Management Letter
On the Ministry of Foreign Affairs Financial Statements
For the Fiscal period ended June 30, 2016
Yusador S. Gaye, CPA, CGMA Auditor General, R. L.
Monrovia, Liberia April 2019
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Table of Contents 1 DETAILED FINDINGS AND RECOMMENDATIONS ...... 6 1.1 Financial Issues ...... 6 1.1.1 Discrepancy in Financial Reporting ...... 6 1.1.2 Expenditure without Supporting Documents ...... 7 1.1.3 Unusual Transaction ...... 8 1.1.4 Procurement of Land ...... 11 1.1.5 Consultancy Contracts ...... 13 1.1.6 Air tickets ...... 14 1.1.7 Amendment to the Restated Biometric Passport Contract ...... 15 1.1.8 Payments made outside the Foreign Missions Project’s Scope ...... 16 1.1.9 Un-authorized Payment Vouchers ...... 17 1.1.10 Payments without evidence of approved policy ...... 20 1.1.11 Unretired Travels Allowances ...... 21 1.1.12 Bank Reconciliation ...... 23 1.2 Administrative Issues ...... 24 1.2.1 Fixed Assets ...... 24 1.2.2 Payment vouchers not stamp PAID ...... 25 1.2.3 Segregation of Duty ...... 25 1.2.4 Passport Division ...... 27 1.2.5 Training ...... 27 1.2.6 Foreign Service Board ...... 28 1.2.7 Approved Financial Manual ...... 29 1.2.8 Budget Committee ...... 30 1.2.9 Fuel Distribution Policy ...... 30 1.2.10 Audit Committee...... 31 1.2.11 Organization Chart ...... 32 1.2.12 Approved Human Resource Policy ...... 33 1.2.13 Strategic and Operational Plans ...... 34 1.2.14 Leases ...... 34
2 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
ACRONYMS USED Acronyms/Abbreviations/Symbol Meaning AC Audit Committee AG Auditor General BC Budget Committee BP Biometric Passports CB Cashbook Balance CBL Central Bank of Liberia CG Controller General COSO Committee of Sponsoring Organizations CPA Certified Public Accountant DMA Deputy Minister for Administration DMFA Deputy Minister for Foreign Affairs ECOWAS Economic Community Of West African States FMA Foreign Missions Account FMP Foreign Missions Project FO Finance Officer FS Financial Statements GoL Government of Liberia IA Internal Audit IAA Internal Audit Agency IAGB Internal Audit Governance Board IC Internal Control IPSAS International Public Sector Accounting Standards ISSAIs International Standard of Supreme Audit Institutions IT Information Technology LRA Liberia Revenue Authority MFDP Ministry of Finance Development Planning MIC Management Internal Control MoFA Ministry of Foreign Affairs MOJ Minister of Justice PA Project Account PD Passport Division PFM Public Financial Management PMT Project Management Team PPC Public Procurement Concessions PPCC Public Procurement Concessions Commission PV Payment Vouchers
3 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
April 11, 2019
Hon. Gbezohngar Findley Minister Ministry of Foreign Affairs Capitol Hill Monrovia, Liberia
Dear Hon. Findley:
Re: Audit of the Ministry of Foreign Affairs Financial Statements for the fiscal Period ended June 30, 2016.
The Financial Statements of the Ministry of Foreign Affairs (MoFA) for the fiscal period ended June 30, 2016 are subject to audit by the Auditor General (AG) consistent with the Auditor General’s mandate as provided for under section 2.1.3 of the GAC Act of 2014 as well as in accordance with the Public Financial Management Act and Regulations of 2009.
INTRODUCTION The audit of the MoFA financial statements for the fiscal period ended June 30, 2016 has been completed; the purpose of this letter is to bring to your attention the findings that were revealed during the conduct of 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.
An audit also includes 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.
4 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
The financial statements, maintenance of effective control measures and compliance with laws and regulations are the responsibility of the Management of the Ministry of Foreign Affairs. Our responsibility is to express our opinion on these financial statements.
Management Personnel The Ministry of Foreign Affairs has the following personnel who handled the administrative and financial affairs of the institution for the period under audit.
Table: 1 Key Management Personnel of the MoFA Name Title / Position Held Period 1. Hon. Marjon V. Kamara Foreign Minister 2015/ 2016 2. Hon. Augustine Kpehe Ngafuan Foreign Minister 2015/ 2016 3. Hon. B. Elias Shoniyin Deputy Minister/IC&EI 2015/ 2016 4. Hon. B. Elias Shoniyin Deputy Minister/ Foreign Affairs 2015/ 2016 5. Dr. Wade Elliott-Brownell Deputy Minister/ Admin. 2015/ 2016 6. Cllr. Boakai Kanneh Deputy Minister/ Legal Affairs 2015/ 2016 7. James Quiqui Comptroller 2015/ 2016 8. Jervis A. Witherspoon Chief of Protocol 2015/ 2016
APPRECIATION We would like to express our appreciation for the courtesy extended and assistance rendered by the staff of the Ministry of Foreign Affairs Team during the conduct of the audit.
Yours Faithfully,
5 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1 DETAILED FINDINGS AND RECOMMENDATIONS
1.1 Financial Issues
1.1.1 Discrepancy in Financial Reporting
Observation 1.1.1.1 Section 36(1) of the PFM Act of 2009 states that “It is a general responsibility under this Act for all government officials handling public financial transactions to ensure that financial information is reported in a timely, comprehensive, and accurate manner, in the manner prescribed in this Act, under its regulations, and in instructions issued by the Minister”.
1.1.1.2 During the period under audit, we observed that the Management of the Ministry of Foreign Affairs reported in the financial statements total expenditure of US$901,237.90 for goods and services, whereas the total amount recorded in the general ledger or final trial balance for goods and services was US$810,058.15 thereby resulting in a total variance of US$91,179.75. See table 1 below for details.
Table 2: Variance noted between Financial Statements and General Ledger Financial General Ledger Account Statements Variance # Account Titles Balances Code Balances (C=A-B) (B) (A) Foreign Travel-Daily Sub. 1 Allowance 221102 402,362.67 397,034.90 5,327.77 2 Telecommunications, Internet 221203 94,744.99 92,244.99 2,500.00 3 221501 Repair and Maintenance-Civil 228,347.47 160,837.45 67,510.02 4 221502 Repair and Maintenance-Vehicle 33,818.31 29,229.48 4,588.83 5 Stationeries 221602 76,130.46 74,880.46 1,250.00 6 Printing, Binding & Publication 221603 10,700.00 9,411.18 1,288.82 7 Uniforms and Specialized Cloth 221804 6,580.00 4,080.00 2,500.00 8 Food and Caterings Services 222103 48,554.00 42,339.69 6,214.31 Total 901,237.90 810,058.15 91,179.75
Risk 1.1.1.3 The failure to accurately report financial information may undermine public sector accountability, transparency, completeness and the accuracy of the financial statements cannot be assured.
Recommendation 1.1.1.4 The Management of the Ministry of Foreign Affairs should provide justification for the difference noted between the financial statements and the General Ledger.
6 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1.1.1.5 The Management of the Ministry of Foreign Affairs should adjust the financial statements to the general ledger to reflect the actual expenditure incurred.
Management’s Response 1.1.1.6 The variances noted between the financial statements and the general ledgers were created as the result of transactions that were not paid for but were committed for the fiscal period under review.
Auditor General’s Position 1.1.1.7 The Ministry’s obligations that were not paid during the period under audit should not be reported as part of the total expenditure on the face of the Statement of Cash Receipts and Payments.
1.1.1.8 PFM Regulation I.16(2) says that “The receipts and payments that belong to a period or a financial year other than the reporting period or financial year, shall be shown in the accounts and the details shall be given in the notes to the accounts”. Therefore, the Management of the MoFA should adjust the financial statement to reflect the actual expenditure incurred for the 2015/2016 fiscal year. Further, Management is in breach of financial discipline in line with Regulation A.20 of the PFM Act of 2009.
1.1.2 Expenditure without Supporting Documents
Observation 1.1.2.1 Section 36(1) of the PFM Act of 2009 states “It is a general responsibility under this Act for all government officials handling public financial transactions to ensure that financial information is reported in a timely, comprehensive, and accurate manner, in the manner prescribed in this Act, under its regulations, and in instructions issued by the Minister”.
