Parastatal Report 2016
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REPUBLIC OF ZAMBIA REPORT OF THE AUDITOR GENERAL ON THE ACCOUNTS OF PARASTATAL BODIES AND OTHER STATUTORY INSTITUTIONS FOR THE FINANCIAL YEARS ENDED 31ST December 2013, 2014, 2015 and 2016 K60.00 REPUBLIC OF ZAMBIA REPORT OF THE AUDITOR GENERAL ON THE ACCOUNTS OF PARASTATAL BODIES AND OTHER STATUTORY INSTITUTIONS FOR THE FINANCIAL YEARS ENDED 31ST DECEMBER 2013, 2014, 2015 and 2016 OFFICE OF THE AUDITOR GENERAL VISION: A dynamic audit institution that promotes transparency, accountability and prudent management of public resources. MISSION: To independently and objectively provide quality auditing services in order to assure our stakeholders that public resources are being used for national development and wellbeing of citizens.” CORE VALUES: Integrity Professionalism Objectivity Teamwork Confidentiality Excellence Innovation Respect i Office of the Auditor General Stand No. 7951 Haile Selassie Avenue, Longacres P.O. Box 50071 TRANSMIT TAL LETTERLusaka, Zambia. Email: [email protected] 30th November 2017 30th September 2017. His HisExcellency Excellency Mr. Mr. Edgar Edgar C. Lungu C. Lungu PresidentPresident of the of theRepublic Republic of Zambia of Zambia StateState House House LUSAKALUSAKA YourYour Excellency, Excellency, RE: RE:REPORT SUBMISSION OF THE OF THEAUDITOR ANNUAL GENERAL REPORT OFON THE THE AUDITOR ACCOUNTS GENERAL OF ONPARASTATAL THE AUDIT BODIES OF THE AND ACCOUNTS OTHER STATUTORY OF THE REPUBLIC INSTITUTIONS FOR THE FOR THE FINANCIAL YEARFINANCIALS ENDED YEAR 31st DECEMBER 2013 to 2016 ENDED 31ST DECEMBER, 2016 In accordance with Article 250 of the Constitution of Zambia (Amendment) Act No.2 of 2016, I haveIn accordancethe honour withto submit Article the 250 Report of the of Constitution the Auditor ofGeneral Zambia on (Amendment the Account)s Act of ParastatalNo. 2 of 2016Bodies, I have and the other honour Statutory to submit Institutions the Annual for Report the financial on the Audit years ofended the Accounts 31st December of the Republic2013 to of Zambia2016. for the financial year ended 31st December, 2016. Sir, Sir,the Reportthe Report has alsohas alsobeen been submitted submitted to the to Speaker the Speaker of the of National the National Assembly Assembly in accordance in accordancewith Article with 212 Article of the 212 Constitution. of the Constitution. I remain, Your Excellency’s Obedient Servant Your Excellency’s Obedient Servant Ron M. MwambwaRon M. FCMA, Mwambwa FZICA, CGMA, MSc, CFE ACTINGACTING AUDITORAUDITOR GENERALGENERAL ii ii Office of the Auditor General Stand No. 7951 Haile Selassie Avenue, Longacres P.O. Box 50071 Lusaka, Zambia. Email: [email protected] 30th September 2017. PREFACE This Report is as a result of audit reviews in parastatal bodies and other statutory institutions His Excellency Mr. Edgar C. Lungu President of the Republic of Zambiafor the financial years ended 31st December 2013, 2014, 2015 to 2016. The Report is prepared State House in accordance with the Provisions of Article 250 of the Constitution of Zambia (Amendment) LUSAKA Act No.2 of 2016. Your Excellency, The Auditor General has a Constitutional mandate to audit all public finances and as the RE: SUBMISSION OF THESupreme ANNUAL Audit Institution REPORT of OF Zambia, THE AUDITORour vision is GENERALto promote transparency, accountability and ON THE AUDIT OF THE ACCOUNTS OF THE REPUBLIC FOR THE prudentFINANCIAL management ofYEAR public resources. ENDED 31ST DECEMBER, 2016 In this Report, I have highlighted matters concerning the management and financial In accordance with Article 250performance of the Constitution of selected of Zambiaparastatal (Amendment bodies and) Actstatutor No.y 2 institutionsof such as failure to have 2016, I have the honour to submit the Annual Report on the Audit of the Accounts of the Republic of Zambia for the financial year endedaccounts 31st December, audited, internal2016. control weaknesses which include the failure to remit statutory contributions, unsupported payments and unaccounted for stores. Sir, the Report has also been submitted to the Speaker of the National Assembly in accordance with Article 212 of the Constitution.I am hopeful that, by highlighting areas of weaknesses in the organisations audited, those Yourcharged Excellency’s with the Obedient responsibility Servant of running these institutions will focus on the key drivers of internal control , these being leadership, financial and performance management and governance. Ron M. Mwambwa FCMA, FZICA, CGMA, MSc, CFE Ron M. Mwambwa FCMA, FZICA, CGMA, MSc, CFE ACTING AUDITOR GENERAL ACTING AUDITOR GENERAL ii iii Table of Contents Executive Summary ................................................................................................................... v Introduction ................................................................................................................................ 