The state of CAG: 'US report is not entirely true'

The US Fiscal Transparency Report says that Bangladesh fell short of minimum standards in terms of fiscal transparency. The report mentions Bangladesh's office of the comptroller and auditor general for it 'failed to meet international standards.'

The Business Standard reached out to Ahmed Ataul Hakeem, former Comptroller and Auditor General and Rustum Ali Faraji, MP, Chairman of Parliamentary Standing Committee on Public Accounts to talk about their observation of the US report findings.

'The auditor general should have the power to recruit the right person for the right position'

Illustration: TBS

Ahmed Ataul Hakeem, Former Comptroller and Auditor General

The US Fiscal Transparency Report says that Bangladesh cannot ensure international standards in audit. Do you agree?

I retired 10 years ago. The standard that I left it in, it should definitely be better now. I launched a media centre in the office to disseminate published reports. It was inaugurated by the president. To make the audit report effective, interaction with the media is important so that people know.

When I became auditor general I emphasised on increasing the quality of audit. We had to follow international standards to enhance the quality of audits. In around 2011/12, we signed the International Organisation of Supreme Audit Institutions. We are a member and we participate regularly.

The current auditor was the finance secretary. He was a consultant on all the projects. I think he is the most competent auditor general now as he worked both as finance secretary and a project consultant. I am definitely sure he will improve a lot.

But yes one thing I must admit that we are independent only functionally. No one interferes in our work. But unfortunately our administration and budgets are under the finance ministry. And that has been a big handicap. I struggled a lot as I couldn't recruit anybody. I wanted to reform the organisation but they didn't approve it in 10 years, we couldn't get approval for the audit act.

But fortunately, since the current auditor general was a finance secretary, he has done it. So our department is now very strong. I don't know how independent it is now. We are not interfered in our functionality. And although they have given us independence in functionality, they didn't give us resources.

So you don't agree with the report about not meeting international standards?

We are trying. We tried to reach that stage when I was there. And I think they are doing pretty well now. They are not lagging behind. That the report said Bangladesh still falls short of the minimum standard is not right.

What benefit would you get if the audit act was passed?

It would increase the power of the auditor general. He could recruit people on his own accord. He could take his budget resources from the government on his own. It wouldn't depend on the finance ministry the way it depends now. It is a constitutional body that works under the finance ministry, that shouldn't be the case.

It also says that our reports don't have substantial findings.

It is not correct. The findings are there, but yes, our expertise is not that strong. The audit report has a weakness for lack of skill, we had addressed this when I was there. I have seen huge improvement. This should be more improved now. And Muslim Chowdhury [current auditor] is a man for the job. It is definitely working better now. So this accusation is not entirely correct.

What about the fact that the reports are not publicly released in a reasonable time, as cited in the US report? 

This can be partially true but not entirely. We are releasing these reports publicly. We are uploading them on our website. It is now more modern. The time lag must have reduced by a lot.

It [the time lag] used to be one year during my time. One year is normal. We took on a crash programme to dispose of the backlogs. Almost 90% of the backlog was disposed of when I was there. Back then, we, almost, caught up.

This US report gave four recommendations. One of them is documenting our budget following international guidelines.  

The finance ministry introduced a modern practice regarding the framework of the budget when I was there. Only lacking was that they didn't develop the key performance indicator (KPI). But I knew that they were working on it.

The US report mentions that there should be an international level of independence. However, you have already said that there is full independence in your auditing but there are limitations in terms of budget allocation and manpower recruitment. How does it impact your work?

If I cannot hire people how would I work? However, after Muslim Chowdhury came, it [the department] had good expansion. I believe now the department doesn't have a lack of employees. However it took 10 years to accept our proposal.

We are only the recommending authority. We don't have authority to implement.

What is the main problem with our auditing?

For audit to become effective, skill is a must – we need to have auditing skills. We need resources. And commitment. Our main responsibility is to ensure accountability and transparency. These are the main purposes of our audit.

To serve this purpose the first thing we need is skill. And if you want proper audit capacity, you need to do proper recruitment.

We take officers from BCS, who may have a degree in history or philosophy, or some other subject. But to audit a bridge, you need an engineer. The auditor general should have the power to recruit the right person for the right position.

'The auditor general is the only independent post, but not the employees'

Illustration: TBS

Rustum Ali Faraji, MP, Chairman of Parliamentary Standing Committee on Public Accounts

The US Fiscal Transparency Report says the audit system of Bangladesh lacks international auditing standards. Does the US state report represent reality?

The US state department compares everything from an international perspective. What I believe is that the US state department reports randomly, without considering the condition of a country thoroughly. Corruption and indiscipline are far less in the Western and European countries, they are able to enact laws and regulations, unlike Bangladesh.

But Bangladesh definitely follows the national guidelines and fulfils every condition while conducting audits. The office of the Comptroller and Auditor General (CAG) does the auditing task.

The auditor general is a constitutional post, there is an entire department that works under him. This office carries out audits of the entire country. The department then organises bilateral, trilateral meetings with different ministries, and other departments of the administration. So there are many formalities that they carry out, maintaining international standards. 

