Audit shows decline in public sector financial governance

The Office of the Auditor General says the number of state-owned enterprises, regional councils and local authorities with clean audits dropped from 13 to six, indicating worsening financial management.

The auditor general identified a growing number of government offices with financial report issues, with the count increasing from two to eight between the 2018/19 and 2022/23 financial years.

According to recent audit reports from the auditor general’s office, in the 2023/24 year, two organisations received “adverse opinions”, indicating even more serious problems.

According to the parliamentary standing committee on economics and public administration’s report on maximising the potential of public administration, public service management and public service delivery in Namibia, the Office of the Auditor General raised concerns about the state of financial accountability in Namibia’s public sector.

The reports highlight systemic weaknesses in internal auditing across offices, ministries and agencies (OMAs), state-owned enterprises, regional councils and local authorities.

“Between the 2018/19 and 2022/23 financial years, financial accountability in Namibia’s public sector has shown concerning trends, particularly within OMAs.

The number of OMAs receiving unqualified audit opinions is a sign of sound financial management. In contrast, qualified audit opinions, which indicate issues with financial reporting, rose from two to eight OMAs,” the report reads.

The report notes that although there were slight improvements in reducing disclaimer audits and adverse opinions, the overall trend remains troubling.

It adds that several entities continue to request audit extensions, turning what should be an exception into a norm, further weakening accountability.

The report also says Namibia’s current auditing mechanisms appear ineffective, contributing to public distrust, procurement violations, and increasing cases of financial mismanagement.

“Disclaimers have also improved slightly, declining from 35 to 14, yet these numbers remain worrisome. Furthermore, many OMAs and state-owned enterprises, regional councils, and local authorities request special extensions, however, this extension tends to be a continuous cycle and a norm which hampers true accountability,” the report reads.

To address these challenges, the standing committee recommended that the internal audit mechanisms should be reinforced to better detect and address financial mismanagement by ensuring auditors’ independence and providing adequate resources for comprehensive assessments.

The committee notes that there is a need for increased oversight of entities with recurring audit issues through more frequent and targeted audits.

Additionally, stricter enforcement of audit submission deadlines must be implemented to prevent habitual delays, with additional scrutiny for entities that frequently request extensions.

A comprehensive review of audit legislation and practices should be conducted to close gaps, strengthen enforcement, and promote transparency in public financial management.

The report further says the auditor general must propose amendments to the relevant acts to provide clear timelines for financial statement submissions by local authorities and introduce corrective or punitive measures for non-compliance.

It also recommended that the auditor general should be empowered to audit the procurement board and public enterprises, ensuring comprehensive financial oversight of these critical institutions.

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