FRIENDS OF GAC AND JOHN MORLU
Liberian President Ellen Johnson Sirleaf’s Auditor General, Mr. Robert Kilby has made a lot of unfounded statements designed to please the Cabinet and many officials in government who hated the vigorous and uncompromising audits conducted under the world renowned former Auditor General, John Morlu.
By his statements, Mr. Kilby has indicated that he was appointed and pre-programmed to engage in a massive attack on former Auditor General John Morlu. He has failed in his first attempt by exposing his own limited understanding of modern day auditing. Mr. Kilby is a product of the 1970s and holds a CPA from the 1980s, a far cry from the post Enron era auditing environment.
In article entitled, ‘I Will Set Standards’: Auditor General Designate Kilby Blasts Predecessor Morlu,’ FrontpageAfrica reported, “Auditor-General designate Robert Kilby identified what he termed as the lack of standards as former Auditor-General John Morlu’s major gap during the latter’s tenure that expired since April and never renewed.” FPA quoted Mr. Kilby as saying: If confirmed, I will ensure that standards are set at the General Auditing Commission. I will set auditing standards…“If it comes to standard, there was no standard set … basically, as you go through setting the standard, you will have to set those standards first.”
During Mr. Kilby’s confirmation hearing, he begged the legislature to empower him to set standards. This is a shame, as the Executive Law of 1972, Chapter 53.3 already empowers the Auditor General to set standards. So why beg for empowerment to set standards when the Auditor General is already empowered as per law?
This clearly showed that Mr. Kilby has not read a single GAC audit report to make such a claim that there were no standards. In May 2007, Auditor General Morlu was the first AG to formally adopt international standards on auditing as prescribed by INTOSAI. INTOSAI is the United Nations recognized international body that established Auditing Standards for Government auditing. All GAC audits from 2007 to current have been done under INTOSAI standards, as per audit reports and per GAC practice. All the audit reports are on GAC website at [LINK=http://www.gacliberia.com]http://www.gacliberia.com[/LINK].
No Standards, So How US Government Conducted Peer Review
Mr. Kilby is on a pre-programmed smear campaign against the GAC and its former Auditor General, all designed for Mr. Kilby to gain relevance. How the following institutions will accept reports that were not done without any standards, according to Mr. Kilby?
Inspector General of USAID conducted a Peer Review and on the basis of the GAC audits, concluded that GAC audits were done according to INTOSAI standards. In April 2011, the Inspector General gave GAC a provisional approval to audit U.S. Government funds and projects, a complete mark of great accomplishment for a 4 year old GAC under Morlu and Winsley Nanka leadership.
International Crisis Group, in its August 19 2011, Report named “How Sustainable Is the Recovery” recommended that all audit reports are implemented.
U.S Government, in its State Department Report and also in statement by Assistant Secretary of State for African Affairs, Bruce Wharton stated the importance of implementing audit recommendations.
European Union has indicated time and time again in official communications to the Government that these audit reports are implemented. This was recently buttressed by the French Ambassador.
EU sponsored an independent evaluated, who is a Chartered Accountant and has extensive background in government audits. He evaluated the work of the GAC and indicated that GAC and its audit reports meet international standards, measured against INTOSAI Standards and 1977 LIMA declarations.
World Bank and IMF have indicated that these audit reports are implemented, as the Board of Directors of IMF and World Bank accepted the GAC audit reports as the main pre-condition for Liberia to meet HIPC, with US$4.5 billion debt waived.
The Swedish International Development Agency (SIDA) has pressed the government to implement the recommendations in these audit reports.
All of UN Secretary General Moon’s Reports on Liberia since 2009 have indicated that these audit reports are implemented, as the implementation of these audits report recommendations are also part of UNMIL exit strategy from Liberia.
Global Witness, the international anti-corruption and anti-impunity watchdog, indicated that the government should implement all these audit reports.
These audit reports were conducted with 4 years of manpower support from Ghana AG, Zambia AG and also AFROSAI-E and World Bank sponsored principal auditors. 27 Auditors Generals supported GAC under AG Morlu and they cannot all audits without any standards.
GAC was selected as the model supreme audit institution in 2009 by the Forum of Auditors and Accountants General of West Africa. Global Integrity listed GAC as the best performing government institution, all on the basis of the quality work of the General Auditing Commission under AG Morlu.
AG Morlu was selected to draft the Level Three Standards for all English speaking Auditor Generals. An important aspect of meeting Level Three is conducting audits according to international standards on auditing as prescribed by INTOSAI.
All the platforms of all political parties, except may be UP, all indicate that they will implement audit report recommendations.
The Great Paradox—DAG Nanka Conducted No Standard Audits But Still Appointed
Fundamentally, is Mr. Kilby questioning President Ellen Johnson Sirleaf’s wisdom to continue Mr. Winsley Nanka as Deputy Auditor General for Audits? Mr. Nanka served in same position that produced the audits in which he is now questioning. Is he saying the same substandard Mr. Nanka that worked for John Morlu is excellent under Mr. Robert L. Kilby? Mr. Kilby has shot himself in the foot, just to please President Sirleaf and members of the Executive and some in the Legislative branch of Government.
No Financial Statements, There Can Be No Audits
FPA quoted Mr. Kilby as saying: “There were efforts made by the GAC but in my opinion there was no financial statement and there can be no audit without a financial statement.”
