| Sierra Leone Broadcasting Corporation (SLBC) |
| Management Letter |
| for the year ended 31 December 2010 |
| KPMG Sierra LeoneNovember 2011 |
| This report contains 57pages |
| Ref:gh/emj |
Risk
Contents grade Page
1.1 Scope and objective 1
1.2 Excutive summary 3
2 Matters reported as at 31 December 2010 audit 6
2.1 Human Resource Management
2.1.1 Lack of competitive and effective recruitment policy 1 6
2.1.2 Irregularity and discrepancies in salaries 1 7
2.1.3 Lack of trained and qualified finance staff
in the regional office 1 9
2.1.4 Non adherence to attendance control policy 2 10
2.1.5 Inadequate documentation in employee files 1 11
2.1.6 unsatisfactory performance appraisal 2 12
2.1.7 Management of leavers 2 13
2.1.8 Training of regional managers 2 14
2.2 Financial Operations
2.2.1 Basis of financial statement preparation 1 15
2.2.2 No transactions reported for Kailahun station 1 17
2.2.3 Differences between regional and head office information 1 18
2.2.4 Inconsistent feef for use of the station's facilities 1 19
2.2.5 Completeness and existence of revenue for head office 1 20
2.2.6 U sabi dance supporting documents 1 21
2.2.7 No budgetary control 1 22
2.2.8 Lack of business plan 1 23
2.2.9 Lack of chart of accounts 1 24
2.2.10 Non existence of an internal audit function 1 25
2.2.11 Lack of proper filing system 1 26
2.2.12 Inadequate segregation of duties 2 27
2.2.13 Weakness in the use of payment voucher 2 28
2.3 Procurement
2.3.1 Procurement of satelite uplink 1 29
2.3.2 Procurment of construction works 1 31
2.3.3 Authorisation of purchase orders 1 33
2.4 Asset Management
2.4.1 Absence of title deeds 1 34
2.4.2 Disposal of property, plant and equipment 1 35
2.4.3 Maintenance of fixed asset register 1 38
2.4.4 Property, plant and equipments were not coded 2 39
2.4.5 Adequacy of insurance cover 2 40
2.4.6 Incorrect dipsosal procedure 2 41
2.5 Cash management
2.5.1 Over reliance on overdraft facility 1 42
2.5.2 Absence of bank reconciliation statements 1 44
2.5.3 Lack of appropriate secure safe for cash in hand 1 45
2.6 General Administration
2.6.1 The change from Sierra Leone Broadcasting service to
Sierra Leone Broadcasting corporation (SLBC) 1 46
2.6.2 Staff acting as thrid parties/payees (receiving cheques
on behalf of third parties) 1 48
2.6.3 Inadequate support for expense transactions 1 50
2.6.4 Supply of fuel 1 52
2.6.5 Absence of breakdown schedule for significant accounts 1 53
2.6.6 Unrecorded transactions 1 54
2.6.7 Omission of taken over transactions 1 55
2.7 Information systems
2.7.1 Introduction of accounting software 1 56
2.7.2 Backup of accounting records 1 57
1.1. Scope and objectives
We have completed our audit of the financial statements of Sierra Leone Broadcasting Corporation (SLBC) for the year ended 31 December 2010 and we wish to record our appreciation for the assistance given to us by management and staff during the course of the audit.
In accordance with International Standards on Auditing, the primary purpose of our audit was to enable us to express an opinion as to whether or not the financial statements give a true and fair view of the financial position of the Corporation as at 31 December 2010, and its financial performance and cash flows for the year ended 31 December 2010, in accordance with International Financial Reporting Standards and in the manner required by the Sierra Leone Broadcasting Corporation Act.
Accordingly, we considered internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
Internal control, no matter how well designed and operated, can provide an entity with only reasonable assurance about achieving its financial reporting objectives. The likelihood of achievement is affected by limitations inherent to internal control. These include, amongst others, the realities that human judgment in decision making can be faulty, breakdowns in internal controls can occur because of human failures, and controls can be circumvented by the collusion of two or more people or inappropriate management override of internal control.
Our audit of the financial statements of your Corporation for the year ended 31 December 2010 would not necessarily disclose all weaknesses in the system because it is based on selective tests of accounting records.
However, this report summarises certain observations and recommendations which resulted from our audit. The implementation by management of these recommendations should assist management in improving internal controls relevant to the corporation’s preparation and fair presentation of the financial statements.
A system of grading the management report has been used as follows:
- Grade 1 - Observations are those which are particularly significant and the involvement of management may be required for their resolution.
- Grade 2 - Observations are those which may have a significant impact on the control environment.
- Grade 3 - Observations are less significant than grades 1 and 2 but nevertheless merit attention.
Finally we shall be pleased to discuss and explain these recommendations and to provide any assistance you may require in putting them into effect.
This report is provided on the basis that it is for your information only and that it will not be copied or disclosed to any third party or otherwise quoted or referred to, in whole or in part, without KPMG's prior written consent.
Freetown Chartered Accountants
Date:
Executive summary
There are a number of factors responsible for the present situation at the Sierra Leone Broadcasting Corporation. These have been discussed in detailed in the audited report. We however summarise below the salient issues:
Control environment
The whole system of control, financial and otherwise established by the corporation to safeguard its assets and ensure the completeness, accuracy and reliability of its records were generally found to be very ineffective or nonexistent.
Included in the audited financial statement are the following for which sufficient and appropriate audit evidence is lacking:
- Property, plant and equipment amounting to Le11 billion.
Several of the assets received from UNDP amounting to Le322 million were not so tagged for identification purposes.
Certain costs were incurred for some vehicles but we were unable to review third party supporting documents for them as none was made available to us for review despite several requests.
In-appropriate disposal procedures for certain vehicles by the corporation, thus leading to inaccurate recording of revenue on disposals, no supporting documents are available to back up these transactions.
No fixed assets register is being maintained for all fixed assets of the corporation.
Title deeds to some land and buildings occupied by the corporation for business were not made available for our review and the whole of the assets of the corporation are not insured.
- Cash management
The cash position of the corporation is unhealthy.
The Board of Directors receives sitting fees and are so paid even if they did not attend board meetings. In addition the Board of directors are paid monthly salaries, totalling to Le40 million per month. This is very unusual as they are not executive directors and are not involved in the day to day operations of the corporation.
Certain expenses were made amounting to Le290 million for which we were not provided with any details on expense, forms, vouchers etc. These were described as refurbishment of the office building (Le96 million), other payments (61.9 million) and repairs to vehicles and equipment (Le132.3 million).
