Billions of taxpayers’ money continue to go down the drain, with the latest Auditor General’s report revealing failure by Malawi Government ministries and departments to account for about K3 billion (about $7.5m) in the financial year ended June 2011.
This is despite the existence of stringent laws, such as the Public Finance Management Act, aimed at checking economic and financial management of government funds and holding controlling officers accountable for problematic financial transactions.
The report—currently under examination by the Parliamentary Public Accounts Committee (PAC)—is questioning expenditure of K2 962 217 047. 15 (about $7.5m) in 98 transactions which the Auditor General indicates was misused or not accounted for by government ministries, departments and councils in the 2010/11 financial year.
The audit report shows that most of the public funds were lost through mis-procurement, payments made without supporting documents, cash drawn but not accounted for, revenue collected but not accounted for and abnormal payment of allowances to staff.
The transactions include the largest wastage of about K1.19 billion (about $2.9m) in drugs that were boarded off at the former Central Medical Stores (CMS)—now called Central Medical Stores Trust (CMST)—after mis-procurement of drugs because of failure to follow appropriate procurement procedures and established regulations.
The funds wasted through drug mis-procurement at CMS and several other health-related institutions make the Ministry of Health the biggest culprit in the Auditor General’s audit, with a sum of about K2.27 billion queried, according to the report. Faulted transactions in the ministry include overpayment to contractors, expenditure on fuel but not signed for and failure to collect outstanding debts.
The K2.27 billion (about $5.6m) queried under Ministry of Health is over 75 percent of the overall K3 billion faulted by the Auditor General in all the government offices included in the audit.
Reads the report in part: “An examination of payment vouchers and project contract documents revealed that [a local construction company] was awarded a contract to refurbish Central Medical Stores Headquarters after it was gutted by fire on 30 April 2009 at a contract sum of K80 880 888 .31 [about $202 202].
“It was, however, noted that the main contractor and three other subcontractors were paid a sum of K114 407 086 .30 [about $286 000], resulting in an overpayment of K33 526 197 .99 [about $84 000].”
The committee is also scrutinising how the Ministry of Agriculture and Food Security, which is the second biggest culprit in the audit, lost or misused over K400 million (about $1m) in several transactions such as use of public funds for unrelated purposes, salary payments to people not on staff payroll at Lunyangwa Agricultural Research Station in Mzuzu and fuel not accounted for.
Mismanagement of Fisp
Other public funds at the ministry were also lost through mal-administration of the Farm Input Subsidy Programme (Fisp) and failure to recover plant and equipment hire charges from contractors.
Adds the report: “It is a Treasury requirement that where a cheque is drawn to pay several officers, each payee (officer) must sign on payment voucher against his or her name for the cash received to support the expenditure.
“It is further required that acquitted receipted payment vouchers should be returned to the cash office for record and audit purposes within 10 days after the close of the activity.
“An examination of payment vouchers for subsistence allowance for the financial year under review disclosed that cash amounting to K16 111 720 .00 [about $40 279] was drawn to pay several officers but receipted payment vouchers were not made available to the audit team for inspection. It was, therefore, difficult for the auditors to ascertain the accountability of the funds drawn.”
Malawi’s Foreign Affairs Ministry is the third biggest culprit in the audit, where about K130 million (about $325 000) of taxpayers’ money is said to have been mismanaged, not accounted for or misused through several transactions such as payment of K29.7 million (about $75 000) foreign service allowances in excess of the staff’s entitlements and expenditure without Treasury approval in some country’s diplomatic posts such as the Malawi High Commission in Mozambique.
The K3 billion queried in the audit report is more than half of this year’s total budget for the Ministry of Foreign Affairs and International Cooperation which was allocated K5.825 billion (about $14m) at the beginning of the 2012/13 fiscal year in June last year.
Inefficiencies in government
Minister of Finance Dr. Ken Lipenga on Saturday said his ministry is facing a long-standing challenge to deal with inefficiencies in government ministries, departments and councils which result in audit queries.
“There is obviously a problem because every audit report from the Auditor General points to some queries and inefficiencies in the system. There is an ongoing fight against fraud and misappropriation of government resources,” said Lipenga who asked for more time to give specific details on what his ministry is doing to tighten internal controls and ensure all people implicated in the audit queries are taken to task and prosecuted.
According to Section 87 (2) of the Public Finance Management Act, where a controlling officer or chief executive authorises expenditure or commitment of funds in excess of an approved limit or expends funds where there is no appropriation permitting such expenditure by a ministry or statutory body, they may be suspended without pay with effect on and from the date on which unauthorised expenditure is certified.
Chancellor College economic analyst Professor Ben Kalua described the continued misuse and failure to account for public funds as confirmation of lawlessness on government expenditure.
“It is a worrying trend because it’s nice to be accountable. In the absence of accountability, people can expect the worst,”said Kalua.
He said it is difficult to reverse the trend on abuse of public funds if perpetrators of the same are not taken to task or prosecuted.
Asked Kalua: “You can’t enforce anything if people are going about with impunity. How can you stop the malpractice if nobody is taken to task?”
The K3 billion queried in the most recent audit report of the fiscal year ended June 2011 is more than about K675 million (about $1.6m) and around K2 billion (about $5m) queried during the audits of financial years ended June 2010 and June 2009, respectively.