Tag: auditor general

Audit Office’s state budget increased by MVR 14 million

The Audit Office’s state budget has been increased by MVR 14 million, following approval by Parliament’s Public Finance Committee.

This year the Audit Office was approved a budget of MVR 57.8 million by the committee, as opposed to last year’s budget of MVR 44.5 million.

According to a member of the committee, the budget of MVR 57.8 million, as proposed by the Audit Office, was passed after thorough assessment by the Sub-Committee, and due to the importance of the work carried out by the Audit Office.

Auditor General Niyaz Ibrahim said that the budget had to be increased to facilitate the recruitment of 43 additional employees to the office.

From the MVR 57.8 million, MVR 54 million has been assigned as recurrent expenditure and MVR3.8 million as capital expenditure.

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Finance Committee debates prompt investigation of government finances

The Majlis Finance Committee has decided to table the issue of the alleged embezzlement of MVR24million ($US1.5million) by the Disaster Management Centre (DMC) as an emergency issue tomorrow, local media has reported.

Following the release of the Auditor General’s report on the DMC’s 2010 finance, released last week, there have reportedly been two arrests in relation to the case.

Head of the committee Ahmed Nazim called into question the government’s accounting system, as did the Auditor General, Niyaz Ibrahim, who criticised those in charge at the DMC.

Ibrahim has also decided to expedite the audit of the government’s finances after being questioned in the Finance Committee about an allegedly unauthorised MVR300million ($US19.4million) loan, taken by the government from the Bank of Maldives in June.

That is an assignment we had planned for this year. But after the MPs raised questions over the matter, we have sped up that process and the assignment has commenced and is ongoing. This exercise is intended to carry out a comprehensive public debt audit of the State,” Haveeru quoted Ibrahim as saying.

He said that the audit will cover five years of spending and admitted that it was his office’s responsibility to determine legality of state debt.

“Based on the ratios, it is the responsibility of the Auditor General to determine the vulnerability of the State. If you look at the practice of the rest of the world public debt audits will cover such issues,” Niyaz added.

“Debt is a highly sensitive issue. It is related to the sustainability of the State. In addition to determining the authenticity, there are some vulnerability ratios we look for in a public debt audit,” reported Haveeru.

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Auditor general raises concerns over monitoring of state assets

Auditor General Niyaz Ibrahim has hit out at the monitoring procedures of state assets, alleging that sums of leftover funding dating back as much as seventeen years had not been deposited into the government’s revenue account.

Along with Allegations that various offices may also have been using funds illegally, the auditor general said that monitoring of the transfer of assets between various government departments had been an ongoing problem for a “long time”, Haveeru has reported today.  He claimed this uncertainty had resulted in the exact assets of certain government offices not being known upon being transferred or merged with other bodies.

The comments were made to the media following a meeting of Parliament’s Finance Committee concerning issues with a Health Ministry audit report from 2010. The issues were said to relate to the transferring of the administration of hospitals and health centres to specially devised regional corporations under the previous government.

The new government announced back in April that 30 state companies, including these regional health corporations, would be abolished to try and streamline various public services.

Healthcare has been one area in particular singled out by the Waheed administration as needing major policy changes in recent months.

Alongside monitoring physical assets, Niyaz alleged that significant sums of revenue have been incorrectly left within state office accounts rather than a specially sanctioned government revenue account.

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Fisheries Ministry audit reveals mismatched expenses, widespread abuse of fuel subsidies

The Auditor General’s report on the Fisheries Ministry for 2010 reflects “differences in interpretations” rather than actual fraud in the ministry, Minister of State for Fisheries and Agriculture, Dr Hussein Rasheed has claimed.

Dr Hussein Rasheed served as the Ministry’s Finance Executive from 2010 to 2012.

Parliament’s Finance Committee is currently investigating issues raised in the audit report published earlier this year. The committee on Tuesday summoned Fisheries Minister Ahmed Shafeeu and senior officials of the ministry for questioning.

