E53M FOR NON-EXISTENT MINISTRY, DEPARTMENTS

MBABANE – There is a lot of financial activity in the account of the Ministry of Enterprise and Employment – a portfolio that does not exist after being abolished.

An audit by the Office of the Auditor General, Timothy Matsebula, discovered that this is not the only abolished ministry or department that continues to be allocated money by government and also receive payments from other related bodies. There are two others; the Income Tax Department and the Department of Customs and Excise. According to Matsebula, unauthorised and unappropriated budgets amounting to E53 296 219.40 were allocated to these three for the financial year ended March 31, 2021. A huge chunk of this figure – E32 million to be exact – went to the Department of Customs and Excise, which, together with the Income Tax Department, were abolished to give way to the creation of the Eswatini Revenue Service (formerly Swaziland Revenue Authority).  

From the E53 million, an amount of E5 289 996 was released for purposes of CTA Vehicle Charges (usually for fuel) and personnel costs (usually staff salaries). The AG found that an amount of E20 797.20 was actually spent on the CTA Vehicle Charges. Noteworthy is that the Ministry of Enterprise and Employment, whose assignments and responsibilities were taken over by the Ministry of Commerce, Industry and Trade, as well as the two departments were also found by the AG to have been irregularly allocated a budget amounting to E57.9 million in the previous financial year ended March 31, 2020.

Irregularly allocated

For the year ended March 31, 2021, the Ministry of Enterprise and Employment was irregularly allocated an amount of E46 104. “The same abolished Head (enterprise and employment) had been allocated E57 959.00 of which E4 829.00 was released in the previous fiscal year. Ideally, discontinued Heads should not be allocated any budget, and the Ministry of Finance is not expected to allocate a budget for discontinued ministries, departments and agencies, as it is the responsibility of controlling officers (Principal Secretaries) to submit draft estimates for planned activities of government, for the ensuing year,” Matsebula said in his report that has been tabled in Parliament. The contents of the report are yet to come under the scrutiny of the Public Accounts Committee (PAC), which summons all officials who have to account for monies spent by the different ministries and departments.

The AG said he was concerned that budget allocations to abolished budget votes may result in the incurring of unlawful and fruitless expenditure. “Further, other more deserving budget lines may be unnecessarily deprived of funding thereby negatively impacting service delivery and the budgeting process,” Matsebula said. He said he drew attention to the controlling officers that through their accounting personnel, they should closely monitor budget appropriations in order to avoid allocations to abolished Heads and further engage the Ministry of Finance to rectify such anomalies. “In his response, the controlling officer stated that budget allocations are a responsibility of the Ministry of Finance.

Deactivate

“He further emphasised that the budget allocation was never released and that it was an error from the Ministry of Finance, they have since written a memorandum to the Ministry of Finance requesting them to deactivate the Head,” the AG said. He said he noted the response of the controlling officer, but still maintained that the ministry bears the responsibility for engaging the Ministry of Finance on such irregularities in order to ensure that they did not recur. With regard to the E32 million that was allocated to the Customs and Excise Department, the AG observed that the unauthorised budget allocation was for CTA Vehicle Charges and personnel costs. “There were also unauthorised and unappropriated Budget Allocation on CTA Vehicle Charges amounting to E40 596.50 and on Personnel Costs amounting to E32 003 039.30. They were incurred under the abolished Customs and Excise Department, in the financial year ended March 31, 2021,” said the AG.

Matsebula said he cautioned the controlling officer to closely monitor the budget to avoid allocations to the abolished Heads and engage the related ministries to rectify the recurring anomaly and establish internal controls to curb the allocation of budgets to the abolished ministry and departments. “The controlling officer stated that the ministry was closely monitoring the anomaly and engaging the relevant stakeholders. The controlling officer’s response was noted, but the matter is still not resolved, hence it remains reportable,” he said. Pertaining to the abolished Department of Income Tax, the AG found that it was allocated an amount of E21.2 million, of which E5 306 598 was released and an actual expenditure amounting to E20 797.20 on CTA Vehicle Charges was incurred.

Unauthorised budget

“Further, I reported that there was an unauthorised budget allocation on Personnel Costs amounting to E21159 993.90, where the budget released amounting to E5 289 996 was also charged under the abolished Income Tax Department,” Matsebula said. The AG said he also noted that the abolished departments had assets and liabilities balances not cleared and/or reconciled to nil balances in the year of closure. “Both Income Tax Department and Customs and Excise Department had assets balances amounting to E4 603.76 and liabilities balances amounting to E2 603 506.24 as at March 31, 2021,” he said. He expressed concern that the financial position of the Consolidated Statement of Assets and Liabilities may be distorted and funds could remain unaccounted for and unremitted to the Eswatini Revenue Service.

Matsebula said he advised the controlling officer to reconcile the suspense accounts and requested that supporting documentation for the assets and liabilities should be provided to the AG’s office. “The controlling officer stated that as a Ministry they will request the assistance from the Treasury Department on the matter, since that department has their own accounting functions away from the ministry. I noted the response, but the matter has not been resolved, hence it remains reportable,” he said. The AG cited financial and accounting instructions to highlight the seriousness of  what was happening. One of these was Financial and Accounting Instruction number 0101, to stress that was essential that expenditure estimates should be as accurate and realistic as possible and should cover all foreseeable expenditure.

He said this instruction further provides guidance that submission of requests for expenditure estimates to the Ministry of Finance is the responsibility of the controlling officer.
“However, I am not aware whether the budget for the discontinued operations was part of the controlling officer’s submission to the Ministry of Finance,” he said. supporting documents
Also, he said according to the Financial Management and Accounting Procedures Manual (1993) Section 11 (1.4), applications for the creation of new Below-the-Line Account items must be submitted to the accountant general together with any supporting documents on the background and need for new account. “I requested the controlling officer to provide the instrument establishing this Special Fund Account, the purpose Programme/Project, Cashbook, Financial Records and supporting documents, and bank statements. At the time of writing this report, this information had not been provided,” Matsebula said.

Under the abolished Ministry of Enterprise and Employment, the AG also found that there were unremitted deductions of the National Provident Fund amounting to E11 953.43, and taxes amounting to E51 216, which were not remitted to Eswatini Revenue Service, as at March 31, 2021. He said uncleared balances may lead to the reporting of distorted financial information. Furthermore, he said, none or late remittance of such deductions may result in negative consequences to both the employee and government. The AG said he advised the controlling officer to ensure that Provident Fund, Pensions Fund and Tax deductions were promptly remitted to their respective authorities. “In his response, the controlling officer stated that under normal circumstances, it is expected that when the accountant general generates cheques to Eswatini National Provident Fund there will be a zero balance on the account and, hence his ministry had written to the accountant general requesting advice on the matter.

“He further stated that his Ministry had remitted the outstanding taxes of Board members to Eswatini Revenue Service on batch 68 and 69 of the current month,” he said.
However, according to the AG, the controlling officer did not provide evidence to support the remittance of taxes as per his response. “Moreover, at the time of compiling this report, there were no adjustments in the government accounting system,” added the AG.

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