By TZ Business News Staff.

The recently released Controller and Auditor General’s report  in Tanzania lists the country’s Embassy in Muscat as the nation’s only Government office with an “adverse” audit opinion, while it also identifies the Ministry of Lands and National Housing Corporation (NHC) among public enterprises with suspicious books of accounts.

An adverse audit opinion represents a red flag on an organization’s financial statements, indicating existence of  significant problems with the books, where an adverse balance represents excess of payments over receipts.

Tanzania is currently managed through a combination of 55 Ministries and Executive Agencies. The Treasury Registrar (TR) Statement of Government Investments says there are currently 238 Public Enterprises in the country.  The Government majority share owns 166  of these by more than 51% of the shares while it owns 62 with minority interest.  The number of PEs increases when 26 Urban Water Authorities are added into the mix as well as new PEs which are formed periodically–such as the recently formed National Identification Authority as well as National Social Security Regulatory Authority.

The Tanzania Embassy in Muscat is the only Tanzania central government entity carrying an “adverse” audit opinion in the 2012/2013 CAG report released in May, 2015.

The  Embassy  reported  in  the  statement  of cash  flow  a  closing  balance  of TShs.150,681,699  instead  of  TShs.639,874,314  after omitting one transaction of cash receipt of  TShs.97,065,176  and  including  an unanalyzed  exchange  loss  of  TShs.392,127,439 resulting  into  an  understatement  of TShs.489,192,615,  the CAG report says. The current exchange rate is Tsh. 2000  for one US dollar.

The  Embassy  collected  TShs.564,194,173  of which  TShs.456,085,421  was  banked  leaving TShs.108,108,753  unbanked  and  it  is  likely that the money was misappropriated. The amount misappropriated has  understated the  cash  and  cash  equivalent  balance reported.

The  Embassy  did  not  perform  bank reconciliation  for  all  the  period  from  1^st July 2011  to  30^th June,  2013.   In  the  absence  of bank  reconciliation,  the  correctness  of  the cash  and  cash  equivalent  balance  at  the  year and could not be ascertained.

Muscat  has received  the “adverse” audit opinion from a list of MDAs  who collectively misused  some Tsh. 600 billion from public funds during the audit period–which is  financial years 2009/2010,  through 2012/2013.

Books of accounts for the Embassy of Tanzania in Kinshasa, the Democratic Republic of Congo and the Tanzania High Commission in Kampala, Uganda,  carry the “qualified” audit opinion, , an indication the accounts also contain serious queries.

Tanzania’s Minister of Foreign Affairs and International Co-operation Bernard Membe did not respond to a text message asking for comment on the possibility of government action concerning this suspected misuse of public funds.

The Prime Minister’s office, led by Mizengo Kayanza Peter Pinda, the Tanzanian who once described himself as ‘the son of a peasant’  is among eight ministries with dubious expenditures.  The books of accounts  from the Prime minister’s office and the Tanzania Commission for Aids (TACAIDS) which is also in the  Prime minister’s office carry the negative “qualified” audit reports.

The  Prime  Minister‘s  office  received  an  amount  of Shs.2,750,989,763  development/capital expenditure. However,  this  amount  was  not  disclosed  in  the  cash flows  statement  as  cash  flows  from  financing activities as required by IPSAS 2. The office also over-paid a contractor by TShs.25,947,276.

The  PMO  contracted  Stefnat  Engineering  and Technical  Services  Ltd  to  refurbish  the  old  German Building  and  disaster  management  located  at  Oyster bay  at  a  contract  price  of  Shs.3,177,477,826.  The final  contract  valuation  reported  a  tota TShs.32,954,790  as  a  balance  due  for  payment  to  the contractor.  However,  the  total  funds  paid  for  the final  payment  was  Shs.58,902,066  resulting  into unexplained  difference  of  Shs.25,947,276  to  the contractor.

The Tanzania Commission for Aids (TACAIDS) in the Prime Minister’s office was found to have expensed unutilized inventories valued  at TShs.222, 013,632  contrary to the requirements of IPSAS 12 (44).

An expenditure  amounting  to  TShs.79,607,500  was  also not supported  by  appropriate acknowledgement  receipts and  retirement  particulars.  In  the  absence  of  these supporting  documents,  the  authenticity  of  the amount paid could not be established.

