Glaring Irregularities highlighted in 2017 Auditor General’s Report

Despite improvements in unvouched for expenditure, undelivered materials and unaccounted for revenue, grave irregularities still reflect in misappropriation and overpayments to the tune of 500%.

The international community and citizens await the litmus test of the Public Finance Management bill on those responsible for the AGs reported irregularities

The Report of the Auditor General on the Accounts of the Republic for the financial year ended 31st December 2017 is out with glaring irregularities in the various Ministries, Provinces and other Spending Agencies (MPSAs). This was established according to a press release shared by the Head of Public Relations at the AGs Office.

The Report highlights some reductions in unaccounted for revenue from K3 – million in 2016 to  K873 – thousand in 2017, unvouched expenditure from K170 – million in 2016 to K14 – million in 2017 and undelivered materials from K116 – million to K1 – million among others.

However, these gains have been reversed by the several areas of concern such as unaccounted for funds that has increased from K386 – thousand in 2016 to K31- million in 2017, misappropriations of funds from K3 – million in 2016 to K5 – million in 2017 and overpayments from K1 – million in 2016 to K7- million in 2017. These irregularities in some instances increased by more than 500%.

Misapplication of funds remains an issue

Below is a breakdown of the findings on a comparative trajectory from 2015 to 2017 as compiled by Office of the Auditor General.

Although misapplication of funds seems to have reduced to K61 – million in 2017 (from K162 – million in 2016), it is still the highest ranking irregularity for the period under review and continues to be an area of high concern for the Office as it entails that institutions applied funds budgeted for a specific programme on unrelated programmes without the authority from Secretary to the Treasury thereby depriving the beneficiaries of the much needed benefits from the said programmes.

The nation may wish to know that although misapplication of funds on face value may appear to be a lesser evil especially if applied on buying medicines in hospitals, but it may have some criminal undertones especially if paid to officers purporting to be undertaking government programmes when in actual fact they may have no intentions to travel and carry out the work. This irregularity deprives government of the resources to be applied on developmental issues instead of benefiting a few individuals.

The other irregularity red flagged by the AG report was that of irregular payments which have ballooned to K21 – million in 2017 (from K1  – million in 2016).

 Audit alignment to the SNDP areas

The audit of 2017 covered areas that cut across all the five (5) Developmental Strategic Areas of the Seventh National Development Plan (SNDP) and the issues mentioned in the report are those issues which could not be resolved during the audit process and those which were highlighted in the previous reports, but had not been corrected as of 24th September, 2018.

It is also worth noting that the Office interacted and communicated with Controlling Officers whose accounts were audited at various levels. The purpose of this interaction was to provide an opportunity for the Controlling Officers to clarify and take corrective action on the findings of the audits by so doing demonstrate the value and benefits of the Supreme Audit Institution (SAI).

The Report contains seventy four (74) paragraphs consisting of sixty one (61) paragraphs on audit matters whilst thirteen (13) paragraphs are on other matters. In addition, the Report contains audit recommendations which are aimed at addressing the issues raised during the audit process.

Audit was in accordance to best practice ISSAI’s

The nation can further take comfort in the fact that the audit was conducted in accordance with the International Standards of Supreme Audit Institutions (ISSAIs) which are the standards relevant for the audit of Public Sector entities and are issued by the International Organization for Supreme Audit Institutions (INTOSAI) to which the Office of the Auditor General is a member.

Also interesting to note is that the Office has for the second time issued an opinion on the Consolidated Financial Statements of Government in line with Article 211 of the Constitution of Zambia (Amendment) No. 2 of 2016.

The table below shows a comparative summary of some of the major issues contained in the report for your scrutiny.

A litmus for the effectiveness of the Public Finance Management bill

The Audit findings are yet to sink into the confines of the various special investigative wings who will then implement action recommended by the strengthened Public Finance Management Bill. Zambian’s have been served with an AG report year in and out but the key concern is that those responsible for irregularities have not been brought to book. With Zambia in the lime light from a funds accountability  perspective with donors and the international community to include bilateral and multilateral institutions, the Public Finance Management bill will be litmus tested to address these irregularities revealed by the Auditors. Already the nation has cracked the whip with social cash transfer irregularities and funding in the ministry of education with regards accountability of donor funds. Those responsible have been brought to book, but the nation awaits feedback on action to be taken for all responsible for the anomalies raised.