6.22. Bank of Sierra Leone (2010)
6.22.1. Adequacy of share capital of the bank
At close of business on 31 December 2010, total assets of the Bank stood at Le 2.226 billion, whilst the sum of total liabilities and the minimum paid up capital of the Bank amounted to Le2.146 billion. The margin of safety of the Bank was therefore Le 0.08 billion.
This was eroded by the general reserve of Le 0.92 billion. The margin of safety of the Bank did not take into consideration the end of service benefits liabilities which if included would have further reduced this margin of safety possibly to a negative amount.
Considering the operations of the Bank, its future plans, the nature of the industry in which it operates and the role it plays for both the government and other financial institutions and the economy at large, the value of the Bank‟s authorized share capital of Le 100 billion of which Le50 billion was issued and paid up by the government is considered inadequate to meet its recurrent expenditure and also funding for working capital.
We also draw attention to Section10(b) of the Bank of Sierra Leone Act, 2000 which considered critical periods when the total assets of the Bank exceed the sum of its total liabilities and minimum paid up capital. In these circumstances, the Board shall notify the member who shall notwithstanding any other provision of the Act, authorize the transfer to the Bank, funds or readily marketable securities or foreign exchange for the purpose of preserving the minimum paid up capital of the Bank from impairment.
It was recommended that consideration should be given by the shareholders to increase the capital base of the Bank so as to maintain a wider and positive margin of safety when comparing total assets and the sum of total liabilities and minimum paid up capital.
The Governor stated that the Bank continued to dialogue with the Government on the issue of protecting the capital base of the Bank from impairment. Also, the issue of increasing the authorized capital of the Bank (from SLL100 billion to SLL250 billion) and the minimum paid up capital from SLL 50 billion to SLL 125 billion had been addressed under Sections 10 and 11 of the Revised BSL Act to be tabled in Parliament by the end of this year.
6.22.2. Non-Compliance with International Financial Reporting Standards
The Bank‟s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). However full compliance with these standards is yet to be achieved as the bank was not in compliance with IAS 19 (Employee Benefits) and IAS 21 (The effects of changes in foreign exchange rates).
The Governor in his response stated that:
The service of an actuary had been contracted.
Action had also been taken to open a separate account reflecting provisions made in respect of the Bank‟s Severance Benefit Scheme.
Section 13 Profits, losses and distributable earnings of the revised Bank of Sierra Leone Act (which has been forwarded to the Minister of Finance and Economic Development for tabling at Parliament) will address the requirement of IAS 21 once it was enacted.
6.22.3. Financial reporting – Monitoring of systems posting and recording of financial transactions
There was the lack of adequate review, supervision and monitoring over the computation and recording of financial transactions into the accounting system. This was manifested in the numerous audit adjustments and differences being noted on the various financial statements captions, notably, fixed assets, loans and advances and prepayments.
Also, the high level of accounting errors and mis-postings noted cast significant doubt on the competence of the Bank‟s personnel responsible for booking entries into the systems, especially errors in respect of accounting entries made by personnel outside the Accounts and Budget department. There is thus high risk of financial statements misstatements, considering the fact that the auditor had to raise about thirty six audit adjustments in the form of audit journals.
The Governor noted our recommendations and stated that measures had been put in place to forestall a recurrence.
6.22.4. Non review of clearing settlements
A review of a sample of the clearing settlement forms on various dates revealed that the signature of the Manager of Banking Operations was not included on the forms as evidence of being reviewed. There was the risk that errors and omissions on daily transactions and computation differences may not be detected on a timely basis for correction. This was extremely important considering the financial value of these transactions, as irregularities may well occur leading to possible financial losses.
The Governor stated that the Manager Banking Operations inadvertently failed to sign the aforementioned clearing Settlement Forms after reviewing them. Action had been taken to sign the forms as that was also part of the findings of an Internal Audit report on the Banking Department. The auditors were informed that the related vouchers to these forms were always signed by the Manager and Head of Banking Operations Division as an additional control measure.
