management letter on the audit of the governance ... letter on the audit of the gc financial... ·...

Management Letter

On the Audit of the Governance Commission Financial Statements

For Fiscal Year Ended June 30, 2014

Yusador S. Gaye, CPA, CGMA

Auditor General

Monrovia, Liberia

May, 2018

Management Letter On the Audit of the Governance Commission Financial Statements For Fiscal Year Ended June 30, 2014

2 Promoting Accountability of Public Resources www.gac.gov.lr

Table of Contents

1 DETAILED FINDINGS AND RECOMMENDATIONS ...................................................... 6

1.1 Financial Matters ..................................................................................................... 6

1.1.1 Discrepancy between Final Trail balance and Financial Statements ........................... 6

1.1.2 Payment Vouchers not stamped “PAID” .................................................................. 7

1.1.3 Payment for Consultancy without Tax Deduction ..................................................... 8

1.1.4 NASSCORP Contribution ........................................................................................ 9

1.1.5 Presentation of Comparison of Budget and Actual Amounts.................................... 10

1.1.6 Uncommitted Cash Balance ................................................................................. 12

1.1.7 Comparative Information .................................................................................... 13

1.2 Administrative Issues ........................................................................................... 14

1.2.1 Payment Vouchers Not Pre-numbered .................................................................. 14

1.2.2 Lack of Audit Committee ..................................................................................... 15

1.2.3 Staff Attendance records ..................................................................................... 16

1.2.4 Training and Development Policy ......................................................................... 16

1.2.5 Unrecorded Fixed Asset Disposal ......................................................................... 17

1.2.6 No Evidence of Appointment Letter for Evaluation Panel ........................................ 19

1.2.7 Non-declaration of Conflict of Interest .................................................................. 20

1.2.8 Petty Cash Policy ................................................................................................ 20

1.3 INTERNAL CONTROLS ........................................................................................... 21

1.3.1 Risk Assessment ................................................................................................. 21

1.3.2 IT Strategic Committee ....................................................................................... 22

ANNEXURE ..................................................................................................................... 24



Acronyms

Acronyms/Abbreviations Meaning

AG Auditor General

CBL Central Bank of Liberia

CGMA Chartered Global Management Accountant

CPA Certified Public Accountant

ED Executive Director

FAR Fixed Assets Register

GAAP Generally Accepted Accountant

GAC General Auditing Commission of Liberia

GC Governance Commission

GOL Government of Liberia

IA Internal Audit

IAA Internal Audit Agency

IAS Internal Audit Secretariat

ISSAI International Standards on Supreme Audit Institutions

OSIWA Open Society Initiative for West Africa

UNDP United Nations Development Program

UNESCO United Nations Education, Scientific and Cultural Organization

LDSP Liberia Decentralization Support Program

LHP Liberia History Project

LDLD Liberia Decentralization and Local Development

LEMTAIL Legislative Monitoring for Transparency and Accountability

LGA Local Governance Act

LRC Law Reform Commission

GT Guarantee Trust Bank

UBA United Bank for Africa

PFM Public Financial Management

LBDI Liberia Bank for Development and Investment

ARIC Audit Recommendation Implementation Committee

NSRP National Symbol Review Project



The Audit of the Governance Commission Financial Statements for the fiscal

Period 2013/2014 performed by the Auditor General

Hon. E. Othello Gongar

Acting Chairperson

Governance Commission

Monrovia, Liberia

May 31, 2018

Dear Hon. Gongar:

The Governance Commission (GC) financial statements are subject to audit by the Auditor-General

in terms of Section 2.1.3 of the New GAC Act of 2014 as well as in accordance with the Public

Financial Management Act and Regulations of 2009. The audit covered the fiscal year 2013/2014.

INTRODUCTION

The audit of the GC financial statements for the year ended June 30, 2014 was completed and the

purpose of this letter is to bring to your attention the findings that were revealed during the audit.

SCOPE AND DETERMINATION OF RESPONSIBILITY

The audit was conducted in accordance with the International Standards of Supreme Audit

Institutions (ISSAIs). These standards require that the audit is planned and performed so as to

obtain reasonable assurance that, in all material respects, fair presentation is achieved in the annual

financial statements.

An audit includes:

Examination on a test basis of evidence supporting the amounts and disclosures in the

financial statements;

Assessment of the accounting principles used and significant estimates made by

management; and

Evaluation of the overall financial statement presentation.

The audit will also include an examination, on a test basis, of evidence supporting compliance in all

material respects with the relevant laws and regulations which came to our attention and are

applicable to financial matters.

The matters mentioned in this letter are therefore those that were identified through tests

considered necessary for the purpose of the audit and it is possible that there might be other

matters and/or weaknesses that were not identified.

The financial statements, maintenance of effective control measures and compliance with laws and

regulations are the responsibility of the Accounting Officer. Our responsibility is to express our

opinion on these financial statements.



