Monrovia – The Internal Audit Unit (IAU) of the Ministry of Finance and Development Planning (MFDP) presented their final audit report on the Private Sector Development Initiatives (PSDI) to President Ellen Johnson Sirleaf last Friday.
Report by Clarissa Sosin – [email protected]
The report includes recommendations based on the findings by the IAU auditors, as well as responses to these recommendations from the auditees.
The 14 recommendations given by the auditors range from as broad as stating the need to define a specific budget authority, to as specific as investigating individual loans and payments.
The draft of the report originally obtained by FrontPageAfrica did not include the auditees’ responses.
The PSDI is a project established in 2014 by the MFDP.
It was designed to provide loans to Liberian-owned small and medium sized enterprises (SME) with the hope that the loans would create jobs and strengthen Liberian-owned businesses participation in the economy.
The audit report said it found irregularities, conflicts of interest, and financial malpractice in the workings of the PSDI and noted weakness in the people, processes, and systems.
As previously reported by FrontPageAfrica, Dr. James Kollie, the Former Deputy Minister for Fiscal Affairs at the MFDP and one of the people implicated in the report, called the audit superficial, flawed, and unprofessional.
The Recommendations
The 14 recommendations in the detailed and more than 15,000 words long report are as follows:
Recommendation 3.1 – That the MFDP establish a clear budget authority for the PSDI and ensure proper documentation of the project’s processes.
“Going forward, it is important to establish clear budget authority for significant policy instruments such as the PSDI, and not blanket references that could be used for almost any purpose,” the report said.
Recommendation 3.2 – That the MFDP collect all outstanding loan repayments and restructure payment plans for businesses that can’t fulfill their current plans.
“Out of the total loan disbursed to 46 businesses amounting to US$2,274,400, only US$283,614 had been recovered at the time of the audit (April 2017). This represents an overall loan recovery of 12%,” says the report.
Recommendation 3.3 – That the MFDP handle all loans that have been dispersed to businesses owned by MFDP staff because of conflicts of interest.
“MFDP officials who authorized these transactions and the conflicted individuals should be answerable and repayment of amounts should be enforced,” said the report.
Recommendation 3.4 – That the MFDP ensure they have proper documentation of all businesses receiving loans so that the business owners can be contacted if need be.
“We recommend that a follow up should be done with the Liberia Business Registry and the Tax Department to ensure persons behind those entities can be traced and contacted,” said the report.
Recommendation 3.5 – That the MFDP review all transactions from the US$900,000 operational fund.
“We noted that the operational fund transactions were not processed through a voucher system, neither did the transactions route through MFDP’s approved processing structure.
Instead, checks were written to individuals directly for payment. We also did not see any evidence that the Procurement proceedings were compliant with the PPCA or the PPC regulations,” said the report.
Recommendation 3.6 – That the responsible officials be disciplined and appropriated sanctions applied for the lack of preparation of Financial Statements, Cash Plan, Procurement Plan and Bank Reconciliation Statements for the LPSEGF account.
“Officials of PSDI could not make available for our review PSDI financial reports, cash plan, PPCC approved procurement plan or reconciliations of LPSEGF accounts,” said the report.
Recommendation 3.7 – That an irregular payment to former Deputy Minister for Fiscal Affairs MFDP, Dr. James F. Kollie of US$16,200 for a three-month consultancy should be investigated.
“His responsibilities as “holdover” or acting Deputy Minister for Fiscal Affairs were not exclusively to the PSDI project. Therefore, he should not have had a consultancy contract under the PSDI project,” said the report.
Recommendation 3.8 – That PSDI Coordinator Mr. Amos Koukou provide documentation for the unsupported payments from the LPSEGF account.
“The PSDI Coordinator, Mr. Amos Koukou should provide all documents to show evidence of how the US$87,438 received was expended. He should also provide evidence that the PPCA was fully complied with,” said the report.
Recommendation 3.9 – That the responsible officials and Mr. Benedict Roberts provide documentation for the usage US$70,000 from the petty cash account.
“Mr. Benedict Roberts was paid US$70,000 on check number 133794 from the LPSEGF account. We did not see any supporting document to provide evidence for the payment,” said the report.
Recommendation 3.10 – That documentation be provided for an irregular payment of US$10,800 made for a consultancy contract with Hon. Sumo Kupee.
“The transaction was seen on the bank statement along with the returned check. However, there is no evidence of work performed for the payment,” said the report.
Recommendation 3.11 – That documentation be provided for a payment of US$63,850 made from the operational fund.
“We observed that an amount of US$63,850 was paid for Private Sector development surveys in three (3) counties (Bong, Lofa and Nimba). Moreover, an invoice valued US$25,000 for printing 1,000 PSDI booklets was seen attached to the survey documents but there was no evidence of compliance with the PPCA.”
Recommendation 3.12 – That documentation be provided for payments made to 14 different individuals adding up US$82,320.
“Amongst those who attended… told us that they were seconded to the program to formulate policy framework or strategy that served as blueprint for the project and were compensated as such. However, we did not see any report(s) or written policy to authenticate work done.”
“ We could not also ascertain how long, in terms of days, weeks and months, they worked.”
Recommendation 3.13 – That an explanation be provided for the movement of more than US$1.6 million from the PSDI operational funds into the GoL consolidated fund account.
“We did not sight documentation on why the amount was transferred,” the report said.
Recommendation 3.14 – That collateral be secured for all loans dispersed to ensure the safeguarding of public funds.
“Our observation was that loans were processed without evidence of specific assets indicated as collaterals,” said the report.
