OPC analysis fears another Cashgate, as some district councils fail to reconcile ORT accounts
An analysis by Office of the President and Cabinet (OPC) in collaboration with a local Non Governmental Organisation (NGO), Citizens for Justice (CFJ), has revealed delays in reconciling Other Recurrent Transactions (ORT) bank accounts of some district councils, raising fears that this may create room for theft and fraud.
The analysis was done under the GIZ-supported Budget and Expenditure Transparency Project, which was conducted in nine districts between March and July, 2015.
According to the report, in nine district councils, the reconciliations were behind ranging from 18 months to two years.
“In all councils we visited, bank reconciliations for ORT were far behind, ranging from 18 months to two years. In Mchinji District Council for example, there is a challenge with cashbook [system]. The system has a technical problem to the extent that the cashbook cannot capture transactions from the sectors,” reads the report.
Apart from Mchinji, other districts involved were Chitipa, Karonga, Nkhata Bay, Kasungu, Nkhotakota, Chikwawa, Blantyre and Balaka.
It adds: “The problem was reported to both the supplier and the NLGFC [National Local Government Finance Committee]. The supplier keeps on sending different officers to fix the problem but without any success. We view this as a serious matter.”
The issue of bank accounts reconciliation is highlighted under the sub-headline ‘Managing Budget Execution and Report Requirements’. The section talks about funding and cash management, commitments, payment system, bank reconciliations and reports.
Former Auditor General, Reckford Kampanje, who was a consultant in the project, presented the findings to stakeholders in Lilongwe yesterday.
According to the cited section, failure to do bank reconciliations creates room for fraud and theft.
“An institution that does not reconcile its main bank account is susceptible to fraud and theft. We would like to recommend to NLGFC and councils to work together so that the backlog can be cleared within the shortest space of time. If capacity
is a challenge, we strongly recommend that the assignment should be contracted out to the private sector,” reads the report.
CFJ Executive Director, Reinford Mwangonde, said the project was one way of tracking funds that are disbursed to the councils.
“We observed lately that Malawians are demanding socio-economic rights. If you go to the districts, people are asking for drugs. People are asking for quality education, people are asking for security. These districts have been entrusted to disburse these funds so that people at local level can benefit,” Mwangonde said.
He added: “We know now and you also know that lately, the DCs [District Commissioners] have complained that they don’t have the money. Drugs are a problem, education materials are missing in schools. This is one attempt in our view to follow the money: where the money is coming from, where it is going, is it being used for the intended purposes?”
Annika Wolframm, Technical Adviser for GIZ’s Strengthening Public Financial and Economic Management (PFEM), stressed the importance of transparency and accountability.
“Transparency and accountability in public finance is very important because if you see government as a body, as a human, all the veins, blood and everything, is finance, is money. Everything that is happening is done with money. If there is no money, nothing will be happening. It is the money that keeps the system running. If there is no accountability and transparency in finance, it doesn’t work,” she said.
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