PAC hearings: How some entities aced audit report

A sense of ownership and adherence to public finance management standards by chief budget managers are key elements among institutions that were not implicated in poor management of public funds in the latest Auditor-General’s report.According to the 2011/2012 AG’s report, 28 per cent of the audited entities attained a clean audit opinion, a feat that Auditor-General Obadiah Biraro said came about because budget managers in these institutions “complied with the law, international accounting standards and best practices.”Ministries such as of Finance, Agriculture, and Public Service as well as local governmnents, including Western and Northern provinces, did not get summoned by the parliamentary Public Accounts Committee (PAC) this time.“In the previous two years, we were summoned by PAC and we decided that this must stop. One thing is that we had to hire a new accountant because the previous one wasn’t doing enough,” said Northern Province Governor Aime Bosenibamwe.“We took the recommendations of the Auditor-General seriously. We summoned our budget managers, even let the auditor general come in to expound more on how errors can be eliminated; and it paid off.”The governor said part of the earlier problem was that leaders never bothered with the public finance management and this was left to junior administrators such as the district administrative secretaries.“Clearly, there was a gap in political leadership. For ownership purposes, in the Northern Province, we decided that apart from the routine monthly public finance management meetings in districts that are held quarterly,” Bosenibamwe said.Chamber of Deputies passes testFor the first time, the Chamber of Deputies also had a clean audit opinion.Claire Semanyenzi, the director-general in charge of services at Parliament, said: “We got a clean audit opinion simply because we have abided by the guidelines set up in public finance management practice. There is no other explanation other than that.”The East Africa Public Health Laboratory Networking project-2011 (under the Ministry of Health) also had a clean audit opinion.Dr Daniel Ngamije, the coordinator in the Single Project Implementation Unit (SPIU), said a comprehensive annual planning process with the involvement of all implementers, explains part of the success.“Strong follow up of implementers through quarterly meeting by the ministry’s chief budget manager who is the chair of EAPHLN steering committee MOH/SPIU, and capacity building through formative field visits by experts in different areas mainly in programmatic , financial and procurement areas, are other reasons.”According to the AG, entities that attained a clean audit opinion did “upscale their capacity, and take our advice seriously.”“During the audit process, there is a lot of exchange going on and these auditees try to make the best of it. Our only hope is that even the others learn from it. It is possible to get a clean audit if they commit to it,” Biraro said in an interview yesterday.As per the audit of 2012 financial statements, overall, there were significant improvements in financial management in public entities.Notably, the number of entities that obtained reports with unqualified (clean) audit opinion increased from 11 reports (9 per cent) in 2011 OAG annual report to 36 reports (27 per cent) in the 2012 report.AG’s explanationTo explain factors that contributed to the improvements, Biraro pointed to positive changes in the audit environment such as: continued commitment by chief budget managers to implement audit recommendations; and continued government follow-up of Auditor-General’s recommendations through Imihigo.Another important element is the continued oversight by the Public Accounts Committee (PAC).The report, presented in June, showed a significant improvement in management of public finances, with entities that obtained clean audit opinions increasing to 37.The general picture was positive because, for example, in the previous report, wasteful expenditure was Rwf1.6 billion, while in the latest report, it reduced by almost half to Rwf850 million.On embezzlement, the previous report had Rwf657 million as embezzled funds, while the new report, noted about Rwf22.8 million.For the year ended June 30, 2012, government revenues increased by Rwf223 billion, while total expenditure increased by Rwf188 billion and the fund balance at year-end increased by Rwf6.5 billion.The Ministry of Finance and Economic Planning has, as part of the ongoing public financial management reforms, updated the Government Chart of Accounts, a combination of the standard requirements of both the budgeting and accounting functions.The Government Chart of Accounts’s aim is to harmonise the budgeting and reporting definitions of items of payments, receipts, assets and liabilities so as to facilitate preparation of uniform government financial information. It was updated to achieve specific objectives.

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PAC hearings: How some entities aced audit report