FEATURED: Factors for WASAC financial flaws explained during PAC public hearing

PAC members. Courtesy

The factors that have been causing the low quality of financial statements over the past five years in Water and Sanitation Corporation (WASAC) and solutions to address them were well disclosed and explained during PAC public hearing.

During the audit of the financial statements for the year ended June, 2018, it was noted that WASAC financial reporting system did not improve to address flaws reported from previous years which resulted into expressing ‘a disclaimer opinion’ on the financial statements.

 

A disclaimer opinion on financial statements, is the worst audit opinion in the audit by auditor.

 

While appearing before members of the Public Accounts Committee (PAC) on Monday September 21, 2020, WASAC had to explain factors for “disclaimer opinion’ highlighted by the Auditor General Report.

 

In the discussions that lasted four hours, members of PAC insisted on knowing the source of low quality in financial statements that lead to  recurrent ‘disclaimer opinion’  and why the issue is yet to be addressed.

Marcel Mukeshimana, the Accountant General at the Ministry of Finance and Economic Planning (MINECOFIN) revealed four factors said to cause low quality of financial statements in WASAC.

The  factors, he explained, include financial system that has been in use since the establishment of  WASAC , lack of handover of  finance and financial books from  former EWASA to WASAC, difficulties in using new financial system called ‘Oracle’ as well as environment in which WASAC operates.

Mukeshimana said that it has become difficult for WASAC to inserts data into Oracle financial system considering that other previous data were randomly introduced into the system by the dissolved EWASA.

He said that it is not clear if WASAC is a public institution or commercial company because one part of it designs water production projects and get budget from government budget while another part sells water services.

Both two parts in WASAC use the same financial and procurement systems despite being governed by different guidelines.

According to laws, he said, the part that is in charge of producing water employs staff that are paid by government though MINECOFIN and the budget it uses comes from government budget.

This means that procurement should is also based on public procurement guidelines.

On the contrary, he noted that the part in charge of selling water is governed by laws set up by board of directors and this part  carries out procurement processed based on board of directors guidelines,” he said.

Despite the differences in guidelines, Auditor General indicates that WASAC proceeds procurement without abiding by public procurement laws while WASAC explains that the tenders considered as illegal are those procured by the part in charge of selling water services which is done according to board of directors’ guidelines.

When it comes to financial statements, auditor observes financial flaws but indicates that combining finances of two parts remains difficult.

Madame Patricie Uwase, the Permanent Secretary at the Ministry of Infrastructure (MININFRA) told members of PAC that government has realized the challenges and added that process has started to separate the two parts in WASAC.


“It has been clear that this is a challenge seeing that WASAC has two parts; one that produces water and the other that sells water services. Government, after realizing it, started to think of way to separate the two,” she explained.

Uwase insisted that the proposed solutions is one of many that will change the performance of WASAC in terms of audit.

She said the exercise will be the same as the one that happened to REG where it has now EDCL for energy production and EUCL to provide energy services.

She explained to PAC that WASAC is state owned entity that is commercial as government is the shareholder.

CEO of WASAC Aime Muzola told PAC members that WASAC has committed to comply with public procurement laws.

editor@newtimesrwanda.com

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