6.22.5. Incomplete records on the Sierra Rutile/Government of Sierra Leone loan
Relevant supporting documents, explanation and agreement on the Sierra Rutile/Government of Sierra Leone account, with a balance of USD 725,039.70 (Le 3,043,723,911.00), were not provided for inspection.
In the absence of proper and complete records in respect of transactions, the balances on the financial statements could have been misstated.
The Governor maintained that Sierra Rutile had confirmed the outstanding balance of US$727,364 in their books (whilst BSL‟s books showed a balance of US$725,039) and that the difference of US$2,325 represented interest accrued for which action would be taken to reflect it in the ledger. The Bank was currently working with Sierra Rutile and the Ministry of Finance and Economic Development to trace the relevant documentation.
6.22.6. Staff Matters
A review of the Internal Audit Reports issued during the year revealed that two investigation reports related to the activities of a Divisional Head of the General Services Department, for alleged fraudulent activities and negligence of duties and responsibilities. It was observed that he was transferred to another department, a measure the auditors considered inadequate based on evidence on the integrity of the said officer. Management and the Board should be firmer in giving punitive measures to staff found wanting.
The Governor and the Board maintained that they were committed to stamp out any malpractice or acts of indiscipline as can be seen from evidence of actions taken during year 2010. With specific reference to the issue in question, they inform us that the said staff was not only transferred but was suspended for three (3) months without pay, deprived from any overseas training program, given no salary increment at the end of year, 2010 Appraisal Exercise and given a final warning on his conduct in the employment of the Bank. Any further breach could result in termination. They further went on to say that the Bank was constrained to give more punitive measures because with the controls in place it was difficult to ascertain that the staff was wholly and solely responsible for all the offences that came out of the investigations.
6.22.7. The Tokeh Resort Centre
The building structure was dilapidated with cracks on the building walls. In addition, some of the windows were broken and ceilings were not in good shape. Thus, the Bank will need to incur extra cost on refurbishment of the building before the Resort could be operational. The amount spent to date was Le 6.2 billion which has been locked up in work in progress for the past few years. As at 31st December2010, total amount spent was Le2.8 billion. Management should review the current status of the Resort Centre and take a positive decision on how to maximize the investment potential of the facilities at the Centre.
The Governor noted our observations and recommendations relating to the Bank of Sierra Leone Resource Centre at Tokeh. He stated that the Bank had commenced the process of leasing the Resource Centre during the third quarter in year 2010 in a bid to get maximum value and returns on its investment.
6.22.8. Monitoring of Community Banks
A review of correspondences between the Community Banks and Bank of Sierra Leone as well as IFAD Rescue Plan revealed the following control weaknesses in the various reports reviewed:
a great possibility of fraud and malpractice perpetrated by management;
Staff‟s salary was very low, which resulted in the recruitment of low quality and inexperienced staff;
draft accounting policy and procedures were available but there was no evidence that they had been approved and adopted;
Most of the Community Banks were operating manually;
In one instance, the sum of Le50 million was paid to acquire MIS software through MITAF; however, the required hardware has not yet been installed for the implementation of MIS;
Most of the Community Banks were yet to meet the minimum paid up capital of Le80 million;
No evidence that loans to customers were being monitored regularly;
The banks had no working capital. It is therefore urgent that working capital is provided before the confidence of the public is completely eroded to trigger a run on the Bank. The Banks currently depend totally on depositors‟ funds for the financing of daily operations;
Since inception, community banks had been facing a series of major challenges that have become threats to their existence. Most have sunk about 80% of the capital provided by the Bank of Sierra Leone on buildings, motor vehicles, furniture and fittings; and
The Community Banks management organised frequent Board meetings, with high sitting fees and transport allowances paid to Board members which have adversely impacted on their profitability.