Other payments made as was evident from proforma invoices and cash receipts were completely omitted from the corporation’s books.
These were largely described as expenses on fuel and oil amounting to Le9.7 million. The corporation is reliant on overdraft facility from the bank.
Revenue amounting to Le1.9 billion could not be supported as no comprehensive documentation was maintained by the corporation in recording revenue from TV birthday and immemorial, adverts and programs, radio adverts and program and public notices and obituaries.
The amount accounted for is therefore incomplete and inaccurate in the absence of credible underlying documentation of such incoming revenues to the corporation.
An amount of Le441 million is being described as suspense creditors as no supporting documents could be provided for such transactions. Subvention from the Government of Sierra Leone could not be sufficiently verified.
Direct operating costs and administrative expenses amounting to Le8.9 billion could not be substantially verified with invoices, bills, expense forms and other forms of approved/authorised expenditure. In short it is difficult to ascertain whether all these costs were so incurred for the benefit of the corporation
- Human Resource Management
No documented recruitment policy or procedure are in place and staff recruited in October 2011 did not follow any laid down recruitment procedures. Whilst some salaries paid to freelancers ranged from Le40,000 to Le300,000 from 1 January 2010 to 30 September 2010, we observed that substantial amount ranging from Le878,000 to Le1,124,249 were paid to freelancers recruited in October 2010.
Management did not provide to us the basis for such differences.
Staff at the regional offices responsible for accounting and financial operations lacked the basic accounting skills and experience required for running these offices.
Documentation on employees’ files were largely incomplete and certain employees have no files maintained for them by the corporation.
There is not on record a complete listing of all staff that left the employment of the corporation and these will definitely impact on the payroll costs.
- Financial statement preparation
Material omission were noted as the following were not included in the management accounts prepared for audit purposes.
- Donor funded expenditure
- Returns from Kailahun radio station
- Bo station returns
- Valuation of take-over balances on property and equipment from SLBS
- Use of station’s facilities
For all regional offices, standard rates or charges for services are not so utilised, but lower rates are used leading to loss of funds on the corporation.
- Revenue
Head office listing for revenue amounting to Le766 million for October, November and December 2010 was not provided to us for review as management maintained that there was computer breakdown in this area. No supporting document was provided for revenue for the months of February and March 2010 amounting to Le107 million
- U Sabi Dance
Out of Le165.5 million received from Airtel as sponsorship for this programme, Le156.4 million was subsequently reported as expenditure but no supporting documentation was made available for us for review and verification of payments made on this programme by the corporation.
- Payment vouchers
All vouchers used were hand-written and not pre numbered.
- Procurement – Satellite Uplink ($397,505)
Three quotation invoices were considered in selecting the consultant of the above link but rather than the consultant assisting the corporation to select a credible supplier based proper transparent procurement procedures, it turned out that the consultant (Transtech International Limited) invoiced the corporation for the supply of the equipment in his own name (Transtech International Limited). Payments were also made to this consultant for the equipment. Also it was noted that even though payments was made to Transtech International Limited for a Backup uplink satellite and transmitter amounting to Le692.6 million, the said equipment were never supplied to the corporation nor was the money returned to the corporation.
Construction work procured for construction of fence (Le33.3 million) and construction of minimart (35.4 million were irregular as no contract agreement was made available for our review. Also several of the cheque payments on these contracts were made directly to staff of the corporation.
Generally purchase orders were not used by the corporation for purchases in 2010. Generally for other expenditure, cheque payments for third parties were issued in the name of staff of the corporation, instead of the contractors or suppliers.
Supporting documents for expenses amounting to Le273 million were not available for our review.
2. Matters reported as at 31 December 2010
2.1 Human Resource Management
2.1.1 Lack of competitive and effective recruitment policy
Observation Grade 1
We observed that the corporation had no documented recruitment policy or procedure in place and management was not able to demonstrate how the recruitment of the staff taken on in October 2010 was carried out.
Implication
In the absence of a recruitment policy and standard minimum requirements, the recruitment process might become subjective and ineffective with the respective positions filled based on contacts and nepotism.
Recommendation
Management should ensure that recruitment policies and procedures are documented and adhered to in the recruitment and the hiring of personnel.
Benefit
The right quality of staff would be recruited which would improve the efficiency and effectiveness of the corporation as a whole.
Management’s comment
2.1.2 Irregularity and discrepancies in salaries
Observation Grade 1
We observed that the salaries paid to freelancers from the beginning of the year up to September ranged from Le 40,000 to Le 300,000 depending on the number of news, obituaries, public notices etc read by the freelancers and dependent on freelancer’s length of service. However, the under listed freelancers recruited in October were paid significantly higher salaries, with no basis provided by management for the increment.
We have taken out the names and pay of the concerned staff based on our editorial judgment bordering on privacy reasons
Implication
Lack of a clear basis for the differences in salaries of same category of staff could result in strike action and misunderstanding among staff members.
Recommendation
Changes in salary structure should be communicated and the basis clearly indicated.
Benefit
Staff would be fairly well informed.
Management’s comment
2.1.3 Lack of trained and qualified finance staff in the regional offices
Observation Grade 1
During our visits to the regional offices it came to our attention that the personnel responsible for the accounting and financial operations for each of the regional offices lacked basic accounting skills and experience required for the effective and efficient running of the finance units.
Implication
The absence of personnel possessing the required skills and experience for the effective and efficient operation of a financial unit increases the risk of erroneous financial reporting, mismanagement of the corporation’s financial resources and wrong decision making on financial issues that might have an adverse impact on the organization.
Recommendation
Management should conduct training on basic accounting skills frequently to equip existing personnel who are acting in the capacity of finance officers and appropriate personnel recruited going forward.
Benefit
The risk of erroneous financial reporting will be reduced to a low level; the corporation financial resources will be adequately utilized and personnel will be in a position to make the right judgment on financial issues that will be of benefit to the corporation.
Management’s comment
2.1.4Non adherence to attendance control policy
Observation Grade 2
The attendance book maintained by management which is required to be signed off by all staff at reporting and exit time was not done. The attendance register was not signed off by all staff, both at entry and exit to ascertain whether they commenced and left at the stipulated time.
Also follow-up on persistent latecomers did not indicate any disciplinary measures taken by management.
Implication
Staff were not adequately monitored, which increases the risk of the corporation having ghost staff on its payroll.
Recommendation
We require management to ensure attendance control policies are adhered to,and action taken to discipline absent and frequent late comers.
Benefit
Proper administration of the register would indicate the frequency and punctuality of staff which would reflect in efficiency and productivity of the corporations activities.
