You are here:Home>Latest News>PARLIAMENT BUDGET OFFICE Analysis of the Auditor General’s Report on Appropriation Accounts for the Financial Year Ended December 31, 2017

PARLIAMENT BUDGET OFFICE Analysis of the Auditor General’s Report on Appropriation Accounts for the Financial Year Ended December 31, 2017

 

 

 

                                               

PARLIAMENT BUDGET OFFICE

 

 

                                                                                                                                     

Analysis of the Auditor General’s Report on Appropriation Accounts for the Financial Year Ended December 31, 2017

 

 

Disclaimer

The Parliamentary Budget Office (PBO) is a non-partisan professional office of the Parliament of the Republic of Zimbabwe. The primary function of the Office is to provide professional advice and objective in-depth analysis of fiscal, economic, financial and related policies.

Contacts:

Asha Jenje

This email address is being protected from spambots. You need JavaScript enabled to view it.

This email address is being protected from spambots. You need JavaScript enabled to view it.

+263712 452 331

+263773 452 331

+263242 700 181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

                                                                                                                                                                                                PBO ANALYSIS-2018       

 


 

 

Table of Contents

1.0         Introduction. 1

2.0         Stations visited by the Auditor-General’s Office. 1

3.0         Audit Opinions. 2

3.1         Appropriation Accounts. 4

3.2         Consolidated Finance Accounts (CFA) 6

3.3         Consolidated Revenue Accounts (CRA) 7

4.0         Findings. 8

4.1         Highlights of Findings. 8

4.2         Number of findings categorized by Appropriation Accounts. 9

          Ministries with Sub-PMG Account Balances not reconciling with the PFMS Balance. 11

          Transfer of funds between Fund Accounts and Parent Ministries. 12

          Outstanding payments to suppliers for goods and services. 12

          Unsupported Expenditure. 14

          Unallocated Reserves. 15

          Uncollected Receivables/Debtors. 15

          Employment Cost 16

5.0         Implementation of Audit Recommendations. 18

6.0         Recommendations. 19

7.0         Conclusion. 20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

List of Figures

Figure 1: Number of Stations Visited. 2

Figure 3a: Number of findings per Appropriation Account 10

Figure 3b: Number of findings per Appropriation Account 11

Figure 6: Employment cost proportion to total expenditure less than 30%.. 17

Figure 7: Employment cost proportion to total expenditure greater than 30%.. 17

Figure 5: Uncollected Debtors. 16

Figure 8: Overview of progress in implementation of recommendations. 18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

List of Tables

Table 1: Summary of Audit Opinions. 4

Table 2: Audit Opinion on Revenue Accounts. 7

Table 3: Unsupported Expenditure. 14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A.     Abbreviations and Acronyms

 

ISA                              International Standards in Auditing

AG                              Auditor General

PAC                             Public Accounts Committee

PFMA                          Public Finance Management Act Chapter 22.19

PBO                            Parliament Budget Office

UQM-                          Unqualified without material observations

UQM+                        Unqualified with material observations

ZACC                          Zimbabwe anti- Corruption Commission

CFA                             Consolidated Financial Accounts

SPD                             Statement of Public Debt

PMG                            Paymaster General

UR                               Unallocated Reserve

ANAO                        Australian National Audit Office


1.0                 Introduction

 

According to the International Standards on Auditing (ISA) 700 the objective of an auditor is to form an opinion on the financial statements based on the evaluation of the conclusions drawn from the audit evidence obtained and to express clearly that opinion through a written report that also describes the basis for that opinion. Consistent with the provisions in Section 309 (2) of the Constitution of Zimbabwe Amendment (No. 20) Act 2013 and Section 10 of the Audit Office Act [Chapter 22:18], the Auditor-General (AG) prepared and submitted the report of her examination and audit of the public accounts of Zimbabwe to the Minister of Finance and Economic Development. The examination of the public accounts followed the submission of financial statements by Accounting Officers in terms of Section 35 (6) and (7) of the Public Finance Management Act (PFMA) [Chapter 22:19].

 

On 30 October 2018, the Minister of Finance and Economic Development laid the report of the Auditor General for the Financial Year Ended December 31, 2017 on Appropriation Accounts, Finance and Revenue Statements and Fund Accounts before the National Assembly in terms of Section 35 (12) of the Public Finance Management Act [Chapter 22:19].

