Consolidated Compliance Audit Report of the Federal ...

Consolidated Compliance Audit Report of the Federal Government

of Somalia for the Year Ended 31 December 2019

FEDERAL REPUBLIC OF SOMALIA

OFFICE OF THE AUDITOR GENERAL

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CONTENTS

ABBREVIATIONS AND ACRONYMS ................................................................................................................................. IX

AUDITOR GENERAL’S MESSAGE ....................................................................................................................................... XI

GOGOLDHIG ................................................................................................................................................................................1

I. EXECUTIVE SUMMARY .......................................................................................................................................................1

II. INTRODUCTION .................................................................................................................................................................. 7

III. SUBJECT MATTER(S) ........................................................................................................................................................ 9

IV. AUDIT OBJECTIVE AND SCOPE ................................................................................................................................... XI

V. AUDIT CRITERIA ................................................................................................................................................................ 13

VI. INTERNAL CONTROL ..................................................................................................................................................... 15

VII. AUDIT FINDINGS AND RECOMMENDATIONS ......................................................................................................17

ADMINISTRATIVE SECTOR ................................................................................................................................................ 19

1. Office of the President ........................................................................................................................................................20

1.1 Asset Management 20

1.2 Contract Management 21

1.3 Internal Audit 22

1.4 Audit Follow Up 23

2. House of the People .............................................................................................................................................................24

2.1 Expenditure Control 24





3. The Senate ............................................................................................................................................................................. 31






4. Office of the Prime Minister .............................................................................................................................................36





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5. Ministry of Foreign Affairs .............................................................................................................................................. 40

5.1 Annual Accounts 40






6. Ministry of Finance.............................................................................................................................................................47



6.3 Procurement Management 53

6.4 Debt Management 55



7. Office Of The Accountant General ..................................................................................................................................59







8. Ministry Of Planning .........................................................................................................................................................66







9. Ministry of Interior Affairs...............................................................................................................................................72






10. Ministry of Endowments & Religious Affairs............................................................................................................ 77

10.1 Revenue 77

10.2 Hajj & Umrah 78



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11. Ministry of Justice .............................................................................................................................................................86






12. The Supreme Court ...........................................................................................................................................................90







13. Banadir Regional Court ...................................................................................................................................................96







14. Banadir Regional Appeal Court ................................................................................................................................... 101






15. The Office Of The Attorney General ...........................................................................................................................105






16. Ministry of Humanitarian & Disaster Management ............................................................................................109




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17. Ministry of Constitutional Affairs .............................................................................................................................. 114





17.5 udit Follow Up 116

18. National Independent Electoral Commission ..........................................................................................................117






19. National Civil Service Commission ............................................................................................................................ 122


19.2 Contract Manegement 122



SECURITY SECTOR ..............................................................................................................................................................125

20. Ministry of Defense ....................................................................................................................................................... 126






21. Somali National Army .................................................................................................................................................... 133


21.2 Legal Framework 133

21.3 Human Resource Management (Personnel Management) 134

21.4 Management Food And Fuel Supplies 136






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22. Ministry of Internal Security ......................................................................................................................................143






23. Somali Police Force .........................................................................................................................................................149

23.1 Submition Of Annual Accounts 149


23.3 Human Resource Management (Personnel Management) 150

23.4 Management Food and Fuel Supplies 152



23.7 Contract Mangement 157



24. National Intelligence and Security Agency .............................................................................................................160







25. Immigration & Naturalization Directorate ............................................................................................................ 167





ECONOMIC SECTOR ............................................................................................................................................................ 173

26. Ministry of Petroleum .................................................................................................................................................. 174







27. Ministry of Fisheries & Marine Resources ............................................................................................................... 179



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28. Ministry of Transport & Civil Aviation.....................................................................................................................184

28.1 Revenue 184






29. Somali Civil Aviation Authority ..................................................................................................................................190


29.2 Revenue 190





30. Ministry of Commerce & Industries ......................................................................................................................... 195







SOCIAL SECTOR ....................................................................................................................................................................201

31. Ministry of Health .......................................................................................................................................................... 202






32. Ministry of Education ................................................................................................................................................... 208






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33. Somali National University ...........................................................................................................................................211





34. Ministry of Labour & Social Affairs ...........................................................................................................................214







35. Banadir Regional Authority ........................................................................................................................................ 219




35.4 Weak Management of Vehicles 223

35.5 35.4 Contract Management 224



VIII. OVERALL CONCLUSION .......................................................................................................................................... 227

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ABBREVIATIONS AND ACRONYMS

FRS Federal Republic of Somalia

FGS Federal Government of Somalia

FMS Federal Member States

SFMIS Somalia Financial Management Information System

STA Single Treasury Account

ISSAI International Standards of Supreme Audit Institutions

SAI Supreme Audit Institution

OAGS Office of the Auditor General of Somalia

INTOSAI International Organization of Supreme Audit Institutions

AFROASAI African Organization of Supreme Audit Institutions

AFROSIA-E African Organization of English-Speaking Supreme Audit Institutions

ARABOSAI Arab Organization of Supreme Audit Institutions

IMF International Monetary Fund

WB World Bank

FY Financial Year

MoF Ministry of Finance

OPM Office of the Prime Minister

MoFA Ministry of Foreign Affairs

IED Improvised Explosive Device

TIN Tax Identification Number

TCC Tax Clearance Certificate

NCB National Competitive Bidding

ICB International Competitive Bidding

UNCTD United Nations Conference on Trade and Development

DMO Debt Management Office

MTDS Medium Term Debt Strategies

DMIS Debt Management Information System

PFMIS Public Financial Management Information Systems

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MDA’s Ministries Department and Agencies

PFM Public Financial Management

MOIFAR Ministry of Interior Affairs, Federalism, and reconciliations

MERA Ministry of Endowment & Religious Affairs

MoHADM Ministry of Humanitarian and Disaster Management

MoCA Ministry of Constitutional Affairs

NIEC National Independent Electoral Commission

NCSC National Civil Service Commission

MoD Ministry of Defense

MoIS Ministry of Internal Security

SNA Somali National Army

SPF Somali Police Force

TOE Table of Organization and Equipment

NISA National Intelligence and Security Agency

IND Immigration and Naturalization Directorate

AAIA Aden Adde International Airport

SCAA Somali Civil Aviation Authority

SNU Somali National University

BRA Banadir Regional Authority

PBC Private Business Company

PFRS The Parliament of the Federal Republic of Somalia

FPS The Federal Parliament of Somalia

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H.E. Mohamed M. Ali “Afgoi” Auditor General, FRS

“Efficiency in the management of public resources through transparency and robust accountability systems lead to improved citizen’s livelihood and creation of more resilient community in our country. Our audit approaches should propel us to realizing that sacred commitment.”

AUDITOR GENERAL’S MESSAGE

Villa Somalia, Mugadisho, Somalia Email: [email protected] | Website: www.oag.gov.so

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The Office of the President,The Federal Republic of Somalia,Villa SomaliaMogadishu, Somalia

Your Excellency the President

I am pleased to submit the Compliance Audit Report on 35 selected reporting entities of the Federal Government of Somalia for the year ended 31 December 2019. This is the second year that the OAGS submits the Compliance Audit Report. I have conducted the compliance audit in accordance with article 114 of the Provisional Constitution of Somalia, Public Finance Management Act, Magistrate of Accounts Act and the International Standards of Supreme Audit Institutions (ISSAIs). The Office of the Auditor General of Somalia (OAGS) is a member of the International Organization of Supreme Audit Institutions (INTOSAI), AFROSAI, AFROSAI-E and ARABOSAI.

The delay in the submission of this Consolidated Compliance Audit Report is mainly attributed to the impact of COVID-19. This was entirely beyond our control. Furthermore, my office was unable to cover all government institutions of the Federal Government of Somalia (FGS) because of COVID-19 outbreak. My office, therefore, prioritized the 35 key institutions based on the risk assessments for audit.

The audit provides a reasonable assurance that there is accountability and transparency in the management of resources through a strict adherence to the laws and regulations that the government have put in place to manage these resources.

In this report, I have highlighted significant audit findings which include non-preparation of financial statements by some ministries, departments, and agencies (MDAs) of the FGS, weak expenditure controls, weak controls over management of fixed assets, poor debt management, weak procurement management, failure to register contracts, and poor controls over Hajj and Umrah services among other issues. These are clear indicators of lapses in internal controls in these MDAs I audited.

GOGOLDHIG

Ref.: OAG/AG-190/2020 Date: 21/11/2020

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Villa Somalia, Mugadisho, Somalia Email: [email protected] | Website: www.oag.gov.so

Included in this report, is specific section under each MDAs on audit follow-up with regards to the implementation of audit recommendations of the previous financial year. It is of concern that many of the recommendations have not been implemented by the time of my audit and requires urgent attention.

I am hopeful that by highlighting the areas of weaknesses in the institutions audited, those charged with the responsibility of managing these institutions would focus on the key drivers of internal controls that would enhance prudent management of public resources.

Your Excellency, I would like to thank you, respective ministries, departments and agencies audited for the support you have given to my office in executing its mandate. Special thanks also go to the staff of the entities who provided information, explanations and support during the course of my audit.

Yours sincerely,

Mohamed M. Ali Auditor General, FRS

CC: The Prime Minister, FGS, The Speaker, House of the People, PFRS, The Speaker, The Senate, FPS

CONSOLIDATED COMPLIANCE AUDIT REPORT OF THE F.G.S. 2019 | 1

EXECUTIVE SUMMARY

During the audit process there were various levels at which the office interacted and communicated with the

management of the audited institutions. The purpose of this interaction was to provide an opportunity for

the management to clarify and take corrective actions on the findings of the audit. This was done through the

Management Letters and the audit queries which were issued during the course of the audit.

This Consolidated Compliance Audit Report is for the 35 MDAs that were audited for the Financial Year ended

31 December 2019. The audit focused on compliance with laws, regulations, and best practice in the following

key subject matters:

i. Annual Accounts

ii. Expenditure Control

iii. Asset Management

iv. Contract Management

v. Procurement Management

vi. Revenue

vii. Debt Management

viii. Hajj and Umrah Services

ix. Human Resources Management (Personnel Management)

x. Management of Food and Fuel Supplies

The audit findings reflected in this report are for those issues that could not be resolved during the audit

process whose collective action is required. The report also contains audit recommendations that are aimed

at addressing the findings for the issues raised.

Below is the summary of the major findings contained in this report highlighting the weaknesses in compliance

with laws, regulations and best practices.

1. FAILURE TO PREPARE ANNUAL ACCOUNTS

Observation

About 55% of ministries, departments, and agencies of the FGS failed to submit annual financial statements

in respect of the FY 2019 to the Office of the Auditor General for audit.

Article 41(1) of the law no. 2 of 29 December 1961 Financial & Accounting Procedure of the State (which was

amended 1971) requires the Accountant General, where an account has not been prepared and submitted,

to prepare the accounts in an ex-officio position, and submit to the Auditor General for audit.

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2 | CONSOLIDATED COMPLIANCE AUDIT REPORT OF THE F.G.S. 2019

Recommendations

All ministries, departments and agencies which get annual appropriations for their budgets should submit annual financial statements to the Office of the Auditor General for audit or the Accountant General (in ex-officio capacity) should prepare the accounts of those MDAs, and submit them for audit in an ex-officio capacity.

2. WEAKNESSES IN EXPENDITURE PAYMENT CONTROL – US $12,326,903.60

Observations

Under budget lines for most ministries, departments and agencies, payments were processed without supporting documents attached to payment requests. The payments did not have one or more of the following supporting documents such as: (a) purchase orders or requisition order, (b) boarding passes for travels, (c) invoices, (d) receipt vouchers, (e) evidence of authorization for travels made, (f) approved accountabilities for the travels made, (g) names and signatures of those who received travel advances and invitations for travel made.

There were payment vouchers along with supporting documents that were not cancelled by stamping them with a dated “PAID Stamp” to prevent the use of such documents in support of further payments.

There were also instances where expenditures were charged to wrong sub-heads because of insufficient funds in certain sub-heads. For example, funds for office running costs would be used for travels where the sub-head for travels do not have adequate funds.

There were also circumstances where there were internal reallocations of funds from one budget line to the other without the explicit approval of the Minister of Finance where this is required.

Recommendations

All payments must be based on adequate supporting documents, and are properly authorized by a senior responsible officer for goods and services received in accordance with specified terms.

All payment documents should be stamped as “PAID” as soon as payments have been affected (or cancelled as paid) to prevent their use in support of further payments.

All expenditures should be charged to the correct sub-heads to ensure that funds are utilized in accordance with appropriations made by the Parliament.

Where required by the Minister of Finance, all internal re-allocations of funds should be explicitly approved before disbursement of funds are affected.

3. WEAKNESS IN REVENUE COLLECTION – US $1,857,170.00

Observations

It was noted during the audit that three MDAs collected revenues using their own receipt books, not the official receipts from the Ministry of Finance, and used such revenues directly without banking them in tact with the Central Bank of Somalia.

The authorized receipt books are those issued by the Accountant General. Such revenues were neither captured in the Treasury Single Account, nor reflected in the financial statements of the reporting entity.


A total amount of US $115,070.00 was collected by Ministry of Air Transport and Somali Civil Aviation Authority using receipts that were not issued by the Accountant General and were being used at source. Also, a total amount of US $1,742,100.00 was collected by Ministry of Endowments using receipts that were not issued by the Accountant General.

Recommendations

Regularize revenue collections in accordance with laws or regulations and ensure revenues collected are deposited in a Treasury Single Account of the FGS held with the Central Bank of Somalia. This would ensure full accountability on the use of such public funds.

4. WEAKNESS IN CONTRACT MANAGEMENT

Observations

For most ministries, departments and agencies audited, each of them had at least two contracts that were not registered with Office of Auditor General.

In some specific instances, the entities did not provide the audit team with copies of the contracts. For example, the Accountant General’s Office did not make available to the audit team contracts relating to the Somali Financial Management Information System (SFMIS) and other consultants employed in the SFMIS. It was noted further that SFMIS is managed and supervised from outside the country and supervised by consultants who are not the government civil servants.