Contradicting  information  in  the  financial statements were also found in that  there  was  a  contradiction  on  the  amount  of exchequer  issues  received  during  the  year, whereby,  in  the  commentary  to  the  financial statements  (pg.14) and statement of exchequer received  (pg.56)  disclosed  an  amount  of TshShs.9,167,936,780  while  the  statement  of  vote account  (pg.47)  disclosed  an  amount  of Shs.9,691,811,644,  which  created  a  difference of Shs.523,874,864.

TACAIDS  disclosed  that,  3  grounded  motor vehicles  and  furniture  and  fittings  were disposed  of  for  Shs.31,800,000  and Shs.4,231,000  respectively.  However  the amount  of  disposed  motor  vehicles  was  not deducted  at  all  in  the  PPE  movement  schedule to  arrive  at  the  balance  as  at  30^th June  2013, while  an  amount  of  Shs.127,787,101  was deducted  in  respect  of  furniture  and  fittings instead  of  Shs.4,231,000  which  was  disclosed  in the note.

Of Tanzania’s 30 Regional Administration Secretariats, the CAG found 16 offices to have questionable books of accounts.  The dubious-spender Regional Secretariats (RSs)  listed are Katavi, Njombe, Tanga, Simiyu, Kigoma, Kagera, Dar es Salaam, Iringa, Ruvuma, Rukwa, Mara, Arusha, Shinyanga, Kilimanjaro, Mwanza and Tabora.

The other seven ministries with “qualified” audit opinions include  Ministry of Communications, Science and Technology, Ministry of Agriculture, Food Security and Co-operatives, Ministry of Livestock and Fisheries Development, Ministry of Home Affairs (and its Fire and Rescue police force), Ministry of Lands, Housing and Human Settlement,  Ministry of Health and Social Welfare, and the Ministry of  Education and Vocational Training.

The  Ministry  of  Home  Affairs  reported  outstanding accounts  payable  of  TShs.84,295,595.  However,  this amount  was not supported by invoice, delivery note, issue voucher and receipt voucher. For this case, we could not confirm its correctness. The accountability  of  fuel supply was not  confirmed. Audit  of  the  supplies  and  consumable  component noted  fuel  of  Shs.83,000,000  was  paid  to  M/S  CEO Government Procurement Services Agency. However, the  audit  team  could  not  verify  accountability  and utilization of procured fuel and therefore audit scope was limited.

The Ministry of Lands received Shs.1,451,862,356 for acquisition/  construction  of  PPE.  However,  this amount  was  not  disclosed  in  the  cash  flows statement as financing activities.  Contrary  to  Regulation  162  of  the  PFR  of  2001,  the Ministry  did  not  prepare  bank  reconciliations  as  a result,  the  correctness  of  the  amount  of  cash  and cash  equivalent  of  Shs.5,734,804,409.97  reported  in both  the  cash  flows  statement  and  the  statement  of financial position could not be established.

The  Ministry  intended  to  compensate  the  owner  of the  plot  No.  12  Block  65  which  was  located  in karikoo;  with  Plot  No.  2009  Block  2  (371  sqm) Kurasini with reserved value of Shs.970,000,000 as it was  observed  in  the  invoice  No.  8612012  of  19 September,  2011.  However,  this  intention  was  later reversed and instead, he was compensated with plot No.  2003  in  Block  1  (131,000  sqm)  with  a  value  of Shs.3,240,000,000 located in the industrial areas.

It  was  further  noted  that,  incorrect  information  was given to the Ministry regarding  Plot  No. 12 Block 65. The actual  area  of this plot was 371 sqm against the claimed area of 750 sqm.

It  was  noted  that,  out  of  the  263,000  title  deeds issued in the  Eastern Zone, only 22,740 or (9%) were recorded  in  the  Land  Rent  Data  Base  System  leading 240,260  certificates  unrecorded. This  limited  the audit  in  establishing  the  amount  of  land  rent  which should have been collected. It  was  noted  that,  up  to  October  2013,  information from  the  directorate  of  Surveying  and  Mapping indicate  that  187,896  plots  in  DSM  city  had  been surveyed and obtained an approval from the Director of Survey and Mapping .

However, the Ministry‘s Land Rent  Data  Base  System  shows  only  128,236  plots  to have  been  entered  into  the  system  for  collecting annual  land  rent,  which  recorded  un-reconciled differences  of  59,660  plots.  Hence  the  audit  could not  establish  the  amount  which  was  supposed  to  be collected. National Housing Corporation was found to have issued Tsh1.75 billion in tenders using a non-competitive bidding procedure and this led to only one company being picked to do the job. NHC is led by Nehemia Mchechu as Director General.