 

The Parliament Budget Office (PBO) takes this opportunity to analyse and highlight the key aspects of the report on Appropriation Accounts, Finance and Revenue Statements for the Financial Year Ended December 31, 2017. Fund Accounts are analysed in a separate report by the PBO. The analysis aims to draw attention to major weaknesses in governance, risk management and the internal control system (ICS) as observed by the AG.

 

2.0           Stations visited by the Auditor-General’s Office

An insignificant increase of stations visited by the Auditor-General of 0.3% (317 stations) was recorded in 2017 compared to those visited in 2016 (316 stations). A notable reduction of 32,5% was observed on the 2016 audit were the number of stations visited dropped from 468 stations in 2015 to 316 stations in 2016. The reduction in stations visited may compromise the scope of the audit and credibility of findings as it is important for the auditor to be satisfied with available audit evidence. Site visits are necessary to obtain evidence which forms the basis for an audit opinion

 

 

Figure 1: Number of Stations Visited


 

 

Resources must be availed to ensure a wider coverage in terms of stations visited to obtain sufficient audit evidence. Station visits helps the auditor to verify the accuracy and quality of the provided information. Station visits for Ministries such as Defence, Sports and Recreation, and Public Service Commission were not conducted.

 

Most Ministries are decentralized so there is need for increased audit coverage of the outstations. As highlighted in our 2016 analysis; inadequacy of financial and manpower resources continues to be the major reasons for low audit coverage. The PFMA and Audit Acts increased AG’s mandate to include local authorities but this was not met with an increase in financial and human resources. Treasury should avail adequate financial resources to ensure that the office of the AG efficiently undertakes its constitutional obligations.

 

3.0        Audit Opinions

ISA 705 provides that the auditor forms an opinion on whether the financial statements are prepared in all material respect in accordance with financial reporting framework. To form an opinion, the auditor shall conclude as to whether the auditor has obtained reasonable assurance about whether the financial statements as a whole are free from material misstatements whether due to fraud or error. The AG is duty bound to issue an opinion as to whether there is reasonable assurance that the financial statements are free from material misstatements.  

 

An audit opinion can be summed up as the outcome of an auditor’s view on whether the statements represents a true and fair view of the financial performance and position of the organization. Audit opinion may range from unqualified opinion to modified opinions.

 

According to ISA 700, the auditor shall express an unmodified opinion when the auditor concludes that the financial statements are prepared in all material respect in accordance with the applicable financial reporting framework. An unmodified opinion is commonly known as an “unqualified audit opinion” and also referred to as a “clean certificate”. However, if the auditor concludes that based on the audit evidence obtained, the financial statements as a whole are not free from material misstatements or is unable to obtain sufficient appropriate audit evidence to conclude that the financial statements as a whole are free from material misstatements the auditor issues a modified opinion.

 

There are three (3) types of modified opinions, namely; a qualified opinion, an adverse opinion and a disclaimer of opinion. The decision regarding the appropriate modified opinion depends on whether the financial statements are materially misstated or whether there is an inability to obtain sufficient and appropriate audit evidence and also on the auditor’s judgement about the pervasiveness of the effects on the financial statements as detailed on the table below:

 

            Audit Opinion

Nature of Matter Giving Rise to the Modification

Auditor’s Judgement about the Pervasiveness of the Effects or Possible Effects on the Financial Statements

Material but not Pervasive

Material and Pervasive

Financial statements are materially misstated

Qualified opinion

Adverse opinion

Inability to obtain sufficient appropriate audit evidence

Qualified opinion

Disclaimer of opinion

Source: ISA705

 

A qualified audit opinion is issued when the auditor concludes that misstatements individually or aggregate, are material, but not pervasive, to the financial statements or when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion and the possible effects on the financial statements of that inability are material but not pervasive (ISA 705).

 

An adverse opinion is expressed when the auditor concludes that misstatements, that are material individually or aggregate are pervasive to the financial statements.

 

A disclaimer of an opinion is expressed on the financial statements when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the possible effects on the financial statements of that inability are both material and pervasive. This is the most undesirable state.

