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Govt accounts shambolic: Auditor-General

by Staff reporter
28 Aug 2020 at 07:18hrs | Views
GOVERNMENT'S books of accounts are in a shambolic state amid revelations it has no balance sheet, making accountability for its assets impossible with some civil servants being promoted without the pre-requisite qualifications.

Some government assets have disappeared because of the weak accounting systems while government has over the years lost money after paying for goods which were never delivered.

This was revealed by Auditor-General Mildred Chiri while making a presentation to the Institute of Chartered Secretaries and Administrators of Zimbabwe (Icsaz) Winter School on Public Finance Management (PFM) in Harare last Friday.

Chiri attributed the-PFM chaos to poor accounting maintenance exacerbated by the use of cash-basis accounting instead of accrual accounting method.

She said while the government adopted the IPSAS (International Public Sector Accounting Standards), implementation was still in its infancy.

The country targets to fully implement IPSAs by 2025 to enhance financial accountability in central government, urban and rural authorities.

Chiri said the government should come up with accurate and complete information on transactions given that some payments and assets are not reflected in financial statements.

"It's not safe to use this system. We always insist that there is an asset register to ensure that there is value and that these assets do not disappear without being accounted for. Yes, assets are recorded, but because we do not have something like a balance sheet, we cannot really see what government possesses as assets," she said.

In a recent document, the International Monetary Fund (IMF) raised a red flag over the credibility of government's state of accounts, especially in relation to Extra
Budgetary Units (EBUs) and classification of government subsidies to state-owned enterprises as well as the correct classification of other government transactions in line with the Finance Statistics Manual (2104) framework.

Chiri noted that poor maintenance of accounting records has resulted in assets disappearing in some ministries.

Another glaring challenge that Chiri pointed out was employment costs in the various ministries as there is no effective checking and reconciling of paysheets against payments made from the Salary Service Bureau.

"Pay sheets were not being reconciled with payments from the Salary Services Bureau. This is an area which we will be looking at in 2020 to see whether there have been improvements. There have also been tendencies across ministries to continue to obtain goods and services when they did not have adequate funds from Treasury. Unsupported expenditure has led to accumulation of debts," Chiri said.

Zimbabwe has been struggling with its wage bill which gobbled up to 90% of government revenues, leaving very little space for investment in infrastructure development projects.

However, the wage bill has since been reduced to below to 50%.

On procurement, Chiri said substantial sums of money were incurred in purchasing assets such as motor vehicles, generators, excavators, which were not delivered and there was no evidence of follow up on the outstanding goods.

Chiri emphasised the need for professionalism in the public sector, saying some government employees rose through the ranks despite not having professional qualifications

"One of the other interventions besides implementation of the correct accounting methods, would be professionalising the public sector. Some of the people who have been through ranking government have no professional qualifications. This was a recommendation by the World Bank that the government should professionalise the sector. Icaz (Institute of Chartered Accountants of Zimbabwe) and Icsaz have also taken up this offer along with other organisations, so we hope to see an improvement in that area," she said.

A diagnostic tool, Public Expenditure and Financial Accountability (PEFA) used to assess the performance of the-PFM system of a country has been administered on Zimbabwe twice, in 2011 and 2016 by the World Bank.

The PEFA assessment focused on aggregate fiscal discipline, strategic resource allocation and efficient delivery.

During that time, aggregate budget outturns showed consistent under-performance on aggregate revenue estimates, expenditure was significantly above budget, giving rise to budget deficits, while the budget formulation process and budget execution, including investment management, were not satisfactory.

On service delivery, some services were deprived of funding due to shifts in priorities during the year.

There was also absence of data on procurement at an aggregate level and lack of standard approach in monitoring of projects execution.

"PEFA assessments and external audits have revealed gaps in performance of the-PFM. Donors have shown willingness to assist in terms of building and boosting capacity through professionalisation. Implementation of IPSAS key. These interventions should go a long way in improving the-PFM system in Zimbabwe," Chiri said.

Source - the independent

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