Management’s comment
2.1.5 Inadequate documentation in employee files
Observation Grade 1
From our review of employee files it was noted that most files lacked adequate documentation such as their job description and proof of educational qualifications. Documents filed were contract letters and completed employment forms. We also observed that the underlisted staff had no files.
| Designation | Names | Category |
| Camera Operator | Sydney Kamara | Freelance |
| Reporter/Presenter | Cecelia During | Contract |
| News/Presenters | Nancy Farmah-Mende | Freelance |
| News/Presenters | Kwame Yankson | Freelance |
| Camera Operator | Jerry Cole | Freelance |
Implication
In the absence of proper documentation in staff files, management might not be able take effective decisions, regarding the staff.
Recommendation
Proper documentation should be filed for each staff.
Benefit
Proper management of personnel records would ensure availability of information forreference and decision taking purposes.
Management’s comment
2.1.6 Unsatisfactory performance appraisal
Observation Grade 2
Management attempted to carry out an appraisal of staff performance in September 2010. The performance was to assess the extent to which each respective staff was able to fulfill the objectives of the corporation, and the developmental needs that they might have. However only 117 staff were approved out of a total number of 259 staff, and no action was taken with regards to the staff evaluated.
Implication
The primary reason for performance appraisal (i.e. monitoring of employees’ performance, motivating staff and improving company morale) was not achieved as the process was neither completed, nor the results obtained utilized.
Recommendation
The performance appraisal program should be effectively carried out at least annually to monitor the performance of employees, motivate staff and should involve the entire population of staff.
Benefit
Effective appraisal process will assist the corporation to achieve its goals. Objectives and training needs of staff would also be identified and hidden talents discovered.
Management’s comment
2.1.7 Management of leavers
Observation Grade 2
We observed that some staff left the corporation without a either a resignation letter or an exit interview and consequently the corporation could not provide us with a complete record of all staff that left during the year.
Implication
The payroll register might not be updated promptly which would pave way for fraudulent activities, and the human resource department might not be able to obtain feedback which might be useful in helping to improve working conditions and retaining employees,
Recommendation
Management should maintain a comprehensive list of leavers and ensure exit meetings are conducted.
Benefit
The entity would be able to gather data for improving working conditions and retaining employees, and payroll cost would be correctly stated.
Management’s comment
2.1.8 Training of Regional Managers
Observation Grade 2
During our field visit to the regional offices we noted that in as much as the regional managers had been working for the corporation for a lengthy period of time and possess the technical knowhow and experience in journalism, there is a need to develop their managerial and administrative skills in order to ensure the organization’s success.
Implication
Failure by management to develop the capacity of the regional managers through the provision of adequate managerial and administrative training will adversely affect the successful operation and continuity of the regional stations.
Recommendation
Management should establish structures whereby it can be able to identify the various managerial and administrative training needs of the regional managers and ensure that training activities are rolled out to meet those needs.
Benefit
Regional managers will be well equipped to carry out their managerial in an effective and efficient manner.
Management’s comment
2.2 Financial operation
2.2.1 Basis of financial statement preparation
Observation Grade 1
Our review of the financial statement and accounting records revealed that that the financial statements were not prepared in accordance with any recognized accounting framework and best practices.
Material omissions were also noted in the financial statements such as:
- the non inclusion of donor funded expenditures;
- the lack of returns from the Kailahun radio station;
- differences between the figures reported for the Bo Station by the head office and the figures maintained at the Bo station;
- omission of transactions; and
- appropriate valuation of the take-on balances for property and equipment from SLBS.
Implication
Failure by management to prepare financial statement in accordance with an applicable financial reporting framework increases the risk of management presenting and preparing materially misstated financial statement and will not reflect a true and fair view of the financial position of the corporation.
Recommendation
Management should ensure that the corporation’s financial statement is prepared in accordance with an applicable financial reporting framework.
Benefit
This will reduce the risk of errors, omissions and misstatement in the financial statement and thereby enhance the true and fair view of the corporation’s financial position.
Management’s comment
2.2.2 No transactions reported for Kailahun staion
Observation Grade 1
No transaction were reported for the Kailahun station even though the station operated during the period.
Implication
This implies a material omission in the financial statements and lack of accountability on the part of management. The extent of the omission could not be determined as no records had been provided, and we are doubtful that records were even maintained.
Recommendation
The situation should be investigated as it is extremely doubtful that no single transaction occurred for the entire year at that location; and why no documentation was maintained.
Benefit
The operations and activities (financial and otherwise) of the station would be better managed and correctly reported.
Management’s comment
2.2.3 Differences between regional and head office information
Observation Grade 1
During our review at the Bo regional station we observed that the income and expenditure trial balance presented to us at the head office was different from the transactions recorded in their books of account.
We also observed that the under listed bank accounts had been omitted from the trial balance presented to us by management at the head office.
| Name | Location |
Amount Le |
| Sierra Leone Commercial Bank | Makeni |
2,075,876.10 |
| Union Trust Bank SL Limited | Kono |
303,700 |
| Rokel Commercial Bank | Kono |
830,091.13 |
| Total |
3,209,667.23 |
Implication
The differences and omission indicates inadequate monitoring and supervision of the regional station and could be an indicator as to the occurrence of fraudulent activities.
Recommendation
Management should ensure the regional offices are adequately monitored and all returns are properly checked and verified. A centralized accounting application could also be introduced to enhance the book keeping of the corporation.
Benefit
The corporation’s transactions would be adequately recorded and the financial statements fairly stated.
Management’s comment
2.2.4 Inconsistent fees for use of the station’s facilities
Observation Grade 1
In the case of the regional stations, we observed that even though they might have standard rates or charges (for the reading of obituaries, public notices, adverts and other programmes), these rates were rarely applied. Management said that due to competition and price cutting by other stations, customers always negotiated down the standard rate or fees charged by the station.
Implication
The result is that different amounts are received for rendering the same service, and because payments are usually done in cash, it is difficult to determine whether the amounts recorded as payments received for a particular service was actually the correct amount of money received, because in most cases, the amounts were lower than the standard rates.
Recommendation
The station should set fixed rates which should be non negotiable, but may be should be low enough to be competitive, and within the range at which rates are usually negotiated.
Payment of fees where possible should be paid directly to the bank or made by cheque rather than in cash.
Benefit
The risk of fraud or misappropriation would be minimized and the reported income would be more easily verifiable.
