AG makes shock findings:
- M6, 16 billion govt funds for the 2020/21 financial year cannot be accounted for,
- state had failed to account for M3, 47 billion in the previous fiscal year.
IN a shocking development suggesting either massive corruption or the mismanagement of state finances, the government cannot account for M6, 16 billion that was deposited as cash in its various bank accounts during the 2020/21 financial year.
While the government’s financial statements indicate that it had M11, 62 billion in its bank accounts, bank statements have shown that the actual amounts is only M5, 46 billion. This means that there is a shortfall of M6, 16 billion.
This is a massive figure considering this amount is about 25 percent of the M24, 8 billion for the budget for the current fiscal year presented in February by Finance minister, Thabo Sophonea.
The shock findings are contained in Auditor General, Monica Besetsa’s recently published report for the 2020/21 financial year.
Even more damning is the fact that the shortfall is far worse than that of the 2019/20 financial year when the government failed to account for M3, 47 billion.
In her report on the consolidated financial statements of the government for the fiscal year ended 31st March 2021, Ms Besetsa expresses an adverse opinion, mainly due to the unexplained missing cash.
An adverse opinion is a signal for the government and development partners to note that the financial statements are not reliable and they should not be trusted to make an informed decision.
In a section of her report titled “Adverse Opinion”, Ms Besetsa says, “I have audited the consolidated financial statements of the government of Lesotho, which comprise the consolidated statement of cash receipts and payments as at 31 March 2021, and consolidated statement of budget and actual amounts for the year then ended, statement of consolidated entities and notes to consolidated financial statements including a summary of significant accounting policies”.
“In my opinion, because of the significance of the matters discussed in the basis for adverse opinion paragraph, the accompanying consolidated financial statements do not present fairly the financial position of the government as at 31 March 2021, and its financial performance and its cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSAS),” Ms Besetsa states.
Chief among her reasons for issuing an adverse opinion is the unexplained M6, 16 billion cash shortfall.
“The consolidated statement of cash receipts and payments shows that the government had a cash balance of M11, 620 billion as at 31 March 2021.
“However, the financial statements reflect M5, 463 billion held in 383 accounts at various banks, resulting in an unexplained shortfall of M6, 157 billion. This unexplained difference is of critical concern as it has increased by M2, 744 billion from M3, 413 billion as at 31 March 2020.
“I have conducted my audit in accordance with the International Standards of Supreme Audit Institutions (ISSAIs)… I am independent of the government in accordance with the ethical requirements that are relevant to my audit of the consolidated financial statements and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my adverse opinion,” Ms Besetsa states.
There were more woes as the auditor general also found that government owed local suppliers over half a billion maloti in the period under review.
“Payment arrears have reached M545 million as at 31 March 2021, representing an increase of 12 percent over the previous year’s figure of M488 million,” Ms Besetsa said.
She further noted that various government ministries did not comply with the Public Financial Management and Accountability (PFMA) Act which requires them to prepare quarterly and annual reports of their performances.
“The performance reporting Section 34 (1) of the PFMA Act, 2011 requires a spending unit of government to prepare quarterly and annual reports which should include details of the programme results achieved, including the impact of new policies implemented in that year and in the previous years, and set out the performance indicators used to assess the programme.
“Section 34 (9) further requires that a minister responsible for a spending unit should present an annual report to parliament within four months of the end of the financial year to which it relates. There has been non-compliance to the requirements of PFMA Act, as ministers responsible for spending units have not presented annual reports to parliament.”
The auditor general is also exasperated by government ministries and departments over their perennial failures to address what she calls “recurring issues”.
Among others, she complains that she has “repeatedly raised audit queries on the unexplained differences on cash balances”.
“Since the 2009/10 financial year, there have always been unexplained differences between cash balances reported in the Consolidated Statement of Cash Receipts and Payments and cash balances reported in the Notes to the financial statements.
“The Accountant-General has not operated an advance account since April 2009 and advance warrants from the Contingencies Fund are irregularly treated as release warrants. This makes it difficult to determine whether the funds were applied for intended purposes. Furthermore, I am not aware of any surcharge imposed by the Minister of Finance on the chief accounting officers who have incurred excess expenditure over the authorised provision for a head of expenditure. This contravened Section 27 (6) of the PFMA Act 2011 that empowers him to impose a surcharge of M1000 or the amount of the excess, whichever is the lesser amount, on the person who was chief accounting officer for that head at that time,” Ms Besetsa states.