Our fight against corruption continues.........

Comrades and partners in progress:

We like to thank President Ellen Johnson Sirleaf for the time we have served her Administration, and the Liberian people. We first served as an Assistant Minister for Africa, Asia and the Pacific for two years, and later as Deputy Minister for International Cooperation and Economic Integration for half year. We are also grateful to have been Liberia’s lead Negotiator and Head of Delegation at the Intergovernmental Negotiations on the Post-2015 Development Agenda at the United Nations in New York-a task we have expeditiously executed in collaboration with others especially at Liberia’s Mission at the United Nations. This Post-2015 Global Development Agenda (the Sustainable Development Goals) will replace the Millennium Development Goals (MDGs), and guide the world’s poverty reduction and development processes for the next fifteen years up to 2030.

That we have been removed from the Post of Deputy Foreign Minister for International Cooperation and Economic Integration today does not stop our commitment to Liberia’s socio-political and economic progress. We remain ever grateful to our family, comrades, the people of Liberia and the general public to all of whom we owe the greatest responsibility. We will forever remain committed to the economic growth and development of Liberia by supporting pro-poor growth policies intended to reduce and or alleviate poverty in our great country yea the region and the world. We will remain unbending in our fight against corruption in any shape, form and color.

Meanwhile, we will hold a major press conference in the next few days to fully explain circumstances surrounding our alleged crime for the removal from office “the leakage of official public document on fraud and corruption at the Foreign Ministry to the Press”. Now that we are no longer held hostage by the Code of Conduct for Public Officials, we will attempt to provide substantive and systematic evidence on how corruption of donor and local resources continue to impede Liberia’s poverty reduction, economic growth and development. We will first focus on the Japanese grants and their abuse thereof as a case in point.

The Internal Audit Report that broke things apart..............

1.0 Executive Summary

The Internal Audit Bureau performed an audit on the department of International Economic Cooperation and Integration (IECI) Japanese grant project and the respective controls over execution, payment, processing and recording. This audit was conducted in the third quarter of FY2014/2015 and it gives an analysis of the project's financial and operational activities during the period June 2014 - December 2014 and the related control weaknesses identified during the course of the audit.

The following control weaknesses have been identified as a result of our audit:

• The Department does not have established policy on the selection of staff that should benefit from Top-up allowances, scratch cards and gasoline.
• There is no evidence to indicate monthly withholding on allowances; aggregate allowances paid exceeded the approved budget for the period June to December 2014.
• Procurement of the project's vehicle valued US$ 49,000.00 did not go through an approved procurement method; moreover, the payment check was written in the name of Augustine Nyanplu, Senior Desk Officer (IECI).
• The required PPCC procurement methods were not met for most of the transactions carried out by the department.
• Transactions were not routed through the main financial system; they were not routed through Internal Audit Bureau for vetting, and procurements are solely initiated and completed by the Department without the intervention of the financial bureau of the Ministry of Foreign Affairs .
• We also noticed alterations on financial documents; while there were some payments made that were not supported by receipts or invoices.
• There is no register for fixed assets; moreover, assets are not coded for identification.

The summaries highlighted above are amongst the numerous weaknesses noted during the review process; however, the details are indicated in the findings below.    

2.0 Background

In July 2014, the Japanese Government provided a grant valued at US$ 731,422.00 (Seven hundred thirty one thousand four hundred twenty two united states dollars) to fund a project titled "Institutional and Human Resource Support for Efficient Operation of the Department of International Economic Cooperation and Integration (IECI)". In response to the bilateral consultations between the Governments of Liberia and japan in 2008, the Japanese Government provided the fund for capacity building of staff of the Department of International Economic Cooperation and Integration (IECI)

  

A 50% transfer valued at LR$33,474,197.00 (US$ 365,711.00) was requested, approved by the Minister and transferred from GoL consolidated account to the Project's account at Afriland Bank.  The project's bank statement showed that as of January 7, 2015, LR$ 22,236,386.00 of the 50% has been spent, while the account balance is LR$ 10,990,036.00.

Behind this backdrop, on January 7, 2015 Hon. B. Elias Shoniyin, Deputy Minister for Foreign Affairs who also served as Deputy Minister for International Economic Cooperation and Integration requested that the Internal Audit Bureau to commission an audit of the project. He indicated that the review would serve a smooth transition to the new DMA for IECI.