Management’s comment
2.2.5 Completeness and existence of revenue for head office
Observation Grade 1
The listing of (head office) daily revenue transactions for the months of October, November and December 2010 amounting to Le 766 million was said to have been permanently lost due to a computer breakdown; further more there were no supporting documents for revenue for the months of February and March 2010 amounting Le to 107 million.
Implication
Failure to provide the breakdown of revenue for the months of October, November and December 2010 and the relevant supporting documents for revenue for the months of January, February and March 2010 implies that the revenue reported by management for those respective months could not be verified, and could have been misstated.
Recommendation
We advise management to develop a strong control environment with respect to its revenue generating activities, ensuring that there are adequate segregation of duties in the units that deal with revenue and periodic conduct of high level review of the revenue process.
Benefit
This will reduce the potential for fraud and misstatement of revenue will be mitigated.
Management’s comment
2.2.6 U sabi dance supporting documents
Observation Grade 1
The corporation received the amount Le165,500,000 from Airtel as sponsorship for a programme called U Sabi Dance. An amount of Le156,435,000 was subsequently reported as the expenditure incurred on the programme, but management has been unable to provide the relevant supporting documents in respect of the reported expenditure.
Implication
The non provision of the relevant supporting documents creates doubt over the reported related expenditure, since we have been unable to verify the completeness, and accuracy and existence of the reported expenditure.
Recommendation
All documents pertaining to the authorization, receipt of goods and services and payment of expenditure relating to U sabi dance should be retained. This would help to ensure that expenses are correctly recorded and properly accounted for.
Benefit
The expenditure relating to the programme would have been properly accounted for.
Management’s comment
2.2.7 No budgetary control
Observation Grade 1
From our review we noted that the corporation did not have a budget for the year under review. A budget is a monetary plan used as a tool to monitor and control the financial activities of the corporation as a whole and its respective departments or units. The actual results are compared with the budget and differences investigated to determine the cause and effects.
Implication
Had a realistic budget been drawn up, management would have been able to determine areas where the corporation performed well and areas where performance was lacking. It would have also served as a guide to management in managing the corporation’s expenses, as unbudgeted expenditure would have been questioned and possibly rejected.
Recommendation
Management should endeavour to prepare a challenging budget with input and buy in from all the respective units and staff of the corporation.
Benefit
Management will be well placed to monitor the performance of the corporation and indentify those areas where there is a need for improvement to enable the corporation attain its objectives.
Management’s comment
2.2.8Lack of business plan
Observation Grade 1
We noted that the corporation does not have a documented business plan which would spell out amongst other things the objectives, opportunities and threats, and the strategies to achieve the objectives, and or overcome the risks and threats facing the corporation. After the business plan has been well thought out and articulated in terms of identifying potential programmes and services that could be sold and how it could be done, the plan could then be translated into an operating budget.
Implication
The lack of a business plan may prevent management from identifying viable business operations and potential pitfalls.
Recommendation
Management should prepare a business plan that cover areas such as the business description, business environment analysis, market analysis, market plan, operational plan and financial plan to serve as a guide.
Benefit
Management will be better positioned to achieve the best for the corporation.
Management’s comment
2.2.9 Lack of chart of accounts
Observation Grade 1
One of the first steps required in designing a robust accounting information system is to develop a chart of accounts. A chart of accounts is a complete list of an entity’s accounting codes including the descriptive nature, and use of each respective code. It was noted that the corporation did not have a chart of accounts.
Implication
Failure by management to develop a proper chart of accounts may result in misposting or wrong use of an account code, or the treatment of an asset account as an expense, all of which increases the risk of error and the financial statement being materially misstated.
Recommendation
Management should develop a systematic and detailed chart of account that can be easily updated as and when a new account is included in the corporation’s accounting information system.
Benefit
The corporation accounting information system will be more organized and the risk of error will be reduced to an acceptably low level.
Management’s comment
2.2.10 Non existence of an internal audit function
Observation Grade 2
Given the nature of operations of the corporation, we believe an internal audit unit, would have been a good complement to management’s efforts at instituting control and accountability which sadly appears to be lacking.
Implication
Management may find it difficult to ensure that laid down systems and controls are been adhered to by the various provincial stations and even at head office..
Recommendation
Management should develop an internal audit unit or a department of a similar nature that should be mandated with the following responsibilities among others;
- Risk assessment reviews to identify significant risks in the corporation processes.
- Monitoring and review of the corporation’s finance and procurement functions.
- Reviewing the general IT control environment of the corporation for adequacy and efficiency of controls (antivirus updates, regular back-up of relevant and critical information etc).
Benefit
Management will be able to effectively monitor and review the control environment of the corporation, thus the risk of nurturing a weak control environment and perpetration of fraudulent activities will be mitigated.
Management’s comment
2.2.11 Lack of proper filing system
Observation Grade 2
The corporation did not maintain a proper filing system and this was prevalent both in the Freetown and regional offices. During our field work it came to our attention that payment vouchers and receipts prepared for suppliers were not sequentially filed, and as a result there were difficulties in locating some of the documents in support of the figures in the financial report.
Implication
The absence of proper filing system may make it difficult to retrieve documents; and if documents cannot be provided as required, doubts would be created as to whether the transactions took place as reported.
Recommendation
A proper filing system should be set up wherein documents are being file in sequence according to their serial numbers and management should also ensure that all corporation document files should be updated on a timely basis.
Benefit
A good filing system will save time, money and a lot of frustration and documents can easily be located and the risk of misplacing will be mitigated.
Management’s comment
2.2.12 Inadequate segregation of duties
Observation Grade 2
It was observed that there was inadequate segregation of duties in the finance department as follows:
- The accountant was one of the signatory to the corporation’s account;
- The accountant was in charge of recording cash and bank transactions into accounting books;
- The accountant was in charge of the preparation of payment voucher and local purchase order; and
- The accountant was in charge of the preparation of cheque to make payment to suppliers.
Implication
The lack of segregation of duties among the above functions could result in potential errors or irregularities remaining undetected and uncorrected.
Recommendation
Management should ensure that activities in the finance department are adequately segregated.
Benefit
Potential errors and irregularities would be easily detected.
Management’s comment
2.2.13 Weakness in the use of payment vouchers
Observation Grade 2
Payment vouchers (“PVs”) were used by the corporation throughout the period both in the Freetown and regional offices. However, some weaknesses in the use of payment vouchers were noted, as follows:
- Voucher numbers were hand-written instead of pre-numbered;
- PVs were not properly filed in sequential order; and
- Particularly in the regional offices there were no evidence of approval from the Regional managers for some of the expenditure incurred.