For all ministries, departments and agencies audited, most of them prepared local contracts in English language, instead of them preparing in Somali language.

Recommendations

All contracts are to be registered with the Office of the Auditor General in accordance with the law.

The Accountant General’s Office is required to make available all contracts relating to the implementation of SFMIS to the Office of the Auditor General for review and audit as appropriate.

All local contracts should be prepared in Somali language.

5. WEAKNESS IN ASSET MANAGEMENT

Observations

There was no approved document on policies and procedures for asset management in the FGS.

Asset registers were not maintained and in some cases they were not updated.

Furthermore, there were vehicles that were not registered in the institution name and in some cases the vehicles were not availed for audit purposes.


Recommendations

Comprehensive policy guidelines and procedures for management, control and reporting of fixed assets should be developed and implemented. The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies.

All FGS entities should establish a comprehensive register of assets with clear guidelines to ensure that particulars of all assets of each entity are entered into the register and updated on a periodic basis.

The Ministry of Finance should establish a central register of national assets in order to conduct periodic physical verification and update the asset register.

All vehicles should have log books, vehicle ownership books, should be registered in the name of the entity, and stored safely by a senior responsible official. All vehicles should also be recorded in the asset register with details such as the type of the vehicle, vehicle model, registration number, chassis number, location, value and responsible officer among other details.

Conduct periodic physical verification of all vehicles to ascertain existence, condition, and usage among others. The asset register should be updated with the results of the counts.

6. FAILURE TO CARRY OUT INTERNAL AUDIT FUNCTION

Observations

It was noted that, most of the audited entities neither had an internal audit unit nor function. There were no periodic internal audits conducted in most of the entities audited.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and that internal audit functions are effectively established across all FGS institutions. .

In the meantime, they should take necessary steps to ensure that periodic internal audits of all the audited entities are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations, and policies of the entity.

7. HAJJ & UMRAH

Observation

The audit reviewed weaknesses in the administration of Hajj and Umrah services as there were no policies or procedures in place to regulate these services.

As a result of not having clear policies, 21 visas of the 115 that were meant service providers were given to members of the Parliament, Cabinet Ministers and other people to use and attend the Hajj of 2019/1440 in breach of the contract between the Ministry of Endowment and Religious Affairs of FGS and the Ministry of Religious Affairs of Kingdom of Saudi Arabia. This led challenges of poor service that Somali Pilgrimage faced last year (2019/1440) as a result of the reduction of service providers such as for health specialist, sheikhs and among others.


Furthermore, the process used by the committees for the evaluation and the award of the companies was not completely clear as evaluation forms were not filled at all to conclude the process. In this regard, it was not possible to ascertain how the final bids were awarded.

Recommendations

There is an urgent need for the development and implementation of important policies. The Ministry of Endowment & Religious Affairs should develop comprehensive policies and guidelines for the implementation of Hajj and Umrah.

The Ministry should assign a skilled number of service providers to the Somali Pilgrimage so that the Pilgrimage can participate in the Hajj properly. The Ministry should not in any way give other people visas that were meant for the service providers of the Somali Pilgrimage.

All the companies that were evaluated and awarded to serve the Somali Pilgrimage must pay all required fees and taxes that were made mandatory by the Ministry and other FGS institutions for the companies to be allowed to serve the Pilgrimage.

The Ministry should ensure that all companies that do business with the Ministry are registered with FGS respective institutions and that they pay the required taxes in accordance with the laws.

8. DEBT MANAGEMENT

Observations

The Ministry of Finance did not have an approved debt management strategy for managing national debts in the medium to long term. In this regard, it was not possible to ascertain how the Ministry is managing the national debt contracted from various lenders.

It was also observed that the Ministry of Finance did not have laws or regulations for public debt reporting that includes content, periodicity and format of public debt reports.

During the course of the audit, it was identified that the Debt Management Information System (DMIS) was not integrated with other Public Financial Management Information Systems (PFMIS), in particular with the Somali Financial Management Information System (SFMIS). The SFMIS is the main PFMS used for preparing FGS financial statements and financial statements of the MDAs.

Recommendations

The Ministry of Finance, in particular the Debt Management Unit, should develop a debt management strategy to support the formulation of national economic policies and plans that can lead to economic growth and development.

The Ministry of Finance, in particular the Debt Management Unit, should develop regulations and guidelines for preparing periodic debt reports consistently in accordance with best practice.

The Ministry of Finance, in particular the Debt Management Unit, should interface the DMIS with the SFMIS and other relevant PFMISs.


9. PROCUREMENT MANAGEMENT

Observations

During the course of the audit the following were noted:

• The Ministry of Finance did not prepare procurement plans

• One company was awarded a contract without producing a Tax Identification Number (TIN) and a Tax Compliance Certificate (TCC) before being awarded the contracts by the Ministry of Finance.

• The Ministry of Finance did not use the appropriate procurement methods based on the thresholds set out in the National Procurement Law.

Recommendations

All MDAs should comply with the National Procurement Act and regulations and abide by the law in all procurements.

10. FAILURE TO ENACT NEW REGULATIONS FOR SECURITY SECTOR INSTITUTIONS

Observations

The Somali National Army, Somali Police Force, the Custodial Corps/Somali Prisons Forces and NISA generally operate under the old outdated laws enacted before the Provisional Constitution was promulgated.

Recommendation

The Federal Parliament of Somalia should take appropriate steps to enact new laws and regulations for the Somali National Army, the Somali Police Force, the Custodial Corps (Somali Prisons Forces) and NISA since Somalia is now a Federal Republic.

11. PERSONNEL MANAGEMENT

Observations

There was no evidence that there are approved Table of Organization & Equipment’s (TOEs) for the SNA and SPF personnel to guide recruitment, deployment and management of personnel.

Furthermore, there were shortcomings in the administration of the personnel database maintained by the institutions.

Recommendations

Steps should be taken to develop an appropriate TOE which takes into account security threats, security policy and strategy for Somalia. The TOE should be reviewed and approved by the highest military and police authorities and preferably by the Head of State, His Excellency the President of the FGS. Like the national budget, the TOE should be reviewed and updated periodically to take into account national security threats.


The Ministry of Defense, the Somali National Army, the Ministry of Internal Security and the Somali Police Force should have an up to date database for both personnel and equipment and should ensure that strong controls are put in place in order to effectively and efficiently manage the database.

The Ministry of Defense, the Somali National Army, the Ministry of Internal Security and the Somali Police Force should carry out periodic physical counts of the personnel to remove nonactive or “ghost personnel” from the system.

12. MANAGEMENT OF FOOD AND FUEL SUPPLIES

Observations

Weaknesses in the management of food supplies were noted and there was no documented policy and procedures of quality control for ensuring distribution of the right quantity and quality of food to the personnel.

In addition to the above, there was no documented and approved policy guidelines and procedures for management, distribution and issue of fuel supplies for the operations of the Somali National Army and the Somali Police Force. In this regard it was not possible for us to ascertain whether the fuel was used for intended purposes aimed at serving the citizen and the nation.

Recommendations

Ministry of Defense, Somali National Army, Ministry of Internal Security and Somali Police Force should develop and implement approved food quality policies and procedures for food rations and ensure adequate measures are implemented.

On the one hand, they should develop and implement detailed policy guidelines and procedures for the management of fuel supplies with the approval of the Ministry of Defense and Ministry of Internal Security. While on the other, they should be conducting periodic verification of fuel supplies, and any discrepancies investigated for prompt remedial action.


INTRODUCTION

The responsibility of the Minister of Finance, the Accountant General, the Controlling Officers and the Auditor General as regards to the management of public resources, reporting and accountability are contained in the Public Financial Management Act. The auditor General is responsible for the audit of all public funds.

This compliance audit report for the selected 35 institutions for the year ended 31st December 2019 has been conducted in accordance with the article 114 of the Provisional Constitution of Somalia, Public Financial Management Act and the Law of Magistrate of Accounts and International Standards of Supreme Audit Institutions (ISSAIs) that gave the mandate to the audit office to audit all government institutions in order to assess the prudent utilization of public funds. The compliance audit reports the deviations from the applicable criteria and violations of the applicable rules and regulations, so that corrective actions may be taken, and those responsible for such deviations or violations could be held accountable for their actions.

Article 114 of the Provisional Constitution of the Federal Republic of Somalia mandates the OAGS to undertake audits. Furthermore, Law 34 of Magistrates of Accounts (in particular sections 6, 7, 8, 9, 13 and 17) empowers the Auditor General to examine transactions, books, accounts and other public records of every Ministry, statutory office, agency, board, commission and bureau of the Government ; along with public funds received by a non-profit organization, including relevant international organizations.

This compliance audit on the 35 selected institutions was carried out based on the risk assessments from previous years audit reports in particular the 2018 Compliance Audit Report.

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SUBJECT MATTER(S)

This compliance audit report was conducted on the following subject matters, namely:

1. Annual Accounts2. Expenditure Control3. Asset Management 4. Contract Management5. Procurement Management6. Revenue7. Debt Management8. Hajj and Umrah Services 9. Human Resource Management (Personnel Management)10. Management of Food and Fuel Supplies

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CONSOLIDATED COMPLIANCE AUDIT REPORT OF THE F.G.S. 2019 | xI

AUDIT OBJECTIVE AND SCOPE

The main objective of this audit was to obtain sufficient appropriate audit evidence to enable the Auditor General to provide reasonable assurance on the compliance of the selected institutions in the above-mentioned subject matters for the year ended 31st December 2019. The compliance with the provision of the Constitution, Public Finance Management Act as well as other regulations such as the Public Procurement Act was assessed for each subject matter. The scope of this audit includes carrying out sufficient audit work to give a compliance audit conclusion on each subject matter.

In order to achieve this objective, sufficient audit evidence on compliance was obtained through appropriate tests of controls and substantive procedures.

The scope of the compliance audit covered activities of the institutions from 1st January 2019 to 31st December 2019. The compliance audit also covered the implementation of recommendations that were issued in the previous audits and which have remained outstanding at the time of issuing this report and are specifically linked to the above subject matters.

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Assessments for other subject matters as shown in the table above on debt management, Hajj and Umrah Services, Human Resource Management and Management of Food and Fuel that are not covered under the existing laws and regulations, good practice or best criteria existing internationally was used.

AUDIT CRITERIA

The audit was carried out based on the criteria derived from the following authorities for each respective subject matter:

NO SUBJECT MATER CRITERIA

1 Annual Accounts Article 25, 26, 30, 37, 39, 40 and 41 (1) of law no. 2 of 29 December 1961

Financial & Accounting Procedure of the State and article 7 (a) & (b) of law

no 317 Regulation for the Accounts of the State of 17 December 1962

(amended 1971)

2 Expenditure Control Article 16, 24 of law no. 2 of the Financial Management and Government

Accounts of 29 December 1961(amended 1971), Article 6 (A) of law

no 317 Regulation for the Accounts of the State of 17 December 1962

(amended 1971) and Best practice

3 Asset Management Article 134 sub-section 2 of law no. 318 for Stores of 18 December 1962,

and Best practice

4 Contact Management Article 33 of law no. 2 of the Financial Management and Government

Accounts of 29 December 1961 (amended 1971) and article 14 of law no.

22 of National Procurement Act of 09 August 2016

5 Procurement Management Article 27 sub-section (1), article 33 sub-section (2-g), article 62 (1, 2, 3

& 4) and paragraph 1 of Schedule 3 (A, B and C) of law no. 22 National

Procurement Act of 09-August-2016 (amended 2020)

6 Revenue Article 34 and 46 of law no. 317 of the Regulation for the Accounts of 27

December 1962

7 Debt Management Best practice

8 Hajj and Umrah Services Best practice

9 Human Resource Management

(Personnel Management)

Best practice

10 Management of Food and

Fuel Supplies

Best practice

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INTERNAL CONTROL

In this report, a specific mention is made for non-preparation of financial statements and failure to properly manage assets, debts, procurement, contracts, hajj and umrah, revenue among other issues. These are clear indicators of internal control lapses by the Government Agencies.

VI


AUDIT FINDINGS AND RECOMMENDATIONS

This detailed report displays the audit findings for each institution assessed and offers appropriate recommendations that are critical in addressing these findings. The Compliance Audit Report also lays out the responses that were received from the audited entities which have remained unresolved at the time of issuing this report. These responses are written in italics format.

VII


ADMINISTRATIVE SECTOR


OFFICE OF THE PRESIDENT

1.1 ASSET MANAGEMENT

1.1.1 Lack of Asset Management Policy and Procedures

Best Practice requires an institution to have an asset management policy and procedures that would assign management responsibility over assets, require establishment of asset registers, define how the assets are to be recorded and reported on, how the assets are to be monitored and how they might be disposed of, among other matters.

It was however observed that the Office of the President did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

All data related to the assets have been submitted to the Ministry of Finance’s asset registerer unit. The data was also share with the audit team.

Recommendations

A comprehensive and documented policy guidelines and procedures for management, control and reporting of assets should be developed and implemented.

The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Office of the President to follow.

1.1.2 Failure to Maintain up to date Asset Register

Law no. 318 for Stores of 18 December 1962, Article 134 subsection 2 suggests maintaining up-to-date recordings of the Government Offices’ equipment as well as the goods in the stores. Such register should have details as to the type of asset, date of acquisition, cost of acquisition, responsible officer for the asset, and unique identification number among other details.

It was, however, observed that contrary to the requirement of the law, the Office of the President did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity. Furthermore, the physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

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Management Response

All the assets have been submitted to the Ministry of Finance and we shown to audit team.

Recommendations

The Office of the President should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.

The Ministry of Finance should establish a central register of national assets and also to conduct periodic physical verification and update the asset register.

The Office of the President and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.

1.2 CONTRACT MANAGEMENT

1.2.1 Failure to Register Contracts With OAGS

Law No. 2 of the Financial and Accounting Procedure of the State issued on 29 December 1971 makes it mandatory to register all contracts with the Magistrate of Accounts (the Office of the Auditor General). Article 33 states that “contracts entered into on behalf of the Government and of other organs of the public administration shall require prior registration by the Office of the Auditor General”.

