The 2021 Audit Report has exposed how the Ministry of Youths Affairs flagrantly evaded taxes that were supposed to be paid to the National Revenue Authority among other things.
Contrary to Section 130 of the Income Tax of 2000, withholding taxes totalling Le507,726,923.27 were deducted from payments to suppliers, but evidence of payments to the NRA was not submitted for audit inspection by the Ministry of Youths Affairs. This could result in the loss of public funds. The Auditor’s recommended that the Administrative and Finance Officers of the projects should ensure that payment is made immediately to the NRA and that the proof of payment is submitted for audit inspection.
In his response, the Finance officers said that they had paid the sum of Le28,611.11 with analysis of withholding tax to suppliers for services rendered. However, “taxes deducted for 40% payment to contractors in respect of construction of car wash centres would be paid when funds are transferred to the sector from the Ministry of Finance, and evidence of payment submitted for verification. As per recommendations of the 2020 audit, overpaid PAYE taxes deducted from staff salaries, amounting to Le32,782,500 were to be paid back to the affected staff. However, owing that the NRA does not make payment refunds, a tax set-off arrangement was initiated by way of notification to the NRA, from whose outstanding tax payment owed, the overpaid taxes were deducted and paid to the affected staff.
From the outstanding balance of taxes owed, Le39,430,545.00 had been paid to the NRA”, he said.
Commenting further, Auditor’s says out of the Le507,726,923.27, evidence of withholding taxes payment to NRA totalling Le68,041,660 (accounting for 13% of total withholding taxes) was submitted and verified, leaving a balance of Le439,685,263.27 unpaid. Since 77% of the withholding tax remained unpaid, the issue is unresolved.
The report also discovers payment without supporting documents.
Contrary to Section 100 (1bi) of the PFMR of 2018, bank withdrawals which amounted to Le557,251,524 were without payment vouchers and the relevant supporting documents. In addition, total bank withdrawals of Le283,161,118.40 were without adequate supporting documents such as: invoices, local purchase orders, back-to-office reports, etc.
The Senior Accountant and the Administrative and Finance Officers of the Projects should ensure that the payment vouchers and relevant supporting documents are submitted to the auditors.
The management, in their views, said the Le30,000,000 withdrawal was a backlog payment of Imprest for the 4th quarter of 2020. (ii) TheLe190,325,159 was part of the 20% refunds that was done by GIZ for a programme they fully funded. The file is available for verification.
- (iii) TheLe29,048,986 was the withholding tax amount paid back to GIZ for a programme they funded. It is their policy to pay taxes to the NRA on behalf of their implementing partners. However, vouchers and receipts of payment to GIZ are available for verification. Attached herewith for verification are documents detailing the transactions as shown below; Imprest retirement in respect of the 4th Quarter 2020. Payment for safety gears, rollup banners used at the launch of the National Youth Policy Payment for window curtains for youth connect centres in Mattru, Mongoa and Daru Payment for two face signposts for youth connect centres in Mattru, Mongo and Daru.
- (iv) The supporting documents of Le23,625,000 for the repairs and maintenance of AJG347 were with the previous Procurement Officer who was transferred but are available for verification.
- (v) The back-to-office reports and signed distribution list of activities totalling Le268,161,118.40 made from the National Youth Farm and District Account were in a separate file and are available for verification.
- (vi) As an audit response to audit query, please see documents for verification (payment voucher for transport allowance and other supporting documents).
Auditor’s Comment
Of the Le557,251,524, payment vouchers and relevant supporting documents for 84% of the payments which totalled Le468,631,524 were submitted and verified leaving a balance of 16% of payments totalling Le88,620,000, without payment vouchers and other relevant supporting documents. Therefore, the recommendation was substantially implemented.
Of the Le283,161,118.40, adequate supporting documents such as back to office report signed distribution list, invoices etc. were submitted for 75% of payments totalling Le211,988,715.20 leaving a balance of 25% payments amounting to Le71,172,403.20 without adequate supporting documents. Therefore, the recommendation was substantially implemented.
On the National Youth Apprenticeship Programme not Developed, the Ministry enters into agreement with Ingenious Consulting Limited for a monthly composite fee of Le40,000,000 for six months for the development of a National Youth Apprenticeship Programme.
On the review of payment records, the Auditor’s verified total payment of Le60,000,000 to the consultant but evidence of work done such as the inception report, report on the development of the apprenticeship programme, etc. was not submitted for audit inspection.
This, the Auditor’s, recommends for the Component Manager to submit evidence of work done by the consultant. Otherwise, the money paid should be recovered and paid back into the Project’s bank account and the evidence submitted for audit inspection.
Official’s Response
Attached for your kind consideration and subsequent action is the report from the consultant referred to the GoSL for the non-payment of its counterpart funding”.
Auditor’s Comment
Report justifying consultation work done by the consultant was submitted and verified. However, there was no evidence of the development of the National Youth Apprenticeship Programme. Therefore, the issue remains unresolved.
Advanced Payment Guarantee (APGs) and Status Report for Car Wash Centres Construction Not Submitted
The Ministry’s Livelihood Technical Skills Centre made 30% advance payments totalling Le653,430,628.53 to five contractors for the construction of cash wash centres without obtaining an advance payment guarantee (APG). From the review of report on the construction of car wash centres, works for these five car wash centres had not commenced. We recommended that the Director of Livelihood Technical Skills Centre should submit evidence of work done by these contractors to justify the advance payments made. Otherwise, the advance payment guarantees should be submitted for the payments made.
Official’s Response
“Submitted for audit verification is status/monitoring report March 2022 for work executed so far.
The Auditor’s, in his comment said, the Monitoring report including pictorial evidence of the construction of the relocated car wash centres in Metchem Hill Station, Y-Junction, Bo and Moyamba Town were submitted and verified. Monitoring report including pictorial evidence of construction of car wash centres by Mishael Kay Construction and General Supplies and Bangso Construction and Trading Enterprise were not submitted for audit inspection. Therefore, the issues are partly resolved.
