How our Money is Spent Controller and Audit General Report

2010/2011

HakE Brief No 12:3E

Adverse Opinions on the Rise

In our e�orts to achieve better lives for ourselves and our families, we know that we can achieve more when we work together than individually. To this end we organise ourselves into communities, cities, and nations to help us reach our shared goals. Local governments are one of the lowest forms of such organisation, with a primary task of making sure that the available resources are used for the common interest at the district and village levels.

�e decentralisation policy enables Local Government Authorities (LGAs) to have power to implement various projects in order to facilitate development at the district and village level. LGAs have a responsibility of planning and executing their day-to-day activities in the area of administration and development based on their budgets. However, corruption, negligence, greed or incompetence are some of the obstacles that hinder LGAs from achieving these goals.

�e Controller and Auditor General (CAG) exists to ensure that public funds are used e�ectively. �is brief presents a summary of the CAG report on Local Government Authorities for the year 2010/2011.

Adverse opinions are given when �nancial statements of an auditee are materially mis-stated and when considered as a whole do not conform to the applicable �nancial reporting framework. For many years now, the reports of the Controller and Auditor General have shown an increase in the number of LGAs which are getting adverse opinions. In 2007/08 there were 72 unquali�ed opinions

while quali�ed opinions were 61. In that year, there were no adverse opinions.

  �e 2010/2011 CAG report shows that unquali�ed opinions remained 72. However, the number of quali�ed opinions had declined from 61 to 56 and the number of LGAs with adverse opinions had increased from 0 to 5. �is can be deduced from the fact that since there was no increase in the number of LGAs with clean audit results between 2007/08 and 2010/2011; the 5 LGAs with adverse opinions come from the worsening in the performance of 5 of the 61 LGAs with quali�ed opinions. See chart on the left.

Embezzlements on Salaries

The money is available but is not spent

LGAs are still plagued by the problem of ghost workers. In 2010/2011�scal year, LGAs paid Tshs 792.9 million to ghost workers. �ese were people who had either retired, left their jobs or passed away. Furthermore, although Tshs 1.7 billion which was set aside for salaries was unpaid for 2009/2010 �scal year, this was not returned to the Treasury as per �nancial regulations. Government’s reluctance to implement CAG’s recommendations on ghost

workers is also re�ected in its reluctance to implement similar recommendations given by the Parliamentary Public Accounts Committee (PAC) and Local Authority Accounts Committee (LAAC).  �e CAG report reveals that recommendations which were given by LAAC were not implemented. One of these recommendations directed the Government to ensure that the unpaid salaries for 2009/2010 �scal year amounting to 1.7 billion were returned to Treasury. However, these were not returned to the Treasury by 2010/2011. �e CAG report for the year 2010/2011 has again unveiled the arrogance and reluctance of local government o�cials to

implement the CAG recommendations. LGAs have continued to be intransigent in their reluctance to return unpaid salaries to the Treasury. As a result, the amount of unpaid salaries not returned to the Treasury has increased from Tshs 1.7 billion in 2009/2010 to Tshs 4.4 billion in 2010/2011.

Although health services, water and education services are generally deplorable, our LGAs do not spend the money allocated for the provision of these services. For example, up to June 30, 2011 a total of Tshs 188.9 billion which was budgeted for development expenditures was not spent by various LGAs. As a result when money that was set aside for development expenditures go unspent, citizens get the impression that although the Government has money it does not know how to spend it. Consequently, citizens �nd it hard to understand why the Government should then turn around to claim that it cannot improve social services for lack of funds ! Citizens pay taxes to facilitate and improve the provision of social services such as water, education and health. As a result they expect that the money budgeted for these services is spent as it was planned. �is is the only way of implementing projects and administrative activities in local Governments.

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While public health services are generally in pathetic condition with pregnant women and those in labour sleeping on hospital �oors, and hospitals go without drugs and facilities; a total of Tshs 9.915 billion budgeted for development projects in the health sector was not spent in 2010/2011. Of this amount, Tshs 5.849 billion was set for Primary Health Sector Reform Programme (PHSRP), Tshs 1.104 billion was budgeted for AIDS Control Strategy and Tshs 2.962 billion was set aside for Social Health Fund.

�s 9.915 billion= 33,000 beds where all 250 hospitals would get 132 beds and hence rescuing the pregnant women and those on labour from sleeping on the �oor.

A total of Tshs 1.722 billion which was set aside for PEDP and SEDP projects in 2010/2011 was not spent. PEDP and SEDP projects are not being

implemented ostensibly due to lack of funds by the Government. Moreover, only 3% of PEDP I goals were implemented in the area of infrastructure improvement (HakE Brief 2011, URT 2011, ESR). However, the amount of money which went unspent was adequate to improve the infrastructure in our schools.

Tshs 1.722 billion would facilitate the purchase of 25,000 desks which would cater for the needs of all primary school pupils in Morogoro region.

In 2009/2010, Tshs 1.3 billion set aside for various development projects in constituencies was not spent. �is amount more than doubled in 2010/2011 when it shot up to Tshs 2.683 billion. �at means in just two years the amount of funds set aside for development projects in constituencies amounted to Tshs 3.983 billion.

�is amount would have have been enough to construct 1,327 wells whereby 265 villages would get 5 wells each.

Recommendations

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Local Government Authorities do not Collect Revenue

• Members of Parliament– To give the Public Accounts Committee and Local Authorities Accounts Committee power to hold responsible all Government Officials who fail to implement effectively the CAG recommendations, who fail to effectively collect revenues, those who spend public funds without adhering to available financial laws and regulations.

• Directorate of Criminal Investigation-To investigate all cases revealed in the CAG report and the Public Accounts Committee, Local Authorities Accounts Committee and take to court those who are involved in the embezzlement of public funds.

• �e Government-To implement the previous CAG recommendations and 2010/2011 CAG report and to continue building the culture of respecting CAG report.

A total of 682 revenue receipt books from 36 Local Government Authorities were missing and therefore were not submitted for audit in the year 2010/2011. For that reason, auditors were unable to determine the revenues which were collected by the respective Local Government Authorities. Considering on the number of revenue receipt books which were not audited, the implications is that a big amount of collected public funds has vanished into thin air. In the sample of only 12 audited Local Government Authorities, a total of Tsh 8.3 billion was not collected.

In 2010/2011 Ilala Municipal Council failed to collect levies for various services, including buildings and Billboards amounting to Tsh 1.38 billion.

Kipawa Ward has an acute shortage of infrastructure in primary schools. 662 desks, 172 chairs, 139 tables, 52 classrooms, 230 pit latrines. If this money was to be collected, it could help to remove the problem of poor infrastructure in all primary schools in Kipawa Ward. Secondary schools in Kilosa District

have an acute shortage of laboratories (DEO Report, Kilosa). If these monies were collected, they would help to construct 26 laboratories and thus reduce the shortage of laboratories in public secondary schools in the Kilosa district.

In 2010/2011 The Kilosa District Council failed to collect sugar cane levy amounting to Tshs 1.27 billion.