It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling US $299,611.25 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS.

Management Response

We will register all the contracts with the Office of the Auditor General as recommended.

Recommendations

NO CONTRACTOR PURPOSE OF THE CONTRACT CONTRACT DURATION AMOUNT US $

1 PBC 013 Supply of food 1 Year 34,991.25

2 PBC 115 Supply of food 4 Months 139,960.00

3 PBC 054 Supply of fuel 1 Year 31,165.00

4 PBC 116 Supply of fuel 3 Months 93,495.00

TOTAL $299,611.25


All contracts should be registered with the Office of the Auditor General in accordance with the law, so that the Auditor General may conduct audits and report the contracts.

Failure to Write Local Contracts in Somali Language

Law no. 22, Article 14 of the National Procurement Act requires international contracts shall be prepared in English or Arabic languages while local contracts shall be prepared in Somali language.

Contrary to the above criteria, that the Office of the President wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

We agree and we will write the local contracts in Somali language as recommended.

Recommendations

The Office of the President should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

1.3 INTERNAL AUDIT

1.3.1 Failure to Carry out Internal Audit Function

International best practice requires management to put in place an internal control management system that includes an internal audit function to ensure adherence and implementation of controls.

It was noted that the Office of the President neither had an internal audit unit nor function. In this regard, no periodic internal audits were conducted in the Office of the President.

Management Response

There was no written response from the audited entity on this matter.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including the Office of the President.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Office of the President are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and the Office of the President policies.


1.4 AUDIT FOLLOW UP

1.4.1 Outstanding Issues from the 2018 Audit Report

NO FINDING STATUS

1 There was no asset register Partially Implemented

2 There was no asset management policy guidelines & procedures Not implemented

3 Regularity of internal audit Partially implemented


HOUSE OF THE PEOPLE

2.1 EXPENDITURE CONTROL

2.1.1 Unsupported Payments - Running Costs

Law no. 2 of the Financial & Accounting Procedure of the State of 29 December 1961 obligates that every payment shall have supporting documents attached to payment requests to justify the payment. Supporting documents vary depending on the type of payment, and could include purchase orders, signed contracts, invoices, delivery notes; goods received notes, acknowledgement receipts, etc.

It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $747,865.00 were made without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. Details of payments in question are set out in the table below:

Management Response

The audited entity responded that they kept the document into the SFMIS and it can be found in the files of the entity.

Recommendations

All payments must be based on adequate supporting documents and they must be properly authorized by senior responsible officers for goods and services received in accordance with specified terms.

NOSUB-HEAD

PAYEE MONTHAMOUNT

US $COMMENT

1 2211PBC 001, PBC 002, PBC

003, and PBC 004

Feb, Apr,

Aug & Dec 1976,775.00

This payment did not have contracts,

invoices & receipt voucher

2 2212 PBC 001Feb, Apr, Aug &

Dec 1985,700.00



3 2213PBC 001, PBC 005, and

PBC 006

Feb, Apr, Aug &

Dec 19167,540.00



4 2214PBC 001, PBC 002, and

PBC 006

Feb, Apr, Aug &

Dec 1975,060.00



5 2215 PBC 007Feb, Apr, Aug &

Dec 1969,470.00



6 2261PBC 001, PBC 005, and

PBC 006273,320.00



TOTAL 747,865.00

2



2.1.2 Unsupported Payments - Parliament Committees’ Expenses

Law no. 2 of the Financial & Accounting Procedure of the State of 29 December 1961 obligates that every payment shall have supporting documents attached to payment requests to justify the payment.

Supporting documents vary depending on the type of payment, and could include purchase orders, signed contracts, invoices, delivery notes; goods received notes, acknowledgement receipts, etc.

It was, however, observed contrary to the requirements of the above-mentioned law, payments for the Parliament committees totaling US $211,000.00 that were paid from sub-head 2261 for the months of May, June, September, November, and December 2019 without adequate supporting. This did not make it possible for us to verify the authenticity of these payments.

Management Response

The audited entity responded that these payments were given to Parliament committees after the approval of the Speakers of the House of the People. The Parliament committees provided supporting documents as much as they could although COVID-19 was also a challenge for the non-completeness of the supporting documents. The Secretary General informed the Auditor General about the challenges faced.

Recommendations



2.1.3 Unsupported Payments - Medical Expenses


Supporting documents vary depending on the type of payment, and could include patient payment request, request approval documents, medical forms or reports, invoices and acknowledgement receipts, etc.

It was, however, observed contrary to the requirements of the above-mentioned law, medical expenses totaling US $150,000.00 was paid without adequate supporting documents such as patient payment request, medical forms or reports, invoices and acknowledgement receipts, etc. This did not make it possible for us to verify the authenticity of these payments.

Management Response

The audited entity responded that these payments were given to the members of the Parliament after the approval of the chairperson of the by-laws or Speakers of the House of the People. The management gives out the amount listed on the approval letter and members of Parliament do not provide any supporting documents.


Recommendations



2.1.4 Unsupported Payments - Travel Costs


Supporting documents vary depending on the type of payment, and could include purchase orders, signed contracts, invoices, acknowledgement receipts and travel documents.

Contrary to the requirements of the above-mentioned law, payments in amounts totaling US $190,769.00 that were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.

These payments were made to various recipients. The payments did not have one or more of the following supporting documents such as:

• Boarding passes;• Evidence of authorization for travels made;• Acknowledgement receipt;• Approved accountabilities for the travels made;• Names and signatures of those who received travel advances, and• Invitation letters.

Management Response

The audited entity responded that the amount of money used as per diem was deposited into the personal accounts of the travelers and there is no any supporting document they provide after travelers used the money, also the entity mentioned that the amount of money issued on tickets have all the supporting documents and are attached to them.

Recommendations




2.2.1 Lack of Asset Management Policy and Procedure

Best Practice requires an institution to have an asset management policy and procedures that would assign management responsibility over assets, require establishment of asset registers, define how the assets are to


be recorded and reported on, how the assets are to be monitored and how they might be disposed of among other matters.

It was however observed that the House of the People (Lower House) did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including House of the People (Lower House) to follow.



However, contrary to the requirement of the law, the House of the People did not maintain up to date asset register, making it difficult for us to verify the asset owned by the entity. Furthermore, the physical verification revealed that the assets were not tagged with unique identification numbers for control and monitoring.

Management Response

The audited entity responded that House of the People has buildings and was recorded in the register of National Asset Committee. However, the office equipment has inventory list but do not have tag numbers, someone was assigned to do the work but COVID-19 impacted although it will be ready by the time you come for next year audit.

Recommendations

Secretariat of the House of the People should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


House of the People (Lower House) and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.


NO CONTRACTOR PURPOSE OF THE CONTRACTCONTRACT DURATION

AMOUNT US $

1 PBC 007 General service 9 Months 131,400.00

2 PBC 001 General service 9 Months 198,000.00

3 PBC 005 Fuel & Oil 9 Months 48,240.00

4 PBC 001 Rent 32,830.00

5 PBC 004 Rent 39,830.00

6 PBC 002 Repair 9 Months 53,640.00

7 PBC 006 General service 1 year

8 PBC 003 Internet 1 year 4,000.00

9 UNDP Human Rights 1 year 63,700.00

10 UNDP Support the Parliament 1 year 276,000.00

TOTAL $847,640.00


2.3.1 Failure to Register Contracts with OAGS


It was, however, observed that contrary to the requirements of the above-mentioned law, contracts amounting US $847,640.00 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS.

Management Response

The audited entity responded that the Secretory General brought the contracts to the Office of the Auditor General and will be brought again to solve the issue.

Recommendations



2.3.2 Failure to Write Local Contracts in Somali Language


Contrary to the above criteria, House of the People have written the local contracts in English language, instead of writing them in Somali language as required by law.

Management Response

The audited entity responded that Procurement Office ordered the contracts to be written in English language so that World Bank and IMF staff can understand. OAGS should discuss the issue with Procurement Office and contracts will be written Somali language.

Recommendations

House of the People should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

2.4 INTERNAL AUDIT



It was noted that the House of the People neither had an internal audit unit nor function. There were no periodic internal audits conducted in the House of the People.

Management Response

Currently, the Lower House of the Parliament, have no Internal Auditor.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including the Senate.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the House of the People are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and the House of the People policies.


NO FINDING STATUS

1 19.2.1 Payments under sub-heads not fully supported Not implemented

2 19.2.2 Unauthorized internal re-allocation of funds Not implemented

3 19.2.4 Travel costs lack adequate supporting documents Not implemented

4 19.3.1 There is no Fixed Asset register Partially implemented

5 19.3.2 There was no asset management policy guidelines & procedures Not implemented

6 19.4.1 Contracts were not registered with the OAG Not implemented

7 19.5.1 Regularity of Internal Audit Partially implemented

2.5 AUDIT FOLLOW UP



THE SENATE


3.1.1 Unsupported Payments - Medical Expenses


Supporting documents vary depending on the type of payment, and could include patient payment request, request approval documents, medical forms or reports, invoices and acknowledgement receipts, etc.

It was observed that contrary to the requirements of the above-mentioned law, medical expenses totaling US $51,000.00 for the months of February, April, June and July were paid without adequate supporting documents such as patient payment request, medical forms or reports, invoices and acknowledgement receipts, etc. This did not make it possible for us to verify the authenticity of these payments.

Management Response

The Upper House of the Parliament has agreed the finding verbally but there was no written response from Upper House of the Parliament.

Recommendations






It was, however, observed that, total amount of US $96,000.00 were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.

These payments were made to various recipients.

The payments did not have one or more of the following supporting documents such as:

• Boarding passes;

3


• Evidence of authorization for travels made;• Acknowledgement receipts;• Approved accountabilities for the travels made;• Names and signatures of those who received travel advances, and• Invitation letters.

Management Response

The Upper House of the Parliament has agreed the findings verbally but there was no written response from Upper House of the Parliament.

3.1.3 Recommendations





Best Practice requires an institution to have an asset management policy and procedures that would assign management responsibility over assets, require establishment of asset registers, define how the assets are to be recorded and reported on, how the assets are to be monitored and how they might be disposed of among other matters.

It was however observed that the Senate (Upper House of the Parliament) did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

The Upper House of the Parliament have agreed to the finding verbally but there was no written response from the Upper House of the Parliament.

Recommendations


NO SUB-HEAD PAYEE MONTH AMOUNT US $

1 2216 PBC 008 Jan, March and June 2019 72,000.00

2 2216 Individuals July and Oct 24,000.00

TOTAL $96,000.00


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including the Senate (Upper House of the Parliament) to follow.



It was, however, observed that contrary to the requirement of the law, the Senate (Upper House of the Parliament) did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Response

The Upper House of the Parliament have agreed to the finding verbally but there was no written response from Upper House of the Parliament.

Recommendations

Secretariat of the Senate (Upper House of the Parliament) should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.

The Ministry of Finance should establish a central register of national assets and also to conduct periodic physical verification and update the asset register the Senate (Upper House of the Parliament) and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.




It was, however, observed that contrary to the requirements of the above-mentioned law, contracts in amount totaling US $1,709,268.00. as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS.

NO THE CONTRACT PURPOSE OF THE CONTRACT PERIOD OF THE CONTRACT

AMOUNT IN US $

1 PBC 009 Food services 10 months from March 2019 170,750.00


Management Response


Recommendations


3.3.2 Local contracts were written in English language

Law no. 22, Article 14 of the National Procurement Act requires international contracts shall be prepared in English or Arabic languages while local contracts shall be prepared in the Somali language.

Contrary to the above criteria, the Senate (Upper House of the Parliament) wrote its local contracts in English language, instead of writing them in Somali language.

Management Response


Recommendations

The Senate (Upper House of the Parliament) should write its local contracts in the Somali language in accordance with the laws; and get them translated into English if necessary.

NO THE CONTRACT PURPOSE OF THE CONTRACT PERIOD OF THE CONTRACT

AMOUNT IN US $

2 PBC 009 General services 2 months from March 2019 10,000.00

3 PBC 009 General services 2 months from Apr 2019 20,000.00

4 PBC 009 General services 5 months from June 2019 40,000.00

5 PBC 009Supply, of

Office equipment10 months from March 2019 60,000.00

6 PBC 009 House rent 10 months from March 2019 95,000.00

7 PBC 003 Internet services 1 year from Jan 2019 48,000.00

8 PBC 010 Oil and Gas 10 months from March 2019 137,500.00

9 PBC 011 Air tickets services 1 year from Aug 2019 1,110.00

10 UNDP Supporting for the Senate 2 years from Jan 2018 1,126,908.00

TOTAL $1,709,268.00


NO FINDING STATUS

120.2.2 The staff of the Senate were not enrolled with the

National Civil Service CommissionNot implemented

2 20.2.3 Payments were made without adequate supporting documents Not implemented


4 20..3.1 Lack of fixed asset register Partially implemented

520.3.2 There was no asset management policy

guidelines & proceduresNot implemented


7 20.5.1 Regularity of internal audit Partially implemented

3.4 INTERNAL AUDIT



It was noted that the Senate (Upper House of the Parliament) neither had an internal audit unit nor function. There were no periodic internal audits conducted in the Senate.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including the Senate.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Senate (Upper House) are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and the Senate policies.

3.5 AUDIT FOLLOW UP



OFFICE OF THE PRIME MINISTER



Law no. 2 of the Financial & Accounting Procedures of the State of 29 December 1961 obligate that every payment shall have supporting documents attached to payment requests to justify the payment.