In the light of the challenges facing the Community Banks, it appears the banks need more effective monitoring and supervision by the Bank of Sierra Leone.
The Governor in his response stated that:
The Bank was working with the International Fund for Agricultural Development (IFAD) to restructure the six (6) community banks, in a bid to enhance their operational efficiency and provide training for staff, capacity building and an improved pay package.
The Operations of the Banking Supervision Department, which had responsibility for the monitoring and regulation of the Community Banks, were being enhanced to execute its functions effectively.
6.22.9. Loan agreement with the Community Banks
It was observed that the following loan agreements with the Community Banks were not signed by all parties to the agreement:
Kabala Community Bank
Mattru Community Bank
Zimmi Community Bank
The Governor stated that :
The Loan Agreement and Debenture for Mattru Community Bank had not been signed by all the parties and that the debenture for Zimmi Community Bank was yet to be executed by all concerned;
Efforts were being made to ensure that the parties to the said documents complete the execution process accordingly; and
The debenture for Kabala Community Bank had been signed by all the parties.
6.22.10. Repayment of interest by Community Banks
The interest due for payment on the loans granted to the Community Banks are not being repaid as agreed despite the 5 years interest free period waived for the Banks. The amount due and the Community Banks involved in the default include:
The Governor stated that the Bank was in the process for reviewing the operations of the six Community Banks. For those that had reached operational and financial self sufficiency, action would be taken to request them to start repaying interests on the loans, whilst the loan agreements of those that were yet to attain that level would be reviewed by the management and the board and a decision taken on the way forward. In addition, the Governor stated that action had been taken to account for interest due and received from the banks.
6.22.11. Safeguard of assets in Kenema
The under-mentioned physical control lapses were observed in the Kenema Branch:
Unserviced fire extinguishers
No fire alarm systems and smoke detectors
The CCTV cameras in the vaults and banking hall were not working. It was recommended that essential equipment should be serviced and be in good working condition, so as to guard against theft or any other perils.
The Governor noted our observations and recommendation and stated that the fire extinguishers had been serviced, adding that provisions have been made in the year 2011 capital budget for a functional Close Circuit Monitoring Television (CCTV), Fire Alarms and Smoke Detector security systems.
6.22.12. Fixed Assets Management
A review of the various insurance policies covering fixed assets was done by comparing the net book value to the sum insured, and it was noted that adequate insurance coverage was only provided for motor vehicles and not for the other categories of fixed assets as detailed below:
Management noted our recommendation and stated that the Bank‟s properties, plants and equipment should be adequately insured to mitigate any eventual risk of financial losses and assured the auditors that action was being taken in that regard.
6.22.13. Contract staff
A review of the Bank‟s staff strength revealed that there were lots of staff who had been working in the Bank for the past one year on a contract basis. It was recommended that the appointment of all contract staff should be regularized if possible and effort should be made to restrict the area of operations of existing contract staff to non-sensitive functions.
The Governor noted the concern about fixed term appointments, and stated that action was being taken to review their positions and take corrective action accordingly. He confirmed that some of them had been with the Bank for over five years, adding that the majority of contract staff were Note Counters, some of whom had already passed the retirement age and were only filling a temporary gap, whilst the Bank was in the process of procuring a note processing machine.
6.22.14. Stock records differences
A review of stock records in the general ledger revealed that there were some stock items with nil quantity but with monetary value. It was observed that there was an item with a credit balance in the stock list. The differences could lead to overstatement or understatement of the financial statements.
The Governor confirmed that the audit exercise revealed that there were some stock items with nil quantities but with monetary values and that the said anomaly had been identified during the stock-take exercise conducted by the Bank. The issue was being investigated and appropriate action would be taken to regularize the records.
6.22.15. WAMA Ecowas Traveller Cheque Records
Supporting documents, for the balance of Le11,797,889 included in the WAMA Ecowas Travellers Cheques account, were not submitted for inspection.