1.1.2.2 Regulations P.9 (1) and (2) of the PFM Act of 2009 states(1) “All disbursements or payments of public moneys shall be properly supported by pre numbered payment vouchers.(2) Payments except for statutory transfers and debt service shall be supported by invoices, bills and other documents in addition to the payment vouchers”. < 1.1.2.3 During the period under audit, we observed that the Management of the Ministry of Foreign Affairs did not provide supporting documents such as payment vouchers for transactions totaling US$31,931.78 See Table 3 below for details.
Table 3: Expenditure without Supporting Documents Variance Purpose Financial Statements US$ Payment Vouchers US$ US$ Repair & Maintenance Civil Work 158,798.77 126,866.99 31,931.78
Risk 1.1.2.4 The failure by the MoFA Management to provide supporting documents could undermine the legitimacy of the transactions.
7 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Recommendation 1.1.2.5 The Management of the MoFA should provide substantive justification backed by material evidence to validate the authenticity of the transactions.
1.1.2.6 The Management of the Ministry of Foreign Affairs should adjust the financial statements to the general ledger to reflect the actual expenditure incurred.
1.1.2.7 Going forward, the Management of the Ministry of Foreign Affairs should ensure that vouchers to support transactions are archived in files on a month by month basis to enable easy retrieval of documents when requested.
Management’s Response 1.1.2.8 Similarly to discrepancy in Financial Reporting, the payment voucher for the US$31,931.78 variance noted was not paid for due to unsatisfactory completion of job (Repair & Maintenance Civil Work) by the contractor. On the basis of this, the payment was recognized in the financial statements because it was committed.
Auditor General’s Position 1.1.2.9 The obligation for repairs and maintenance was not paid during the period under audit. It should not be reported as part of the total expenditure on the face of the Statement of Cash Receipts and Payments. PFM Regulation I.16(2) says that “The receipts and payments that belong to a period or a financial year other than the reporting period or financial year, shall be shown in the accounts and the details shall be given in the notes to the accounts”. Therefore, the Management of MOFA should adjust the financial statement to reflect the actual expenditure incurred for the 2015/2016 fiscal year. Further, Management is in breach of financial discipline in line with Regulation A.20 of the PFM Act of 2009.
1.1.3 Unusual Transaction
Observation 1.1.3.1 Section 20 of the PFM Act - Responsibilities for National Budget Execution, Count 3 states that, “Ministers of individual spending Ministries, and other heads of budgetary institutions and agencies which are separately identified in the Annual Appropriations Act, are responsible for the proper and efficient execution of their budget in accordance with this Act, the regulations issued under it, and the instructions and guidelines issued by the Minister. Furthermore, they are fully accountable to the President and the Legislature for their performance in the implementation of their budgets”.
1.1.3.2 Section R.3 , (4) ad (5) of the PFM Regulations of 2009 states that “(4) Any public officer who opens or operates any Bank Account for a Government Agency, which is not authorized by the Comptroller-General, is in breach of financial discipline as defined in sub regulation 20(1). (5) Any bank that opens an account for any Government Agency without the authority of the Comptroller-General is in breach of these regulations and liable to be sanctioned by the Central Bank of Liberia”.
8 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1.1.3.3 During fiscal year 2015/2016, the Management of the MoFA prepared and presented to the Ministry of State for Presidential Affairs a budget in the total amount of US$3,400,000 for the renovation, refurbishing, purchase of vehicles and equipment for fifteen (15) of Liberia Foreign Missions.
1.1.3.4 On April 2, 2015 the amount of US$694,600 was deposited in the Foreign Missions Project Account #0220630001514 maintained at the CBL for the purpose of the project implementation. On June 23, 2015, the Management of the MoFA requested that the balance of US$2,750,400 be transferred to the project account domiciled at the CBL operated by the Ministry to facilitate the completion of the projects.
1.1.3.5 During the conduct of the audit, it was observed that another account in the name of the Project bearing account #0308470/002/0001/000 was opened at the Guaranty Trust Bank (GTBank) Liberia Ltd, on July 1, 2015; and, upon confirmation it was shown that the former Deputy Minister of Fiscal Affairs, Dr. James F. Kollie, and the Director for Financial Reporting Mr. Prince M. Lighe are signatories to the account in the name of the MoFA instead of the authorized officers of the Ministry of Foreign Affairs.
1.1.3.6 We further noted that the total amount of US$2,750,400.00 was credited to the Account. Further, there was no evidence that the Comptroller and Accountant General approved the opening of the account as required by the PFM Regulations.
Risk 1.1.3.7 Opening unauthorized account on behalf of government agencies and projects without authorization could lead to misappropriation of public resources.
1.1.3.8 Opening and operating an account in the name of a ministry without the participation of the authorities of the Ministry to operate the account could undermine public sector accountability and transparency.
Recommendation 1.1.3.9 Dr. James F. Kollie and Mr. Prince Lighe should provide material justification for opening a separate account in the name of the Ministry of Foreign Affairs Foreign Missions Project without authorization and participation of the ministry’s management.
1.1.3.10 Going forward, Dr. James F. Kollie and Mr. Prince Lighe should discontinue the practice of opening and operating accounts in the name of line ministries without the participation and or knowledge of the line ministries, as this could lead to misappropriation and undermines the budgetary process.
Management’s Response 1.1.3.11 The Land in question was purchase through the Ministry of Finance and Development Planning for the Ghana Embassy through the project funds. However, this account was opened at the end of the fiscal year to secure a huge portion of the project fund which was at the verge of lapse. The Ministry of Foreign Affairs was not aware of the account at GT Bank.
9 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Dr. James F. Kollie’s Response 1.1.3.12 To the best my recollection, we opened the account as an escrow account to be used for the renovation and support of foreign missions as instructed by the President. Once it is an escrow account, it is still a part of the Consolidated Account but only set aside to be used for specific purpose intended. In this case, though the money was earmarked for renovations and support to foreign mission, the expenses would only be authorized and paid once the actual job had been done or contracted. But so that the funds are not co- mingled or used for other reasons, they are usually moved into escrow and upon request by the relevant ministry or agency, the payment will be made. Though the account title might reflect the name of an entity or the purpose for which it is escrowed, it is not under that agency’s control until they can justify it’s use by the contracting of services or the purchase of goods for the intended purpose. However, monies used from that account will be on request by that entity or if not used, returned to the Consolidated Account.
1.1.3.13 In this situation, I believe that Mr. Prince Leigh, the Deputy Comptroller-General, was the Acting Comptroller and Accountant General (CAG) at that particular time and so he signed in that capacity. By his signature as CAG, it means that the account was duly authorized consistent with the PFM Act. Because the Deputy Minister of Fiscal Affairs and Comptroller and Accountant General are signatories to the Consolidated Account and this escrow account was still a part of the Consolidated Account, James F. Kollie and Prince Leigh were only performing their functions consistent with the PFM Act of 2009.
Auditor General’s Position 1.1.3.14 The assertions made by MFDP Management/Dr. James F. Kollie do not address the observations raised. The finding is that an undisclosed account with the exact balance due of an amount that was budgeted on MoFA’s behalf for a specific project was discovered at a commercial bank in the name of MoFA without authorities of MoFA being aware.
1.1.3.15 Further, if the account is an escrow account that is part of the Consolidated Account that domiciles at the Central Bank of Liberia (CBL), the escrow should have been opened at the CBL and not at a commercial bank.
1.1.3.16 Regulation R.3 of the PFM Act of 2009, R.3 is clear on the opening of accounts and states that: (1) When ordering the opening of a bank account for a Ministry or a Government Agency, the Comptroller-General under instruction from the Minister, shall communicate to the bank and the head of government agency, the conditions under which the account will be operated; and.
(2) Comptroller-General shall maintain a register of all bank accounts including the details of officers authorized to operate these accounts.
10 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1.1.3.17 The Comptroller and Accountant General authorizing himself with the Deputy Minister for Fiscal Affairs to be the signatories of an account on behalf of another Ministry is a violation of the PFM Act and Regulations of 2009. Clearly by doing so, duties are not segregated and public funds could be diverted. The Management of MFDP should desist from the practice of opening and operating accounts in the name of line ministries without their participation and/or knowledge as this could lead to misappropriation or fraud and undermines the budgetary process.
1.1.3.18 Further, the Minister of Foreign Affairs could have been held liable per PFM Act of 2009, Section 20 count 3, which states that “if the amount is budgeted under a budget code for a Ministry, the head of that Ministry or his /her designee is held accountable for execution” for an account over which he/she has no control.
