The Auditor General, yesterday, submitted his 2014/15 report to Parliament showing a slight increase in clean audits by some entities but with a worrying slowdown in the implementation of his previous recommendations.
Obadia Biraro emphasised that structural problems, failure on corporate responsibilities, gaps in human resources and skills, staff attitudes and poor accounting management were persisting challenges leading to financial errors by public enterprises which result in huge losses.
Biraro said in the last audit his office again pinpointed Government Business Enterprises (GBEs) and Boards as public enterprises that failed to improve accountability and enhance value for money.
Among the 157 audited public entities (131 were audited last year), only 50 per cent recorded a clean audit opinion, having relatively improved from last year’s 36 per cent, although he dismissed excuses to justify failure to attain 100 per cent clean audit reports.
However, unlike last year where his recommendations were implemented at a rate of 60 percent, Biraro was repetitively asked to provide constructive opinions over continuous mismanagement.
“In general, we can confidently say that transactions involving Rwf12.7 billion lacked supporting documents, Rwf3.8 billion had incomplete financial documents while Rwf1.7 billion can be classified as wasteful expenditure,” he explained.
“In addition, some Rwf443 million was lost in unnecessary salary payments while Rwf173 million was spent on fraudulent transactions done mostly at the former Energy, Water and Sanitation Authority (EWSA), Rwanda Biomedical Centre (RBC), University of Rwanda, and districts.”
But Biraro said, despite notable concerns, the coverage rate in the public financial management with regard to the allocated budget reached 82 percent while the recovery of fraudulent government money remains, low at just 2 per cent.
The annual report which normally assesses public institutions with the lion’s share of the budget allocations, show that parastatels such as Rwanda Revenue Authority (RRA), Rwanda Social Security Board (RSSB), Rwanda Biomedical Centre (RBC), Rwanda Education Board (REB), again cited as the biggest spenders and wasters.
The AG gave an example of RSSB, which, among other financial flaws, kept idle assets worth around Rwf970 million, mostly relating to poor returns from constructed rental offices, while the Rwanda Biomedical Centre Incinerator in Mageragere lay idle after costing the government Rwf214 million.
Biraro further stated that a number of school laboratories and the celebrated One-Laptop-Per-Child project in some districts were still dysfunctional after the government had spent more than Rwf400 million of tax-payers’ money for their operations.
While the auditors could not carry out an extensive audit on the former EWSA after the latter failed to produce its financial statements, Biraro expressed concern over possible mismanagement in the institution, saying there was an incredible imbalance between the company’s cost of investments and revenues.
“It has become almost like a principle for EWSA to operate at a loss, but as soon as they provide a financial report, our team will embark on the audit, although we realised a lot of money is spent on thermal energy, yet we think the focus should be more on hydro power,” he said, expressing skepticism that the sector’s effectiveness in accounting management and sustainability will be attained soon.
On Rwanda Revenue Authority, Biraro said his office could not provide a true and fair opinion adding that the latter’s procurement of a $6 million (around Rwf4.6 billion) IT system did not help the tax body to salvage a huge gap in its financial management.
“There are still issues of reconciliation in their books of accounts, tax audits, declaration and payment of arrears, where we found quite a good number of dormant taxpayers. All these diminish the authority’s integrity in revenue collections,” he said.
However, Biraro commended the tax body for efforts put in the implementation of his office’s previous recommendations.
There has been an improvement, he said, but there are still areas that need improvement such as taxpayer register, and use of IT facilities in declaration and tax payment processes.
He also said that there was need to address tax audit related anomalies.
Other organisations put on spot include RBC, over expired drugs valued at least Rwf3 billion on top of keeping anonymous debts and unsupported financial documents, and the Rwanda Education Board whose part of allocated budget for the construction of classrooms was diverted into other activities.
Reacting to the report, which will be scrutinised further by the Public Accounts Committee (PAC) over the next few weeks, legislators expressed concerns on the continuous public finance mismanagement, saying the Auditor General should provide practical recommendations that can allow the government to address the financial malaise in a sustainable manner.
“I don’t think we can comfortably say that there are notable improvements, when we still have institutions that do not implement your recommendations. There is no vivid change with regard to the issues which were raised in the last report,” said Juvenal Nkusi, chairperson of PAC.
So far, total government expenditure in the report by the end of June 30 2015 amounted to Rwf1.8 trillion, compared to Rwf1.7 trillion for the previous financial year.