3.0 Objectives

The objectives of this audit/ review process are outlined as follows:

• To determine the reliability and Integrity of Financial and Operational Information provided by the IECI; 
• To determine that staff capacities were actually built as purposed by the donors;
• Ascertain compliance with Laws, Regulations, and Contracts during the partial implementation of the Project;
• Verify the existence of  assets procured and operated by the project,
• Authenticate the effectiveness and Efficiency of Operations of the Project's implementation; 
• Review staff attendance and remuneration processes;
• Ensure that all spending are in line with Project's approved budget.

4.0 Scope

The IECI audit covers the period June 2014 to December 2014; and applies to personnel related processes, procurement, Finance and project assets management. The audit also covers the identification of control weaknesses and threat (if any) to the achievements of objectives of the project in relation to the Ministry's deliverables.

5.0 Methodology

In the conduct of the audit, there are number of procedures that were carried out by the Internal Audit Bureau. These procedures include face-to-face discussions, review of key documentations and testing the reliability of the financial statements provided. Detailed procedures are listed below:

·         Developed an audit programme and distributed notice to interested parties that stated the scope and objectives of the audit;

·         Conducted an entry meeting with auditee to introduce audit staff and provide overview of audit work to be undertaken. 

·         Examined available records to ascertain the level of compliance with relevant applicable laws;

·         Tested control processes as enshrined in applicable laws and regulations to determine control strength/weaknesses that exist;

·         Conducted physical verification of the project's assets;

·         Reviewed available documents and collate findings;

·         Summarize findings and prepare report.       

6.0 Findings

6.1 Procurement

Condition 1: PPCC required procurement method was not adhered to for the following

The PPCC procurement requirement for purchase of goods with value US$ 10,000.00 and below was not adhered; the three (3) quotes were not solicited to ensure Request for Quotation (RFQ). See table below

