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AUDIT REPORT ON THE ACCOUNTS OF THE

OFFICE OF THE

AUDITOR-GENERAL

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2005

2005

Pubished by authority

Price (Vat excluded) N$ 16.58

Report no: 397

REPUBLIC OF NAMIBIA

OFFICE OF THE AUDITOR-GENERAL

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REPUBLIC OF NAMIBIA

TO THE HONOURABLE SPEAKER OF THE NATIONAL ASSEMBLY

I have the honour to submit herewith my report on the accounts of the Office of the Auditor-General for the

financial year ended 31 March 2005 in terms of Article 127(2) of the Namibian Constitution. The report istransmitted to the Honourable Minister of Finance in terms of Section 27(1) of the State Finance Act, 1991,(Act 31 of 1991) to be laid upon the Table of the National Assembly in terms of Section 27(4) of the Act.

JUNIAS ETUNA KANDJEKEWINDHOEK, May 2006 AUDITOR-GENERAL

2005

Office of the Auditor----General

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REPORT OF THE AUDITOR-GENERALON THE ACCOUNTS OF THE

OFFICE OF THE AUDITOR-GENERALFOR THE FINANCIAL YEAR ENDED

31 MARCH 2005

1. INTRODUCTION

1.1 ReportThis report on the accounts of the Office of the Auditor-General for the financial year ended31 March 2005 is presented to the National Assembly in accordance with the terms of Article127(2) of the Constitution of the Republic of Namibia and Section 27(1) of the State Finance Act,1991 (Act 31 of 1991), as amended.

1.2 Powers and dutiesSection 25(1)(c) of the State Finance Act, 1991, provides that the Auditor-General should satisfyhimself that:

(a) all reasonable precautions have been taken to ensure that all monies due to the State arecollected, and that the laws relating to the collection of such monies have been compliedwith;

(b) all reasonable precautions have been taken to safeguard the receipt, custody and issue ofand accounting for, the States assets, such as stores, equipment, securities and movablegoods; and

(c) expenditure has taken place under proper authority and is supported by adequatevouchers or other proof.

In addition, the State Finance Act, 1991, Section 26(1) (b) (iv) empowers the Auditor-General toinvestigate and report on the economy, efficiency and effectiveness of the use of the Statesresources.

2. FINANCIAL STATEMENTS

The appropriation accounts were submitted to the Auditor-General in terms of Section 13 of the

State Finance Act, 1991. The financial statements, notes to the financial statements and generalinformation supplied by the Accounting Officer are attached as annexure A to this report.

3. SCOPE OF THE AUDIT

3.1 The Deputy Auditor-General in co-operation with the Permanent Secretary of the Ministry ofFinance is responsible for the preparation of the financial statements and for ensuring theregularity of the financial transactions therein. It is the responsibility of the Auditor-General toform an independent opinion, based on the audit, on those statements and on the regularity ofthe financial transactions included in them and to report his opinion to the National Assembly.The audit included:

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(a) examination on a test basis of evidence relevant to the amounts, disclosure andregularity of financial transactions included in the financial statements; and

(b) evaluation of the overall adequacy of the presentation of information in the financialstatements.

3.2 The audit was planned and performed so as to obtain all the information and explanationsconsidered necessary to provide sufficient evidence to give reasonable assurance that:

(a) the financial statements are free from material misstatement, whether caused by error,fraud or other irregularity;

(b) in all material respects, the expenditure and income have been applied to the purposesintended by the legislator; and

(c) the financial transactions conform to the authorities that govern them.

4. AUDIT OBSERVATIONS

4.1 MAIN ISSUES/FINDINGS IDENTIFIED BY THE AUDIT

4.1.1 Unauthorised expenditure

The undermentioned unauthorised expenditure occurred during the financial year and is reported as suchin terms of Section 27(a) of the State Finance Act, 1991 (Act 31 of 1991):

(i) Main division 01 Office of the Auditor-General, was exceeded with an amount of N$ 503.41which is unauthorised in terms of Section 27(6)(a)(ii) of the Act.

(ii) Although Treasury approval was obtained to utilize certain expected savings for the defrayal ofexcess expenditure through virements during the year, one (1) subdivision was exceeded by anamount of N$ 1 186.91 which is unauthorised in terms of Section 27(6)(a)(iii) of the Act.

4.1.2 Audit of and report on the Office of the Auditor-General

The present position of the State Finance Act (Act 31 of 1991) requires the Auditor-General to audit his

Office, which puts him in a difficult position, as the Auditor-General has to report on his own Office.

