911 and was very small, but today has grown very big with 25,000 employees and 30 companies in the group. The biggest strength of TVS was the employees who are treated like a family and thus the company has not lost a single day on labour disputes. A substantial amount is spent on charity and in Tamil Nadu State itself, TVS runs 30 hospitals. TVS has chosen UMLL for its ethical business practices and dynamism. Dinesh predicted that there was tremendous scope in economic growth in Sri Lanka and thus the potential for sales of motorcycles would also grow. (QP)

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