Implication
There is an increased risks that:
- Unauthorized payments may be made without being detected timely;
- Transactions might be misstated in the financial statements; and
- Payment vouchers and supporting documents might be presented for payment more than once.
Recommendation
- All payment vouchers should be pre-numbered and properly filed in sequential order;
- The management of the corporation should require regular checks that all PVs are accounted for; any missing PVs should be resolved promptly; and
- The PVs should be properly recorded in the cash book and approved by authorized management.
Benefit
The risk of the corporation making unauthorized payment could be mitigated.
Management’s comment
2.3 Procurement
2.3.1 Procurement of satelite uplink
Observation Grade 1
At a Board of Trustees meeting held on 18 November 2010, the Board approved the option of the corporation owing its own satellite uplink.
The purchase was to consist of the main back bone for the television costing USD 188,450, a backup system for the television channel costing USD 111,825, and other charges including freight totalling USD 97,230.
It was however noted that whilst a comparison of three quotations was considered in selecting Transtech International Limited as the consultant for the procurement exercise, a bidding process was not subsequently carried out for the actual procurement of the satellite uplink transmitter and related accessories.
It was noted that rather than select a supplier based on an internatonal tender, Transtech International Limited (the consultant), invoiced the corporation for the suppply of the equipment in their own name (Transtech International Limited) and payments were made to Transtech International Limited by the corporation.
Further more it was also noted that even though payments had been made to Transtech International Limited for a Backup Uplink Satellite and Transmitter to the sum of Le692,65,000 the equipment were not supplied nor was the money returned.
Implication
The corporation and management are clearly in breach of the Public Procurment Act 2004, and the failure of the consultant to deliver as contracted may be tantamount to fraud.
Recommendation
The entire procuement process relating to the purchase of the satellite uplink should be thoroughly investigated and corrective action taken as appropriate.
Benefit
The corporation may be able to recover some of the money spent which would otherwise may have been saved had the proper procurement procedures been followed and competitive budding carried out.
Management’s comment
2.3.2 Procurement of construction works
Observation Grade 1
From our review of the corporation’s procurement transaction, we noted that there were two construction works undertaken by the corporation during the period under review for which no evidence of contract agreement was seen for the construction work, no evidence of a minimum of three quotation from at least three bidders thereby contravening the public procurement act 2004 as stipulated in section (45) sub-section (3) which states that ‘quotation shall be requested in writing from as many bidders as practicable but from at least 3 bidders . Listed below are the details of the construction work carried out:
| Description of works |
Amount spent |
| Construction of Fence |
Le 33,393,000 |
| Construction of Minimart |
Le 35,408,000 |
It also came to our attention that during the process of the construction work, several cheque payments were made directly to staff who later made payment to the contractors/suppliers instead of the payment being made directly to the contractors/suppliers.
Implication
Management failed to comply with both the internal policy on procurement as well as the public Procurement Act 2004. Also it is completely against the norm for payment to be made to staff for subsequent payment to the contractor or supplier. Such actions could also pave the way for fraudulent activities.
Recommendation
Management should ensure internal procurement procedures and the public procurement Act 2004 policies are adhered to; and payments should be made directly to suppliers.
Benefit
The corporation would be in compliance with the respective procurement policies with the risk of fraud mitigated.
Management’s comment
2.3.3 Authorisation of purchase orders
Observation Grade 1
During our audit at SLBC, we noted that there were quite a few purchase orders for items procured during 2010. A whole bulk of the items procured during that year did not come from authorised purchase orders.
Implication
There are no standard procedures for the procurement of items at SLBC. This may lead to the purchasing of unnecessary items for the corporation as there were no authorised purchased orders to facilitate the buying process. Also, ascertaining the existence of certain expenses may be difficult as there are no purchase orders authorised by the appropriate person (s). There is also the risk of fraudulent practices.
Recommendation
The SLBC’s procurement process should be revisited and modified where appropriate, clearly indicating a sequential process of procuring items and the recommended signatories for the authorisation of purchase orders and other supporting documents
Benefit
The corporation will be able to purchase items needed for its operations easily through the appropriate procedure, and the risk of fraud will be greatly reduced.
Management’s comment
2.4 Asset management
2.4.1 Absence of title deeds
Observation Grade 1
Management is claiming ownership of some land and buildings which they believe belongs to the corporation; these include:
- The building which serves at the Head office premises located at New England Ville;
- The Leceister peak site;
- A site located at Goderich;as well as
- The regional offices
However upon request of the title deeds of these land and buildings for the purposes of review, management was not able to provide any.
Implication
Management will not be in a position to claim ownership of these land and buildings without the evidence of a proof of ownership. In addition we cannot be able to ascertain the completeness of all the property and equipment owned by the corporation when there are no supporting documents to prove the ownership.
Recommendation
We recommend management to ensure all land and buildings of the corporation are legally perfected and securely kept.
Benefit
The corporation’s assets would be securely safe guarded and the financial statements fairly stated.
Management’s comment
2.4.2 Disposal of property, plant and equipment
Observation Grade 1
In December 2010, some fixed assets (scrap vehicles) were disposed of which brought in revenue for the corporation. While vouching for the revenue on disposal of these vehicles, some issues came to our notice. A Toyota 4Runner with registration number AAG 068 among other assets disposed of during that period was stated to be disposed at Le 2,500,000 in the notes to the accounts while the sum of Le3, 000,000 was indicated in the receipt issued to the buyer. As such, the amount on the receipt does not agree with the amount in the notes to the accounts.
A vehicle valuation report wherein a Turbo Jeep with registration number ACQ 503 was valued at Le 1,500,000 was found but no other supporting documents were found and it was not included in the notes to the accounts.
A letter addressed to the Director General was seen where a Nissan Vanette was among the list of assets valued for disposal but no vehicle valuation report neither any other supporting document was found in relation to the vehicle.
In the same letter addressed to the Director General, it was mentioned that three Land Rovers with registration numbers as below, were valued.
| Vehicle Type | Registration Number |
| Land Rover | AAG 365 |
| Land Rover | AAG 366 |
| Land Rover | AAG 367 |
We, however, could not find any vehicle valuation report for any of the three land rovers.
The DG did not approve the sale of the above vehicles but two of them were later auctioned as below:
| Additional Vehicles Later Auctioned | Amount (Leones) | Name Of Buyer |
Supporting Documents |
| LAND ROVER - AAG 365 (KENEMA) | 2,500,000 | PatriciaMassaqoui |
Paying slips |
| LAND ROVER - AAG 366 (BO) | 5,000,000 | Yallah Turay |
Paying slips |
The disposal of these vehicles was not included in the corporation’s notes to the accounts.
