Auditor-General calls for caution on state investments

The habit of providing proper and adequate accountability for funds is taking root in some public entities but there are still tendencies of poor management of government business enterprises and wasteful spending among many entities, the Auditor-General has said. Obadiah Biraro made the observation, yesterday, while presenting his report for the Financial Year 2013/14 to both chambers of Parliament. The Auditor-General (AG) audited 81 per cent of the slightly over 1.7 trillion that was allocated for the Financial Year 2013/14 and focused on major government independent bodies (parastatals) to explore how their money was spent in relation with the value for money. In total, the AG assessed the financial management at 131 institutions, including ministries and the districts, as well as parastatals. The parastatals audited include the Rwanda Revenue Authority (RRA), the Rwanda Social Security Board (RSSB), the former Energy, Water and Sanitation Authority (EWSA), Rwanda Broadcasting Agency (RBA), Rwanda Education Board (REB), Rwanda Utilities Regulatory Agency (RURA), the Rwanda Biomedical Centre (RBC), the Rwanda Natural Resources Authority (RNRA), and the National Agricultural Export Development Board (NAEB). Of all the financial audits made for the Financial Year 2013/14, 36 per cent were clean (presenting a clean audit opinion), which is a slight improvement from previous year’s performance (2012/13 financial year) where 34 per cent of the audit reports got a clean audit. “Although this number is still small, it is an indicator that the culture of providing proper and adequate accountability for public funds is taking root in some public entities,” the AG said about the 36 per cent mark of clean audits. (L-R) Senate President Bernard Makuza exchanges ideals about the Auditor General’s report with Mukabalisa Donatille, Speaker of the Chamber of Deputies. But the AG raised concerns over poor value for money on investments made by government-affiliated bodies, especially the RSSB, as well as wasteful expenditure of government resources on different projects that ended up in failure. “There are still various gaps in public financial management which should be addressed to improve accountability and enhance value for money from public resources. These gaps mainly relate to failures in management of government business enterprises, ineffective corporate governance structures, failed projects and persistent weaknesses in contract management,” Biraho said. Lack of proper planning He also noted that there is “lack of proper planning and coordination of government programmes, misappropriation or diversion of public resources, and failure to implement audit recommendations”. The AG’s report for 2013-2014 indicated that there was Rwf11 billion in wasteful expenditure in comparison to the Rwf1.6 billion in wasteful expenditure that was reported for the fiscal year 2012-2013. Out of this, EWSA, which has since been split into different parastatals, accounted for over Rwf8 billion, according to Biraro. EWSA had not been audited for the 2012/13 financial year, while RSSB and RRA had never been audited previously. The report also particularly documented failures in management of government business enterprises (GBEs) and other parastatals, especially the RSSB and RRA. The report said many of the GBEs audited did not maintain proper books of account and their financial statements were misleading and not reliable for decision making, with RSSB, EWSA and RRA cited among the culprits. Honourable Suzanne Mukayijore reacts to the Auditor Generals report during a plenary session yesterday at parliament. (All photos by Doreen Umutesi) The institutions were also found with failures in their internal financial control systems, with significant errors found in implementing internal controls and resulting in delayed execution of activities, loss or misuse of public resources, diversion of public funds from the intended purpose and lack of value for money in many projects implemented. At RSSB, potential losses of public funds were detected in the board’s loans to other institutions, construction projects, sale of properties and purchase of shares. According to the AG’s report, there are various cases where RSSB has not been able to recover loans granted or proceeds from disposal of investments with potential loss of funds totaling more than Rwf16 billion. The Boards of Directors of RSSB, EWSA and RRA were also found in failure to effectively provide oversight to ensure proper accountability for resources they generate and manage. At the RRA, the report said that there are gaps in the revenue reporting system and accounting function, which resulted in presentation of inaccurate information at the revenue body. “The potential revenue that can be collected in Rwanda we are not sure that we exploit it to the maximum, we are not sure that we fully collect the money,” Biraro said. The AG urged different institutions to consider his report for the fiscal year 2013-2014 and translate its recommendations into actions. His report will be sent to respective parliamentary and senatorial standing committees for analysis, which the legislators will use in their work to assess the government’s business. editorial@newtimes.co.rw

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Auditor-General calls for caution on state investments