Transaction Date	Request #	Description	Cheque #	Amount LR$	Rate	USD Equivalent	Comment
Jan. 9, 2015	62	Payment to DITCO for two (5X8ft) Liberian flags and two flag poles	Afriland chq. # 00163898	33,060.00	87	380.00	Procurement requirement for three quotes was not adhere to. No quote attached, only a single invoice seen. Delivery not verified by IAB
Jan. 13, 2015	66	Payment in favor of J-MART for one senior executive desk and one Executive chair for Deputy Minister Office	Afri-land Chq. # 00168703	121,800.00	87	1,400.00	Procurement requirement for three quotes was not adhere to. No quotes attached, no receipt. Delivery not verified by IAB
Sept. 5, 2014	10	Payment to Sky-Tech International (Lib.) INC for 1 desk top computer, one 3" colour printer, 1 link, 1 USB hub, one pack RJ 45 connector and a box of Cat 6 cable for the Department	Afriland Chq. # 00155625	110,490.00	87	1,270.00	Procurement requirement for three quotes was not adhere to. No quote attached, only a single invoice seen. Cheque written in the name of Augustine Nyanplu. Delivery not verified by IAB
July 4, 2014	1	Payment in favor of Prestige Motor Corporation for one SUV, 2014 Ford Explorer XLT for the project	Afriland Chq. # 00127904	4,581,500.00	93.5	49,000.00	Procurement requirement for competitive bid not adhere to, cheque written in the name of Augustine Nyanplu, Delivery not verified by IAB
Sept. 16, 2014	12	Payment to NARESH  Brothers for 5 Dell laptop computer and 3 canon printers for the Department	Afriland Chq. # 00155628	526,350.00	87	6,050.00	Procurement requirement for three quotes was not adhere to. No quote attached, only a single invoice seen. Delivery not verified by IAB
Oct. 13, 2014	19	Payment to Lion Stationery Store for four executive chairs for the Department	Afriland Chq. # 00155639	52,200.00	87	600.00	Procurement requirement for three quotes was not adhere to. No quote attached, only a single invoice seen. Delivery not verified by IAB
Dec. 18, 2014	46	Payment to Metro Stationery Store for 1 HP desk jet printer  and 1 signature book for Minister Shoniyin's office	Afriland Chq. # 00168086	7,830.00	87	90.00	Procurement requirement for three quotes was not adhere to. No quote attached, only a single invoice seen. Delivery not verified by IAB
Jan. 2, 2014	49	Payment to D&G Office Depot for 1 senior executive desk with side table and a cabinet for the office of the Deputy Minister.	Afriland Chq. # 00168089	95,700.00	87	1,100.00	Procurement requirement for three quotes was not adhere to. No quote attached;  a single invoice seen, tax clearance certificate seen, Business Registration certificate seen. Delivery not verified by IAB
Jan. 2, 2015	50	Payment in favor of SKT-TECH International (Lib) INC for 1 HP Probook Laptop Computer for the Department	Afriland Chq. # 00168090	111,795.00	87	1,285.00	Three quotes attached, however, there are no tax certificates, business registration certificates. Delivery not verified by IAB
Jan. 2, 2015	53	Payment to DITCO for two Liberian flags for the office of the Deputy Minister	Afriland Chq. # 00168094	26,100.00	87	300.00	Procurement requirement for three quotes was not adhere to. One quote attached, only a single invoice seen. Delivery not verified by IAB
Jan. 3, 2015	51	Payment to D&G Office Depot for five (5) office desks 140 cm for the office of the Deputy Minister.	Afriland Chq. # 00168092	84, 825.00	87	975.00	Procurement requirement for three quotes was not adhere to. One quote attached, only a single invoice seen. Delivery not verified by IAB
Jan. 8, 2015	57	Payment to SKY-Tech International for 3 Laptop computers, 2 printers and 1 Modem for the Department	Afriland Chq. # 00165047	270,640.00	85	3,184.00	Procurement requirement for three quotes was not adhere to. One quote attached, a single invoice seen, tax and business registration certificates seen. Delivery not verified by IAB
Jan. 9, 2015	61	Payment to Electronic World for 1 ice box and 1extension cord for the use of the Department	Afriland Chq. # 00163895	17,015.00	83	205.00	Procurement requirement for three quotes was not adhere to. No quote attached, only a single invoice seen. Delivery not verified by IAB
Jan. 9, 2015	63	Payment to SKY-TECH International (Lib) INC for 1 canon photocopier, 1 Ink cartridge for photocopier, 1 set of ink cartridges for 3 in 1 printer and 1 extension cord for the Department.	Afriland Chq. # 00163896	48,025.00	85	565.00	Procurement requirement for three quotes was not adhere to. One quote attached, only a single invoice seen. Delivery not verified by IAB
Audited Bal				6,087,330.00		66,404.00

Criterion

PPCA Section 53 provides that the request for quotations method may be used for the procurement of goods, works and services:

(a) When the procurement is for readily available commercially standard goods, not specially manufactured to the particular specifications of the Procuring Entity and the estimated contract price does not exceed the applicable Threshold;

Thresholds for the requests for quotations shall be the following estimated contract prices.

Quotations:

In the case of contracts for the procurement of goods, US$10,000

In the case of contract for the procurement of services, US$10,000

In the case of contracts for the procurement of works, US$30,000

Cause

The Department of International Economic Cooperation and Integration failed to apply due diligence.

Consequence

Risk of transacting with illegal business institutions, conflict of interest is eminent and value for money may not be achieved.

Corrective Action

Senior management of the department should ensure that RFQ method is adhered for transaction meeting the threshold.

Management Response

Firstly, with reference to paragraph 2 of the Background Section, Internal Audit states that 50% of the fund disbursed totaled LRD 33,474,197.00. Management's records, which is the official receipt from the Bank, states receipts of 33,316,422.00. This displays a LRD 157,775.00 difference/overstatement. Management requests immediate rectification of this error.

With reference to Condition 1, from Management's perspective, at least 95% of procurement made, had three quotations and due diligence was promptly applied to every transaction. Moreover, most of said transaction checks were co-signed by Assistant Minister Elizabeth Johnson Sirleaf who rigorously applied due process before signing each check. There may have been an exception to few purchases which were made from one or two quotations due to the urgent nature of some requests from our superiors. Management will therefore reexamine all transaction documents and make the necessary corrections where needed.