1.1.3.1 The Ministry of Finance and Development Planning should not have budgeted the amount in the name of the Ministry of Foreign Affairs and should desist from the practice of opening and operating accounts in the name of line ministries without their participation and/or knowledge as this could lead to misappropriation or fraud and undermines the budgetary process; therefore, we maintain our finding and recommendations. Further, Dr. Kollie and Mr. Lighe are in breach of financial discipline per PFM Regulation A.20.
1.1.4 Procurement of Land
Observation 1.1.4.1 Regulations P.9 (1) and (2) of the PFM Acts of 2009 states(1) “All disbursements or payments of public moneys shall be properly supported by pre numbered payment vouchers.(2) Payments except for statutory transfers and debt service shall be supported by invoices, bills and other documents in addition to the payment vouchers”.
1.1.4.2 Additionally, Regulation A.20 (1) of the PFM Act of 2009 states “A public officer is in breach of financial discipline if he or his act or omission goes contrary to instructions or directives contained in these Regulations or in accounting instructions or manual for which no variation is permitted except by an appropriate authority”.
1.1.4.3 Further, Regulation P. 13(2) of the PFM Act of 2009 states “the original payment voucher or certificates shall be signed and the officer shall ensure that legible copies of the signature are on each of the vouchers.”
1.1.4.4 During the period under audit, we observed that on July 21, 2015 the Government of Liberia through the Ministry of Foreign Affairs purchased from the intestate Estate of Christian D. Maxwell 2.8 lots of land containing a building for US$425,000 to be conveyed to the Republic of Ghana to be used for their embassy facility on a reciprocal basis.
11 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1.1.4.5 Further, the review of the land documents showed that the land purchased by GoL for the Embassy of the Republic of Ghana, was leased to the Embassy of Ghana from Christian D. Maxwell in 1977 for a period of sixty three (63) years commencing from March 3, 1977 up to and including March 2, 2040. The total rent for the lease which amounted to US$360,000 was settled in full by the Embassy of the Republic of Ghana during the signing of the lease agreement.
1.1.4.6 We further noted that the payment was made without evidence of payment voucher.
Risk 1.1.4.7 The purchase of property with unexpired lease may lead to litigation.
1.1.4.8 The failure by the management to provide payment voucher could undermine the legitimacy of the transaction.
Recommendation 1.1.4.9 The management should provide substantive justification for not considering legal remedies for the purchase of 2.8 lots of land under a valid leased.
1.1.4.10 The management should provide material justification for making payment without evidence of a payment voucher.
1.1.4.11 The Former Deputy Minister of Fiscal Affairs, Dr. James F. Kollie, and the Director for Financial Reporting Mr. Prince M. Lighe should account for the disbursement of US$425,000 without considering legal implication for the purchase of the 2.8 lots of land under a valid leased and without evidence of payment voucher.
Management’s Response 1.1.4.12 The Land in question was purchase through the Ministry of Finance and Development Planning for the Ghana Embassy through the project funds. However, this account was opened at the end of the fiscal year to secure a huge portion of the project fund which was at the verge of lapse. The Ministry of Foreign Affairs was not aware of the account at GT Bank.
Dr. James F. Kollie’s Response 1.1.4.13 I believe that all necessary documentations and legal paperwork were completed for the purchase of the 2.8 lots of land. The Deputy Minister of Legal at the Ministry of Foreign Affairs and the Minister of Justice of the Republic of Liberia all certified that ever legal paper required for the transfer of the title of the land were in place and the request was consistent with the use of the money which was intended to purchase a land in Monrovia so that the Liberian Embassy in Ghana could benefit from land swap in Accra, Ghana. All the necessary documentations are there.
1.1.4.14 Again, for the records, Mr. Prince Leigh’s proper title was Deputy CAG for Financial Report.
12 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Auditor General’s Position 1.1.4.15 In our observations, it appears that due diligence was not performed in reference to the property that was purchased in the land swap arrangement with the Republic of Ghana as there was no voucher associated with the payment made for the land. The assertions made by both MoFA and MFDP/Dr. Kollie do not adequately address the issues raised.
1.1.4.16 The Management of MoFA in its response squarely places the land purchase arrangements on the MFDP while the MFDP/Dr. Kollie’ s asserts that all documents in reference to the land swap is with MoFA.
1.1.4.17 The property in questions per our review of documents that were available is a property that was already under lease by the Ghanaian Government for sixty three years, 3rd March 1977 to 2nd March 2040. The land was still under lease when the Liberian Government purchased the property on a reciprocal basis in June 2015. There was still twenty five (25) years of unexpired lease term.
1.1.4.18 It is likely that litigation could arise from this purchase as the Ghanaian Government informed the Government of Liberia on 3 July 2013 of the active lease on the property prior to payment and purchase of the property by the Liberian Government without apparent consideration of the communication from the Ghanaian Embassy.
1.1.4.19 In addition, Regulation P.15 (2) of the PFM Act of 2009 states that “ Unless a budgetary agency has adopted a computerized online system of payment, a head of government agency shall for the purposes of payments , submit payment vouchers to the Treasury or accounts office thereof completed in triplicate, two copies being sent with the vouchers to the Treasury or accounts office and supported by the following supporting documents: original approved Local Purchase Order, original copy of the contract where applicable, three copies of supplier’s invoices, original signed copy of the procurement proceedings of the tender committee, original copy of the goods received note.” There was no evidence that the process was followed.
1.1.4.20 MoFA and MFDP Managements are in breach of financial discipline per Regulation A.20 of the PFM Act of 2009. Further, the matter is being referred to the Liberian Anti- Corruption Commission for in depth investigation.
1.1.5 Consultancy Contracts
Observation 1.1.5.1 Section 46(1) of the PPC Act states, “Public procurement shall be undertaken by means of advertised open bid proceedings, to which equal access shall be provided to all eligible and qualified bidders without discrimination, subject only to the exceptions provided under this Part for particular methods of procurement.”
1.1.5.2 Section 54(1) of the PPC Act requires that quotation shall be requested in writing from as many bidders as practicable, but from at least three (3) bidders.
13 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1.1.5.3 During the conduct of the audit, we observed that management awarded separate consultancy contracts to Mr. Boakai Kollie and Atty. Pela Boker-Wilson amounting to US$33,000.00 and US$30,250.00 respectively without evidence of a competitive procurement process.
1.1.5.4 According to the contract documents, the contracts commenced on July 1, 2015 and August 1, 2015 respectively. From our review of the contract documents, the consultants purportedly started work before the contracts were signed. The contract documents called for consultants to be paid retroactively for work already done when there was no evidence to validate the work done for which payment was made to the contractors.
Risk 1.1.5.5 The non-competitive awarding of consultancy contracts could lead to conflict of interest and the non-achievement of value for money.
1.1.5.6 Retroactively payments made to consultants without evidence of work done may casts doubt on the legitimacy of the transactions.
Recommendation 1.1.5.7 The MoFA Management should provide material justification for awarding two consultancy contracts amounted to US$63,250.00 without adherence to the requirement of the Amended and Restated PPC Act of 2010.
Management’s Response 1.1.5.8 Relative to the consultant, all proceedings as per the relevant provisions of the PPC Law were adhered to.
1.1.5.9 Reference to the publication of the award of contracts, it was an oversight. However, History of our contracts awards shows that MoFA normally adheres to provisions of the PPC Law. Henceforth, the MoFA Management will publish annually, the requisite information regarding awards of contracts.
Auditor General’s Position 1.1.5.10 The Management of the Ministry of Foreign Affairs should adhere to all the provisions of the PPC Act of 2005 as Amended and Restated in 2010 in all future procurement process. Further, Management is in breach of Section 46(1) of the PPC Act of 2005 as Amended and restated 2010.
1.1.6 Air tickets
Observation 1.1.6.1 Section 54(1) of the Public Procurement and Concessions (PPC) Act of 2005 as Amended and Restated in 2010, states “Quotations shall be requested in writing from as many bidders as practicable, but from at least three (3) bidders.”
14 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1.1.6.2 During the conduct of the audit, it was observed that the Ministry of Foreign Affairs Management authorized a payment for the purchase of air ticket during the 2015/2016 fiscal period without soliciting the required number of quotations. See table 4 below for details.
Table 4: Payment without the required number of quotations 1. August 25, 2015 53461 Love Travel and Tours Payment for air ticket 7,127.00 TOTAL 7,127.00
Risk 1.1.6.3 The non-competitive purchase of air ticket could lead to conflict of interest and undermine the achievement of value for money.
Recommendation 1.1.6.4 The Management of the MoFA should provide justification for not applying the competitive procurement method for the purchase of air ticket.