It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $163,806.49 were made to some companies without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. Details of payments in question are set out in the table below:

NO SUB-HEAD PAYEES MONTHAMOUNT

US $COMMENTS

1 2211 PBC 012 December 19 5,516.39 This payment did not have receipt

voucher

2 2211 PBC 012 November 19 5,946.10 This payment did not have receipt

voucher

3 2211 PBC 013 February 19 12,832.00 This payment did not have receipt

voucher

4 2211 PBC 013 March 19 12,832.00 This payment did not have receipt

voucher

5 2212 PBC 014 October 19 3,895.00 This payment did not have receipt

voucher


voucher


voucher

8 2261 PBC 016 October 19 9,997.00 This payment did not have receipt

voucher

9 2261 PBC 017 December 19 66,977.00 This payment did not have receipt

voucher


voucher

4


Management Response

The Office will work on to support the expenditure and will stamp as paid once the payment is paid as recommended.

Recommendations






It was, however, observed that contrary to the requirement of the law, Office of the Prime Minister did not maintain up to date asset register making it difficult for us to verify the assets owned by the entity. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Response

The Office have completed the registration of assets and gave the assets tag numbers, but the Office will work on updating and modernizing the asset registration process.

Recommendations

Office of the Prime Minister should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Office of the Prime Minister and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.

NO SUB-HEAD PAYEES MONTHAMOUNT

US $COMMENTS


voucher


voucher

TOTAL $163,806.49


4.2.2 Weak Management of Vehicles

Best practice requires all vehicles to have logbooks, vehicle ownership book and vehicles are registered in the name of the entity.

It also requires that an approved policy be in place and adhered to. Furthermore, all vehicles should be recorded in the asset register as above.

It was however observed that there were several vehicles reportedly belonging to the Office of the Prime Minister, the management of OPM provided a list of vehicles but 3 vehicles did not have vehicle ownership books which were registered in the name of OPM and 1 vehicle did not have vehicle plate number. Details of the vehicles are set out below:

Management Response

Vehicles have been registered with the name of OPM and issued log sheets for all vehicles to use for the movements. The Office will work on the 4 vehicles mentioned above as recommended.

Recommendations

All vehicles should have logbooks, vehicle ownership books registered in the name of the Office of the Prime Minister and stored safely by a senior responsible official.

All vehicles should be recorded in asset register with details such as type of the vehicle, vehicle model, registration number, chassis number, location, value and responsible officer among other details.


Develop and implement policy guidelines and procedures specifically for management of vehicles.




NO VEHICLE TYPE SOURCE OF FUNDS CHASSIS NO. COMMENTS

1Toyota

Land cruiser FGS JTMHV09J4F152896

The vehicle had no ownership book which

was registered with name of the Entity.

2Toyota

Land cruiserFGS JTMHV09J6F4152236

The vehicle had no ownership book which


3 Toyota pickup FGS MROFR22G3E0723906The vehicle had no ownership book which


4 Toyota pickup FGS MROFR22G3F0793584 The vehicle had no plate number


NO FINDING STATUS

1 17.3.1 There was no fixed asset register Partially implemented

2 17.3.4 There were weak controls over vehicles Partially implemented

Contrary to the above criteria, Office of the Prime Minister wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The Office registered four contracts from the Office of the Auditor General and will register the remaining contracts from OAGS as recommended.

Recommendations


4.4 AUDIT FOLLOW UP



MINISTRY OF FOREIGN AFFAIRS

5.1 ANNUAL ACCOUNTS

5.1.1 Failure to Prepare and Submit Annual Accounts

Article 26 of law no. 2 of 29 December 1961 Financial & Accounting Procedure of the state requires the accounts of the State to be submitted for audit by 30 April of the year following that to which the annual accounts related to comprising the following:

i. Statement of Receipts and Payments;ii. Statement of Comparison of Budget and Actual Amounts;iii. Statement of Cash Flows;iv. Reconciliation of opening and closing bank and cash balances;v. Statement of assets and liabilities, andvi. Comprehensive accounting policies and detailed explanatory and disclosure notes.

As of August 2020, the financial statements for the Ministry of Foreign Affairs for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

We have prepared the financial statements but there was a delay due to unavailability of a format to use, but the Ministry will submit the financial statements to the Accountant General’s Office.

Recommendations

Ministry of Foreign Affairs should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.





5


It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $399,559.40 were made to three companies without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.

Details of payments in question are set out in the table below:

Management Response

The Ministry checked the files and goods delivery note was attached to the payments, but the Ministry did not see necessary to make available on receipt vouchers as the payments were not cash but was directly transferred by the Central Bank to the vendor. The Ministry will work on to fully support the payments and make available rescript vouchers as recommended.

Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $422,100.00 were spent by the Ministry as travel costs without adequate supporting documents. Also, US $186,300.00 were spent by Embassies as travel cost without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.

NO SUB-HEAD PAYEE MONTH AMOUNT US $ COMMENTS

1 2211 PBC 022 Jan-sep19 53,888.00 This payment did not have receipt voucher


3 2213 PBC 023 Jan-sep19 71,896.40

This payment did not have details of the

vehicles that were given fuel and receipt

voucher




TOTAL $399,559.40



• Boarding passes;• Evidence of authorization for travels made;• Acknowledgement receipts;• Approved accountabilities for the travels made;• Names and signatures of those who received travel advances, and• Invitation letters.

Management Response

Some of the documents were in the files and the Ministry will work and assign employees to make available of all supporting documents required as recommended.

Recommendations






It was however observed that the Ministry of Foreign Affairs did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

The Ministry is ready and will implement this recommendation.

NO BENEFICIARY MONTHS AMOUNT US $

1 PBC 024 Jan – Nov 19 422,100.00

2 Embassies Jan - June 19 186,300.00

TOTAL $608,400.00


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Foreign Affairs to follow.



It was, however, observed that contrary to the requirement of the law, Ministry of Foreign Affairs did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Response

The Ministry is ready and will implement this recommendation.

Recommendations

Ministry of Foreign Affairs should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry of Foreign Affairs and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.


Best practice requires all vehicles have logbooks, vehicle ownership books and are registered in the name of the entity. It also requires that an approved policy be in place and adhered to. Furthermore, all vehicles should be recorded in the asset register as above.

It was however observed that the Ministry provided a list of 14 vehicles reportedly owned by the Ministry. Out of the 14 vehicles the Ministry only provided 11 vehicles for physically verification and the remaining 3 were never brought for physical verification. None of these vehicles were registered in the name of the Ministry for ownership.

The Ministry do not have the list of the vehicles that our embassies around the world use or owned.

The table below is a list of Ministry vehicles, some of which could not be identified with the Ministry or could not be physically verified during the audit:


Management Response

The Ministry though that all the 14 vehicles had made available to the audit team and physically verified but for now the Ministry is ready to provide the 3 remaining vehicles and will work all the vehicles to be registered with the name of the entity.

The Ministry submitted the list of all land and building we have abroad but for the vehicles the Ministry is ready to work with the Ministry of Finance and Office of the Auditor General to work and verify all the assets we have abroad.

Recommendations

All vehicles should have logbooks, vehicle ownership books, be registered in the name of the Ministry of Foreign Affairs and stored safely by a senior responsible official.




1 Toyota Crown FGS J25171-0045987 Not registered in the name of MOFA

2 Toyota Harrier FGS SXV15-0013279 Not registered in the name of MOFA

3 Toyota Camry FGS ACV35-0002659 Not registered in the name of MOFA

4 Toyota Hilux FGS AHTF2299609023841 Not registered in the name of MOFA

5 Toyota Camry FGS AGF35-3360003575 Not registered in the name of MOFA

6 Hyundai South Korea KMHSN81E4GU115816 Not registered in the name of MOFA

7 Hyundai South Korea KMHSN81E9GU121336 Not registered in the name of MOFA

8 Hyundai South Korea KMHSN81EXGU127341 Not registered in the name of MOFA

9 Toyota Camry Qatar 6T1BE42KX8X499960 Not registered in the name of MOFA

10 Toyota Hiace QatarNot registered in the name of MOFA &

was not physically verified

11Toyota Land Cruiser

bulletproofFGS

Not registered in the name of MOFA &

was not physically verified


bulletproofFGS JTMHX09J9D4046144 Not registered in the name of MOFA


bulletproofQatar ING 7T1400+ Not registered in the name of MOFA

14Toyota Hilux

pick up FGS

Not registered with name of MOFA & was

not physically verified


NO CONTRACTOR PURPOSE OF THE CONTRACTDURATION OF THE CONTRACT

AMOUNT US $

1 PBC 018 Office supplies 11 Months 89,375.00

2 PBC 018 Maintenance and repairing 11 Months 88,000.00

3 PBC 018 Lease 11 Months 52,250.00

4 PBC 023 Fuel & oil 11 Months 88,000.00

TOTAL $317,625.00





It was, however, observed that contrary to the requirements of the above-mentioned law, contracts in amount totaling US $317,625.00 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS.

Management Response

The Ministry will work on this and will register the contracts as recommended.

Recommendations




Contrary to the above criteria, Ministry of Foreign Affairs wrote its local contracts in English language, instead of writing them in Somali language.


NO FINDING STATUS

1 4.1.1 No annual accounts submitted for audit Not implemented



4 4.3.1 There was no asset register Partially implemented


6 4.3.4 There were weak controls over vehicles Not implemented

7 4.4.1 Contracts were not registered with the OAGS Not implemented

8 4.5.1 Regularity of internal audit function Partially implemented

Management Response

The Ministry was using examples on how the contracts were written earlier but will work on this and will write the local contracts in Somali language as recommended.

Recommendations

Ministry of Foreign Affairs should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

5.5 INTERNAL AUDIT



It was noted that Ministry of Foreign Affairs neither had an internal audit unit nor function. In this regard, there were no periodic internal audits conducted in the Ministry of Foreign Affairs.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Ministry of Foreign Affairs.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Office of the Accountant General are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry of Foreign Affairs policies.

5.6 AUDIT FOLLOW UP



6MINISTRY OF FINANCE






Management Response

Usually, the government payments go to a bank account owned by the person or company who brought the goods or services and the Central Bank transfers the money directly to the client and there ARE no cash transactions that were made by the government.

The above payments for rent, and supplies have documentation of payment, such as contract and can be found from the Administration and Financial Department as it is not possible to attach the documents to this email.

Recommendations



NOSUB-HEAD

PAYEE MONTHSAMOUNT

IN US $COMMENTS

1 2214 PBC 030 July-Aug 15,731.00 This payment did not have receipt voucher

2 2261 PBC 004 Jun-Aug 73,842.00This payment did not have receipt voucher and

contract.

TOTAL $89,573.00


6.1.2 Unsupported Payments - General Service Expenditures



During the audit it was noted that there were payments totaling US $1,234,836.00 that were paid from the general service head (03) which lack adequate supporting documents. Payments were given to other FGS entities, travel agencies, and other companies but the payment vouchers lacked supporting documents. It was therefore difficult to ascertain the nature and purposes of these payments. Summary details are set out in the table below:

NOSUB-HEAD

PAYEE MONTHSAMOUNT IN

US $COMMENTS

1 2256 Different vendors June-Oct 19 419,484.00The payment did not receipt

voucher and contracts.

2 2256 PBC 025 July 19 67,579.00The payment did not have receipts

voucher and contracts.

3 2821 Government Officials Aug-Dec 19 36,280.00The payment did not have receipts

voucher.

4 2631 PBC 026 November 19 75,000.00

The payment did not have

boarding pass; invitation letter,

tickets, and invoice.

5 2314 Different vendors Sep-Dec 19 282,302.00The payment did not have receipts

voucher

6 2261 Different vendors June 19 36,010.00The payment did not have receipt

voucher

7 2261Expenses for National

Independence DaysJune 19 97,060.00

The payment did not have invoice

and receipts voucher.

8 2621 PBC 121 October 19 164,897.00The payment did not have receipt

voucher

9 2621 PBC 027 November 19 51,224.00The payment did not have receipt

voucher

10 2621Government Official

(Health Expenses)November 19 5,000.00

These payments did not have

patient request, medical forms or

reports, invoices and

receipts voucher

TOTAL $1,234,836.00


Management Response

The budget Head for the General Services funds is paid for Government expenditure that include funds to the Federal Member States. There are many supporting documents that cannot be attached to this email but can be found from the Administration and Finance Department. We will provide sufficient supporting documents and stamp the invoices as paid (Paid Stamp).

Recommendations




Law no. 2 of the Financial & Accounting Procedure of the State of 29 December 1961 obligates that every payment shall have supporting documents attached to payment requests to justify the payment. Supporting documents vary depending on the type of payment, and could include purchase orders, signed contracts, invoices acknowledgement receipts and travel documents.

It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $296,441.00 were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.


• Boarding pass; and• Invitation letter.

Management Response

The travel costs have the supporting documents but the recommendations of OAGS will be implemented.

Recommendations


NO SUB-HEAD BENEFICIARY MONTHS AMOUNT US $

1 2216 Staff of Ministry of Finance July-Dec 164,770.00

2 2216 PBC 024 July-Dec 131,671.00

TOTAL $296,441.00






It was however observed that the Ministry of Finance did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

The Ministry has developed a procedure and registered fixed asset that are in Mogadishu and other Regions of the Country which the employees faced many challenges and there is an asset module that is at the final stage which can be found in the SFMIS.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Finance to follow.



It was, however, observed that contrary to the requirement of the law, Ministry of Finance did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity.

There was no evidence that assets of the Ministry were physically verified recently to ascertain their existence, condition, value and location among other matters.

Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Response

The Ministry of Finance has an asset register and is currently finalizing new asset module in accordance with Best Practice but considering where we came from year after year, we are making some progress.


Recommendations

Ministry of Finance should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.

Ministry of Finance should establish a central register of national assets and also to conduct periodic physical verification and update the asset register.



During the period under review, the Ministry provided for audit a list of motor vehicles totaling 25 reportedly as owned by the Ministry. Out of the 25 vehicles, only 14 vehicles were availed for audit verification and the remaining 8 were never brought for physical verification. 1 of the vehicles was destroyed by IED, and the audit team saw the pictures of the destroyed vehicle. All the vehicles availed for audit verification were not registered in the name of the Ministry.

