Ruminating on Public Financial Management: Government slow decisions

This week the Minister of Finance Dr. Samura Kamara (in photo) read the National Budget for 2011, which shows significant increase from the 2010 National Budget. Dr. Samura Kamara has served in every strategic financial position and with his international exposure he has been unable to help President Ernest Koroma achieve financial turn around. His speech failed to mention how his ministry will in fighting mismanagement and recovery of waste identified in the last audit report.

In the last audit report dated 31 December 2009, Dr. Samura Kamara, Ministry of Finance and Economic Development was one of the most corrupt ministries, which shows that he is not up to the task and therefore he is one of the long serving officials that needs to resign before they are forced to exit. His budget implementation will be no different from 2010 and from his budget it shows that this government do not believe in consultation and that is why our economy is at a position of stagnation. We claimed increase in tax revenue but our budget deficit continues to increase. A lot of state owned enterprises, banks, parastals continue to face difficulties leading to liquidity shortage.

This government need to be serious with tax payers’ money and our parliamentarians should question Dr. Samura Kamara what policy measures he has in place to recover the financial mess in his ministry if he is not a party to the corruption. Dr. Samura Kamara as Bank Governor and Financial Secretary was also unable to maintain financial stability by keeping the exchange rate stable and injecting liquidity into the banking system and unable to reduce inflation. He is unable to develop prudent policy responses that will help maintain macroeconomic and financial stability.

I support the intention to increase but I am skeptical about the authorities’ effectiveness in moving from Donor finance. That is why I think the Anti Corruption Commission, Policy Unit, Extractive and Transparency Initiative, Auditors General and Public Service Commission has a role to play in fighting budget deficit.

Corruption in Anti Corruption: I read about corrupt practices in Anti Corruption Commission the body responsible for prosecuting fraud cases. It shows that employees will always try to embezzle when there is lack of internal control structure designed to deal with this condition. Employees working for ACC and other MDAs will try to steal from government purse even when there is internal control but they are sure that there is an appropriate safeguard in place to monitor them or they have State House protection.

Some people that I speak with that lack governance knowledge claimed that our Chief of State is busy constructing roads. I wonder if these people read about government mismanagement that is going on and little has been done to address it. We should therefore call for cabinet reshuffle now as it is a necessity, not a choice.

We should learn from mistakes in the past that it is trusted employees that are granted access to the organisation record funds that will commit fraud in the organization. Therefore, there is need for reform. However, President Koroma has taken too long to make cabinet changes and only faster reform can help his government achieve his manifesto.

Extract below from Audit Report showing Dr. Samura Kamara’s Ministry of Finance in Financial Mismanagement:

DEPARTMENT OF FINANCE

There was lack of segregation of duties in the Accounts Division as the accountant was solely responsible for processing payments and also was a signatory to the bank accounts of the Public Expenditure Tracking Survey (PETS) and Medium Term Expenditure Framework (MTEF). Bank Reconciliation exercises were not carried out for the period under review. The Procurement Plan submitted was prepared in June 2008, implying that no Procurement Plan was in operation for the first five months of the year. Even though the department’s assets were clearly labelled/marked, no Inventory Register was maintained.  Amounts, totalling Le4,500,000.00 paid in May, in respect of the Financial Year 2007 PETS Sampling Framework collection exercise, were not acknowledged by recipients.  There was a marked difference of Le5,668,680.00 between the amount on a receipt and invoice and that recorded in the Cash Book and Bank Statement. The sums of Le500,000.00 and Le1,800,000.00 were withdrawn from bank and paid to two suppliers by cash.  Standing Imprests, totalling Le22,000,000.00, for the months of January and February in respect of the Financial Secretary and special imprests amounting to Le42,658,560.00 issued to personnel  for official trips abroad, were not retired.  Furthermore, the Imprest Register was incomplete as details of imprests for the months of January and February were not found in the register.  A Fuel Policy was not in existence. Reconciliations between the department and the fuel station were not carried out. Samples of Fuel Chits issued to officials were compared with the Fuel Register. It was observed that the Fuel Chits and Register were not signed by the officers receiving fuel. The amount involved was Le7,490,000.