IAB's Position

A signed copy of the project's bank statement submitted to the audit team reveals an initial deposit of Afriland Bank cheque # 00050433 valued at LR$ 33,474,197.00. This amount represent's 50% of the project's amount received; therefore, there is no error committed by Internal Audit  as asserted by respondent.   

Condition 2: Purchase of vehicle did not go through competitive bidding process

On July 4, 2014, the department of IECI procured one SUV 2014 Ford Explorer XLT valued US$ 49,000.00. However, the transaction did not go through the competitive bid process. Prestige Motor was solely selected with no approval from the PPCC. 

Criterion

Section 48 (1) of the PPCA provides for National Open Competitive Bidding, which states that the Procuring Entity shall employ national open competitive bidding procedures for procurements in which the estimated contract price of the procurement does not exceed the ceiling Threshold applicable to national open competitive bidding.

The ceiling Thresholds for national open competitive bidding shall be the following estimated

contract prices. Above these ceilings, international open competitive bidding shall be used.

In the case of contracts for the procurement of goods, US$500,000

In the case of contracts for the procurement of services, US$200,000

In the case of contracts for the procurement of works, US$1,000,000

Cause

The Department of International Economic Cooperation and Integration failed to apply due diligence.

Consequence

Breach of section 48 (1) of the PPCA as mentioned in the criteria above..

Corrective Action

Senior management of the department should ensure that National Competitive Bidding (NCB)method is adhered to for transactions meeting the threshold set by the PPCA.

Management Response

Management acknowledges that PPCC requirements were not strictly followed during the procurement process of the Department's Project SUV. However, Deputy Minister Elias Shoniyin has clarified, and Internal Audit can verify with him, that the procurement of the SUV was handled as a matter of extreme urgency. Deputy Minister Shoniyin's official vehicle at the time was completely down which gravely impeded his official duties as a Deputy Minister. Subsequently, Mr. Nyanplu was ordered to swiftly facilitate the purchase of a Project SUV. The vehicle was initially on sale for US$60.000.00 but following Minister Shoniyin's intervention, import duty and other taxes were instantly waived and the SUV was bought for a mere US$49,000.000, a price which Internal Audit can verify and will probably realize that it is the cheapest price for such type of vehicle.

The Check was written in the name of Mr. Augustine Nyanplu because the vendor would not accept payment in Liberian Dollars which is the currency of the entire project fund. We initially attempted to bid for United States Dollars at Central Bank but the process was long and tedious with no certainty that we would have won the bid. Thus, Mr. Nyanplu was constrained, with the full acquiescence of Minister Shoniyin, to purchase United States Dollars from a foreign exchange bureau to make the purchase in a timely fashion.

Management accepts responsibility for this procurement mishap but assures that there was no conflict of interest, purchase was made from a legally established entity with up-to-date tax clearances, business registration, etc., and full monetary value was achieved while saving the project fund an unnecessary additional expenditure of US$11,000.00.

IAB's Position

The conduct of the transaction remains a breach of the PPCA section 48(1) and Part B(subsection B.28) of the PFM Regulations which provides that a payment shall be made only to the person or persons named on the payment voucher or to their representatives duly and legally authorized in writing to receive the payment.

Condition 3: Vendor's cheque written in employee's name

On July 4, 2014, the department of IECI procured one SUV 2014 Ford Explorer XLT valued US$ 49,000.00. However, the payment cheque was written in the name of Augustine Nyanplu, Senior Desk officer (IECI) instead of Prestige Motor Company. 

Criterion

Part B (Sub section B.28) of the PFM Regulations provides that a payment shall be made only to the person or persons named on the payment voucher or to their representatives duly and legally authorized in writing to receive the payment.

Cause

Lack of due diligence

Consequence

Full amount disbursed may not reach the  vendor.

Corrective Action

Going forward, Cheques should be written in vendors' name

Management Response

Please refer to Condition 2 response. Meanwhile, for your information, all subsequent procurement checks, following this transaction, were written in vendor's name.