In addition, some vehicles had been given away for private use without formal authority and transfer of ownership. Details of the 19 vehicles that were not registered in the name of the Ministry of Finance are set out in the table below:

NO TYPE OF THE VEHICLE SOURCE OF FUND CHASSIS NUMBER COMMENTS

1 Toyoto Hilux Pick Up Ministry of Finance MROHB8CD1G0471841The vehicle was not registered

the name of the Ministry

2Toyota

Land CruiserMinistry of Finance JTMHVOIJ6H5038746

The vehicle was not registered


3Toyoto

Hilux Pick UpMinistry of Finance

The vehicle was not

physically verified

4Toyoto

Hilux Pick UpMinistry of Finance MROHX8C02G0897703



5Toyoto

Hilux Pick UpMinistry of Finance MROHB8CDOGO472138



6Toyota

Land CruiserMinistry of Finance JTMHVO917C4084573



7Toyoto

Hilux Pick UpMinistry of Finance MR0HA3CDXOO713232



8Toyoto

Hilux Pick UpMinistry of Finance MROHB8CD290471444



9Toyoto

Hilux Pick UpMinistry of Finance MROHX8CD5H0920036




Management Response

The Ministry bought the vehicles from the car vendors under the name of the Ministry although there was one vehicle that was destroyed by improvised explosive device (IED) in Hodan District. There was also a report from the Attorney General Office which stated that a vehicle was destroyed by IED on Makka Amukaramah street although the vehicle was under the control of a member of the Parliament.

Recommendations

All vehicles should have logbooks, vehicle ownership books, be registered in the name of the Ministry of Finance and stored safely by a senior responsible official.




NO TYPE OF THE VEHICLE SOURCE OF FUND CHASSIS NUMBER COMMENTS

10Toyoto

Hilux SurfMinistry of Finance K2W1850054730



11 Toyoto Prado Ministry of Finance K7J780025731The vehicle was not registered


12Toyoto

Noah 4wdMinistry of Finance SR50-0093919



13Toyoto

Hilux Pick UpMinistry of Finance MRO33LNGG907819867



14Toyoto

Hilux Pick UpMinistry of Finance MROFR2291CO674931



15 Toyoto Carib Ministry of Finance AE115-0053114The vehicle was not registered


16 Toyoto Carib Ministry of FinanceThe vehicle was destroyed

by IED

17 Toyoto Alion Ministry of Finance 22T245-0006204The vehicle was not registered


18 Toyoto Noah Ministry of Finance SR50-0082546The vehicle was not registered


19 Toyoto Noah Ministry of Finance SR50-0082546The vehicle was not registered



6.3 PROCUREMENT MANAGEMENT

6.3.1 Failure to prepare annual procurement plan in 2019

Article 27 Sub-section (1) National Procurement Act of 2016 (law no. 22) requires all Ministries, departments and spending agencies to prepare an annual procurement in line with the annual budget.

It was, however, observed that, although the ministry of Finance made procurements of goods and services, no procurement plan was prepared.

Management Response

The Ministry have prepared annual procurement plan based on the annual budget but for the revenue and expenditure based on estimation, with the effect of that it’s not possible that the procurement plan should be implemented as planned.

OAGS Response

OAGS reviewed the above response from the Ministry but the above response is contrary to what procurement officers provided and mentioned that there is procurement plan for FGS budget, but the Ministry have a procurement plan for donner funds.

Recommendations

As required by the procurement law, the Ministry of Finance should prepare approved annual procurement plan which prioritizes the most important activities for the Ministry for efficient and effective service delivery.

6.3.2 Bid was awarded to supplier who lacked TCC, TIN and Valid License

Law no. 22 of National Procurement Act article 33 is for debarment of suppliers, contractors, and consultants. Sub-section 2 states that a potential supplier, contractor, or consultant shall be barred from participation in procurement on the following grounds: (g) non-settlement of tax obligations after assessment by the Commissioner of Income Tax.

During the period under review, we have noticed that 1 company were awarded contract when they did not produce Tax Identification Number (TIN), and Tax Compliance Certificate (TCC), which is a violation of the procurement act. See below details:

Management Response

There is no company contracted that had no tax clearance certificate and tax identification number. All the companies mentioned above has the requirement and the payment process will not accept transactions without tax certificates. please see the attachments.

NO COMPANY NAME PURPOSE OF THE CONTRACT AWARD DATEAMOUNT IN US $

1 PBC 025Installation of doors and windows to the

national theater11/04/2019 $ 135,158.00


OAGS Response

OAGS reviewed the above response and the documents from the Ministry but could not provide a solid evidence on issue related to TIN and TCC of the company mentioned above.

Recommendations

The Ministry of Finance is required to comply with the procurement law. Secondly, the Government should establish a National Procurement Authority to supervise and monitor procurements in the FGS and encourage compliance with the law.

6.3.3 Failure to Follow Procurement Threshold (In-correct Procurement method)

In accordance with the paragraph 1 of the 3rd Schedule of the National Procurement Act, the following are the procurements methods to be used:

It was observed that contrary to the requirements of the above-mentioned law, the Ministry of Finance used Shopping method for non-perishable food stuff worth US $184,156.28 for Somali Police Force instead of using International Competitive Bidding method.

Management Response

The Ministry has carried out activities that had connection with the security of the Ministry of Finance, the Central Bank, the Ministry of Air Transport, and Shangani District following security threats, so there is an urgent need to ensure the security of public financial institutions and prevent enemy attacks. The work was immediately handed over to the company that built the new headquarters of the Ministry, and the law allows the work to be paid directly due to the security situation.

A.Shopping procedures shall be used when the estimated value of the procurement is below:

I. In the case the procurement budget for goods is less than US $ 40,000

II. In the case the procurement budget for services is less than US $ 40,000

III. In the case the procurement budget for services is less than US $ 50,000

B. National Competitive Bidding (NCB) procedures shall be used when the estimated value of the procurement

is below (less than):

I. In the case the procurement budget for goods is less than US $ 100,000

II. In the case the procurement budget for services is less than US $ 40,000

III. In the case the procurement budget for works is less than US $ 200,000

C. International Competitive Bidding (ICB) procedures shall be used when the estimated value of the

procurement exceeds (more than):

I. In the case the procurement budget for goods is more than US $ 100,000

II. In the case the procurement budget for services is more than US $ 40,000

III. In the case the procurement budget for works is more than US $ 200,000


Recommendations

The Ministry of Finance should comply with National Procurement Act and abide the laws all the time.

6.4 DEBT MANAGEMENT

6.4.1 Lack of Public Debt Management Strategy

According to the United Nations Conference on Trade and Development (UNCTD), Principle 13, the Debt Management Office (DMO) should develop an effective Medium Term Debt Strategies (MTDS) including procedures to review the strategy periodically, to monitor emerging risks, to monitor interest costs, to take into account other liabilities that could impact on the government’s budgetary position, to monitor performance, and to report clearly and transparently the outcome of the strategy. Furthermore, all debt contracted should be in line with the debt management objectives and strategy of the sovereign government.

It was however observed that the Ministry of Finance did not have approved debt management strategy for managing national debts in the medium to long term. In this regard, it was not possible to ascertain how the Ministry is managing the national debt contracted from various lenders.

Management Response

Debt issues and their management are set out in the country’s laws. During the collapse of the Central Government, all the debts information was lost but the Ministry tried to look and find debts related information in accourdance with the best practice. The Ministry tranined staff to manage and monitor debts.

Recommendations

The Ministry of Finance, in particular the Debt Management Unit, should develop a debt management strategy to support formulation of national economic policies and plans that can lead to economic growth and development.

6.4.2 Lack of Public Debt Reporting Framework

According to UNCTAD Principle 11 on public debt disclosure and publication recommends that relevant terms and conditions of a financing agreement should be disclosed by the sovereign borrower, be publicly made available, preferably through online means to stakeholders, including citizens.

Sovereign debtors should have a responsibility to disclose complete and accurate information on their economic and financial situation that conforms to standardized reporting requirements and is relevant to their debt situation.

Governments should respond publicly to requests for related information. There should be no legal restrictions to disclosing information should be based on evident public interest and to be used reasonably.

It was however observed that the Ministry of Finance did not have laws or regulations for public debt reporting that includes content, periodicity and format of public debt reports.


Management Response

Debt issues and their management are set out in the country’s laws. There is no foreighn debts that the government took so far, debt information can be found on the website of the Ministry. The Ministry has managed the debts which contributed to the debt relief process. For now the government implemented the PFM law and regulation that clearly defines the debts.

Recommendations

The Ministry of Finance, in particular the Debt Management Unit, should develop regulations and guidelines for preparing periodic debt reports consistently in accordance with best practice.

6.4.3 Weak Debt Management Information System

There should be a functional Debt Management Information System (DMIS) for managing and reporting on national debts, which can be accessed by many stakeholders who have different roles and authorities for monitoring and managing debt information.

The system should be reliably secure in terms of data protection and storage, and it should be integrated with the other national financial systems to increase its functionality and lead to better goals.

During the course of audit, we identified that the debt management information system (DMIS) is not integrated with other Public Financial Management Information Systems (PFMIS), in particular with the Somali Financial Management Information System (SFMIS). The SFMIS is the main PFMS used for preparing FGS financial statements and financial statements of the MDAs.

Management Response

Debt information is stored in a system called Commonwealth Secretariat Debt Recording Management System (CS-DRMS). The debts are local and external which was agreed after a committee that OAGS was a member has worked and completed.

Recommendations

The Ministry of Finance, in particular the debt management unit, should interface the DMIS with the SFMIS and other relevant PFMISs.




It was, however, observed that contrary to the requirements of the above-mentioned law, contracts in amounting US $76,518.00 as shown in the table below were not registered with the Office of the Auditor General. This


did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS.

Management Response

The Ministry will submit all unregistered contracts to the Office of the Auditor General to register.

Recommendations




Contrary to the above criteria, Ministry of Finance wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The country is on debt relief program and the Ministry works with external entities and foreigners who do not understand Somali language, that made contracts to be written in English language despite there is no one who enters contract that does not understand the requirements of the contract but we will consider the recommendation of OAGS.

Recommendations

Ministry of Finance should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.


AMOUNT US $

1 PBC 041 Fuel Four months 38,480.00

2 PBC 030 Small items for MoF One year

3 PBC 031 Office equipment Four months 38,038.00

4 PBC 024 Travel services Six months

TOTAL $76,518.00


NO FINDING STATUS


21.2.2 Payments were wrongly charged to the contingency sub-head without

adequate supporting documentsNot implemented






8 1.6.1 The Ministry did not follow the procurement law Partially implemented

6.6 AUDIT FOLLOW UP



NO ENTITY NAME NO ENTITY NAME

1Ministry of Humanitarian Affairs

and Disaster Management18 Ministry of Fisheries and Marine Resources

2 Banadir Regional Court 19 Somali Marine Resource Research Center

3 Banadir Regional Appeal Court 20 Fisheries Development Program/Projects

4 Supreme Court 21 Armed Forces Court

5 Ministry of Commerce and Industries 22Agency of Disabled and Orphans of the

Armed Forces.

6 National Independent Electoral Commission 23 Somali Police Force

OFFICE OF THE ACCOUNTANT GENERAL

7.1 ANNUAL ACCOUNTS

7.1.1 Annual accounts for all MDAs not submitted for audit for FY 2019

The current law is no. 2 of 29 December 1961 Financial & Accounting Procedure of the State which was amended 1971. Annual accounts of the State are described in Article 25 of the law. Article 26 requires the accounts of the State to be submitted for audit by 30 April of the year following to which the annual accounts related to.

Article 30 of the above mentioned law mandates the Accountant General to manage the accounts of the State. Article 37 of the law requires every officer or agent managing public finances of the State to render accounts and submit to the Accountant General as stipulated in Article 39.

The Accountant General is then required by Article 40 to submit the accounts, with or without comments, to the Auditor General for audit. This is further strengthened by Article 7 (a) and (b) of the “Regulation for the Accounts of the State” which was amended 1971.

Article 41(1) of the law no. 2 of 29 December 1961 Financial & Accounting Procedure of the State requires the Accountant General, where an account has not been prepared and submitted, to prepare the accounts in an ex-officio position, and submit to the Auditor General for audit.

It was however observed that during the period under review, only 28 MDAs of the Federal Government of Somalia have submitted the annual financial statements for the year ended 31 December 2019 to the Office of the Auditor General for audit while 35 ministries, departments, and agencies as listed in the table below, of the FGS failed to submit annual financial statements in respect of the FY 2019 to the Office of the Auditor General for audit. See the table below for the MDA’s that failed to prepare annual accounts:

7


NO ENTITY NAME NO ENTITY NAME

7 Somali National Army 24National Intelligence and

Security Agency (NISA)

8 Ministry of Petroleum 25 Office of Attorney General

9 Ministry of Labor and Social Affairs 26 Office of State Attorney General

10 Ministry of Youth and Sports 27 Financial Reporting Center

11 Ministry of Women and Human Rights 28 Ministry of Planning

12 Somali Disability Agency 29 Ministry of Foreign Affairs

13 Ministry of Health 30 Somali Civil Aviation Authority

14 Ministry of Ports and Marine Transportation 31National Independent Commission

for Asylum Seekers

15 Ministry of Post and Telecommunications 32National Independent Commission

for Human Rights

16 National Communication Authority 33 National Commission for Justice

17 Ministry of Livestock 34 Commission for Border and Federalism

Management Response

These entities are those that failed to prepare and submit the financial statements of 2019.

Recommendations

All Federal Government Entities should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.

The Accountant General should prepare the accounts of those MDAs and submit them for audit in an ex-officio capacity.


7.2.1 Unsupported Payments – Running Costs



It was, however, observed that, payments amounting to US $381,520.00 were made to three companies for the months of January, February, May, June, July, September, and December 2019 without adequate supporting documents. It was there difficult for us to ascertain the authenticity of these payments in the absence of supporting documents.


Details of payments in question are set out in the stable below:

Management Response

All payments have the supporting documents required and the supplier confirmed that they received the money.

Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $37,070.00 were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.



• Boarding passes;• Evidence of authorization for travels made;• Acknowledgement receipts; and• Invitation letters.