Payment Vouchers and Local Purchase Orders

Out of a sample of 118 Payment Vouchers, 12 vouchers, totalling Le5,173,664,850.00, had amounts written in figures but not in words. Payments relating to air tickets, operational activities for PETS and MTEF, amounting to Le347,387,360.00, Le213,723,000.00 and Le152,150,000.00 respectively were effected without due regard for the requirement of three competitive proforma invoices. In addition, these payments were not supported by the relevant business documents. Payment Vouchers, totalling Le286,661,760.00, were not supported by Local Purchase Orders. Also there was no indication of approval on the Local Purchase Order attached to a Payment Voucher for the sum of Le21,034,000.00 paid to IPC Travel Agency for Air Tickets. Stores Verification Certificates were not available in respect of payments, totalling Le15,192,250.00.  It was observed that 3 out of 118 PETS Forms II, attached to Payment Vouchers, totalling Le334, 844,458.00, were not adequately completed by those charged with the responsibility of signing, certifying and authorising the expenditure. Payments totalling Le467,351,764.00 relating to overseas travelling did not have itineraries attached to justify additional Daily Subsistence Allowances (DSAs) paid to officers. Payments totalling Le74,576,400.00 and Le43,570,000.00 in respect of Public Expenditure Tracking Survey (PETS) and Medium Term Expenditure Framework (MTEF) respectively were not supported by the relevant documentary evidence. Various items, totalling Le169,415,000.00, were not taken on ledger charge. Withholding Taxes, to the tune of Le10, 686,150.00 and Le6, 947,500.00, in respect of PETS and MTEF operational activities, relating to the procurement of goods and services, were not deducted and paid over to the National Revenue Authority (NRA).

Miscellaneous Expenditure (501)

Out of a sample of 74 Payment Vouchers (including other supporting documents), 22 of these vouchers, totalling Le1,047,718,829.00, were not ruled in red to prevent recycling. Thirty (30) Payment Vouchers, totalling Le3, 959,558,528.00, were not submitted for inspection. Out of a sample of six (6) file copies of Departmental Warrants, only one (1) was seen on the Miscellaneous Expenditure print-out. The remaining five (5), totalling Le253,364,220.00, could not be traced to the IFMIS print-out of Miscellaneous Expenditure. Fifteen (15) Payment Vouchers, totalling Le466,897,532.00, did not have letters of request or approval to justify payments made.

DEPARTMENT OF ECONOMIC DEVELOPMENT

Payments, totalling Le108,496,906.00, were effected without due regard for the requirement of three competitive proforma invoices. Daily Subsistence Allowances (DSAs) for overseas travelling were overstated by Le22, 087,236.  The purchase of a business class return air ticket from Freetown to Beijing was overstated by Le12,966,100.00 when compared to the present business class return air ticket price taking into consideration the rate of inflation. A sample of 4 Payment Vouchers and other supporting documents, totalling Le21, 120,000.00, were not ruled in red ink to indicate completion of payment to avoid recycling.  A sample of 31 Payment Vouchers, totalling Le1, 220,650,695.00, had amounts written in figures but not in words.  Payments to the tune of Le72,599,031.00 were made without adequate supporting evidence. PETS Forms II, attached to Payment Vouchers, totalling Le1,119,832,317.00, were not adequately completed by those charged with the responsibility of signing, certifying and authorising expenditure. Eleven (11) Payment Vouchers, totalling Le87,330,000.00, had Local Purchase Orders prepared before Commitment Control Forms (CCFs) were approved. An imprest of Le3,500,000.00 for the month of April was not retired.  Furthermore, out of the total imprest of Le3,500,000.00 for the month of July only Le2,000,000.00 was retired. It was also observed that the imprest retirements were done earlier than the dates shown on the receipts. Neither a Procurement nor a Strategic Plan was in existence. Even though the department maintained an Inventory Register, details such as inventory cost, dates of purchase, code/ type and names of suppliers were absent. It was also noted that no authority was given and no set procedures were followed before assets were classified as scrapped.

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