When the CAG finds something wrong in any of the audits, which may be caused by some kind of irregularities, they register that in the records. These records are then published as a book and sent to the PM and the president's office. Then the signed copy is submitted to the speaker of the parliament, the speaker sends it to the chairperson of a committee, who then sends the file to my department, which is like a quasi-judiciary committee. Then I, along with my team, conduct a meeting where we take the final decision. 

I admit that we, both the CAG and us, have some limitations. We need to improve our manpower, accommodation, technology, digital system, integration, etc. 

And then because of the lack of manpower, the audit office cannot get inside the system thoroughly, randomly picking departments or sectors, which doesn't give them the entire picture. 

If the audit department could segment the sectors while sampling, for example, taking 50% at a time, then Bangladesh could get rid of corruption. And if they could send us the reports in the meetings that we conduct regularly, we could discuss this and solve as many of the issues as we can. We are following the international best practice, I am sure the CAG is also trying. It's just that they need to hire more people to conduct audits thoroughly.  

The fiscal transparency report says that Bangladesh falls short of minimum standards of fiscal transparency. Why is that?

In the survey, they probably focused on the former practices of the audit department when audits were conducted by junior officers, hence making the process not transparent enough, as they didn't have to be highly accountable. 

But the situation has improved a lot now. There are directors and senior officers who carry out the audits. Earlier, 5-10 years ago, we lacked manpower, which we are recovering from. More and more employees are being hired, which makes the process transparent and accurate. 

Do you agree that Bangladesh is incapable of even reaching the minimum requirements of fiscal transparency? 

No, I don't agree with that statement. What I am saying is that now we have a faster networking system, modern technology, and substantial skilled manpower which makes it possible for us to prepare reports and recheck them properly. 10 years back now, the situation was not like this. Back then, we had reports from 8 to 10 years back, and most of the officers that conducted those reports either died or were transferred or moved to somewhere else. 

So the entire situation was pretty embarrassing for us, we couldn't present the updated information. But now the system is updated. Without the permission and dictation of the President, the audit forms cannot be prepared. Now we have an international-standard audit form, dictated by the President and senior skilled officers that conduct the audit. 

The report was published on 10 September, very recently. The report paints a picture that doesn't correspond with what you are saying. Why is that?

Maybe they just randomly gave the statement. I am sure in the US, they don't have to conduct audits so often, as the companies follow rules and regulations themselves, and less corruption makes it easy for them to maintain transparency. Now it's not possible for the auditor to look into every sector. Until they are able to make up [for] this situation, there will be questions regarding the transparency of the department. 

So I don't agree with the statement that we fail at ensuring minimum fiscal transparency, but I agree that we are not perfect, there is a scope of improvement.  

The report focuses on two other points - our audit reports take a long time to be published and generally the reports don't have any serious findings, and no information on major irregularities. Is it true?

Not really. We do find serious irregularities sometimes and sometimes we don't. But it's true that the reports take time to get published. This is because the CAG itself starts working on the reports late. And then the companies take time to answer the notice, and lastly, the principal accounting officer is a secretary, most of the time he doesn't reply timely. In our meetings, we often hear that the secretary didn't respond to this [or that]. This is unprofessional and an extremely bad practice, we must correct this.   

When we find any serious irregularities, we send the file to the Anti-Corruption Commission as well. 

The report also says that our audit reports are not public. Do you agree with this?

Journalists and reporters are always present at our meetings. And I want to say that after the meetings if they want to question us in press briefings, we are open to that. So I do not agree with that statement of the report. 

Do you have any jurisdiction in allowing permission to the companies that extract natural resources? 

No, we don't. We can only look into the matter if the audit department finds any irregularities in any of the companies. Otherwise, we don't have any jurisdiction in the matter.  

The US state department has made four recommendations - one of which is we need to make the budget document following international regulations. Do we follow this?

Preparing a budget document requires several meetings with the public estimate committee, financial committees, special budget committees, etc and then the drafts are sent to the ministries after which it is brought to the parliament. So it's a lengthy process. We used to follow this before the pandemic, but during the pandemic, this minute detailed practice could not be followed. But we are resuming the practice with time. 

The report also says that our audit department cannot work independently. Do you agree with this?

The auditor general post is a constitutional position, he/she is appointed by the President. He can work independently. But the 1200-1500 employees that work under him are appointed by the finance ministry, they are not independent. They follow the orders of the auditor general but they are under the direction of the finance ministry. So there is complexity. 

Even for funding and appointing manpower, the audit office has to depend on the finance ministry. These things need modification. 

Lastly, what do you think is the biggest problem of our audit department?

The audit department's quality has [already] improved. But what I feel is needed here is the independence of the employees. And also the audits should be supervised by senior audit officers. Then the reports will be more transparent. 

And since many audit officers are corrupt, we need to ensure accountability.  

The Business Standard's Kamrun Naher and Masum Billah contributed to this report.