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Parliament PAC faced with shambolic public finances
Southern African Parliamentary Support Trust
July 05, 2012

View this article on the SAPST website

The Public Accounts Committee (PAC) of Parliament last week held a workshop to review audited reports from the Comptroller and Auditor General (C&AG). What came out clearly from the workshop is that Zimbabwe’s public finances are in shambolic state, and that public officials have not been held to account for their actions. In fact, it is business as usual in ministries and parastatals, judging by the recurrence of the same issues in the various Auditor General’s reports.

The reports that the PAC reviewed include the 2009 audit report, the 2010 audit report, two state enterprises and parastatal reports for 2009 and 2010, special report on service delivery by the Zimbabwe National Road Administration, value-for-money audit for the management of HIV care and treatment programme and another value-for-money audit on deforestation in peri-urban and resettlement areas. These reports have been tabled in Parliament, which means they have become public documents. The role of the PAC is to review and analyse these reports and report its findings and recommendations to the House for debate.

What is highly depressing from the audit reports is that between 2009 and 2010, the situation of non-compliance with generally accepted accounting standards and provisions of Zimbabwe’s public finance management laws and regulations actually worsened when one would have expected measures to be taken to address findings in the C&AG’s previous audit reports. For example, the percentage of state enterprises and parastatals without fully constituted boards of directors increased from 43 % in 2009 to 50 % in2010. What this means is that there is no one to provide oversight on the work of management of these state enterprises. The result is that the parastatal becomes extremely vulnerable to looting and enrichment of the pockets of those closely connected to the enterprise.

Internal controls in state enterprises and parastatals are very weak or non-existent. The C&AG found out that the majority of the parastatals did not carry out internal audit functions, risk assessments were not performed, proper reconciliations not carried out and that there was clear lack of segregation of duties. In addition, asset management was very poor. An updated asset register was not maintained while physical asset verification was not performed. Surely, assets such as vehicles can be abused or disappear without properly maintained assets. What is depressing is that this is the same situation that prevailed in previous years, meaning that our Parliament has not done enough to make the culprits accountable for their actions.

ZINARA is one of the poorest parastatal when it comes to financial management. The parastatal has revenue collected on its behalf by the Zimbabwe Revenue Authority; fuel utility NOCZIM, local authorities and Vehicle Inspection Department. Despite this decentralised means of revenue collection, the administration has no primary record-keeping mechanism to ensure the completeness and accuracy of revenue from the revenue collectors. This is because bank reconciliations are performed from the bank statements and no cash books are maintained. The 10 % administration fees deducted by ZIMRA cannot be verified while revenue banked is not compared against receipts or source documents. Reconciliations are not performed on remittances from the collectors and no follow ups are made on outstanding remittances. From these findings, it is very clear that the potential for abuse and theft of revenue is very high.

In ministries, the financial situation is gloomy. The number of line ministries not submitting financial statements to the Accountant General in the Ministry of Finance increased between 2009 and 2010, while those engaged in unauthorized expenditure increased from two to five. Failure to submit financial statements is a violation of several provisions of the Public Finance Management Act. Unauthorised expenditure means those ministries would have violated Section 103 of the Constitution which requires that all expenditures be authorized by Parliament. To make matters worse, a whopping 40 % of the ministries could not provide adequate supporting documentation of expenditures such as invoices and goods received notes.

The primary reason cited for poor financial management in ministries is the continued breakdown of the public finance management system for the past four years. While the Accountant General’s Office says the system is now being upgraded and reconfigured, they do not explain why it has taken that long to fix the system. The PAC should also question ministries why they do not maintain back-up accounting manual systems to deal with the problem.

Given the serious nature of mismanagement of public funds and assets in ministries and parastatals, Parliament through the Public Accounts Committee must recommend strong measures to bring sanity in the public sector. Heads should roll in those ministries and parastatals singled out by the Auditor General for mismanaging public resources. We cannot continue to have the same accounting officers being moved from one ministry to the next when it has been proved beyond any reasonable doubt that they have poorly performed and acted unlawfully. These accounting officers and heads of parastatals should appear before the PAC and explain their unlawful actions.

The PAC must fully acquaint itself with provisions of the Public Finance Management Act and demand that the necessary penalties be invoked for non-compliance. The Minister of Finance should quickly gazette the Public Finance Management Act regulations in order to enforce the Public Finance Management Act. The minister should be quizzed on why it is taking ages for the regulations to be gazetted more than two years after the Act came into force.

And when the PAC has presented its report to the House, it must demand response from the relevant ministers within a reasonable period. It has become the norm that reports will be presented and debated, but then gathers dust. The PAC must closely monitor implementation of its recommendations and question non-implementation of agreed actions. We need a PAC with teeth and not one that will simply go through the motions.

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