Key Management Personnel

No. Name Position Tenure

1 Dr. Amos C. Sawyer Chairperson 2007 - Present

2 Madam Elizabeth Mulbah Vice Chairperson 2007 - Present

3 Dr. S. Jabaru Kallon Commissioner 2007 - Present

4 Mr. Yarsuo-weh Dorliae Commissioner 2007 - Present

6 Mr. Esther Richards-Freeman Executive Director 2007 - Present

7 Mr. Kollie Dorko Finance Manager 2013 - Present

APPRECIATION

We would like to express our appreciation for the courtesy and assistance rendered by the staff of

the GC during the audit.

Yours Faithfully,



1 DETAILED FINDINGS AND RECOMMENDATIONS

1.1 Financial Matters

1.1.1 Discrepancy between Final Trail balance and Financial Statements

Observation

1.1.1.1 Regulation A.3 (1) of the PFM Act of 2009 state that “Any public officer concerned with

the conduct of financial matters of the Government of Liberia, or the receipt, custody

and disbursement of public and trust moneys, or for the custody, care and use of

government stores and inventories shall keep books of accounts and proper records of

all transactions and shall produce the books of accounts and records of the transactions

for inspection when called upon to do so by the Auditor General, the Comptroller

General, the relevant internal auditor or any officers authorized by them, by the

Minister.”

1.1.1.2 During the audit, we observed from the final GC trial balances for two accounts bearing

the Codes (3211034 and 31NSRPL. NSRP) were US$3,983.22 and US$67,339.96

respectively, whereas the total amounts recorded in the financial statements for these

accounts were US$399.36 and US$63,962.50 thus resulting in unexplained net variance

of US$6,961.32. See table #2 for details:

Table #2: US Dollar variance for two accounts in the GC trial Balance

Risk

1.1.1.3 The financial statements could be misstated and the accuracy and completeness of the

financial statements would not be assured.

Recommendation

1.1.1.4 Management should provide justification for the variances noted in the final GC trial

balance and the financial statements for the fiscal under audit.

Management’s Response

1.1.1.5 Chapter 7 on Foreign Currency Translation of the Cash Basis IPSAS as adopted by the

Government of Liberia requires account balance at the end of the fiscal year (June 30,

2016) to be converted using the exchange rate issued by the Central Bank of Liberia. In

this particular case, the balances in the Adjusted Trial were converted by QuickBooks

using the average rate over the fiscal period. In adherence to the Cash Basis IPSAS as

adopted by the Government of Liberia, the balances were manually converted and

FY 2013/2014

Total per Final Trial

balance

US$

Total per

Financial Statement

US$

Variance

US$

AC Code:3211034 3,983.22 399.36 3,583.86

31NSRPL. NSRP 67,339.96 63,962.50 3,377.46

Total 6,961.32



placed in the Statement of Cash Position. This is included in the Financial Statement for

the fiscal period 2015/2016 on page 16, (ii), “Translation of transactions in foreign

currency” and page 25, “Appendix4”. Please find attached on page 25 as exhibit.

Table#2

Account Liberian Dollars Conversion rate USD Equivalent

31NSRPL 5,756,625 90 63,962.00

3211034GTB/AC L 35,942.36 90 399.36

Auditor General’s Position

1.1.1.6 The GC Management did not address the issue raised in our findings. We indicated that

there is a net variance between the GC trial balance and financial statements. We

therefore maintain our recommendation. However, Management is in breach of financial

discipline in line with Regulation A.20 of the PFM Act of 2009.

1.1.2 Payment Vouchers not stamped “PAID”

Observation

1.1.2.1 Regulation A-3 (1) of the PFM Act of 2009 states that “ any public officer concerned with

the conduct of financial matters of the Government of Liberia, or the receipt, custody

and disbursement of public and trust moneys, or for the custody, care and use of

government stores and inventories shall keep books of accounts and proper records of

all transactions and shall produce the books of accounts and records of the transactions

for inspection when called upon to do so by the Auditor General, the Comptroller General

, the relevant internal auditor or any officers authorized by them, by the Minister.(2) A

public officer who fails to keep or produce any records under this regulation is in a

breach of financial discipline as defined in Regulation A.20.’’

1.1.2.2 During the audit of the GC for the Fiscal Year 2013/14, it was observed that two paid

vouchers valued at US$3,152.50 were not stamped “PAID”. See table #3 for details

Table #3: Vouchers Not Stamped “PAID”

No Date Payee Voucher # Check# Amount US$

1 Aug. 14, 2013 Super Petroleum Co. 004 246619 1,700.00

2 Aug. 14, 2013 Super Petroleum 002 38863 1,457.50

Total 3,157.50

Risk

1.1.2.3 Failure to stamp payment voucher “PAID” could lead to the recycling of payments.

Recommendation

1.1.2.4 The GC Management should provide substantive justification and material evidence for

not stamping vouchers that have already been processed and paid.



1.1.2.5 Management should ensure that all payment vouchers, once processed and paid, are

stamped “Paid” to avoid recycling.