Condition 4: Lack of Tax Clearance and Business Registration certificates

We sampled fourteen (14) transactions valued US$ 66,404.00 that were made for procurement of assets ranging from laptops to vehicle. However, only two (2) of the fourteen (14) transaction valued US$ 4,284.00 in favor of D&G Office Depot and SKY-Tech International had tax clearance and business certificates attached.  Kindly see the table in condition one (1) above

Criterion

Best practice demands Government institutions to do business only with vendors who are tax compliant. 

Cause

Lack of due diligence on the part of the staff responsible for procurement activities

Consequence

Risk of doing transacting with illegal businesses

Corrective Action

The department should ensure that vendors business should be duly registered and must have valid tax certificates before doing business with them.

Management Response

Management will get business registration and taxes clearances from entities we have procured with thus far and ensure that all subsequent transactions will have tax clearances and business registration attached. Meanwhile, Management has consulted with Procurement on numerous occasions to advise on which entity is best to procure from.

IAB's  Position

The law provides for solicitation of quotes for the selection of vendor(s), not after the procurement process is consummated.

Condition 5:  Transactions not verified by Internal Audit Bureau

The Internal Audit Bureau (IAB) did not verify any of the procurement processes carried out by the department (IECI).    

Criterion

Section 6 of the Internal Audit Strategy and Section A01 of the Internal Audit Agency Operating procedures require internal auditors to verify delivery of goods and services by a procuring entity. Also, best practice necessary to achieve value for money requires that an independent party (internal audit) physically inspect and authenticate goods procured and delivered prior to verification of payments for such goods.

Cause

Failure to adhere to statutory requirement

Consequence

Fictitious and erroneous transactions could pass clear for payments or payments could be prepared for goods and services that were not delivered to the entity.

Corrective Action

Going forward. Management should ensure that all transactions  and deliveries be routed through Internal audit for verification.

Management Response

Management will solicit Internal Audit advice while undertaking future transactions.

IAB Comment

The involvement of Internal audit will greatly support the achievement of the project's objective.

Condition 6:  Procurement Bureau was not involved in the project's procurements

Except for laptop computers purchase that was vetted by the Procurement Bureau, the rest of the Project's procurements were exclusively independent of the procurement bureau 

Criterion

Section 29 (5) of PPCA provides that the functions of a Procurement Unit shall be carried out in accordance with the Act and applicable regulations established by the Commission, and shall include all procurement processes of the Government institution.

Cause

Failure to adhere to regulation

Consequence

Risk of breaching procurement processes

Corrective Action

Procurement processes should always be carried out by the Ministry's procurement unit.

Management Response

Management will deliberate on the issue and come up with an appropriate decision.

IAB Position

Exclusion of the Procurement section is a violation of section 29.5 of the PPCA and should be rectified going forward.

6.2 Personnel

Condition 1:  No tax deduction on monthly allowances

The project accountants are not taxing supplementary allowances processed monthly. Moreover, there is no documented evidence approved by both Japanese and Liberian Governments to grant waiver on benefits relating to the project.   

Criterion

Section 200 (a) (1) of Liberia Revenue Code states that an annual income tax is hereby imposed on the annual taxable income of every natural person resident in Liberia (including resident Liberian citizens employed by an embassy, a diplomatic mission, or international organization).

Cause

The payroll processors of the IECI failed to comply with the financial regulations related to income tax.

Consequence

Undermine government of Liberia revenue generation capacity .

Corrective Action

Remittance for outstanding period (June - December, 2014) should be made to GOL Revenue account, and the exercise should be adhere to going forward.

Management Response

Management will ensure that tax deductions are made from monthly allowances and remitted to the Liberia Revenue Authority

Condition 2:  Non-required exchange rate

Project amount transferred to the project's account was in Liberian dollars; checks for withdrawals are issued in Liberian dollars, but allowances are quoted in United States dollars. There is no basis for a rate of exchange when in-fact the grant was provided to the project in Liberian dollars, while checks are also issued in Liberian dollars.       

Criterion

Best practice requires institutions to apply consistency in recording financial transactions. 

Cause

Lack of consistency in reporting financial transaction

Consequence

Leads to complicated financial records; and also ensures unwarranted exchange gains and losses on transactions processed.

Corrective Action

With the  maintenance of project account in Liberian dollars, and the issuance checks for allowance in Liberian dollars, the transactions should also be recorded and  maintained in Liberian dollars.