 

3.1          Appropriation Accounts

There was an unsatisfactory decline of 17.4% in terms of the number of Appropriation Accounts with an unqualified opinion whether with or without other material issues from 2016 to 2017. Clean opinions [Unqualified without other material issues (UQM-)] reduced from 6 in 2016 to 5 in 2017. Likewise, unqualified opinions with other materials (UQM+) reduced to 14 from 17 in 2016 as shown in Table 1 below:

 

Table 1: Summary of Audit Opinions

Opinion

Appropriation Accounts

CFA

CRA

 

2017

2016

2017

2016

2017

2016

UQM-

5

6

 

 

 

1

UQM+

14

17

 

 

 

 

Qualified

19

15

2

1

2

2

Adverse

 

 

 

1

1

1

Disclaimer

 

 

 

1

2

1

Total

38

38

2

3

5

5

 

Table 1 shows an increase in the number of qualified opinions from 15 in 2016 to 19 in 2017. There was a decline in the number of appropriations issued with unqualified but with material observations from 17 in 2016 to 14 in 2017. This change is only welcome if the entities moved from UQM+ to UQM-. Unfortunately, this was not the case as the increase was observed on Qualified opinions. 

 

Improvements were observed on the following Appropriation Accounts which were issued with qualified opinion in 2016 and were unqualified in 2017 are:

      Parliament of Zimbabwe

      Lands and Rural Resettlement

 

There was an improvement on the accountability of public monies and reasonable precautions on safeguarding State property by Parliament of Zimbabwe and Ministry of Lands and Rural Resettlement. Parliament also recorded a decrease in the number of observations from 2 in 2016 to 1 (one) in 2017.

 

The Appropriation Accounts which were issued with unqualified opinion in 2016 and were qualified in 2017 are:

      Transport and Infrastructural Development

      Home Affairs

      Justice, Legal and Parliamentary Affairs

      Small and Medium Enterprises and Cooperative Development

      Energy and Power Development

      Women’s Affairs, Gender and Community Development

 

The above mentioned six Ministries failed to maintain their good status as far as the audit is concerned. Efforts must be made to address issues raised by the AG.

 

The Appropriation Accounts which have maintained unqualified opinions (clean bills) include:

      Office of the President and Cabinet

      Public Service, Labour and Social Welfare

      Defence

      Information, Media and Broadcasting Services

      Judicial Service Commission

 

The above mentioned ministries have managed to maintain a clean bill despite their size and huge budgets levels, a total reflection that effort and will are the only essential tools to ensure a clean bill.

 

The Appropriation Accounts with recurring qualified opinions includes the following:

      Finance and Economic Development

      Industry and Commerce

      Agricultural, Mechanisation and Irrigation Development

      Environment, Water and Climate

      Foreign Affairs

      Local Government, Public Works and National Housing

      Health and Child Care

 

The ministry of Finance and Economic Development Accounts are consistently receiving a qualified opinion. The ministry must attempt to move from this negative position since it the one charged with supervising other line ministries. The Public Accounts Committee (PAC) must consider calling the ministry for oral evidence to appreciate the challenges being faced by the ministry.

 

Neither adverse nor disclaimer audit opinions were issued for Appropriation Accounts in both financial years (2016 & 2017). Accounts for the Zimbabwe Electoral Commission were yet to be submitted for audit for the past two years, while those of Zimbabwe Human Rights Commission were submitted but the audit was still in progress at the time of the audit report. The Zimbabwe Anti-Corruption Commission (ZACC) had submitted its accounts for 2016 and the Auditor-General was still working on them at the time of the audit report. However, as at May 24, 2018, ZACC was yet to submit its 2017 accounts for audit.

 

Commissions are failing to submit returns within the stipulated time frames. Punitive measures prescribed in the PFMA must be invoked to ensure compliance.

 

A “traffic lights indicator” analysis for Appropriation Accounts (financial years 2013 - 2017) is provided in Annexure 1.

 

3.2          Consolidated Finance Accounts (CFA)

The Consolidated Finance Accounts (CFA) audited during the period were Statements of Public Debt (SPD) of 2015 and 2016. Table 1 shows that these statements were both issued with qualified opinions which denotes no improvement on consolidated financial statements particularly on Treasury Bills/Bond Issuances, variances on debt service amounts, penalty interest charges, disclosure of debts in the Statement of Public Debt and failure to have approved manuals. Failure by Treasury to present consolidated accounts is a violation of regulations.

