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Inside Story: Mfumukeko Maintains Grip as Incomplete Report Kicks up Dust at EAC

The East African Community (EAC) Audit Commission did not consider written responses received from the regional body’s Secretariat hence producing a report that never reflected the situation on ground, an investigation by ChimpReports shows.

Regional states are wondering why the Audit Commission never bothered to do enough due diligence, leading to fiery debates in the Legislative Assembly.

“The MPs’ debates that saw many baying for the secretariat officials’ blood were based on an inaccurate and incomplete report,” said a Ugandan official handling EAC Affairs.

The high level official said lack of properly prepared reports could lead to divisions and destruction of EAC’s image at a time the region needs harmony to deal with non-tariff barriers, armed conflicts and regional integration.

Out of the 17 audit reports, 16 were unqualified while one for the EAC Secretariat was qualified due to audit findings.

It’s understood that while the audit report was signed in April 2018, the secretariat submitted clarifications to the chairperson of the Audit Commission on January 19 as had been agreed one month earlier.

The Ugandan government was informed that the supporting documents and clarifications were disregarded.

This reportedly infuriated the Ugandan government which is also expected to officially protest the modus operandi of the Audit Commission.

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There also is fear that EAC Secretary General Liberat Mfumukeko, the Burundian running the Secretariat, is being targeted in the wider conflict pitting Burundi and Rwanda.

Audit report.

The audit report questioned inadequate compliance with international accounting standards at the time of recording questionable transactions. EAC has since explained that this was caused by delayed disbursement of funds by donor countries.

The audit report also queried payroll variances between the interface file and general ledger for the secretariat. Officials said this was caused by paying temporary staff using an excel template. This was reflected in the accounting software (sun systems).

The Secretariat explained that annual allowances such as education allowances effected per year were not paid through the monthly payroll and the personnel management system included established staff only.

While the Audit Commission did not present this a loss, it urged the secretariat to capture all staff, permanent and temporary in the personal management software.

Another contentious issue was the execution of the East African Competition Authority (EACA) Budget funded from the EAC General Reserve fund managed at the EAC Secretariat.

On the recommendations of the Council, EALA approved a budget of $1.5m for EACA. This amount would be drawn from the reserve fund ($841,365) and $746,201 from external partners.

While MPs claimed the money was abused, records show only $196,538 out of $841,000 approved to be obtained from the reserve was spent by EACA and the balance of $644,827 remained on the reserve account.

The anticipated $746,201 was not released by donors due to lack of absorption capacity.

The auditors also revealed that funds meant for staff emoluments budgets of the EAC secretariat were diverted to pay service providers.

This website has learned that at the 35th meeting of the Council of ministers, the secretariat was directed to reallocate funds within its current budget to cater for the recruitment exercise. But the source of funds was not disclosed due to a tight budget.

This occurred at a time Deloitte was preparing to take EAC to court for failure to pay outstanding invoices. It’s understood the Secretariat decided that since the recruitment exercise was related to the staff emoluments cost category and there were funds due to delayed recruitments, the balance on personal emoluments was used to implement the council decisions and also pay the service provider to avoid a costly litigation process.

Kitchen

It also will be recalled that Germany funded the construction of the EAC building but the body had to equip it. EALA gave the secretariat a budget of $212,987 for kitchen equipment. But when auditors moved into the kitchen they realized the utensils were not being used.

Officials clarified they were in the process of obtaining a catering service provider. The equipment was bought between 2012 and 2014 before Mfumukeko was appointed SG.

Regarding failure to have in place security equipment in line with the $500,000 contract signed with Ms Avtech systems Ltd, officials said the contractor‘s systems had deficiencies while some installations were not completed.

The secretariat has since threatened to sue the company.

During EALA debates, MPs expressed concern over what they described as dwindling support from development partners for EAC.

Donor support

Ugandan officials told us the support had actually increased only that the mode of support changed to indirect funding.

“The secretariat will manage $298m of which $185 will be indirect funding to implement activities in the EAC partner states. An extra Euro 8m will be direct funding for EAC while Euro 122m will be channeled to activities of the body. In October 2018, Germany committed $61m to support EAC in regional integration and health. How can anyone say the external support is dwindling? It’s just the opposite,” said an official at the EAC Affairs department in Kampala.

In October 2018, Afdb considered EAC projects worth $2bn in the Regional Integration Strategy Paper for Eastern Africa indicative operation program.

Contacted, EAC SG Liberat Mfumukeko said he needed more time to look at our questions and prepare answers as he was attending the AU Summit in Addis Ababa.

He, however, said EAC has moved to “strengthen its accountability systems to give regional partners value for money.”

He said EAC Management has developed administration controls to guide its operations, giving the example of a compliance committee which was recently appointed to closely examine contracts before being sent to management for signing.

Mfumukeko said the EAC also has enhanced the internal audit function to ensure operational efficiency and maximum compliance with established rules thus providing effective checks and balances in the community’s operations.

The regional body recently introduced the Annual Development Partners’ Consultative Forum to have talks with external donors and build confidence in EAC.

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