MASERU – Finance Minister Timothy Thahane’s call to rein in runaway government expenditure is likely to be a tall order.
A report by the Auditor General, Lucy Liphafa, for the 2007/8 financial year shows that government departments and ministries continued to spend more than their budget allocations and flout accounting regulations.
Money was spent on items that were not budgeted for, according to the report made public last week.
The report says the government’s accounts for 2007/8 are shambolic with some departments and ministries failing to keep their financial books in order.
Some of the accounts don’t balance, the auditor general says.
The report says basic accounting regulations and statutes have been disregarded, making it difficult for the auditor general to give a fair assessment of the government’s financial status.
Liphafa says her previous recommendations have not been heeded.
Government accounts have been qualified for the past 30 years, she says. If government accounts are not in order it is difficult to trace money lost through corruption and fraud.
It also becomes difficult to control expenditure and bring corrupt public officers to book.
The auditor general’s report has been made public at a time Thahane has been calling for the tightening of the national purse.
Thahane is expected to deliver his national budget next month but he has already warned the next financial year will be tougher.
Revenue from the Southern African Customs Union (Sacu), which contributes 60 percent of Lesotho’s national budget, has been dwindling.
Last month the International Monetary Fund advised the country to cut government expenditure, consider revising service charges and improve tax collection in response to the Sacu receipts decline.
But, looking at the auditor general’s latest report, financial indiscipline in the government is likely to be hard to stem.
“The issue of a negative opinion on the state of affairs of the government of Lesotho is becoming a norm,” Liphafa noted in her report.
“The issues that I have repeatedly raised are not being addressed hence the balances in the accounts would always be distorted and unsupported.”
The auditor general says the main reason the government books are in a parlous state is because of failure to comply with accounting principles.
Reconciliation remains a big challenge for public officers.
Liphafa also has strong words for the accountant general concerning the government’s failure to comply with the International Public Sector Accounting Standards (IPSAS).
“The accountant general being in the accounting profession should abide by the requirements of his/her profession,” she says.
“He/she should strive to be fully compliant with IPSAS and not make an excuse based on the silence of the legal framework which in principle should be amended regularly to facilitate compliance.”
The report also notes the failure to reconcile the treasury’s ledger with ministries’ records under the Government of Lesotho Financial Information System which has since been replaced.
“The issue of non-reconciliation dates as far back as 1978 and this has been one of the main reasons for qualification of the public accounts for over 30 years,” Liphafa says.
“The problem of non-reconciliation has always been the issue for the past 30 years and no remedial measures have been taken.”
She says despite her previous warnings some government departments still failed to produce proper documents to support their expenditure.
There had not been efforts to penalise government accountants whose departments or ministries would have exceeded their allocations, she notes.
“The majority of government departments’ expenditure exceeded their estimates as voted by the parliament on expenditure items,” the auditor general says.
“Specific mention should be made on the item ‘fuel and lubricants’ whereby out of 27 voted heads, 18 heads exceeded their budget by M31.5 million on this item.
“This item of expenditure raises a concern as in the previous years, many ministries recorded over-expenditure on ‘fuel and lubricants.’”
During the period under review, expenditure was incurred for purposes not intended.
The Independent Electoral Commission (IEC), which during the period under review overshot its budget by whopping M10 426 529, repeatedly flouted financial regulations.
The report notes that “whenever there were insufficient funds under recurrent expenditure votes . . . payments were made from the non-recurrent special expenditure and, as a result, expenditure totalling M1 681 538.95 was incurred for the purposes not intended”.
“The Independent Electoral Commission abused the facility of operating a bank account as the payments were not going through treasury and as such the accountant general could not disallow such expenditure.”
Lesotho’s embassy in the United States also blew its budget by M1 109 315.
No explanation was given as to how the money was spent.
The Ministry Home Affairs, Public Safety and Parliamentary Affairs, according to the report, also exceeded its allocated budget by M6 007 332 during the same financial period.
The money was allegedly spent on administrative purposes and the Lesotho Mounted Police Services (LMPS).
The administration department had originally been allocated M25 021 325 but exceeded its budget by M3 728 257.
The LMPS on the other hand had been originally allocated M201 811 600 but had overshot its budget by M2 279 075.
The local government ministry also appears in the report as having overspent by a staggering M4 064 172 during the same year.
During the audit, it was discovered that there was an amount of M112 197 which was paid for goods that the ministry never received.
The Ministry of Health and Social Welfare was also not far off with over-expenditure of M3 013 295 in the Thaba-Tseka and Maseru districts.
The audit also discovered that although the Global Fund had made a financial donation of US$2.3 million, the money was not recorded in the financial statements “but only in the KY campaign review of 2008”.