1.1.2.6 Management acknowledged that it was purely an oversight. This was not the case with

Fiscal Years 2014/2015 and 2015/16 that being audited by the GAC with Draft Audit

Reports already released.


1.1.2.7 We acknowledge the acceptance of our finding and recommendation. However,

Management is in breach of financial discipline in line with Regulation A.20 of the PFM

Act of 2009.

1.1.3 Payment for Consultancy without Tax Deduction

Observation

1.1.3.1 Section 905(e) of the Revenue Code of Liberia Act of 2000 as amended in 2011 states

that “a payer who makes a payment of wages or salaries to an employee in an amount

that during the tax year exceeds the standard deduction amount of Section 205(a) is

required to withhold tax from each payment in accordance with the income tax rates

specified in Section 200(a).” and (m) stipulates “a person who has a withholding

obligation under this section and fails to withhold and remit the amount of tax required

to be withheld is subject to section 52 penalty for late payment and failure to pay.”

1.1.3.2 During the conduct of the audit for the Fiscal Year 2013/14, it was observed that there

was no evidence that Management deducted income taxes totalling US400.00 from the

salaries of the Consultant hired for the National History Project (LHP). See table #6

below for details:

Table #6: Payments made to GC Consultants without Tax Deduction

Payee Position Voucher # Check # Amount US$

Withholding

Tax @ 10%

per GAC

calculation

Dr. Herbert Brewer Consultant 4,000.00 400.00

Total 4,000.00 400.00

Risk

1.1.3.3 The failure to deduct withholding taxes from the salary of service provider could deprive

the Government of much needed revenue.

Recommendation

1.1.3.4 The GC Management should provide substantive justification for failing to withhold taxes

in the amount of US$400.00.



1.1.3.5 Going forward Management should ensure that income taxes are withheld from the

income of consultants and remitted into the GoL Consolidated Revenue Account.


1.1.3.6 The Commission needed to start the rewriting of Liberia’s history under the Liberia

History Project. The Liberia History Project is the offspring of the Vision 2030 conference

held in Gbarnga, Bong County. Beginning the project was a challenge because of the

lack of funding. With the availability of limited funding, management decided to have the

consultant paid net of tax since the amount charged was beyond the Commission’s

reach.


1.1.3.7 Management assertion that “management decided to have the consultant paid net of tax

since the amount charged was beyond the Commission’s reach” is not materially

supported. No evidence of any article or section within the contract signed between the

GC Management and Dr Herbert Brewer that the contractor would be paid net of tax. We

therefore maintain our finding and recommendations. However, Management is in

breach of financial discipline in line with Regulation A.20 of the PFM Act of 2009.

1.1.4 NASSCORP Contribution

Observation

1.1.4.1 Chapter 89.16 (a, and h) of the Decree establishing the National Social Security &

Welfare Corporation (NASSCORP), requires that except as otherwise provided,

contributions and the method of payment shall be as follows:

1.1.4.2 The contribution payable under this Decree in respect of an employee shall comprise

contribution payable by the employer (herein after referred to as the employer’s

contribution) and contribution payable by the employee (herein after referred to as

employee’s contribution and shall be paid to the Corporation; (h) The contributions

payable in respect of each month shall ordinary fall due on the last day of the month

and where an employee is employed for part of the month or is employed under two or

more employers during the same month, the contributions shall fall due on such days as

may be specified in the Regulations.

1.1.4.3 Also, Section 89.18 of the Decree establishing NASSCORP says that “where a principal

employer defaults in paying any contribution prescribed by this Decree or subsequent

regulations, a sum equal to four (4%) of the amount unpaid shall be added for each

month or part of a month after the date on which payment was due, and any amount so

added shall be recoverable as a debt owed by the employer to the Republic”.



1.1.4.4 During the conduct of the audit, we observed that Management paid salaries totalling

US$1,179,212.06 for the fiscal period 2013/2014 without deducting employee’s

contribution to NASSCORP. See Annexure 1 for details:

Risk

1.1.4.5 Failure by Management to deduct and remit Employees’ contribution could attract high

penalties for non-remittance and employees, and their families may not achieve benefits

when the employees retire from service.

Recommendation

1.1.4.6 Management should ensure that employees’ contributions are deducted and timely

remitted to NASSCORP so as to give protection to employees and their families in the

case of retirement.


1.1.4.7 Management acknowledges the lack of employer’s contribution and employee’s

contribution to NASSCORP. Employer’s contribution has not been forthcoming from

MFDP. Going forward, management intends to engage with the authority of MFDP to

have past arrears and future contributions resolved.


1.1.4.8 We acknowledge the acceptance of our finding and recommendation. We will do a follow

up on the implementation of the recommendations in subsequent audit of the

Governance Commission. However; management is in breach of Chapter 89.16 of the

Decree establishing the National Social Security & Welfare Corporation (NASSCORP).