1.1.6.5 Going forward, the Management of the Ministry of Foreign Affairs should always ensure adherence to the Amended and Restated PPC Act of 2010 in all its future procurements.
Management’s Response 1.1.6.6 Management recognizes and acknowledges the audit observation and will adhered to the recommendation going forward in all its future transaction.
Auditor General’s Position 1.1.6.7 We acknowledge Management’s acceptance of our recommendation. We will make a follow-up on the implementation of the audit recommendation in subsequent audit. However, the procurement of air ticket amounting US$7,127 was not supported by documentary evidence. Therefore, the MoFA Management is in breach of Section 54(1) of the Public Procurement and Concessions (PPC) Act of 2005 as Amended and Restated in 2010.
1.1.7 Amendment to the Restated Biometric Passport Contract
Observation 1.1.7.1 Section 24, paragraph 4 of the Public Financial Management(PFM) Act of 2009 requires that all contracts falling within the threshold of US$250,000 set forth in the regulations under the Public Procurement and Concessions Commission Act as amended to date, shall be reviewed and approved by the Minister and attested to by the Minister of Justice or his designee.
1.1.7.2 During the conduct of the audit, we noted that, a biometric passport contract for more than US$340,000 was restated and awarded to Buck Press Limited, a Ghanaian company for the printing and delivery of 360,000 personalized Republic of Liberia ECOWAS Passports from the effective date up to the end of seventy two months (6years) without evidence of the Justice Minister’s attestation to the amendment of the restated contract dated April 6, 2015.
15 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Risk 1.1.7.3 Contract documents not attested to by the Minister of Justice could become difficult to enforce when said document is challenged before management and in a court of law.
Recommendation 1.1.7.4 The Management of the MoFA should ensure that the amendment to the Restated Biometric Passport Contract is attested to by the Minister of Justice so as to avoid future legal challenge.
Management’s Response 1.1.7.5 Management recognizes and acknowledges the audit observation and will adhered to the recommendation going forward in all its future transactions.
Auditor General’s Position 1.1.7.6 We acknowledge Management’s acceptance of our finding and recommendation. We will make a follow-up on the implementation of the audit recommendation in subsequent audit. However, the Management of the Ministry of Foreign Affairs is in breach of financial discipline in line with Regulation A. 20 of the PFM Act of 2009.
1.1.8 Payments made outside the Foreign Missions Project’s Scope
Observation 1.1.8.1 Regulation E.16 (1) of the PFM Act of 2009 states that “Except as provided for in the Public Financial Management Act 2009, and these regulations, a head of government agency may not authorize payment to be made out of funds earmarked for specific activities for purposes other than those activities”.
1.1.8.2 During the conduct of the audit, it was observed that the Management of the Ministry of Foreign Affairs authorized and made several payments totaling US$265,655.15 for the purchase of vehicle, building and repairs of vehicles that were not budgeted for under the Foreign Mission Projects. See Table 5 below for details.
Table 5: payments made outside the scope of the Foreign Missions Project Amt. # Date REF Narratives US$ Purchase of One Mercedes –Benz at the Lib. 1. 11-25-2015 00190059-162 Embassy, Brussels 48,545.90
2. 05-30-2016 00190402-235 Purchase of a Building-(Lib. Embassy in Pretoria) 210,000.00 Payment for the DIGITAL Printing of MoFA 3. 05-27-2016 00190411/232 Annual Report 5,760.00 4. Pmt. for Storage for Six Vehicles donated to the 06-14-2016 N/A MoFA 1,349.25 Total 265,655.15
16 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Risk 1.1.8.3 Payments made for goods and services outside the project’s scope could lead to non- achievement of the project’s objectives.
Recommendation 1.1.8.4 The Management of the Foreign Missions Project of the Ministry of Foreign Affairs should provide justification for expending the project’s funds on activities outside the project’s scope.
1.1.8.5 Going forward, the Management of the Ministry of Foreign Affairs should avoid using the project’s funds on activities outside the project’s scope.
Management’s Response 1.1.8.6 Management recognizes and acknowledges the audit observation. However, the transactions mentioned above were all authorized and approved by the Ministry of Foreign Affairs Authorities base on the urgency needs of the activities indicated in the audit observation above. Additionally, many of those transactions were reimbursed to the Ministry of Foreign Affairs Foreign Missions Account at the CBL. Nevertheless, Management will adhere to the recommendation going forward in all its future transactions.
Auditor General’s Position 1.1.8.7 We acknowledge Management’s acceptance of our audit finding and recommendation and looks forward to its full implementation of the recommendation. However, the Management of the Ministry of Foreign Affairs did not use the funding for the renovation, refurbishing and the purchase of vehicles as specified in the request approved by the Minister of State for Presidential Affairs.
1.1.8.8 Therefore, Management is in breach of financial discipline per Regulation A.20 of the PFM Act of 2009.
1.1.9 Un-authorized Payment Vouchers
Observation 1.1.9.1 Regulation P. 13(2) of the PFM Act of 2009 states that “the original payment voucher or certificates shall be signed and the officer shall ensure that legible copies of the signature are on each of the vouchers.”
1.1.9.2 During the conduct of the audit, it was observed that the Management of the Foreign Missions Project of the Ministry of Foreign Affairs made payments without the signature of either the Project Accountant or Financial Comptroller, or the Deputy Minister for Administration or the Minister. See Table 6, 7 and 8 below for details.
17 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Table 6: Pmt. vouchers without evidence of approval by the Minister Amount. Date Ref # Payee Comments $US 1. Magnet Payment Voucher not approved by 27-May-16 00190411/232 Developers 5,760.00 Minister 2. Payment Voucher not approved by 27-May-16 Yar N. Boayue 00190420/229 5,264.00 Minister 3. Payment Voucher not approved by 27-May-16 Josiah K. Domah 00190423/228 5,264.00 Minister 4. Marie K. Payment Voucher not approved by 14-Mar-16 187 Coleman 3,487.00 Minister 5. Payment Voucher not approved by 14-Mar-16 Mambu S. Sonie 189 2,987.00 Minister Yekeh P. Payment Voucher not approved by 6. 28-Mar-16 00190078/206 Johnson 50.00 Minister Payment Voucher not approved by 7. 22-Mar-16 00190365/197 Samuel V. Norris 150.00 Minister Payment Voucher not approved by 8. 22-Mar-16 00190368/196 Evelyn Lah-Adile 150.00 Minister Payment Voucher not approved by 9. 23-Mar-16 00190356/200 Eric Gabriel Jenn 150.00 Minister Payment Voucher not approved by 10. 17-Apr-15 00000010/ Techno IT INC 1,633.66 Minister Payment Voucher not approved by 11. 22-Mar-16 00000000/194 James Reynolds 400.00 Minister Payment Voucher not approved by
12. Charles Minister 19-May-16 00190015/227 H.V.Allen 2,196.00
Total 27,491.66
Table 7: Pmt. vouchers not sign by the Deputy Minister for Administration Amt. # Date Ref # Payee Comments US$ 1 00143911/093 ciata A Pmt. voucher not signed by Deputy . Oct-11-2016 Stevens 925.00 Minister for Adm. 2 00143914/092 Marjon V. Pmt. voucher not signed by Deputy . Oct-11-2016 Kamara 1,255.30 Minister for Adm. 3 00190036/220 S. Karpee Pmt. voucher not signed by Deputy . May-2-2016 Denia 7,321.00 Minister for Adm. 4 Jan-11- 00207353/378 Tobias S. Pmt. voucher not signed by Deputy . 2017 Togba 1,550.00 Minister for Adm. 5 00207359/376 Tobias S. Pmt. voucher not signed by Deputy . Jan- 5- 2017 Togba 4,748.40 Minister for Adm. Total 15,799.70
18 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Table 8: Pmt. vouchers not sign by the Project Accountant or Financial Comptroller Amt. # Date Ref # Payee Comments US$ 1. Payment Voucher not signed by the 00144490/062 Project Accountant/Financial 29-Jun-16 S. Karpee Denia 3,017.00 Compt. 2. Payment Voucher not signed by the 00190369/246 Project Accountant/Financial 9-Jun-16 Juah Doe Jenkins 5,000.00 Compt. 3. Payment Voucher not signed by the 00190393/238 Project Accountant/Financial 2-Jun-16 Ciata A. Stevens 2,000.00 Compt. 4. Payment Voucher not signed by the 00190396/237 Project Accountant/Financial 2-Jun-16 Johnnie F. Fallah 3,835.00 Compt. 5. Payment Voucher not signed by the 236 Project Accountant/Financial 30-May-16 Siaffa B. Kemokai 3,694.00 Compt. Total 17,546.00
Risk 1.1.9.3 The failure to ensure that payment vouchers are fully completed by the authorized signatories before disbursement of checks could lead to misappropriation of fund.
