WorksÔÇÖ dept debt reaches N$131m

The Auditor-General (AG)’s report on the accounts of the Department of Works of the Ministry of Works and Transport for the financial year ended 31 March 2011 was submitted to the National Assembly (NA) in February this year, which is within the time limit prescribed by the State Finance Act, 1991.
The Department received an unqualified audit opinion, which means that its accounts are fairly stated. In his findings, the AG highlighted the following areas of concern:
1.    Expenditure
The following unauthorised expenditure was reported by the AG:
Although Treasury’s approval was obtained to utilise certain expected savings for the defrayal of excess expenditure by way of virements during the year, six sub-divisions were exceeded with a total amount of N$1 077 550.81. This excess expenditure is unauthorised in terms of Section 6(a)(iii) of the State Finance Act, 1991.
The State Finance Act, 1991, prescribes to the AG what comprises unauthorised expenditure and that he must report such. The above-mentioned excess expenditure is defined as such ‘unauthorised expenditure’.

Considering the size of the Department, which operates a total budget of 
N$462 877 000, the amount mentioned above is insignificant, but the fact remains that it is unauthorised. It appears as such that the Accounting Officer controls the expenses versus the budget quite well.
2.    Trade accounts
The auditors pointed out that there are huge differences between the expenditure and income amounts of the Government Stores Trade Account as recorded in the Department’s records and the Integrated Financial Management System (IFMS) operated by the Ministry of Finance. The differences are as follows:
The auditors also pointed out that debtors at year-end amounted to 
N$131 732 756.43. The Accounting Officer further stated that not all receipts were posted to the IFMS by the Ministry of Finance.
First and foremost, it is the Accounting Officer’s responsibility to ensure that all transactions are brought to account. The Ministry of Finance is just the “bookkeeper”.
One can only agree with the audit recommendation that the two systems should be reconciled on a regular basis and that the Accounting Officer should ensure that all receipts are posted to the general ledger before the closure of a financial year.
The debtor figure is also not acceptable as these are inter-ministerial services for which the receiving ministries must accept debit acceptances and bring the expenses to account in their respective books.
There are of course various possible reasons for such debit balances, one being that a receiving ministry might be in danger of exceeding the approved budgeted amount in its budget should it accept the debit. By transferring the debt to the next financial year, one may escape unauthorised expenditure but this is not correct.
The Trade Account shows a debit balance of N$47 752 579.69.
The question then arises as to whether or not this amount comprises expenditure, which bypasses the budget. It is essential that Treasury authorises a single capital amount towards a trade account, which must be approved by the NA in the budget and the receiving ministry must stay within such an amount. Unspent money must be shown as cash on hand while the balance should consist of the stock on hand.
Treasury should look into all the trade and operating accounts run by ministries and solve this problem.
3.    Subsistence and travel allowances
The report points out a difference of N$343 168.55 between the list of outstanding advanced amounts as submitted by the Accounting Officer (N$213 315.88) and the debit balance reflected in the General Ledger (N$556 484.43).
The Accounting Officer explained that the difference is due to the fact that staff members travelled between February and March 2011 and that outstanding advances were inherited from the year 2006.
According to me, this does not explain why his list of advances does not agree with the amount shown in the General Ledger. The amounts of those staff members, which travelled between February and March must be included in his list as outstanding and the amount carried forward from 2006 should have been analysed and cleared.
4.    Tender Board exemptions
The report points out that the auditors were unable to check whether or not the expenses on the various exempted amounts totaling N$104 755 121 did not exceed these exemptions as the Accounting Officer did not submit the actual expenditure per exempted amount as requested by the AG.
The Tender Board annually approves, on request of a ministry, that certain services/procurements are exempted from normal tender procedures. Unfortunately, the audit report does not list these services/procurements to make it more clear to the reader what these consist of.
Proper records should, however, be kept to ensure that the approved exempted amounts are not exceeded.
5.    Suspense accounts
Except for the subsistence and travel allowance balances and the Government Stores balances, the AG reflected two more debit balances in suspense accounts; the receipt suspense account (N$15 854 455) and the Cash Sales Government Stores account (N$53 843 469).
It is unclear why these accounts reflect debit balances as they all seem to be income accounts. This should warrant a proper audit investigation. It is also advisable that the Standing Committee on Public Accounts of the NA looks into this issue.