Monrovia – Senior officials of the Liberia Maritime Authority (LMA) have admitted to several financial irregularities revealed by the audit report of the General Auditing Commission (GAC) on the Authority for the Fiscal Years ended June 30, 2013 to June 30, 2015.
Report by Henry Karmo – [email protected]
Appearing before the Legislature’s Joint Public Accounts Committee (PAC), Dr. James Kollie, head of the LMA said all the issues raised in the report are true but measures have been put in place to correct them so as to avoid reoccurrence.
In the audit report, LMA was accused of failing to implement the International Financial Reporting Standards (IFRS) as adopted by the Government of Liberia and the entity maintained seven bank accounts with three banking institutions and failed to conduct monthly bank reconciliations of those accounts.
Public Financial Management (PFM) regulations stipulate that “The balance of every bank account as shown in a bank statement shall be reconciled with the corresponding cashbook balances at least once every month; and the reconciled statement shall be filed or recorded in the cash book or the reference to the date and number thereof.”
The 2013 audit report also alleged that the LMA Board passed a resolution to borrow US$16.4 million consisting of US$14.0 for special projects and US$2.4 million for revolving bridge facility to gap fund recurring operational activities.
“LMA Management incurred high interest charges of US$1.334M on the loan. The US$2.4M revolving credit facility to fund recurrent expenditure violated Section 31 of the PFM Act, which expressly states that borrowings should be obtained to finance capital expenditure and not recurring expenditure.
“In the absence of reconcilable statements, management could not provide evidence that all its accounts were fully reconciled to their respective ledgers on a regular basis LMA Management failed to maintain a Fixed Asset Register (FAR) that contains the minimum requirements of a FAR such as description, code, date acquired, depreciation net book value etc.”
The GAC further disclosed in its report that the LMA Management failed to provide details of assets disposed and maintained on the book since 2007 assets that should have been fully depreciated.
“The Fixed Asset Register and the financial statements did not reconcile and there were substantial differences noted between the trial balance. The amount recorded as accumulated depreciation, and amounts recorded as depreciation expense.”
GAC also reported that a black Nissan patrol jeep costing US$60,000 with license plate number BC-6418 purchased in 2011, and assigned to Madam Kau Joseph, Director for Coastal and Inland Waterways from 2012-2013 was taken away with her when she was appointed by former President Ellen Johnson Sirleaf as Assistant Minister at the Ministry of Transport in contravention of Management’s policy.
As part of its work, the Auditor General recommended that the LMA provides justification along with documentary evidence for not complying with IFRS’ requirement adopted by the Government of Liberia and that the Liberia Maritime Authority comply with the IFRS and restate the financial statements for the periods ended June 30, 2012, 2013, and 2014 using IFRS.
PFM Implication
Under the “Scope and Applicability of Standard” Section of the Cash Basis IPSAS standard as adopted by the Government of Liberia, all Government Business Enterprises are required to apply International Financial Reporting Standards (IFRS) in the preparation and presentation of their financial statements.
The Preface to International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) explains that IFRS are designed to apply to the general purpose financial statements of all profit oriented entities.