Parastatal Report 2014
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REPORT of the AUDITOR GENERAL for 2014 on the ACCOUNTS OF PARASTATAL BODIES AND OTHER STATUTORY INSTITUTIONS Table of Contents Introduction .......................................................................................................................................... 1 Scope of Audit ...................................................................................................................................... 1 Internal Control ..................................................................................................................................... 1 Institutions that have not Submitted Audited Financial Statements ...................................................... 1 Institutions Appearing in this Report .................................................................................................... 2 The Copperbelt University (CBU) ........................................................................................................ 3 Competition and Consumer Protection Commission .......................................................................... 12 Citizens Economic Empowerment Commission ................................................................................. 16 Energy Regulation Board .................................................................................................................... 21 Food Reserve Agency ......................................................................................................................... 23 Hotel and Tourism Training Institute (HTTI) ..................................................................................... 27 Judiciary ............................................................................................................................................. 29 National Heritage Conservation Commission ..................................................................................... 41 North Western Water and Sewerage Company ................................................................................... 61 National Youth Development Council ................................................................................................ 94 Road Development Agency .............................................................................................................. 100 Rural Electrification Authority (REA) .............................................................................................. 105 TAZAMA Pipelines Limited ............................................................................................................ 110 Water Resources Management Authority ......................................................................................... 117 Western Water and Sewerage Company ........................................................................................... 121 ZESCO Limited ................................................................................................................................ 143 Zambia National Broadcasting Corporation ...................................................................................... 161 Zambia Railways Limited ................................................................................................................. 179 Conclusion ........................................................................................................................................ 204 Recommendations of the Public Accounts Committee (PAC) which have either not been Implemented or have been partly Implemented ...................................................................................................... 204 Appendix I – Outstanding Issues as at 31st December 2015 .............................................................. 205 Executive Summary The audit and review of operations of selected parastatal bodies and other statutory institutions for the periods up to the year ended 31st December 2014 was conducted in accordance with the provisions of Article 121 of the Constitution of the Republic of Zambia, the Public Audit Act Cap 378 of the Laws of Zambia and the Public Finance Act No. 15 of 2004. This Report contains twenty five (25) paragraphs out of which eighteen (18) are paragraphs on parastatal bodies and other statutory institutions that were audited and remained with unresolved issues as at 31st December 2015. The eighteen (18) institutions that appear in this Report either had their operations reviewed or accounts audited for periods longer than one financial year as in most cases, their books of accounts are primarily audited by appointed auditors in line with the appropriate pieces of legislation. However, it is necessary that such accounts are reviewed and the results of such reviews submitted in compliance with the Republican Constitution and Public Audit Act. The Report also includes results of the audits of Information Communication Technology (ICT) systems that the organisations have implemented in order to improve on the efficiency and effectiveness of service delivery. Notable observations included the failure to comply with the international standards on information technology and failure to adopt IT policies which could guide the operations of the institutions. Some of the issues raised in this Report are: i. Weaknesses in corporate governance, ii. Weaknesses in the implementation of Information Communication Technology (ICT) systems, iii. Failure to produce financial statements, iv. Poor financial and operational performance, v. Lack of title deeds for properties that should be owned by various institutions, vi. Weaknesses in contract management. Other irregularities raised in this Report are as shown in the table below. i Amount Summary of Findings K Non Remittance of Statutory Contributions 876,156,916 Inadequately Supported Payments 15,522,630 Irregular Payments 2,490,403 Unaccounted for Stores 358,398 Unretired Imprest 1,807,650 Missing Payment Vouchers 873,774 Wasteful Expenditure 396,275,835 ii Introduction 1. This Report on the accounts of selected parastatal bodies and other statutory institutions for the periods up to the year ended 31st December 2014 is submitted to the President for tabling in the National Assembly in accordance with the provisions of the Constitution of Zambia and the Public Audit Act Cap 378 of the Laws of Zambia. Scope of Audit 2. The Report is a result of a programme of test checks and reviews of audited accounts of selected organisations for the financial years up to 31st December 2014. In preparing the Report, Controlling Officers and Chief Executive Officers of the affected organisations were availed draft paragraphs for comments and confirmations of the correctness of the facts presented. Where comments were received and varied materially with the facts presented, the paragraphs were accordingly amended. Internal Control 3. In this Report, specific mention is made of non-preparation of financial statements, failure to remit statutory contributions, weaknesses in procurement procedures, irregular payments and poor financial performance among other issues by the respective organisations. These are clear indicators of internal control lapses in most parastatal and statutory organisations. Institutions that have not Submitted Audited Financial Statements 4. There were twenty six (26) statutory and parastatal bodies that had not produced audited financial statements on the accounts for the financial years up to 31st December 2014 as detailed below. 1 PERIOD FOR WHICH THERE WERE NO AUDITED INSTITUTION PARENT MINISTRY FINANCIAL STATEMENTS 1 National Food & Nutrition Commission Ministry of Health 2009 to 2014 2 Zambia Medicines Regulatory Authority Ministry of Health 2011 to 2014 3 General Nursing Council Ministry of Health 2014 4 Hotel Tourism and Training Institute Ministry of Tourism Since inception in 2001 5 Citizenship Economic Empowerment Commission Ministry of Commerce 2013 to 2014 6 Zambia Public Procurement Authority Ministry of Commerce 2009 to 2014 8 Zambia Institute of Mass Communication Ministry of Information 2013 to 2014 9 Independent Broadcasting Authority Ministry of Information 2013 to 2014 10 Food Reserve Agency Ministry of Agriculture 2012 to 2014 11 Livestock Development Trust Ministry of Agriculture 2009 to 2014 12 Cotton Board of Zambia Ministry of Agriculture 2014 13 Tobbacco Board of Zambia Ministry of Agriculture 2014 14 Cotton Development Trust Ministry of Agriculture 2012 to 2014 15 Chambeshi Water and Sewerage Company Ministry of Local Govt 2012 to 2014 16 Luapula Water and Sewerage Company Ministry of Local Govt Since inception in 2008 17 North-Western Water and Sewerage Company Ministry of Local Govt 2012 to 2014 18 Western Water and Sewerage Company Ministry of Local Govt 2012 to 2014 19 Zambia Education Publishing House Ministry of Education 2007 to 2014 20 Nitrogen Chemicals of Zambia Ministry of Agriculture 2009 to 2014 21 National Housing Authority Ministry of Local Govt and Housing 2012 to 2014 22 National Heritage Conservation Commission Ministry of Tourism 2007 to 2014 23 National Youth Development Council Ministry of Youth and Sport 2006 to 2014 24 State Loteries Board Ministry of Commerce 2007 to 2014 25 Zambia Railways Ministry of Works & Supply 2013 to 2014 26 TAZAMA Ministry of Works & Supply 2013 to 2014 The non-production of audited financial statements by the above institutions is contrary to good practices and various enabling legislations governing the organisations. Institutions Appearing in this Report