Management Response

Management will ensure that subsequent transaction records will carry only Liberian Dollar figures.

Condition 3:  Staff included on the Top-Up payroll without authorization

We reviewed the payroll and observed that there was no evidence of authorization for the inclusion of Baccus M. Carr, Tharam Z. Quaye, Alfred G. Sonnie, Johnnie F. Fallah, Tommy Luogon and Titus J. Williams to the top-up payroll.

Criterion

The Project's approved budget provides for an approved number of staff; any additional name(s) should had request for approval by the Minister's.  

Cause

Failure to adhere to required approval procedures

Consequence

Unapproved inclusion of staff could strain the budget and could also stall anticipated deliverables. 

Corrective Action

Each additional Staff inclusion for top-up should first be requested and approved before inclusion to the top-up payroll

Management Response

Management does not fully comprehend what Internal Audit means by "no evidence of authorization of payments to Baccus M. Carr, Tharam Z. Quaye, Alfred G. Sonnie, Johnnie F. Fallah, Tommy Luogon and Titus J. Williams." The mere fact that Minister Elias Shoniyin signed the payroll including them, should suffice. For Ms. Tharam Quaye, it was clearly stated that the payment was a one-time compensation since she was being transferred from the Department. Internal Audit may verify with Minister Shoniyin.

Condition 4:  Lack of policy on scratch card and gasoline payments

Some staffs who work in the office of the Deputy Minister (IECI) usually receive scratch cards and gasoline; however, there is no policy in place for payments of gasoline and scratch cards to said staff. No basis for the selection of staff who are beneficiaries. .  

Criterion

Best practice requires an approved policy for scratch cards and gasoline benefits to staff.   

Cause

Failure to establish policy and basis for distributing benefits to staff could undermine the essence of the  top-up.

Consequence

Awarding benefits without approved policy leads to the possibility of spending outside the approved budget and benefits may be assigned to non-deserving staff, a situation,  that will defeat the top-up project.

Corrective Action

Management should establish an approved policy for the distribution of benefits. 

Management Response

Management will subsequently establish a written policy in this regard on who should benefit from scratch card and gasoline allowances. Meanwhile, this Project is all about boosting capacity in the Department and rewarding hard-working staff with more benefits while lazy staff will receive less benefits. Deputy Minister Elias Shoniyin, in his capacity as overseer of the Project reserved the right to make changes on monthly benefits based on performance reports submitted by the Assistant Ministers of International Organization and International Cooperation as well as based on his supervision of his office and the entire Department. This should explain fluctuations and changes in monthly benefits scheme.

Condition 5:  Actual paid for top-up exceeded amount approved by the Minister

For the period September to December 2014, a variance of LR$ 240,400.00 was noted  between the approved payroll and the actual payment. The approved payroll valued LR$ 2,644,095.00, whereas the department spent LR$ 2,884,495.00 for staff allowance.

Criterion

The project's budget is a legal instrument that guides disbursement limit; any spending in excess of the approved budget needs to meet the approval of the Minister.   

Cause

The variance is a result of the department's failure to adhere to the approved budget

Consequence

Spending outside the budget could stall the achievement of the project's deliverables

Corrective Action

Processors should provide reason(s) why they should not be held liable for spending the project's fund outside the budget. Going forward, all payments arising outside the approved budget should meet the approval of the Minister  or be restituted.

Management Response

Management will adhere to provisions stipulated in the approved budget. Meanwhile, all transactions in this regard were approved by Deputy Minister Shoniyin. Internal Audit can verify with Minister Shoniyin on this matter.

Condition 6:  No evidence of staff attendance record

The department did not provide the audit team with attendance record(s), which should serve as a basis for performance appraisal. In this case, it became difficult to establish the criteria used for determining allowances for top-up.  

Criterion

Chapter 5, Section 5.1.2 of the Civil Service Standing Orders provides that all Government Ministries and Agencies should provide monthly attendance report. 

Cause

The Department failed to adhere to required regulation (CSA Standing Orders) regarding staff attendance.

Consequence

The failure to maintain an attendance record makes it difficult to ascertain whether staff with top-up actually deserve the respective monthly allocation.

