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Summary report on the accounts of the Government for the financial year ended 31 March 2012 (continued)

Mon, 2 June 2014 03:21
by Walter Barth

It was already mentioned that the Auditor-General (A-G) annually compiles a summary report on the accounts of all ministries/offices/departments of the Government. His latest summary report, which has been tabled in the National Assembly, has been concluded during September 2013.
Except for the expenditure and qualified opinions issues, which were discussed in the previous edition, the following additional issues have been raised in the report:

1.    Budget controls
Nine ministries/offices/departments (m/o/d) exceeded the approved budgeted amounts on between 10 and 30 subdivisions of their respective votes (2011: Eight), while 17 exceeded less than five subdivisions (2011: 21).
The Auditor-General recommended once again that an up to date commitment register can assist accounting officers to a large extent to eliminate most of theses excesses by requesting approvals for virements timeously. Properly trained accountants and improved communication between the offices/ministries/departments will also contribute largely to improve the situation. (NIPAM?)
Seven (2011: Three) offices/ministries managed to keep their total deviation between the real expenses and the approved budget to less than 2%. These are:
Office of the President – 1.65%
Office of the Auditor-General – 0,31%
Foreign Affairs – 0.41%
Education – 1.74%
Health – 1.56%
Prisons – 0.93%
Veteran Affairs – 0.20%

It appears that more and more ministries/offices/departments take the recommendations made by the Auditor-General seriously, but there is still much room for improvement.
Congratulations to those seven offices/ministries who managed their budget extremely well.
2.     Exemptions from normal Tender Board procedures
The Tender Board annually approves deviations from normal tender procedures where the Board is convinced that the nature of the required services or procurement is as such that normal tender procedures would not be in the best interest of the State. In most cases a monetary value is attached to these exemptions.
As in the previous year, at eleven vote accounts the auditors found that there are either no control measures in place to ensure that these values are not exceeded or that the
actual expenses exceed the approved amount at random. No additional approvals were obtained from the Tender Board to cover the excess expenditure. The Auditor-General commented that improved recording of these expenditures will contribute to avoid excess expenditure or to request additional exemptions timeously.

It would be nice to see an improvement on this issue. The respective o/m/d have not been mentioned and as such it is difficult to see whether the same o/m/d than in the previous year are guilty.
As mentioned last year, once a Tender Board exemption has been received, the approved amount should be recorded at the subdivisions involved and every expense relating to that approved exempted amount should be booked against such amount in a decreasing balance method so that the Accounting Officer can easily see what amount is still available. Should excess expenditure be expected he is then able to request an additional exemption from the Tender Board in time.

3.    Subsistence advances
The auditors found discrepancies relating to subsistence advances at 17 of the 31 votes. (2011: 19) In some cases it was found that there were long outstanding subsistence advances, mainly due to the reluctance of staff to submit the relevant claim forms against which advances can be cleared. Treasury instructions require submissions of claims within thirty days after the return of the official. Advance balances have to be repaid immediately. This issue has been repeatedly reported by the Auditor-General and he once again urged the relevant ministries/offices/departments to continue taking the necessary steps to clear these advances.
Other areas of concern highlighted in the report were differences between the respective suspense account balances and the debtors list kept by the ministries/offices/departments.

It is a pity to notice that only a slight improvement took place. Stern measures should be considered by accounting officers to curb these malpractices.
It can only be emphasized once again that staff should realize that a subsistence advance is a loan to them to enable them to pay for the expenses while on a trip away from home. The balance is not theirs for buying presents or using the money for other things and when they come back nothing is left to repay any excess advance. This makes one reluctant to submit the claim as one then has to repay the balance immediately and one is short of cash. The best advice is not to spend any excess amount until the claim has been cleared.

4.    Reconciliation of suspense accounts
The report mentions that the auditors found 27 (2011: 26) m/o/d who failed to reconcile their suspense accounts, either partly or wholly.  The A-G pointed out that these reconciliations are important in order to account for the transactions that need to be transferred to the relevant vote account or revenue account to ensure the completeness thereof.

 Again no improvements took place in this area of concern. The Ministry of Finance should take a strong stand against m/o/d which do not reconcile these accounts.
It can only be repeated that suspense accounts have to be treated with utmost care. As soon as one looses track of the transactions recorded therein and do not clear amounts regularly, at a certain stage one will no longer be able to reconcile such accounts as happened many a time in the past. No wonder Treasury is very reluctant to approve a balance just to be written off due to poor accountancy.
Suspense accounts can of course also be misused by charging expenses to these which should have been charged to a valid vote account and through this action avoid exceeding the budget if insufficient funds are available.
Auditors should intensify their audits on this area in order to identify any misuses of suspense accounts. More areas of concern will follow in the next edition.