NOSUB-HEAD

PAYEE MONTHAMOUNT

US $COMMENT

12211 PBC 033 Jan, Feb, May, Jun,

July, Sep and Dec

2019

85,463.00 This payment did not have receipt voucher

2 2261 PBC 033 Jan-Dec 2019 22,000.00 This payment did not have receipt voucher


4 2215 PBC 102 Jan- Dec 2019 200,950.00 This payment did not have receipt voucher


6 2215 PBC 033 Dec 2019 37,180.00 This payment did not have receipt voucher

TOTAL $381,520.00


Management Response

Most of travel payments are view and travels are more although most of the documents are in the files, but the Office will implement the recommendations.

Recommendations






It was however observed that the Office of the Accountant General did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

The Office will work on this finding and will implement the recommendations.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including the Office of the Accountant General to follow.


Law no. 318 for Stores of 18 December 1962, Article 134 subsection 2 suggests maintaining up-to-date recordings of the Government Offices’ equipment as well as the goods in the stores. Such register should have details as to the type of asset, date of acquisition, cost of acquisition, responsible officer for the asset,

NO SUB-HEAD PAYEE MONTH AMOUNT US $

1 2216 PBC 024 Jan–March 2019 6,400.00

2 2216 Individual April-June 2019 6,750.00

3 2216 PBC 032 July-Sep 2019 6,870.00

4 2216 PBC 024 Oct-Dec 2019 17,050.00

TOTAL $37,070.00


and unique identification number among other details.

It was, however, observed that contrary to the requirement of the law, Office of the Accountant General did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity.

There was no evidence that assets of the Accountant General were physically verified recently to ascertain their existence, condition, value and location among other matters. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Response

The Office will work and implement the recommendation.

Recommendations

The Office of the Accountant General should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


The Office of the Accountant General and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.

7.3.3 Weakness in Management of Vehicles


It was however observed that the Office of the Accountant General provided a list of 2 vehicles reportedly owned by the Office for physically verification. None of these vehicles were registered in the name of the Ministry for ownership.

Management Response

The Office had 2 vehicles although one of them is not working but due to security reasons the vehicles could not be given a government plate.

Recommendations

All vehicles should have logbooks, vehicle ownership books, be registered in the name of the Office of the Accountant General and stored safely by a senior responsible official.


1 Toyota Noah FGS SR500086663Not registered in the name of Office of the

Accountant General

2Toyota

Hilux SurfFGS

R&N185-

9014447

Not registered in the name of Office of the

Accountant General








It was, however, observed that contrary to the requirements of the above-mentioned law, contracts in amounting US $85,500.00 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS.

Management Response

The payments for the companies mentioned above was issued as single source.

Recommendations




Contrary to the above criteria, Office of the Accountant General wrote its local contracts in English language, instead of writing them in Somali language.

NO CONTRACTORPURPOSE OF THE CONTRACT

DURATION OF THE CONTRACT

AMOUNT US $

1 PBC 033 General Services 5 Months 67,500.00

2 PBC 010 Fuel and Oil 1 Year 18,000.00

TOTAL $85,500.00


Management Response

We share the contracts with foreigners that do not understand the Somali language, due to that the contracts were written in English language.

Recommendations

Office of the Accountant General should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

7.5 INTERNAL AUDIT



It was noted that the Office of the Accountant General had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Office of the Accountant General.

Management Response

The Office of the Accountant General has established Internal Auditor after the Auditors from the Auditor General has completed their audits at the Office of the Accountant General.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including the Office of the Accountant General.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Office of the Accountant General are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Accountant General Office policies.

7.6 AUDIT FOLLOW UP


NO FINDING STATUS

12.1.1 MDAS did not submit annual financial statements

for audit (FY 31/12/2019)Partially implemented



42.3.2 There was no asset management policy guidelines

& proceduresNot implemented





MINISTRY OF PLANNING

8.1 ANNUAL ACCOUNTS




As of August 2020, the financial statements for the Ministry of Planning for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

The Ministry submitted the financial statements to the Accountant General’s Office.

Recommendations

Ministry of Planning should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.






8


Management Response

The Ministry did not respond to this finding.

Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US

NOSUB-HEAD

PAYEE MONTHS AMOUNT US $ COMMENTS

1 2211 PBC 018 Jan – July 2019 17,500.00 Receipt voucher was not stamped


3 2213 PBC 041 Jan – July 2019 7,800.00

Receipt voucher was not stamped,

also there was no details of the vehicle

that used the fuel

4 2214 PBC 018 Jan – July 2019 11,662.00 There was no signed contract and

receipt voucher was not stamped


6 2256 PBC 011January and

November 201931,260.00

Receipt voucher was not stamped and

there were no other documents such

as invitation for the travels made

7 2256Director of Admin

& FinanceJanuary 2019 211,371.00 Receipt voucher was not stamped

8 2255Director of Admin

& FinanceJuly 2019 78,867.00




9 2255 PBC 011 September 2019 66,531.00




TOTAL $448,771.00


$71,500.00 were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.



Management Response

The Ministry did not reply on this finding.

Recommendations






It was however observed that the Ministry of Planning did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

For now, there is approved asset policy for the management of assets.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Planning to follow.




It was, however, observed that contrary to the requirement of the law, Ministry of Planning did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity.

There is no evidence that assets of the Ministry of Planning were physically verified recently to ascertain their existence, condition, value and location among other matters. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Response

We shared the excel sheet that was used as an asset register which was recorded all the asset.

Recommendations

Ministry of Planning should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry of Planning and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.





NO. AGREEMENT PURPOSE CONTRACT PERIOD AMOUNT US $

1 PBC 035 Office Supplies April -Dec 18,000.00

2 PBC 034 Rent April -Dec 18,000.00

3 PBC 028 Fuel and Oil April -Dec 18,000.00

TOTAL $54,000.00


Management Response

There was no notice from the Auditor General that was mentioned for the requirement of local contract registration from OAGS.

Recommendations




Contrary to the above criteria, Ministry of Planning wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The Ministry followed the procedure that Office of the Accountant General which was writing the contracts in English Language.

Recommendations

Ministry of Planning should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

8.5 INTERNAL AUDIT



It was noted that Ministry of Planning neither had an internal audit unit nor function. There were no periodic internal audits conducted in the Ministry of Planning.

Management Response

The Ministry of Planning is under the process in establishing an Internal Auditor which shall be effective by October 2020.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Ministry of Planning.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry of Planning are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry of Planning policies.


NO FINDING STATUS




4 8.3.1 There was no asset register Partially implemented




8.6 AUDIT FOLLOW UP



MINISTRY OF INTERIOR AFFAIRS





It was however observed contrary to the requirement, payments amounting to US $215,900.00 were made to some companies without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. Details of payments in question are set out in the table below:

Management Response

The Ministry will work on this finding and implement the recommendation.

Recommendations




Law no. 2 of the Financial & Accounting Procedure of the State of 29 December 1961 obligates that every payment shall have supporting documents attached to payment requests to justify the payment.Supporting documents vary depending on the type of payment, and could include purchase orders, signed contracts, invoices, acknowledgement receipts and travel documents.

NO DATE PAYEE AMOUNT US $ COMMENTS

1 3/10/2019 PBC 104 135,900.00 This payment did not have receipt voucher

2 31/3/2019 PBC 150 80,000.00 This payment did not have receipt voucher

TOTAL $215,900.00

9


It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $51,100.00 were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. The payments did not have one or more of the following supporting documents such as:


Management Response


Recommendations






It was however observed that the Ministry of Interior Affairs did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the entity is using in managing, storing or disposing of the assets.

Management Response


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Interior Affairs to follow.




It was, however, observed that contrary to the requirement of the law, Ministry of Interior Affairs did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity.

There was no evidence that assets of MIA were recently verified physically to ascertain their existence, condition, value and location among other matters. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Response


Recommendations

Ministry of Interior Affairs should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry of Interior Affairs and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.



It was however observed that the Ministry provided a list of 7 vehicles reportedly owned by the Ministry for physically verification. None of these vehicles were registered in the name of the Ministry for ownership.

NO VEHICLE TYPE

SOURCE OF FUNDS

CHASSIS NUMBER OF VEHICLES

COMMENTS

1 Surf Hilux FGS RZN- 185- 9020531 The vehicle was not registered in the name of the Ministry.

2 Prado Grant JTEBD9F J70K021851The vehicle was not registered in the name of the Ministry

and had no registration number plate.

3 Surf Hilux FGS RZN- 185- 9020540 The vehicle was not registered in the name of the Ministry.

4 Surf Hilux FGS RZN 185- 0031585 The vehicle was not registered in the name of the Ministry.

5 Surf Hilux FGS RZN 185 0040480 The vehicle was not registered in the name of the Ministry.

6 Prado FGS RZN 185- 9021861 The vehicle was not registered in the name of the Ministry.

7Toyota

Pick-upGrant AHTFK8CD400321060

The vehicle was not registered in the name of the Ministry

and had no registration number plate.


NO. COMPANY CONTRACTED PURPOSE PERIOD AMOUNT US $

1 PBC 036 General services11 months from

Feb-Dec 2019 20,163.00

2 PBC 037 General services11 months from

Feb-Dec 2019 30,250.00

3 PBC 038 Fuel & lubricate 11 months from

Feb-Dec 2019 38,500.00

TOTAL $88,913.00

Management Response


Recommendations

All vehicles should have logbooks, vehicle ownership books and registered in the name of the Ministry of Interior Affairs and stored safely by a senior responsible official.








Management Response


Recommendations





Contrary to the above criteria, Ministry of Interior Affairs wrote its local contracts in English language, instead of writing them in Somali language.

Management Response


Recommendations

Ministry of Interior Affairs should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

9.4 INTERNAL AUDIT



It was noted that Ministry of Interior Affairs neither had an internal audit unit nor function. In this regard, no periodic internal audits conducted in the Ministry of Interior Affairs.

Management Response

The Ministry of Interior Affairs has no Internal Auditor at the moment but there is a plan to establish.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Ministry of Interior Affairs.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry of Interior Affairs are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry of Interior policies.

9.5 AUDIT FOLLOW UP


There is no audit follow-up this year as this is the first year of conducting a compliance audit of the Ministry of Interior Affairs.


MINISTRY OF ENDOWMENTS & RELIGIOUS AFFAIRS

10.1 REVENUE

10.1.1 Failure to Remit Revenue Collections to the Central Bank

Law number 317 of Approbation of Regulation for the Accounts of the State of 17 December 1962 article 46 requires that revenue can be only collected using receipts from the Office of the Accountant General. Also, article 34 of the law states that no public money shall be made use whatsoever; nor any officer shall lend any sum for which he is answerable to the State.

During the course of the audit there were 58 out of 84 companies that were selected to provide services to the people who went for the Hajj of 2019/1440.

Each selected company paid US $450.00 to the Ministry of Endowments & Religious Affairs (MERA) which was deposited in 5 private bank accounts. The breakdown of US dollar was as follows:

Out of the 58 selected companies, 57 companies successfully paid a total amount of US $1,742,100.00 into the 5 private bank accounts out of which US $1,167,065 was remitted to the Central Bank while the balance of US $ 575,000.00 was kept in commercial or private banks contrary to the requirement of the law and the private banks charged US $35.00 for cheques issued. There was also one company that did not pay registration fee that was made mandatory by the Ministry for all companies to pay. The summary of the revenue collections is presented in the table below:

Registration fee US $ 300

Hajj service fee US $ 100

Refundable security deposits US $ 50

10


Management Response

There was no revenue used before it was banked to the Central Bank of Somalia except US $35.00. The expenses of Hajj were used from the budget of the Ministry. The Ministry of Finance and the Ministry of Endowment agreed upon some of the money amounting to US $575,000.00 to be kept in the private accounts. The Ministry will work on developing the process while considering the lessons learnt from this year Hajj services.

Recommendations

Regularize revenue collections in accordance with the law or the regulation by depositing the total amounts into the Central Bank of Somalia.

The Ministry of Endowment should have adequate budget with sub-heads to manage its operation.

10.2 HAJJ & UMRAH

10.2.1 Lack of Hajj and Umrah Management Policy

Best practice requires that policies and procedures should be in place to regulate the Hajj and Umrah. The policies indicate important issues such as organization of Hajj and Umrah services, payment of funds, complaints and penalties.

It was however observed that there were no policies or procedures in place to regulate Hajj and Umrah services.

Management Response

There is a policy for the management of Hajj services which is under review and we hope this will solve many challenges.

Recommendations

There is an urgent need for development and implementation of important policies. The Ministry should develop a comprehensive policies and guideline for the implementation and oversight of Hajj and Umrah.

NO MONTHSNAME OF THE BANK

AMOUNT DEPOSITED US $

AMOUNT DEPOSITED TO CENTRAL BANK US $

AMOUNT KEPT IN THE PRIVATE BANKS FOR US $

1 23 May - 02 June 19Dahabshil Bank

International218,300.00

1,167,065.00 575,000.00

2 22 May - 13 June 19 Amal Bank 316,100.00

3 22 May – 27 May 19 Premier Bank 113,700.00

4 23 May – 30 May 19 IBS Bank 373,600.00

5 23 May – 05 June 19Salaam Somali

Bank720,400.00

TOTAL $1,742,100.00 $1,167,065.00 $575,000.00


10.2.2 Irregular Issuance for Visa of Pilgrimage

Best practice require the Ministry to ensure that there is adequate number of service providers who are competent and vetted in their respective field to render services to the pilgrimage during the Hajj. This specialized service providers such as health specialist, sheiks among others are to be assigned.

In 2019/1440 the kingdom of Saudi Arabia shared MERA with 11,500 allocated quota for Somali Pilgrimage and 115 that were meant for health specialist, sheikhs, translators and other service providers to serve the Somali Pilgrimage (11,500) in 2019/1440 which was mentioned a contract that was signed by Federal Government of Somalia and Kingdom of Saudi Arabia.

