By Mustapha Wai, CPA

The outcome of the just concluded technical audit of Sierra Leone Government agencies is not necessarily new. Year after year, government audit reports have concluded that majority of the recommendations from prior audits have not been resolved. Of the 232 audit recommendations issued by Sierra Leone’s Auditor-General (AG) in 2016, which affect thirteen ministries, department and agencies (MDAs), only 34% (79) of them have been resolved according to the most recent audit report. Generally, an independent audit is not intended to be an “end” in itself. Instead, it is designed to be a means to an “end”—with the “end” being to help identify areas in need of improvement. The war against corruption will be greatly complimented by a sound system of internal control in the Sierra Leone public financial management system. And this cannot be achieved unless deliberate actions are taken to implement audit recommendations in ways that will improve financial management processes across government.

Pursuant to Section 95 of the Public Finance Act (PFM), the AG is required to, within twelve months after the end of the immediately preceding fiscal year, submit an audit report on the annual government-wide financial statements to the Parliament. Accordingly, in December 2019, the AG will be issuing theAnnual Report on the Accounts of Sierra Leone 2018. The report will include an opinion on government’s financial statements and underlying financial activities of the first year of President Julius Maada Bio’s administration. As mandated by Section 86 of the Public Finance Act of 2016, Sierra Leone Government ministries and departments (MDAs) are required to submit their financial statements to the AG within three months after the end of the fiscal year. Therefore, the 2018 financial statements were due to the AG on March 31, 2019 and are expected to be currently under audit.

Since 2003, the Sierra Leone Government’s supreme auditing arm—Audit Service Sierra Leone (ASSL), headed by the AG has been performing audits of activities of agencies anddepartments making up the Sierra Leone Government, including audits of the annual financial statements. Each year, the AG issues an independent audit report titled Annual Report on the Accounts of Sierra Leone, as well as other performance audit reports. In addition to the AG’s opinion on the fair presentation of the government’s financial statements, several audit findings and recommendations have been issued over the years. Many of the audit findings describe conditions of extremely weak internal control environment. Such conditions create an opportunity for fraud, waste and abuse in government, and ultimately becomes breeding ground for corruption in public financialmanagement. For example, the 2016 audit report cited internal control weaknesses under several issues that included unsupported and questionable bank and cash transactions and reconciliations; revenues not recorded in government accounts; weak local councilfinancial management system in a number of councils; lack of key controls in the government’s Integrated Financial Management Information System (IFMIS), among others. Similar observations are described in the 2017 report in which it was noted that “Ministries, Departments and Agencies (MDAs) showed slow response to the Auditor-General’s previous year’s messages of embracing their responsibility to guide and direct the development and performance of a strong system of internal controls.”

Remediating audit findings and recommendations is the responsibility of management of the respective MDAs. And the function of internal audit is expected to play a major role in helping these MDAs implement audit recommendations in order to improve the overall internal control environment across government. While external audits point to deviations, omissions, and weaknesses in internal control over operations and underlying financial reporting in government, addressing those observations requires a great deal of commitment by management in identifying and deploying the right resources—people, process and tools necessary to remediate them. Governments in developed countries spend significant portions of their budgets on improving internal control, a conduit for minimizing fraud, waste and abuse, as well as ensure compliance with laws and regulations. Strong internal control will also greatly complement the fight against corruption by reducing the opportunities for corrupt acts and help deter and/or prevent corruption before it occurs.

In recent years, the AG’s reports have received increased visibility and have been used as yardstick for measuring the performance and stewardship of past administrations. Donors, Parliament, opposition parties, advocacy groups, as well as the general public have all used audit findings to measure performance and hold the ruling government to account. Several corruption and mismanagement scenarios in government including the missing Ebola funds, $12 million-dollar bus procurement saga, $25 million questionable arms procurement deal, and many others were made public via AG’s audit reports. ASSL will continue their work and the next report will cover activities of the first year of President Bio’s administration. Improving internal audit function and internal control across government will not only help in addressing prior years’ audit findings but may also limit the number of findings that will result from future external audits. This will also reduce surprises that may come out of the AG’s annual audit reports.

To improve internal control across government, the Ministry of Finance (MOF) through the office of Accountant General should consider initiating and championing a government-wide internal control, internal audit and quality assurance improvement initiative. The initiative should be geared towards improving the internal control environment; audit readiness and quality assurance; and the overall external audit management, facilitation, coordination, and remediation activities. Specifically, the following should be considered:

conducting a current state assessment of internal audit and quality assurance functions, audit readiness and overall internal control across government;developing and implementing and/or improving on existing internal control and audit compliance framework and monitoring mechanisms;establishing a systematic framework for facilitating, coordinating, and responding to external audits and training the audit stakeholder community across government; anddesign and implement a comprehensive system for audit remediation (corrective action implementation), audit readiness and sustainment.

The above proposed initiatives are consistent with generally accepted internal control improvement best practices adopted by government agencies in developed countries, including the United States. Leveraging these will provide an opportunity for the Sierra Leone government to achieve measurable results in reducing audit findings, improving overall internal control environment across government, reducing corruption, and ultimately leading to a sound public financial management system.

©Mustapha Wai, CPA

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