Recommendation 1.1.9.4 The Management of the Foreign Missions Project of the Ministry of Foreign Affairs should provide justification why the above payment vouchers were not signed by the authorized signatories.
1.1.9.5 Going forward, the Management of the Foreign Mission Project of the MoFA should ensure that all payment vouchers are signed by the authorize signatories before disbursement are made.
Management’s Response 1.1.9.6 Management wants to indicate that the transactions in question were all approved and authorized by the authorities of the Ministry of Foreign Affairs as evidence shown on all checks that were processed and paid. However, it was an oversight that those vouchers queried were not signed on, but approvals were initially done on all payment requests before vouchers and checks. Again, Management will adhere to the recommendation going forward in all its future transactions to ensure that all vouchers are signed on, authorized and approved before payments are made.
Auditor General’s Position 1.1.9.7 We acknowledge Management’s acceptance of our audit finding and recommendation. We will make a follow-up on the implementation of the audit recommendation in
19 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
subsequent audit. However, approvals on payment requests do not substitute for the signing of all payment vouchers by the authorized signatories. Therefore, Management is in breach of financial discipline in line with Regulation A. 20 of the PFM Act of 2009.
1.1.10 Payments without evidence of approved policy
Observation 1.1.10.1 The Committee of Sponsoring Organizations of the Treadway Commission (COSO)’s internal control framework on control activities requires that institutions deploy control activities through policies that establish what is expected and procedures that put policies into action. Policies and procedures are established and implemented to help ensure that risk responses are effectively carried out within an entity.
1.1.10.2 It was observed during the conduct of the audit that the Management of the Ministry of Foreign Affairs made several payments in the total amount of US$15,625 for honorarium during the period under audit without evidence of an approved policy to guide the payments process. See table 9 below for details.
Table 9: Payment of honorarium without evidence of approved policy Amt. Date Payees Narrative Ref # $US 1. Liberia Permanent Pmt. of hon.in favor of MOFA 15-Sep-15 Mission, New York staff 2440 8,175.00 Liberia Embassy Addis Pmt. of hon. In favor of MOFA 2. 10-Feb-16 Ababa staff 2618 4,250.00 Hon. for serving on bid 00190078/2 3. 28-Mar-16 Yekeh P. Johnson Evaluation committee 06 50.00 Hon. for serving on bid 00190365/1 4. 22-Mar-16 Samuel V. Norris Evaluation committee 97 150.00 Hon. for serving on bid 00190368/1 5. 22-Mar-16 Evelyn Lah-Adile Evaluation committee 96 150.00 Hon. for serving on bid 00190362/1 6. 22-Mar-16 Pela Boker Wilson Evaluation committee 98 150.00 Hon. for serving on bid 00190359/1 7. 23-Mar-16 Pela Boker Wilson Evaluation committee 99 50.00 Hon. for serving on bid 00190356/2 8. 23-Mar-16 Eric Gabriel Jenn Evaluation committee 00 150.00 Hon. for serving on bid 00000000/1 9. 22-Mar-16 James Reynolds Evaluation committee 94 400.00 00190393/2 10. 2-Jun-16 Ciata A. Stevens Hon. for the month, May 2016 38 2,000.00 Hon. for serving on bid 00190081/2 11. 23-Mar-16 Korboi V. Daniels Evaluation committee 05 100.00 Total 15,625.00
Risk 1.1.10.3 Honorarium payments could be carried out arbitrarily in the absence of formal or approved policy to guide the payment process.
20 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Recommendation 1.1.10.4 The Management of the Ministry of Foreign Affairs should provide material justification why several payments were made for honorarium covering the period under audit without evidence of a formal policy to guide the payment process.
Management’s Response 1.1.10.5 Management acknowledge your observation and wish to inform you that we are in the process of finalizing the approval of our financial-policies and procedures manual that will guide the execution of financial transactions/activities which will also include the payments of honorarium.
Auditor General’s Position 1.1.10.6 Going forward, management should ensure that policies and procedures are put in place to guide the payment of honorarium.
1.1.10.7 We acknowledge management’s acceptance of our audit finding. We will make a follow- up on the implementation of the audit recommendation in subsequent audit.
1.1.11 Unretired Travels Allowances
Observation 1.1.11.1 The Foreign Travel Ordinance for the period under audit requires that, upon return from abroad, officials are required to submit to the Ministry of Finance, a Travel Settlement Form as per Annexure II within 21 days from the date of tour or before the date of next journey, which either is earlier. In very exceptional cases where the second tour is performed immediate after return from the first tour; the second advance may be granted with the specific written approval of the minister concerned, explaining the reasons thereof.
1.1.11.2 During the audit, it was observed that foreign travel per diem and incidental allowances totaling US$242,063.05 was paid to staff and officials of the Ministry of Foreign Affairs for trips abroad without evidence of retirement. See table 10 below for details.
Table 10: Non retirement before management response Amt. # Date Payee Narrative Ref # US$ 61763/61764/617 1. 26-Nov-15 B. Elias Shoniyin Et-Al Pmt. for Perdiem 66/617767 11,324.00 2. 1-Dec-15 Rennie M. Thompson Pmt. for Perdiem v-002480 5,490.00 3. 13-Jan-16 Mends Johnsom Pmt. for Perdiem v-002584 2,843.00 4. 13-Apr-16 Evelyn A. Matthews Pmt. for Perdiem v-002788 5,300.00 Pmt. for Incidental 5. 9-May-16 Marie K. Coleman Et-Al &Perdiem v-002832 39,920.00 6. 1-Jun-16 Dephpue Y. Zuo Reimbu. for Perdiem v-002859 1,418.80 7. 30-Jun-16 Francis Karpeh Pmt. for Perdiem v-002904 10,656.00 Marjon V. Kamara Et- Pmt. for Incidental 8. 30-Jun-16 Al &Perdiem v-002903 24,459.25
21 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Amt. # Date Payee Narrative Ref # US$ Pmt. for Perdiem & 9. 6-Apr-16 Ounzuba Kemeh-Gama Ticket v-002779 3, 448.00 Marjon V. Kamara Et- Reimbu. for Incidental 10. 9-Jun-16 Al &Perdiem v-002818 10,222.25 Pmt. for Perdiem & 11. 9-Jun-16 Paul K. Ngafuan Ticket 80,911 5,490.00 Augustine K. Ngafuan Reimbu. for Incidental 12. 15-Sep-15 Et-Al &Perdiem v-002276 106,901.75
Pmt. for Perdiem & 64161/64163/641 13. 21-Dec-15 B. Elias Shoniyin Et-Al Ticket 65/64281 7,195.00 Pmt. for Perdiem & 14. 17-Nov-15 Johnnie F. Fallah Ticket v-002451 1,300.00
Augustine K Ngafuan Reimbu. for Perdiem 55107/55110/552 15. 15-Sep-15 Et-Al Incidental & Ticket 01 5,545.00 Pmt. for Perdiem & 16. 20-Aug-15 Abratha P. Doe Ticket v-002218 3,718.00 Pmt. for Perdiem & 17. 29-Jul-15 Korboi G. Deniels Et-Al Ticket v-002101 280.00 Total 242,063.05
Risk 1.1.11.3 The failure to retire trips in compliance with the GoL Travel Ordinance may undermine public accountability and transparency.
Recommendation 1.1.11.4 The MoFA Management should ensure that upon return from abroad, staff and officials should retire their trips as required by the GoL Travel Ordinance. Failing, the staff and officials should not be given future travel advances for foreign trips until the full amount disbursed is recovered.
Management’s Response 1.1.11.5 Please see attached documentation associated with retirement of some of the foreign travels mentioned in the audit observation. As you may be aware, the audit covered four (4) periods; 2012/2013, 2013/2014, 2014/2015, 2015/2016 and many of the staffers whose travelled have either resigned or pensioned. As such, documentation related to travels retirement required careful search and contacts of those concerned employees. However, Management is in search for the remaining documents when find, they will be submitted to the GAC and we take note of the recommendation in all future transactions relating to travels retirements.