The Governor stated that the account under reference was opened to reflect the ECOWAS T-cheques received on a sale/return basis. He said action has been taken to maintain a register and reflect all transactions in the register, to serve as a supporting document for the outstanding balance of Le11,797,889.
6.22.16. Information Security Policies and Procedure
Our review of the Bank IT Policy documents revealed that the policy did not outline key areas and adequate procedures in support of the policy, as stipulated in the global compliance ISO 27001 standard on information systems security. Furthermore, no evidence of Management approval and any further review of the policy document since its inception in 2004 was evident on the IT Policy Manual.
6.22.17. Configuration of Access Rules
No User Registration Forms were sighted for 2 staff, both Banking Officers, employed during the period under review. Unauthorized users may be granted access to the bank‟s business applications and network resources. Additionally, users may be granted incompatible privileges to mission critical systems hence undermining information security. It was recommended that management should review the profiles of users on the Network and ensure that the privileges granted are based on a business need. Additionally, users should only be granted access to network resources and business applications vide the standard user creation form.
6.22.18. Monitoring and Risk Assessment Activities
A review of reports provided by the Internal Audit Department revealed that there were no evidence of the assessment of the integrity of the banking database using CAAT via ACL as well as review of system logs/audit trail to identify activities of users on the network and banking applications. Monitoring activities of IT should be enhanced by the Internal Audit function. This can be achieved by the regular use of the ACL a CAAT tool in the Bank‟s Internal Audit function as well as Management having adequate personnel with requisite knowledge in IT audit and experience to perform the function.
6.22.19. Disaster recovery plan and business continuity plan
The IT Contingency/Disaster Recovery Plan (DRP was not approved by management and also a Business Impact Analysis not undertaken which should detailed the critical business functions and assets, and impact assessment of an unforeseen event such as in the event of a fire and consequences of losing such critical business functions.
Furthermore, it was observed that a comprehensive and well detail test of the IT Contingency/Disaster Recovery Plan (DRP) was not undertaken during the period under review. It is vital that a complete Disaster Recovery Plan and a Business Continuity Plan are put in place for the recovery of the Bank‟s core systems in the event of disaster.
6.22.20. Manual Record and Processing on Investments
Management is currently undertaking the West African Monetary payment system (WAMZ) to foster inter/intra Banking Operations consequently requiring automation of the banking activities. This project is yet in the early stages. However, we observed that some key processes/transactions of the Bank were processed manually i.e. transactions were handwritten in ledgers before they were later captured into the financial reporting application. This was particularly so with investment (i.e. treasury bearer bonds) wherein investments and disinvestments in treasury bearer bonds by individual customers were recorded handwritten in a ledger. It is recommended that in the interim (i.e. until the completion of the WAMZ project), all process within the Bank should be automated with at least MS EXCEL worksheet. Process owners should also implement a logical security on the worksheets by implementing a password security.
6.23. Rokel Commercial Bank (2010)
6.23.1. Capital Adequacy Ratio
The Bank recorded a Capital Adequacy Ratio of 15.04%. The capital adequacy ratio is the quotient of the capital base of the Bank and the Bank's risk weighted asset base. In accordance with section 8 (1) of the Banking Act 2000 the Bank was supposed to maintain a minimum ratio of 15%.
The Finance Director noted the auditor‟s comments and mentioned that everything was done to improve on the position.
Some former employees instituted legal action against the Bank claiming damages for unlawful dismissal, in respect of which judgement had been given in their favour in the High Court. Guided by expert advice, the Directors of the Bank requested the solicitors to file an appeal against the judgement. Consequent upon the foregoing, no provision was made in the financial statements for this contingent liability as at 31 December 2010.The Finance Director advised that an appeal had been lodged and a stay of action granted subject to certain conditions which had been fulfilled by the Bank. He confirmed that the matter will be reviewed by the Appeal Court shortly and he was optimistic about the outcome. In the meantime, he stated that he will continue to monitor the position and adhere to legal advice.
