In a recent report, Acting Auditor-General Rhea Kujinga revealed a sharp increase in governance issues within state-owned enterprises (SoEs) and parastatals last year. The findings, detailed in the “Report of the Auditor-General on Appropriation Accounts, Finance and Revenue Statements, and Fund Accounts for the Year Ended December 31, 2023,” were presented to Parliament last week.
The report highlights a significant surge in governance problems, rising from 170 to 310 cases. Issues include weak internal controls, unsupported expenditure, non-compliance with tax laws, and the absence of internal audit arrangements. Kujinga’s findings underscore the urgent need for reform in these entities.
The report paints a troubling picture of financial mismanagement and procurement irregularities in SoEs and parastatals. Revenue leakages, long-standing debts, and poor asset management were among the critical issues identified. These problems pose a severe risk to the sustainability of essential services.
“In this report, there are instances of weak internal controls,” Kujinga stated. She pointed out unsupported expenditures, outdated accounting manuals, non-compliance with tax laws, and the lack of internal audit arrangements. Kujinga also noted the late submission of financial statements, which hampers accountability and creates gaps in the scope of audits.
The Auditor-General raised 31 issues regarding revenue collection. Additionally, 26 entities reported concerns about their ability to continue operating due to ongoing losses, undercapitalization, and liquidity challenges. If not addressed, Kujinga warned that these conditions could cast significant doubt on the entities’ sustainability.
Asset management emerged as a significant problem. Kujinga noted that many public entities struggled with asset record-keeping. She also highlighted a lack of due diligence in investments and asset maintenance, which could compromise service delivery.
Procurement processes were another area of concern. The number of procurement issues rose from 20 to 33. These included non-delivery of goods and services, lack of supporting documentation, and insufficient due diligence. Kujinga urged boards of directors to address these issues to improve transparency and accountability.
The Auditor-General’s report called for urgent action to address these weaknesses. Without immediate reforms, the sustainability of essential services remains at risk.
Kujinga’s report has sparked discussions about the need for better governance and stricter oversight in SoEs and parastatals. The findings highlight the critical need for reforms to enhance transparency and accountability. Addressing these issues is essential to ensure the continued provision of vital services.
In response to the report, government officials have pledged to take steps to address the identified problems. They have emphasized the importance of improving internal controls, ensuring compliance with tax laws, and strengthening audit arrangements.
Kujinga’s findings have also prompted calls for improved asset management practices. Experts argue that better record-keeping and maintenance of assets are crucial for service delivery. They also stress the need for more thorough due diligence in investments to safeguard public resources.
The increase in procurement issues underscores the necessity for robust due diligence processes. Ensuring that goods and services are delivered as promised is vital for maintaining public trust. Boards of directors must take decisive action to address these concerns and enhance procurement practices.
The Auditor-General’s report serves as a wake-up call for all stakeholders. It highlights the pressing need for comprehensive reforms to tackle the governance issues plaguing SoEs and parastatals. These entities can only be restored to financial health and operational efficiency through concerted efforts.
The significant rise in governance issues within SoEs and parastatals is alarming. The findings of the Auditor-General’s report underscore the urgent need for reforms. Addressing these problems is essential to ensure the sustainability of essential services and restore public confidence in these entities.
By taking decisive action and implementing necessary reforms, stakeholders can pave the way for a more transparent, accountable, and efficient system. The future of SoEs and parastatals depends on the swift and effective resolution of these governance issues.
Source: Newsday
