2 March 2019

Ethiopia: Auditor General Vows to Sue Offices for Audit Gap

Addis Abeba's Auditor General Office has vowed to bring bureaus under the city administration that do not address audit gaps before the law this coming March.

By the end of the first half of this fiscal year, gaps in the city's finances grew by 26.5 million Br to reach 236 million Br.

The audit gaps, which have been snowballing since 2011, were mainly due to procurements that did not follow the proper procedures, inflated salaries and benefits and uncollected income are among them.

The number of institutions that failed to address these gaps grew from 22 to 55 institutions in the two years since 2016.

In the first half of this fiscal year, 18 institutions made procurements without following the proper bidding process, for which the lion's share was taken up by Zewditu Hospital, accounting for 23pc.

"We have a responsibility to check whether the city administration properly uses its budget or not," said Tsegewoyn Kassa, the capital's auditor general. "We have sent a letter to the institutions with audit gaps for them to repay back by March."

Lack of cash, strong internal regulation, directives for the administration of property and lack of response from the institutions to past audit reports were stated in the report as major challenges.

Since the 2016/17 fiscal year, nine offices under the city administration have failed to collect incomes accounting for 32.5 million Br. The Transport Program Management Office accounts for almost all of these, which has 29 million Br in uncollected incomes.

Out of the total value, the largest audit gap comes from the Addis Abeba Land Development & Management Bureau. For lands leased in the Yeka, Gulele, Arada, Qirqos and Lideta districts, 140 million Br of advances and annual payments have not been made to the Bureau.

Five real estate companies, including Sunshine, Berta, Eskinder Akelilu, Elisa Solomon and Bizuayehu Engedawork, did not make 15 million Br in lease payments, according to the report.

Samuel Tafesse, founder and managing director of Sunshine Real Estate, says that there is no payment his company owes the city administration.

"What we know is that we made the payments and delivered the houses to the home buyers a decade ago," Samuel told Fortune. "We even haven't received any legal claims from them."

This was while thirteen institutions, without following the proper procedures, paid six million Birr as salaries and benefits, of which the Addis Abeba City Beautification, Park & Cemetery Development Agency accounted for over half of it.

In a city where there is a lack of basic needs and unemployment, such audit gaps are worrying, according to Tesfaye Melaku, a lecturer at Bahir Dar University College of Business & Economics.

"The audit gap shows that the institutions have a lack of professionals, which means they have to invest in improving employee capacity and leadership," Tesfaye said.

Audit gaps at the federal level have also been noted as major problems contributing to fiscal deficits. It stood at around 20 billion Br in the 2016/17 fiscal year.


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