Audit report reveals abuse of overdraft facility
An audit of the Ministry of Finance’s accounts has revealed that it did not clear $14 million worth of cheques for the financial year ending June 30, 2014.
The exceeding of the overdraft limit of the Ministry’s general disbursement account was also a cause for concern at that time, stated a report compiled by the Office of the Auditor into the Ministry’s financial affairs.
But the Ministry, in response to the concerns expressed by the Office of the Auditor, said it was due to a backlog in printing cheques.
“The overdraft as at 30 June 2014 was mostly due to cheques printing during the year end process and second supplementary transaction.”
The audit report noted that the rush at the Ministry to process payment was an annual practice close to the end of the financial year, and this is despite the fact that most of the transactions were not part of the Ministry’s cash flow allocation.
The audit report also revealed that the Ministry’s general disbursement account continued to exceed its overdraft limit of $12 million at that time.
For the financial year ended 30 June 2014, the total of the general disbursement account went up to $14 million, which was an increase of $974,653 compared to the same period in the previous financial year.
The processing of “unrepresented cheques” also appeared to be a challenge at the Ministry with the audit report noting that measures were taken by staff to address and resolve the issue.
“For the last three years, work plans were allocated amongst the staff to resolve this issue and recommended the using of electronic funds transfer (E.F.T.) functionality. There is currently an action in place to resolve this issue, although it is moving at a slow pace of additional task needed to clear this as well, the shortage of staff.”
The installation of the E.F.T. payment system since September 2014 was an attempt by the Minister to address the problem, which saw all Government suppliers moved to the E.F.T. payment system.
“We are currently putting in place Ministries’ monthly commitments reminders, monthly payment policy circular and cash flow training to resolve some of these issues,” says the Auditors in their report.