It was however observed that 21 visas of the 115 that were meant for service providers were given to members of the Parliament, Cabinet Ministers and other people to use and attend the Hajj of 2019/1440 contrary to the agreed contract between Ministry of Endowment and Religious Affairs of FGS and the Ministry of Religious Affairs of Kingdom of Saudi Arabia. This led challenges of poor service that Somali Pilgrimage faced last year (2019/1440) as a result of the reduction of service providers such as for health specialist, sheikhs and among others.

Management Response

The Ministry agrees the issue, the Ministry gave some of the parliament that are part of the relevant parliament committee and some of the Ministers to oversight and report back to the parliament. The Ministry will work on to serve the Somali pilgrimage to get services like others Muslim world.

Recommendations

The Ministry should assign enough skilled number of service providers to the Somali Pilgrimage so that the Pilgrimage can participate the Hajj properly. The Ministry should not in any way give other people visas that were meant for the service providers of the Somali Pilgrimage.

10.2.3 Irregular Evaluation and Award of Companies for Hajj Services of 2019/1440

The companies are required to have enough experience to serve the Somali Pilgrimage, registered with FGS and pay the taxes required in accordance with the laws. These companies that provide services should demonstrate that they are competent enough and are vetted properly.

During the audit we found out that there was a temporary committee that was appointed to evaluate and award companies to serve the Somali Pilgrimage in 2019/1440. One of the companies that was evaluated and awarded to serve the Somali Pilgrimage did not pay registration fee of about (US $300.00) that was made mandatory by the Ministry. In this regard, the award of the contract of the company that did not pay the registration fee is irregular.

Further, the process used by the committee for the evaluation and the award of companies was not complete as there were evaluation forms that were not filled at all to conclude the process. In this regard, it was not possible to ascertain how the final bids were awarded.


Management Response

There is a policy for the management of Hajj services which is under review. The Ministry evaluated the companies and the companies awarded were the companies that made available all the requirements. In 2019/1440 was the year that the Ministry tried its best to manage the Hajj services.

Recommendations

All the companies that were evaluated and awarded to serve the Somali Pilgrimage must pay all required fees and taxes that was made mandatory by the Ministry and other FGS institutions for the companies to be allowed to serve the Pilgrimage.

The Ministry should make sure that all companies that will do business with the Ministry are registered with FGS respective institutions and pay the taxes required in accordance with the laws.





It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $86,350.00 were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. The payments did not have one or more of the following supporting documents:

• Boarding passes;

Management Response

Travel payments had the supporting documents required but the Ministry will work to implement the recommendation.

Recommendations







NO. CONTRACTORPURPOSE OF THE CONTRACT

DATE OF CONTRACT

AMOUNT US $

1 PBC 039 Airline tickets. 16/6/2019 5,500.00

2 PBC 050Office cleaning and

consumables 17/11/2019 48847.30

3 PBC 041 Fuel and Oil 02/3/2019 25,000.00

4 PBC 042 Airline tickets 3/11/2019 5,500.00

TOTAL $84,847.30

It was however observed that the Ministry did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the entity is using in managing, storing or disposing of the assets.

Management Response

There is no asset management policy, but the Ministry will work on to implement the recommendation.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Endowment to follow.




It was, however, observed that contrary to the requirements of the above-mentioned law, the Ministry entered four contracts for the provision of various services which were not registered with the OAGS. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS.


→ Table 1: Contracts for goods and services that were not registered with OAGS:

NO. CONTRACTOR PURPOSE OF THE CONTRACT

1 PBCH 105 Hajj services of 2019/1440






























NO. CONTRACTOR PURPOSE OF THE CONTRACT
















45 PBBC 011 Hajj services of 2019/1440














→ Table 2: Contracts for Hajj Services of 2019 that were not registered with OAGS:


Management Response

All the contract signed by the Ministry were as per the contract requirements of the country and the Ministry will register the contracts from OAGS.

Recommendations




Contrary to the above criteria, the Ministry wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

All the companies that the Ministry signed contracts with had good understanding on the requirement contracts although the Ministry will implement the recommendation.

Recommendations

The Ministry of Endowment should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

10.6 INTERNAL AUDIT



It was noted that Ministry Endowment neither had an internal audit unit nor function. There were no periodic internal audits conducted in the Ministry Endowment & Religious Affairs.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Ministry Endowment.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Office of the Accountant General are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry Endowment policies.


10.7 AUDIT FOLLOW UP


There is no audit follow-up this year as this is the first year of conducting a compliance audit of the Ministry Endowment.


MINISTRY OF JUSTICE





It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $17,800.00 were made to some PBC 003 without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. Details of payments in question are set out in the table below:

Management Response

The Ministry agreed and will work to implement the recommendation.

Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $7,044.00 were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. These payments were made to Takahaya Travel Agent. The

NO SUB-HEAD PAYEE MONTH AMOUNT US $ COMMENTS

1 2211 PBC 003Jan, Feb, Mar, April, May, July

& August 1917,800.00

This payment did not

have receipt voucher

11


payments did not have one or more of the following supporting documents such as:

• Boarding pass; and• Invitation letter.

Management Response

The Ministry checked the files and all the payments had the supporting documents except boarding pass, also the Ministry will work to implement the recommendation.

Recommendations






It was however observed that the Ministry of Justice did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the entity is using in managing, storing or disposing of the assets.

Management Response

The Ministry had internal policy for the management of assets and the Ministry will work on to fully implement the recommendation.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Justice to follow.






Management Response

The Ministry agreed and will work to implement the recommendation.

Recommendations




Contrary to the above criteria, Ministry of Justice wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The Ministry followed the procedure that Office of the Accountant General which was writing the contracts in English Language. The Ministry will implement the recommendation.

Recommendations

Ministry of Justice should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

11.4 INTERNAL AUDIT



NO. CONTRACTS PURPOSECONTRACT DURATION

AMOUNT IN US $

1 PBC 043 Provision of fuel 12,375.00

2 PBC 044 General Services 12,375.00

3 PBC 003 Internet services 3 years 90,000.00

TOTAL $114,750.00


It was noted that Ministry of Justice neither had an internal audit unit nor function. There were no periodic internal audits conducted in the Ministry of Justice.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Ministry of Justice.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry of Justice are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry of Justice policies.



There is no audit follow-up this year as this is the first year of conducting a compliance audit of the Ministry of Justice.


THE SUPREME COURT

12.1 ANNUAL ACCOUNTS




As of August 2020, the financial statements for the Supreme Court for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

There was no response from the audited entity on this matter.

Recommendations

The Supreme Court should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.






12


Management Response


Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, a total amount of US $100,655.00 were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.



• Boarding passes;• Evidence of authorization for travels made;• Acknowledgement receipt;• Approved accountabilities for the travels made;• Names and signatures of those who received travel advances, and• Invitation letter.

NO. SUB-HEAD PAYEE MONTH AMOUNT COMMENT

1 2211 PBC 045 Jan- Oct 19 37,629.00 The payment did not have and receipt voucher.


3 2213 PBC 046 Jan- Oct 19 29,462.20

The payment did not have purchase order,

receipt voucher and details of the vehicles that

were given fuel/oil.




TOTAL $201,443.20


Management Response


Recommendations






It was however observed that the Supreme Court did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the entity is using in managing, storing or disposing of the assets.

Management Response


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including the Supreme Court to follow.



It was, however, observed that contrary to the requirement of the law, Supreme Court did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity.

There was no evidence that assets of Supreme Court were recently verified physically to ascertain their existence, condition, value and location among other matters. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.


Management Response


Recommendations

Supreme Court should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Supreme Court and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.

12.3.3 Weaknesses in Management of Vehicles


It was however observed that the entity provided a list of 3 vehicles reportedly owned by the Supreme Court. The entity only provided 2 vehicles for physically verification and the remaining 1 was never brought for physical verification. None of these vehicles were registered in the name of the entity for ownership. The following is List of the vehicles was not verified:

Management Response


Recommendations

All vehicles should have logbooks, vehicle ownership books, be registered in the name of the Supreme Court and stored safely by a senior responsible official.


Conduct periodic physical verification of all vehicles to ascertain existence, condition, and usage among others.


1

Toyota

Landcruiser

bulletproof

From the

president Office.

The vehicle was not registered with the

name of the entity and not physically

verified

2Toyota Hilux

pick upSupreme Court MROFR22G490658151


name of the entity

3Toyota Hilux

pick upSupreme Court MROKA140B24699680


name of the entity


The asset register should be updated with the results of the counts.






Management Response


Recommendations




Contrary to the above criteria, Supreme Court wrote its local contracts in English language, instead of writing them in Somali language.

Management Response


NO. AGREEMENT PURPOSE CONTRACT PERIOD AMOUNT US $

1 PBC 045 Office Supplies 10 months from March 2019 22,900.00

2 PBC 045 Rent 10 months from March 2019 36,000.00

3 PBC 046 Fuel and Oil 10 months from March 2019 27,500.00

4 PBC 047 Other General Expenses 4 months from Sept 2019 36,000.00

TOTAL $122,400.00


Recommendations

The Supreme Court should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

12.5 INTERNAL AUDIT



It was noted that Supreme Court neither had an internal audit unit nor function. There were no periodic internal audits conducted in Supreme Court.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Supreme Court.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Supreme Court are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Supreme Court policies.



There is no audit follow-up this year as this is the first year of conducting a compliance audit of Supreme Court.


BANADIR REGIONAL COURT


13.1.1 13.1.1 Failure to Prepare and Submit Annual Accounts



As of August 2020, the financial statements for the Banadir Regional Court for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

Banadir Regional Court submitted financial statements to the Accountant General’s Office.

Recommendations

Banadir Regional Court should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.





It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $19,948.00 were made to some companies without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.Details of payments in question are set out in the table below:

13


Management Response

See the attached documents.

Recommendations




Law no. 2 of the Financial & Accounting Procedure of the State of 29 December 1961 obligates that every payment shall have supporting documents attached to payment requests and travel documents.


It was, however, observed contrary to the requirements of the above-mentioned law, a total amount of US $2,750.00 were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. The payments did not have one or more of the following supporting documents such as:

• Boarding pass;• Evidence of authorization for travels made;• Acknowledgement receipt;• Approved accountabilities for the travels made;• Names and signatures of those who received travel advances, and• Invitation letter.

Management Response

See the attached documents on the payments for travels made.

NOSUB-HEAD

PAYEE MONTHAMOUNT

US $COMMENT

1 2213 PBC 046 March – August 19 9,975.00The payment did not have receipts voucher

and details of the vehicles given the fuel.

2 2214 PBC 047 February 19 1,989.00 The payment did not have receipt voucher

3 2214 PBC 045 April 19 1,996.00 The payment did not have receipt voucher

4 2215 PBC 045 January 19 5,988.00 The payment did not have receipt voucher

TOTAL $19,948.00


Recommendations






It was however observed that the Banadir Regional Court did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the entity is using in managing, storing or disposing of the assets.

Management Response

There was no response from the audited entity on this finding.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including the Banadir Regional Court to follow.



It was, however, observed that contrary to the requirement of the law, Banadir Regional Court did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity.

There was no evidence that assets of Banadir Regional Court were recently verified physically to ascertain their existence, condition, value and location among other matters. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Response

Banadir Regional Court will implement the recommendation.


Recommendations

Banadir Regional Court should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Banadir Regional Court and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.





Management Response

Banadir Regional Court agrees the finding and will implement the recommendations.

Recommendations




Contrary to the above criteria, Banadir Regional Court wrote its local contracts in English language, instead of writing them in Somali language.

NO CONTRACT PARTIES PURPOSE OF THE CONTRACT CONTRACT DURATION AMOUNT US $

1 PBC 045 General Service 1 Year 36,000.00

2 PBC 046 Fuel & Oil 1 Year 16,000.00

TOTAL $52,000.00


Management Response

Banadir Regional Court agrees the finding and will implement the recommendation.

Recommendations

Banadir Regional Court should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

13.5 INTERNAL AUDIT



It was noted that Banadir Regional Court neither had an internal audit unit nor function. There were no periodic internal audits conducted in Banadir Regional Court.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Banadir Regional Court.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Office of the Accountant General are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Banadir Regional Court policies.



There is no audit follow-up this year as this is the first year of conducting a compliance audit of Banadir Regional Court.


BANADIR REGIONAL APPEAL COURT





As of August 2020, the financial statements for the Banadir Regional Appeal Court for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response


Recommendations

Banadir Regional Appeal Court should prepare a complete set of accounts accounts for every year, fully reconciled, and submit for audit.






14


Management Response


Recommendations






It was however observed that the Banadir Regional Appeal Court did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the entity is using in managing, storing or disposing of the assets.

Management Response


Recommendations


NO. SUB-HEAD PAYEE MONTHAMOUNT

US $COMMENT

1 2211 PBC 047 Jan – Oct 19 24,983.50 The payment did not have receipt voucher.




TOTAL $64,938.10


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including the Banadir Regional Appeal Court to follow.



It was, however, observed that contrary to the requirement of the law, Banadir Regional Appeal Court did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity.

There was no evidence that assets of Banadir Regional Appeal Court were recently verified physically to ascertain their existence, condition, value and location among other matters. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Responses


Recommendations

Banadir Regional Appeal Court should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Banadir Regional Appeal Court and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.

14.4 INTERNAL AUDIT



It was noted that Banadir Regional Appeal Court neither had an internal audit unit nor function. There were no periodic internal audits conducted in Banadir Regional Appeal Court.

Management Response



Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Banadir Regional Appeal Court.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Banadir Regional Appeal Court are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Banadir Regional Appeal Court policies.



There is no audit follow-up this year as this is the first year of conducting a compliance audit of Banadir Regional Appeal Court.


THE OFFICE OF THE ATTORNEY GENERAL





As of August 2020, the financial statements for the Office of the Attorney General for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

The Office prepared the financial statements and submitted to the Accountant General’s Office although there were challenges like COVID-19.

Recommendations

The Office of the Attorney General should prepare a complete set of accounts accounts for every year, fully reconciled, and submit for audit.


