KIMIHURURA - Parliament yesterday commended the notable improvement in the management of state finances that saw over 95 percent of 118 of the state institutions that were audited, coming out with a clean slate.
This was during the presentation of the 2009/10 Auditor General’s report at Parliament buildings by the new Auditor General, Obadiah Biraro.
The lawmakers also welcomed the visible improvement in the presentation of the report and immediately forwarded it to the recently created Public Accounts Committee for detailed scrutiny.
The report covers a longer period (18 months) as it includes the 2009 mini-budget that was prepared as the country aligned its budget to other East African countries.
Despite the positive trend in the current report, it did not fail to point out some shortcomings in some entities that could not account for Rwf 9.7 billion, either through lack of support documents, embezzlement or mismanagement.
“This partially supported expenditure lacked some support documents like utilisation reports, purchase orders, delivery notes among others,” Biraro told Parliament.
He added that, 36 institutions incurred wasteful expenditure amounting to Rwf 1 billion that could have been avoided had they complied with laws, regulations and procedures in force.
“Wasteful expenditure was mainly incurred in penalties to Rwanda Revenue Authority (RRA) for failure and/or delayed remittance of statutory deductions,” he said.
According to the report, Rwf 746 million was lost in penalties or interest and fines to RRA and Social Security Remittances for employees.
The report indicates cases where bonuses and other staff benefits like communication, transport and overtime allowances, totalling Rwf 256 million, were paid to staff who were not eligible to receive such benefits.
Biraro pointed out that during the audit, his office unearthed cases where public entities diverted funds earmarked for specific activities and utilised them on unauthorised activities.
A case in point is the Rwanda Bureau of Standards (RBS) which diverted over Rwf 52 million that had been provided by the Ministry of Commerce and Trade to finance the rehabilitation of a warehouse to accommodate the Mycotoxin Laboratory.
The funds were diverted to other RBS activities without the authorisation of the Ministry.
Another case was noted in Gatsibo District where Rwf 110 million earmarked specifically for the education sector, was withdrawn from the education account and transferred to the district operational bank account without the approval of the District Council.
“Efforts to establish what the funds were utilised for after deposit on the operational account was difficult due to absence of underlying support documents. Management claims that some of the funds were utilised for school construction but no documentation was provided to justify this claim,” Biraro told the Parliament.
The report points out key cases where public funds were lost or misused; a case in point is a contract signed between the Ministry of Education and Rwandatel for the provision of internet access services on a continuing basis to at least 300 public secondary schools.
The total contract price for non-recurring engineering costs was US$ 1,975,000 payable in instalments based on the level of project completion. The connection and provision of internet access was supposed to be completed within a period of 36 months.
According to Biraro, by December 2008, Rwandatel claimed to have connected 85 secondary schools out of the contracted 300 schools.
“This represented only 28 percent of the total number of schools that were to be connected, twenty four months after the expiry of the contractual timeline. No further work was undertaken by Rwandatel to connect the remaining schools and the Ministry terminated the contract with Rwandatel on August 03, 2010,” said Biraro.
Ultimately, this denied most of the public secondary schools the benefit of internet connectivity, envisaged under the contract.
Further still, upon termination of the contract with Rwandatel, a claim of unsettled invoices amounting to US$ 801,970 for internet connectivity of the 85 schools for 13 months from June 2009 to July 2010 was issued to MINEDUC.
“This amount has neither been verified by MINEDUC nor recorded in the ministry’s financial statements for the year ended 30 June 2010,” Biraro reported.
He added that, an additional claim of Rwf 7.5 million in respect of web hosting and modem connection for the period issued by Rwandatel, was also not recognised in the financial statements.
“MINEDUC should endeavour to verify the work undertaken/service provided by Rwandatel and only pay for the service rendered,” said the AG.
Illegal awarding of tenders
Another area that recorded irregularities was in the field of public tenders where some were awarded without involvement of the internal tender committees, and where they were awarded without sufficient tender documents.
“It was noted during the audits that tenders amounting to Rwf 212 million were awarded without any evidence of approval by respective internal tender committees while tenders worth Rwf 1.3 billion were awarded without the approval of the Rwanda Public Procurement Authority (RPPA),” the report reads.
A qualified audit report is issued on financial statements if at the conclusion of the audit, the auditor believes that the financial statements have some omissions and errors which are material and could mislead users of the financial statements.
A qualified audit report can also be issued if the auditor was unable to obtain information that was necessary for the audit of significant balances or if the auditor identified material instances of non compliance with the existing laws and regulations or financial reporting framework.
On the other hand, an unqualified audit report implies that financial statements presented are a true reflection of the transactions of the entity audited and that such transactions were executed in accordance with the relevant laws and regulations.