NDMA’s E513 million put at risk
MBABANE – An audit query shows how over half a billion Emalangeni administered by NDMA was put at risk. Timothy Sipho Matsebula, the Auditor General (AG), stated in his report that the National Disaster Management Agency (NDMA) did not have an accounting system as the cash book was not properly maintained.
As a result of improper accounting of transactions at NDMA, Matsebula said the subventions and COVID-19 response funds amounting to E513 469 777.14 were put at risk. He said the Agency relied on external records or statements that were then uploaded into the main ledgers. For instance, the cash transactions were not recorded as they occurred into the cash book.
Instead, NDMA uploaded the bank statements into the respective cash books at the end of the month, said the AG.
Matsebula reported that the agency created payment vouchers on an excel sheet using a standard template. He mentioned that the referencing, STR for response function and ST for administration function are manual and sequentially generated on a two-quire exercise book.
The AG explained that NDMA once used integrated finance management system (SAGE accounting software) which was, however, terminated as a result of system inefficiency, primarily caused by slow internet connectivity. He said he referred the controlling officer to Section 6 of the Financial Policy and Procedure Manual. He said the law provided that the NDMA executive management shall provide governance, guidance and oversight to the office’s operations. It is ultimately responsible for internal controls.
Further, he said Section 9 states that the Arithmetic and Accounting Controls Transactions shall be properly recorded so that the organisation could account for its assets and prepare accurate and comprehensive financial statements.
The AG expressed concern that the absence of the accounting systems and improper accounting of transactions created a room for errors and fraudulent transactions were not easily detected. “Also, payment duplication without anyone noticing and lack of audit trail are the inherent risks of a manual accounting system,” stated Matsebula in the report.
He advised management to have a proper accounting system and properly record all transactions as they occured, and only use the external records such as bank statements to reconcile their records at the end of the month.
He further urged management to closely monitor the daily recording of transactions in the subsidiary books prime entry, posting of transactions into the ledgers and extraction of a trial balance and then the preparation of financial statements. The AG also advised the NDMA management to migrate from the manual accounting to a computerised accounting system, and to effectively use SAGE.
PS BLAMES LACK OF IT SPECIALIST
In response, he said Makhosini Mndawe, the Principal Secretary and Controlling Officer in the Deputy Prime Minister’s Office, told him that the NDMA accounting system used SAGE evolution, but only the procurement module of SAGE was terminated. He said it was terminated because of gross inefficiencies of the system and the absence of an IT Specialist within the agency.
NDMA is under the supervision of the DPM’s Office. The AG stated in the report that Mndawe informed him that the process of hiring an IT Specialist and procuring an integrated finance management system that would integrate all the NDMA central business processes (human resource, procurement and finance) was at an advanced stage. “The response is noted, although the circumstances resulting in the use of the manual system were not provided for in the response,” he said.
He also drew the attention of Mndawe to the payment requisitions amounting to E191 147 001.20 that were effected from April 2020 to January 2021. These payments were not fully completed but reviewed and approved.
He said invoices were supposed to be taken to the chief financial officer (CFO) for review, then to chief executive officer (CEO) for approval. Matsebula said he expressed concern that there were risks of processing of unauthorised payments, loss of public funds through paying undeserving suppliers, budget depletion and failure to deliver mandate by the agency.
The AG said he advised management to ensure that the accounts office did not pay if all source documents were not attached. He said the CFO should exercise a close supervision in the accounts unit in order to ensure that the controls in place were in use. He disclosed in the report that the accounts office was warned not to use emergencies as an excuse not to comply with procurement policies and procedures.
The NDMA responded to his audit query, explaining that the payment voucher was designed prior to the use of the online payment system. As a result, there was a misalignment between the online and manual payment systems. “All payments are reviewed by the CFO and authorised by the CEO manually and electronically,” reads the report.
“Manual vouchers without the signature of either the CFO or CEO were found because incumbents were out of the office due to the emergency and the approval on the electronic system was done based on vouchers sent through email.”
The report was tabled in Parliament by Neal
‘‘ AG said he expressed concern that there were risks of processing of unauthorised payments, loss of public funds through paying undeserving suppliers, budget depletion and failure to deliver by agency.”
Rijkenberg, the Minister of Finance. The Office of the AG is under the supervision of the Ministry of Finance.
It would now be a subject of discussion and scrutiny of the House of Assembly’s Public Accounts Committee (PAC) which is under the chairmanship of Gege MP Musa Kunene.
It is, therefore, subjudice in terms of Parliament regulations. The veracity of the allegations contained in the audit report will, in a nutshell, be verified when the principal secretary/controlling officer has appeared before the PAC to give the Agency’s side of the story.
The Office of the Auditor General (Supreme Audit Institution) was established as a public office by Section 207 (1) of the Constitution of the Kingdom of Eswatini (2005).
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