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General Auditing Commission(GAC)2007/2008 BUDGET PROPOSALPRESENTED TO THE NATIONAL LEGISLATURE, R.LMARCH 22,2007Fighting Fraud, Waste and Abuse1
Zero Tolerance on Fraud—Waste—Abuse. There is an immediate Moratorium on all of these bad practices! You commit fraud, we will catch you! You engage in wasteful spending , we will catch you! You abuse government assets and the powers given you, we will catch you!General AuditingCommissionA presentation byJohn S. Morlu, IIAuditor General, RLWe have to look over the shoulders of everyone even if it is our mother; the Liberian people’s interestis paramount; it can never ever, under any circumstance, be compromised or negotiated for any selfgratification. It is absolutely sacrosanct!Look below and see what business we are in:Fighting Fraud, Waste and Abuse2
BROAD THEMES1.Historical TRANSFORMATION, GAC Reports to National Legislature2.National Legislature has, for the first time in the history of the Republic, an INSTRUMENT (GAC) to exerciseconstitutionally mandated oversight.3.International Partners BELIEVE in GAC as the frontline accountability institution; our partners took the lead inrecruiting via competitive process an AG.4.GAC MUST be depoliticized; so a competent recruitment panel must select its staff.5.There CANNOT be a genuine push to eradicate fraud, waste and abuse without a functioning GAC withindependent and dedicated source of funding.6.The National Legislature, the President, the international partners and the Liberian people CANNOT know the trueperformance of government ministries, departments, agencies, and administrative and political sub-divisions,concessions, commercial interests, etc. without a viably reliable GAC.7.A professionally run GAC will boost public CONFIDENCE in and brings CREDIBILITY to government’sstewardship of public funds.8.A general Auditing Commission WITHOUT adequate funding is an illusion.9.Liberia MUST be built by Liberians with capacity building at ALL levels forming the core of institutionalreconstruction, structural reforms, AND business process reengineering. Diaspora Liberians are integral part ofthis rebuilding of capacity process. The Liberian can ONLY be built by the ingenuity of Liberians10.Government of Liberia will FAIL again to deliver meaningful result without a genuinely functioning, independentand well-funded GAC to fulfill its constitutional responsibilities.Fighting Fraud, Waste and Abuse3
GAC: A Bird’s-eye View Created in 1956 tomonitor govt.’s use ofpublic funds andprogram performance Ensure accountabilityand transparency Mainly fights Fraud,waste and abuseFighting Fraud, Waste and Abuse4
Legal ambiguities and defects Between 1956 and 2005,the GAC reported to theExecutive Branch It had no autonomy It was under-funded;understaffed; politicized GAC was a reclusiveentity housed in edificethat further dampened itsimportanceFighting Fraud, Waste and Abuse5
Accountability Suffers GAC became a passive bystanderPolitical coercion reduced GAC to anarmchair researcher and invoicedocument reviewerGAC existed for political expediencyAppointees were political croniesGovt.’s stewardship of public funds andprogram performance was nonexistentAccountability suffered for over 50yearsLike the pyramid on the right, the lackof accountability reached its highestpeakNow Liberians want accountabilityNow Int’l. partners want accountabilityBut accountability is an illusion withouta ‘genuinely’ independent, fullyfunctioning GACFighting Fraud, Waste and Abuse6
New Accountability Horizon The Sirleaf govt. declared zerotolerance against unaccountability International partners, especiallythe EU, hailed govt.’s stance EU hired, govt. approved andnominated and Senate confirmedthe auditor general Revamping GAC is underway Critical issues—funding forqualified staff, infrastructure—areraisedFighting Fraud, Waste and Abuse7
Rebuilding a battered GAC Critical issues to be met toshow seriousness foraccountability:– Recruit qualified manpower– Train manpower– Provide adequateinfrastructure– Provide adequate funds– Reconcile legal ambiguities toensure independence,protection and noninterference—to help GACfight fraud, waste and abuse inthe private and public sectors These requirements are crucialto meet the challenges andexpectations to be fulfilledFighting Fraud, Waste and Abuse8