Committee members expressed concern over the audit report findings. Committee Chair Ahmed Nazim said there was a “systematic problem” in the ministry, while MP Abdul Ghafoor Moosa said “nothing had gone right”.

The Auditor General’s report highlighted several cases of the ministry’s failure in adhering to financial laws and regulations.

Issues raised in the report include discrepancies between financial reports submitted by the ministry for audit and actual expenses records kept by the ministry, reporting of unspent figures as expenses in the ministry’s financial report, failure to collect fines and other money owed to the state, bypassing bidding and tender processes in awarding projects, and irregularities in releasing fishing subsidies, among other things.

The disparities between financial statements submitted by the ministry and financial records at the ministry amount to a difference of more than Rf 4 million (US$260,000). The audit report said the ministry had reported unspent money in bank accounts and safes across different atoll and island offices as expenditure in the finance report.

However Rasheed said the ministry considered money deposited to island and atoll accounts for different projects as expenses.

“We record them as expenses after dispersing the money to the atolls. But the Auditor General considers it spent only after the money reaches the pockets of who it was meant for. The money is there in the accounts. It is not lost. This is just a matter of difference in interpretation,” said Rasheed.

He further said that although the ministry had officially responded to the draft audit report sent by the Auditor General, the ministry’s comments did not seem to have been considered in the final audit report.

“We cleared a lot of issues in our response. But the public is only exposed to the contents of the audit report which does not include any of the ministry’s comments. I am quite sad at the distortion of truth by some critics that has unjustly affected the ministry’s reputation,” said Rasheed.

The audit report expressed concern over the failure of the ministry to take action against bad contractors. It stated that in several cases where contractors had failed to finish the project on time, despite several deadline extensions, the ministry had not taken any action to collect fines and liquidated damages owed to the ministry by law.

The report also said the ministry had made payments to contractors without adequate evaluations of their work and to parties who did not meet the required standards for projects.

Rasheed said some of the contracts were signed before the change of government in 2008 and their contents did not always allow the ministry to take action.

Regarding the missing contents in the ministry’s safe, recorded in the audit report, Rasheed said he was confident that “under my authority and knowledge, nobody took away any money.”

“The auditors emptied the contents of the safe on a table which had books and other things already on it. That day they concluded that one envelope was missing from the safe but we later found it and informed the Auditor General’s office,” explained Rasheed.

Commenting on the accusation that the ministry had failed to properly maintain attendance records, Dr Rasheed said the audit report was compiled when the ministry had just started using a new security system after shifting to Velaanaage. He said the system registered staff going out even if they went to the adjacent office to use the bathroom. However despite the use of this system, attendance records were still kept as an Excel spreadsheet.

In 2010 the Majlis allocated 100 million rufiya as fuel subsidies for fishermen. According to Fisheries Ministry records, 75 million rufiya (US$4.8 million) was released as fuel subsidies to fishermen. Some of the concerns raised in the audit report included releasing fuel subsidies to fishing boats without collecting any data of fishing trips made, and the issuing of subsidies to non-fishing vessels such as passenger boats.

The Audit Office took a random sample of 168 boats which collected fuel subsidies on a specific date, and discovered that only two of the boats went fishing on that date despite collecting the subsidy.

Dr Hussein Rasheed said releasing the subsidies was based on the declarations made by the fishermen as it was currently impossible to confirm whether a specific boat went fishing before collecting the fuel money.

“This is a very important issue and we raised this concern even when the initial discussions about the subsidy were held in the parliament. The only way I can think of is installing a tracking device on the boats. Like we have said before, we can’t keep a policeman on every fishing boat,” said Rasheed.

The fishermen are required to fill both sides of a subsidy slip available from the ministry to collect the subsidy. The audit report also highlighted 3543 missing subsidy slips printed by the ministry.

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Large discrepancies in Transport Ministry’s financial records: audit report

Auditors have found large discrepancies between the financial records maintained by the Ministry of Transport and Communication and the general ledger kept by the Ministry of Finance and Treasury.