 

Parliament cannot be exonerated on the failure by the executive to comply with regulations as it is the arm charged with holding the executive to account. PAC must call Treasury for oral evidence and request for management commitment in addressing the recurring findings.

 

3.3           Consolidated Revenue Accounts (CRA)

Revenue statements whose accounts have been submitted and audited during the period were as depicted by Table 2 below:

 

Table 2: Audit Opinion on Revenue Accounts

Revenue Accounts                                                                                            Audit

Opinion

Schedule of Revenue Received 2015

Qualified

Schedule of Outstanding Revenue 2015

 

Qualified

Statement of Receipts and Disbursements 2015

 

Adverse

Summary of transactions of the Consolidated Revenue Fund 2014

Disclaimer

 

Summary of Transactions on the Exchequer Account 2015

 

Disclaimer

 

The results outlined in Table 2 above show a worsening situation on accounting for revenue as all of the statements were not fairly presented. The Accountant General plays a supervisory role on the management of government finances and hence must endeavor to lead by example through judicious production of financial statements.

 

4.0        Findings

           

 

The AG highlighted that most of the issues which were common to most Government Ministries and Departments were governance issues (77.1%), procurement issues (7.6%), and revenue collection and debt management issues (15.3%). These issues call for urgent attention and action to redress by those charged with the responsibility of governance, in order to improve transparency and accountability in the public sector as required by section 298 of the Constitution of Zimbabwe Amendment (No. 20) Act 2013.

 

4.1         Highlights of Findings

            Findings which were common in most government ministries related to the following:

      Maintenance of Accounting Records

      Advance of Moneys from Fund Accounts to Parent Ministries

      Suspense Accounts Balances in Fund Accounts

      Outstanding Payments to Suppliers of Goods and Services

      Direct Payments

      Unsupported Expenditure

      Use of Fund Resources as Collateral Security

      Budgetary Control

      Unallocated Reserves

      Assets Management

      Posting Financial Transactions to Closed Financial Years

      Transfer of Funds from Appropriation to Fund Accounts

      Programmes Funded under IDBZ

      Payment of Labour Costs

      Violation of Procurement Regulations

      Amounts not collected from debtors

             

Most of the issues affecting operations of Government Ministries and Departments have to do with corporate governance. Good governance is an essential ingredient for a prosperous and vibrant economy. National objectives are achieved when good governance, transparency and accountability are embraced. There is urgent need to address leakages in public funds resulting from lack of transparency and accountability in the public sector. Social accountability in the Public sector is also critical for improved service delivery.

 

4.2           Number of findings categorized by Appropriation Accounts

An audit is meant to pick out operational inefficiencies and provide a base for improvement, but it can be noted from the 2017 audit report that the operational situation is slightly worsening in some Government Ministries and Departments. This gives rise to question those charged with corporate governance of Government Ministries and Departments on whether they are heading to the recommendations of the Auditor-General. Some departments have consistently received the same observations with no efforts to implement audit recommendations.

 

The highest frequency of findings was observed in the Ministry of Agriculture, Mechanisation and Irrigation followed by Ministry of Tourism and Hospitality as detailed in Figure 3a below:

 

Figure 3a: Number of findings per Appropriation Account

 

5

5

5

5

5

5

6

6

6

6

7

8

8

9

10

11

12

0

2

4

6

8

10

12

14

MINES AND MINING DEVELOPMENT

HOME AFFAIRS

SMALL AND MEDIUM ENTERPRISES AND

WOMEN’S AFFAIRS, GENDER AND COMMUNITY

LANDS AND RURAL RESETTLEMENT

RURAL DEVELOPMENT, PROMOTION AND

PUBLIC SERVICE, LABOUR AND SOCIAL WELFARE

FINANCE AND ECONOMIC DEVELOPMENT

HEALTH AND CHILD CARE

COUNCIL OF CHIEFS

YOUTH, INDIGENISATION AND ECONOMIC

INDUSTRY AND COMMERCE

TRANSPORT AND INFRASTRUCTURAL DEVELOPMENT

LOCAL GOVERNMENT, PUBLIC WORKS AND

FOREIGN AFFAIRS

TOURISM AND HOSPITALITY INDUSTRY

AGRICULTURAL, MECHANISATION AND IRRIGATION

 

