Whilst the new Prime Minister is busy looking for solutions to provide essentials to people in Sri Lanka, professionals in the country should look at ways of bringing sustainable solutions to the economic crisis of the country. I strongly believe that the root cause for the current economic crisis is lack of ethical values that [...]

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Auditor’s role in preventing corruption

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Whilst the new Prime Minister is busy looking for solutions to provide essentials to people in Sri Lanka, professionals in the country should look at ways of bringing sustainable solutions to the economic crisis of the country. I strongly believe that the root cause for the current economic crisis is lack of ethical values that led to a high-level of corrupt and biased political decisions in the country, such as substantial amounts of foreign loans obtained for projects that had not brought any positive impact to the country, projects with no value for money, unwarranted import and customs duty and tax concessions, unplanned public sector recruitments, and recurrent and non-recurrent purchases at the state institutions.

As the level of corruption that prevailed in the country is a no brainer, I do not intend to do a post-mortem on such widely spoken corrupt dealings through this article. However, I believe so-called professionals and businessmen who did not think of the country when nodding their heads for white elephant projects and corrupt dealings with the Government are responsible for the current economic crisis in the country. If we need to establish good governance in the country, the first step is to identify parties involved in all corrupt dealings in the country as allowing the perpetrators to go scot-free will not set the tone required to prevent future corrupt dealing in the country.

The damage is already done to the country through corruption and trying to recover what is lost to the country through these corrupt dealings is a herculean task. Hence, it is always good to “Prevent” corruption than to “Detect” corruption which is mostly used as a weapon to attack political opponents and to gain publicity. A strong detection system is a must to prevent corruption, but this article mainly focuses on introducing a preventive mechanism to minimise corruption in the country.

The institution that is responsible in conducting audits (auditor) of the state institutions could consider implementing the following actions in “preventing” corruption in the country:

1) Identify and collate data on all budgeted projects that require Cabinet approvals and Ministry approvals by obtaining Master Procurement Plans of each state institution.

2) Procurement Time Schedules of each state institution to be obtained annually to plan required audit procedures for critical stages of large projects.

3) If non-compliances are found during the pre-procurement audits, the Parliamentary Committees on Public Accounts and Public Enterprises to be notified immediately.

4) Consider using services of the internal auditors of the organisation and the level of communications with them based on their status of the organisation, competency levels but be conscious of the level of independence of internal auditors attached to state institutions.

To conduct pre-procurement audits, the responsible auditor should enhance their staff capacity, but this statement does not intend to undermine the capacity or extent of audit work currently being conducted, as I believe the existing audit methodology must be providing sufficient and appropriate audit evidence for them to issue audit opinions.

The responsible auditor in conducting state sector audits could seek funding from international donor agencies for capacity development projects that will enable conducting pre-procurement audits. There are many ways of enhancing the capacity, such as providing technical training, paying output-based incentives for existing staff members to conduct pre-procurement audits and outsourcing of pre-procurements to local or foreign private firms based on the complexities of the procurements.

(The writer is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka. This is his personal opinion and does not reflect the view of any organisation).

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