GENERAL AUDITING COMMISSION CHALLENGESScope and Complexity Requires:Qualified ManpowerAdequate InfrastructureFinancial ResourcesGovernment of LiberiaEuropean UnionOther Sources?DEPENDS ON HOW MUCH GOVERNMENT WANTS GAC TO DOFighting Fraud, Waste and Abuse9
Scope of WorkAuditsAdditional Scope of Work1.2.3.4. Concessions, contracts and awards 15 counties* 64 legislative districts*, and multiple city Gov’ts* Judiciary (Courts) International and domestic NGOs doing business with ion Svcs/SpecializedAuditsRevenue AuditsInformation System AuditUN Panel-Experts on LiberiaRecommendationsStatutory AuditsFighting Fraud, Waste and AbuseStandards (see chart2)1. Accounting2. Auditing3. Public FinancialReporting4. Accreditation ofAuditors10Superimposed on the “scope and volume” is the complexity due to severe institutional weakness and no effective control systems
Qualified Manpower 252Auditor General1 personExecutive AssistantOffice of AG3 peopleDeputy AG--Administration2 peopleGeneral Counsel4 peopleChief Security16 peopleCFO5 peopleDeputy AG--Auditing2 peopleDirector, Quality Assurance5 peopleDirectorHR and Workforce Dev10 peopleDirectorGovernment Affairs4 peopleDirectorLegislative Affairs4 peopleDirectorClaims Division15 peopleMangerMaintenance5 peopleDirectorCommunications/Tech7peopleDeputy AGFinancial & Economic Crimes Department2 peopleManager, Fraud Investigation15 peopleAssistant AGCounties and District Gov’ts3 peopleAssistant AGFinancial StatementsAudit Group10 peopleAssistant AGPublic owned Corp. &Private Sector Firms3 peopleManager, 15 County Gov’t s12peopleFinancial (6)Compliance and Regulatory (3)Performance (3)Manager, 22 Public Corps15 peopleFinancial (7)Compliance and Regulatory(4)Performance (4)Manager, 64 District Gov’ts10 peopleFinancial (6)Compliance and Regulatory (2)Performance (2)Manager, Private Sector Firms15 peopleFinancial (7)Compliance and Regulatory (4)Performance (4)Assistant AGFinancial System Audit10 PeopleAssistant AGMinistries andAutonomous Agencies3 peopleManager, Asset Recovery10 PeopleAssistant AGRevenue Audit Group3 PeopleManager, 22 Ministries22 peopleFinancial (12)Compliance and Regulatory (5)Performance (5)Manager, 25 plus Autonomous Agencies22 peopleFinancial (12)Compliance and Regulatory (5)Performance (5)Manager, Concessions &Contracts7 peopleManager, General Rev7 peopleManagerLibrary—Audit Documentation5 people European Union study shows, as of 1989, that GAC had more than 200 staff producing relatively quality audits GAC will have to be rebuilt from bottom up, with focus on process improvements and organization realignment consistent withstrategic priorities and international best practices. Modeled after Ghana, GAC could boast of a staff of 263 people. But conditions in Liberia cannot sustain suchstaffing levels at this pointFighting Fraud, Waste and Abuse GAC will competitively Recruit Staff11
Qualified Manpower: Why the need? 252 employees needed to oversee:–22 ministries–22 public corporations– 22 autonomous agencies– 15 counties– 64 legislative districts– City mayors around the country Other functions to be assumed– General Revenue audits– Concessions audits– Companies with GOL shareholdings audits– Financial System audits– Financial audits– Private sectors involved with govt.– Standard setting– Performance audits,– Compliance and Regulatory audits etc.– Attestation services– Single purpose audit 33 Diaspora Liberians (included in 252) for capacitybuilding and to complement efforts of local employeesFighting Fraud, Waste and Abuse12
Synopsis of Key Positions Office of AG—Manages GAC; thefollowing report directly to the AG– Executive Assistant—tracks AGdaily activities; aided by 3 people– General Counsel—oversees GAClegal section with 3 assistants– Chief of Security—protectspersonnel and assets; aided by 15assistants– Chief Financial Officer—overlooksfinances; aided by 4 people– Quality Assurance Director—oversees internal audit of GAC;aided by 4 aides– Communications/IT Director—oversees communication andimage-building aspects of GAC;aided by 6 assistantsFighting Fraud, Waste and Abuse13
