AG Report: More public agencies get clean audits

There has been a slight increase in the number of institutions that obtained clean audits, up from 28 per cent the previous reporting year, a new report by the Auditor-General shows. The report was tabled before a joint parliamentary session yesterday by Auditor-General Obadiah Biraro, as he presented the findings on how the taxpayer’s money was spent in the fiscal year 2012/13. “Generally, there has been an improvement on how public funds are managed. Across the board, 32 per cent of all audit reports (45 reports) obtained unqualified (clean) audit opinion, compared to 28 per cent in the previous report,” Biraro said. However, we had a “disclaimer opinion” after auditing EWSA [Energy Water and Sanitation Authority] because of the gross errors that we discovered,” the AG added. EWSA was not audited last year. An auditor’s disclaimer of opinion means that there is no conclusive opinion by an auditor of the audited entity, mainly due to extreme cases of poor book keeping, among other reasons. Despite the number of entities with a clean bill going up, issues such as wasteful spending, fraud, and unjustified expenditures cost the taxpayer billions of francs. In the latest report, expenses that lacked official justification and wasteful expenditures amount to Rwf1 billion in the financial year 2012/13, compared to about Rwf850 million in the previous report. The report also indicates that government ministries and parastatals spent at least Rwf2 billion without supporting documents during year covered by the report. While several entities improved in their performance regarding book keeping and management of taxpayers’ money but the Auditor General’s report indicates that there are some government business enterprises, government boards and universities,that appeared on the declining trend. Particularly, the Auditor-General’s report indicates that continued instances of non-compliance with existing tax and social security laws and regulations which resulted in penalties and interest-runs to Rwanda Revenue Authority and Rwanda Social Security Board, which the errors could have been avoided. “A new category of wasteful expenditure included penalties charged by suppliers for delayed settlement of invoices and payment for services, which should ordinarily be done by staff in public entities,” reads the report. Unsupported expenditure By law, public entities are required to maintain appropriate documentation necessary to support all payments made using public resources. However, according to the Auditor-General, Chief Budget Managers in 22 public entities did not provide necessary documents to account for Rwf 2 billion received from government coffers. The AG report indicates that about Rwf1.3 billion had partial supporting documents, while about Rwf742 million spent had no support documents. “Most of the unsupported expenditure was incurred by the National University of Rwanda (now University of Rwanda) amounting to Rwf863 million; EWSA has no supporting documents for expenditure of Rwf455 million; Gatsibo District with Rwf204 million; the City of Kigali with Rwf141 million; and Rwanda Cooperative Agency had no papers for the expenditures worth Rwf133 million,” reads the AG report. During the audit, the AG’s office uncovered abuse of taxpayers’ money through unauthorised staff benefits and staff advances. According to the report, there are still cases where public entities granted their staff additional perks like communication, transport and overtime allowances without appropriate approval. A total of Rwf 145 million was spent on these benefits during the year 2012/2013 compared to Rwf86 million of the previous year. EWSA The AG’s report has a special section on EWSA that exposes poor book keeping. The auditors were not provided with books of account (general ledger) during the audit period to support balances in financial statements. “Management (of EWSA) had invested $1.1 million (about Rwf750 million) on acquisition and installation of Oracle system, but the system, expected to have been fully operational by May 2010, had not been working, even at the time of audit in August 2013 and was the main reason for failure to prepare financial statements,” reads the report. The report adds that lack of regular reconciliation information in different departments resulted into misappropriation of cash collections amounting to Rwf115 million for electricity sales to a cash power dealer at Karongi branch and this had not been recovered by the time of audit in August 2013. “Stock balances of Rwf15 billion reported in financial statements was higher than the value of Rwf13 billion for stock physically counted by EWSA as of June 30, 2012. No reconciliation or response was prepared to explain the stock shortfall, hence the risk of misappropriated or stolen stock items,” the AG report says. A total of 40,108 water customers in the EWSA database are not billed by the c commercial department. Fifty-two per cent of these unbilled customers are attributed to 7 branches. Fourteen million cubic litres of water produced by EWSA (42.38 per cent) worth Rwf10. 4 billion was not billed, says the report. Fraud The Auditor General reported to Parliament that cases of fraud are increasing compared to the previous years. A total of Rwf1 billion reported to have been lost in fraudulent activities had not been recovered by the time of audits this year. This unrecovered balance includes amounts for fraud cases identified during the audits, and outstanding recoveries from previously reported fraud cases. We were concerned with the rate at which this keeps increasing,” said the AG. The AG also told lawmakers that there are some budget agencies that acquired assets and other equipment but have not put them to use for long. Cases of idle equipment and materials worth Rwf1.1 billion were noted in seven public entities, alongside those highlighted in the health sector and Workforce Development Authority. Other cases include shoddy tenders awarded without complying with existing public procurement procedures. Ten entities used inappropriate procurement methods to award tenders worth Rwf6.4 billion in the financial year 2012/13. Notable among these tenders is one issued by Rwanda Transport Development Authority worth Rwf5.3 billion for completion of works of rehabilitation of Kigali-Ruhengeri road that was awarded using single sourcing instead of competitive bidding.