eBusiness Weekly
Business Writer
Public entities, chiefly line ministries, State enterprises and parastatals continue defying the Auditor General (AG), in violation of the Public Finance Management Act (PFMA), as it emerged nearly half of accounting irregularities raised in the 2020 audit were once again not addressed in 2021.
The government continues to lose billions of public funds due to weak implementation of the PFMA while potential widespread acts of corruption and mismanagement of resources accentuate financial leakages at state entities and local authorities.
For 2021, a total of 76 financial statements comprising appropriation accounts, finance and revenue statements and fund accounts were audited, and of these only 12 had no issues.
The AG’s office is, in terms of Section 309 (2) of the Constitution of Zimbabwe Amendment (No. 20) Act 2013, and Section 10 of the Audit Office Act [Chapter 22:18], required to audit the accounts, financial systems and financial management of all departments, institutions and agencies of government, provincial and metropolitan councils and local authorities.
At the request of the government, the AG is also empowered to carry out special audits of the accounts of any statutory body or government–controlled entity to ensure the receipt and disbursement of public monies is done in accordance with proper authority and correctly accounted for and that all reasonable precaution is taken to safeguard State property and resources.
The AG is also obligated to carry out value for money audits, which entail the examination into the economy, efficiency and effectiveness with which those entrusted with financial and material resources have utilised them in carrying out their mandates.
The 2021 audit (AGs latest audit report) covered financial, compliance and public service delivery aspects on governance issues, revenue collection and debt management, compensation of employees, procurement of goods and services, management of assets, and gender policies and supporting structures.
Guided by the Government thrust on service delivery as enunciated in the National Development Strategy (NDS 1 2020-25), the audits also included evaluation of the implementation of planned programmes by the various entities to ensure the achievement of the national strategies and national vision.
Auditor General, Mildred Chiri, said key issues raised in the report were mainly on ineffective budget utilisation and control, unreconciled variances between complementary accounting records and ineffective management of public resources.
Irregularities were also noted on payments made from exchequer accounts, ineffective debt recovery systems, absence of supporting documents, non-delivery of procured assets, inadequate accounting records and implementation of programmes.
“The efforts of the ministries which have taken steps to address the audit findings highlighted in the 2020 Annual Audit Report of the Auditor-General, are appreciated.
“Out of 150 audit findings that were raised, 58 (39 percent) were fully addressed, 18 (12 percent) were partly addressed and 74 (49 percent) were not addressed. Accounting Officers are urged to fully address the outstanding audit findings,” Chiri said.
The AG said there were instances where investments were made without authorisation from the Treasury and the investments were not disclosed as public financial assets.
For instance, a total amount of $7,731 million taken from Funds was used by some ministries to finance their Appropriation activities without obtaining Treasury authority.
This deprived the funds from undertaking planned activities. There was no evidence produced to show that the Funds had been reimbursed.
Payments amounting to US$26, 714 million, EUR 100 809 and ZAR 385 million were made from Sub-Exchequer Accounts, which are also revenue receiving accounts.
“The respective supporting documents for the payments were not availed. In terms of government accounting, all expenditure is supposed to be paid from the Paymaster General’s Account,” Chiri said.
On debt recovery, Chiri said there was an increase in the non-collection of monies due to the Government by the Fund Accounts. The fund managers did not apply effective strategies to collect amounts due to fund accounts.
Some ministries did not avail for audit inspection documents relating to payments amounting to $84,6 million made to various suppliers of goods and services.
The AG said regulations require transactions to be accurate, complete and supported with adequate documentation.
Therefore, the audit could not ascertain the validity of these payments. Chiri said the unavailability of supporting documents leads to lack of transparency in the usage of public resources.
Further, about $320 million was paid in 2020 for procurement of assets by some ministries. The full payment was made in advance as a precondition of the contracts.
“However, at the time of concluding the audit, the suppliers had not delivered the assets. Payments in advance may result in loss of public funds in the event that the supplier fails to deliver.
“Public service delivery is compromised if assets procured are not delivered on time,” she said.
There also were cases where Ministries were refunded by suppliers who had failed to deliver. However, the refunds could not procure the same quantities due to inflation.
It was also established that some departments and funds did not record some assets in the public finance management statements, contrary to legal requirements.
“Assets may be misappropriated or converted to personal use if they are not recorded promptly or if accounting procedures for assets are not followed,” Chiri said.
An evaluation of programme implementation revealed an improvement on the achievement of set targets. This was attributed to the adoption of programme-based budgeting coupled with monitoring and evaluation mechanisms.
Implementation of some of the programs was curtailed by the Covid-19 pandemic, which had a significant negative effect, Chriri noted in her latest audit findings.
However, there is still need to improve on documentation of performance information, as some entities could not avail non-financial information which indicates planned and achieved outputs and outcomes and record of budget committee meetings for the relevant year.
