Monrovia – The General Auditing Commission (GAC) has announced an audit of the Government’s consolidated funds financial statements showed millions of United States dollars of transfer to entities for fiscal year 2016/2017 were not confirmed by purported recipients.
In a release issued recently in Monrovia, the GAC said there were several misstatements in the financial statements gathered.
According to the GAC, audit uncovered that the trial balance generated from the Integrated Financial Management Information System (IFMIS), which is the Government of Liberia accounting system used as the basis for the financial statements is out of balance.
“And management did not endeavor to find the difference, saying only that it has been an on-going issue,” the GAC said in the report signed by Auditor General Yusaydor S. Gaye and submitted to the Legislature.
The GAC also quotes the Liberia Revenue Authority (LRA) as saying that no ‘Consolidated Revenue Accounts Reconciliation’ was prepared for the fiscal year under audit because they could not agree with the Ministry of Finance & Development Planning (MFDP) on the final revenue amount for the year due to issues relating to two payments.
Without the Consolidated Revenue ‘Reconciliation Statement,’ the GAC added that could not satisfy itself about the accuracy of the total revenue reported in the Statement of Cash Receipts and Payments for the financial year under audit.
Key Findings
According to the GAC, it wrote 175 letters for the confirmation of US$53,513,071.58 which is said to have been paid out to 175 different institutions.
Of this, the GAC noted that a total of 123 entities (70.3% of sample) believed to have received of US$36,207,426.21 did not respond to the letters of confirmation of payments received from the MFDP/Consolidated Funds.
Eighteen (18) entities or 10.3% of the sample confirmed receiving US$2,587,451.69 instead of the US$3,651,783.06 reportedly paid to them; leaving US$1,064,331.37 unconfirmed.
Nine entities or 5.3% of the institutions sampled, for whom a total amount of US$1,655,173.14 was reported as disbursed, confirmed receipt of US$1,860,136.06, leaving the understated amount of US$122,727.92.
The GAC also stated that it requested 451 transaction payment vouchers with a sample value of US$9,572,730.93, but management did not provide 188 transaction payment vouchers (or 42 per cent of sample items) amounting to US$3,020,550.10 (or 32 per cent of the sample value requested).
The Cash and Cash Equivalent at year-end as reported in the Statement of Cash Receipts and Payments is US$8.75 million.
However, the GAC said in the financial statements, it is reported to be US$255.79 million, and this includes US$253.223 million of investments with no explanation of the type and nature of these investments.
Adjusting for the investments, The Auditing House noted that only an amount of US$2.567 million is left and this does not agree with the US$8.75 million as reported.
Additionally, the GAC mentioned three (3) of the listed five bank accounts totaled US$23.982 million. The other two accounts are in overdraft totaling US$21.414, giving a net amount of US$2.568.
This, it added does not again agree with the reported cash amount where the overdrafts (liabilities) were netted off against the positive balances (assets).
Against this, GAC claimed the management did not provide any explanation and the debts are not disclosed, and management did not provide any overdraft facility agreement for the purpose of the audit.
In the absence of the overdraft facility agreement and the related bank reconciliation statements for each bank account, the GAC said it was unable to establish the correct and true cash balance of the Consolidated Funds as at the reporting date.
In the trial balance the total normal balance for ‘Revenue Bank Accounts’ and ‘Project Bank Accounts’ is US$175,682,582.77, whilst the total for ‘Expenditure Bank Accounts’ and ‘Ministry and Agency Bank Account’ is abnormal and totaled US$564,063,067.61, leaving a net cash balance of US$388,380,484.84.
In addition to the lapses observed, the GAC added that management did not disclose the amount of capital.
Excerpt of the audit report: “The GAC observed from the inspection of reported financial statements that only the current period receipts are disclosed. The creditors, interest rates, and any other terms and conditions of the loans are not disclosed. Note some grants (condition grants) may give rise to future obligation to refund money if certain conditions are not met.”
It continues: “Borrowings are even more aggregated in the notes than the amount reported on the face of the financial statement. This means that the total debt on the face is understated. The amount is also not classed as internally or externally sourced whilst the creditors are unknown. Management neither disclosed the method of interest calculation nor did they provide documents relating to the basis of the calculation. Without these details, the GAC could not recalculate the interest
paid.”
The GAC said it further observed from the inspection of reported financial statements that only the grantors and current period receipts are disclosed.
As some grants (condition grants) may give rise to future obligation to refund money if certain conditions are not met, the GAC added it is also important to disclose the nature of each grant and say whether GOL has complied with its terms and condition.