According to the Transport Ministry’s 2010 audit report, the ministry’s records show that a total of Rf26 million (US$1.7 million) was spent on purchasing  information technology hardware, while the Finance Ministry’s ledger for National Center for Information Technology had no record of the expense.

Meanwhile, income received as Driving Licence Insurance Fee was recorded in the Transport ministry’s books as Rf229,935 (US$14,911) more than the amount stated in the Finance ministry’s ledger while the total income received by the Transport Authority in 2012 was recorded as Rf2.3 million less in the ministry’s ledger.

The latter discrepancy occurred because the ministry had not updated their records with the income generated from ministry’s services provided in the atolls under the Decentralisation Act, the report said.

Furthermore, Rf47 million (US$3 million) allocated to three regional airports in 2010 were recorded as expenses in the ministry’s financial statements, although  auditors found a sum of Rf947,014 (US$61,500) remained unspent in the respective airport’s bank accounts.

Over Rf 600,000 (US$39,000) received as revenue to the Kadhoo Regional Airport between November 2008 and February 2010 was not deposited to the state’s consolidated revenue account, the report added, while  poor management of  airport’s invoices and records made it difficult for auditors to determine how much money is owed to different parties or supposed to be received as income.

Auditor General Ibrahim Niyaz observed in the report that the the ministry had not “identified and reconciled” the aforementioned discrepancies.

The ministry also did not compile its financial statement in accordance with ‘International Public Sector Accounting Standards’ (IPSAS) as stipulated by regulations under the Public Finance Act, and as a result lacked important information such as detailed disclosure notes, Niyaz added.

Therefore, Auditor General refrained from providing an opinion of the ministry’ financial statements and instructed to adjust the figures accordingly to remove discrepancies and compile it in accordance with IPSAS.

The report further noted that the ministry had purchased equipment without the stipulated bidding process and had assigned maintenance of traffic lights to a company prior to signing the contract, thereby violating public finance regulation.

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Stop buying iPads, computers and phones, ACC tells government

The Anti Corruption Commission (ACC) has ordered the Finance Ministry to cancel plans to buy computers, iPads and phones for government ministries, claiming that only the People’s Majlis can approve ministerial salaries and benefits.

The Finance Ministry on April 30 released a circular approving the purchase of mobile phones, computers, and iPads for ministers from state funds allocated to the respective ministries. Furthermore, the finance ministry said the treasury would cover up to Rf 4000 (US$260) in monthly payments for ministers’ phone bills.

However, the ACC has told the Finance Ministry that no state institution could approve salaries and benefits for its staff, claiming that the task fell under Majlis’ jurisdiction.

“Article 102 of the Constitution authorizes the People’s Majlis to allocate salaries and benefits for the President, Vice-President, Judges, Members of Parliament and staff of the state institutions. Instead of state institutions deciding for themselves on matters within Majlis jurisdiction, we have ordered the Finance Ministry on May 7 to approve such benefits through the Majlis,” an ACC statement read.

“We would like to remind you the Auditor General has repeatedly criticized such actions in his audit reports and called on state offices not to do so without Majlis authorization. Further, when this commission asked the Majlis for advice on phone allowances, the Majlis Finance Committee told us in a letter on 30 March 2011 to act according to the salary structure approved by the Majlis on 28 December 2011 until the Majlis decides otherwise,” the statement noted.

The Auditor General Ibrahim Niyaz last week released a report on the Department of Judicial Administration (DJA) noting that between October 2008 and December 2011, Supreme Court judges had paid their phone bills amounting to RF 281,519 (US$18,280) from the state budget, despite the fact that the parliament had not allocated phone allowances to the judges.

Niyaz has recommended the amount be reimbursed and that the granting of phone allowances be determined by the parliament.

The Supreme Court on 16 May 2011  released a statement claiming that no Supreme Court judge had received phone allowances, after local media accused judges of misappropriating state funds for phone allowances.

Meanwhile, Chief of the IMF mission in the Maldives, Jonathan Dunn, warned parliament in April that if the country does not reduce its expenditure, it risks running out of reserves and miring the country in poverty.