Auditor General’s Position 1.1.11.6 We reviewed the documents provided by Management and observed that some staff and official did not provide travel retirement report. Therefore, the staff and officials concerned should not be given any future travel advances until the full amounts disbursed to them are recovered. For former staff members, the Management should
22 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
make every effort to recover the amounts from them. See table 11 below for details.
Table-11 Unretired travel allowances after management response Amt. # Date Payee Narrative Ref # $US 1. 1-Dec-15 Rennie M. Thompson Pmt. for Perdiem v-002480 5,490.00 2. 13-Apr-16 Evelyn A. Matthews Pmt. for Perdiem v-002788 5,300.00 Hon. Francis Karpeh, Hon.Rosetta Jackollie, Pmt. for Incidental & Hon Dephue Y. Zuo, Ciata A. Stevens, Gitomo Perdiem 3. 30-Jun-16 Anderson, Hon. Marjon V. Kamara v-002903 25,133.50 Rufus D. Neufville, Baba Sillah, Therry Pmt. for Perdiem for Genesis, Horatio B. Willie Rancy V. Torkpa, the UN General Susan W. Bouhadir, Dehpue Zuo, Christiana Assembly trip to New 4. 15-Sep-15 M. Wahlo and Louise Diggs York v-002276 92,943.00 Total 128,868.50
1.1.12 Bank Reconciliation
Observation 1.1.12.1 Regulation R.3 (6) of the PFM Act of 2009 states “the balance of every bank account as shown in a bank statement shall be reconciled with the corresponding cashbook balance at least once every month; and the reconciliation statement shall be filed or recorded in the cash book or reference to the date and number thereof”.
1.1.12.2 During the conduct of the audit, it was observed that the Finance Section at the Ministry of Foreign Affairs did not prepare bank reconciliations for several MoFA accounts maintained at the CBL. See table 12 below for details.
Table 12: Account not reconciled for the periods indicate in the table below: # Account Title Account # Bank Currency Period not Reconciled 1. MoFA Operations A/C 0220630001506 CBL USD June 2016 2. MoFA Operations A/C 0120630001506 CBL LRD July 2015 to June 2016 3. Foreign Mission Proj. A/C 0220630001514 CBL USD July 2015 to Nov. 2015 and June 2016 4. MoFA Donation A/C 0220630001505 CBL USD July 2015 to June 2016
Risk 1.1.12.3 Failure to prepared timely bank reconciliation could lead to the non-detection of errors timely, and total cash carried forward cannot be assured.
Recommendation 1.1.12.4 The MoFA Management should provide substantive justification backed by material evidence for not performing monthly bank reconciliation of the Entity’s Bank Accounts.
1.1.12.5 Going forward, the MoFA Management should prepare monthly bank reconciliation statements so as to timely detect errors on the bank statements.
Management’s Response 1.1.12.6 Management supplied all active bank account statement to the GAC. Management wish to inform the GAC that it did not intentionally fail to prepare bank reconciliation for those
23 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
accounts mentioned in the audit observation. Many of the accounts in question contained very few transactions. However, going forward, Management will take note of the recommendation.
Auditor General’s Position 1.1.12.7 Management should ensure that all bank accounts are reconciled regularly regardless of the number of transactions in each account. Therefore, Management is in breach of financial discipline in line with Regulation A. 20 of the PFM Act of 2009.
1.2 Administrative Issues
1.2.1 Fixed Assets
Observation 1.2.1.1 Regulation V.4 (1-2) of the PFM Act of 2009 provides that furniture, and equipment issued for Government quarters or offices or vehicle and other fixed asset shall be brought on a master inventory of the Government Agency. The master inventory shall record under each category of item: (a) The date and other details of the voucher or other document on which the items were received or issued; (b) their serial numbers where appropriate; and (c) their distribution to individual locations and the total quantity held.
1.2.1.2 During the physical verification exercise of the ministry’s Assets, it was observed that several fixed assets assigned at various departments at the Ministry of Foreign Affairs for the period under audit, were not coded. See Table #13 below for details:
Table 13: Ministry of Foreign Affairs Assets not coded
# Type of Assets Section Assigned
1. Eleven Semi- executive chairs Minister of Foreign Affairs Conference Room 2. One meni Icebox (Haier) Deputy Minister for Administration Office
3. One paper stirrer SD815B, Strpass Dream Deputy Minister for Administration Office
4. One HP printer (Laser Jet pro 200 color MFP) Deputy Minister for Administration Office
5. HP Laser Jet pro 200 Minister Office
Risk 1.2.1.3 In the absence of coding, public assets could be converted to personal use or exchanged easily.
Recommendation 1.2.1.4 The MoFA Management should ensure that all assets belonging to the ministry are coded.
24 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Management’s Response 1.2.1.5 The Management, in consultation with GSO, will input all necessary information of the fixed assets into the fixed assets registry and ensures the coding of all its assets.
Auditor General’s Position 1.1.1.1 We acknowledge Management’s acceptance of our audit finding. The MoFA Management should ensure that fixed assets management complies with Regulation V.4 of the PFM Act of 2009. The registry should include assets type, date of purchase, cost, serial number, where applicable, code, assignee location etc. We will make a follow-up on the implementation of the audit recommendation in subsequent audit. However, Management is in breach of Regulation A.20 of the PFM Act of 2009.
1.2.2 Payment vouchers not stamp PAID
Observation 1.2.2.1 The Committee of Sponsoring Organization of the Tradeway Commission (COSO) Internal Control Framework on control activities emphasizes that “Institutions deploy control activities through policies that established what is expected and procedures that put policies into action”. Policy and procedures are established and implemented to help ensure that risk responses are effectively carried out within an organization.
1.2.2.2 It was observed during the conduct of the audit that paid vouchers authorized and processed by management were not stamped “PAID”.
Risk 1.2.2.3 Vouchers not stamped PAID could be recycled multiple times.
Recommendation 1.2.2.4 The MoFA Management should provide substantive justification for not stamping the vouchers PAID after payments were made.
1.2.2.5 Going forward, the MoFA Management should ensure that all payment vouchers are stamped PAID after payments are made.
Management’s Response 1.2.2.6 Management acknowledges the audit finding and will ensure that the recommendation is implemented.
Auditor General’s Position 1.2.2.7 We acknowledge management’s acceptance of our audit finding. We will make a follow- up on the implementation of the audit recommendation in subsequent audit.
1.2.3 Segregation of Duty
Observation 1.2.3.1 Regulation P.11 of the PFM Act of 2009 States that “a head of government agency may in writing authorize by name officers in his Government Agency or office to sign payment vouchers on his behalf and shall in doing this set the financial limits and other conditions
25 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
within which this authority shall be exercised and communicate same in writing to Comptroller-General and the Auditor General.”
1.2.3.2 Furthermore, COSO Internal Control Framework on Internal Control requires that organizations put in place Control activities that will help the entity achieve its objectives and spell out the necessary actions taken to address risks affecting such achievement. Control activities occur throughout the organization, at all levels and in all functions. They include a range of activities as diverse as approvals, authorizations, verifications, reconciliations, reviews of operating performance, security of assets and segregation of duties.
1.2.3.3 During the conduct of the audit, it was observed that the Deputy Comptroller at the Ministry of Foreign Affairs served as the preparer of the bank reconciliation for the USD Operational Account covering the months of November and December 2015 and also approved the reconciliation prepared by him.
1.2.3.4 Additionally, the Deputy Comptroller served in the following capacities: Project Accountant for the Foreign Missions Project
Preparer of the Foreign Missions Payment vouchers
Preparer and approval of monthly bank reconciliations for the Foreign Missions Project Accounts
Preparer of monthly bank reconciliations for the Ministry’s Operational Accounts and the
Writer of checks for the Foreign Missions Project
Risk 1.2.3.5 Fraud could be perpetrated and go unnoticed when duties are not segregated.
Recommendation 1.2.3.6 The MoFA Management should provide substantive justification for allowing the Deputy Comptroller to undertake multiple accounting tasks that could have been dedicated to other staff in the Finance section.
1.2.3.7 Going forward, the MoFA Management should ensures that segregation of duties exist at the finance section of the ministry to promote check and balance in the preparation and authoring of accounting transactions.
Management’s Response 1.2.3.8 Management acknowledges the audit finding and will ensure that the recommendation is implemented.
Auditor General’s Position 1.2.3.9 We acknowledge Management’s acceptance of our audit finding. We will make a follow- up on the implementation of the audit recommendation in subsequent audit. However,
26 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Management is in breach of financial discipline in line with Regulation A. 20 of the PFM Act of 2009.