1.1.5 Presentation of Comparison of Budget and Actual Amounts

Observation

1.1.5.1 Paragraph 5.2.0 of the IPSAS-Cash Basis of Accounting states that “subject to the

requirements of paragraph 5.3.0, an entity that makes publicly available its approved

budget(s) shall present a comparison of the budget amounts for which it is held publicly

accountable and actual amounts either as a separate additional financial statement or as

additional budget columns in the statement of cash receipts and payments currently

presented in accordance with this Standard. The comparison of budget and actual

amounts shall present separately for each level of legislative oversight: 12a) the original

and final budget amounts; 1b) the actual amounts on a comparable basis; and (1c) by

way of note disclosure, an explanation of material differences between the budget for

which the entity is held publicly accountable and actual amounts, unless such

explanation is included in other public documents issued in conjunction with the financial

statements, and a cross reference to those documents is made in the notes”.



1.1.5.2 During the fiscal period under audit 2013/2014, we observed that Explanatory Notes

relating to the causes of significant variances between the budget and actual amounts

(i.e. revenues and expenditures) as required by the IPSAS Cash Basis Accounting were

not disclosed in the financial statements. We were thus unable to confirm or verify the

reasonableness of the variances as a result of the omitted disclosures.

Risk

1.1.5.3 Failure to disclose reasons for significant variances within the financial statements could

indicate the lack of proper budgetary control.

Recommendation

1.1.5.4 Management should ensure that notes to the financial statements include explanations

for significant variances between the budget and actual amounts to assist users better

understand the reason for material departures from the approved budget. Compliance

with this requirement would ensure that Management is accountable for its performance,

and is in compliance with the approved budget.


1.1.5.5 Management did not include any explanatory note to the Statement of Budget and

Actuals because there was no material difference to report on as required by Paragraph

5.2.0 of the Cash Basis IPSAS Accounting adopted by the Government of Liberia.


1.1.5.6 Management did not address the issue raised by the GAC. In the Statements of Budget

versus Actual Amount, Management reported significant variances for the following

accounts as detailed in the table below:

No Description Actual

Amount US$

Final Budget

US$

Original

Budget US$

Difference

Final Budget

and Actual

US$

Percentage

variance

1. Capital

Expenditure 18,314.00 14,000.000 - 4,314.00 (31%)

2. Goods and

Services

Consumed 628,653.00 484,271.00 340,968.00 (144,382) (30%)

Net Effect (61%)

1.1.5.7 Financial statement items are material if they could influence the economic decisions of

users. The materiality concept is the universally accepted accounting principle that all

material matters are to be disclosed. Therefore, we maintain our recommendation.



1.1.6 Uncommitted Cash Balance

Observation

1.1.6.1 Section 27 of the PFM Act of 2009 states that, “All un-allotted appropriations and all

uncommitted allotments will lapse at the end of the fiscal year. All balances of

appropriations committed but not disbursed prior to the end of the fiscal year, shall be

available for the settlement of those obligations within 90 days from the end of the

preceding fiscal year. All such balances not disbursed after ninety (90) days following the

end of the preceding fiscal year shall be moved to government Consolidated Account.

The recording, accounting and reporting of such undisbursed balances shall be set out in

accounting regulations to be issued under this Act and shall be consistent with the

provisions of sections 33, 34 and 35 of this Act”.

1.1.6.2 During the conduct of the audit, we observed that as at 30 June 2014, there was no

evidence that Management re-deposited into the GoL Consolidated Fund account the

total uncommitted cash balance of US$1,498.38.

Risk

1.1.6.3 The failure to re-deposit uncommitted fund into the consolidated Fund is in violation of

the PFM Act of 2009 and understates the reallocation of public resources.

Recommendation

1.1.6.4 Management should provide substantive justification for not depositing into the

Consolidated Fund Account the unexpended cash balances totaling US$1,498.38.

1.1.6.5 Going forward, at the end of each fiscal period, Management should ensure that all

unobligated cash balances are re-deposited into the GOL Consolidated fund account for

reallocation by the National Legislature.


1.1.6.6 The US$1,498.38 amount reported in the observation was committed in Fiscal Year

2013/2014 and paid in Fiscal Year 2014/2015. The documents are available for

verification.


1.1.6.7 During the course of the audit, Management did not provide any commitment schedule

to cover the uncommitted cash balance of US$1,498.38 reported. Moreover,

Management did provide the document which it said is available. Therefore, we maintain

our recommendation. Further, Management is in breach of financial discipline in line with

Regulation A.20 of the PFM Act of 2009.



1.1.7 Comparative Information

Observation

1.1.7.1 Paragraph 2.6.0 of the IPSAS cash Basis of accounting as adopted by the Government of

Liberia requires that unless a provision of this Standard permits or requires otherwise,

comparative information should be disclosed in respect of the previous period for all

numerical information required by this Standard. Comparative information should be

included in narrative and descriptive information when it is relevant to an understanding

of the current period’s financial statements.

1.1.7.2 During the Fiscal period 2013/2014, we observed that the financial statement was not

comparable to previous period as required by the above IPSAS provision.