Furthermore, the Majlis Finance Committee last week has projected that the Maldives budget deficit will reach 27 percent of the GDP by the end of year 2012, a 175 percent increase on earlier forecasts.

Government spending in 2012 is expected to increase by almost 24 percent, reaching Rf17.45 billion (US$1.13 billion) at the end of the 2012, while government revenue for 2012 will be Rf2.6 billion (US$168.6 million) less than the projected amount of Rf10.87 billion (US$704 million) – a 23 percent plunge.

With the shortfall of revenue and increased government spending, Head of the Majlis’s Financial Committee, Deputy Speaker and People’s Alliance (PA) MP Ahmed Nazim observed that the budget deficit will exceed from Rf 3.9 billion (US$ 252 million) to Rf9.1 billion this year (US$590 million), amounting to 27 percent of the country’s GDP.

Finance committee member and MDP MP for Kulhudhufushi, Abdul Ghafoor Moosa, told reporters that unplanned spending on police and military personnel and planned reimbursement of civil servants pay cuts in 2010, are both significant causes for rising costs to the government.

He observed that the largest shortfall in revenue is a direct result of the US$135 million pulled out from the budget with new government’s recently revised policy on lease extension payments for resort islands.

Maldives Inland Revenue Authority (MIRA) anticipated receiving a total of Rf375 million (US$ 24 million) for lease extensions, however the income received dropped to Rf23 million (US$1.5 million) as a result of the decision to accept the lease extension fees in an annual installment instead of a lump sum as decided by former administration.

The loss of concession fees from Ibrahim Nasir International Airport (INIA), the result of a successful Civil Court case to block the Airport Development Charge (ADC) filed by the Dhivehi Qaumee Party (DQP) while it was in opposition, also saw the government receive only US$525,355 from the airport for the quarter, compared to the US$8.7 million it was expecting.

The government-aligned PA’s Deputy Leader Nazim however contended that the 23 percent drop in government income was caused by unrealised revenue from privatisation schemes and a shortfall of Rf 166.7 million and Rf435 million (US$28 million) from the projected dividends of Dhiraagu and import duties respectively.

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Department of Judicial Administration failed to distribute RF1.3 million in child support

The Director of the Department of Judicial Administration (DJA) has made no effort to distribute child support money worth over Rf1.3 million (US$85,000), according to the Auditor General, while large amounts of money owed after court rulings has not been collected from offenders or distributed to successful plaintiffs.

According to a 2010 audit report on the DJA released on Thursday, auditors found that if the recipients of the child support did not explicitly collect the money from the court, the money remained undistributed and no additional measures were taken by the court deliver the child support to its rightful recipient.

“Until December 2010, a total of Rf1,301,767.67 million remains undistributed with the court. However, the documents indicate that the court has made no efforts to distribute the money,” the report reads.

Following the breakdown of a marriage, husbands are mandated to make payments to their former spouses to cover the costs of childcare.

The report further notes that “as the records on child support money received by the court so far have not been maintained by the court properly”, it was unclear as to how much money the court was also supposed to receive as per the court orders.

The audit report noted that the DJA had not collected a total of Rf 1.6 million (US$104,000) owed by men found guilty of divorcing their wives outside the court.

A total of Rf2.1 million US$136,000) needs to be collected by the Civil Court as of February 2011, while a significant sum of Rf22 million (US$1.42 million) is owed to the Criminal court following court rulings and remained uncollected as of January 2011.

“The Department of Judicial administration has not done adequate work to collect the funds,” Auditor General Ibrahim Niyaz observed in the report.

Niyaz refrained from issuing an opinion on the financial statements provided the DJA, citing that the statements were not prepared in accordance with international public sector accounting standards (IPSAS) following principles of “accrual accounting” or the “financial reporting under cash basis of accounting” issued by the IPSAS board, while several “fundamental records” were unaccounted for in the statements.

