Assistant Director of Audits – Southern Province THE ROLE OF OFFICE OF THE AUDITOR GENERAL (OAG) IN “THE MANAGEMENT AND ACCOUNTABILITY OF PUBLIC RESOURCES IN ZAMBIA”. PRESENTER – E H BUUMBA Assistant Director of Audits – Southern Province

MANAGEMENT Definition: Management has several definitions. with reference to today's theme, we shall define management as: The organisation and coordination of activities of a country in accordance with certain polices and laws in order to achieve clearly defined objectives.(BusinessDictionary.com) For management to be effective, there needs to be some type of defined approach or system in place. This system becomes the plan to manage public resources, economically, efficiently and effectively.

ACCOUNTABILITY To be held accountable means that you are required, whether by law or custom to provide a statement of your actions to those with a legitimate interest.

RESOURCES Definition: Human, financial, physical, and knowledge factors that provide a firm (Country) the means to perform its business processes (functions). (BusinessDictionary.com)

ACCOUNTABILITY CYCLE Government is required to account for the country’s public resources. The constitution requires the Minister of Finance and National Planning to lay before Parliament, the audited Financial Report, nine (9) months after the end of the Fiscal year. Further, the Constitution requires the Auditor General to submit her annual Report on the accounts of the Republic to the President who not later than seven (7) days after the first sitting of the National Assembly causes it to be laid before the National Assembly .

ACCOUNTABILITY CYCLE (continued) The diagram below illustrates the relationship between Parliament, Government and the Auditor General. The office does not fall under any Ministry

ESTABLISHMENT/MANDATE Article 121 and 122 of the constitution of Zambia establishes Office of the Auditor General – headed by the Auditor General (AG) who is appointed by the President and ratified by National Assembly. These articles: Confer duties, responsibilities and rights of the AG, Prescribe tenure of office of the AG, Allows for enactment of other laws – Public Audit Act Cap 378 - empowers the AG to audit statutory bodies, departments and private entities that receive government grants.

MISSION STATEMENT Office of the Auditor General exists in order to provide quality audit and related consultancy services to Government and other institutions in order to PROMOTE ACCOUNTABILITY and value for money in the MANAGEMENT of public funds and other resources for the benefit of SOCIETY.

GOAL/OBJECTIVE STATEMENT The goal of the office is to increase the scope and coverage, and improve the quality of audit services in order to contribute to the ENHANCEMENT of ACCOUNTABILITY in the MANAGEMENT of public resources. (The Office present in all the nine Provincial Headquaters) The objective of the OAG is to conduct independent, timely and cost effective audits to ENHANCE optimal collection and utilization of resources by those entrusted with the responsibility to collect or to spend.

MANAGEMENT OF PUBLIC RESOURCES AND ACCOUNTABILITY During the year 2008, the office audited and produced eighty nine (89) individual audit reports (paragraphs).In addition a special report on Public Debt and on the operations of the Defence Forces has been produced separately and submitted to the President as a secret report. Out of the 89 reports, 66 had outstanding issues to warrant mention in the AG’s annual report as paragraphs. The major highlights in this report include:

MANAGEMENT OF PUBLIC RESOURCES AND ACCOUNTABILITY (CONTINUED)   Amount (K) Unaccounted for Revenue / Missaprop. 14,107,336,231 Misapplication of Funds 15,792,027,765 Wasteful Expenditure 772,347,000 Unretired Imprest 20,918,861,052 Unsupported Payments 5,439,032,719 Irregular Payments 2,443,892,655 Unauthorised Payments 1,617,977,960 Unaccounted for Stores 15,394,628,301 Unutilised Building Materials 37,363,500 Expired Drugs 249,142,125 Unvouched Expenditure 14,537,768,499 Failure to Follow Tender procedures 3,919,489,353 Non Recovery of Loans and Advances 4,811,518,037 Delayed Banking 7,989,363,277 Overpayments 116,051,792 Tax Deficit & Under collections 659,381,780,764 TOTAL   767,528,581,030

MANAGEMENT OF PUBLIC RESOUCES AND ACCOUNTABILITY (CONTINUED) REVENUE SIDE On the revenue side, Unaccounted for Revenue and Misappropriations amounted to K14, 107,336,231. Amounts totalling K659, 381,780,764 were tax deficits and under collections. REVENUE INSTITUTIONS THAT WERE AUDITED Nine (9) Revenue institutions were audited and the unaccounted for revenue, misappropriated funds and Tax arrears were due to weaknesses in the systems that institutions use to collect and account for revenue.

