Some public entities ignore filing of financial statements within specified period contrary to the Organic Budget Law (OBL) designed to ensure proper public finance management, the Auditor General Obadia Biraro said yesterday.
The Auditor General was meeting senators on the committee in charge of economic development and finance to discuss the way forward on his financial audit report of 2014/15 which was tabled before the Lower House in May this year.
According to Biraro, provisions of the OBL have often been ignored when submitting financial statements, requiring serious enforcement before resorting to the Prosecutor General’s investigations.
Biraro, in his brief report, stated that the Senate can push for more administrative measures on proper public financial management as opposed to relying on prosecution.
“The OBL compels, for example, all government entities to file every 45 days a financial statement to the Ministry of Finance, which will be assessed by the chief internal auditor, but you realise that some entities go up to 12 months without filing until the Auditor General comes in,” he said.
Questioning why such incidents should not necessitate the intervention of the Prosecutor General to check on why such an institution failed to report its status of finances, Biraro called on senators to establish administrative measures compelling all public entities to file, within time, reliable financial statements.
“People tend to forget that OBL is a law like others, it needs proper implementation and closer monitoring, all its provisions relating to issuance of financial statements and budget execution should be followed accordingly,” he added.
Article 66 of the OBL on preparation and submission of financial statements by public entities requires public entities to prepare and submit monthly financial statements to the ministry by the fifteenth day, following the end of the month.
“Public institutions shall submit their financial statements on a quarterly basis after approval by the relevant competent authority. Public institutions shall also prepare and submit their annual financial statements in a period of two (2) months from the end of the fiscal year,” reads part of the law.
The AG cited former Energy Water and Sanitation Authority (EWSA), which had not provided financial statement by the start of the audit; Rwanda Social Security Board (RSSB), which had provided unreliable financial statements; and Rwanda Revenue Authority, which posted suspense running accounts.
With respect to unreliable financial statements, the report stated that many of the government business enterprises audited did not maintain proper books of accounts while their financial statements were misleading and not reliable for decision making.
“For example, the financial statements of RSSB, EWSA and RRA have fundamental errors, omissions, unreconciled balances and cases of suspense accounts with unexplained transactions, despite existence of fully staffed finance departments and significant investment in various IT systems to facilitate data processing and financial reporting,” he said.
“Ultimately financial statements do not reflect accurate financial position operations of the entities,”
The 2014/15 AG report had showed a steady growth in public entities which got unqualified opinion by the Auditor General but decried slow implementation of the Auditor General’s recommendations in relation to management of public funds.
Among the 157 audited public entities (131 were audited last year), only 50 per cent recorded a clean audit opinion, having relatively improved from the previous year’s 36 per cent, a performance Biraro said was below expectations.
The report stated that transactions involving Rwf12.7 billion lacked supporting documents, Rwf3.8 billion had incomplete financial documents, while Rwf1.7 billion was classified as wasteful expenditure.
The Senators pledged to consider the AG concerns and make appropriate recommendations to relevant institutions.
“We have taken note of the issues raised, he mentioned something about Senate being able to vet high ranking officers and or structures, but fail to ensure proper monitoring to make sure government gets value for money, we should have it corrected,” said Senator Chrysologue Karangwa, a member of the committee.
“There is room for improvement, prevention is more paramount and we should ensure its efficiency before we resort to harsh penalties which are avoidable.”