Audit malpractice causes funding revocation

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The Council of Ministers has cancelled the audit gap of selected federal public offices. The Office of the Federal Auditor General (OFAG) annually reported billions of birr of uncollected revenue, receivables or unsettled debts.
According to the Ministry of Finance’s annual report (MoF), the government has annulled 290 million birr in receivables mentioned in OFAG’s annual audit report as discrepancies observed since 2005. The money revoked by the council covers 18 public offices.
According to Haji Ibsa, Public Relations Head of MoF, based on a mandate from the Council of Ministers they also cancelled 119.3 million birr from 42 public offices. The Ministry revoked a total of 395 million birr in receivables from 60 offices.
Haji said most of the cancelations came about because of deviations between what was seen in annual audit reports from OFAG and what actually existed.
Higher education institutions had the most audit problems. “From the total 60 offices more than 60 percent are higher education institutions,” he explained. Most of the issues revolved around unexplained expenses such as buying a coffin for a dead student that was not included on the expenditure list. Instead that money went to other items.
Haji said the government has improved the expenditure directive of unlisted expenses observed in universities and diplomatic missions which are the other major public offices with audit discrepancies.
According to Haji, the Council of Ministers has given a mandate to MoF to revoke from 10,000 to one million birr.
Public offices shall revoke 10,000 birr based on their perogative and 50,000 birr via the consultation of MoF.
In a related development MoF has disclosed the country’s debt from local and foreign sources, while the report did not include the debt secured by Ethiopian Airlines and Ethio Telecom, both are secured loans without a government guaranty.
The government debt has reached USD 28.7 billion. Out of this amount, USD 12.7 billion from is from local sources or 47.5 percent and USD 15.99 billion is from external sources.
The government received USD 2.8 billion in non-concessional and concessional loans in the 2018/19 budget year. This is down from USD 3.5 billion in the 2017/18 budget year. Haji said the reduction shows the government’s strict procedures on accessing loans.
The country is stressed out from debt because they have recently received a lot of money for some finalized and under construction projects and some of the major loans are commercial loans mainly from China.
Regarding joint projects with the private sector the initial bid for Dicheto and Gaad Scaling Solar projects the government targeted to develop in a public private partnership (PPP) has opened on August 15.
In the bid 12 companies have been listed out of five that participated, according to Haji. The technical evaluation and financial evaluation will be finalized in August 28 and August 30. Haji explained the final result would be disclosed in September 2. The projects sites located at Afar and Somali regions are expected to generate 125MW each and estimated to cost USD 150 million each.
Under the PPP the government plans to finish eight solar projects, five hydro power and three road projects.