Key Positions Cont’d Office of Deputy AG for Admin—oversees daily operation of GAC; thefollowing report directly to the DeputyAG/Admin– HR/Workforce Dev Director—oversees employment, remuneration,staff development, etc.; aided by 10staff– Govt. Affairs Director—liaises withgovernment agencies; develops goodcustomer relations; aided by 3 staff– Legislative Affairs Director—liaiseswith the legislature; aided by 3 staff– Claims Director—processes claims;will train 14 staff to report, documentand process claims from the public.Manage GAC Fraud, Waste andAbuse Hotline– Maintenance Manager—aided by 4staff, maintains GAC assets.– Library Manager—maintains a viablelibrary ensuring material codificationand organizationFighting Fraud, Waste and Abuse14
Key Positions Cont’d Deputy AG, Financial/Economic Crimes—oversees fraud investigation, documentation andasset recovery; will organize training programs forstaff; the director is assisted by 2 managers– Fraud Investigation Manager—handles allfraud reports or claims; will track fraudsters forprosecution; aided by 14 staff– Asset Recovery Manager—is aided by 10staff; will track fraudsters’ assets Deputy AG/Overseas Audit—technical arm of theGAC; has 2 aides. This office has 6 assistant AGand 6 managers, respectively:– Assistant AG/County/District govt.: overseescounty/district audits; aided by 2 people Manager, County govt. assisted by 12staff; oversees financial, compliance andperformance of county governments Manager, District govt. made of 10 staff;also oversees financial, compliance andperformance of district governmentsFighting Fraud, Waste and Abuse15
Key Positions Cont’d– Assistant AG/Financial Statement Audits:authenticates financial statements andensures they conform with generallyaccepted accounting principles (GAAP) andadequate disclosures and supplementaryinformation; verifies accuracy of govt.financial reports to the legislature; aided by10 professionals, this group is the publicwatchdog for financial statement fraud.Lawmakers must be confidence that financialstatements put in the public domain are fairlypresented and not misleading. The Groupalso leads the effort to produce publicreporting standards– Assistant AG/Public Corporations and PrivateSector Firms: oversees audits of public andprivate sector entities; he/she manages 2managers Manager, Public Corporations assistedby 15 staff; oversees public corporationaudits as well as statutory andattestation services Manager, Private Sector Firms is alsoaided by 15 staff that ensures financial,compliance and regulatory, andperformance of private commercialentities providing services to governmentFighting Fraud, Waste and Abuse16
Key Positions Cont’d Assistant AG/Financial Systems AuditGroup—oversees audit function of financialsystems in government entities and privateentities providing services for government;this section has 10 professionals.Lawmakers must know that financialsystems are working as they should, thatsystem vulnerabilities to fraud are preventedand detected Assistant AG/Ministries/Autonomousagencies—oversees audit of governmentministries and autonomous agencies; staffedby 3 people and oversees 2 managers– Manager, Ministries—ensures financial,compliance, regulatory, statutory andattestation services; aided by 12 staff– Manager, Autonomous Agencies—ensures financial, compliance,regulatory, statutory and attestationservices; also aided by 12 staffFighting Fraud, Waste and Abuse17
Key Positions Cont’d Assistant AG/Revenue Audits—oversees audits of governmentrevenues, mainly concessionaryroyalties, dividends, taxes, etc. asrequired by INTOSAI; staffed by 3people; manages 2 managers––Manager, Concessions/Contracts AuditGroup: composed of 7 professionals,the manager will ensure that fairroyalties, taxes, dividends, etc. arepaid; will provide expert advice onconcession-related matters togovernment and the legislatureManager, General Revenue AuditGroup: oversees audits of generalrevenues including tax revenues; alsoaudits nation’s tax collection system;provides expert advice to thelegislature and administration on taxrelated taxes as stipulated in theLIMA declaration signed by Liberia.Fighting Fraud, Waste and Abuse18
