MILLIONS of United States dollars and billions in local currency have vanished from government coffers due to accounting malpractices and breach of protocol, with no paper trail to back the spending.

This is contained in Auditor-General Mildred Chiri’s report on the appropriation accounts, finance and revenue statements and funds accounts for 2021.

According to the report, Treasury’s exchequer account, whose purpose is to receive revenue, was used to make payments totalling $6,1 billion to various service providers during the financial year ended December 31, 2019.

Further payments of US$26,7 million, EUR100 809 and ZAR385,4 million were made from sub-exchequer accounts, which are also revenue receiving accounts, but there were no supporting  documents.

“The respective supporting documents for the payments were not available. In terms of government accounting, all expenditure is supposed to be paid from the Paymaster-General’s Account. Monies paid from the exchequer account may not be properly accounted for and disclosed,” Chiri said.

The report covers financial statements on appropriation accounts, finance and revenue statements and fund accounts, highlighting the key audit findings and recommendations.

The report exposes a number of entities with variances between figures in the financial statements or returns and corresponding or related accounting records.

The variances totalled $3,2 billion.

Chiri said monthly reconciliations were not being done, and in other cases there was no evidence that efforts were being made to clear the variances, making it difficult to validate the correctness of figures reported.

For instance, the Paymaster-General’s account expenditure had a variance of $2,7 billion, while the exchequer account receipts closing balance had a $429 million variance.

A $23 million variance was reported on compensation of employees, while another $35 million variance was in respect of principal and interest repayments of Treasury Bonds and Bills.

Chiri said there were instances where investments were made without the authority of Treasury and the investments were not disclosed as public financial assets.

She cited a case in which $7,7 million was used by some ministries to finance their appropriation activities without obtaining Treasury authority.

“This deprived the funds from undertaking planned activities. There was no evidence produced to show that the funds had been reimbursed,” Chiri said.

She said there was a need for line ministries to have accurate and up-to-date records of all investments for Treasury to have a consolidated return that was accurate.

According to Chiri, this would help facilitate follow-up by line ministries on receipt of dividends where shares have been acquired and repayment of loans, hence improving on revenue generation.

Some ministries did not avail their documents for audit relating to payments amounting to $84 688 794 made to various suppliers of goods and services.

This is despite regulations requiring transactions to be accurate, complete and supported by adequate documentation.

“Therefore, the audit could not ascertain the validity of these payments. Unavailability of supporting documents leads to lack of transparency in the usage of public resources,” Chiri said.

An amount of $320 364 074 was paid for procurement of assets by some ministries, but the assets were not delivered.

Chiri said full payment was made in advance as a precondition of the contracts.

“However, at the time of concluding the audit, the suppliers had not delivered the assets. Payments in advance may result in loss of public funds in the event that the supplier fails to deliver. Public service delivery is compromised if assets procured are not delivered on time.”

Chiri said there were flaws in debt collection systems, with uncollected debt ballooning to $184,2 million compared to $76,1 million in the prior year.

“There was an increase in non-collection of monies due to the government by the fund accounts. The fund managers did not apply effective strategies to collect amounts due to fund accounts. Service delivery remained constrained in the respective funds as resources were tied up in debtors. If the trend continues the outstanding amounts will be rendered valueless due to the inflationary environment,” the Auditor-General said.

On local authorities, Chiri said only 23% of the councils have up-to-date financial accounts.

“Out of the 92 local authorities, 21 had current (2021) financial statements submitted for audit, while 71 had not submitted their accounts as at May 31, 2022,” she said in the report.

“Governance issues dominated major findings as there was an 11% increase from 2020 (42%) to 2021 (53%) and the same have remained high in all my reports over the last five years.

“The 2021 annual report had governance issues that I have perennially reported on and these include absence of key policies, non-compliance with laws and other regulatory provisions, poor contract management and mismanagement of assets.”