The Parliamentary Public Account Committee (PAC) in Malawi has given the country’s National Audit Office (NAO) and the Ministry of Finance Budget Director a 21-day ultimatum (from Monday September 18) to come up with plausible recommendations that will help to sort out the financial mess in most government ministries, departments, and agencies (MDAs).
PAC gave the ultimatum following concern over the “massive fraud and misallocation of funds” reported in the financial year 2012/2013 which the Committee described as a fiscal year marred by laxity and lawlessness in the management of public finances.
In an interview after completing reviewing the audit queries for the said financial year as presented by NAO, the Committee’s chairperson Alekeni Menyani noted that the year under review had “massive fraud and misallocation of funds” as evidenced by confessions from controlling officers of various MDAs that had queries.
“It looks like the fiscal year ending June 2013 was disastrous in the history of the country. It is also the year that marked the genesis of Cashgate,” he says.
“There was misallocation of funds and unnecessary spending in each and every place where office bearers do things on their own and there is laxity that needs to be addressed,” Menyani said.
The major cause of such financial mismanagement, according to Menyani, is the breakdown of internal systems across the government.
“The internal audit system has collapsed in the country and it is the weakest link that has seen these institutions bleeding,” he added.
Menyani said it was time the country started reviewing or implementing laws governing implementation of internal audit functions to address the weaknesses.
The 2012/13 financial is believed to be the climax of the massive plunder of public resources at Capital Hill, dubbed Cashgate.
A government commissioned forensic audit established that within six months from April to September 2013, government and private sector players allegedly siphoned at least K24 billion from the State coffers.
Another forensic audit that looked at the five years up to December 2014 found out that at least K577 billion may have been stolen. The figure was later revised downwards to K236 billion.
During the three weeks that PAC has been meeting the MDAs, a common problem of misallocation and poor filing system emerged. These revelations raised concerns over the role of internal auditors in various departments as some of the issues were easily traced by external auditors.
Treasury Public Finance and Economic Management (PFEM) situation analysis report identifies weak Central Internal Audit which falls under the Ministry of Finance, Economic Planning and Development as one of the major reasons for the massive pilferage in government as it fails to provide effective financial assurance.
Ministry of Finance, Economic Planning and Development spokesperson Davis Saddo said in an interview that most of the audit queries raised during the review resulted from failure to properly record and file transactions due to lack of training by the officers carrying out the duties. He said to avoid similar issues in future; an internal audit law was being developed.
“We are in a process of formulating the Internal Audit Act, which is at an advanced stage and we are optimistic that it will be finalised as soon as possible to avoid shortfalls highlighted in the report.
“Besides, the Ministry of Finance has also set finance compliance units within MDAs to scrutinise documentation and ensure that funds are paid in line with the required regulations,” he said.
Saddo said Treasury will manage to furnish the committee within the 21-day deadline with possible solutions, some of which are already being developed.
He said Ministry is also working on reintroducing staff induction courses at the Staff Development Institute (SDI) at Mpemba in Blantyre to equip newly recruited staff on government financial systems.Follow and Subscribe Nyasa TV :