4.2 FINDINGS ON MINISTRY OF FINANCE’S APPROPRIATION ACCOUNT (VOTE 5)
4.2.1 Direct payments to Service Providers
Treasury made direct payments amounting to $179 816 213 to service providers on behalf of line Ministries. Treasury informed the Committee that such payments were made on the strength of confirmation by Directors of Finance in line Ministries, service providers and the Zimbabwe Revenue Authority (ZIMRA). On the other hand, line Ministries alleged that such payments were made without their knowledge and as a result, they were not able to capture the payments on their books. The challenge posed by direct payments is that they violate the principle of double entry in that only the PFMS reflects the transactions while Ministries sub-Paymaster General accounts are not charged with the expenditure.
The Accountant General explained to the Committee that direct payments were occasioned by the misalignment between consumption of utility services by line ministries and Treasury capacity to pay for such services. At the end, utility providers were not able to discharge their mandate and also meet tax obligations with ZIMRA. The Ministry provided documentation exchanged between line Ministries, Service providers and ZIMRA which enabled Treasury to effect the payments through set offs.
4.2.1.1 The Committee appreciates the difficult financial situation Government is currently facing which necessitated direct payments. It recommends that Treasury must formulate procedures for handling direct payments to facilitate proper and systematic capturing of such transactions and curb recurrences of the audit observation in future. This should be done by 31st September 2016.
4.2.2 Expenditure reversals by line Ministries after Treasury failed to transfer funds to line Ministries’ Sub PMG bank accounts to meet expenditure already posted in the System
Treasury failed to transfer cash to line Ministries Sub PMG bank accounts to meet expenditure that had already been posted. Line Ministries were instructed to reverse all unfunded releases as at December 31, 2014. However, the Ministry of Finance had no documentation for those unfunded expenditures. As a result of such reversals, the total expenditure for the year may be misstated if the Ministry fails to account for the total expenditure reversals for the year.
The Accountant General advised the Committee that budget releases were done in anticipation of revenue inflows which did not materialise. Treasury monitored and ensured unpaid (open) items were reversed during the 13th period. The expenditure was then charged on the subsequent budget when releases were received. The Committee was satisfied with the action taken to address the finding.
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