FINANCIAL COMPARISON/OPTIONS--DECISION MATRIXSelected Comparative InstitutionGovernance Reform Commission ?General Auditing Commission *Central Bank of LiberiaAnnual Budget Requests 5,000,000 6,600,000?*GAC provides oversight of government’s financial management, programs andactivities, as well as government commercial interests and investments.*GAC recurring operating budget is 6.6 million in fiscal year 2007/2008, afteradjusting for EU direct financial assistance of US 253,000. But GAC needsfunding in 2006/2007 to renovate its building, furnish it and recruit staff.*GAC is the FRONTLINE accountability institution representing the NationalLegislature and ALL the Liberian people.*GAC is the LEGALLY mandated institution to fight fraud, waste and abuse(FWA). This obligation cannot be divulged to any newly created‘commissionized’ entity.*The Liberian people depend on the GAC to promote and protect their interestsat all times, anywhere without fear or favor*GAC will appear in the consolidated budget of the Republic of Liberia.How come the oversight institution, GAC, is inthe National budget but CBL is not? I am justwondering?Why are you picking on the CBL?All the major Public Corporations, and anyinstitution that can get AWAY with it is alsooutside of the Consolidated budget. But thenwhy call it Consolidated? Why not half-dated?*Where is the budget of the Central Bank of Liberia? Outside the NationalBudget?*Who provides oversight of the budget performance of the CBL? The GAC.Fighting Fraud, Waste and Abuse19
FINANCIAL COMPARISON/OPTIONS--DECISION MATRIX,CONT’D Are these numbers for real? Yes, the AG got them from theEuropean Union.2004NPA AuditRIA AuditBMA AuditFirsr FDA AuditFirst LPRC AuditFirst CBL AuditTotalEuropean Union Sponored AuditsEurosExchangeRrate US 3512,6981,411,4271,834,8552006Second RIA AuditSecond FDA AuditSecond LPRC AuditSecond CBL AuditTotalEuropean Union Sponored 3,008279,9841.3363,979926,5801,204,554 What is driving these numbers? High risk exposure due to lack of effective internal controlsystems, weak institutions, and poor management practices. Audit firms have to be compensated for the high riskexposure; you know auditors can be sued for negligence, too. You should know this risk-reward tradeoff, Sir How much will it cost the Government of Liberia if we were tooutsource all the audit work, especially since theUN Panel of Experts keep demanding that we do audits of allministries, departments, and agencies annually dating backOctober 2003? SEE ANALYSIS ON NEXT SLIDE, SIRFighting Fraud, Waste and Abuse20
FINANCIAL COMPARISON/OPTIONS--DECISION MATRIX, CONT’DExternal Audit Agency (EAA)Annual AverageInstitutionsTotalPublic Corporation 280,00022 6,160,000Autonomous Agencies (24 plus) 110,000242,640,000MinistriesTotal 491,260293,7532110,316,465 19,116,465 Are you telling me that it will cost GOL almost US 19 million per annual to conduct good quality audits of ministries,public corps, and autonomous agencies, if we were to outsource these audits like European Union did? That is true Sir, but we can probably do it for about 40% of cost if we were to hire local firms, which is about US 7.6million. Unfortunately that is still higher than the annual cost of the GAC. We are also concerned about quality, sir? How did you get these numbers? We assumed the following: We averaged the 2006 audit costs for FDA, RIA and LPRC for the public corporations We considered the BMA audits in 2004, CBL in 2006 and FDA in 2006, and determined that the autonomousagencies were more in line with FDA 2006, with tagging on a factor of 1.3 For the ministries, we inflated LPRC 2006 by a factor of 1.25 because ministries are bigger and more complex. Sir, these numbers do not even reflect all the other audits like financial system audits, performance audits, financialstatement review for fraud, single purpose audits like LIMINCO, attestation work, concession audits, etc. This US 19million figure is very conservative estimate given the problems we have in this country; no effective system. We cannot afford this kind of costs. Do we have alternative options? Yes, we have come up with three good options that the Government can choose from. It is on the NEXT slideFighting Fraud, Waste and Abuse21
