Financial indiscipline rife in govt — WB

Source: Financial indiscipline rife in govt — WB | The Financial Gazette July 6, 2017

FINANCIAL indiscipline in government is so rife that some state-owned institutions have not been audited since 1980, a World Bank report has revealed.

The 2017 Public Expenditure Review, done by the World Bank with input from the Government of Zimbabwe, indicates that lack of internal audit capacity within ministries and government departments had created fertile ground for abuse of public funds.

The Bretton Woods institution’s assessment, coinciding with the release of the Auditor General’s 2016 audit report revealing widespread abuses of public funds, shows that government ministries have tended to under-staff and under-resource the internal auditor position, undermining its effectiveness.
“For example, the Ministry of Public Service, Labour and Social Welfare allocated only 0,005 percent of its 2015 budget to the Department of Internal Audit, while the Ministry of Primary and Secondary Education revealed that certain schools have not been subject to an internal audit since 1980,” says the World Bank report.

The Labour Ministry allocated $149 079 out of a total budget of $27 311 000; yet the ministry’s Department of Finance and Administration was allocated US$1 047 252, $301 006 of which went to top management remuneration.

The AG, which uses risk profiling to determine which institution to audit, has always found the Ministries of Home Affairs, Health and Child Welfare, and Primary and Secondary Education as entities with the highest risk of funds abuse.

“Though each ministry is required to have an audit committee, only the Ministry of Health has established one – and even this committee does not meet the (Public Finance Management) Act’s requirements.”
The World Bank further indicates that while sifting through the 2009 First Quarter Special Report of the Comptroller and Auditor General — which identified abuse of public funds and assets in several ministries and government departments — Parliament’s Public Accounts Committee discovered “a lack of adherence to rules and regulations in the management of cash, public assets and human resources, and a lack of accountability by government ministries; weak systems for management and accountability, and a culture of non-performance in government; and the importance of implementing performance-based management techniques, and addressing irregularities.”

Financial indiscipline has remained one of government’s Achilles heels as far as accounting for public funds is concerned.

The indiscipline has been replicated in state enterprises and local authorities which rarely conduct timely audits.

For instance, the AG’s 2016 report shows that only one out of the country’s 92 local authorities is up to date in terms of audited financial statements.

Only Goromonzi Rural District Council is current, while 22 are in the process of submitting and 69 have not submitted their statements for 2016.

For 2015, only 38 councils were audited, while 15 are in the process and 39 have not yet submitted. Some of the councils are yet to submit their statements for 2014 (22) and 2013 (three).

In an effort to assist Zimbabwe get its house in order, the World Bank recently launched a Public Financial Management Enhancement Project, which invests in internal audit improvements and capacity building, which are “the building blocks for establishing an independent internal audit function”.
People’s Democratic Party spokesperson, Jacob Mafume, condemned government’s financial indiscipline.
“Fiscal mismanagement has also seen domestic debt ballooning to 60 percent of GDP,” he said.
Mafume said due to fiscal indiscipline, government was running huge deficits, which were being funded using real time gross settlement, which it was using to create money in the economy.

“The government also issues toxic Treasury Bills worth billions of dollars which has resulted in the crowding of the financial leg room at the expense of private sector activity. The point is that as long as there is fiscal indiscipline, the problem will not only remain, but will exacerbate, digging the economy into a bottomless abyss,” said Mafume.