Risk

1.1.7.3 In the absence of comparable information, users would not be to identify similarities and

differences of information provided in the financial statements and past reports.

Recommendation

1.1.7.4 Management should provide justification for not preparing the financial statements on

comparable basis.

1.1.7.5 Going forward, Management should ensure that the financial statements are prepared

on a comparable basis so as to help users to understand the similarities and differences

of information provided.


1.1.7.6 For the Fiscal Year 2013/2014, the reporting template received from the erstwhile

Ministry of Finance did not include columns for comparative information. Submission of

financial statement was based on the straight usage of the reporting template received.

Find attached the reporting template.


1.1.7.7 Management did not provide any evidence that reporting template provided by the

erstwhile Ministry of Finance excluded the inclusion of comparative information in the

financial statements.

1.1.7.8 Furthermore, IPSAS cash Basis of accounting as adopted by the Government of Liberia

requires financial statements to be comparable because it provides users with relevant

information on the entity’s performance over multiple periods thereby enabling them to

make economic and financial decisions. Therefore, we maintain our recommendation.



1.2 Administrative Issues

1.2.1 Payment Vouchers Not Pre-numbered

Observation

1.2.1.1 Regulation P.9.1 of the PFM Act of 2009 requires that all disbursements or payments of

public moneys shall be properly supported by pre-numbered payment vouchers.

1.2.1.2 It was observed during the audit that several payments vouchers for goods and services

were not pre-numbered. Below are samples of payment vouchers that were not pre-

numbered. See table #7 for details:

Table #7: Fifteen (15) Payment Vouchers Not Pre-numbered

No Date Payee Check

#

Voucher

#

Amount

US$



3 Aug. 27, 2013 HIGH TEC 38868 007 1,750.00

4 Aug. 27, 2013 Liberia Observer Corp. 38869 008 1,200.00

5 Sept. 5, 2013 Lone Star Comm. Corp. 45454 017 1,170.00

6 Sept. 5, 2013 Global Stationery & Computer Center 45455 018 430.00

7 Sept. 12, 2013 Auto LINK 45459 022 1,300.00

8 Oct. 29, 2013 Office Ideals 45487 047 1,416.50

9 Nov. 6, 2013 Liberia Observer Corp. 45991 50 2,475.00

10 Dec. 12, 2013 Super Petroleum Co. 332656 049 218.00

11 Dec. 19, 2013 Super Petroleum Co. 51001 060 9,976.60

12 Dec. 23, 2013 Samuel K. Johnson 332659 052 200.00

13 Jan. 17, 2014 Aaron Weah 332673 065 731.85

14 Feb. 25, 2014 Abou Hacheam Store 355809 096 377.50

15 April 21, 2013 Super Petroleum Co. 355843 130 218.00

Total 244,620.95

Risk

1.2.1.3 Payment vouchers not pre-numbered could lead to duplication of payments and

recycling of invoices.

Recommendation

1.2.1.4 Management should ensure that all its payment vouchers are pre-numbered and type

written to enable management to track payments and avoid possible duplication of

payments.


1.2.1.5 This was corrected in the Fiscal Periods 2014/15 and pre-numbered vouchers are

currently being used. This evidenced by the fact that there was no such observation

raised in the Draft Management Letters for FY 2014/2015 and FY 2015/2016. Find

attached pre-numbered voucher for fiscal year 2014/2015.




1.2.1.6 We acknowledge Management acceptance of our finding and recommendation. We shall

do a follow up on the implementation of the recommendations in subsequent audit of

the Governance Commission. However, management is in breach of financial discipline in

line with Regulation A.20 of the PFM Act of 2009.

1.2.2 Lack of Audit Committee

Observation

1.2.2.1 Regulation K.10 of the PFM Act of 2009 states that “a head of government agency or

government organization shall in consultation with the internal audit governance board

establish and maintain an audit committee for the government agency or organization

for which he/she is responsible”.

1.2.2.2 In addition, Regulation K.11(1a) of the PFM Act of 2009 requires that the Audit

Committee of Government Agencies or Organizations shall review internal controls,

including the scope of internal audit, internal audit Plans, internal audit findings, and

recommend to the head of government agency the appropriate action to be taken.

1.2.2.3 During the period under audit, there was no evidence to indicate that the Management

of GC established functioning audit Committee.

Risk

1.2.2.4 The failure of Management to establish functioning Audit Committee may prevent

Management from taking timely corrective action on deficiencies identify in internal

controls.

Recommendation

1.2.2.5 Management should establish a functioning Audit Committee as part of the Governance

structures. This will enable Management to evaluate and ensure that internal controls

are operating effectively.


1.2.2.6 Management acknowledges and will take measure to have the Audit Committee

constituted.