Corrective Action

The Department ensure staffs attendance record is put in place by the project and that payments of top-up benefits are based on attendance and performance records.

Management Response

Management will ensure the establishment of a Project Attendance Record. Meanwhile, Internal Audit can verify with the Bureau of Personnel, the attendance records covering the period under review.

6.3 Finance

Condition 1: Alterations/Changes made on dates of receipts provided by recipients of gasoline and scratch card covering the period under review.

The IECI provided documents (receipts) that were tampered, dates of receipts were observed scratched.

Criterion:

Part O (Sub Section O.12-1) of the PFM Regulations states that no alterations shall be made to any Government Agency receipts, licenses or other accountable documents.

Consequences/Risks:

Alteration of financial documents presents a serious negative picture and create doubts as to whether said transaction was actually executed by the department.   

Causes:

Lack of knowledge on procedures or processes in making changes on official financial document.

Corrective Actions/Recommendations:

In order to ensure an authenticate and credible documentation as well as the avoidance of situations that may be considered forgery, the department of IECI project must ensure all receipts and other documents are free of alterations or changes. Additionally, in the scenario where alterations/changes are to be made on said document, it is advisable that the individual who instituted such change affix his/her signature to claim responsibility in case of future reference. 

Management Response

Management is not aware of any gasoline or scratch card receipt that was altered. Internal Audit may want to shine some light on these tampered receipt as alleged. However, it must be noted that Gasoline and Scratch Cards allowances have been given in cash to relevant staff, which has become common policy. Management pledges to subsequently procure Gas slips and Scratch Cards from certify vendors and accordingly distribute to relevant staff as approved by the ICEI Deputy Minister.

Condition 2: Payments for Scratch cards valued LR$106,575 and Gasoline valued LR$ 213,150 were not supported by payment receipts or invoices.

The IECI department project on numerous occasions didn't provide relevant source document (invoice, receipt) to substantiate claims of payment/ disbursements for scratch cards and gasoline valued LR$ 106,575.00 and LR$ 213,150.00 respectively.   

Criterion:

Part P (Section P.9-2) of the PFM Regulations  states that payments, except for statutory transfers and debt service shall be supported by invoices, bills and other documents in addition to the payment vouchers.

                                          

Consequence/Risks:

Lack of third-party documents for payments creates a room for misappropriation. Accountability and transparency of the process will be questioned. In said situation, there is an increasing risk  for the perpetration of fraud.

Causes:

Lack of oversight responsibilities by those charged with governance is responsible for said action.

Corrective Actions/Recommendations:

Those charged with governance at the IECI department's project must ensure that supporting documents are attached and kept for all payments made.            

 Management Response

Management must note in this regard that Deputy Minister Shoniyin is the only recipient of Gasoline and Scratch Card Allowance who never signed a receipt acknowledging thus, for administrative reasons. This may probably explain the receipt gap. Internal Audit may verify with him.

Condition 3: Transactions are not routed through the main financial system

The processing of transactions of the IECI project did not route through the main financial system of the Ministry of Foreign Affairs. Processing was done through separate processing by the department of IECI outside the main stream financial processing system.

Criterion:

It is prudent to route transactions through the main financial system because optimum value for money will be obtained, transactions are properly tracked, approval levels will be clearly documented and records are maintained at each level.

Consequence/Risks:

Divergence from approved procedures are likely to occurred  and also errors/fraud may be perpetuated but not detected on time, thereby leading to mismanagement of the project fund.

Causes:
The inability by the IECI department to properly supervise financial operation processes which allows all transactions to route through the central processing system.

Corrective Measures/Recommendations:

The IECI Management should ensure that transactions are routed through MOFA financial system.

Management Response

Management will take this recommendation into consideration during subsequent transactions.

Condition 4: Inaccurate Financial Record System

December 2014 salary checks with numbers (165035, 168083, 168085) paid to Susan Wannie Bou, Manie H. Momolu and Alfred G. Sonnie valued LR$ 313,203.00, were noted on the project's bank's statement, but could not be traced to the department's internal cashbook. Similarly, checks numbers 168087 and 168088 valued LR$ 45,240.00 and described as payments for vehicle rental were noted on the bank statement, but could not be traced to the cashbook.

