Audit Finds Financial Malpractices at Liberia Water & Sewer
Monrovia – The Liberia Water and Sewer Corporation (LWSC) lacks adherence to internal control and administrative practices, according to an audit report from the General Auditing Commission (GAC).
The report on the LWSC comes into play as the Public Accounts Committee (PAC) of the Legislature began hearing into audit conducted by the GAC from 2006-2009 in the joint chambers of the Legislature on Wednesday.
According to then Auditor General, John Morlue, administrative and financial malpractices were evident when he reviewed the LWSC’s procurement documents provided.
The audit revealed that 139 vouchers, amounting to L$5,824,007.65 and US$34,518.90 were paid without approval. There was also no petty cash replenishment report submitted for the disbursement made in the tune of L$94,199.00 as petty cash.
“Moreover, there were no related documents such as supplier invoices quotations, purchase orders, receipts and delivery notes for 177 vouchers examined. I could therefore not assure that the total amount of US$61,751.80 and L$578,969.90 were used for the purposes of the LWSC. For instance, I could not establish whether the goods were supplied in the absence of relevant supporting documents.
“I noted during my audit obvious material issues that the cashier paid out cash advances and loans in the tune of L$91,690.00 and US$1,294.00 directly from the cashier’s office without going through the voucher system as required by procedures.”
According to the AG, the management in its response stated that the LWSC does not give cash advances to unknown individuals. Those that received cash advances are either LWSC employees or service providers to the Corporation.
The AG furthered that rather than providing him the names and services purportedly rendered by these unknown individuals, management contended that AG should give a name and the individual will be brought physically to him.
While documents provided to the AG by LWSC upon which the payments were made did not indicate the names and the services rendered by these unknown individuals for which cash advances were made. “Management contention cannot be sustained administratively and judicially when challenged on the merit,” the report says.
The GAC report claimed that the Managing Director’s assertion was in total contravention of Section 55 (b) of the Revenue Code of 2000, which requires the maintenance of documents for 5 years. The audit of LWSC covered the period commencing 1 July 2006 to 30 June 2009.
“I was not in Liberia 2006 but even if I were, my comments to the general lack of documentation for financial transactions cannot be used as an excuse for a lack of documentation at LWSC.
The Managing Director was under legal obligation to ensure that transactions at LWSC were duly supported and materially justified. I, however, appreciate the Managing Director for confirming my statements, which he is referencing.”
The GAC report examination also revealed that Management collected a total of L$2,750,818.94 and US$63,207.54 as goods and service tax for the period 2008/09 and remitted to government revenue account the amount of L$2,542,993.47 and US$58,894.29, thus leaving a balance of L$207,825.47 and US$4,313.25 that was not accounted for.
The Auditor general in his report claimed that during his examination of the delivery notes, it was observed that Capricorn International Inc. did not deliver the chemicals on 15 February 2009 as was mentioned in the contract. Instead, Capricorn International Inc. delivered the consignment on 25 March 2009, which was 37 days after the required date of delivery.
The report furthered that there was no evidence of a US$100.00 deduction each day from the balance 15 percent for the penalty payment which is equivalent to US$3,700.00 as stipulated in the contract.
“Figures reported in the financial statement should be consistent from one accounting period to another. However, my analysis of the financial statements of LWSC revealed that employee cost reported for the periods 2007/08 and 2008/09 amounted to US$1,011,808.21, while the actual reported in the subsequent budgets for the same periods amounted to US$862,779.00 thus leaving a variance of US$149,029.21 unaccounted for,” the report stated.
Examination conducted by the GAC revealed that payment voucher numbered 12586 and check numbered 00444614 and noted that on 18 November 2008, management procured 11,500 gallons of fuel for the White Plains Treatment Plant and the Central Office.
Of this quality, 1,500 gallons for the Central Office was calculated at a rate of US$4.38 which amounted to US$6,570.00 while the reduced rate of US$3.58 should have been US$5,370.00, creating an unexplained variance of US$1,200.00.
Likewise, on 17 October 2008, according to the report, a memorandum from Loretta Y. Kwaizah, Procurement Officer, through Administrative Manager, J. Luke Garlo Sr. to DMD/Adm., J. Benedict Matalda requesting the approval of 11,500 gallons of fuel at the rate of US$4.38 per gallon which amounted to US$50,370.00 for the operation at Central Office and White Plains.
“Further examination of the payment voucher dated 21 October 2008 with voucher number 12629 and check numbered 976861 and Total-Liberia Inc’s cash receipt revealed that the total amount of US$61,084.95 was paid for the 11,500 gallons, instead of the US$50,370.00 indicated in the memorandum and the purchase order request,” the report said.
Henry Karmo (0886522495) [email protected]