The Spirit of the Social Partners’ Joint Declaration: Fixing the ‘System’

The Spirit of the Social Partners’ Joint Declaration: Fixing the ‘System’

Eight years ago, the Office of the Auditor General (AG) published its audit report for the 2011/12 Fiscal Year which contained, among many other things, this statement:

“The report received from Accountant General’s Department showed that forty-two (42) entities were sent memoranda requesting arrears of revenue list. Thirty (30) entities did not submit any arrears of revenue returns. Six (6) entities submitted nil returns and the other six (6) entities submitted their returns with arrears totaling $296,062,730.01.”

Basically, the almost $300 million figure represented close to 10% of that year’s GDP, and was more than the FY 2019/20 budget for the Ministry of Education, Youth and Sports.

Of course, that’s from a relatively “old” report, and it is very much unclear how much of those arrears are even still collectible; thus, there is logic in focusing our attentions on more recent Fiscal Years. And frankly, that is indeed the logical thing to do, but there is one small problem: Despite the fact that the audit reports for FY 2012/13, FY 2013/14, and FY2014/15 have been completed, they have not been made public.

Now, the careful reader would note that even the most recent report—again, which has not been made public—is from more than five fiscal years ago. That same astute person may also ponder if such lags in reports are allowed under the Finance and Audit Reform Act (FARA). The FARA, speaking on that matter, says: “Within a period of three months after the close of each financial year the Accountant General shall sign and submit to the Auditor General accounts showing fully the financial position of the Consolidated Revenue Fund and other public funds of Belize on the last day of such financial year.”

Okay and what about the Auditor General? The same FARA says: “Within ninety days after receiving the accounts mentioned in section 15(1) of this Act, the Auditor General shall send to the Minister [of Finance] … a report upon his audit of all accounts relating to the public moneys, stamps, securities, stores and other property of the Government and the Minister shall cause them to be laid before the next meeting of each House of the National Assembly without alteration. If the Minister fails to lay them before the National Assembly at the next regular meeting of the National Assembly, the Auditor General shall send copies to the Speaker for presentation to the House of Representatives and to the President for presentation to the Senate.”

Consequently, the law calls for annual audit reports of the “Consolidated Revenue Fund and other public funds” to be prepared within six months and not six years! Naturally, the law does allow for extensions, which in aggregate should not go beyond five months. So, clearly a five-year delay is beyond excessive.

But why should the business community or any individual care? Well the answer to that question is found when one understands the functions of a Supreme Audit Institution (SAI) such as the AG’s Office. As explained by Mahabat Baimyrzaeva and H. Omer Kose in their 2014 paper “The Role of Supreme Audit Institutions in Improving Citizen Participation in Governance”, SAIs “are in charge of checking whether public funds are being used for intended purposes efficiently, effectively, and economically in compliance with existing rules and regulations. Reliable and objective reporting is critical for SAIs to ensure accountability and transparency in public management.”

Frankly, even organizations registered under the Trade Unions and Employers’ Organization (Registration, Recognition and Status) Act know a thing or two about annual audits. Under that Act, trade unions and employers’ organizations are expected to follow the section 15 (d) requirement of providing “an audited financial statement of the trade union or employers’ organisation for the preceding year.” Failure to comply with this annual obligation can lead to the offending entity’s registration being suspended or cancelled.

If the rational for yearly audits is sound for a private company or civil organizations, how much more pertinent is it for the Government’s management of more than $1 billion of taxpayers monies? Clearly, the drafters of the Belize Constitution and the FARA shared that logic.

So, what’s the problem? Unfortunately, there are several. One such issue is the dysfunctional status of the AG’s Office’s “link” to the National Assembly: The Public Accounts Committee (PAC). The Standing Orders of the House of Representatives rightfully assigns the chairmanship to Opposition; however, it does so while keeping the majority in the hands of the incumbent government. As a result, despite the holding the chairmanship, the incumbent government—under the current design—can always out vote or undermine quorum, thereby, challenging the committee’s ability to effectively execute its all-important function.

There are also technical difficulties, which were likewise expressed in the last publicly available report (2011/12). In that report the Auditor General stated: “The Office of the Accountant General is tasked with the responsibility of maintaining and preserving financial records in accordance with the regulations, even though it lacks human resources and suitable infrastructure.” Fundamentally, AG relies on the information provided by the Account General; however, if the latter entity lacks sufficient “resources” to conduct the work in a timely manner, it stymies the work of the former—which also suffers from its own resource constraints.

But these sort of built-in, institutional limitations are not only common for the likes of the Auditor General; they also exist for other oversight institutions, thereby, triggering the systematic erosion of proper public management.

It is for this reason and more that the Belize Chamber of Commerce & Industry (BCCI), the National Trade Union Congress of Belize (NTUCB), and Belize Network of NGOs (BNN) saw it fit to collaborate on efforts to bring about requisite changes to these oversight mechanism. This collaboration was crystallized via the September 25^th signing of the Joint “Declaration of Social Partners of Belize (SPoB) for Reform of Essential Oversight Mechanisms to Strengthen the Democratic Governance of Belize”. Among the SPoB’s specific targets are the Integrity Commission, the Office of the Contractor General, the Office of the Auditor General and the Public Accounts Committee (PAC).

These sorts of institutional defects are what the Social Partners of Belize intend to address via their joint efforts to “strengthen the democratic governance of Belize”.

As we conclude, if we return to that $300 million we discussed earlier, it is impossible to say definitively whether such arrears have declined or increased over the last eight fiscal years, because, as was elucidated above, the Audit reports are grossly behind schedule. However, there have been reliable indications that such problems persist. If that is indeed the case, proper management of public funds becomes especially important at a time when the Central Bank of Belize (CBB)’s July 2020 report has already placed Belize’s debt at more than 130% of GDP.