1.2.4 Passport Division
Observation 1.2.4.1 Regulation I.6.2 of the PFM Act of 2009 states “the documents and records pertaining to the collection of revenue, the control of expenditure, the administration of trust funds, the management of government movable and immovable assets, stores and inventories, and such other financial business as may be made the responsibility of government agencies shall be termed other government accounts and shall be kept by heads of government agencies”.
1.2.4.2 We noted during the audit that the MoFA Management provided no evidence that the Passport Division of the ministry prepared monthly or quarterly report detailing total passports printed, issued and the total amount generated.
1.2.4.3 We further observed that there was no evidence of reconciliation record of passport issued against the total number of 360,000 passports agreed to be printed and issue by Buck Press as contained in the Biometric Passports Contract of the Ministry of Foreign Affairs.
Risk 1.2.4.4 Failing to prepare monthly or quarterly report on the number of passports printed and issued could undermine public accountability and transparency.
Recommendation 1.2.4.5 The MoFA Management should provide material justification for not preparing monthly report and reconciliation on the number of passports printed and issued.
Management’s Response 1.2.4.6 Management acknowledges the finding regarding the monthly report and reconciliation of the biometric passport. Since last year, management started the process of preparing monthly report and carrying out regular reconciliation of the passports.
Auditor General’s Position 1.2.4.7 We acknowledge Management’s acceptance of our audit finding. We will follow up on Management’s assertion the process of preparing monthly report and regular reconciliation of the passports is being carried out during subsequent audit. However, Management is in breach of financial discipline in line with Regulation A.20 of the PFM Act of 2009.
1.2.5 Training
Observation 1.2.5.1 Article 3.8(C) of the Restated biometric passport Contract of the Ministry of Foreign Affairs requires that Central Operation and processing site personnel with IT knowledge
27 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
be trained by Buck Press as operators of the IT equipment installed. Article 3.9(b) also requires that adequate training be provided to Liberian personnel designated by the GOL to operate the equipment to its maximum capacity.
1.2.5.2 During the conduct of the audit, it was observed that the MoFA Management did not provide evidence that the requisite training has been provided to some staffer of the Ministry during the period under audit, as enshrined in the Restated biometric passport contract.
Risk 1.2.5.3 The non- training of Staffer of the Ministry could deny the opportunity to build the capacity and improve the productivity of the staff of the ministry.
Recommendation 1.2.5.4 The MoFA Management should ensure that the requisite training is provided to the concerned staffers of the ministry as enshrined in the Restated biometric passport contract.
Management’s Response 1.2.5.5 Management did not respond to this observation.
Auditor General’s Position 1.2.5.6 In the absence of a response by Management, we maintain our finding and recommendation. Further, Management is in breach of Article 3.8(C) of the Restated biometric passport Contract.
1.2.6 Foreign Service Board
Observation 1.2.6.1 The Foreign Service Manual of the Ministry of Foreign Affairs requires a Board of the Foreign Service to have oversight responsibility over the Foreign Service. It shall also hear charges of misconduct against a Foreign Service Officer, and be composed of the Deputy Minister of Foreign Affairs; the Deputy Minister for Administration, Deputy Minister for Legal Affairs, Inspector General of the Foreign Service, Director General of the Foreign Service Institute, and one member of the Policy Advisory Council as Members; and the Assistant Minister of Foreign Affairs as Secretary of the Board.
1.2.6.2 During the conduct of the audit, we observed that the MoFA Management operated for the period under audit without evidence of a functional Foreign Service Board.
Risk 1.2.6.3 In the absence of a functional Foreign Service Board, decisions affecting the Foreign Service could be delayed and program objectives may not be met timely.
Recommendation 1.2.6.4 The MoFA Management should provide justification why the Foreign Service Board has not been functional during the period under audit.
28 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1.2.6.5 The Management of the Ministry of Foreign Affairs should ensure that the Foreign Service Board become functional to carry out its mandates as enshrined in the Foreign Service Manual.
Management’s Response 1.2.6.6 Management acknowledges the audit finding regarding the Foreign Service Board and will ensure that the recommendation is implemented shortly.
Auditor General’s Position 1.2.6.7 We acknowledge management’s acceptance of our audit finding. We will make a follow- up on the implementation of our recommendation during subsequent audit.
1.2.7 Approved Financial Manual
Observation 1.2.7.1 Regulation I. A.5 (1) of the PFM Act of 2009 states “A head of government agency shall with the approval of the Minister issue an accounting manual to suit the operations and regulate the financial matters of the Government agency, indicating: A. The duties to be performed by specified officers,
B. The accounts to be kept and returns to be submitted, and
C. Such other instructions as may be required for the proper conduct of the financial matters of the Government agency.
1.2.7.2 Furthermore, Regulation I. A.5 (1) of the PFM Act of 2009 requires the accounting manual shall contain relevant procedures for the keeping of accounts, preparation and format of financial statements, Government agency chart of accounts, and all administrative issues relating to the keeping and preparation of government accounts.”
1.2.7.3 During the conduct of the audit, it was observed that the MoFA Management operated for the period under audit without evidence of approved accounting manual to guide the financial management process of the ministry.
Risk 1.2.7.4 In the absence of a financial manual, the financial operations of the ministry shall be left to the discretion and personal judgment of individual staff.
Recommendation 1.2.7.5 The MoFA Management should develop, approve and implement financial manual outlining all accounting procedures, processes and controls to be used by staff of the ministry’s finance section and ensure its regular update.
Management’s Response 1.2.7.6 Management is in the process of finalizing the approval of its financial-policies and procedures manual that will guide the execution of financial transactions in compliance with IPSAS. Upon completion, copy will be submitted to the GAC.
29 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Auditor General’s Position 1.2.7.7 We acknowledge management’s acceptance of our audit finding. We will make a follow- up on the implementation of the audit recommendation in subsequent audit. However, Management is in breach of financial discipline in line with Regulation A.20 of the PFM Act of 2009.
1.2.8 Budget Committee
Observation 1.2.8.1 Regulation D.16.1 of the PFM Act of 2009 states “Every head of government agency shall establish a Budget Committee which shall be responsible for budget formulation, implementation, monitoring and evaluation made up of (a) the head of government agency, who shall be the chairperson; and (b) Heads of budget management centers or cost centers)”.
1.2.8.2 During the audit, we observed that the MoFA Management operated for the period under audit without evidence of an established budget committee as required by the PFM Regulations of 2009.
Risk 1.2.8.3 In the absence of an established budget committee, management may experience delay in the ministry’s budget formulation, implementation, and monitoring.
Recommendation 1.2.8.4 The MoFA Management should establish a Budget Committee to be responsible for budget formulation, implementation and the monitoring of the institution’s activities. This would enable management to be in compliance with Section D.16.1 (a and b), of the PFM Regulations of 2009.
Management’s Response 1.2.8.5 Management acknowledges your audit finding regarding the Budget Committee and will ensure that the recommendation is implemented in full.
Auditor General’s Position 1.2.8.6 We acknowledge management’s acceptance of our audit finding. We will make a follow- up on the implementation of the audit recommendation in subsequent audit. However, Management is in breach of financial discipline in line with Regulation A.20 of the PFM Act of 2009.
1.2.9 Fuel Distribution Policy
Observation 1.2.9.1 The Committee of Sponsoring Organizations of the Tread way Commission (COSO) Internal Control Framework on control activities stipulates that all organizations should deploy control activities through policies that establish what is expected and procedures that put policies into action.
30 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1.2.9.2 During the conduct of the audit, it was observed that the Management of the Ministry of Foreign Affairs operated for the period under audit without evidence of an approved policy on fuel/ gasoline distribution.
Risk 1.2.9.3 The distribution of fuel/gasoline could be carried out arbitrarily in the absence of a formal policy to guide the distribution process.
Recommendation 1.2.9.4 Going forward, the Management of the Ministry of Foreign Affairs should provide justification why the ministry operated without evidence of a formal policy to guide the distribution process.
1.2.9.5 The Management of the Ministry of Foreign Affairs should establish a formal policy to guide the distribution of fuel/gasoline for the ministry’s operations.
Management’s Response 1.2.9.6 Management acknowledges your finding regarding the fuel distribution log. The Ministry Financial Manual to be finalized will also include guideline on fuel distribution in full.
Auditor General’s Position 1.2.9.7 We acknowledge management’s acceptance of our audit finding. We will make a follow- up on the implementation of the audit recommendation in subsequent audit. However, Management is in breach of financial discipline in line with Regulation A.20 of the PFM Act of 2009.
