In the CU Audit Report, Where Did GAC of Liberia Differ with Private Audit Firm, PKF?

This maiden feature article of The Inquirer Media Weekly column raises a point on a discussion in the media last month, which was centered basically on public accountability and the way people go about handling it. In fact, of late, there has been a growing interest in audit reports in the local media.  The Cuttington University audit report was not the only one in the media last month. There was another one, of seemingly greater public interest, on activities of the former Chairman of the Board of NOCAL, but which was taken from a different angle from that of the CU’s.

As regards the Cuttington University audit, on Friday, March 21, 2014 The Inquirer and the Daily Observer newspapers reported on the audit report of the General Audit Commission (GAC) of Liberia on Government of Liberia (GOL) subsidies to Cuttington University (CU) between 2006 and 2008. After reading the stories in the two papers, one would ask: Did the GAC not agree with the report of an audit conducted by the world-famous private auditing firm, Parnell Kerr Foster (PKF) International Limited?

It is prudent to note that the newspaper stories stressed that GAC in its audit report did not take into account early audit findings from the private auditing firm PKF into the operating activities of the Cuttington University. The audit report of PKF had taken note of the situation that the CU technology software system had got corrupted over time. The situation caused the university to lose vital database in its system, which could have gone into informing the audit by the state audit commission. Therefore, the CU wanted two years, periods from 2006 to 2008, omitted from the audit period; instead, the audit should cover the period 2009/10 to 2011/12. The GAC adapted a position contrary to this request of time exemption, which had come from the administration of the Cuttington University. This is shown by the finding of the GAC’s audit report.

In the Observer story, the GAC’s audit finding covered the fiscal periods 2006/2007, and 2007/2008. The GAC while it acted otherwise, however reported in its findings that  documents were not available for spending by the CU of the total amount  of the Government of Liberia (GOL) subsidies between fiscal years 2006/2007 and 2007/2008.

In this discussion it would pay off well to throw some light on the dynamics of audits. Audits can be commissioned for evaluation of performance, to determine whether specific criteria, procedure or system, policies or rules have been followed in conducting a piece of task or job. One institution can itself commission audits of its own operation as a prelude or introduction to major audit to be undertaken. Audits such as internal or external audits for internal and external communication of results of the audits serve this kind of purpose. For example, probably this was what happened when the CU engaged the private auditing firm, PKF and this was why the GAC got from Cuttington copy of the private audit firm’s report. And the papers reported Cuttington presented the PKF audit findings to the GAC.

Another audit is stakeholders -commissioned audit, as in the case of GAC audit of CU. The audit also may be financial audit, as in the case of the PKF audit of the CU; they can be procedural or system, or one audit exercise can combine both financial and system audits. And by all indications, the GAC audit involved the latter.

The GOL disbursed subsidies to one of Liberia’s highest learning institutions in this case. By law, GOL must account for revenue intakes and disbursements in “an annual statement and account of the receipt and expenditure of all public monies…by the Office of the President of the Republic to the National Legislature and publish once a year”, or ‘a how you spend the people money account’. The GAC audits go to inform preparation of such annual statements. It is in that vein that GOL through its audit commission conducted the CU audit. But access to information for certain period of the GAC audit of the CU was not provided to the audit commission, as the information was said to not be available due to technology breakdown. A professional accounting colleague said to me: “You did not provide access to information, then how could they audit you?” Thus, one may ask, given the access-to-information constraint, could the audit findings of PKF serve the purpose of the GAC? Another may ask: “Did the CU intentionally wish to conceal some information from audit?”

It is cogent to note that audit, whether financial or procedural audit, contrary to the notion held by the average person, is not normally about criminal investigation, though the outcome of an audit may lead to clue of misapplying funds, or not performing the task or job according to the rules.

Parties involved with audits can work together, agreeing to specific conditions or situations of the audit during the whole audit exercise. But that collaboration may not necessarily result to common position, as can be seen, for example, in the case with CU and the GAC, a point which is indicated in the stories of The Inquirer and the Observer newspapers. The newspapers’ stories tell the main sticky point as being that CU expected collaborating with the GAC of Liberia on the conduct of the audit to come up with the similar position as the audit findings of the private auditing firm PKF International Limited. But then the purpose of the CU-self-commissioned PKF audit may not have been the same as the purpose of the GOL-commissioned GAC audit, which has a mandate to report on the entire period of GOL’s financial activities.