HARARE – The Defence ministry’s books are in shambles, with revenue returns and payments accounts improperly filed while an asset register has not been maintained, a report by Auditor-General (AG) Mildred Chiri has revealed.
According to Chiri’s damning forensic audit report tabled in the National Assembly a fortnight ago, the Sydney Sekeramayi-led ministry failed to present for scrutiny paperwork for the consolidated revenue fund (CRF) — an account from which government’s income and expenditure is managed.
“The revenue return for the Defence ministry was not submitted for audit, contrary to provisions of Section 35(b) of the Public Finance Management Act (Chapter 22:19),” she said in the report for the year-ending December 31, 2015.
“This was notwithstanding the fact that the PFMS (public finance management systems) report for the same ministry had a total revenue received of $969 071. There was no explanation given,” the AG said, adding there was a risk that revenue received may have been understated.
“Treasury should insist that line ministries with sub votes submit consolidated revenue returns so as to ensure completeness of revenue reported,” she said.
The AG said she asked for a Defence ministry management response to the matter, but it had “not been received at the time of finalising the report”.
Chiri, who leads the autonomous government agency, also said they found a number of management shortcomings at Defence ministry, which oversees the Zimbabwe Defence Forces, Zimbabwe National Army and Air Force of Zimbabwe.
She said the ministry was granted an “unsatisfactory” grade because auditors found out that internal controls, government and risk-management processes were either not established or not functioning well.
The ministry received $1, 9 million from the Finance ministry for fuels, oils and lubricants, which it then paid to Sakunda Private Limited (Sakunda) for the procurement of fuel on January 20, 2015, without following tender procedures.
“This was in contravention to Statutory Instrument 171 of 2002 read in conjunction with the Procurement (Amendment) Regulations, 2012 (No. 17) which required that goods and services above $300 000 be done by formal tenders,” Chiri said.
“I could not verify the quantity of the purchased fuel as there was no supporting documentation in the form of purchase requisition, purchase order and the goods received voucher,” she said.
“The fuel could also not be verified as the purchase was not recorded in the register.”
Chiri said “failure to follow laid down procurement regulations may result in uneconomic buying”.
Asked why the ministry paid Sakunda without State Procurement Board (SPB) approval, Defence ministry management responded: “The expenditure was liquidation of a debt to Sakunda . . . The investigation on whether the fuel was received is still underway.”
The AG also raised a red flag on $25,9 million directly paid by Treasury to service providers on behalf of the Defence ministry.
“Treasury advised that confirmation of payments be made from each respective service provider. However, an amount of $4 879 774 had not been confirmed as at May 23, 2015,” she said, adding that “therefore, I could not confirm whether the direct payments made by Treasury were paid against existing debts, and that the ministry accounts were subsequently credited with the same amounts”.
“In the absence of confirmation of payments from respective service providers, it will be difficult to monitor the debts the ministry owes to service providers. Errors made by both parties will not be detected.”
The auditors also found out that the Defence ministry did not maintain an asset register contrary to Treasury’s instructions.
Chiri said a book with no entries was submitted for audit as an asset register, resulting in her being unable to confirm that assets had been properly accounted for during the year.
“The ministry should maintain an asset register capturing all relevant details such as serial or asset number, type or model of assets and location,” the AG’s damning report said.
It also raised concerns that the Defence ministry has not set up an audit committee as required by Section 84 of the Public Finance Management Act (Chapter 22:19).
The ministry said it was yet to get guidance from Treasury on the appointment of the committee.