As recommended in previous reports, it is once again recommended that the State Finance Act (Act 31 of1991) be amended to allow the Office to be audited and reported on by the private audit firms. However, ithas been noted with appreciation that this issue has been addressed in the intended bill on the Office of theAuditor-General.

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4.1.3 Outstanding revenueThe following accounts in respect of audit fees have been rendered, but were still outstanding at the end of thefinancial year:

Institution Financial year N$

Karibib (02/03) 26 494.23Otavi (97/98) 24 828.20Otavi (99/00) 22 848.10Otavi (00/01) 24 509.18Otavi (01/02) 26 815.07Otavi (02/03) 13 833.25Outjo (02/03) 35 518.75Usakos (99/00) 30 715.28Usakos (00/01) 24 678.86

Bethanien (99/00) 25 025.72Ondangwa (00/01) 39 575.40Ongwediva (02/03) 34 623.90Oshakati (03/04) 41 818.74Development Brigade Corporation (02/03) 8 967.00Diamond Board 1999 3 339.00Diamond Board 2000 3 895.50Diamond Board 2001 4 662.00Namibia Press Agency (NAMPA) (02/03) 29 617.88Sports Development Fund (98/99) 5 301.45

Total 427 067.51

It is recommended that the Accounting Officer should indicate how and by when the outstanding amounts willbe recovered.

The following accounts were handed over to the Attorney-General for collection.

Institution Financial year N$

Otavi 97/98 24 828.20Otavi 99/00 22 848.10Otavi 00/01 24 509.18

Otavi 01/02 26 815.07Usakos 99/00 30 715.28Usakos 00/01 24 678.86Bethanien 99/00 25 025.72

Total 179 420.41

4.1.4 Suspense accounts

The Bills Payable account of the Office reflects a credit balance of N$ 1 325 520.65.

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4.1.5 Reconciliation of expenditure transactions for the financial year ended 31 March 2005

During the verification of annual report statements, an expenditure reconciliation was performed with theobjective to ensure that all expenditure transactions relevant to the year of account have been recorded and toensure that the expenditure ledger is complete. No errors or omissions were found and it was also found thatthe Office regularly reconciles the expenditure ledger on a monthly basis. The Office is commended for a jobwell done.

4.1.6 Other findings from the control environment

An audit plan was prepared prior to the audit of the Office in order to establish the risk areas which the auditneeded to focus on. Various controls such as managements organisation, managements approach to controls,management override, the framework for management controls, segregation of duties, personnelconsiderations, and protection of assets and records were addressed. It was concluded that these controls weresatisfactory. However, the following issues need managements attention:

(a) there is no adequate physical protection for the computer hardware in case of destruction by fire andwater. Although back-ups are kept in a fireproof safe, a sprinkler valve system should be considered,

especially for the server room. It is also recommended that back-ups should be kept off-site; and

(b) although a disaster recovery plan exists, it has never been tested nor revised or updated.

5. ACKNOWLEDGEMENT

The co-operation and assistance given by the management and staff of the Office of the Auditor-Generalduring the audit is appreciated.

6. AUDIT OPINION

I certify that I have audited the financial statements of the Office of the Auditor-General for the yearended 31 March 2005, in accordance with the terms of Article 127(2) of the Namibian Constitution andSection 25(1) of the State Finance Act, 1991 (Act 31 of 1991).

In my opinion the financial statements fairly represent the receipts and payments of Vote 04 for the yearended 31 March 2005 and in all material respects the receipts and payments have been applied to thepurposes intended by the National Assembly and conform to the authorities which govern them.

JUNIAS ETUNA KANDJEKE OFFICE OF THE AUDITOR-GENERALAUDITOR-GENERAL Metropolitan Building, 5th floor

Cnr Dr Frans Indongo / Werner List StreetsPrivate Bag 13299WINDHOEKNAMIBIA

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ANNEXURE A

1. FINANCIAL STATEMENTS

1.1 Appropriation Account

2004/2005 2003/2004

Variations

ServiceAuthorizedexpenditure

Actualexpenditure

Under-expenditure/

(Excess)

Percent-age

Actualexpenditure

N$ N$ N$ N$ % N$

01 . Office of the

Auditor-General:

Original budget 1 138 000

Less: Virement (81 000) 1 057 000 1 057 503.41 (503.41) 0.0 4 488 582.60

02. Administration:

Original budget 4 182 000

Plus: Virement 40 000 4 222 000 4 205 195.56 16 804.44 0.4 10 680 472.72

03. Auditing:

Original budget 11 327 000

41 000 11 368 000 11 331 774.92 36 225.08 0.3 -Plus: Virement

Total:

