via Audit reveals flaws in Govt accounts | The Herald 6 January 2015
SERIOUS governance issues and debt recovery weaknesses have resulted in Government failing to properly account for its revenue, the 2013 Auditor-General’s report shows.Governance weaknesses were observed in internal controls, record keeping and diversion of resources from fund accounts to ministries, reconciliations of the sub paymaster general account with the Public Finance Management Systems records, submission of returns and accounts and management of State property and resources.
As a result, the audit revealed significant variances totalling $409 million between the Exchequer bank account and Public Finance Management Systems records in 2013.
“Due to weak internal control systems in most ministries, unsupported payments were made and losses resulting from suspected fraudulent activities were incurred, involving amounts ranging from $3 000 to $3,5 million,” according to the audit report.
This was in contravention of the provisions of Public Finance Management Act, which requires public entities to establish and maintain effective, efficient and transparent systems of financial and risk management and internal controls.
“As such, the accuracy of the expenditure figures disclosed in the appropriation accounts of such ministries could not be relied upon,” said the Auditor-General report.
Weaknesses in debt recovery systems in some ministries resulted in Government being owed more than $50 million in respect of various debtors such as outstanding travel and subsistence advances and outstanding revenues in form of rentals.
Further, the audit revealed that $33 million was advanced by Government to three parastatals as loans without signing loan agreements. The report said the absence of such agreements between the parties rendered recoverability of the loans difficult.
The audit also noted that the Government may fail to recover the funds due to the fiscus through writing off of the debts.
In terms of procurement, some ministries did not comply with statutory requirements in purchasing goods and services resulting in flouting of tender procedures, failure to purchase to best advantage, payment before supply and purchase of overpriced goods, which if not addressed will continue to drain State resources.
In relation to employment costs, there were payments of overtime allowances to employees and bonuses to casual workers without approval from the Treasury and the Civil Service Commission. In one case, a Ministry paid about $172 000 in respect of damages for unfair dismissal of an employee.
According to the audit report, 31 ministries out of 33 (about 94 percent) had material audit findings warranting management’s attention. Twenty two or 67 percent of the ministries had qualified audit opinion on their appropriation accounts.
One of the ministries had a disclaimer of opinion. Out of 10 ministries with unqualified audit opinions, eight had other material issues reported on. Nineteen fund accounts, out of the 40 audited, had qualified disclaimer or adverse audit opinions.
Most of the concerns raised around the governance issues were raised in the previous year’s audit report.
“Audit revealed that most of the ministries partly implemented prior years audit recommendations, hence there was still great room for improvement. If audit recommendations are implemented, accountability, transparency, corporate governance, efficiency and effectiveness of operations of ministries would improve,” said the report.
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