Report of the Auditor General On Nimba County Social and County Development Funds For Periods Ended June 30, 2012- June 30, 2013 REPORT OF THE AUDITOR GENERAL On Nimba County Social and County Development Funds For The Fiscal Years 2011/2012 & 2012/2013 December 2014 Yusador Gaye, CPA, CGMA 1 Promoting Accountability of Public Resources Auditor General www.gac.gov.lr, R.L. www.gac.gov.lr Report of the Auditor General On Nimba County Social and County Development Funds For Periods Ended June 30, 2012- June 30, 2013 Republic of Liberia TRANSMITTAL LETTER The Honorable Speaker of the House of Representatives and the Honorable President Pro-Tempore of the House of Senate We have undertaken the audit of the Social and County Development Funds of Nimba County for the fiscal periods ended June 30, 2012 and June 30, 2013. The audit was conducted under the Auditor General's statutory mandate, as provided for under Chapter 53.3 of the Executive Law of 1972. Findings conveyed in this report were formally communicated to the Nimba County Administration for their responses. The reportable issues were submitted through a Management Letter. Where responses were provided by the County’s Administration on the report’s findings, they were evaluated and incorporated in this report. Given the significance of the matters raised in this report, we urge the Hon. Speaker and members of the House of Representatives and the Hon. President Pro-Tempore and members of the Liberian Senate to consider the implementation of the recommendations conveyed herein with urgency. Monrovia, December 2014 2 Promoting Accountability of Public Resources www.gac.gov.lr Report of the Auditor General On Nimba County Social and County Development Funds For Periods Ended June 30, 2012- June 30, 2013 Table of Contents 1 DETAILED REPORT ............................................................................................................... 7 1.1 Introduction ............................................................................................................... 7 1.2 Background ................................................................................................................ 7 1.3 Audit Objectives .......................................................................................................... 9 1.4 Audit Scope and Methodology ...................................................................................... 9 1.5 Limitation of Scope ................................................................................................... 10 1.6 Limitation of Responsibility ........................................................................................ 10 1.7 Part I: Social Development Fund (SDF) ....................................................................... 11 1.7.1 Detail Findings and Recommendations ............................................................................. 11 1.7.1.1 Financial Analysis ........................................................................................... 11 1.7.1.2 CDMC Failure to Submit Project Proposal ............................................................ 13 1.7.1.3 Violation of the PPC Act in the Awarding of Contracts ............................................. 15 1.7.1.4 Project Approved Without PPC Requirement ........................................................ 19 1.7.1.5 Unsupported Payment to NCCC ........................................................................ 22 1.7.1.6 Repeated Payment Voucher Number ................................................................. 23 1.7.1.7 Third Party Payment ....................................................................................... 25 1.7.1.8 Contract Awarded to Unqualified Bidder .............................................................. 27 1.7.1.9 Contracts Awarded Without Bid ........................................................................ 28 1.7.1.10 Scholarship Awarded Without Policy ................................................................... 30 1.7.1.11 Unsupported Withdrawals ................................................................................ 31 1.7.1.12 Projects Implemented Without Resolution ........................................................... 33 1.7.1.13 Contract Analysis ........................................................................................... 35 1.7.1.14 Failure to Maintain Fixed Asset Register ........................................................ 44 1.8 Part II- County Development Fund (CDF) .................................................................... 46 1.8.1 Project Implementation ..................................................................................................... 46 1.8.1.1 Project Implementation without Bid .............................................................. 46 2 ACKNOWLEDGEMENT .............................................................................................. 49 3 STATEMENT OF ACCOUNTABILITY .......................................................................... 50 5 EXHIBITS ................................................................................................................ 69 3 Promoting Accountability of Public Resources www.gac.gov.lr Report of the Auditor General On Nimba County Social and County Development Funds For Periods Ended June 30, 2012- June 30, 2013 Acronyms/Abbreviations/Symbol Meaning A/C# Account Number AG Auditor General BEP Bid Evaluation Penal BOQ Bill of Quantity Corp. Corporation CDMC County Development Management Committee CDA County Development Agenda CDF County Development Fund CDO County Development Officer CGMA Chartered Global Management Accountant CPA Certified Public Accountant DFCS Dedicated Fund Committee Secretariat DFC Dedicated Fund Committee FY Fiscal Year FAR Fixed Asset Register GAC General Auditing Commission GOL Government of Liberia IPSAS International Public Sector Accounting Standards LBR Liberia Business Registry LAMCO Liberia-American Mining Company LBDI Liberia Bank for Development and Investment LOA Letter of Agreement MIA Ministry of Internal Affairs MOF Ministry of Finance MLME Ministry of Lands, Mines and Energy MDA Mineral Development Agreement NCDMC Nimba County Development Management Committee NTGL National Transitional Government of Liberia NCCC Nimba County Community College MOU Memorandum of Understanding PMT Project Management Team PMC Project Management Committee PIU Project Implementation Unit PPC Public Procurement and Concession PPCC Public Procurement and Concession Committee USD United States Dollar UNOPS United Nations Office of Project Services 4 Promoting Accountability of Public Resources www.gac.gov.lr Report of the Auditor General On Nimba County Social and County Development Funds For Periods Ended June 30, 2012- June 30, 2013 AUDITOR GENERAL’S CONCLUSION ON THE COUNTY AND SOCIAL DEVELOPMENT FUNDS OF NIMBA COUNTY FOR THE FISCAL PERIODS ENDED JUNE 30, 2012 & JUNE 30, 2013 During the fiscal periods 2011/2012 and 2012/2013, the Nimba County Administration received the amount of US$800,000.00 as Social Development Fund. The SDF had an opening bank balance of US$2,239,835.08. The total cash available as SDF during the audit periods amounted to US$3,039,835.08. The county received US$200,000.00 as County Development Fund. A deposit of US$53,797.30, the source undisclosed, was also deposited in the CDF account. The opening bank balance in the CDF account was US$351, 623.51. Therefore, the total amount available as CDF during the audit periods was US$605,420.81. Financial activities and the conduct of the affairs of Nimba County’s CDF and SDF were marred by financial irregularities for a number of projects implemented by the County Administration. These irregularities occurred because the Nimba County Administration did not execute the CDF and SDF consistent with the contractual terms and conditions, the PPC Act of 2005 and 2010 amendment, the Budget Laws, applicable laws and regulations as well as the Ministry of Internal Affairs’ Guidelines. We observed the non-adherence to the PPC Act by the Nimba County Administration without material justification. For instance, the Nimba County Administration and PMC made a total payment of US$5,024,295.35 of which US$4,774, 145. 35 was paid prior to the audit periods for the purchase of earth moving equipment for the county without regard to the PPC Act. We also observed that the contractor, UNOPS defaulted on the contract terms and conditions. Similarly, we observed that a contract valued at US$260,000.00 for the renovation of the Sanniqueille Sports Stadium was awarded to the Jungle Water Group of Investment without evidence to indicate that a competitive bidding process was carried out. We observed that the Chairman of the Nimba County Sports Steering Committee was the owner of the company. This action on the part of the County Administration and PMC amounted to a violation of the PPC Act Section 131 (a-c). Furthermore, we observed that two separate payments, US$71,799.21 and US$90,000.00 were made to the Jungle Water Group of Investment. The payment documents revealed that the payments were reimbursements to the company for purportedly the pre-financing of the Nimba County’s participation in the 2011/2012 and 2012/2013 National County Sports Meet respectively. Awarding contract and making payments to a company owned by the Chairman of the Nimba County Sports Committee constitute conflict of interest which undermines public sector accountability