6.24. Sierra Leone Commercial Bank Ltd. (2010)
6.24.1. Review of 2009 Management Letter
There was non-compliance with banking regulations. Also loans and advances classification had not been addressed as at the report date. It was therefore recommended that timely consideration should be given to matters raised by auditors, and that the matters noted should be addressed promptly.
The Managing Director in his response stated that the non compliance with bank regulations which related to instances of breach in the „cash ratio‟ had been largely resolved given the significant reduction in the number of breaches to only one (1) in the entire 2010. He further stated that practical challenges in cash management vis-a-vis their dealings with Central Bank made it extremely difficult for the bank not to be found wanting. On the issue of advance classification, he stated that this was a continuous process receiving management‟s attention given their periodic review of the lending portfolio. While greater focus was placed on classification of large exposures over the last three years, the small lending‟s which were the subject of query by the auditors were also given due attention always, he mentioned. In concluding he noted that the position of these accounts will be regularised shortly.
6.24.2. Non-Compliance with Banking Regulations – Liquidity Breaches
Central Bank‟s penalties amounting to Le39.2 million, levied on the bank, were still high in respect of liquidity breaches of banking regulation. It was recommended that the bank should be operating within the legal framework that provides rules and regulations which it needs to comply with. It was also recommended that rules and regulations be adhered to in other to avoid or reduce penalties significantly.
The Managing Director in his reply mentioned that the fine which related to breaches in both the cash ratio and large credit exposures showed a marked improvement over the last report. He said that the bank continued to face challenges such as delays in the receipt of statement from Bank of Sierra Leone which hindered accurate intra-day cash management of the bank and with regard to the fines relating to breach in credit exposures limits, he said that the related accounts had been regularized and the entire loan portfolio had being monitored to avoid recurrence.
6.24.3. Review of Recurrent Budgets
Differences were observed between the budget and the operating profit and loss for 2010.
It was recommended that the budget prepared reflected the operations of the Bank and that it motivated or challenged managers in achieving their budget. In addition, a detailed investigation should be done on the adverse variances and evidence of action taken must be documented and filed.
The Managing Director explained that the adverse variances were as a direct result of the impacts of the Goods and Services Tax (GST). He added that when the budget was designed in 2009, the bank was expected to reclaim GST on goods and services purchased but this was not the case as NRA restricted banks from claiming input GST resulting to huge taxes being paid in respect of GST of close to Le1bn. This he said, resulted in increased expenses in many areas.
6.24.4. Loans and Advances
Customers‟ current loan balances exceeded their approved loan limits. See examples below:
It was recommended that the risk department should constantly monitor customers advance and loan balances in order to avoid approved limit being exceeded.
The Managing Director responded by giving the status on the above - mentioned Loan transactions:
Mace Construction - Facility Liability Nil Le 730,927,114
Account is under special assets for which full provision has been made, while we continue to chase through the solicitors for settlement of the debt. The bank has already issued notice of intention to sell the legal mortgage property.
Bakor Construction - Facility Liability Nil 1,000 - This debt is already written down given the paucity of the amount which is wholly interest charges. We however continue to chase for settlement.
Rime Engineering - Facility Liability Temp. O/D limit Le300M Bank Guarantee Le 1,169,192,323.49 - Facilities in this name were mainly contingent liabilities and a temporal overdraft limit of Le300m. All contingent liabilities had their respective approvals and the positions reported to the board accordingly. The current account position as at 31st December 2010 was Le936,548,928.82cr.
Danisha Enterprises - Facility Liability O/D limit Le150,000,000 – Balance Le 354,229,616.87dr - Loan – Le 266,666,000
The excess overdraft which was duly authorized by Head office was to pre-finance major contracts in Kenema and Port Loko valued over Le2bn. Execution of contracts was well advanced with over 70% completion achieved and we await lump sum payments from the employers.