 

Figure 3a above, shows that 17 appropriation accounts had issues ranging from 5 to 12. These issues vary from one Appropriation to another and had different material weight on the audit report. It can be noted that number of appropriation accounts with highest frequencies of findings resemble qualified opinions issued. In the previous audit (2016), Ministry of Transport had 9 issues raised against it while currently it has 8 issues. Contrary, the Tourism Ministry was at the second position on issues raised against it in 2016 at 8 but currently maintain the position with 11 issues. 

 

The lowest frequency of findings by Appropriation Account are shown in Figure 3b below:

 

Figure 3b: Number of findings per Appropriation Account

 

1

1

1

2

2

2

3

3

3

3

3

3

3

4

4

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

OFFICE OF THE PRESIDENT AND CABINET

PUBLIC SERVICE COMMISSION

NATIONAL PEACE AND RECONCILIATION

ZIMBABWE GENDER COMMISSION

ZIMBABWE MEDIA COMMISSION

PARLIAMENT OF ZIMBABWE

SPORTS AND RECREATION

ZIMBABWE LAND COMMISSION

INFORMATION COMMUNICATION TECHNOLOGY,

MACRO

-

ECONOMIC PLANNING AND INVESTMENT

NATIONAL PROSECUTING AUTHORITY

DEFENCE

ENVIRONMENT, WATER AND CLIMATE

PRIMARY AND SECONDARY EDUCATION

JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS

ENERGY AND POWER DEVELOPMENT

JUDICIAL SERVICE COMMISSION

WELFARE SERVICES FOR WAR VETERANS, WAR

HIGHER AND TERTIARY EDUCATION, SCIENCE AND

INFORMATION, MEDIA AND BROADCASTING

 

 

It can be noted from Figure 3b above that there were no material issues raised on most of the Commissions. The Office of the President and Cabinet remained in the right direction as far as accounting for public resources is concerned.  

 

4.3        Finding by Nature

 

Ministries with Sub-PMG Account Balances not reconciling with the PFMS Balance

Variances between the PFMS and the Sub-Paymaster-Generals’ accounts in various Ministries increased from $3 million (2016) to $19 million (2017). The Ministry of Finance and Economic Development made direct payments to suppliers on behalf of line ministries resulting in a challenge in reconciling the Sub-PMG Account and the PFMS balances. Ordinarily the Sub-PMG Account and PFMS must balance. Treasury must therefore desist from making payments on behalf ministries behalf to allow for accountability.  

 

Transfer of funds between Fund Accounts and Parent Ministries

Various Ministries utilized Fund accounts without reimbursement amounting to $1.77 million (2016: $0.89 million). This was done in the form of advances to Parent Ministries in respect of payments to suppliers on procurement of goods and services for appropriation activities. The Ministry of Public Service, Labour and Social Welfare owed various Funds a total of $1.49 million as at 31 December 2017. Of greater concern is the utilisation of the Disabled Persons Fund ($107 183), Older Persons Fund ($53 666), National Drought Fund ($136 843) and BEAM ($107 183) among other fund accounts without reimbursement. This impacted on the funds ability to fulfil their constitutional obligations as the advanced funds were not reimbursed by the parent ministry.

 

An amount of $17,94 million was transferred by Ministry of Agriculture ($2.21 million), Ministry of Health and Child Care ($6.74 million) and Ministry of Home Affairs ($8.99 million) from the Paymaster General Account to their respective Fund accounts without Treasury Authority. This action violated the provisions of the Appropriation Act and the Public Finance Management Act [Chapter 22:19].

 

Outstanding payments to suppliers for goods and services

Outstanding payments to suppliers of goods and services for Ministries had reduced by 24.7% from $84.44 million in 2016 to $63.59 million in 2017. The outstanding amount is however, significant and needs to be addressed. Ministries must adhere to the provisions of Treasury Instructions of paying suppliers promptly when goods and services are received. Government is still using the cash basis of accounting hence goods and services must not be procured when there are no resources.

