CAG: Parties still can’t keep proper accounts

Wednesday May 16 2018

Controller and Auditor General (CAG), Professor

Controller and Auditor General (CAG), Professor Mussa Assad speaking at a press conference in Dodoma. PHOTO | FILE 

By Louis Kolumbia @Collouis1999

Dar es Salaam. The Controller and Auditor General (CAG) reports in the last three years have revealed that a lot has to be done by the opposition parties in terms of improving financial management.

The 2014/15; 2015/16 and 2016/17 audit reports have exposed various financial irregularities which should immediately and seriously be addressed if they are to replace the ruling Chama cha Mapinduzi (CCM) in the near future.

Observers say the failure by the opposition to manage the meager financial resources cast doubt on the parties’ capacity to oversee government’s financial resources, huge by any comparison, when entrusted they take over the country.

According to the audit reports, Chadema has been found with irregularities in the areas of procurement of goods and services, unaccounted collections of funds, unconfirmed loans, unaccounted payments and inadequately supported payments.

The CAG report says Chadema procured goods and services worth over Sh24.216 billion contrary to party’s financial management manual requiring that all procurements should be competitive and quotations from different suppliers should be acquired. The reports reveals that the main opposition party failed to deposit its substantial revenue amounted to Sh2.302 billion in the bank account managed by trustees during the 2014/2015 and 2015/16 financial years.

“My review on revenue collected by Chadema noted that Sh4.42 million was collected in 2014/15 and that Sh2.298 billion was collected in the 2015/16 financial year. However, the funds were not deposited in the bank account and party’s expenditure details were not provided,” CAG says, adding; “Non-banking of revenue collected implies ineffective controls over revenue collections which exposes the main opposition political party to risks of misappropriation of funds collected. Also, failure to obtain alternative quotations exposed the party to the risk of uneconomic use of party resources.”

Furthermore, the CAG audit report suggests that Chadema signed a contract on April, 2015 to secure Sh2 billion loan for political activities, noting that however, evidence failed to confirm receipt of the funds due to lack of documents.

The CAG report suggests that tax invoice no.201508226 dated August 26, 2016 valued at Sh866.600 million was settled by one of the party members on behalf of the party in respect of boards supplied and installed by the M/S Milestone International Co. Ltd.

“Out of the said amount Sh715 million was paid back over various periods to one of the party members, being refund of the secured loan without support of contractual obligations as a result of non-established loan policy,” reads part of the report.

Furthermore, the audit report establishes that Chadema issued advance payment to its staffs in form of imprests amounting to Sh400 million. The amount was used to carry party activities, but they remained unaccounted as to time of audit.

Report also shows that Sh20.9 million and Sh379.14 million were issued in the form of imprests during the 2014/15 and 2015/2016 respectively.

“The amount was neither retired nor reported as part of account receivables in the statement of financial position for the year contrary to Section 9.3. 1 to 9.3.6 of the party’s financial management manual of April25, 2012,” the CAG says.

Other opposition political parties were outlined to have failed to submit to the CAG financial statements which was contrary to Section 14 of the Political Parties Act of 1992 (R.E 2015) which requires all permanently registered political parties to maintain proper accounts of the funds and properties for the purpose of audit.

These parties include ACT Wazalendo, United Democratic Party (UDP), Tanzania Democratic Alliance (Tadea), Civic United Front (CUF) and the African Progressive Party of Tanzania, NCCR-Mageuzi, the National Reconstruction Party (NRA), United People’s Democratic Party (UPDP) and Party for People’s Redemption (CHAUMMA).

According to the CAG report, the law requires political parties with permanent registration to submit to the Registrar of Political Parties an annual statement of the audited accounts and annual declaration of properties owned by a respective political party.

Apart from financial statements, the audit report says some political parties had failed to perform bank reconciliation, noting that the move denied respective parties with internal control of funds.

Report says reconciliation of cash book balances and bank balances was important move for respective parties to identify inconsistencies and take immediate corrective measures.

Respective political parties included the Alliance for Tanzania Democratic Change (ADC), Demokrasia Makini, Chama cha Sauti ya Umma (SAU), and National League for Democracy (NLD).

The CAG recommended that Chadema management should strictly comply with its financial management manual in order to promote competitiveness and transparency in procurement processes and obtain the value for money for the goods and services purchased.

“I urge party’s management to account for Sh2.302 billion by providing proper documentation and ensure that in future all collections made are immediately deposited into bank account,” reads the CAG report.

The audit report also recommended that Chadema should continue to monitor and enforce compliance with its financial memorandum on early retirement of outstanding imprests after completion of the intended job.

“Political parties should ensure that bank reconciliation mechanisms are in place and that relevant officials properly check and review bank and cash book transactions in order to correct errors at an early stage,” reads the audit report.

“I still insist political parties to strictly comply with Section 14 (1) (i) of Political Parties Act Number 5 of 1992 (R.E 2015),”

He CAG added.

According to the CAG, the Registrar of Political Parties is advised to hold awareness programme and capacity building to political parties on the importance of preparation and presentation of financial statements.

The CAG reiterate that the Registrar should also hold accountable party leaders who fail to submit their financial statements for the audit purposes.

“The Registrar of Political Parties also is recommended to have capacity building programmes which will enhance political parties to be more compliant with the requirements of the Political Parties Act of 2009 (R.E 2015) together with its underlying Regulations and IPSAS requirements,” reads the CAG report.

Commenting on the report, Chadema director of Protocol, Communications and Foreign Affairs, Mr John Mrema said Chadema spent Sh14 billion during the period under audit, noting that the Sh24 billion stated in the report was recorded by mistake.

“We clarified the issue to the CAG and he has admitted that it was a mistake. We have also notified the Registrar of Political Parties in writing and that currently, we are waiting for the CAG to correct the mistake in his new report,” he said in an interview.

Speaking on the Sh2 billion loan secured by Chadema for political activities, Mr Mrema said Chadema clarified to the CAG that they secured loan in order to meet the deadline for purchasing equipment for the 2015 General Election.

“We told him, that Mlimani City Hall and the helicopter hiring processes lacked competitors during the procurement process. Also, money collected during the M4C fundraising in Mwanza, Mbeya, Arusha and Dar es Salaam remained in respective zones hence lacked financial justifications to be included in the national party account,” he said.

For his part, ACT-Wazalendo secretary for Ideology, Publicity and Public Communications, Mr Ado Shaibu, said his party was responsible for not being inspected, noting that CAG concerns outlined in the 2015/16 audit report remained in 2016/17.

“The problem facing many political parties including ACT is our failure to institutionalize our activities, resulting into lack of consistency and proper flow of information,” he said.

“We received financial management trainings from the CAG’s office after receiving unsatisfactory certificate on the 2015/16 audit. Failure to be audited in the 2016/17 have denied us with opportunity to show our progress,” he added.

Responding to critics who claim that opposition parties’ failure to manage their finances means they are not well prepared to lead the country Mr Shaibu said people should differentiate between being engaged in fraud or embezzlement- which was not the case in the CAG reports of opposition parties- and improper financial recording.

He said ACT-Wazalendo has embarked on a programme to train its staff on financial management.