News / National
Ministry in financial mess
20 Mar 2014 at 09:47hrs | Views
The Comptroller and Auditor General's office has unearthed glaring financial irregularities at the ministry of Transport and Infrastructural Development, among them, the failure in two consecutive years to disclose $45 million public financial assets disbursed to Air Zimbabwe, Zimbabwe National Road Administration, Civil Aviation Authority of Zimbabwe, National Railways of Zimbabwe and TelOne.
In a damning 2011 report before the parliamentary public accounts committee, the Comptroller and Auditor General, Mildred Chiri, revealed weak accounting procedures in the ministry, exposing "state funds to misappropriation". The audit was done when the ministry was headed by minister Nicholas Goche.
"The public finance management system operated fairly well throughout the 2011 financial year with exception with the Materials Management Module which did not function consistently. The ministry procured goods and services outside the system," read the report.
"In addition, the ministry used internally generated purchase orders which did not have any security features. No adequate controls were put in place to ensure that all processed transactions were fully uploaded in the system."
It said the use of internally generated purchase orders exposed state funds to abuse.
Chiri recommended the use of the public finance management system to ensure accuracy and completeness of information or in its absence, the use of a manual system with adequate controls to protect state funds.
In the report, the ministry was also accused of entering into "unsigned loan agreements" worth millions of dollars with parastatals, including Air Zimbabwe.
"During the year (2011), the ministry advanced Air Zimbabwe Holdings (Pvt) Ltd a loan amounting to $5 000 000. However, the loan agreement availed for audit was not signed by the contracting parties to confirm the obligations. The Ministry did not make an effort to cause the loan agreement to be signed," read the report. "Audit noted that a loan of $15 000 000 was advanced to the National Railways of Zimbabwe (NRZ) and another loan of $6 000 000 was made to the Civil Aviation Authority of Zimbabwe (CAA) by the ministry of Finance (then under Tendai Biti). However the ministry (of transport) failed to avail for audit the loan agreements to substantiate both loans. I could not ascertain the terms of the loans."
Chiri said the ministry of transport had since 2010 failed to disclose financial assets valued at $45 million relating to funds allocated to parastatals.
"In my 2010 report, l raised concern over the ministry's failure to disclose Public Financial Assets amounting to $45 380 000 relating to disbursements made to Zimbabwe National Road Administration (ZINARA), TelOne, NRZ and CAA. The same amount was not disclosed in the statement of Public Financial Asset submitted for audit, thus reflecting the incompleteness and inaccuracy of information disclosed," Chiri averred.
"Failure to endorse signatures on loan agreement documents compromises the authenticity of the transaction and borrower would not be legally bound by such contract (and) Ministry may not be able to assess the terms and conditions on which the loans were made to the parastatals."
The Comptroller and Auditor General said a treasury instruction 0806, that sanctions accounting officers to authorise a saving under any item within a subhead or between sub-heads, had also been flouted.
"Contrary to the above provisions, the ministry procured goods and services from any item or sub-heads with funds without following proper budgetary procedures. There were instances of misallocations, across all ministry sub-votes. From a sample expenditure of $4 795 660, misallocations amounting to $223 329 were noted. No satisfactory explanation for such actions was provided," the report added.
Chiri in the report said as was the case in 2010, no monthly reconciliations of the sub-Exchequer account were prepared to check whether all moneys collected were properly receipted and banked into the ministry's sub-Exchequer account.
"As a result, the statement of receipts and disbursements that shows all the receipts collected and deposits made to the bank by the ministry was not properly done.
"The statement of receipts and disbursements disclosed a figure of $18 329 985 while the statement of revenue received disclosed a different figure of $18 711 920.Total receipts disclosed on the statement for receipts and disbursements should have been more than the figure on the revenue received return as it is made up of all receipts issued by the Ministry. I could not place reliance on the figures disclosed on the two statements because of the inaccuracies noted," auditor general said.
In a damning 2011 report before the parliamentary public accounts committee, the Comptroller and Auditor General, Mildred Chiri, revealed weak accounting procedures in the ministry, exposing "state funds to misappropriation". The audit was done when the ministry was headed by minister Nicholas Goche.
"The public finance management system operated fairly well throughout the 2011 financial year with exception with the Materials Management Module which did not function consistently. The ministry procured goods and services outside the system," read the report.
"In addition, the ministry used internally generated purchase orders which did not have any security features. No adequate controls were put in place to ensure that all processed transactions were fully uploaded in the system."
It said the use of internally generated purchase orders exposed state funds to abuse.
Chiri recommended the use of the public finance management system to ensure accuracy and completeness of information or in its absence, the use of a manual system with adequate controls to protect state funds.
In the report, the ministry was also accused of entering into "unsigned loan agreements" worth millions of dollars with parastatals, including Air Zimbabwe.
"During the year (2011), the ministry advanced Air Zimbabwe Holdings (Pvt) Ltd a loan amounting to $5 000 000. However, the loan agreement availed for audit was not signed by the contracting parties to confirm the obligations. The Ministry did not make an effort to cause the loan agreement to be signed," read the report. "Audit noted that a loan of $15 000 000 was advanced to the National Railways of Zimbabwe (NRZ) and another loan of $6 000 000 was made to the Civil Aviation Authority of Zimbabwe (CAA) by the ministry of Finance (then under Tendai Biti). However the ministry (of transport) failed to avail for audit the loan agreements to substantiate both loans. I could not ascertain the terms of the loans."
"In my 2010 report, l raised concern over the ministry's failure to disclose Public Financial Assets amounting to $45 380 000 relating to disbursements made to Zimbabwe National Road Administration (ZINARA), TelOne, NRZ and CAA. The same amount was not disclosed in the statement of Public Financial Asset submitted for audit, thus reflecting the incompleteness and inaccuracy of information disclosed," Chiri averred.
"Failure to endorse signatures on loan agreement documents compromises the authenticity of the transaction and borrower would not be legally bound by such contract (and) Ministry may not be able to assess the terms and conditions on which the loans were made to the parastatals."
The Comptroller and Auditor General said a treasury instruction 0806, that sanctions accounting officers to authorise a saving under any item within a subhead or between sub-heads, had also been flouted.
"Contrary to the above provisions, the ministry procured goods and services from any item or sub-heads with funds without following proper budgetary procedures. There were instances of misallocations, across all ministry sub-votes. From a sample expenditure of $4 795 660, misallocations amounting to $223 329 were noted. No satisfactory explanation for such actions was provided," the report added.
Chiri in the report said as was the case in 2010, no monthly reconciliations of the sub-Exchequer account were prepared to check whether all moneys collected were properly receipted and banked into the ministry's sub-Exchequer account.
"As a result, the statement of receipts and disbursements that shows all the receipts collected and deposits made to the bank by the ministry was not properly done.
"The statement of receipts and disbursements disclosed a figure of $18 329 985 while the statement of revenue received disclosed a different figure of $18 711 920.Total receipts disclosed on the statement for receipts and disbursements should have been more than the figure on the revenue received return as it is made up of all receipts issued by the Ministry. I could not place reliance on the figures disclosed on the two statements because of the inaccuracies noted," auditor general said.
Source - zimmail