 

 

 

 

 

 

 

 

 

 

 

 

Figure 4: Outstanding payments to suppliers for goods and services

 

 

As highlighted in fig 4 above, there was a general improvement on the outstanding payments to suppliers of goods and services. The Ministry of Health and Child Care had the highest outstanding amount to suppliers of $48.3 million which is a 31.1% decrease from the 2016 balance of $70.1 million. Outstanding payments to suppliers have remained high for the Ministry of Public Service with an increase of $0.17 million from $7.13 million to $7.3 million.

 

Payables balance for the Ministry of Environment, Water and Climate slightly reduced to $1.7 million from $1.9 million in 2016. Likewise, payables balance for Ministry of Tourism and Hospitality Industry reduced from $0.69 million to $0.68 million.

 

Ministries of Finance, Local Government, and Small and Medium Enterprises had outstanding payment balances to suppliers of $1.72 million, $4.43 million and $1.17 million respectively.

 

Potential impact:

      Affected supply system

      Litigation costs

      Crowding out the private sector

 

Unsupported Expenditure

Some Ministries were processing payments without adequate supporting documents. This made it difficult for the Auditor-General to determine the nature of the payments and whether they were being done in accordance with rules and regulations. The unsupported total expenditure for Ministries was $21.15 million which signify a ballooning increase of 172% from the previous years’ figure of $7.77 million as shown by table 3 below:

 

Table 3: Unsupported Expenditure

Ministry

2017

2016

Industry and Commerce

250,827

 

Environment, Water and Climate

411,871

 

Transport and Infrastructure Development

5,000,000

 

Foreign Affairs

7,916,191

44,483

Local Government, Public Works and National Housing

 

424,565

Health and Child Care

97,504

 

Higher and Tertiary Education, Science and Technology

 

121,000

Home Affairs (Registrar General)

1,129,360

 

Justice, Legal and Parliamentary Affairs

2,590,508

 

Small and Medium Enterprises and Co-operative Development

90,440

 

Lands and Rural Settlement

3,603,243

7,175,000

Welfare of Services for War Veterans, War Collaborators,

Former Political Detainees and Restrictees

62,062

8,500

Total

21,152,006

7,773,548

 

Table 3 above shows the extent to which expenditure was being incurred without supporting documents. The Ministry of Foreign Affairs and Transport and Infrastructure Development had the highest figures of $7,9million and $5million respectively being processed without supporting documents. The ministry of Lands made a payment of $3,6million without supporting documents as compensation for immovable properties. Unsupported expenditure exposes public funds to fraud and embezzlement. Accounting officers must ensure that proper procedures are followed when processing payments to safeguard public funds from misappropriation.

 

Potential impact:

·         Misappropriation of public funds

·         Fraud

 

Unallocated Reserves

Unallocated reserves were increased by $2.99 billion to $3.02 billion and transferred to various votes. According to Section 305 (5) of the Constitution of Zimbabwe, an additional or supplementary estimate should have been made and approved by Parliament. Audit observed a huge variance of 78.9% between the Unallocated reserves reported by Ministries and that reported by Treasury. Transfer from the Unallocated Reserve have an effect of increasing the budget and hence must be properly accounted to ensure that funds are used for the intended purposes.

 

              Uncollected Receivables/Debtors

Accounts receivables are an essential part of any organisation's statement of financial position. Often referred to as debtors, these are monies which are owed to an organisation by a customer (Chartered Institute of Internal Auditors).

 

Amounts not collected from Debtors in Appropriation Accounts increased by 59.3% from $27.56 million (2016) to $43.91 million (2017). The increase demands for more effort to be put to recover the outstanding revenue by employing efficient accounting systems.