Below is a list of the vehicles that we were not able to find third party supporting documents for:
| DATE | DESCRIPTION |
AMOUNT (Leones) |
NAME OF BUYER |
| December 2010 | FORD - ACJ 987 |
2, 500,000 |
Joseph Kaynie |
| LAND ROVER - ABR 621 |
1 000 000.00 |
Alusine Kargbo | |
| MAZDA - AAA/V 888 |
500 000.00 |
Alusine Kargbo | |
| LAND ROVER - ABD 912 |
1 500 000.00 |
Santigie Kanu | |
| VANETTE - ABF 274 |
600 000.00 |
Albert Kanu | |
| LAND ROVER - AAG 972 |
1 000 000.00 |
Sajor Bah |
Management had not been accumulating depreciation on fixed assets at no point in time.
Implication
There is a high risk of revenue being misstated in the financial statements as there are no supporting documents for the transactions relating to the disposal of these scrap vehicles. Therefore, ascertaining the existence and accuracy of the net realised value on disposal will be very difficult; and the corporation’s profitability will be adversely affected.
Recommendation
Automated accounting software should be provided in order to ascertain that depreciation on fixed asset is accumulated from the date of purchase to the time of disposal. An asset register should be made available for recording every asset obtained and regular asset valuation should be carried out. Also, proper documentation should always be done for supporting documents.
Benefit
Management will be in a position to effectively and efficiently manage the corporation’s property, plant and equipment, also when there are adequate supporting documents for assets disposed off, the risk of misstating income received from disposal will be mitigated.
2.4.3 Maintenance of fixed asset register
Observation Grade 1
A fixed asset register is used to record details of all the physical assets owned by the organization, and may include details such as the cost of the asset, date of purchase, location, description, economic useful life, the location of the asset, and the asset coding. We observed that management did not maintain a fixed asset register during the year.
Implication
Without an asset register, management may not be able to keep track of all the assets of the corporation, which may result in the assets being stolen or moved without management knowledge or consent
Recommendation
Management should develop and maintain an asset register which should be updated as and when the corporation acquires and disposes of an asset.
Benefit
Theft and misappropriation of the corporation’s assets will be mitigated.
Management’s comment
2.4.4 Property, plant and equipments were not coded
Observation Grade 2
During our physical verification exercise we observed that both the assets taken over were not appropriately tagged or coded for identification purposes, and assets received from UNDP amounting to Le 322,250,000 during the year were not tagged.
Implication
If the assets are not tagged or coded, it would be difficult to physically verify the assets and reconcile the physical assets verified with the assets listed in the asset register. The code or tag is the identifying factor that links the physical asset to the description entered in the register. Therefore the assets could still be stolen, moved or exchanged without management’s knowledge.
Recommendation
Management should ensure that all the assets owned by the corporation whether purchased or received from donors should be tagged with an asset code for identification purposes.
Benefit
Management will be able to adequately monitor its assets and reduce the risk of theft and misappropriation of assets.
Management’s comment
2.4.5 Adequacy of insurance cover
Observation Grade 2
During the audit, we observed that the corporation did not insure its entire property, plant and equipment.
Implication
There is a risk that the corporation will not adequately recover the value of its property, plant and equipment if there are any unforeseen occurrences.
Recommendation
We recommend that the corporation should adequately insure its property, plant and equipment.
Benefit
The corporation will be adequately compensated in the event of a loss
Management’s comment
2.4.6 Incorrect disposal procedure
Observation Grade 2
The corporation’s procedure for the disposal of fixed assets was not followed. A bidding process was to be carried out after the procurement meeting in order to determine the final buyers of the scrap vehicles. The parties involved did not do this, and receipts from the disposal of these vehicles were not paid directly to the accounts department.
Implication
There is inconsistency in the procedure for disposal of assets. This poses high risk of fraud. Also, the corporation may not be able to realise much proceeds from the disposal of fixed assets.
Recommendation
Management should ensure that the corporation’s procedure for the disposal of fixed asset are adhered to by making sure that a bidding process is carried out in order to determine the buyers of the fixed assets disposed off, also monies received from the disposal of these fixed assets should be paid directly to the accounts department.
Benefit
Management will be able to realise an appreciable proceeds from the disposal of its fixed assets.
Managements’ comment
2.5 Cash management
2.5.1 Over reliance on overdraft facility
Observation Grade 1
The corporation obtained an overdraft facility to the tune of Le 300 million on the 21st of October 2010 and a further Le 500 million on the 24th December 2010.Subsequent after year end a further request was made to increase the limit to Le 1 billion on 26th January 2011 and Le 1.5 billion on 4th March 2011 respectively.
We believe that the continuing reliance on the use of overdraft is due firstly to the inability of the corporation to pay off the initial overdraft and secondly the continued need to service the growing expenditures of the corporation.
The growth in expenditure which we believe necessitated the need for an overdraft facility was mainly as a result of the increase in the staff costs directly borne and paid by the corporation.
In October 2010 the Board of Directors employed some additional staff who were paid directly by the corporation and were not on the UNDP payroll. We also observed that the Board of Directors, in addition to them receiving sitting fees, were also; paid monthly salaries (which is very unusual as they are not executive directors). Total additional salary costs were approximately Le400 million per month. We also noted that the Board of Directors were paid sitting fees even if they did not attend the Board meeting.
Implication
It is obvious that the corporation has bitten more than it can chew, and the situation would continue to get worse as sufficient funds are not being generated to maintain the corporation’s operations at that level. Eventually the banks may stop financing the ever increasing overdraft, and if staff salaries are not paid it might result in a chaotic situation.
Recommendation
Management should embark on drastic cash/liquidity management by streamlining its expenditure and ensure that only those expenditures which are necessary and relevant to the running of the corporation operations are undertaken. Furthermore management should endeavor to develop and create products that it can market to the public from which it can generate adequate revenue which can be used to meet its day to day to running costs.
The corporation should also clearly determine its staffing requirements, and strive to raise the required revenue, whether from operations or through subvention or from donors;
Overdraft should only be taken as a short term, stop gap measure to smooth the timing of the corporation’s cash flows; and should be paid off as soon as cash is available. But the corporation should definitely not seek to run its operations on overdraft; as it would only worsen its financial problems.
Benefit
Management will be able to improve its liquidity position and have funds available which it can use to meet the corporation obligation.
Management’s comment
2.5.2 Absence of bank reconciliation statements
Observation Grade 1
No bank reconciliations were prepared for the year under review.
