The Secretariat of the East African Community (EAC) has rejected an audit report that showed it was abusing the bloc’s funds.

The audit, tabled before the East African Legislative Assembly (Eala) in Arusha, Tanzania, last week, was done by the EAC Audit Commission, which comprises auditors-general of all the five EAC partner states. The audit covered activities of the bloc for the financial year 2012/2013.

Yesterday’s rebuttal follows a series of articles in regional media in which the EAC Secretariat, the executive organ of the bloc, particularly came under attack for what was portrayed in the report as gross misuse of financial resources.

The unflattering audit report had pointed to cases of wasteful expenditure during staff interviews, over expenditure, and even indicated that the Arusha-based Secretariat spent about $3.4 million during the financial year in review on uncalled-for procurement of air tickets.

In statement, however, the Secretariat said in the Financial Year 2012/2013, all EAC organs and institutions received an unqualified (clean) audit opinion from the commission.

"This is the first time all organs and institutions receive a clean audit from the Audit Commission. In the previous years, many EAC-related institutions received qualified or disclaimer opinions. This clean audit is testimony of the hard work of leaders and staff of the Community,” the statement reads in part.

It also claims that the audit report does not portray misuse or loss of any funds, nor governance weaknesses or executive negligence but "simply tables audit findings that point to areas that need to be strengthened.”

For reporting period, the statement adds, there was no over expenditure since from the funds appropriated by the Assembly, $1.67 million was transferred to the EAC General Reserve account at the end of the financial year, as a result of factors, including "improved efficiency within the EAC.”

EAC management says $384,834 is mentioned as an ‘irregularity’ because it was released to staff to meet obligated commitments toward the end of the financial year.

"These funds were not misused. They were used to meet duly approved and executed EAC activities.”

Accordingly, details of those activities and obligations will be resubmitted to the Assembly during its next sitting in Bujumbura, Burundi, next month, the statement says.

Last month, Eala adjourned debate on the audit report to allow the Council of Ministers and the EAC management to clarify and additional information "not adequately captured in the report,” in order to allow for informed debate by MPs during Eala’s upcoming session in Bujumbura.

The Council of Ministers has the oversight of the Audit Commission.

Procurement of tickets

The Secretariat explained that procurement of tickets is done through a framework contract agreement with travel agents for a defined period of two years, after which it is re-advertised.

Unutilised air tickets are presented for refund to the travel agents and, given the importance of this expenditure, "periodic internal audit of the procurement of tickets is carried out, and internal control systems continuously strengthened.”

Regarding the reported wasteful expenditure during staff interviews, the Secretariat said 2012/2013 was the first time the EAC contracted an independent reputable international firm to help with the recruitment process.

"This was aimed at getting value for money, as well as shortening this process, which has been less than optimal in the Community. This policy is beginning to bear results, although it has had its teething problems,” reads part of the statement.

Despite financial control systems in place, including making amendments to Financial and Procurement Regulations, and automating most of processes using latest information management software, EAC management admits that an unqualified (clean) audit opinion "does not mean that we have reached perfection.”

The Audit Commission and the Eala Committee on Accounts noted some issues in the EAC Organs and Institutions that require improvements. To this, the Secretariat said it was "working on resolving the indicated issues.”

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