 

The Ministry of Energy and Power Development emerged the highest with regards to uncollected receivables ($21.27 million: 2017) followed by the Ministry of Mines and Mining Development ($10.96 million: 2017) as illustrated by Figure 5 below:

 

 

 

 

Figure 5: Uncollected Debtors

 

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

PUBLIC SERVICE, LABOUR AND SOCIAL WELFARE

DEFENCE

FINANCE AND ECONOMIC DEVELOPMENT

INDUSTRY AND COMMERCE

MINES AND MINING DEVELOPMENT

TRANSPORT AND INFRASTRUCTURAL DEVELOPMENT

LOCAL GOVERNMENT, PUBLIC WORKS AND

HEALTH AND CHILD CARE

PRIMARY AND SECONDARY EDUCATION

HIGHER AND TERTIARY EDUCATION, SCIENCE AND

YOUTH, INDIGENISATION AND ECONOMIC

JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS

SMALL AND MEDIUM ENTERPRISES AND

ENERGY AND POWER DEVELOPMENT

TOURISM AND HOSPITALITY INDUSTRY

INFORMATION COMMUNICATION TECHNOLOGY,

JUDICIAL SERVICE COMMISSION

PUBLIC SERVICE COMMISSION

RURAL DEVELOPMENT, PROMOTION AND

US$

2016

2017

 

 

Potential impact: 

  Loss of revenue to the Government. 

  Cash flow issues.

 

Employment Cost

The report noted that Treasury was unable to release funds to meet demand on all projects and programmes due to the harsh economic environment. This was evidenced by prioritization on the payment of employment costs. Based on audited Appropriation Accounts, an amount of $2.24 billion was spent on employment cost out of a total expenditure figure of $3.58 billion. This means that after paying for employment costs, Appropriation Accounts were only left with 37.4% ($1.34 billion) for programmes and acquisition of capital fixed assets. However, the proportion of employment cost to total expenditure varies from one Ministry to another as depicted by Figure 6 and 7 below:

 

Figure 6: Employment cost proportion to total expenditure less than 30%

 

 

Figure 7: Employment cost proportion to total expenditure greater than 30%

 

NATIONAL PEACE AND RECONCILIATION COMMISSION

PRIMARY AND SECONDARY EDUCATION

HOME AFFAIRS

PUBLIC SERVICE COMMISSION

WOMEN’S AFFAIRS, GENDER AND COMMUNITY

OFFICE OF THE AUDITOR

-

GENERAL

PUBLIC SERVICE, LABOUR AND SOCIAL WELFARE

YOUTH, INDIGENISATION AND ECONOMIC

JUDICIAL SERVICE COMMISSION

DEFENCE

NATIONAL PROSECUTING AUTHORITY

JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS

ENERGY AND POWER DEVELOPMENT

ZIMBABWE LAND COMMISSION

HEALTH AND CHILD CARE

ZIMBABWE GENDER COMMISSION

FOREIGN AFFAIRS

ZIMBABWE MEDIA COMMISSION

SMALL AND MEDIUM ENTERPRISES AND

RURAL DEVELOPMENT, PROMOTION AND

AGRICULTURAL, MECHANISATION AND IRRIGATION

EC/TE %

 

5.0          Implementation of Audit Recommendations

The Auditor-General acknowledged the Ministries that took steps in implementing prior year audit recommendations.

 

According to the Australian National Audit Office (ANAO) recommendations in audit reports highlight the actions that are expected to improve entity performance when implemented. The appropriate and timely implementation of audit recommendations agreed by management is an important part of realizing the full benefit of the audit. An audit becomes a mere waste of resources when audit recommendations are not considered by the auditee. Instead of directing audit recommendations seek to provide suggestions on how to correct the identified challenges.

 

The benefit from the audit work is derived in the effective implementation of recommendations made. It is the duty of management to address all issues raised by the Auditor-General and implement any necessary measures which promotes good governance, transparency and accountability. It is pleasing to note that the Ministry of Finance and Economic Development introduced the “Audit Implementation Office” to help track the implementation of audit recommendation by line ministries as well as drafting Treasury minutes.

 

An overview of progress in implementation of recommendations for the financial years 2015 and 2016 is shown in Figure 8 below: 

Figure 8: Overview of progress in implementation of recommendations

 

 

On overall there was some progress in the implementation of recommendations made by the Auditor-General on Appropriation Accounts. This is shown by a huge progress of 71% in 2016 as compared with 60% in 2015 for fully and partially implemented recommendations. However, there was a reduction on the number of recommendations fully implemented which constitute 48% for 2015 and 22% for 2016.

