26 November 2012

Rwanda: Lawmakers Question Minecofin Over Consolidated Financial Statement

An official from the ministry of finance and economic planning has admitted that the introduction of the Integrated Financial Management System (IFMS) has presented some challenges to various government agencies.

The system, which replaced Sage Pastel (accounting) and Smartgov (budget execution) was designed for Minecofin to manage budget preparation, budget execution, cash management, commitment control, accounts payables, accounts receivables, general ledger and reporting for all budgets and accounting entities.

While appearing before the Parliament's Public Accounts Committee, Minecofin's accountant general Patrick M. Shyaka said the ministry has organized capacity building workshops for accountants in various institutions so as to increase their knowledge of the software and other public accountability skills.

He was responding to a remark by PAC's head Juvenal Nkusi who questioned why the ministry apparently has not done anything about posting errors that prevailed in public institutions. "Almost all the accountants who appeared before us blamed especially posting errors to that system; what's wrong with it?" he asked.

In reply, Finance Minister John Rwangombwa told the committee that most of the accountants were new (at the time of the Auditor General's audit) and needed more experience to get the job done. He also blamed accountants' for not being interested in learning new skills.

"They failed us because of that negative attitude of not being interested in research and learning new things. They should have asked for help at the time when they found IFMS challenging," he said.

But MP Jean-Baptiste Musemakweli pointed out that most of accountants have limited knowledge and their credibility is questionable. "When the software is challenging, they don't even bother using their brains," he said, blaming accountants for not recording some transactions and missing supporting documents. "For a real accountant, papers are the most precious thing and they need to ensure that no document is missing."

Minister Rwangombwa promised PAC members that the problem would be rectified. "We are now following those accountants and directors of finance on permanent basis, so as to make sure that our scarce resources are not mismanaged," he said.

284 entities

Rwangomba and Shyaka were appearing before PAC to account and explain issues regarding the consolidated financial statement of the year ending June 30, 2011, which was ranked 'unfair' by the auditor general's report.

According to the law, the Minister of Finance and Economic Planning is responsible for the preparation of government consolidated financial statements and submitting them to the Auditor General of State Finances (OAG) for audit not later than September 30 of the following fiscal year.

According to Rwangombwa, during the 2011-12 financial year 284 entities were included in the government consolidated financial statements. These include 132 central government ministries and agencies, 31 local government entities, and 121 development projects. A total of 31 government business enterprises were not consolidated.

The auditor general's report reads that for the year ended 30 June 2011, government revenues increased by Frw 156,704,860,060, total expenditure increased by Frw 215,141,965,605 and the fund balance at year end decreased by Frw 33,505,220,737.

Another issue raised in the AG's report was lack of supporting documents for some of the audited institutions. On a sample basis, the AG noted that some budget agencies significantly overspent their approved budget to an amount totaling Frw 61,801,455,398.

"I did not obtain documented correspondences related to the authorization of this overspending per budget agency during my review," wrote the auditor general.

He further noted that some budget agencies also underspent (more than a half of each budget funds per each agency) their approved budget to an amount totaling Frw 2,894,374,599.

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