Does Mr. Kilby conduct research on post Enron, 21st Century auditing before he speaks? Does he know that even the requirement of the CPA has changed since 2001, way more rigorous than the period of the 1980s when he sat for the CPA?
In the 2006/2007 audits of the consolidated accounts of the government of Liberia, GAC recommended that the government of Liberia adopts an internationally accepted accounting principles and begin to put together financial statements, as was then and now, government of Liberia and its institutions only produce fiscal outturn, a form of budget variance analysis. Former Auditor General insisted that financial statements are produced. Financial Statements are reportable issues, and do not preclude audits. For example in 2004, EU hired Ernst and Young to conduct audits on selected public corporation for which RIA, and FDA did not have financial statements, yet Ernst and Young conducted the audits and made the financial statements reportable issues in the Management Letter.
In 2010, the Minister of Finance adopted international public sector accounting standards, called IPSAS Cash Basis 2. Minister of Finance, Augustine K. Ngafuan adopted IPSAS and a consultant was hired to assist the Ministry of Finance to begin preparing financial statements. This was a remarkable first step by Minister Ngafuan. Essentially, Mr. Kilby should know that the preparation of financial statements and the adoption of accounting standards is the responsibility of management, in this instance, the Minister of Finance.
That said, Mr. Kilby makes a fatal assertion when he argued that “there can be no audit without financial statement.” He has claimed to be an Examine Writer of the CPA and he makes such unsupported claim in 21st Century auditing: Below are a few examples of audits that do not need the traditional financial statements such as income, balance sheet, cash flows and changes in shareholder’s equity:
Forensic Audits—President Obama called for forensic audits when he visited Ghana
Public Debt Audits—UN and INTOSAI emphasizing public debt audits. Chapter 59 of the Executive Law of 1972.
IT Audits—New and emerging audit areas in which Mr. Kilby claims he is an expert.
Procurement Audits—World Bank required it as part of performance requirement and it is in Section 131 of the Procurement Act, 2009
Labor Qualifications (credential) audits—new and emerging areas of audits especially with increased credential fraud.
Performance Audits (Value for Money)—International standards to meet Level Three Standards in government Audits.
Internal Control Audits—Section 34 of the PFM Act. Check on GAC website and see the 76 Basic Internal Controls recommendation which is being used by the Ministry of Finance and the entire government, produced by GAC under AG Morlu.
This is a serious problem. President Sirleaf has hired a 1980 and 1970 auditor to head GAC and he is making claims without any supporting evidence. Furthermore, has Mr. Kilby read US GAO audits? There are three opinions given by the head of US GAO, equivalent of Auditor General:
FS with respect to generally accepted accounting principle
GAC is really now in trouble when it’s new Auditor General will say there can be no audits without financial statements. Mr. Kilby is not current and he is outdated on auditing matters. Does he even know what INTOSAI is, before he talked?
Auditors and Management Responsibilities
There is a clear distinction between the responsibilities of auditors and those of management. In each audit report such responsibility is specified. How then can a purported “Examiner Writer” for the CPA not know. Mr. Kilby indicated during his confirmation hearing also as an Auditor General is to build systems and so he will build systems. Building systems is management responsibilities, not Auditor General. Even the most common CPA can understand this.
The auditor is to provide an opinion on internal controls (systems in place), compliance and financial statements with respect GAAP application. Auditors provide recommendations in the management letter for appropriate systems but do not build systems.
So since Mr. Kilby will build systems in government, then who is going to audit the system he is building? Does he not know it would be a conflict of interest to build systems and then audit the same system?
We are waiting for Mr. Kilby to see his first published audit reports, done according to international auditing standards, working with the same Deputy Auditor General for audits.
Challenge to Ellen Johnson Sirleaf’s Auditor General, Mr. Robert Kilby
Mr. Kilby has no known record of ever conducting audits in line with international standards on auditing as prescribed by INTOSAI. He has never conducted a Peer Review of the GAC to indicate audit quality. If Mr. Kilby can show that he has conducted audits on the basis of INTOSAI and has conducted Peer Review of the GAC, we will ask Mr. John S. Morlu, II to pay all funds he earned from the EU. It is all “mouth talk,” as we say in Liberia. Similar challenge was posed to the government in 2010 and no response. Does Mr. Kilby know he could be in violation of Rule 102 of the AICPA professional responsibilities? Mr. Kilby has not worked for a Fortune 500 company as an Auditor or even compliance officer.
Mr. Kilby should be made to provide documentary evidence that he is an Exam Writer for the CPA, as we have contact with the Board of Examiners of the CPA. They can be reached at 609-671-2917. The CITP is earned on the basis of “life time experience” as an IT solutions person, not for audit. There was NO exam for CITP until just this summer 2011.
Mr. Kilby should be made to provide the following proof as we have checked and found no record of him at these places he claimed:
Masters in Telecommunications from the University of Maryland. We have checked via [LINK=http://www.choicepoint.com/]http://www.choicepoint.com[/LINK] and no record of him ever earning such a degree.
DEKALB TECHNICAL COLLEGE in Georgia. He indicated that he is an “Adjunct Instructor at this college.” There is zero record to support this important claim on his CV. You call 404-297-9522. This is a complete fabrication for an incoming Auditor General, as the GAC is the pillar of integrity and accountability in Liberia.
Mary K. Kamara
Friends of GAC and John Morlu