1.2.10 Audit Committee
Observation 1.2.10.1 Section I. K 10. of the PFM Regulations of 2009 states “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”.
1.2.10.2 During the conduct of the audit, it was observed that the MoFA Management provided no evidence that a functional audit committee existed at the ministry to review internal controls, the scope of internal audit; internal audit plans and ensure that internal audit findings are evaluated and implemented.
Risk 1.2.10.3 In the absence of a functional audit committee, Internal audit mandate may be undermined in that, findings and recommendations of internal audit report may not be taken seriously or implemented.
Recommendation 1.2.10.4 The Management of the Ministry of Foreign Affairs should provide justification why the ministry operated for the period under audit without evidence of a functional Audit Committee.
31 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1.2.10.5 Going forward, the MoFA Management, in consultation with the Internal Audit Agency should ensure that a functional audit committee is maintained at the ministry.
Management’s Response 1.2.10.6 Management wants to inform the GAC that the MoFA has an established Audit Committee since the coming of the Internal Audit Agency, but the Committee has not been active for some time now. However, management is currently working with the IAA to revamp the Committee.
Auditor General’s Position 1.2.10.7 We acknowledge management’s acceptance of our audit finding. We will make a follow- up on the implementation of the audit recommendation in subsequent audit.
1.2.10.8 We urge Management to ensure that the audit committee is functional and should work in coordination with Internal Audit Agency to ensure that all audit recommendations (i.e. both external and internal audits findings) are implemented. However, Management is in breach of financial discipline in line with Regulation A. 20 of the PFM Act of 2009.
1.2.11 Organization Chart
Observation 1.2.11.1 The Committee of Sponsoring Organizations of the Tread way Commission (COSO) Internal Control Framework on control activities stipulates that all organizations should deploy control activities through policies that establish what is expected and procedures that put policies into action.
1.2.11.2 Organization Chart improve lines of communication, create a visual employee directory and allow leadership to more effectively manage growth or change at the level of the organization.
1.2.11.3 During the conduct of the audit, it was observed that the Management of the Ministry of Foreign Affairs operated for the period under audit without evidence of an approved organization chart.
Risk 1.2.11.4 The legitimacy of the ministry organization chart could be undermined in the absence of its approval.
Recommendation 1.2.11.5 The Management of the Ministry of Foreign Affairs should provide justification why the ministry operated for the period under audit without approved organization chart.
1.2.11.6 The Management of the Ministry of Foreign Affairs should ensure the approval of its organization chart, to more effectively manage growth at the level of the ministry.
Management’s Response 1.2.11.7 Management acknowledges your finding and will ensure that the recommendation regarding the chart will be adhered to.
32 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
Auditor General’s Position 1.2.11.8 We acknowledge management’s acceptance of our audit finding. We will make a follow- up on the implementation of the audit recommendation in subsequent audit.
1.2.12 Approved Human Resource Policy
Observation 1.2.12.1 The Committee on Sponsoring Organizations of the Treadway Commission’s (COSO) integrated framework for internal control is an effective internal control system which consists of five elements including, the control environment, risk assessment, information and communication, control activities and monitoring.
1.2.12.2 The goal of COSO is to develop guidance for establishing and maintaining effective internal control in the public and private sectors. Government management is therefore an important addressee of the guidelines. Government management can use these guidelines as a basis for the implementation and execution of internal control in its organizations. The guidelines for internal control standards comprising the COSO Model can therefore be used by management as an example of a solid internal control framework for their organization, and by auditors as a tool to assess internal control.
1.2.12.3 During the audit, it was observed that the Management of the Ministry of Foreign Affairs operated for the period under audit without evidence to show that the management has customized the “Civil Service Standing Order” to include its own documented and approved human resource policies and procedures to guide the activities of the human resource management functions.
Risk 1.2.12.4 In the absence of a customized human resource manual or policies, the human resource related issues could be discretionarily applied.
Recommendation 1.2.12.5 The Management of the Ministry of Foreign Affairs should provide material justification why the Civil Service Standing Order has not been customized to address its needs through a Human Resource Manual.
1.2.12.6 The MoFA Management should develop, approve and implement the Human Resource Policy outlining all processes and controls which could enable management to address issues unique to its human resources and ensure its regular update.
Management’s Response 1.2.12.7 Management acknowledges your finding and will ensure that the recommendation is implemented.
Auditor General’s Position 1.2.12.8 We acknowledge management’s acceptance of our audit finding. We will make a follow- up on the implementation of the audit recommendation in subsequent audit.
33 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1.2.13 Strategic and Operational Plans
Observation 1.2.13.1 In reference to the Committee of Sponsoring Organization (COSO) Framework, government institutions should develop strategic or operational plans in order to ensure that their operations are ethical, economical, efficient and effective. A strategic plan is a document that summaries an entity objective in the long term while the operational plan outlines an entity objectives in the short term. These documents establish the basis for allocating resources for the achievement of organizational objectives.
1.2.13.2 It was observed during the conduct of the audit that the Management of the Ministry of Foreign Affairs operated for the period under audit without evidence of strategic and operational plans put in place to guide the allocation of resources for the achievement of the ministry objectives.
Risk 1.2.13.3 The failure to produce strategic and operational plans could lead to the Ministry of Foreign Affairs misdirecting its resources and not prioritizing resources to areas that may best achieve the entity’s mandates.
Recommendation 1.2.13.4 The Management of the Ministry of Foreign Affairs should provide justification for not having strategic and operational plans for the period under audit.
1.2.13.5 Going forward, the Management of the Ministry of Foreign Affairs should ensure that the entity develops its strategic and operational plans in order to properly direct its resources to areas that may best achieve the ministry’s objectives.
Management’s Response 1.2.13.6 Management acknowledges your finding and will ensure that the recommendation is implemented.
Auditor General’s Position 1.2.13.7 We acknowledge management’s acceptance of our audit finding. We will make a follow- up on the implementation of the audit recommendation in subsequent audit.
1.2.14 Leases
Observation 1.2.14.1 The Committee of Sponsoring Organizations of the Treadway Commission (COSO)’s internal control framework on control activities states that “Institutions deploy control activities through policies that establish what is expected and procedures that put policies into action”. Policies and procedures are established and implemented to help ensure that risk responses are effectively carried out within an entity.
34 Promoting Accountability of Public Resources
Management Letter On the Ministry of Foreign Affairs Financial Statement For the Fiscal period ended June 30, 2016
1.2.14.2 During the conduct of the audit, it was observed that leases and rents at the Liberia Foreign Missions were not uniform across the same missions for staff of the same level. Staffers at the same missions negotiated for his or her lease or rent. For instance, the lease or rent cost of the house occupied by the Second Secretary, Ms. Florence S. Brown was US$800.00 monthly. The rent amount increased to US$1,000 monthly as at July 2015 without evidence of approval from the Management of the Ministry of Foreign Affairs.
Risk 1.2.14.3 GoL could lose budgetary control over lease or rent due to arbitrarily increases.
Recommendation 1.2.14.4 The Management of the Ministry of Foreign Affairs should provide material justification why the Ministry made several payments for the increased in Ms. Florence S. Brown lease covering the period under audit without approval from the MoFA Management.
1.2.14.5 Going forward, the Management of the Ministry of Foreign Affairs should ensure that any increase in leases or rents associated with the Liberia Foreign Missions should be approved by management.
1.2.14.6 Additionally, the Management of the Ministry of Foreign Affairs should negotiate with the property owner(s) for all Liberia Foreign Missions leases or rents and ensure approval before payments are remitted.
Management’s Response 1.2.14.7 Management acknowledges your finding and will ensure that the recommendation is implemented.
Auditor General’s Position 1.2.14.8 We acknowledge Management’s acceptance of our finding.
1.2.14.9 The Management of MoFa should negotiate with property owners on behalf of foreign personnel and diplomatic staffs assigned to missions where GOL does not own properties to control rents/leases paid by GoL and to prevent arbitrary increases in rents or leases.
1.2.14.10 The dwelling apartments negotiated for Foreign Service personnel by MoFA should be furnished to a comfortable level. By so doing, large amount required for haulage and carriage for personal effects will be illuminated and Foreign Service Personnel will report post immediately upon appointment.
1.2.14.11 In addition, Foreign Service personnel should deposit into an authorized escrow account for breakages a fee with a refundable portion. The refundable portion of the fee will serve as an incentive for Foreign Service officers to take care of the Mission’s properties.
35 Promoting Accountability of Public Resources