Around $1 billion of spending in two government ministries remains unaccounted for, the Auditor General’s Office states in a new report which questions the competency of some officials responsible for managing public money.
The two large ministries, highlighted as the worst offenders, have been unable to provide a reliable account of how they have spent the people’s money for the past eight years, the auditor states.
The report – an analysis of financial and performance reporting in all government ministries and portfolios for 2010 to 2012 – points to a general improvement in the timeliness and accuracy of financial statements.
But it warns this is relative to the previous “dire position” and says much work remains to be done to restore the financial credibility of government’s accounts.
“There continues to be a lack of due regard by senior officials for ensuring that appropriate systems are in place, exposing public funds to risks of waste and misuse,” Auditor General Alastair Swarbrick states in the report.
The Ministry of District Administration, Works, Land and Agriculture and the Ministry of Tourism and Development are singled out for specific criticism. Neither ministry has been able to present financial statements that the auditor deemed to be reliable or credible since the introduction of the Public Management and Finance Law in 2004.
Highlighting a host of issues, including the capability of staff, poor control of travel and hospitality expenditure and disregard for procurement rules and procedures, Mr. Swarbrick writes that legislators and the public have no way of knowing that funding approved for either ministry was used for the purpose intended between 2004 and 2012.
“Ultimately, there has been no accountability for around $1 billion of public funds in these two ministries and a significant increase in the risk of waste, misuse or abuse of public funds,” he said.
Both ministries have undergone administrative and name changes over the years. Mr. Swarbrick highlights significant concerns about the financial reporting for Tourism and Development, for the period up to June 30, 2012.
He writes that “Whilst there are a number of concerns, a common theme is the inability to effectively account for a broad variety of transactions on an accruals basis, raising significant concerns about the capability of the entity’s finance personnel and its ability to carry out this important role.”
During a press conference Wednesday morning, Mr. Swarbrick said “poor controls and record keeping” in the two delinquent ministries had meant his staff was essentially unable to carry out the necessary audit work.
“I have highlighted a litany of issues that underlined the need for more competent financial managers and for them to comply with the Public Management and Finance Law. The government has informed us that they have taken action to address these issues, the impact of which we will assess in future reports,” he said.
Despite those concerns, Mr. Swarbrick said the overall position is improving, though more slowly than he would like.
“In these reports, my clear overriding message is that I continue to see improvement in the timeliness and quality of information being presented for audit, but there is still much work that needs to be done,” he said.
“Restoring financial accountability needs to be a priority for government. After reporting annually on progress for the last four years, I believe the government needs to do more to achieve that objective in a timely manner.
“A greater and more concerted effort is also needed to address the underlying issues raised in my reports concerning weaknesses in governance and control frameworks.” The report states that the expectation is that all ministries and portfolios will submit annual reports and financial statements that receive an “unqualified opinion” from the auditor – meaning the information is deemed to be credible and reliable by auditors and accurately reflects the entities’ financial positions and how they used resources. Between 2008 and 2010, no government ministry or portfolio was given an unqualified opinion, the report states.
A qualified audit opinion is issued when the statements are generally acceptable with one or two exceptions.
A disclaimer or opinion or an adverse opinion is considered a fundamental failure to provide acceptable accounts for how resources were used.
The two worst offending ministries – District Administration, Works, Land and Agriculture, and Tourism and Development – have received either disclaimers or adverse opinions every year since 2004.
Pointing to general signs of improvement elsewhere, the auditor writes that for the financial year ending June 30, 2012, six entities received unqualified audit opinions, seven got qualified opinions, one was disclaimed and one received an adverse opinion. For the year ending June 30, 2011, the auditor issued two unqualified opinions, 10 qualified opinions, one adverse opinion and one audit was disclaimed.