 

Only three (3) Appropriation accounts managed to fully implement audit recommendations. The Appropriation accounts are listed below:

      Ministry of Home Affairs

      Judicial Service Commission

      Zimbabwe Media Commission

 

National Prosecuting Authority and Zimbabwe Land Commission did not make any progress in implementing Auditor-General recommendations, as at February 28, 2018. All other Ministries where in the process of addressing the recommendations made by the Auditor-General as at February 28, 2018.

 

6.0         Recommendations

·         The Treasury Unit in the Ministry of Finance and Economic Development must be empowered with adequate financial and human resources to enable it visit and monitor implementation of audit and PAC recommendations by the various stations around the nation.

·         The AGs budget must be reviewed upwards in line with the increased mandate which now include local authorities.

·         Staff turnover at the AG’s office must be urgently addressed. Treasury must authorize the filling in of vacant posts and also provide a budget for capacity building.

·         PAC must call for oral evidence ministries with recurring audit observations, with qualified statements and those failing to implement audit and PAC recommendations.

·         Consideration must be made to incentivize those with clean bills and at the same time punish those managers failing to comply the PFMA.

·         There must be a coordinated approach in terms of tracking audit recommendations by the Treasury unit, Parliament Budget Office and the AG. The PBO, Treasury and AG must development defining the roles and responsibilities of each unit.

 

7.0        Conclusion

            The analysis of the AG report reveals a general decline in the number of appropriation accounts with a clean bill. A worrying trend of ministries with recurring observations and audit qualifications was also observed. The bulk of the observations centered around cooperate governance, procurement, revenue collection and debt management. The AG acknowledged that achievement of national objectives is hinged on good governance, transparency and accountability. Parliament, therefore is duty bound to exercise its oversight role on the executive to enforce transparency accountability in the use of public funds. Parliament involvement which is statutory is critical to ensure transparency and accountability in the use of public funds and assets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annexure 1:


Audit Opinions for Appropriation Accounts

Vote

APPROPRIATION ACCOUNT

2013

2014

2015

2016

2017

1

Office of the President and Cabinet

 

N/A

     

2

Parliament of Zimbabwe

         

3

Public Service, Labour and Social Welfare

         

4

Defence

         

5

Finance and Economic Development

         

6

Office of the Auditor-General

 

 

     

7

Industry and Commerce

         

8

Agricultural, Mechanization and Irrigation Development

         

9

Mines and Mining Development

         

10

Environment, Water and Climate

         

11

Transport and Infrastructural Development

         

12

Foreign Affairs

         

13

Local Government, Public Works and National Housing

         

14

Health and Child Care

         

15

Primary and Secondary Education

         

16

Higher and Tertiary Education, Science and Technology Development

         

17

Youth, Indigenisation and Economic Empowerment

         

18

Home Affairs

         

19

Justice, Legal and Parliamentary Affairs

         

20

Information, Media and Broadcasting Services

         

21

Small and Medium Enterprises and Cooperative Development

         

22

Energy and Power Development

         

23

Women’s Affairs, Gender and Community Development

         

24

Tourism and Hospitality Industry

         

25

Information Communication Technology, Postal and Courier Services

         

26

Lands and Rural Resettlement

         

27

Judicial Service Commission

         

28

Public Service Commission

         

29

Sports and Recreation

         

30

Macro-Economic Planning and Investment Promotion

         

31

Welfare Services for War Veterans, War Collaborators, Former Political Detainees and Restrictees

 

N/A

     

32

Rural Development, Promotion and Preservation of National Culture and Heritage

 

 

N/A

   

33

Council of Chiefs

 

 

N/A

   

34

Zimbabwe Human Rights Commission

 

 

N/A

N/A

N/A

35

National Peace and Reconciliation Commission

 

 

N/A

   

36

National Prosecuting Authority

 

 

N/A

   

37

Zimbabwe Anti-Corruption Commission

 

 

N/A

N/A

N/A

38

Zimbabwe Electoral Commission

 

 

N/A

N/A

N/A

39

Zimbabwe Gender Commission

 

 

N/A

   

40

Zimbabwe Land Commission

 

 

N/A

   

41

Zimbabwe Media Commission

 

 

N/A

   

Key:

 
 
 

Unqualified/Clean Bill

Qualified

           Disclaimer                                                                                                                                                                                

Read 464 times