By R. Chand
The 2011 Director of Audit’s Report shows that wastage and unnecessary expenditures have continued unabated. It is unacceptable that at a moment where everyone was bearing the brunt of the continuing global and the consequent local slowdown, the Ministry of Finance (MOF) was profligate with taxpayers’ money doling out some Rs 21 million rupees in overtime over the last three fiscal years plus the avoidable expenditures on the Service to Mauritius and Capacity Building schemes and on the recruitment of IT specialists, draughtsmen, family welfare officers, you name it, as economic analysts.
It is not surprising that overtime has become a recurring feature at MOF. The Ministry of Finance is supposed to be a role model for others, an example in terms of “efficiency and effectiveness” of expenditures. Other Ministries are frequently required to provide justifications for their hard-earned overtime figures or for the new personnel being recruited. The mindset changes when the same logic is expected to be applied to them.
Such overtime is inconceivable from a mega-ministry that has merged three cadres — the Finance Management Analysts of the ex-Management Audit Bureau, Economists of the ex-Ministry of Economic Development (MED) and Budget Analysts of the Ministry of Finance (MOF). Pre-2006, before the merger, there were less than 20 economists and analysts working on the Budget and on the Medium-Term Expenditure Framework/Programme Based Budgeting (MTEF/PBB). With the merger of two ministries and the ex-Management Audit Bureau, there are some 100 economists, analysts and accountants involved in the budget exercise. Moreover many of these officers have been earning over generous budget and responsibility allowances – to the extent of Rs 100,000 for budget work which is one of their main duties.
The Rs 21 million overtime plus the millions distributed generously through allowances cannot be justified given that MOF has had an overly budgetary focus over the past years and had been completely absent on planning and policy making, on reform strategies, on issues of national importance and on sectoral analyses to support growth. There is no research, analysis and evaluation work that is presently being carried out — which had been the core activities of the earlier MEPD — the very core competencies that our taxpayers can rely upon to resolve our national problems and challenges.
Strengthening of Planning
The 2011 Director of Audit’s Report also notes that it “would like to see a strengthening of the economic planning process… it is only when the work on strategic planning feeds into the development of the MTEF/PBB that the process improves, otherwise it might boil down only to an incremental accounting exercise”. The National Audit Office (NAO) recommends a “revamping the planning function and… ensuring that issues are raised and discussed at the technical levels in advance in order to facilitate the work of policy-making.” Where the NAO got it wrong is on the 10-year Economic and Social Transformation Plan (ESTP). The ESTP is a non-starter. The planning dialogue of MOF with line ministries has not cleared things; there is ample confusion and uncertainty about the vision, the policy orientations/strategies and the Plan. Preliminary data and relevant information have not been collected scientifically and analysed comprehensively on a sector-wise basis for the whole economy.
What the NAO is looking for in the “production of detailed analyses of the existing policies and their costs, as well as a review of other policy options that may enable government to achieve policy objectives more effectively” is a body like the National Strategic Transformation Commission (NSTC) — a full-fledged Planning Unit that can carry out in-depth holistic analyses at both micro and macro levels and chart out a forward looking dynamic vision of the country responding to the aspirations of its people — not a mere assemblage of inputs from different quarters that are then presented as a new vision but a work that requires constant re-thinking and analysis, reflection and research, demanding greater coherence and coordination across sectors in the formulation and implementation of comprehensive and integrated medium- to long-term policies and programmes.
Programme-Based Budgeting (PBB): Some Improvements
The 2011 Director of Audit’s Report acknowledges that “budget management and process have significantly improved since the introduction of Programme-Based Budgeting (PBB) in Mauritius.” The Report also hints on some possible areas of improvement. There are some crucial improvements that are badly needed now so that the PBB does not remain a mere theoretical tool failing to deliver in terms of enhancing fiscal discipline, bringing efficiency gains and promoting good governance in a more outcome-oriented public sector. The first step is to have good policies that can only result from proper analysis. Review sectoral policies and formulate 3-year strategic plans that are used as planning and management tools while ensuring that proper economic analysis of programmes and projects lead to the prioritization and the costing of programmes. This will form the basis of the policy rationales behind the ceilings and allow for greater acceptance of the ceilings by ministry policy makers.
No significant budgetary reforms are likely to succeed unless a robust and functioning accounting, reporting, monitoring, evaluation and implementation facilitator/delivering system is in place. And the second step is to upgrade the system of evaluation of projects and programs which is quite weak in many ministries. Evaluation generally takes the form of financial audits. Few examples of engineering and quality control assessments for major capital projects exist. Similarly, there are rare examples of cost effectiveness studies. The Project Plan Committee (PPC) unfortunately does not foot the bill. Attempting performance audit without agreed performance benchmarks and proper systems to record and track and evaluate performance is equally unlikely to be effective. These are some of the basics that must be satisfied for the PBB to be effective — “real” performance and policy-based budgeting — a PBB that secures delivery of government’s major domestic policy priorities.
No need to shoot the messenger
Instead of shooting the messenger, we believe that the whole system of checks and controls — especially the internal control units, the audit committees, the Public Accounts Committee and the Public Finance Management legislation — can be improved to become really effective. The Internal Audit reports are forwarded to MOF. Management, including MOF, is required to prepare an action plan on agreed recommendations and the timing of their implementations. The 2011 Public Expenditure And Financial Accountability (PEFA) Assessment had noted that there was no formal follow-up and monitoring of recommendations made by internal audit. The Office of Public Sector Governance (OPSG) of the Prime Minister’s Office monitors the implementation of the recommendations of the Director of Audit Report. As for the Public Accounts Committee, it holds hearings with accounting officers. Minutes of the meetings of these hearings have been taken but no reports of the proceedings have been issued and no recommendations have been made.
But the system can be improved by (i) strengthening internal audit unit which will require establishing and specifying its functions and its reporting lines, (ii) reintroducing well-designed audit committees with mandates and well-defined operational procedures: membership (external independent members, qualifications), number of members, appointment process, appointment of chairperson, fees, number of meetings, (iii) introducing Information Technology facilities and methodologies to perform internal audit, and (iv) increase training and mentoring opportunities for junior staff in the internal audit unit focusing on advancing their qualification and also at further improving the quality of internal audit work, (v) providing the resources, including where appropriate technical support and allowances to PAC and ensuring that the meetings of the PAC are held in public, and (vi) furthering reform of Public Financial Management with appropriate sequencing for the introduction of greater accountability in Ministries and departments.
* Published in print edition on 20 July 2012