A latest audit of 26 district councils has revealed failure by councils to account for more than K3 billion in transactions where funds were not accounted for, abused or spent outside approved budgets.
The report follows another audit revelation that government ministries and departments had also failed to account for about K3 billion in 98 transactions in the financial year ended June 2011.
This is despite the existence of stringent laws, such as the Public Finance Management Act, aimed at checking economic and financial management of government funds and holding controlling officers accountable for problematic financial transactions.
The council audit report—currently under examination by the Parliamentary Public Accounts Committee (PAC)—is questioning expenditure of K3 029 410 494, in about 170 transactions, which the Auditor General indicates was misused or not accounted for between 2006 and 2008.
UK’s Department for International Development (DfID) funded the audit, which was extended to town councils and three city councils, following concerns that the councils had been operating without audits for many years despite receiving huge sums of money under the decentralisation drive.
The audit report shows that some of the public funds were lost through allowances paid but not accounted for, mis-procurement, payments made without supporting documents, cash drawn but not accounted for and revenue collected but not accounted for.
The transactions include the largest wastage of about K813.6 million in payments without vouchers for Lilongwe City Council and K276 million in development fund expenditure without supporting schedules at Thyolo District Council.
“Consequently, the auditors could not ascertain the validity of the figures in the financial statements,” reads the audit report in part.
In various councils including M’mbelwa, Karonga Nkhata Bay, Mulanje and Phalombe, the audit says over K106 million was spent on procurement of various materials and services without the approval of the councils’ internal procurement committees (IPCs).
It adds that millions of funds in the councils also missed because several projects were implemented without management committees apart from procuring items without following set procedures while some transactions had no supporting documentation.
“An examination of payment vouchers revealed that some payment vouchers totalling K149 519 283 .77 were not produced for audit [at Dedza District Council],” reads the audit report in part.
The councils are also being owed over K2 billion in uncollected ground rentals, city and town rates, among other uncollected revenues.
In an interview, Minister of Finance Ken Lipenga said his ministry is facing a challenge to deal with inefficiencies in the councils which he said are causing the audit queries.
“There is obviously a problem because every audit report from the Auditor General points to some queries and inefficiencies in the system. There is an ongoing fight against fraud and misappropriation of government resources,” said Lipenga.
Controlling officers in the implicated councils are appearing before PAC to answer the audit queries.
According to Section 87 (2) of Public Finance Management Act, where a controlling officer or chief executive authorizes expenditure or commitment of funds in excess of an approved limit or expends funds where there is no appropriation permitting such expenditure by a ministry or statutory body, they may be suspended without pay with effect on and from the date on which the expenditure is certified.