Besetsa issues an adverse opinion Gov’t fiscus
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By Lerema Pheea
Auditor General Monica Besetsa has issued an audit certificate showing an adverse opinion on the consolidated financial statements of the government of Lesotho for the year ended 31 march 2020.
Besetsa said in her opinion owing to significance of matters she discusses in the basis for adverse opinion she issued the financial statements “do not represent fairly the financial position of the government as at 31 March 2020, and its financial performance and its cash flows for the year then ended…”.
The Auditor General said the basis for an adverse opinion is based on that in the cash balances, she could not establish with certainty the number of Bank Accounts government of Lesotho held in various banks and the balances thereon as at 31 March 2020.
She adds that the Accountant General did not maintain properly the register for bank accounts and the banks also provided inconsistent information regarding active, new, and closed accounts.
She reported that a note 15 to the financial statement shows that government had 374 accounts totaling M5.311 billion as at 31 March 2020 however, the Consolidated Statement of Cash receipts and payments reflect that government had cash of M8.724 billion resulting in unexplained difference of M3.474 billion.
Besetsa said that government of Lesotho had 374 bank accounts with a total amount of M5.311 billion as at 31 March 2020 whereas at 31 March 2019, there were 387 accounts totaling M6.328 billion resulting in a cash decrease of M1.017 billion and a decrease by 13 accounts.
But, Besetsa said the statement of consolidated receipts and payments reflects a cash increase of M1.877 billion.
Besetsa added that another basis for issuing an adverse opinion was non-compliance with international public sector accounting standards under cash basis of accounting.
She said the financial statement does not consolidate all government-controlled entities; and state-owned enterprises, autonomous institutions, and other extra-budgetary funds are not fully consolidated.
“Centrally managed bank account balances were not fully reconciled as at 31 March 2020
“The financial statements disclose a small number of accrual items, which had not been cleared at the reporting date, for example; accounts payable, advances, provisions, third party trusts, and deposits,” said besetsa.
Besetsa said another basis she used to issue an adverse opinion was the omission of below-the-line accounts.
She said “the balance of below -the line accounts as at 31 March 2009 have not been brought forward since 1 April 2009. This omission has misstated the consolidated financial statements of the government of Lesotho for the past 11 years”.
She noted that her adverse opinion was also based on the regularity of expenditure noted in the fiscus.
She explained that the issue of regularizing a transfer of M450 billion by a Minister directive from the trust monies account into the consolidated fund, for onward transfer to recurrent expenditure account in 2016/2017 has not been resolved.
She also said that the transfer has not yet been regularized through Supplementary Appropriation Act contrary to the requirements of section 112(2) of the constitution and section 24(4)(b) of the Public Financial Management and Accountability (PFMA) act 2011 that issues from the consolidated fund to voted heads of expenditure should be through Appropriate Act.
“Regularization of excess expenditure still remains a challenge and the statements of excess have not been presented before parliament for regularization of expenditure in the past years. During the year under review, three spending units recorded excess recurrent expenditure but statement of excess has not been presented before parliament, thus contravening the requirements of section 112(3)(b) of the constitution of Lesotho and the PFMA act 2011,” said Besetsa.
Besetsa said advances from the contingencies fund totaling M226 million and M166 million for the financial year 2018/2019 and 2019/2020 respectively were not yet approved by Parliament at time of her reporting through Supplementary Appropriation Acts, therefore the advanced amount has not been replaced contrary to the requirements of section 114 of the constitution.
However, the accountant general ‘Malehlohonolo Mahase said that her previous report indicated that issues that adversely impact the quality of the consolidated financial report.
She also said that some of the issues remain a challenge but efforts are underway to address them over a period of time.
“The minister of finance Thabo Sophonea through the treasury department has been mandated to develop a roadmap that will improve the audit opinion from adverse to clean.
“This roadmap shall be developed in the year 2020/2021 for implementation thereof,” said Mahase.