Lara Taylor-Pearce, Auditor General
By Our Business Editor
The Audit Service has submitted to parliament a damning report on the handling of government finances in 2012. The Auditor General's report estimates that there have been cash losses to the public purse of over Le82 billion (about US$ 20 million) through the activities of government ministries, departments and agencies (MDAs).
“As in previous years this has occurred for a number of reasons, some inter-related. Overall we strongly suggest that public financial management has much room for improvement in all MDAs”, the report said.
It said monthly bank reconciliations were not carried out in most MDAs, which amounted to a fundamental failure of internal control over cash and banking procedures. It added that the control should also be undertaken by persons with no access to the physical cash or bank statements, and there should be separation of duties between those handling cash and accounting for it.
The report which looks at government's books for the period 1 January - 31 December 2012 says: “There are significant weaknesses in the management of revenue in most if not all of the revenue generating entities. For instance, transferring funds to NRA is subject to unnecessary delay. We noted many cases where withholding taxes were not deducted from suppliers or contractors. A perennial problem, payments without adequate supporting documents like invoices, receipts, delivery notes, persists in almost all the MDAs.
“Several significant lapses were observed in procurement procedures, resulting in incomplete transactions and hence unsatisfactory service delivery. Moneys intended to be managed by imprest accounts are not properly closed out or accounted for with the result that controls over imprest accounts are weak and allocating expenditure accurately to ledger accounts is seriously impaired” the auditor general’s report said.
The report stated that in addition, all too frequently requested documents were not made available to its auditors for review although that had improved over previous years, and expressed disappointment that recommendations for improvement in controls remained unimplemented with many government institutions failing to make adequate, if any, responses to their findings.
“The findings do not inspire confidence that resources are being managed optimally with due regard for economy, efficiency and effectiveness or fully in accordance with the intent of Parliament,” the AG lamented.
On public enterprises and donor projects, the report observed that in general and across virtually all public enterprises and commissions, the significant matters identified in the audit examinations included “poor bank, cash and imprest account management practices; missing supporting documentation for transactions; inadequate use of or a failure to use Asset Registers; and failures to deduct withholding tax from supplier remittances”.
It says there were also instances of poorly managed or largely non-existent document filing systems, inadequate personnel records, payroll calculation errors and ineffective internal audit departments.
According to the AG report, such observations suggested the need for greater improvement in financial management with a clear focus on basic principles of internal control, regular bank reconciliations, appropriation segregation of duties and sound procedures for authorizing, recording and reporting transactions.
Meanwhile, the financial statements of the 19 councils were submitted for audit before, or shortly after, the legislative deadline of 31 March, 2013, the report says, implying an improvement in this regard. However the audits of their operations indicate that the financial management of these councils needs to be improved with a clear focus on basic principles of internal control and proper records management. “Significant matters identified in the audit examinations across all Local Councils fall into inadequate budgetary processes; reporting and presentation of financial information; breaches of Procurement Act and Regulations; expenditure not supported by relevant documentary evidence; no guidelines for the payment of Councilor Sitting Fees and other allowances; statutory deductions not paid over to the relevant authorities; inadequate control over the collection, recording and reporting of financial transactions,” the report says.
In her foreword the Auditor General, Lara Taylor-Pearce writes: "In each of the past two years I commented that we had a long way to go in improving the quality of public financial management in Sierra Leone. We are getting better but at a very slow pace and advancing public financial management continues to require urgent attention by the government and public officials."
She calls for "a focus on cash management and the need to dramatically improve internal auditing" urging quality and accuracy in accounting. She writes that "[t]he very definition of what constitutes the government accounting entity remains to be considered, as at present all government bank accounts are not included in the Financial Statements of the Government of Sierra Leone."
She warns that the failure to abide by procurement laws and regulations is causing losses and eroding public trust in government.
"There is still a lack of awareness that as public servants we all are accountable to Parliament and the citizens for managing public funds with due regard and probity. The management of the national pension trust, NASSIT, is of particular concern to me and this is reflected by its inclusion in a separate chapter in my report. The findings on governance, control and asset valuation in that agency should be a major concern for parliamentarians and all citizens".
The previous AG's report for 2011 unearthed rampant corruption in some government offices. In that time, she even issued a "disclaimer of opinion” because the audit was not broad enough in scope to enable her form an opinion. This week's report expresses disappointment that recommendations contained in that report were not implemented.
(C) Politico 19/12/13
