Eala audit report rejected by MPs

What you need to know:

The East African Development Bank, one of the oldest institutions of the East African Community (EAC), has not been audited by the audit arm of the intergovernmental organization because it is not empowered to do so.

Arusha. Members of the East African Legislative Assembly (Eala) have rejected a 151-page audit report of the EAC for the year ending June 30th, 2017 over the missing East African Development Bank (EADB) accounts.

The bank, which is listed as one of the oldest regional institutions, has not been audited internally because of its structural set up.

It was revealed that the Audit Commission of the East African Community has no mandate to carry out auditing activities on the bank because it is not empowered to do so unlike with other institutions under the EAC. Following the rejection of the audit report, the members have ordered the report to be sent back to the House Committee of Accounts for amendments. It emerged before MPs wound up debate on the matter that the bank, one of the nearly a dozen institutions of the community, has never been audited by the EAC Audit Commission contrary to Article 134 of the EAC Treaty.

The House Committee members were informed prior to compiling the report that EAC auditors were not empowered to carry out audit on the bank’s accounts and assets.

“The charter, which established the bank, gives it a different governance structure that is parallel to the EAC Treaty. This charter empowers the EADB to appoint auditors to carry out audits on the banks,” the report said. It was noted that there were disparities on the charter establishing the bank, on one side, and the EAC Treaty, on the other.

The legal status of the bank, it emerged, excluded it from audit by the Audit Commission.

However, the Eala members observed that non-audit of the regional bank by the Audit Commission was in contravention to the EAC Treaty. Members of the Committee, chaired by the Tanzanian lawmaker Dr Ngwaru Maghembe, recommended to the Assembly to urge the EAC Council of Ministers to act fast to resolve the disparity as once directed by the regional leaders.

EADB was established in 1967 by the three member states of the former Community; Tanzania, Uganda and Kenya. After the break-up in 1977, it was re-established under its own charter in 1980.

As of December 2015, the Kampala-based financial institution’s total assets were valued at approximately $381 million, with shareholders’ equity of approximately 239 million.

Major shareholders are Tanzania with 23.77 per cent shares, Uganda and Kenya 27.03 per cent shares each and Rwanda 9.51 per cent while plans had been underway for Burundi to join the bank soon.

Non-EAC shareholders include the African Development Bank ( 8.82 per cent), Netherlands Development Finance Company (2.6 per cent) and others.

As of 2014, the bank had three branches at Kampala, Nairobi and Dar es Salaam with another one planned for Bujumbura.