Noble: Auditing the Nation’s books; why Ms Ramdass’ actions deserve scrutiny

Last week’s column quoted an INTOSAI (the global body of auditors general) statement: “Independence does not mean an adversary relationship… Collaborative spirit must be the governing rule.

“Good relations can help […] to obtain better results. Independence is not only a privilege—it also entails obligations and should not be viewed separately from other values, such as transparency, accountability, ethics, and quality.”

Two spectators take a selfie during Trinidad and Tobago’s 2016 Independence Day Parade celebrations.
(Courtesy Chevaughn Christopher/ Wired868)

In light of this statement, we must consider the actions of the Auditor General in this debacle.

In what appears to be an unchallenged statement by the Finance Minister’s lawyers, the Auditor General refused to accept documents from the Ministry from 9 to 15 April. These documents represent amended financial statements to correct a “material misstatement”.

The Ministry then sent the documents via TTPost. The Auditor General received them on 15 April. The Attorney General sent a pre-action protocol letter to the Auditor General on the same day.

The Auditor General responded immediately, offering the Finance Ministry to recall the 31 January submitted public accounts and provide the revised version. This action had to be done by noon on 16 April.

Auditor general Jaiwantie Ramdass.

It should be noted that this was a case of an audited party discovering a material misstatement. According to Mr Reginald Amour, this error was found after the statutory deadline of 31 January. He dated it from February and indicated that the Treasury, Inland Revenue and Budget Division officials did investigations.

He reported that the Finance Ministry’s Permanent Secretary received no response to their 27 March letter.

These events raise questions about whether the Auditor General demonstrated independence (as elaborated by INTOSAI in the opening quote) by her actions. Depending on publicly available information, how will a reasonable and informed person weigh such actions?

Minister of Finance Colm Imbert during the 2024 Budget presentation.
Photo: Office of Parliament 2023

Looking at all the facts and circumstances in the situation, can the Auditor General be described as objective? The perception of independence underpins the notion of independence.

What should the Auditor General do when a material misstatement comes to light before the publication of her Report? Should she proceed to publish her Report without due consideration of the misstatement?

According to the INTOSAI Financial Audit principles (ISA200), the auditor general “should assess whether uncorrected misstatements are material, individually or in aggregate, to determine what effect they may have on the audit opinion”.

Balancing the books…

The statement quoted by her lawyers did not articulate the potential impact. Auditing Standards require that in the event of a prolonged investigation, auditors notify all parties who rely on its report that they should not rely on the related report until the investigation is completed. This was not done.

The unamended Report was sent to the Speaker of the House and President of the Senate.

Why was there a rush to send the Report on 24 April? Contrary to the assertions made by the Auditor General’s lawyers, the deadline was 30 April.

Attorney general Reginald Armour SC (centre) is flanked by Prime Minister Dr Keith Rowley (right) and Finance Minister Colm Imbert in Parliament.
(Copyright Office of the Parliament 2023)

Did the Auditor-General Department (AGD) follow the ISA520 protocol for handling material misstatements?

“During the completion stage of the audit, the client should prepare the final version of the financial statements, which, as discussed above, should incorporate any adjustments of misstatements proposed by the auditor. The financial statements should be reviewed according to the requirements of ISA 520, Analytical Procedures.

“One of the objectives of the auditor in complying with ISA 520 is to design and perform analytical procedures near the end of the audit that assist in forming an overall conclusion as to whether the financial statements are consistent with the auditor’s understanding of the entity.”

About audits…

This chain of events is relatively unusual because the auditor did not discover the misstatement—the client did.

The Finance Minister’s lawyers asserted that the Auditor General issued the Management Letter simultaneously with the Report (Newsday, ibid). The management letter is a device auditors use to inform clients of unresolved issues emerging from the audit.

It is customary and aligned with the auditing standards that this letter be provided early to allow the client time to respond and clarify any issue.

Best practice also requires the AGD to hold an exit conference with the clients to discuss all the findings. This meeting will allow for additional clarifications to be made and discussed. The AGD submits a draft report, which both parties discuss before it is finalised.

It appears that this practice was not observed. Why?

Assessing what exactly is unaccounted for is now challenging. The Finance Minister’s lawyers cited one such instance where it was alleged that $700 million was missing.

