PRESS RELEASE

ZICA APPEALS TO GOVERNMENT TO ELIMINATE WASTEFUL PUBLIC EXPENDITURE IN THE 2018 NATIONAL BUDGET

Lusaka, September 27, 2017- As part of its statutory duty to advise Government on matters of economic and national development, the Zambia Institute of Chartered Accountants (ZICA) is calling on the Ministry of Finance to eliminate wasteful expenditure in the 2018 National Budget in order to improve the management of Government resources. The Institute has observed that the Auditor General’s Report continues to highlight excessive internal control weaknesses and financial irregularities in Ministries, Provinces and other Spending Agencies (MPSAs). These irregularities results in the country losing colossal sums of public finances at the expense of the much needed public service delivery for the majority of our poor citizens.

The annual Auditor General’s Reports have continued to highlight financial irregularities among MPSAs which include flouting of procurement procedures; failure to account for stores procured; failure to undertake activities which were paid for; undelivered materials; unaccounted for revenue; and failure to collect revenue due to Government.

Other irregularities include failure to terminate retired or deceased officers from the payroll; poor custody of financial records; misapplication of funds; unvouched expenditure; irregular payments; non-recovery of staff advances and loans; wasteful expenditure and overpayments; and misappropriation of funds.

We recommend that in the 2018 National Budget, MPSAs should critically analyse and evaluate their expenditure needs to eliminate unnecessary expenditure and eliminate excessive administrative overheads which are spent at the expense of the stressed taxpayers and the poorer segment of our society,” says ZICA’s Taxation Committee member Victor Nyasulu.

He further explains that in line with the National Planning and Budgeting Policy and Seventh Nation Development Plan (SNDP), the institute is aware that Government is in the process of undertaking Public Financial Management and Budgetary reforms that are aimed at improving public financial management and promoting accountability, transparency and ensure prudent use of public resources.

“We are convinced that MPSAs can restructure and trim down their current spending given the high levels of wasteful expenditure revealed by the annual Auditor General Reports. This measure must be aimed at identifying wasteful expenditure and institute cost saving measures in public expenditure. We propose that these reforms must be expedited to address wastage in government spending,” says Nyasulu.

To help the Zambian Public Sector to enhance financial management and accountability, ZICA introduced a Diploma in Public Sector Financial Management in April 2017 targeted at accountants working in the Public Sector or those trainee accountants intending to pursue a financial management career in the Public Sector. The overall objective of the course is to provide specialised training in Public Sector Financial Management at a national level so as to create a trained professional cadre of public sector accountants.

 

The institute believes that the financial irregularities reported in the Auditor General’s report are accentuated by two aspects – the attitude of the accountants in the MPSAs and the position in hierarchy where accountants are placed.

“It should be noted that hierarchy in a bureaucracy is everything. In the private sector, it is given that other than the Chief Executive Officer, the defacto controlling officer is the Chief Financial Officer. How can we expect the accountant at MPSAs to be number 3 in ranking and then stand strong in opposing planned expenditures that in the absence of budgetary legal framework may not be legal but wasteful?” questions Nyasulu.

“The accountant may feel intimidated and therefore adopt a relaxed attitude towards expenditure control. That is how the two factors reinforce each other to the detriment of Zambian tax payers and their defendants. However, as professional accountants ZICA members are bound by ethical pillars of integrity, objectivity, professional due care, confidentiality and professional behavior. This means that even though the two factors of rank and attitude are part of the reason we think things are out of order, there is still no excuse for any professional neglect of duty by a professional accountant,” charges Nyasulu.

The Minister of Finance Honorable Felix C. Mutati is expected to present the 2018 National Budget to Parliament this week on Friday, September 29.

Ends//

Quick facts and notes for Editors

The table below shows a comparative summary of the issues contained in the recent Auditor General’s report.

Issues 2015

K

2014

K

2013

K

Unaccounted for Revenue 558,449 3,251,333 1,220,260
Unaccounted for Funds 193,910 506,354 4,767,666
Misapplication of Funds 28,153,997 73,637,561 65,158,686
Unretired Accountable Imprest 12,659,892 12,585,194 8,170,462
Unvouched Expenditure 349,306,160 389,905,333 67,139,852
Unaccounted for Stores 13,460,323 26,400,272 72,371,091
Irregular Payments 115,350,860 26,358,488 14,467,146
Non Recovery of Advances and Loans 2,352,451 2,877,442 2,744,814
Failure to Follow Procurement Procedures 35,701,492 2,720,434 8,406,729

 

Undelivered Materials 251,523,804 522,904 19,959,462
Non Submission of Expenditure Returns 6,308,762 1,232,749 1,792,192
Wasteful Expenditure 39,854,959 8,354,290 354,939
Overpayments 26,559,013 1,578,571 360,684
Misappropriation of Funds 4,767 44,500

 

 

During the period under review, the trend of irregularities raised had remained similar to the previous two (2) years. However, the Report on the Audit of the Accounts for the Financial Year 2015 shows an increase in some areas such as Undelivered Materials and Irregular Payments compared to the previous years. Although unvouched expenditure remained the same, it remains an area of high concern as it makes it difficult to ascertain the authenticity of expenditure incurred.

As seen from the above information from the Auditor General Reports for 2013, 2014 and 2015 there is mismanagement of government funds.

MEDIA CONTACTS:

King Syacika
Media & Communications Officer
Tel: +260 211 374550-9
Email: ksyacika@zica.co.zm
Jessica Chisompola
Head: Communication & Business Development
Tel: +260 211 374550-9
Email: jchisompola@zica.co.zm

 

ABOUT ZICA

The Zambia Institute of Chartered Accountants (ZICA) was established by an Act of Parliament in 1982 and repealed in 2008. The Zambia Institute of Chartered Accountants is a membership body regulating the Accountancy profession in Zambia.

The Institute registers all practicing accountants in Zambia as required by the Act. According to the Accountants Act of 2008, an accountant means a person qualified in the theory and practice of accountancy, auditor, tax consultant and tax advisor and registered under this Act. A person may however have read the theory and practice of accountancy but if such a person is not registered as provided for in the Accountants Act of 2008, such a person is not an accountant in the eyes of the law. The Institute further regulates and governs the conduct of its members in the practice of their business and profession. It further maintains appropriate practice standards that are consistent with the principle of self-regulation and protection of public interest among members.

The Institute is mandated by law to register all accountancy students in Zambia and regulate standards of training and practice, including the holding of examinations necessary to qualify applicants for membership of the Institute. The Act also gives power to the Institute to develop, promote, maintain and improve appropriate standards of qualification in the accountancy profession.

For more information www.zica.co.zm