FINANCIAL COMPARISON/OPTIONS--DECISION MATRIX, CONT’DGOL OPTIONS1. Fund General Auditing Commission to reduce cost of EAA GAC will also boost public confidence GAC will fight fraud, waste and abuse GAC will ensure audit quality and limit negligence Liberians can be assured of the truth about their government stewardship of publicmonies, programs, activities, etc2. Privatize all or most of GAC work to EAA Lack of effective system and controls, institution weakness, and a non-functioning GACdrive up cost of EAA audit; high risk exposure must be compensated with high reward to audit firms Audit quality is a significant concern, too. The people have to believe the auditors or else itis pointless to do an audit European Union can NO longer finance these audits; GOL has to finance them NOW! EtcShow me the options3. DO NOTHING (MAINTAIN STATUS QUO) low public confidence continued high levels of fraud, waste and abuse NO accountability and transparency in government Donor fatigue will come into play soonest Potential war or violent outbursts because Liberians cannot tolerate FOREVER fraud,waste and abuse International investors will take their money somewhere else, creating moreunemployment and potential social unrests, and big houses cold be burned down, againWestern Nations relied on their supreme audit institutions until sufficient funding wasavailable to do option 2, enabling supreme audit institutions to concentrate on “High ValueAdded” Expert Opinion and AnalysisFighting Fraud, Waste and Abuse22
Proposed GAC BudgetPers onnelDiaspora LiberianFringe BenefitsS ubtotalDomestic StaffFringe BenefitsS ubtotalAverage S alaryMonthlyAnnual 2,800 33,600S taff3520%Year 1 1,176,000 235,200 1,411,2001,822,800364,560 2,187,360Year 2 1,211,280 242,256 1,453,5361,877,484375,497 2,252,981Year 3 1,247,618 249,524 1,497,1421,933,809386,762 2,320,570Total 3,634,898 726,980 4,361,8785,634,0931,126,819 6,760,911Total PersonnelAssumptions (% of Personnel)Non Personnel CostsComputers, servers, printersTraining Cost/Education18%Travel Costs8%Consultancy8%Outside Legal Counsel5%Materials and Supplies4%Maintenance Costs2%Leases and Rentals2%Information e Maintenance/Fuel3%VehiclesAllowances4%Events and Recreation4%Financial Management SystemIndependent Annual Audit of GACTotal Non-Personnel Cost 3,598,560 3,706,517 3,817,712 11,122,789 000100,000 3,257,821 0 2,683,471 0 2,759,084 100,000 8,250,377Renovation--Old Executive MansionFurnitureRecruitmentTotal Costs 500,000200,000 100,000 7,556,38150,00050,000300,000 6,439,988 6,626,797 19,673,1667,302,492253,889 06,236,877203,111( 0)6,626,79719,216,166457,000 021720% 700Forward AssumptionsCOLA (cost of living Adj)Computer Replacement103%5% 8,400S ourcesGOLEUOthers?Variance 0European Union has committed (sunk cost) US 1,318, 000 for Technical Team and AG. DFID has contributed US 95,000(sunk cost) to date to GAC efforts. Sunk costs because decision has been made and cost irrelevant to future decisions.Fighting Fraud, Waste and Abuse23
Proposed Budget, GraphCost TrendDollars in Millions 8.0 7.0 7.6 6.0 6.6 6.4 5.0 4.0 3.0 3.8 3.7 3.6 3.3 2.7 2.8Year 2Year 3 2.0 1.0 0.0Year 1Total PersonnelNon-personnel CostsTotal CostFighting Fraud, Waste and Abuse24
Budget Notes1.Diaspora Liberians: Diaspora Liberians to mix with country staff to leverage lessonslearned and facilitate continuity when foreign expatriates depart. Hence there is anurgent need to entice Liberians living abroad to come home to assist with therebuilding process. But many are less likely to do so given financial constraintsabroad. So salary represents 3-year transition costs for 35 Diaspora Liberians,whose recruitment will be competitive with advertisement in a minimum three majorpapers, and major Online publications2.Domestic Staff: Domestic Staff at average US 700 to provide for 'living wage' andin turn decrease the propensity to compromise integrity to make up for shortfalls inincome. Auditors are integral to the fight to achieve accountability, so they must becompensated fairly; 700 a month is a fair deal. The total estimated number of localemployees is 217. International NGO, who are paying US 1500 per