The quality of information and confidence in the integrity of information through good corporate governance and internal audit, are the mantras of twenty-first century public finance reform, and according to Bahamas Institute of Chartered Accountants (BICA) President Darnell Osborne, "The Bahamas must echo this mantra".
Osborne spoke with Guardian Business about the importance of internal audit and corporate governance - especially in the public sector - against the backdrop of BICA's recent participation in the eighth CreCer Annual Conference held in Quito, Ecuador last week. The theme of the event was "Preserving economic gains and investing in the future: Promoting growth through improved financial accountability".
Also informing the discussion was the astonishing turn of events following release of an audit by Auditor General Terrence Bastian of the Urban Renewal program: Bastian was subjected to vicious personal attacks by Urban Renewal co-chairs Cynthia "Mother" Pratt and Algernon Allen when the audit of the program revealed findings which called into question management of the project, particularly in the Small Home Repair program.
In addition to blatantly refusing to appear before the Public Accounts Committee, Pratt and Allen - and others - seemed to accuse the auditor general of having a political agenda, and of doing his work improperly.
Osborne did not address the Bastian affair, but spoke to the manner in which the world is approaching such issues.
"The role of public accountants has long been one of providing confidence in the integrity and completeness of financial reporting, for both private and public sector entities," Osborne said. "In recent times, significant focus has been placed on the quality and transparency of financial reporting by governments, and the relevance of financial information available for public use. Further, there continues to be increased attention on corporate governance given the missteps of some very large organizations, including governments."
"The Bahamas is part of these global initiatives and must remain abreast of the discussions and programmes being implemented to strengthen public confidence in financial reporting. BICA's participation in the CreCer event was part of keeping current on the latest developments and initiatives," she added.
Osborne pointed out that corporate governance essentially involves balancing the interests of the many stakeholders in a company. These stakeholders include its shareholders, management, customers, suppliers, financiers, government and the community. She noted that the panel discussion on "Corporate Governance and Protecting the Audit from Undue Influence: Audit Committees and Other Mechanisms" was particularly of interest: specifically to the role of internal audit and audit committees, and by correlation to the auditor general and Public Accounts Committee, Osborne said the panel highlighted the need for such bodies, and the integral role they play in setting the tone at the top.
"In publicly traded companies, and other larger private institutions, the audit committee and internal audit are responsible for establishing a system of internal controls that ensure that financial information is captured and reported correctly with the objectives of completeness and accuracy. In the public sector institutions, the Office of the Auditor General is responsible for constructively assessing the systems of internal controls governing public sector finances," the BICA president said.
"Annual government of The Bahamas expenditures exceed $1.8 billion which, when compared to private sector companies, is indisputably a sizeable organization. The role of the auditor general is, therefore, integral in ensuring that an appropriate system of internal controls is designed and operating effectively," Osborne said.
"This is achieved through audit visits. The reports/results of these visits are opportunities to improve the system of internal controls and to identify areas susceptible to fraud and other errors that can lead to loss of funds," she added.
Osborne maintained that the importance of this role requires public education to increase the understanding of the role of the auditor general.
"Reports should be taken as objective findings of deficiencies and used as benchmarks for improvements. In simplified terms, the role of internal audit and the auditor general is to evaluate and report on the design and operating effectiveness of systems of internal controls within companies and government."
"In this global environment our information and findings are visible to the world. It is in our best interest to support the strengthening of programmes and institutions that enable us to be seen as transparent, accountable and responsible," she noted.
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