PHILLIMON MHLANGA
Government could have lost millions of dollars due to a lax in internal control systems, pilferage and violation of tender procedures at the Ministry of Finance and Economic Development.
An audit report by the auditor-general Mildred Chiri shows that Treasury paid $140 million to international creditors without supporting documents while lack of internal control systems and pilferage were rampant during the year to December 2017.
In her audit report for the year, which was tabled before Parliament this week, Chiri revealed that government could be losing millions of dollars through inflated payments from Treasury’s main exchequer account to various institutions without supporting or source documents.
She raised a red flag after government paid $104 million to various international creditors from the exchequer account, an amount which differed by $93,4 million from $10,2 million disclosed in the Public debt statement.
This means payments could have been made to wrong creditors and there was high risk of fraud, a situation which could certainly cause a huge public outcry.
It remains to be seen whether the current administration will take action based on Chiri’s audit reports unlike former President Robert Mugabe’s administration which used to totally ignore any recommendations from the auditor. The reports usually detail gross irregularities on the part of government officials and their ministries.
“Treasury made loan repayments of about $104 million to various international creditors during the year under review,” Chiri said in her latest report.
“Documents to support the payments were not availed for audit inspection. Furthermore, the amounts paid to the creditors differed with those disclosed in the Statement of Public Debt by $93,4 million indicating that there were no reconciliations of loans repayments between the accountant-general’s office and the Public Debt Management office.”
The Ministry of Finance, which is now headed by Mthuli Ncube, was also making direct payments to various local suppliers of goods and services on behalf of government ministries without supporting documents.
The damning report revealed that unsupported total expenditure paid on behalf of ministries amounted to $27,1 million.
Without supporting documents, Chiri said, it was difficult to determine the nature of the payments, a situation which can amount to serious delinquency.
“A typical example is a Ministry whose bills totalling $2 590 508 had 97 percent of its amount paid directly to its suppliers by the Ministry of Finance. Consequently, a number of Ministries were qualified for not following up on these direct payments and some payments were not properly accounted for in the financial statements,”
Chiri said adding that there must be a vibrant management accounting system that bridges the communication gap between the Ministry of Finance and ministries.
“Without adequate supporting documents, it was difficult to determine the nature of the payments and whether they were being done in accordance with rules and regulations and in line with their mandate. The unsupported total expenditure was $27,1 million.”
Chiri said the laxity in Treasury controls resulted in some ministries transferring close to $20 million from Paymaster General Account controlled by the Ministry of Finance to their fund account without Treasury authority. There were also no supporting documents to show the nature of the transactions that made up the figures.
This, she said, was a violation of the Appropriation Act and the Public Finance Management Act, meaning there could be rampant abuse of public funds. She, however, did not reveal their identity.
“Three ministries transferred monies from the Paymaster General Account, amounting to $17,9 million, without Treasury authority, to their respective Fund accounts. This action violated the provisions of the Appropriation Act and the Public Finance Management Act (Chapter 22:19). I could not therefore satisfy myself whether public funds were used for the intended purpose,” Chiri said.
“Ministries and Fund accounts were processing payments which did not have adequate supporting documents. One ministry made a payment of $3,6 million without supporting documents as compensation for immovable properties.”
She said Government’s ministries accounting system were in shambles as some ministries did not maintain proper accounting and assets records such as cash books and ledgers to record revenue and expenditure, immovable property registers, motor vehicle registers, fuel and other asset registers.
As a result, some financial statements were compiled from bank statements, payment vouchers and cash books instead of using general ledgers. Omission of certain information occurred resulting in misstatement of financial statements.”
The report also revealed that most ministries exhibited poor budgetary control systems. The laxity means that government could be losing millions of dollars.
“Most funds exhibited poor budgetary control systems hence resulting in 24 incurring excess expenditure over income totalling $69,1 million,” Chiri said.
She said most ministries had no asset registers, a situation which made it difficult to trace assets. This means government could be losing most of its assets to government workers.
“The issue of uploading assets in the Public Finance Management System (PFMS) could not be displayed at the time of my audit due to certain procedures not being done to enable registers to be viewed,” Chiri said.
Most ministries could not display assets in the system as uploading still remained a major challenge in the management of public assets.
Assets might go missing without trace if registers in the PFMS are not available for audit.”
She added: “Concern was raised over posting of financial transactions to closed financial years, contrary to the standard 13th period of one month after the end of the financial year.
At the time of finalising the audit, on May 10, 2018, ministries were still posting expenditure figures to the PFMS. The uploading of expenditure after the submission of the Appropriation Accounts for audits implies that all the inputs after the said submission are not audited.”
Chiri also noted that most ministries were not adhering to procurement regulations. There were purchases worth millions of dollars made without tender board resolutions, invoices and goods receipt vouchers, a clear violation of government payment and procurement procedures.
“During the current year some ministries and fund accounts purchased goods and services without following tender procedures,” Chiri said.
“Tender splitting was still prevalent in some ministries especially where bulk buying was the case. The violation occurred mostly in the purchase of motor vehicles, fuel and equipment. In one ministry 12 motor vehicles purchased were not delivered. A total of $3,7 million was spent without following informal tender procedures.”
She also revealed that government workers were occupying government properties without paying rent, contrary to the accounting officer’s circular dated December 14,2015, which requires ministries to collect five percent of a tenant’s salary as rent. The rentals are required to enable Ministry of Local Government, Public Works and National Housing to maintain and carry out repairs to the properties so that they remain habitable.
The implication of non-collection of rentals may result in loss of revenue to the State.