month onaverage, cannot find finance manager with the requisite experience and training.Recruitment is going to be the biggest challenge in building the New GAC.Experienced and trained Liberians who will work at the GAC have to do so for lovefor country; there are better alternatives in the burgeoning INGO community.Benefits: Fringe benefits reflect medical insurance and contributions to retirement,an assumption reflecting current market conditions based on weighing Liberia andDiaspora. Current Diaspora medical trend reflects 20 to 35 percent of salaries. Theassumed percent rate is 20 percent.3.Computers: US 900 times 251 units ( 800 per unit plus 100 custom and shipping).Four Servers are priced at 3,000; 24 printers (4 network printers priced at 1,000and 20 single user units priced at 600) and software licensed at 6,000. Computersare vitally needed in an audit environment. All computers will come installed withMicrosoft Office and staff will be trained how to conduct audits using Access, at leastfor the short-medium term range. Replacement cost is assumed at 5 percent of initialamount.Fighting Fraud, Waste and Abuse25
Budget Notes, Cont’d4.Training Costs: Continuing education. Massive training is 18 percent of personnel cost.Giving the 14-year civil war that left many people out of the reach of formal employment,training and retraining of staff is critically important. International and local experts will becontracted to provide training to staff. They could include the Institute of Internal Auditors, theInstitute of Management Accountant, the Association of Certified Fraud Examiners, theAmerican Accounting Association, and Information Systems Audit and Control Association,among others. Training expense is also expected to provide licensing and professionaldevelopment of staff. International NGO, who are paying US 1500 per month on average,cannot find finance manager with the requisite experience and training. Recruitment is goingto be the biggest challenge in building the New GAC. Experienced and trained Liberians whowill work at the GAC have to do so for love country; there are better alternatives in theburgeoning INGO community looking for seasoned financial people. More funds spent ontraining to build capacity is a solid long term strategy. Liberians are smart people, who justneed an “Opportunity” to be trained.5.Travel Costs: Part of an investigator or auditor function reflects constant travel; so assume 8percent of personnel cost and remaining constant within forecast period. Liberia has 15counties and 64 legislative districts. International travel to attend conferences is also required.6.Consultancy: Auditors and investigators usually need to outsource specialized knowledgenot found in house. Those needs are expected to be high during the first three years duringthe transition, remaining at 8 percent. Consultants are going to be needed as staff is broughtup to standard.7.Outside Legal Counsel: The GAC is expected to face lot of legal challenges fromgovernment officials and members of business community refusing to provide access to filesand documentation. It cannot depend on the Justice Ministry to prosecute its cases.Additionally, GAC is operating in an environment constrained in a rule of law; so it must havesufficient legal representation and advice to stay within the laws of Liberia. Cost is expectedto remain at 5 percent of personnel.Fighting Fraud, Waste and Abuse26
Budget Notes, Cont’d8.Materials and supplies: Materials and supplies include stationary, printer ink andoffice supplies. Those costs are also expected to remain at a constant 4 percent.9.Maintenance Costs: Maintenance costs including renovation, clearing and generalcontinuous maintenance. Cost is expected to be high during the first year at 2percent for forecast period.10.Leases and rentals: This reflects lease of an office space and other equipmentincluding audio visual services. Total cost is expected to remain at 2 percent ofpersonnel cost during the forecast period.11.Information Technology Services: This includes Intranet, Internet and networkinfrastructure equipment. Web based services in particular will continue to becrucial for timely dissemination of audit