1.2.2.7 We acknowledge the acceptance of our finding and recommendation. We shall do a

follow up on the implementation of the recommendations in subsequent audit of the

Governance Commission. However, management is in breach of financial discipline in




1.2.3 Staff Attendance records

Observation

1.2.3.1 Section 5.1.1 of the Civil Service Standing Order requires that Civil Servants are normally

required to work 5 days per week. Normal working hours are from 8:00 a.m. to 4:00

p.m. subject to the approval of supervisors. A period of one hour is allowed for lunch. No

employee is permitted to leave his place of work without the knowledge of his

supervisor.

1.2.3.2 Section 12.1 of the GC Human Resource (HR) Hand Book states “The workday normally

begins at 9:00 a.m. and ends at 5:00 p.m., with a one-hour lunch, Monday through

Friday. Management may grant flexibility in these hours, recognizing transportation and

other personal issues. The general rule is that employees are expected to work a

minimum of forty (40) hours per week”.

1.2.3.3 During the conduct of the audit, we observed from samples selected from the GC Staff

Attendance Log that several employees did not sign out from work to indicate that the

staff worked from 8:00AM to 5:00 PM on working days.

1.2.3.4 In addition, we further observed that several members of staff signed off before 5:00 PM

daily.

Risk

1.2.3.5 The failure by employees to sign out could lead to staffs leaving jobs ahead of time.

Recommendation

1.2.3.6 Management should ensure that the Commission’s staffs sign in and out from work at

the appropriate hours specified in the GC Human Resource (HR) Hand Book.


1.2.3.7 Management acknowledges and will implement as per the recommendation.



follow up on the implementation of the recommendation in subsequent audit of the

Governance Commission. However, Management is in breach of Section 5.1.1 of the Civil

Service Standing Order

1.2.4 Training and Development Policy

Observation

1.2.4.1 Section 4 (a & b, ii) of the CSA Human Resource Manual states that “Agencies are

required to prepare individual Employee Development plans for employees as part of the

Employee Work Profile. The plan must include personal learning goals, learning steps



and resource needs; establishing a procedure for approving employee training requests

when: the training is work-related; and the agency will benefit from the employee’s

training.’’

1.2.4.2 Furthermore, the Committee of Sponsoring Organizations of the Treadway Commission

(COSO) requires that commitment to competence includes the level of knowledge and

skill needed to help ensure orderly, ethical, economical, efficient and effective

performance, as well as a good understanding of individual responsibilities with respect

to internal control.

1.2.4.3 The above can be evidenced by providing training, to raise the awareness of

management and employees of the internal control objectives and, in particular, the

objective of ethical operations, and helps them to understand the internal control

objectives and to develop skills to handle ethical dilemmas.

1.2.4.4 During the audit of the GC for the Fiscal Year 2013/14, it was observed that there was

no evidence that Management had in place criteria for the recruitment of individual

beneficiaries for training and Career Development.

Risk

1.2.4.5 Lack of criteria on training and development may result in training programs not being

able to address employees’ training needs and performance deficiencies.

Recommendation

1.2.4.6 Management should revise the Commission Handbook so as to include detailed criteria

on employees’ training and development needs. This will enhance the performance of

employees in meeting the objectives of the GC.




1.2.4.8 We acknowledge the acceptance of our finding and recommendation. However, we shall

do a follow up on the implementation of the recommendation in subsequent audit of the

Governance Commission. However, Management is in breach of Section 4 (a & b, ii) of

the CSA Human Resource Manual.

1.2.5 Unrecorded Fixed Asset Disposal

Observation

1.2.5.1 Regulation V.5 (1) of the PFM Act of 2009 requires that the conditions and terms of

disposal or sale of immovable or movable assets shall be determined by the General

Services Agency.



1.2.5.2 Furthermore, Page 17, Paragraph 5 of the GC’s Financial Management Policies and

Procedures Manual states that “GC does maintain an asset registry and various inventory

registries to comply with the requirement to control all valuable assets and provide

information to the GSA to compile a central asset registry.”

1.2.5.3 During the audit, it was observed that several assets such as office equipment, furniture

and fixtures were reported damaged and disposed of by Management. However, there

was no evidence that the disposal was done with the participation of the GSA as

required by the above PFM regulations See table #9 for details

Table #9: Assets Disposal without GSA participation

No Description Serial# Code Comment

1 Dell Desktop 4N22K52 GSA-GC-297-33 Damaged Desktop computer

(Executive Assistant to Chair

Office)

2 UPS 350JPS14 GSA-GC-297-7 Damaged

3 HP Printer CNKJR17872 GSA-GC-297-6 Damaged

4 Executive Chair - GSA-GC-420-15 Damaged


6 Plastic - GSA-GC-420-1-4 Damaged

7 Office Desk - GSA-GC-420-56 Damaged


9 Visitor Chair (3PCS) - GSA-GC-420-6-8 Damaged

10 FAN - GSA-GC-420-1 Damaged

11 Desktop (monitor) CNOD3NFO6 GSA-GC-297-17 Damaged

12 Plastic 2pcs - GSA-GC-420-1-3 Damaged

13 A/C - GSA-GC-031-23 Damaged

14 Book Shelf(wood) - GSA-GC-420-3 Damaged

Risk

1.2.5.4 Disposal of fixed assets without the GSA participation could be a violation of the PFM Act

and Regulation.

