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Other Articles from The Villager

Justice fail to submit updated records

Sun, 27 January 2013 18:33
by Walter Barth
Columns

Summary report of the Auditor-General on the accounts of the Government of Namibia and on the State Revenue Account for the financial year ended 31 March 2011 (continued)
In the previous editions a number of issues raised by the Auditor-General were published and discussed.
The last two issues relating to ministries/offices/departments mentioned in the report of the Auditor-General are as follows:
Guardian Fund – Ministry of Justice
The accounting officer of the Ministry of Justice has been unable to provide updated financial statements of the Guardian Fund for the 2010/11 financial year.
The A-G stated that the non-submission of financial statements is unacceptable. He further stated that such non-submission creates room for possible misappropriation of funds.
Comment
The Guardian Fund is operated by the Master of the High Court. All inheritances of minors have to be deposited into this Fund and payments may be requested by guardians or foster parents as and when these are needed in support of the minor, e.g. school fees, uniforms, books, medical expenses and so forth. Once the minor obtains the age of 21, he or she is entitled to withdraw the funds.
The Fund holds millions of Namibian Dollars and it is of utmost importance that the funds are well controlled and managed. It has to be mentioned that, in the past, the Master was unable to produce financial statements for periods of eight or nine years, if not even longer, but managed to produce such statements now with only one year delay.
Hopefully the Master will catch up and submit financial statements timeously in the near future.
Audit committees
The A-G reported that ministries/offices/departments do not have oversight audit committees for their internal functions. Therefore the effectiveness of these functions is not overseen and the independence from management influence may be compromised.
Comment
Audit committees are a useful instrument to ensure proper internal control and that operations are carried out efficiently. These committees should comprise of external and internal persons to ensure independence and the committee should report to the political head of the organization with a copy to the accounting officer. External and internal audit reports should form the basis of their operations and they should ensure implementations of corrections and recommendations. Ministries/offices/departments should as such strive to put these committees into practice.
Total expenditure: Operational vs. development
The report states that the comparisons reflected in the published charts reflect the situation since the 1993/94 financial year, but the charts reflect the situation as from the 1999/00 financial year.
Never the less; the operational expenditure rose from about N$ 5.3 billion Dollars to N$ 22.5 billion Dollars over the past twelve years and the development expenditure from about N$ 1 billion to about N$ 5 billion.
During 2010/11 development expenditure was underspent by N$ 387 million (7.9%), previous year N$ 416 million (10.8%) compared with the approved budget, and the operational budget was underspent by N$ 315 million (1.4%), previous year N$ 25 million (1.2%).
Comment
The percentage deviation from the approved budget is in total 2.6 % which is not excessive, but it is unfortunate that the highest underspendings are on the development budget.
Development is important for any country as it creates income and jobs. Expenditure is however difficult to control due to external factors which cannot be controlled by accounting officers such as delays in the awarding of contracts, bad weather conditions, strikes, delivery delays and so on. Ministries/offices/departments should however take past experiences into account when budgeting in order to avoid excessive underspendings.
Expenditure vs. Government borrowings
The total monies borrowed amounted to N$ 7,640 billion of which N$ 6,8 billion consisted of Treasury bills sold. The redemption of Treasury bills amounted to N$ 5,7 billion. The trade with Treasury bills is important as it stimulates the investment market. The report states that the total expenditure relating to loan expenses is less than 1% of the total expenditure. This of course excludes Treasury bill transactions.
Comment
One can only say Namibia’s lending situation looks sound when compared with other countries.
Interest paid on borrowings
The total interest paid on Treasury bills amounted to N$ 880 million and for foreign loans N$ 85 million. When one looks at the table it is noticed that interest payments dropped from about N$ 2,2 billion to N$ 965 million. The report states that interest related charges on borrowings equaled 4% of the total operational budget for the financial year 2010/11 compared with 6.1 % in the previous year.
In the next edition the statement of balances in the books of the Government and the condition of the State Revenue Fund will be discussed.
Risk management
Ministries/offices/departments do not have risk management processes to address the risk attached to their activities. The focus of good risk management is the identification and treatment of such risks and to add maximum sustainable value to all the activities of the ministries/office/departments.
Comment
Every ministry/office/department has goals to achieve for which it receives funds from Parliament. There are always factors which may prevent these institutions from achieving their goals and that is why risk assessments are necessary.
The next edition will deal with the last few comments and details on the State Revenue Fund.