Original budget 16 647 000 16 647 000 16 594 473.89 52 526.11 0.3 15 169 055.32

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1.2 Standard subdivisions

2004/2005 2003/2004

Under-

Authorised Actual expenditure/ Actual

Subdivision expenditure expenditure (Excess) expenditure

N$ N$ N$ N$

Operational:

Current expenditure: Personnel

001. Remuneration 10 678 000 10 670 046.56 7 953.44 9 689 352.02002. Employers contribution to staffs

pension fund 1 367 000 1 364 275.68 2 724.32 1 212 550.59003. Other conditions of service 63 000 58 988.49 4 011.51 107 148.70

Total 12 108 000 12 093 310.73 14 689.27 11 009 051.31

Current expenditure: Goods and other services

021. Travel and subsistence expenses 737 000 735 833.54 1 166.46 484 972.88

022. Materials and supplies 150 000 149 928.91 71.09 119 795.48

023. Transport 294 000 295 186.91 (1 186.91) 272 272.49

024. Utilities 963 000 961 945.85 1 054.15 746 374.91

025. Maintenance 106 000 101 663.24 4 336.76 69 547.51

027. Other services and expenses 2 079 000 2 048 141.57 30 858.43 2 037 604.11

Total 4 329 000 4 292 700.02 36 299.98 3 730 567.38

Current expenditure: Membership fees andsubscriptions

041. International 40 000 38 538.00 1 462.00 22 679.89

044. Grants & subsidies 50 000 50 000.00 50 000.00

Total 90 000 88 538.00 1 462.00 72 679.89

Total: Current expenditure 16 527 000 16 474 548.75 52 451.25 14 812 298.58

Capital expenditure: Acquisition of assets

101. Furniture and office equipment 120 000 119 925.14 74.86 356 756.74

Total 120 000 119 925.14 74.86 356 756.74

Total: Operational expenditure 16 647 000 16 594 473.89 52 526.11 15 169 055.32

GRAND TOTAL 16 647 000 16 594 473.89 52 526.11 15 169 055.32

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1.3 Departmental revenue

Revenue for the year is as follows:

2004/2005 2003/2004

Revenue heading EstimateActual

revenueMore/(Less )

than estimatedActual

revenue

N$ N$ N$ N$001. Audit fees 1 200 000 1 559 818.74 359 818.74 1 394 283.51

002 Private telephone calls 50 000 45 862.52 (4 137.48) 49 040.84003. Miscellaneous 15 000 16 301.11 1 301.11 28 098.81

Total 1 265 000 1 621 982.37 356 982.37 1 471 423.16

1.4 NOTES TO THE FINANCIAL STATEMENTS

1.4.1 Appropriation account: Explanations of variations exceeding 2% between the amountsvoted and the actual expenditure.

No variations exceeding 2%were recorded during the 2004/05 financial year, therefore no explanationswere required.

1.4.2 Departmental revenue: Explanations of deviations exceeding N$ 100 000:Underestimated

001. Audit fees

More revenue was received than expected.

2. GENERAL INFORMATION

2.1 Gifts/Donations(i) Given by the GovernmentThe undermentioned donations and free services valued at N$ 59 911.06 were given by the Office with thenecessary Treasury authorisation:

Beneficiary Nature Value Authorization

N$Public Accountants and Auditors Board Donation 50 000.00 2004/05 BudgetNews Media Free Services 36.28 20/13/1/1/04Libraries Free Services 3 858.57 (DB 01/262) d.d.

Universities Free Services 2 572.38 4 September 2001Foreign Missions Free Services -SADCC Countries Free Services 1 991.70A.G Complimentary Free Services 165.94Archives Free Services 1 286.19

59 911.06

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(ii) Received by the Government

The following foreign aid was received by the Office during the year:

Name of donor Amount Purpose/objectiveNature ofdonation Authorisation

N$SwedishInternationalDevelopmentAgency

614 889.87 To enhance the ability of theOffice of the Auditor -General to fulfil itsobligation as a supreme auditinstitution.

Training /Technicalsupport

20/11/1/1/04(DB 03/768)20/11/1/1/04(DB 04/146)

2.2 Losses to the Government

Vehicle accidents

Seven (7) accidents were reported during the financial year 2004/2005 and were repaired at a cost of

N$ 9 496.23.

WINDHOEK, 2005-11-23 W P BARTHACCOUNTING OFFICER