Recommendation

1.2.5.5 Management should provide substantive justification and material evidence for disposing

of the fixed assets without the participation of the GSA.

1.2.5.6 Management should ensure that fixed assets disposals are done with the full

participation of the GSA.






1.2.5.8 We acknowledge the acceptance of our finding and recommendations. We shall do a


Governance Commission. However, Management is in breach of financial discipline in


1.2.6 No Evidence of Appointment Letter for Evaluation Panel

Observation

1.2.6.1 Regulation 11 (a-b) of the PPC Act as Amended and Restated in 2010 requires that in

the establishment of a Bid Evaluation Panel by the Procurement Committee under

section 30 of the Act, the Procurement Committee shall ensure that: (a) Persons who

are qualified and required to serve on a Panel for the evaluation of bids are invited

formally by a letter of invitation to serve on the Bid Evaluation Panel for the specific

purpose. (b) A person who accepts to serve on the Bid Evaluation Panel shall give a

written undertaking indicating that no conflict of interest exists or would arise in the

performance of his/her responsibilities as a member of the Panel.

1.2.6.2 During the audit of the GC for the Fiscal Year 2013/14, it was observed that there was

no evidence of appointment letters for members of the Bid Evaluation.

1.2.6.3 Furthermore, we observed that there was no evidence of written undertaking from

members of the Bid Evaluation Panel to indicate that no conflict of interest exists in

performing their respective duties.

Risk

1.2.6.4 In the absence of appointment letter, the Term of reference (TOR) for members of the

Bid Evaluation panel may not be known.

1.2.6.5 Also, in the absence of written undertaking, Members of the bid evaluation panel could

be venerable to conflict of interest.

Recommendation

1.2.6.6 The Procurement Committee of the GC should ensure that each member of the Bid

Evaluation Panel is invited by a letter of invitation to serve on the Panel with appropriate

term of reference (TOR).


1.2.6.7 Management acknowledges that there was no formal letter written for the period under

audit. However, appointment letters were written in subsequent fiscal years. Find

attached copies of the Appointment Letter for Evaluation Panel.




1.2.6.8 We acknowledge the acceptance of our findings and recommendation. We shall do a


Governance Commission. However, Management is in breach of Regulation 11 (a-b) of

the PPC Act as Amended and Restated in 2010.

1.2.7 Non-declaration of Conflict of Interest

Observation

1.2.7.1 Regulation 11 (b) of the PPC Act as Amended and Restated in 2010 states that “a

person who accepts to serve on the Bid Evaluation Panel shall give a written undertaking

indicating that no conflict of interest exists or would arise in the performance of his/her

responsibilities as a member of the Panel.”

1.2.7.2 During the audit, it was observed that there was no evidence that members of the

Evaluation Panel gave a written undertaking to indicate that no conflict of interest exists

in performing their duties.

Risk

1.2.7.3 In the absence of a written undertaking, Bid Evaluation Panel members may be

susceptible to conflict of interest.

Recommendation

1.2.7.4 Management should ensure that individuals appointed to the bid evaluation panel

provide a written undertaking to protect the Commission against conflict of interest.






Governance Commission. However, Management is in breach of Regulation 11 (b) of the

PPC Act as Amended and Restated in 2010.

1.2.8 Petty Cash Policy

Observation

1.2.8.1 Regulation B.33 (4) of the PFM Act requires that in terms of this regulation, the

maximum amount that may be held as petty cash in any one calendar month is the

equivalent of United Sates Dollars Two Hundred.



1.2.8.2 During the audit we observed on Paragraph 1, Page 23, of GC’s Financial Procedure

Manual that Management established a petty cash ceiling amount of US$300.00 instead

of US$200.00 as required by the above PFM Regulation.

Risk

1.2.8.3 The establishment of a petty cash ceiling above the Government approved ceiling

amount could lead to the abuse of the fund.

Recommendation

1.2.8.4 Management should establish an approved petty cash ceiling limit in line with

Government’s fiscal policies.


1.2.8.5 Petty Cash Policy has been revised to reflect the Regulation B.33 (4) of the PFM Act.

Current petty cash ceiling is now US$200.00. Find attached petty cash vouchers.


1.2.8.6 The petty cash policy was not revised during the period under audit. Moreover,

Management did not provide any copy of the revised petty cash policy for audit

validation. Therefore, Management is in breach of financial discipline in line with

Regulation A.20 of the PFM Act of 2009.

1.3 Internal Controls

1.3.1 Risk Assessment

Observation

1.3.1.1 According to the Internal Control Integrated Framework of COSO, the board or heads of

public entity is ultimately responsible for determining whether management has

implemented effective internal control including monitoring. The organization makes this

assessment by (a) Understanding the risks the organization faces and (b) Gaining an

understanding of how senior management manages or mitigates those risks that are

meaningful to the organizations’ objectives”. Obtaining this understanding includes

determining how management supports its beliefs about the effectiveness of the internal

control system in those important areas.

