By Tabora Bojang
An audit on the financial activities of the Mansakonko Area Council for the year 2019 revealed vast financial variances including disagreements between ledgers and trial balances, primary books and general balance sheets, payments without vouchers and clear disregard of standard policies and procedures relating to key processes.
The Council appeared before the Finance and Public Accounts Committee of the National Assembly, chaired by Alhagie S Darboe Monday, to present its activity and financial statements for the year under review.
Presenting the audit findings, director of audit for councils and municipalities at the National Audit Office Bakary Trawally, said the Council’s accompanying financial statements submitted during the exercise do not present fairly its financial position in accordance with the Local Government Act 2002, Financial and Accounting Manual for Local Government Authorities 2009 and General Accepted Accounting Principle.
He said they also evaluated the financial and accounting frameworks of the Council and found out that it does not adopt and follow any accounting policies for the treatment and reporting of its transactions, while no accurate information was provided on the status of its assets and liabilities.
The auditors disclosed that the cash book balance for the relevant accounts have huge differences with the corresponding quote in the ledgers with a cumulative deposit variance of D 618, 130, 00 and cumulative surplus variance of D 125, 219, 00.
They also reported that there were huge differences between most account balances in the ledgers with corresponding balances in the trial balance with a cumulative variance of D 9, 427, 636, and D 11, 786, 41 for revenue and expenditure respectively.
“These were not explained or corrected up to the time of finalising this report. Most of the balances in both the ledger and the trial balance had zero balances and the management did not provide any explanation,” the auditors stated.
Internal audit weaknesses
The auditors reported that they have detected weaknesses in internal control arrangements of the council designed to ensure misstatements are detected and corrected on a timely manner, noting that there was no evidence of code of conduct for staff exacerbated by disregard to standard policies and procedures to payments with no actions taken by the management against such practices.
“There are no robust fraud prevention and detection mechanisms in place to mitigate the occurrence even though several incidences of suspected fraud activities have been reported. There were no minutes on file for the Establishment and Development Committee and Finance Committee for 2019. Other minutes on file which were all single minutes include meeting for the Education and Agriculture subcommittees. The Contract Committee was the only subcommittee which had several minutes on file. The Internal audit- has only one staff that is currently on studies and is available only 2 days a week. There is no audit committee at the General Council, and the internal auditor is currently not a fixed member of any of the sub committees. Review of the internal audit correspondence reveals a general problem with compliance and cooperation from responsible parties. It has to take the intervention of the chairman a number of times to institute basic recommendations,” director Trawally told the committee.
No balance sheet, bank reconciliation statements
The auditors reported that the Council submitted a draft income and expenditure statement during their exercise but no balance sheet was presented and there was no bank reconciliation performed.
They also highlighted differences between cash books and revenue ledgers and between ledgers and trial balance while various payments were made without payment vouchers raised.
“A review of a sample of payment vouchers reveals that several payments were effected with the authorisation of only the CEO. Examination of the Director of Finance GTR against the main cash book revealed an amount of D27, 800 not posted in the main cash book.”
They also noted that a number of subsidiary books crucial for transparency and accounting purposes was not prepared and filed by the Council.
Auditor Trawally said there was also evidence of discriminate allowance payment to a few staff and difference in rates of transport allowance given to some staff with no appropriate basis provided for the decisions.
“Purchase dates of the assets are not recorded, serial numbers not recorded, the cost of the assets not stated and movement of assets not appropriately updated. Two motorbikes with the reference below do not have number plates for identification. The register was not updated with all assets. There was a difference between GTR and cash book and a review of sample GTR against the main cashier’s cash book revealed a cumulative deficit amount of D7, 900 resulting from under posting of collected revenue.”
Responding to these audit queries as the committee moves to the consideration stages of the report, Chairman Landing B Sanneh told members that most of the problems outlined in the audit were as a result of a poor financial management system they inherited.
“That was why at some point we appealed if we could have some form of a waiver on our auditing so that we are able to have a starting point that can be a base for us to move to the next level as far as our financial administration is concerned. The financial management system was very weak when we took over. There was nearly no good system in place and access to reliable records was a serious problem and that will obviously reflect on the record systems. It is work on progress and we have to build on what is there. So, 2018 was a time when the recording system was very weak. So I will not be surprised when we have problems in identifying the reports.”
The Council’s director of finance explained that there was zero balance in the council’s account when he took over in 2019, stating that there was no handing over between him and his predecessor.
He also explained that variance of over D9 million discovered by the audit was caused by an error as the residential rate revenues were under-stated.
The finance director also attributed the differences between GTR and cash book figures to “human errors” while stating that some of the findings such as payment of vouchers with the authorisation of only the CEO was caused by internal differences between the former CEO and the finance director.
He assured members other audit findings including the non-performance of bank reconciliation and incomplete asset registers have all been dealt with and corrected.
The CEO also informed probing NAMs that since the audit exercise, stringent control mechanisms have been put in place to stem revenue leakages and underperformances with revenues collected being banked daily.
After hearing from the Council members, the committee made a ruling for the Council to go back and re-do its financial statements and activity reports as a result of the auditors’ position that the accompanying financial statements do not present a fair financial position of the Council.
Chairman Alhagie S Darboe said the committee expects adjustments in audit queries including the absences of notes, balance sheets and comparative reporting as well as the financial variances in the trial balances.
“We are giving you up to April 7th 2023 for you to redo these reports and submit them back to the committee.”