K96 billion not accounted for

Ministries, departments and agencies (MDAs) collectively failed to account for K96.8 billion in the financial year ending June 30 2021, President Lazarus Chakwera and the Tonse Alliance’s first year in office, it has emerged.

Findings of an audit report conducted by the National Audit Office (NAO) for the 2020/21 financial year have, as in previous years, exposed glaring shortfalls in the management of public funds by MDAs, which is in sharp contrast to the Tonse Alliance  campaign promises to seal loopholes and ensure accountability in managing the public purse.

The report, submitted to Parliament on Monday this week, shows that 46 percent of the unaccounted for expenses involve procurement and construction-related irregularities while almost 20 percent of queries are related to expenditure without supporting documents, which the auditors allege is an act meant to conceal fraud.

Reads the report in part: “MDAs have, for a long time, been guilty of this vice. In the past we have relegated that to poor record management, but this time I am persuaded to think that the MDAs which fail to avail documents for audit are actually committing fraud and they would want to hide it.”

One of the State Residences: Kamuzu Palace in Lilongwe

A breakdown of the K96.8 billion includes K23 billion procurement irregularities comprising K22.5 billion in Malawi Police Service, K529 million at the Ministry of Education and K389 million for the Malawi Parliament.

On the other hand, irregularities in construction total K21 billion, out of which K19 billion is expenditure without documentation availed for audit.

The report has also raised concerns on expenditure without supporting documents with State Residences leading the pack with K4.8 billion. State Residences is also under the spotlight for unliquidated funds totalling K5 billion dating back to 2016.

“An inspection of payment vouchers disclosed that liquidation of payments amounting to K5 236 639 307.93 relating to contingencies and subsistence allowances were not substantiated with liquidation receipts,” reads the report.

Trailing State Residences is the Ministry of Defence with K1 billion while Parliament, which provides oversight in public finance management, is third with K207 million unaccounted for expenditure.

Other major concerns highlighted in the report, which in some cases extended to previous reporting years, are in the Ministry of Foreign Affairs where K3.8 billion was spent without payment vouchers produced for audit.

The audit has also exposed suspected embezzlement of funds at Malawi’s High Commission in Maputo, Mozambique where irregular payments amounting to K597 million were made between 2019 and 2021.

Both State Residences and Ministry of Foreign Affairs have an increase in funding of about 65 percent in the K3.7 trillion 2023/24 National Budget that rolled out on April 1.

Besides the K3.8 billion concern, Foreign Affairs, according to the report, in 2020/21 overspent by K2.7 billion without Treasury’s approval.

The audited accounts for 2019, 2020 and 2021 also show that K597 million was irregularly spent in Maputo through unauthorised advance salaries and borrowing of public funds without repayment.

Based on inspection of bank statements, the report revealed that the embassy in Maputo paid some officers “suspicious and duplicated payments amounting to K73 948116.00 [$89 634.08]” from other recurrent transactions (ORT) and deposit accounts without payment vouchers, making it difficult to ascertain what the funds were used for.

Reads the report: “An inspection of payment vouchers and bank statements for the period under review revealed that some officers of the embassy took salary advances from the deposit account amounting to K71 977 141.50 [$87 245.02] without the approval by the Treasury or the knowledge of the ministry headquarters. However, the officers concerned did not pay back the advances taken.”

The auditors have recommended an investigation at the Maputo Mission.

On irregular revenue, which refers to funds collected on behalf of government, but not deposited into Account Number One as required by law, the Department of Immigration and Citizenship Services has the highest figure of K4.3 billion. It is followed by Ministry of Forestry and Natural Resources with K514 million and Malawi’s Mission in Ethiopia with K104 million in unremitted visa revenue.

Reacting to the findings, Catholic University of Malawi economist Hopkins Kawaye observed that while the queries are recurrent from the previous administration, the new leadership needed to make a difference.

He said: “It is the same civil service but the new managers should do better. We cannot be having the same problems across regimes.

“The fact that MDAs are not willing to submit documentation for audit shows that there is something wrong, it’s about hiding the dirt.”

Kawaye said once government begins to crack the whip, controlling officers will be more willing to enforce standards.

In a written response, Public Accounts Committee (PAC) of Parliament chairperson Mark Botomani said they will come up with a schedule to summon the concerned MDAs for responses starting with local councils.

In 2020, our sister newspaper Nation on Sunday analysed Auditor General’s reports and PAC summaries from 2009 to 2019 and found that recommendations from NAO reports amounted to nothing, with the same concerns recurring in every report largely due to the lack of punitive measures on defiant controlling officers

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