He noted that earnings from the magistrate court amounting to almost Rf4.9 million (US$318,000) were not recorded as income in the financial statement, while the funds remained in court safes and bank accounts. Similarly, Rf6.9 million (US$448,000) dispersed in advance to magistrate courts were recorded as an expenditure in the financial statement, while the auditors found that the funds remain “unspent” by the courts.

In an issue highlighted in previous audit reports of state institutions for 2010, the AG noted that between October 2008 and December 2011, Supreme Court judges had paid their phone bills amounting to Rf281,519 from the state budget, despite the fact that parliament had not allocated any phone allowances to the judges.

Therefore he recommended the amount be reimbursed and that the granting of phone allowances be determined as per parliament’s decision.

Meanwhile, Rf117, 832 (US$7640) was found to have been overspent on wages and allowances to the driver of a judge’s car.

DJA’s reponse: “loophole in the system”

The Director of the Department of Judicial Administration Ahmed Maajid said there is a “loophole in the implementation and enforcement” system that is resulting in millions of rufiya not being collected or distributed after legal decisions have been made.

Maajid explained these findings, arguing that there was currently no governmental authority or body to handle this aspect of the court’s work.

“It is upon the mother to get [the child support]. We have not executive or judicial authority to distribute it. There is a loophole in the system. It is not a case of corruption but a weakness in the system itself,” said Maajid.

“Currently the courts have no authority to give money over to the women. What normally happens is that the men get away without paying,” he continued.

Maajid went on to say that the issue concerned both the collection and the distribution of moneys owed. He argued that a new authoritative body was needed with the responsibility to collect these outstanding fees.

Maajid, however, did not see the problem as insurmountable although he felt it required urgent attention.

“This shortcoming in the system must be patched up very soon in order to fix this loophole,” he said.

Additional reporting by Daniel Bosley.

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Auditor General accuses elections commission of misappropriation of funds

The Auditor General (AG) has said the annual audit report of the Elections Commission (EC) for the year of 2010 suggests that the members of the elections commission had misappropriated funds.

During a meeting with Parliament’s Financial Committee this Wednesday, the AG said the audit reports had identified that the commission failed to produce necessary documents over how its expenditure had been spent.

This included the failure to produce spending details of a sum of money worth Rf 15 million (US$972,762) out of Rf 54 million (US$3,501,945), which had been deposited to regional accounts across the country to facilitate elections.

Local newspaper Sun Online reported the AG as stating that there were several discrepancies found in the audit report, including that the members of EC had stayed in the residences of family members during official trips and the purchase of several electronic devices such as iPads and digital cameras against advice from the office of the auditor general.

The newspaper also reported the AG stating that the Ipads that were bought for each member of the commission had been given out to the family members of the commission members and the money taken as phone allowance had also been transferred to some member’s family members.

AG also alleged that the EC had spent excessively and irresponsibly from the budget that was allocated to the commission. He alleged that a digital camera worth Rf 200,000 (US$ 12,970.17) was bought along with three coffee makers worth Rf 60,000 (US$ 3,891).

The AG was stated quoting that “the Elections Commission is not a photo studio to buy a digital camera worth up to 200,000 rufiya. This shows how irresponsible the commission has been in spending the money.”

Answering questions posed by the members of the Financial Committee, the AG stated that commission members chose to each buy iPads, and that 250 laptops were not used. He also stated that the buying of iPads on state funds was illegal and against the Public Finance act.

The AG however reiterated that even though the commission had failed in producing the details of how the sum of Rf 15 million was spent out of the Rf 54 million allocated to facilitate elections, it was not embezzlement but negligence in overseeing and monitoring expenditure.

The elections commission stated in the Finance Committee that it had the details of how Rf 39 million out of the Rf 54 million was spent, but did not have the details of the remaining Rf 15 million.

Elections Commission response

Speaking to Minivan News earlier, Elections Commissioner Fuad Thaufeeq denied the allegations in the audit report citing that the commission did not have to be responsible for expenditure prior to when the commission was formed.

“None of the members in the present commission have done anything against the financial regulations or the constitution,” he said.