Sierra Fishing Company Limited - Facility Liability O/D Le 4,926,399,413.96dr
The expired overdraft had been duly advised to the board while management continued to engage customers on part settlement and renewal of the overdraft limit given the need to support the business.
In the meantime, customers were making regular lump sum deposit of Le50m monthly towards reduction of the overdraft and the bank was working to renew a lower limit at a later date. They mention that customers had approached Ecowas Bank for infrastructure development (EBID) for a long-term loan of about US$4M to mainly refinance their liabilities with them(client) and other banks.
Overdraft limit expired and loans were repaid at the expense of the current account they were are now chasing for regularization of account.
6.24.5. Loans and Advances Classification
Some loans and advances were misclassified for the year under review. See below:
Monthly review of all advances should be carried out so that classification and impairment provisions would be done correctly.
The Director General in his reply explained that the debt of Le61,262,020 in favour of Gertude Gbassey Karimu had been compromised and repayment had also commenced. He mentioned that the debtor had given her firm commitment to ensure full settlement as against February 2012 and that the rest of the other debtors had been referred to their solicitors who were pursuing vigorously for recovery of the relative debts.
6.24.6. Cash and Bank Balances
A significant difference of USD6,785 cash balance was noticed at the year-end for Mobimbi branch. It was recommended that the differences between the cash count balances and the general ledger should be investigated and reconciled.
The Director General stated that the difference was as a result of an error posting which had been duly investigated and resolved.
Variances relating to the acquisition of stores were observed in the Stores Department records, from 1st October 2010 to 31st December 2010. It was recommended that monthly reconciliation should be done to ascertain the accuracy of inventory.
The Director General stated that reconciliation of these items were done regularly, but unfortunately the list of purchased items provided from the current stock software to the auditors was flawed as a result of technical problems with the software which had now been resolved.
6.25. Sierra Leone Stock Exchange Company Limited (2008 – 2010)
In some instances, procurement procedures were not followed in the purchases of assets. Assets, totalling Le 154,118,000 were procured without due regard to competitive bidding from at least three suppliers. It was therefore recommended that all purchases by the Sierra Leone Stock Exchange Company Limited should be based on Competitive bidding.
The Director General noted the recommendation and promised to adhere to the procurement Act in all future procurements.
6.25.2. Accounting Manual
The office did not have an accounting manual incorporating all financial rules and regulations as an aide and guide to the finance function in the execution of its operations. It was recommended that an Accounting Manual should be introduced to assist and guide the finance functionaries in the performance of their duties.
The Director General stated that the request for an appropriate accounting software and manual was currently in progress.
6.25.3. Conditions of Service and Employee Personal File
It was noted that staff Conditions of Service were non-existent. In addition, some relevant documents such as Curriculum vitas, certificates were missing from the files. Furthermore, provision of medical service was stated in the Appointment letters of staff at the Company but that service was not provided to the staff.
The Director General explained that staff conditions of service were currently under review and appropriate action would be taken to improve the current conditions of service.
6.25.4. Fixed Assets
The Company did not have a capitalization policy and a maintenance policy was not in place for the repair and maintenance of Fixed Assets, such as computer hardware, vehicles, etc. to prolong their useful life. It was recommended that maintenance and capitalization policies should be formulated and included in the accounting manual.
The Director General stated in his response that the review of the organisation‟s capitalisation and maintenance policies was in progress.
6.25.5. Cash and Bank
For 2009 and 2010, monthly bank reconciliation statements were not reviewed and approved.
It was also observed that there was an amount of Le 6,000,000 which had been outstanding at the Bank of Sierra Leone account reconciliation since August, 2010. Furthermore, the Company did not institute a petty cash limit and as such items such as toners and cartridges were bought through petty cash. It was therefore recommended that, in future, the Bank Reconciliation Statements should be checked, signed and approved by responsible officials.
