Misgovernance doubles in SoEs, parastatals
ACTING Auditor-General Rhea Kujinga has revealed that misgovernance nearly doubled in State-owned enterprises (SoEs) and parastatals last year.
She highlighted this in her report titled Report of the Auditor-General on Appropriation Accounts, Finance and Revenue Statements and Fund Accounts for the Year Ended December 31, 2023 tabled before Parliament last week.
The scathing report exposed widespread governance issues, financial mismanagement and procurement irregularities in SoEs and parastatals.
In the report, Kujinga said there was a significant increase in governance issues, from 170 to 310, highlighting weak internal controls, unsupported expenditure, non-compliance with tax laws and lack of internal audit arrangements.
She also uncovered revenue leakages, long outstanding debts and poor asset management, posing a significant risk to the sustainability of services.
“In this report, there are instances of weak internal controls as evidenced by unsupported expenditure, non-alignment ofaccounting policies and processes with reporting framework (accounting standards), outdated accounting manuals, non-compliance with tax laws and regulations, non-performance of bank reconciliations and absence of internal audit arrangements,” Kujinga said.
“Late submission of financial statements creates gaps for accountability and results in limitation of scope. Due to lapse of time, some documents cannot be located.
“I have noted issues of revenue leakages, long outstanding debts and deposits not receipted on time, which contributed to net liability position with a potential risk of threatening sustainability of service.”
Kujinga said she “raised 31 issues on revenue collection and 26 entities had reported on going concern matters arising from continued operating losses/deficit, under capitalisation and liquidity challenges”.
She said these conditions, if not addressed, might cast significant doubt on the entities’ ability to continue operating as going concerns.
On management of assets and investments, Kujinga said most of the issues in public entities related to asset record keeping, adding lack of due diligence in placing investments and maintenance of assets remained a challenge and might compromise service delivery.
“Moreover, 26 entities faced going-on concerns due to operating losses, undercapitalisation and liquidity challenges.”
On procurement of goods and services, Kujinga said there might be a need to strengthen due diligence processes to include evaluation of capacity to deliver goods to be procured.
“Procurement issues also rose from 20 to 33, with non-delivery of goods and services, lack of supporting documentation and insufficient due diligence processes being major concerns,” she said, urging boards of directors to address “these issues” to improve transparency and accountability.
She said urgent action wass needed to address these weaknesses and ensure the sustainability of essential services.newsday