The Dr Eric Williams Financial Complex.

The lawyers asserted this was a false allegation based on documents submitted on 17 April. The management letter and exit meetings enable the requisite clarifications for such anomalies.

The INTOSAI Code of Ethics and Auditing Standards clearly defines how the auditors and their institutions should conduct themselves. The media has a responsibility to support such a position.

It is professionally wrong and morally unacceptable to play on the gullibility of the population. All that the unrestrained media has done is to feed the trolls. Plenty of heat, no light.

Oropouche West MP and Public Accounts Committee (PAC) chair Dave Tancoo.
(Copyright Office of the Parliament)

It is sad to note that in November 2023, the Public Accounts Committee was delighted about the state of affairs. But now, there is a free-for-all like all hell has broken loose. We are being asked to believe that money was stolen.

Mr Shiva Sinanan of the AGD noted: “The 2022 report captures areas of irregularities, some of them fairly substantial. Across the board, in most ministries it’s not that prevalent. There are issues, but sometimes we cannot pursue this since the documents aren’t provided, contracts not seen.”

He continued: “Generally, we’ve found no major issues of fraud. The press would have picked up maybe three issues with incidents in the public domain, which we wouldn’t comment on.

Eagle eye…

“Two of them are before the investigation committee and the courts right now. One was tried and found guilty.”

What happened to cause the purported backsliding in procedures? Or is it that we neglect the independent nature of the office to stir the pot?

Examining the reports over the years, it is clear that significant systemic deficiencies must be addressed. Millions of dollars have gone missing over several administrations and years. Members of Parliament and Senators who have been paid from the public purse are always noted.

Prime Minister Dr Keith Rowley (right) and Opposition Leader Kamla Persad-Bissessar.
(Copyright Newsday)

Implementing the proposed digital system will address some of these deficiencies. The AGD has a vital role in this implementation.

We are being asked to believe they did not know what they should have. Did they include the new Central Bank system in their audit planning? Were they aware of its implementation? Why the furore?

How did the AGD not discover the glitch in the Central Bank’s system? Ms Jaiwantie Ramdass, according to The President’s Office, has extensive experience in Value for Money and information technology auditing.

Auditor general Jaiwantie Ramdass (left) receives her instrument of appointment from President Christine Kangaloo.
(via OTP)

Value for Money is a fascinating area of expertise in that it examines and reports on whether public funds were spent effectively and efficiently.

A professional information technology auditor evaluates and assesses an organisation’s information technology systems, processes, and controls to determine compliance with set standards and ensure that they operate effectively and efficiently.

Did that experience benefit the nation in this episode?

Minister of Finance Colm Imbert.
(Copyright Office of the Parliament 2022)

The staff of the AGD have long careers. They represent a store of institutional knowledge. (Mr Shiva Sinanan, at the last PAC meeting, clearly rejected the short-term hiring of recruits.)

Being caught up in this unprecedented drama with their line supervisor instructing them not to engage the client can have long-term repercussions.

Will their environment be safe where questions and opinions can be voiced? Or will we now find that toeing the line set will become the norm? Will our nation benefit from silencing line auditors and heads of departments?

Buckle up…
(via Baloocartoons)

The silence on this and other national matters by the professional bodies in our country is deadly and deafening.

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  1. Mr Mohan Ramcharan has offered us a very vacuous comment on the rather erudite article by Mr Noble Philip.

    Mr Ramcharan needs to tell us on what basis he asserts Mr Philip is making out “a very spurious”case against the Auditor-General.

    Some politicians frequently resort to such vacuous comments when addressing their diehard supporters of a moribund sectoral political party. They oppose for opposing sake, lack intellectual rigour, creativity, and are bankrupt of ideas. They hide behind the ignorance of their captive audience who never ask the particular politician to specify the rationale for the stance taken. Blind loyalty reígns supreme.

    Mr Philip has expressed his opinion on a very important matter. It would be helpful if Mr Ramcharan could, at the very least, tell us what are the major shortcomings in the views expressed by Mr Philip. We would then be in a position to evaluate the two opposing points of view, and draw our own conclusions.

    Please help us Mr Ramcharan. Please justify your stance.

  2. It seems that Mr. Noble is making out a case against the Auditor General.

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