Funding woes threaten to paralyse National Audit Office (NAO) operations in the 2018/19 financial year following the withdrawal of 200 000 euro (about K1.5 billion) support by a German agency, a development that could see 15 councils going unaudited.
In a brief to a parliamentary cluster committee meeting on Budget and Public Accounts in Lilongwe yesterday, Auditor General Stevenson Kamphasa said the K2.2 billion allocation in the proposed 2018/19 National Budget will not be enough for his office after German institute, KfW, withdrew its assistance.
Ironically, NAO’s cry for more funding comes against a background of rhetoric by President Peter Mutharika and his Democratic Progressive Party (DPP) administration that it was committed to fighting corruption and abuse of public funds.
Kamphasa said in an interview after the meeting he hoped that the parliamentary committee will voice out NAO’s concern to see how best they can help.
He said: “My office has been allocated a total amount of K2.2 billion. You can say it is enough or not enough, but the question is how best can we use this to make the best out of it even though we know that at times when we are allocated this amount we think we can carry out our duties.
“But there are some things which come like emergencies which affect how we carry out our activities and creates problems and challenges.”
Kamphasa said it will be difficult to conduct audits in some councils in the 2018/19 financial year, set to roll out on July 1, because the money they were using for such functions came from financisers such as KfW.
He said: “Beginning next year we will no longer receive funding from KfW. This will affect some councils which are audited with funding from KfW.”
Head of cooperation at the German Embassy in Lilongwe, Thomas Staiger, said in an interview they will not continue funding NAO because they achieved their objective of helping clear the backload of audits in district councils.
He said: “We never funded operational costs, the only specification was to address the backlog of audits in specific councils. So, the audits have been completed and the financing period has ended. There is no need to continue financing because we have seen that we have achieved our goals.”
Budget and Finance Committee of Parliament vice-chairperson John Chikalimba, who chaired the meeting on behalf of the chairperson for the joint committee, said it was sad that a key institution such as NAO has not been given enough money despite acting as a watchdog on public funds.
He said the fact that 15 councils will be affected with the low provision of funding will hugely affect its operations and the watchdog role.
Said Chikalimba: “We have 35 councils in Malawi, the money provided will only cover 20 councils; leaving 15 councils without being covered. This is not good.
“If the Auditor General doesn’t have enough, that means the watchdog role will not materialise. As a committee we have agreed that on Friday we will come up with a way forward to summon the Minister of Finance on the issue.”
The development comes amid concerns of abuse of funds in councils. Earlier this year, Treasury extended audit to 28 district councils to examine usage of Constituency Development Fund in the country’s 193 constituencies after an audit showed that about 20 members of Parliament allegedly misappropriated about K80 million.
Following decentralisation, local councils are handling increased volumes of money and, according to a 2015 Tilitonse Fund Report, local councils face numerous queries bordering on fraud and accountability after the funds progressively increased from K3 billion in 2005/06 to K34.2 billion in 2015/16.
The report, titled Political Economy Analysis of Accountability for Resources and Results in Local Government Councils, followed a research by Asiyatu Lorraine Chiweza, a professor in the department of political and administrative studies at Chancellor College, a constituent college of the University of Malawi.
The report revealed that there was limited production of financial reports and attention to audit reports, abuse of locally generated revenues and politicised intra-district allocation of development resources, among others.
NAO is mandated to undertake a programme of audits and examine transactions, books and accounts and other public records of every ministry, statutory office, agency and public funds received by non-profit making organisations.
In the 2017/18 financial year, NAO managed to conclude the audit of the K236 billion Cashgate case which resulted into the compilation of the 54 case files submitted to the Anti-Corruption Bureau and conducted a forensic audit for Malawi Embassy in Ethiopia among others.