4.1.2 Public Financial Assets (2014)
During the 2013 Audit, it was observed that the Ministry issued loans to Zimbabwe Steel Company (ZISCO) and Industrial Development Corporation (IDC) amounting to $12 658 331 without signing loan agreements. In 2014, the Ministry further issued $11 663 363 to the same parastatals again without loan agreements. In the absence of loan agreements, the legality of the advances could not be ascertained.
The Ministry informed the Committee that ZISCO Steel and IDC had contracted loans from the China Exim Bank and experienced challenges in servicing the loans. The Ministry then approached Treasury which in turn paid the amounts in question to the Bank in 2013 and 2014 on behalf of the parastatals. The Ministry indicated that loan agreements between the Ministry and the respective parastatals were prepared following the audit observation. Signed copies of the loan agreements were availed for audit inspection and as a result, the audit observation has been cleared.
The Committee however, noted with concern the payment of over $24 million on behalf of ZISCO Steel and IDC without the corresponding record of the liability in national accounts reflecting these amounts owing to central government. It therefore, makes it difficult for Treasury to adequately record the full extent of sums owing to Government by parastatals.
4.1.3 Absence of a properly constituted Audit Committee (2014)
Section 84 of the Public Finance Management Act (PFMA) [Chapter 22:19] provides for the establishment of Audit Committees whose responsibilities are to liaise with external audit, supervise internal audit, and review annual accounts and internal controls. The Ministry is commended for taking steps to establish an Audit Committee. However, the Committee was made up of Ministry’s employees contrary to the provisions of 84 of the Public Finance Management Act which stipulates that the majority of members should not be persons employed in the Ministry and the chairperson should not be a member of the Public Service. Given, the current composition, the independence of the Audit Committee is compromised and the internal controls may not be adequately evaluated.
In response, Mrs. Shonhiwa, the Accounting Officer acknowledged the observation. She also advised that the existing Committee was an interim one, put in place as a stop gap measure to assist in the implementation of audit recommendations. Other Ministries were said to be in the same predicament. The Ministry indicated that it would continue to engage Treasury on the way forward regarding the setting up of the appropriate Audit Committee as provided for in Section 84 of the PFMA and in that regard, a letter was written to Treasury on 14 July 2016.
The Committee noted with concern that seven years after the PFMA was enacted, Ministries have failed to establish Audit Committees in the absence of PFM Regulations instructing Ministries and other public entities on how to implement the provisions of the Act. In the absence of Audit Committees, Ministries have not been able to follow through the recommendations made by the Auditor General, hence the continued recurrence of issues.
Continued next page
(292 VIEWS)
