Govt Books of Account in a Shambles

A new report by the Auditor General has uncovered how government books of accounts are in a worse shape than expected, thus creating room for fraud and collusion. This is the conclusion of the “Certificate of the Auditor General on the Annual Statements of Accounts of Government” which forms part of a report titled “Annual Statements of Account for the Financial Year Ended 31st March 2021.” [ihc-hide-content ihc_mb_type="show" ihc_mb_who="1,2,3,4" ihc_mb_template="3" ] The Auditor General found that the accounting records of the government, which comprise a number of various annual statements of account, have been plagued by strings of poor bookkeeping and shortcomings in the government accounting system, resulting in billions of Pula being misstated and understated. In her introduction to the report, the Auditor General Pulane Letebele states: “In my opinion, except for the effects of the matters described in the basis for qualified opinion paragraph, the accompanying annual statements of account present fairly, in all material respects, the financial state of affairs of the Botswana Government as at March 2021 and of its revenues and expenditures for the year then ended.” By “qualified opinion paragraph”, Letebele is making reference to some of the annual statements of account that she found wanting. First on her list of the annual statements of account that she raised a red flag on is the statement relating to loans and investments from special funds. Letebele notes: “The figure of P3 284 422 326 shown as the value of investments from Special Funds as at 31 March 2021 is misstated in the respect of the following matters: “The payment of P900 566 097 made to the liquidator of BCL from Public Debt Service Fund purported to be a loan is included under this statement although there is no evidence for this as an investment as stated in the report for financial year ended 31 March 2021.” She also raised concern about the financial statement relating to Accounts of Special Funds. The Auditor General indicates that Debt Participation Capital Fund Limited (DPCF) accounts were not verified as most documents were not availed to her for purposes of auditing. She added that the Tourism Development Fund-Royalties were overstated by P1 024 396. Letebele also expresss concern that the audited financial statements for Guaranteed Loan Insurance Fund had not been availed for audit. Regarding the statement of advance accounts, Letebele says: “These accounts included two items totalling P885 541 752 which I considered not appropriate to be included under these accounts. An amount of P673 597 322 related to the balance of purchase of shares in De Beers and a balance of P211 944 430 in respect of BCL liquidation advance account for which an appropriate account is yet to be identified.” Regarding the statement relating to cash and bank balance, the report found that the EFT (Electronic Fund Transfer) Group 2 and 4 accounts were overdrawn by P229 333 580 and P49 972 177 respectively”. “Point of Sale accounts had reconciling items dating as far back as 2015 with an overdrawn balance of P4 724 245” while “Cash in Transit had unreconciled debits and credits of P25 574 788 and P257 031 respectively dating as far back as March 2017,” says the report. “The Pula Card General Ledger was not updated by funds transferred to the bank, resulting in discrepancies of P4 280 038 debit and P2 442 177 credit balances between the general ledger and bank statements. Banking group Q had an overdrawn balance of P12 961 892 in the General Ledger.” Then report notes that call accounts were not availed for verification, adding: “The Government Investment Account component had an overdrawn balance of P23 306 166 421 as at March 2021.” According to the report, the Bank of Botswana’s “salaries account had reconciling items of P220 534 962 dating as far back as 2005” and that “BoB Group F had an unrepresented cheque of P2 038 363 dating as far back as 2011; Electronic Funds Transfer accounts for offices had overdrawn balances of P956 694 464; BoB Lome III System account was not availed for audit”. Another statement of concern relates to assets held by the government in statutory bodies and other commercial undertakings. “The statement was understated by P71 569 389 as at March 2021 due to omission of the Debt Participation Capital Fund Limited (DPCF),” says Letebele. “I believe that the audit evidence I have obtained is sufficient to provide a basis for my qualified opinion.” Explaining her responsibilities for the Audit of the Annual Statements of Accounts, the Auditor General Pulane Letebele notes: “My objective (is to) obtain reasonable assurance about whether the Annual Statements of Account as a whole are free from material misstatement, whether due to fraud or error and to issue a certificate (of) my opinion.” Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual statements of account. The Auditor General says her responsibilities also include identifying and assessing “risks of material misstatement of the Annual Statements of Account, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion”. “The risk of not detecting a material misstatement resulting from fraud is higher than for one error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.” [/ihc-hide-content]

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Govt Books of Account in a Shambles

The Auditor General has concluded that there is much room for fraud and collusion on Government Enclave

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Govt Books of Account in a Shambles

The Auditor General has concluded that there is much room for fraud and collusion on Government Enclave

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