information to the consumer public,including donors, government and tax payers. Total cost expected to remain at 4percent of personnel cost during the forecast period.12.Communications: This involves content management and dissemination ofinformation, including advertisement in newspaper, radio, and online. It alsoinvolves the creation of a monthly newsletter and quarterly magazine on the GACactivities, meeting the press forums, and public survey. Cost is expected to remainflat at 6 percent of personnel cost during the forecasted period.13.Transportation: This includes vehicle maintenance, gasoline and other lubricants.Costs are also expected to remain flat at 3 percent of personnel cost during theforecasted period.14.Vehicles: The budget assumed 13 vehicles at 15,000 per unit, inclusive of shippingcosts. This is a one time cost that is vitally needed to enable staff to move about.Fighting Fraud, Waste and Abuse27
Budget notes, Cont’d15.Allowances: In Liberia, agencies are expected to provide allowances tothe employees of the institution, including management. This cost is expected toremain at 4 percent of costs.16.Events and Recreation: GAC expects to host multiple public awareness events,as well as hosting of events and recreation activities between National Legislature,administration, Civil Society, international partners, media and the GAC. The conceptof a fully functioning GAC with an independent AG is a new thing in Liberia, and mustbe engrained in the minds of the Liberian people and the political leadership.Particularly more relationship building between GAC and the National Legislaturemust be an integral part of the New GAC efforts to build a genuine accountabilitysystem. This expense line is expected to remain at 4 percent for costs.17.Financial Accounting System. GAC will purchase a new financial managementsystem to manage its finances. The estimated US 250,000 include financial systemselection, implementation and training costs.18.Independent Annual Audit of GAC. National Legislature will competitively engagean international auditing firm to audit the annual accounts of the GAC. The estimatedamount of US 100,000 is based sample reviewed of the amount spent by theEuropean Union to audit various Liberian government institutions; see slide 19 onFinancial ComparisonFighting Fraud, Waste and Abuse28
Budget notes, Cont’d19.Office Building: Renovation and furnishing of the Old Executive Mansion and theExecutive Pavilion (Annex). The Annex would be used as the primary training groundfor GAC staff, financial reporters, members and staff of the National Legislature, andCivil Society, among others. It will become the Center of Excellence. This amount isa one time cost that is vitally needed to enable adequate housing of the New GAC.Ministry of Public Works is finalizing engineering cost estimate with local firm Miltonand Richardson.20.Furniture. GAC estimates US 200,000 to furnish the Old Executive Mansion. This isalso a one-time cost, with a meager amount of US 50,000 a year to replace brokenfurniture.21.Recruitment. Cost to pay honorarium to the members of the recruitment panel tocompetitively recruit the New GAC staff. It is a one time cost to build a credible GAC.International NGO, who are paying US 1500 per month on average, cannot findfinance manager with the requisite experience and training. Recruitment is going tobe the biggest challenge in building the New GAC.Fighting Fraud, Waste and Abuse29
Other Sources of Funding1. INDPENDENT FINANCIAL SOURCEA. Government of Liberia Financial Commitment Put back 66 percent of funding taken away in this fiscal year Provide FUNDING in this fiscal year (2006/2007) Place funding in an independent account to avoid “vouching”since independence is compromised if Finance or BudgetBureau has to approve budget and regular vouchers GAC cannot audit an institution that feeds it.B. European Union
Accreditation of Auditors Superimposed on the "scope and volume" is the complexity due to severe institutional weakness and no effective control systems . . *GAC recurring operating budget is 6.6 million in fiscal year 2007/2008, after adjusting for EU direct financial assistance of US 253,000. But GAC needs
