Underspending sparks concern

THE Auditor General’s office has expressed concern about overspending by Government departments, while overall Government is underspending on its development budget.

In the most recent audit report on Government accounts for the financial year ending 2004, Auditor General Junias Kandjeke noted that the N$12 million underexpenditure on the development budget during that year was not to be encouraged, as it delayed development. “The current trend should be reduced to the minimum,” he said.The amount underspent, however, is far less than the N$30 million underspent on the development budget in the previous year.During 2003-04, the operational budget was also not utilised fully, and N$4 million remained unspent.However, underexpenditure on the operational budget during 2003-04 was a vast improvement on the situation in the previous year, when that budget was overspent by N$52 million.The Auditor General also reiterated concerns by private economists that increasing Government debt was a worrying trend.During the financial year 2003-04, Government debt increased to N$9,8 billion from N$7,6 billion the previous year.INTEREST MOUNTS During 2003-04 Government paid N$850 million in interest on its loans.Also during that year, Government funded nearly half its expenditure (48,2 per cent) through borrowing.In the report, the Auditor General also expresses negative audit opinions on the vote accounts of 21 ministries and offices, compared to 26 in the previous year.”This implies that the accounts concerned do not, in a material sense, fairly represent the financial transactions or that the approved funds were not utilised for the purposes intended by the National Assembly within the approved budget limits,” said the Auditor General.The expenditure of 12 ministries exceeded the approved budget by nearly N$96 million.This amount is less than the N$207 million that was overspent by nine Government departments in the previous financial year.”Government should continue to improve on existing controls to reduce the level of unauthorised expenditure,” says the report.The departments of Civic Affairs, Police, Foreign Affairs and Environment and Tourism were singled out for exceeding their approved budget not only during the financial year under review, but for the two financial years prior to that.The ministries said the overspending was because of unexpected cost increases, overtime payments due to insufficient manpower, insufficient budgetary provision, the absorption of ex-combatants and the general salary increase implemented in April 2003.THE AG’S ADVICE The Auditor General’s office advised improved communications, budget procedures, internal controls and guidance by the Ministry of Finance to improve the situation.”Exceeding approved budget limits represents a disregard of the National Assembly’s powers to control and authorise the use of taxpayers’ money for approved activities and up to specified limits,” said the AG’s report.Only the Auditor General’s office and the Ministry of Agriculture, Water and Rural Development did not exceed their budget allocations during 2003-04.The Auditor General advises that properly trained accountants and improved communication between the various Ministries and departments and the Ministry of Finance will improve the situation.The Ministries of Foreign Affairs, Women’s Affairs, Health, Labour and the Department of Works were singled out for not adequately reconciling bank accounts they hold at commercial banks.The Ministries of Mines and Fisheries and the National Planning Commission did not submit reports on the record-keeping of their bank accounts.”Action should be taken with immediate effect to regularise these accounts and carry out reconciliations between the bank balances and the cashbooks,” said the AG’s report.The audit found that the accounting officers did not carry out regular reconciliations and that if budget control was up to standard, misstatements in the General Ledger would be discovered on time.”The current trend should be reduced to the minimum,” he said.The amount underspent, however, is far less than the N$30 million underspent on the development budget in the previous year.During 2003-04, the operational budget was also not utilised fully, and N$4 million remained unspent.However, underexpenditure on the operational budget during 2003-04 was a vast improvement on the situation in the previous year, when that budget was overspent by N$52 million.The Auditor General also reiterated concerns by private economists that increasing Government debt was a worrying trend.During the financial year 2003-04, Government debt increased to N$9,8 billion from N$7,6 billion the previous year.INTEREST MOUNTS During 2003-04 Government paid N$850 million in interest on its loans.Also during that year, Government funded nearly half its expenditure (48,2 per cent) through borrowing.In the report, the Auditor General also expresses negative audit opinions on the vote accounts of 21 ministries and offices, compared to 26 in the previous year.”This implies that the accounts concerned do not, in a material sense, fairly represent the financial transactions or that the approved funds were not utilised for the purposes intended by the National Assembly within the approved budget limits,” said the Auditor General.The expenditure of 12 ministries exceeded the approved budget by nearly N$96 million.This amount is less than the N$207 million that was overspent by nine Government departments in the previous financial year.”Government should continue to improve on existing controls to reduce the level of unauthorised expenditure,” says the report.The departments of Civic Affairs, Police, Foreign Affairs and Environment and Tourism were singled out for exceeding their approved budget not only during the financial year under review, but for the two financial years prior to that.The ministries said the overspending was because of unexpected cost increases, overtime payments due to insufficient manpower, insufficient budgetary provision, the absorption of ex-combatants and the general salary increase implemented in April 2003.THE AG’S ADVICE The Auditor General’s office advised improved communications, budget procedures, internal controls and guidance by the Ministry of Finance to improve the situation.”Exceeding approved budget limits represents a disregard of the National Assembly’s powers to control and authorise the use of taxpayers’ money for approved activities and up to specified limits,” said the AG’s report.Only the Auditor General’s office and the Ministry of Agriculture, Water and Rural Development did not exceed their budget allocations during 2003-04.The Auditor General advises that properly trained accountants and improved communication between the various Ministries and departments and the Ministry of Finance will improve the situation.The Ministries of Foreign Affairs, Women’s Affairs, Health, Labour and the Department of Works were singled out for not adequately reconciling bank accounts they hold at commercial banks.The Ministries of Mines and Fisheries and the National Planning Commission did not submit reports on the record-keeping of their bank accounts.”Action should be taken with immediate effect to regularise these accounts and carry out reconciliations between the bank balances and the cashbooks,” said the AG’s report.The audit found that the accounting officers did not carry out regular reconciliations and that if budget control was up to standard, misstatements in the General Ledger would be discovered on time.