Implication
Failure to prepare bank reconciliation statements increases the risk of errors and fraud going undetected in the cash book and the reported bank balances could have been materially misstated.
Recommendation
We recommend that monthly bank reconciliation be prepared for each account maintained by the Corporation and should be independently reviewed and signed off by a senior person other than the preparer.
Benefit
This will reduce the risk of errors, omissions, fraudulent transactions and misstatement of the bank balances.
Management’s comment
2.5.3 Lack of appropriate secure safe for cash in hand
Observation Grade 1
From our visit of the regional offices, we noted that cash payments were usually received from customers and were kept in the custody of the account officers or the station managers, usually in drawers or the bags of these officers who sometimes have to take the monies home.
It was also noted that the cash received from customers were subsequently used (without banking it) to pay for office expenses.
Implication
Failure by management to ensure that monies generated by the corporation are kept in an adequately secured environment increases the risk of theft and misappropriation of the Corporation’s funds. Also the practice of not banking the cash received, and spending directly from the cash in hand increases the risk of misappropriation and fraud.
Recommendation
Management should provide a metal safe at each of the regional offices,under dual control to adequately secure the corporation’s funds. Also all cash received should be banked intact as soon as possible, and subsequent payment for expenditure should be made by cheque or after withdrawing money from the bank.
Benefit
The risk of theft and misappropriation of the corporation’s assets will be mitigated.
Management’s comment
2.6 General Administration
2.6.1 The change from Sierra Leone Broadcasting Service to Sierra Leone Broadcasting Corporation (SLBC)
Observation Grade 1
Whilst we recognized that efforts were made at effecting a smooth transition from SLBS to SLBC, which included the approval of the SLBC Act, and the settlement of staff benefits relating to SLBS and the appointment of a Board of Director amongst other things, the transition was and still is besieged by a number of issues. These include the following:
Determining the actual land and property of the corporation such as whether Leicester Peak is owned by the corporation, as the corporation was unable to provide any title deeds pertaining to their alleged properties.
Centralizing all reporting including the accounting function. It was noted that regional stations did not send any returns to the head office for the entire period in respect of income earned by them and expenses incurred during the year. It appears that the regional stations continued as self accounting units, rather than reporting all income generated from its operations and seeking approval for expenses to be undertaken;
Also having all expenditure above Le1,000,000 to be approved by the Chairman and Board of Directors, which effectively turned the directors into executive directors as they became involved in the day to day running of the corporation, a function which should be the responsibility of the Director General and his management team.
The staffing of the corporation continues to be an issue; as virtually all of the staff were on a one year contract which has even expired, and the corporation based on the reported revenues was unable to meet the salary cost of the staff.
Implication
All of these issues have besieged the transition process, and have undermined the effectiveness of the management team in assuming effective control of its presumed assets, effective control and accountability of the operation of the corporation and has created a divided and depressed work force.
Recommendation
All title deeds pertaining to all land and properties owned by the corporation should be passed on to the corporation.
The regional stations should send a monthly statement of all income and expense; and approval limits should; be set for the approval and payment of expenses of the regional stations.
The staffing should be promptly resolved to restore staff moral, and the involvement of the Board of Directors should be limited to addressing corporate governance issues.
Benefit
The corporation would be in a position to correctly report on all of its assets. There would be better control and supervision over the regional stations. Staff moral would improve and management would be given a free hand to work.
Management’s comment
2.6.2 Staff acting as third parties/payees (receiving cheques on behalf of third parties)
Observation Grade 1
We observed that cheques payments for third party contracts were issued in the name of the under listed employees of the corporation instead of the contractor or suppliers.
| Date (2010) | Expense Items paid for | Contractors/Supplier
(third parties) |
Staff | Amount (Le) |
| 3 November | Mini Mart | Workmanship | Alpha Turay |
800,000 |
| 11 October | Fence workmanship | Unavailable | Alpha Turay |
1,995,000 |
| 30 September | Top-up | Unavailable | Bamidele Bailey |
1,063,800 |
| 27 January | Amplifier | Unavailable | Thomas Bernett |
3,190,000 |
| 26 April | Transformer, Capacitors and Bridge Rectifier | Unavailable | Thomas Bernett |
400,000 |
| 24 Nov | Block Making | unavailable | Thomas Bernett |
848,000 |
| 30 April | Laptop computers, Fluorescent tubes and Choke | Raju’s Electricals | James S.Kargbo |
3,929,000 |
| 24 Nov. | Fencing | Claire Ent. | Mohamed M.Koroma |
7,000,000 |
| 9 Nov. | Mini Mart(floor tile) | Unavailable | Mohamed M.Koroma |
450,000 |
| 17 Nov. | Mini Mart(sanderete Blocks) | Unavailable | Mohamed M.Koroma |
3,150,000 |
| 17 Nov | Mini Mart(Guard Bars) | Unavailable | Mohamed M.Koroma |
Implication
As a result the corporation’s funds could be misappropriated by the employee and the corporation would still be liable to the contractors or suppliers.
Recommendation
Management should ensure all cheques are issued in the name of suppliers or contractors and not employees of the corporation.
Benefit
The corporations fund will be appropriately accounted for.
Management’s comment
2.6.3 Inadequate support for expense transactions
Observation Grade 1
We were not provided with supporting documents to substantiate expenses amounting to Le 273 million. Accordingly, in the absence of adequate supporting documents, we were unable to ascertain the completeness and accuracy of expenses.