Criterion:

Part P (Sub section P.8 -1) of the PFM Regulations states that the date of payment of any amount determines the date of the recording of the transaction in the accounts. No payment shall be made before it is due, for the purpose of utilizing an anticipated saving on a programme. This means that transactions are recorded immediately as they are made.

Consequence/Risks:

Failure to internally record transaction(s) leads to inaccurate financial report; could also be a basis for false payments.

Causes:

Lack of supervision from senior staffs or supervisors of the department

Corrective Measures/Recommendations:

All payment/transactions must be recorded on the cashbook immediately when a check is made.   

Management Response

This Condition was brought to Management's attention at least a week prior to the submission of this draft audit report. This condition was clarified and regularized and it turned out that Internal Audit was in error. Why is this matter still being broadcasted?

Internal Audit is hereby requested to expunge this Condition from the report.

IAB Comment

The issue was not resolved; there were outstanding cheques with numbers (163860, 163876, 168051, 165010 and 168060) noticed in the cashbook but had not hit the project's account. This issue alongside the point raised above was brought to the attention of Mr. Augustine N. Nyanplu; and he provided voided copies of the outstanding cheques, but did not resolve the issue of cheques posted to the account without being recorded to the cashbooks. Therefore, IAB maintains that the project's record system is inaccurate.

Condition 5: Irregular Transaction

The Department processed documents for the purchase of two (2) Samsung Galaxy Trend phones valued US$ 320.00 to be used by Hon. Therry S. Genesis and Hon. Dehpue Y. Zuo. We noticed that only one Samsung Galaxy Trend valued US$ 180.00 along with one Nokia D500 valued US$ 18.00 was procured. However, there is no evidence that the remaining US$ 162.00 was remitted to the project funds account.

Criterion:

Section A.15 of the PFM Regulations provides that the head of government agency must exercise all reasonable care to prevent and detect unauthorized, irregular, fruitless and wasteful expenditure, and must for this purpose implement clearly defined business processes, identify risk associated with these processes and institute effective internal control to mitigate these risks.

Consequence/Risks:

Possibility of not obtaining value for money

Causes:

Lack of adequate supervision to ensure that transactions are rightfully done.

Corrective Measures/Recommendations:

Senior officers of the Department should ensure that goods or services procured are actually delivered.

Management Response

Two Samsung Galaxy Phones were procured for Assistant Ministers Genesis and Zuo on 15 January 2015. Both Minster Zuo and Minister Genesis signed for the mobile telephones on 15 January 2015. Management is eager to provide Internal Audit with copy of the Acknowledgement of Receipt note signed by Minister Genesis and advises that Internal Audit promptly confirms this with him. There was no irregular transaction in this regard.

IAB  Position

We physically verified one Nokia D500 with Hon. Genesis and not a Samsung Galaxy Trend as mentioned by Management. Up to the completion of this report, we did not receive any Acknowledgement of receipt note signed by Minister Genesis for Samsung Galaxy trend.

6.4 Assets

Condition 1: There is no Assets Register, and Fixed assets are not coded

We reviewed assets documents and conducted physical verification of said assets; however, the department does not have an established register for said assets, and the assets are not coded.

Criterion:

Part V of the PFM Regulations provides for payment, custody, disposal and management of public assets.

Consequence/Risks:

Possibility of assets going missing, abused or misappropriated.

Causes:

Failure to establish basic laws and guidelines as it relates to assets management

Corrective Measures/Recommendations:

The department should establish an asset  register to track and locate their assets and code the assets. Also, an asset movement log be established to track movements of assets under the project.

Management Response

Management has established an Assets Register and looks forward to coding all project fixed assets very soon.

7.0 Conclusion

The absence of policies to guide execution of basic activities of the IECI project is a major gap that Management needs to remedy. Financial transactions are not routed through the Ministry's major flow, and the PPCA and PFM laws are often disregarded or violated. Additions to the Top-up roaster are not done with regards to appraisal; there is no attendance log to validate staffs turnout on job. No set criteria was made available by the IECI project for additional benefits assigned to staff.

Management should seek proper solution to the many issues including those highlighted in the findings; this will help meet the project's objectives.