Durrant Pate/Contributor

With the National Water Commission spending billions of dollars each year in capital projects, its budget credibility is being put under the microscope by the Auditor General’s Department (AuDG).

The AuGD has confirmed that it is carrying out an audit of the NWC’s management of capital projects to assess how effectively it is managing and executing its capital expenditure in line with approved budgets. This audit, which began in August 2024, is being executed by the AuGD’s Economic Assessment Unit (EAU), as part of its inaugural audit of budget credibility.

Through this process, the EAU aims to evaluate the credibility of budget allocations and actual spending, ensuring alignment with established financial guidelines and best practices. A draft report has already been submitted to the NWC’s management and is now scheduled for submission to Parliament in during this current last quarter. 

Budget credibility refers to a government’s ability to meet its revenue and expenditure targets during the fiscal year. A budget credibility audit (BCA) seeks to identify and examine root causes of deviations, to improve budget preparation and execution. The BCA was planned and conducted in accordance with UNDESA/International Budget Partners (IBP) Handbook for auditors. The AuGD has been strengthening budget credibility in government through external audits.

Detailed evaluation coming for some agencies

In parallel with our ongoing activities, the EAU has commenced a preliminary review, as part of preparations for the forthcoming Financial Statement Assessment (FSA). This early-stage assessment is focused on establishing clear options for prioritising, which public bodies will be subject to detailed evaluation during the FSA process. 

The objective is to ensure that the selection of entities for review is both systematic and evidence-based, thereby enhancing the effectiveness of the overall assessment. The EAU remains firmly on track to complete the comprehensive FSA review within the designated timeframe, targeting completion by the fourth quarter of the 2025/26 financial year. 

Financial Statement Assessments are primarily based on information drawn from each entity’s audited annual financial statements, annual reports, and other relevant supplementary materials. Key ratios are calculated to facilitate an analysis of performance and to assess the viability and sustainability of each public body.

EAU forward plans

From 2026/27 onward, audits of budget credibility will remain the cornerstone of the EAU’s workplan. In its just tabled 2025 Annual Report, the AuDG says the unit will continue to apply a risk-based approach in selecting public bodies for financial statements assessments and will carry out evaluations of user-pays PPPs to determine the extent of any contingent liabilities as they arise. 

Subject to receiving a list of entities from the Minister of Finance and the Public Service, the unit may also undertake validation assessments to determine whether the listed entities fall outside the specified public sector, in accordance with the Financial Administration and Audit (FAA) Fiscal Responsibility Framework Regulations. In addition, the unit will continue its education programme aimed at strengthening staff understanding of economic issues and concepts, thereby enhancing the analytical depth of its reports.