1.3.1.2 During the audit, we observed that there was no evidence to indicate that Management

conducted risk assessment for the fiscal period 2013/2014 which would enable

Management to understand the extent of risks it faced in achieving the Commission’s

objectives.

1.3.1.3 Furthermore, there was no evidence that the GC Management has a risk management

policy to mitigate internal and external risks that could severally impact the achievement

of the institution’s objectives.



Risk

1.3.1.4 Management’s failure to carry out risks assessment during the fiscal period 2013/2014

could lead to Management not being aware of the risk the Commission faced.

Recommendation

1.3.1.5 The Management of the GC should ensure that risk assessment is conducted on a

periodic basis so as to enable Management identifies risks that the institution is faced

with and design strategy to mitigate the identified risks.




1.3.1.7 We acknowledge the acceptance of our findings and recommendation. We shall do a


Governance Commission.

1.3.2 IT Strategic Committee

Observation

1.3.2.1 For Planning and Organization, COBIT 4.1 PO4.2 explains the need to establish an IT

strategy committee at the board level. This committee should ensure that IT

governance, as part of enterprise governance, is adequately addressed; advise on

strategic direction; and review major investments on behalf of the full board.

1.3.2.2 During the audit we observed that Management used QuickBooks Application to process

the Commission’s accounting information. We further observed that there was no

evidence that Management established an IT Strategy Committee to provide strategic

direction in order help regulate and govern IT activities at the Commission during the

fiscal period under audit.

Risk

1.3.2.3 The absence of an IT Strategic Committee could lead to poor or non-proper

management of IT activities at the Commission.

Recommendation

1.3.2.4 The GC Management should ensure that IT Strategic Committee is established to help

with the governing and management of its IT activities.


1.3.2.5 Currently, the Commission has a team called the Project Accountability Team

representing head of departments, program managers, and policy analysts. The team

played the role of the IT steering Committee in addition to other functions it executes.

The Commission notwithstanding acknowledges the recommendation and will work to

have it implemented.




1.3.2.6 Management did not provide any evidence that the Project Accountability Team was

functioning during the Fiscal Period under audit. Moreover, the term of reference for the

Project Accountability Team was not provided by Management to determine whether the

Team played the role of the IT steering Committee. However, we acknowledge the

acceptance of our recommendation. We shall do a follow up on the implementation of

the recommendation in subsequent audit of the Governance Commission.



ANNEXURE

Annexure 1: Remunerations paid to GC Staff without deducting Social Security Contributions for

FY 2013/14

Month Payroll Gross NASSCORP

Deduction @ 3%

NASSCORP

Employees

Contributions

@ 4%

Totals

Jul-13 Special & Gen. Allow. 60,945.00 1,828.35 2,437.80 4,266.15

Professional Allowance 41,688.88 1,250.67 1,667.56 2,918.22

Aug-13 Special Allowance 30,000.00 900.00 1,200.00 2,100.00

Gen. Allow. &

Professionals 64,950.54 1,948.52 2,598.02 4,546.54

Sep-13 Special & Gen. Allow. 54,595.00 1,637.85 2,183.80 3,821.65


Oct-13 Special Allowance 30,000.00 900.00 1,200.00 2,100.00

Gen. Prof. Allow. 65,711.65 1,971.35 2,628.47 4,599.82

Nov-13 Special Allowance 41,000.00 1,230.00 1,640.00 2,870.00

Prof. & Gen. Allow. 67,586.65 2,027.60 2,703.47 4,731.07

Dec-13 Special Allowance 30,000.00 900.00 1,200.00 2,100.00

Gen. Allow. 26,120.00 783.60 1,044.80 1,828.40


Jan-14 Special Allowance 30,000.00 900.00 1,200.00 2,100.00

Prof. & Gen. Allow. 63,697.76 1,910.93 2,547.91 4,458.84

Feb-14 Special Allowance 30,000.00 900.00 1,200.00 2,100.00

Prof. & Gen. Allow. 63,697.76 1,910.93 2,547.91 4,458.84

Mar-14 Special Allowance 30,000.00 900.00 1,200.00 2,100.00

Prof. & Gen. Allow. 67,786.66 2,033.60 2,711.47 4,745.07

Apr-14 Special Allowance 30,000.00 900.00 1,200.00 2,100.00

Gen. Allow. 32,920.00 987.60 1,316.80 2,304.40


May-14 Special Allowance 30,000.00 900.00 1,200.00 2,100.00

Prof. & Gen. Allow. 69,944.99 2,098.35 2,797.80 4,896.15

Jun-14 Special Allowance 30,000.00 900.00 1,200.00 2,100.00

Prof. & Gen. Allow. 69,944.99 2,098.35 2,797.80 4,896.15

Totals 1,179,212.06 35,376.36 47,168.48 82,544.84

management letter on the audit of the governance ... letter on the audit of the gc financial... ·...

Documents