“We are very much ready to prove we are innocent. The present committee doesn’t have to be responsible before November 24, 2009,” he also said at the time.

The Auditor General also concurred at the time  with Thaufeeq that the period in question did pre-date the current Election Commissioner’s tenure.

When contacted, Deputy President of Elections Commission Ahmed Fayaz told Minivan News that Thaufeeq would be the best person to give information. However he was not responding to calls at time of press

Along with his assertions that the expenses concerned pre-dated the current incarnation of the EC, Thaufeeq previously told Minivan News that he had the impression that there were efforts being undertaken to discredit members of the commission.

The ousted Maldivian Democratic Party (MDP) has called for early elections after the party’s Mohamed Nasheed resigned on February 7 in an alleged “coup d’état.” The Commonwealth and EU have supported the call for early elections.

However State Minister for Foreign Affairs Dunya Maumoon – daughter of former President Gayoom – recently told the BBC that the state’s independent institutions including the Elections Commission, Human Rights Commission (HRCM) and the judiciary were not strong enough for early elections to be held.

Unless the institutions are strengthened, elections cannot be held in the country in “the foreseeable future,” Dunya told the BBC.

The US government subsequently pledged US$500,000 (Rf7.7 million) for an elections programme to assist Maldivian institutions in ensuring a free and fair presidential election. The assistance will be made available from July 2012.

“We have already held three successful elections in the past: the country’s first multi-party election in 2008, parliamentary elections in 2009 and local council elections in 2011,” Thaufeeq has said.

“There were more than 1180 seats for the island councils, atoll councils and city councils. That was a very large and complicated election. It was very successful. So I don’t see how anyone can raise questions regarding the Election Commission’s capacity,” he added.

Recently-held by-elections for the seats of Thimarafushi and Kaashidhoo were decided in favour of MPs affiliated with the new government.

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Prosecutor General’s Office spent Rf145,596 in violation of Public Finance Act, finds audit report

The audit report of the Prosecutor General’s Office (PGO) for the financial year 2010 has found that the office spent a total of Rf145,596 (US$9,706) in violation of the Public Finance Act.

In the report made public yesterday, Auditor General Ibrahim Niyaz revealed that the PGO spent Rf 40,745 (US$2640) in additional expenses for interior design after moving to its new offices without an agreement on price and quality of the work as required by section 8.21 of the public finance regulations.

In addition, the PGO spent Rf 58,913 (US$3800) out of its 2010 budget to settle outstanding bills from 2009 without requesting the funds from the Finance Ministry in the duration stipulated in the Public Finance Act.

Moreover, the PGO spent Rf45,938 (US$3000) on an official dinner to participants of an e-crime conference participants in June 2010 without a publicly-announced bidding process.

In an issue highlighted in previous audit reports of state institutions for 2010, the Auditor General noted that financial statements were not prepared in accordance with international public sector accounting standards (IPSAS) following principles of “accrual accounting” or the “financial reporting under cash basis of accounting” issued by the IPSAS board.

The PGO however informed auditors that it would discuss the issue with the Finance Ministry to prepare financial statements in accordance with international standards in the future.

Attorney General’s Office

Meanwhile the audit report of the Attorney General’s Office (AGO) published along with the PGO audit report, the Auditor General noted that staff were paid overtime salary for the time spent waiting in a queue to sign out at the fingerprint system at the end of working hours.

The audit report also found that the Attorney General’s Office had not settled bills for services obtained from different parties within the duration stipulated in the public fiance regulations.

The AG Office was meanwhile owed a total of Rf 71,637 (US$4640) from different parties dating from 2009 but had not taken adequate efforts to recover the money, the audit found, adding that the cases had not been filed at court two years on.

A comparatively high amount of money had meanwhile been spent since 2002 for a software installed to maintain records of employees and case files, the audit found, noting that Rf1.5 million (US$100,000) had been spent as of last year to the company that created the software for maintenance fees, upgrades and other expenses.

The AGO informed auditors that the software initially purchased for Rf376,200 (US$24,000) would not be used from next year onward.

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