In addition, a limit should be established as a policy for the disbursement of petty cash, to be revised when necessary. Furthermore the outstanding reconciling item in the Bank of Sierra Leone account reconciliation should be investigated and cleared.
The Director General noted the recommendation and promised to investigate the issue of the Le6 million.
6.25.6. File Management System
Documents relating to the Company‟s activities were not properly filed, making it difficult to trace supporting documents to activities in the financial statements. It was recommended that, in future, payment vouchers and supporting documents should be filed by subhead, date or payment voucher number so that documents relating to particular activities would be easily identified. In addition, the Company should ensure that all files were systematically and chronologically kept and properly referenced.
The Director General stated that the current filing system was under review and management would incorporate the ASSL‟s recommendation in the implementation process.
6.25.7. Withholding Tax
It was observed that withholding tax amounting to Le 10,480,150 was not deducted from suppliers‟ payments for goods and services for the period under review. It was therefore recommended that complete and accurate calculations of withholding tax should be recovered from suppliers and paid on time to the NRA.
In his response, the Director General stated that he had taken appropriate action and that all future transactions would have the appropriate withholding tax applied.
6.25.8. Overseas Tour
We observed that the sum of $1,000 was paid for a study tour for the Director General in 2009; however, further investigations revealed that the Director General did not attend and we were not given a reasonable explanation why he did not attend. It is therefore recommended that proper planning should be done before monies were paid for activities such as training, study tours, etc.
The Director General noted ASSL‟s recommendation and promised taking appropriate action in future to avoid repetition.
6.26. National Electoral Commission (2006)
6.26.1. Review of Bank Reconciliation Statement
Bank reconciliation Statements were not reviewed by an appropriate official of the National Electoral Commission to certify that they were true and correct. It was recommended that bank reconciliations should be reviewed by an appropriate official of the National Electoral Commission and the evidence of such review should be indicated on the reconciliation statement.
The Commission noted the audit recommendation and explained that reviews of Bank reconciliation statements were currently being carried out on a monthly basis by an appropriate official.
Tax deduction by the Commission was understated by the sum of Le 8,528,183. This was due to the fact that the tax threshold used for middle management and junior staff was incorrect. It was recommended that the Commission should calculate Pay-As-You-Earn Tax in accordance with the provisions in the Income Tax Act, 2000. In addition, steps should therefore be taken to make payment to the NRA for the understated amount.
The Commissioner noted the audit findings and explained that the differences were as a result of using an obsolete tax threshold scheme. She however stated that appropriate actions would be taken to effect the payment of the understated amount to the National Revenue Authority.
6.26.3. Poor Filing System
Documents relating to the Commission‟s activities were not properly filed i.e. they were not filed according to activities and payment voucher sequence, making it difficult to trace supporting documents to activities in the Financial Statements. It was recommended that, in future, Payment Vouchers and supporting documents should be filed by subhead, date or Payment Voucher number, so that documents relating to particular activities could be easily identified.
It was also recommended that the Commission should ensure that all files must be systematically and chronologically kept and properly referenced.
The Commissioner stated that written procedures would be developed in respect of the filing system of the Commission. She also mentioned that filing would be done using the “payment voucher number” method and efforts would be made to cross reference account sub-heads to payment voucher number in the filing system.
6.26.4. Fixed Assets
Some of the assets of the Commission did not have any identification number. In addition, some of the assets, especially those in the provinces, were not in good working condition.
It was therefore recommended that all assets must be clearly marked with identification numbers consistent with previous assets. In addition, verification exercises should be conducted regularly to reconcile the Fixed Assets Register with the assets in existence. Also assets not in good working order must be maintenance, or, if unserviceable, should be properly disposed of and removed from the Fixed Assets Register.
The Commissioner explained that the Commission did verification exercises periodically during which all assets were adequately tagged; also assets not in good working condition were identified for appropriate maintenance or measures of disposal.