1 Eastern Water and Sewerage Company ..................................................................................... 4 Electoral Commission of Zambia ............................................................................................ 12 Food Reserve Agency .............................................................................................................. 21 Indeni Petroleum Refinery Company Limited ......................................................................... 27 The Judiciary ............................................................................................................................ 34 The Local Authorities Superannuation Fund (LASF) ............................................................. 48 Mpulungu Harbour Corporation Limited................................................................................. 62 Mulonga Water and Sewerage Company Limited ................................................................... 69 The National HIV/AIDS/STI/TB Council ............................................................................... 79 The National Pension Scheme Authority ................................................................................. 85 The National Savings and Credit Bank (NATSAVE) ............................................................. 95 Ndola Lime Company Ltd (NLC).......................................................................................... 100 Nkana Water and Sewerage Company .................................................................................. 111 Pensions and Insurance Authority ......................................................................................... 121 Public Service Pensions Fund ................................................................................................ 129 The Road Transport and Safety Agency ................................................................................ 145 The Rural Electrification Authority (REA) ........................................................................... 153 Workers Compensation Fund Control Board (WCFCB) ....................................................... 162 Zambia Cargo and Logistics Limited .................................................................................... 173 The Zambia Institute of Mass Communications Education Trust ......................................... 186 Zambia Medicines Regulatory Authority .............................................................................. 192 Zambia National Broadcasting Corporation .......................................................................... 196 Recommendations .................................................................................................................. 207 Recommendations of the Public Accounts Committee (PAC) .............................................. 208 Analysis of Closed and Outstanding Issues 2016 .................................................................. 209 iv Executive Summary This Report has been produced in accordance with Article 250 of the Constitution (Amendment) Act No. 2 0f 2016 of the Republic of Zambia, Public Finance Act No. 15 of 2004 and Public Audit Act No. 13 of 1994. During the audit process, there were various levels at which the Office interacted and communicated with Chief Executive Officers whose accounts were audited. The purpose of this interaction was to provide an opportunity for the Chief Executive Officers to clarify and take corrective action on the findings of the audits. The Report contains paragraphs on twenty two (22) institutions out of which two (2) are under the Industrial Development Corporation (IDC) and three (3) paragraphs on water utility companies. The Report has listed fourteen (14) institutions that had not produced audited financial statements for the financial years up to 31st December 2016 contrary to their enabling Acts and the tenets of good corporate governance. It has raised issues of non-remittance of statutory contributions (NAPSA and ZRA), unsupported payments, unaccounted for stores and unretired imprest among other issues as shown in the table below. Amount Summary of Findings K Non Remittance of Statutory Contributions 664,155,249 Unsupported Payments 6,833,380 Unaccounted for Stores 22,637,485 Unretired Imprest 13,116,978 Missing Payment Vouchers 1,606,916 Wasteful Expenditure 15,435,151 Failure to Submit Expenditure Returns 195,355 Irregular Issuance of Fuel 206,650 Irregular Procurements 335,546 Undelivered Stores 1,440,524 Irregular Payments 1,654,128 Loss on Non Revenue Water 196,092,932 Failure to Recover Loans 3,472,274 It