MANAGEMENT OF PUBLIC RESOUCES AND ACCOUNTABILITY (CONTINUED) These weaknesses not only cause revenue not to be accounted for properly but also cause other irregularities such as growing arrears and under-assessments among others. The Zambia Transport Information System (ZAMTIS) at Road Transport and Safety Agency (RTSA), the Lands Information Management Systems (LIMS) at Ministry of Lands and Automated Customs Data Systems (ASYCUDA) system at Zambia Revenue Authority (ZRA) are amongst such systems that exhibited weaknesses. In the 2006 and 2007 reports, for example, there are detailed Information Technology (IT) reports highlighting such weaknesses. There is therefore, an inevitable need to address such weaknesses and their related abuses to enhance the revenue collections.

MANAGEMENT OF PUBLIC RESOUCES AND ACCOUNTABILITY (CONTINUED) EXPENDITURE SIDE: Twenty (21) institutions appear in the 2007 Auditor General’s Report as paragraphs: In all these institutions, there were instances of misapplications, unretired imprest, unvouched expenditures and other irregularities in amounts totalling K93, 892,663,769. Other irregularities that can not be quantified such as weakness in the management and execution of contracts and failure to account for accountable documents were also revealed. Notable amongst these are contracts under Zambia Police such as the following: Contract with Ser Brierley Investments to supply Police Uniforms Contract to supply Police uniform materials

MANAGEMENT OF PUBLIC RESOURCES AND ACCOUNTABILITY (CONTINUED) Contract with Instrumentation for Traffic Law Enforcement(Pty) Limited Procurement of Riot Equipment There were also weaknesses in the implementation of Poverty Reduction Programmes and other Government Programmes such as: The Sector Pool under the Ministry of Education The programmes under the Ministry of Community Development and Social Services (Public Welfare Assistant Scheme and Street Children Fund both administered through grants) The Fertilizer Support Programme (FSP) under the Ministry of Agriculture and Cooperatives.

MANAGEMENT OF PUBLIC RESOURCES AND ACCOUNTABILITY (CONTINUED) District Health Management Teams(DHMTs) under Ministry of Health The grants given to councils for various purposes. (We have commenced the Audit of Grants under councils since we are in the provinces). Another issue that is worth mentioning is the running of financial affairs in the Foreign Affairs Ministry-Missions Abroad. The results of these audits are meant for corrective action that would lead to prudent management of public funds. The reports are not meant to merely criticise the Government but as an action point to better the systems.

MANAGEMENT OF PUBLIC RESOUCES AND ACCOUNTABILITY (CONTINUED) SOUTHERN PROVINCE During the year 2008, the Provincial Audit Office audited and produced twenty (20) individual audit reports (paragraphs) out of which twelve (12) had outstanding issues to warrant mention in the AG’s annual report as paragraphs. The major highlights in this report include:

MANAGEMENT OF PUBLIC RESOURCES AND ACCOUNTABILITY SOUTHERN PROVINCE(CONTINUED)   Amount (K) Funds Not Received 323,347,202 Misapplication of Funds 186,000,000 Wasteful Expenditure 12,750,000 Unretired Imprest 395,858,483 Irregular Payments 774,345,488 Unauthorised Payments 24,240,400 Unaccounted for Stores 660,644,145 Unutilised Funds 2,244,891,179 Expired Drugs 4,108,460 Unvouched Expenditure 402,146,736 Failure to Follow Tender procedures 196,000,000 Non Recovery of Advances 72,628,249 Overpayments 26,450,361 TOTAL   5,323,410,703

MANAGEMENT OF PUBLIC RESOURCES AND ACCOUNTABILITY SOUTHERN PROVINCE(CONTINUED)   Other irregularities that can not be quantified as weakness in the management of public resources were: Failure to complete constructional works on time by contractors.

CONCLUSION The role of the OAG is to PROMOTE ACCOUNTABILITY and value for money in the MANAGEMENT of public funds and other resources for the benefit of SOCIETY. www.ago.gov.zm / E-mail: evanshbuumba@yahoo.co.uk Cell: 0955 -125199

I REST MY CASE! ANY QUESTIONS????