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Delayed payment costs government K8.5 billion

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Delayed payments to contractors forced government, through the Roads Fund Administration, to pay K8.5 billion in penalties in the year ended June 30 2020, an Auditor General report for selected statutory bodies has revealed.

The K8.5 billion lost through penalties was K1.4 billion more than the K7.1 billion the government paid in 2019.

According to the report, which Finance Minister Sosten Gwengwe presented to Parliament last week, such huge amounts would be enough to cater for new development initiatives, including road projects, in the country.

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According to the audit report, interest penalties are charged by contractors at the point which Roads Fund Administration or Malawi Government release payments for works that have been certified.

“Total interest expense incurred for late payments on measured works in the current period has increased from K7.1 billion in 2019 to K8.5 billion in 2020.

“Such huge amount would be enough to cater for new development (including road) projects in the country,” reads the audit report in its assessment of Roads Authority (RA) accounts.

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When contacted yesterday to explain the delayed payments that resulted in the hefty penalties, RA spokesperson Portia Kajanga said her organisation does not handle payment for contractors.

According to the report, financial statements of RA showed that the entity’s government liability balances on development projects stood, as at 30 June 2020, at K72 billion (K80 billion in 2019), representing a 10 percent decrease from the previous year.

It noted that the 2020 balance remained high and would attract significant interest charges which negatively affect project implementation.

The audit also faults RA for having people who do not work for the organisation as signatories of some of its accounts.

According to the report, good accounting procedures and control measures require all signatories for bank accounts in use by an organisation to be employees who are serving the organisation in question.

This, according to the report, is a control measure to ensure that cash from the bank can only be withdrawn by responsible employees of the organisation.

“During the audit, it was noted that some signatories for National Bank at Lilongwe Service Centre with account number 304383 (current account) and account number 1602276 (deposit account) had Placid Kasakatira and Trever Hiwa who were no longer working with the authority, but still appeared as signatories for the said accounts,” the report reads.

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