Failure of Compliance in the Public Sector

Editorial

Report of the Director of Audit

It has become routine for the Director of Audit to send out an annual report that attracts a lot of public attention. This is so because the report details out a lot of circumstances in which public funds have either been misapplied or they have been applied inefficiently. This report creates a lot of hue and cry and then is heard of no more until the next year’s report will be tabled again with identical remarks about similar lapses and lacunae in the allocation of funds and resources in the public sector.

This year’s report is no exception. It highlights various shortcomings that have attracted the government auditors’ attention. Among others, references have been made to cost overruns in several departments, inadequate timing and failure to act where it was necessary to do so. The sums involved are quite substantial in certain cases; not surprisingly, therefore, carelessness and inadequate specification of budgets are being brought up as the main shortcomings.

It was assumed that the projected coming into operation of government’s program based budgeting as from 2008 would bring about a greater alignment between individual departmental budgets and expenses. That would have fine-tuned the allocation of funds allowing for more principled and rational decision-making in the use of public funds. Had this been the case effectively, the Director of Audit would not have so many reproaches to make on the side of non-compliance by individual government departments.

This is not so. It means that individual government units are still piloting their expenses on a more or less ad hoc basis. This situation often occasions short spending on allocated amounts so that budgets are not used up efficiently according to plan. In other cases, there are unplanned-for add-ons which hike up costs, at times disproportionately compared with the originally planned expenses for individual projects in the public sector.

It is well known that when delays are caused in the implementation of projects due to adjustments made to them along the way, higher costs are subsequently incurred. Contractors do not assume such higher costs. This means they are passed on to the public sector agencies in charge of implementing them. Since the additional costs have to be met anyway if one wants to see such projects implemented, the cost overruns, representing higher prices of materials in the interval, go counter to the public interest. The Director of Audit is doing a valuable public service when pointing out such shortcomings on the part of implementing ministries.

While this aspect of the work is appreciated, the question still remains as to why despite repeated adverse remarks pertaining to departmental non-compliance of the sort, the same tune is played over again each year. The target departments may be different from year to year but the basic reproach being made is not different. One would assume that lessons would have been learned and corrective action not to repeat the same mistake would have been taken across all departments. The facts brought out in the audit report actually show that this has not been the case. Sometimes, the same departments which failed to comply with particular requirements are in the line of fire once again. This situation points to amateurism in a sector that has been primarily responsible for spearheading all economic developments in the country since independence. Some in an otherwise public sector that has performed honourably must be taking more than their fair share of the burden to get the ministries an overall clean bill of health despite such poor management at specific levels.

Was it the duty of the auditor, and nobody else’s, to point out the shortcomings which came to light? Was it also solely his duty to point out the type of risk incurred in the wider national framework if the matter was not attended to with due care and responsibility? Did not common sense and past experience show what ought not be done in a particular loss-making manner? Are there rules laid down for the good and orderly governance of public sector officials in these matters that have not been followed? The answer to all of these would probably be in the affirmative.

If so, is there a regime of well-directed sanctions for failure of duty? Alternatively, does the system permit weaknesses in public management to get scattered out across various individuals and units, each one at its own level of accountability? In that case, the system ought to have been reformed to allow pinpointing the real culprits behind the recurrent failures pointed out by the Director of Audit each year. This would have acted as a disincentive against temporisation in project implementation with implied huge added excessive costs.

We are not in the bad state of certain “advanced” economies where public account figures had been manipulated to paint a brighter picture than the reality. We are also lucky that tax buoyancy in Mauritius has continuously been yielding enormous revenues to the government. Moreover, substantial funds that had been set aside by raising taxes under previous budgets, along with non-commercial borrowings from friendly governments, are meeting huge infrastructure costs being incurred. All these are not forever. Debts will have to be paid back. This is why it is important to cut at least the waste of resources associated with faulty project implementation in the public sector. The Greeks and the Spaniards will tell you the consequences of not acting to hold back those lavish spenders who are exceeding limits. Time is still on our side. The time has come to act so that the Director of Audit does not have to point out a finger again at the very type of shortcoming he drew attention to in the past.

* Published in print edition on 13 July 2012