Details of unsupported expenses are listed below:
| Date (2010) | Expense item | Suppliers(third parties) | Amount (Le) |
| 7 October | U Sabi Dance | Bamidele Bailey(Staff) |
25,000,000 |
| 29 October | U Sabi Dance | B. Bailey |
40,100,000 |
| 24 December | U Sabi Dance | B. Bailey |
91,335,000 |
| April, June, July and August | Cultural Show | Fatmata Jalloh |
11,986,000 |
| 18 March | Newspapers | Claire Enterprises |
850,000 |
| 26 April | Fuel and oil | Unavailable |
639,000 |
| 9 July | Fuel and oil | Unavailable |
930,000 |
| 18 March | Stationery | Unavailable |
500,000 |
| 9 July | Top-up cards | unavailable |
1,890,000 |
| 26 July | Top-up cards | unavailable |
790,000 |
| 19 Aug. | Top-up cards | unavalable |
864,000 |
| April | Per Diem and local travelling | unavalable |
2,293,500 |
| 4 June | Per Diem and local travelling | unavailable |
130,000 |
| 9 Aug. | Per Diem and local travelling | unavailable |
907,000 |
| Oct. | Per Diem and localTravelling | unavailable |
7,931,090 |
| 11 October | Professional fees | M.G.Mansaray |
1,500,000 |
| 10 November | Professional fees | David Bertin |
6,000,000 |
| April | Radio and TVPrograms | unavailable |
2,400,000 |
| May | Motor Vehicle Licensing | unavailable |
1,830,000 |
| September | M.V.Licensing | Unavailable |
420,000 |
| October | M.V.Licensing | Unavailable |
2,400,000 |
| May | M.V.Insuramce | Unavailable |
6,053,000 |
| February | Air Ticket | Unavailable |
13,893,025 |
| April | Air Ticket | unavailable |
7,720,000 |
| November | Grates |
4,000,000 |
|
| November | ID Cards |
1,889,175 |
|
| February | Electricity Bill | unavailable |
10,000,000 |
| December | Bank Charges | Transect International* |
13,332,000 |
| December | Construction of Satellite Base | Civil Works Construction |
12,000,000 |
| January | Consultancy Fee | Africa Development Agency |
3,000,000 |
| February | Water Bill | unavailable |
1,000,000 |
| Total |
273,582,790 |
Implication
The absence of adequate supporting documents creates an impression of doubt over the genuity of the purported transactions.
Recommendation
All documents pertaining to the authorization, receipt of goods on services and payment of expenditure should be retained. This would help to ensure that expenses are correctly recorded and properly accounted for.
Benefit
Expenses would be fairly stated and the Corporation’s funds would be adequately managed.
Management’s comment
2.6.4 Supply of fuel
Observation Grade 1
We observed that the quantity of fuel approved for on a weekly basis did not agree with the quantities recorded as supplied to the various recipients. The chit shows different number of gallons supplied to SLBC and the log book shows less number of gallons supplied to recipients’.
Implication
The weekly discrepancies could be an indication of fraud on one hand and a breach of control on the other hand. As far as the records are concerned, the total gallons of fuel received where not supplied nor was there an evidence to show that it was returned to the corporation.
Recommendation
We recommend that the total gallons requested for and supplied to the Corporation must be dished out and all recipients must sign to show proof of receipt.
Benefit
The corporation will be able to know who has been supplied, who hasn’t and how many gallons of fuel remain (if any).
Management’s comment
2.6.5 Absence of breakdown schedule for significant accounts
Observation Grade 1
We were not provided with the detail listing of the following transactions to enable as ascertain the completeness and accuracy of the transactions.
| Expense transactions |
Amount (Le) |
| Refurbishment of Office Building |
96,066,700 |
| Other Payments |
61,889,950 |
| Repairs of Vehicles and Equipment |
132,293,175 |
| Total |
290,249,825 |
Implication
In the absence of detail listing of transactions, management would not be able to ascertain the completeness of the transaction which could pave way for fraudulent activities.
Recommendation
Management should ensure expense line transactions are adequately listed for transparency.
Benefit
The corporations books would be fairly stated.
Management’s comment
2.6.6 Unrecorded transactions
Observation Grade 2
During our review we observed that the under listed transactions were not recorded in the corporation’s books even though proforma invoices and cash receipts were attached to the monthly payment files.
| Date (2010) | Expense item |
Amount(Le) |
| 10 May | Breakfast & Lunch |
127,500 |
| 30 September | Breakfast & Lunch |
410,000 |
| January | Fuel & Oil |
614,000 |
| March | Fuel & Oil |
257,500 |
| May | Fuel and Oil |
1,086,250 |
| June | Fuel and Oil |
740,000 |
| November | Fuel and Oil |
1,395,000 |
| December | Fuel and Oil |
2,583,500 |
| November | Stationery |
1,258,750 |
| November | Stationery |
1,258,750 |
| Total |
9,731,250 |
Implication
In the absence of accurate recording of the corporation’s transactions we will not be able to ascertain the accuracy and completeness of the corporation’sbooks.
Recommendation
Management should ensure all expense transactions are adequately recorded and reviewed by a superior.
Benefit
The corporation’s books would be fairly stated.
Management’s comment
2.6.7 Omission of taken over transactions
Observation Grade 2
Assets taken over from the Sierra Leone Broadcasting Services as at vesting day, 31 March 2010 amounting to Le 9.89 billion referred to as capital introduced were excluded from the books of the corporation. The assets taken over comprised the under listed transactions;
| Type of asset |
Amount Le |
| Fixed assets Taken over from SLBS |
10,344,638,000 |
| Accumulated depreciation on assets |
(470,056,000) |
| Cash and cash equivalent |
20,165,000 |
| Total |
9,894,747,000 |
Implication
The financial statement would be understated considering the value of assets excluded which could also pave way for misappropriation of the corporations assets.
Recommendation
Assets taken over should be incorporated in the corporation’s books and the assets adequately managed.
Benefit
The corporation’s assets would be safe guarded and the financial statements fairly stated.
Management’s comment
2.7 Information systems
2.7.1 Introduction of accounting software
Observation Grade 2
The corporation has been using excel spreadsheets and manual cash book to record daily transactions and as such no accounting software has been used, even though the corporation volume of transactions that requires processing continues to increase.
Implication
Excel spreadsheets and manual cashbook are adequate only for a situation where the corporation transactions are minimal, but when the volume of transactions increase it will be difficult for the corporation to compile its transactions using Excel spreadsheets and manual cash book.
Recommendation
The corporation should consider obtaining a simple accounting software to process its transactions.
Benefit
This will help ensure the integrity of the corporation data and the accurate processing of its transactions.
Management’s comment
2.7.2 Back up of accounting records
Observation Grade 2
The corporation has some of its transactions that are inputted in excel spreadsheet and there was an instance whereby daily revenue transactions inputted for the month of October to December 2010 were permanently lost due to a computer breakdown .We noted that no back up was made for the corporation’s accounting records that are electronic in nature. Moreover, back up policies have not been included as part of the corporation policies.
Implication
If the corporation doesn’t back-up its electronic data, operational and accounting information may be damaged or permanently destroyed or lost in an accident as in the case of the daily revenue transactions inputted in excel from October to December 2010. Valuable time will be required from personnel to re-input and organise the data in the system which would have been used alternatively in achieving the corporation’s objective.
Recommendation
The various core units/departments of the corporation should prepare regular back-ups of operational and financial records in diskettes, CDs or removable hard drives. Back-ups should be stored securely away from the original computer or server.
Benefit
In the event of a breakdown in the corporation system management will always have data which it can fall back on that is stored in a separate and secured location.
Management’s comment