15.2.1 Weaknesses in the Management of Vehicles

Best practice requires all vehicles have log books, vehicle ownership books and are registered in the name of the entity. It also requires that an approved policy be in place and adhered to. Furthermore, all vehicles should be recorded in the asset register as above.

It was however observed that the Office of the Attorney General did provided a list of 4 vehicles reportedly owned by the Office for physical verification. None of these vehicles had ownership books registered with the name of the Attorney General Office.

15


NOVEHICLE TYPE

SOURCE OF FUNDS

CHASSIS NO. COMMENTS COMMENT

1Toyota

Noah

A somali

citizenSR50-0061520

The vehicle was Not

registered in the name of

the AGO.

The payment did not

have receipt voucher.

2Toyota

HiluxUNDP 434051

The vehicle was not


the agency

The payment did not


3Toyota

NissanUNDP JN1CPUD22U0086063

The vehicle was not


the agency

The payment did not


4

Hilux

Double

Cabin

6-seater

LHD

UNDP AHTFK22G-503093397

The vehicle was not


the agency

The payment did not


Management Response

The Office agrees the finding and will implement the recommendations mentioned above although one vehicle mentioned above is owned by another entity and we transferred that vehicle back to the owned entity.

Recommendations

All vehicles should have logbooks, vehicle ownership books, be registered in the name of the Office of the Attorney General and stored safely by a senior responsible official.







It was, however, observed that contrary to the requirements of the above-mentioned law, contracts in amount totaling US $119,164.00 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts.


Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS.

Management Response

There was response from the audited entity on this finding.

Recommendations




Contrary to the above criteria, that the Office of the Attorney General wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The two parties that signed the contracts understand the requirements on the contract and the Office will implement the recommendation.

Recommendations

Office of the Attorney General should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

15.4 INTERNAL AUDIT



It was noted that Office of the Attorney General neither had an internal audit unit nor function. There were no periodic internal audits conducted in the Office of the Attorney General.

NO CONTRACTPURPOSE OF THE CONTRACT


AMOUNT US $

1International Development Law

Organization

Prosecution for criminal

offences in Somalia1 Year Not Specified

2 PBC 033 Goods and Services Not Specified 36,664.00

3 PBC 038 Fuel Not Specified 82,500.00

TOTAL $119,164.00


Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Office of the Attorney General.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Office of the Attorney General are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Office of the Attorney General policies.



There is no audit follow-up this year as this is the first year of conducting a compliance audit of the Office of the Attorney General.


MINISTRY OF HUMANITARIAN & DISASTER MANAGEMENT





As of August 2020, the financial statements for the Ministry of Humanitarian for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

The Ministry prepared the financial statements and submitted to the Accountant General’s Office and a copy to OAGS.

Recommendations

Ministry of Humanitarian should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.





16


It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $11,000.00 were made to several companies without adequate supporting documents such as receipt voucher. This did not make it possible for us to verify the authenticity of these payments.

Management Response

The Ministry had kept most of the supporting documents, the Ministry stamped receipts for not to be used again for different payments.

Recommendations







• Boarding passes;• Acknowledgement receipt; and• Invitation letters.

Management Response

The Ministry provided most of the supporting documents required.

Recommendations





Best Practice requires an institution to have an asset management policy and procedures that would assign


management responsibility over assets, require establishment of asset registers, define how the assets are to be recorded and reported on, how the assets are to be monitored and how they might be disposed of among other matters.

It was however observed that the Ministry of Humanitarian did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the entity is using in managing, storing or disposing of the assets.

Management Response

The Ministry uses an excel sheet to record the assets and would like if OAGS would help in developing asset management policy.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Humanitarian to follow.



It was, however, observed that contrary to the requirement of the law, Ministry of Humanitarian did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity.

There was no evidence that assets of the Ministry were physically verified to ascertain their existence, condition, value and location among other matters. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Response

The Ministry uses an excel sheet to record the assets and have shared with audit team.

Recommendations

Ministry of Humanitarian should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry of Humanitarian and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.






Management Response

The Ministry registered one of the contracts and will register the other contract as recommended.

Recommendations




Contrary to the above criteria, Ministry of Humanitarian wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The Ministry followed the procedure for writing contracts of which have been shared by the Accountant General Office and we look forward if OAGS would provide one in line with the Somali language.

Recommendations

Ministry of Humanitarian should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

NO CONTRACTOR PURPOSE OF THE CONTRACT DURATION OF THE CONTRACT AMOUNT US $

1 PBC 048 Car purchase 60,000.00

2 PBC 049 Purchase and car rent 10 Months 23,750.00

TOTAL $83,750.00


NO FINDING STATUS



3 6.3.1 There is no fixed asset register in place Partially implemented

46.3.2 There was no asset management policy guidelines &

proceduresNot implemented


6 6.4.1 Contracts were not registered with the OAG Partially implemented

7 6.5.1 Regularity of Internal Audit This was partially implemented

16.5 INTERNAL AUDIT



It was noted that Ministry of Humanitarian neither had an internal audit unit nor function. There were no periodic internal audits conducted in the Ministry of Humanitarian.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including MoHADM.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry of Humanitarian policies.




MINISTRY OF CONSTITUTIONAL AFFAIRS







Management Response

The Ministry provided the supporting documents although there were some challenges.

Recommendations






17



It was however observed that the Ministry of Constitutional Affairs did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the entity is using in managing, storing or disposing of the assets.

Management Response

The Ministry Agrees and will implement the recommendations.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Constitutional Affairs to follow.



It was, however, observed that contrary to the requirement of the law, Ministry of Constitutional Affairs did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity.

There was no evidence that assets of the Ministry were recently verified physically to ascertain their existence, condition, value and location among other matters. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Response

The Ministry updated its register.

Recommendations

Ministry of Constitutional Affairs should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry of Constitutional Affairs and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.





Contrary to the above criteria, Ministry of Constitutional Affairs wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The Ministry will implement the recommendation.

Recommendations

Ministry of Constitutional Affairs should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

17.4 INTERNAL AUDIT



It was noted that Ministry of Constitutional Affairs neither had an internal audit unit nor function. There were no periodic internal audits conducted in the Ministry of Constitutional Affairs.

Management Response

At the moment the Ministry of the Constitutional Affairs (MCA) has no Internal Auditor. Nonetheless, the current organizational structure consists of Internal Auditor function but due to limited staff at the entity, MCA has no functional Internal Auditor.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Ministry of Constitutional Affairs.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry of Constitutional Affairs policies.

17.5 UDIT FOLLOW UP


There is no audit follow-up this year as this is the first year of conducting a compliance audit of the Ministry of Constitutional Affairs.


NATIONAL INDEPENDENT ELECTORAL COMMISSION





As of August 2020, the financial statements for the National Independent Electoral Commission for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

NIEC provided the supporting documents although there were some challenges.

Recommendations

The National Independent Electoral Commission should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.






18


Management Response

The payment had the supporting documents required and the auditors saw the documents.

Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $58,490.00 paid to various recipients as travel costs were not adequate supported. This did not make it possible for us to verify the authenticity of these payments. These payments were made to various recipients. The payments did not have one or more of the following supporting documents such as:


Management Response

The Committee kept the supporting document required.

NO. SUB-HEAD PAYEE MONTH AMOUNT US $ COMMENT

1 2214/2215 PBC 033 Jan 19 19,417.00The payment did not have receipt

voucher

2 2214/2215 PBC 047 June 19 19,417.00The payment did not have receipt

voucher

3 2213 PBC 038 and PBC 047Jan –

June 1926,400.00

The payment did not have receipt

voucher and details of vehicles

was give the fuel

4 2256 PBC 018 Sept 19 29,820.00The payment did not have receipt

voucher

TOTAL $95,054.00


Recommendations






It was however observed that the National Independent Electoral Commission did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the entity is using in managing, storing or disposing of the assets.

Management Response

Details of this is not quite clear but we shared the information with the audit team.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including National Independent Electoral Commission to follow.



It was however observed that there were vehicles reportedly owned by National Independent Electoral Commission but were not registered with National Independent Electoral Commission.

NO VEHICLE TYPE SOURCE CHASSIS NO. COMMENTS

1 Toyota Pickup UNDP AHTKK8CD100678016Not registered in the name of NIEC but

physically verified


physically verified


physically verified



DURATION OF CONTRACT

AMOUNT US $

1 PBC 047 General service 5 months 28,834.00

2 PBC 033 General service March 2019 19,417.00

3 PBC 047 Fuel 5 months 35,200.00

Management Response

These 5 vehicles are not registered with name of the entity, but all other vehicles are registered with name of the entity. The entity will work to implement the recommendation.

Recommendations

All vehicles should have logbooks, vehicle ownership books, be registered in the name of the National Independent Electoral Commission and stored safely by a senior responsible official.


Conduct periodic physical verification of all vehicles to ascertain existence, condition, and usage among others. The asset register should be updated with the results of the counts. Develop and implement policy guidelines and procedures specifically for management of vehicles.





NO VEHICLE TYPE SOURCE CHASSIS NO. COMMENTS


physically verified


physically verified


Management Response

The Committee signs contract with vendors that are registered with Ministry of Finance and we shared with the audit team at the time of the audit.

Recommendations




Contrary to the above criteria, National Independent Electoral Commission wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

NIEC will make sure to register all local contracts as recommended.

Recommendations

National Independent Electoral Commission should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.



There is no audit follow-up this year as this is the first year of conducting a compliance audit of the National Independent Electoral Commission.


DURATION OF CONTRACT

AMOUNT US $

4 PBC 047 General service 7 months 30,000.00

5 PBC 018 General service 29,820.00

6 NIEC & PBC 039 Travel Service

7 PBC 038 Fuel

TOTAL $143,271.00


NATIONAL CIVIL SERVICE COMMISSION




It was, however, observed that contrary to the requirement of the law, National Civil Service Commission (NCSC) did not maintain up to date asset register making it difficult for us to verify the asset owned by the entity.

There is no evidence that assets of NCSC were recently verified physically to ascertain their existence, condition, value and location among other matters. Furthermore, physical verification revealed that all the assets were not tagged with unique identification numbers for control and monitoring.

Management Response

There entity prepared asset register and registered all the assets.

Recommendations

National Civil Service Commission should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


National Civil Service Commission and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.

19.2 CONTRACT MANEGEMENT



19



Management Response

There was no written response from the audited entity on this finding.

Recommendations




Contrary to the above criteria, National Civil Service Commission wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The entity followed the procedure that Office of the Accountant General shared which was writing the contracts in English Language.

Recommendations

National Civil Service Commission should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

19.3 INTERNAL AUDIT



NO. PARTIES TO THE AGREEMENT PURPOSE PERIOD AMOUNT US $

1 PBC 038 Fuel and lubricants 1 year 27,492.00

2 PBC 055 Goods and services 1 year 16,500.00

3 PBC 056 Printing Civil Servant ID cards Open 50,000.00

TOTAL $93,992.00


It was noted that National Civil Service Commission neither had an internal audit unit nor function. There were no periodic internal audits conducted in the National Civil Service Commission.

Management Response

National Civil Service Commission has no Internal Auditor however the entity structure consists of internal audit but there is no budget to establish an audit unit.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including NCSC.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the National Civil Service Commission are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and National Civil Service Commission policies.



There is no audit follow-up this year as this is the first year of conducting a compliance audit of the National Civil Service Commission.


SECURITY SECTOR


MINISTRY OF DEFENSE





It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $98,984.00 were paid during the FY 2019 without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. Details of payments in question are set out in the table below:

Management Response

There was no written response from the audited entity although the Ministry provided some supporting documents.

Recommendations


NOSUB-HEAD

RECIPIENT OF PAYMENTS

MONTHSAMOUNT

US $COMMENTS

1 2211 PBC 055 Jan-Aug 19 29,328.00 These payments did not have receipt voucher





TOTAL $98,984.00

20






It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $20,330.00 were made to Private Business Company (PBC 122) for the months of January, February and April 2019 without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. The payments did not have one or more of the following supporting documents such as:


Management Response

There was no response from the audited entity although the Ministry provided some supporting documents.

Recommendations






It was however observed that the Ministry of Defense did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

The Ministry will work on this issue and will implement the recommendation.


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Defense to follow.



It was, however, observed that contrary to the requirement of the law, the Ministry of Defense did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that all assets were not tagged with unique identification numbers for control and monitoring.

Management Response

The Ministry will work on this issue and will implement the recommendation.

Recommendations

Ministry of Defense should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry of Defense and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.


Best practice requires all vehicles have log books, vehicle ownership books and are registered in the name of the entity. It also requires that an approved policy be in place and adhered to. Furthermore, all vehicles should be recorded in the asset register as above.

It was however observed that the Ministry provided a list of 25 vehicles reportedly owned by the Ministry. Out of the 25 vehicles that the Ministry 12 vehicles were taken away by former officials of the Ministry.

The Ministry reported 13 vehicles were under the control of the Ministry although only 7 vehicles were provided for physical verification and 1 vehicle that was destroyed by IED.

None of these vehicles were registered in the name of the Ministry for ownership. The table below is a list of Ministry vehicles, some of which could not be identified with the Ministry or could not be physically verified during the audit:


NOVEHICLE TYPE

SOURCE OF VEHICLE

CHASSIS NOUNDER THE CONTROL OF THE MINISTRY

COMMENTS

1Hardtop

(Bullet Proof) USA Government JTGEB73J3G9017399 Yes

Physically verified by the

auditors

2Hardtop

(Bullet Proof)USA Government JTGEB73J9G9027696 Yes


auditors

3Hardtop



auditors

4Hardtop

(Bullet Proof)USA Government JTGEB73J7G9017395 Yes Blast occurred

5Hardtop



auditors

6Hardtop



auditors

7 Pickup HiluxTurkish

Government 040GU20B01BR156F Yes Not physically verified

8 Pickup HiluxTurkish

Government No Not physically verified

9 Pickup Hilux Turkish

Government No Not physically verified

10Hardtop

(Bullet Proof)

Government of

Egypt No Not physically verified

11 Pickup HiluxGovernment of

Egypt No Not physically verified

12 Toyota NoahGovernment of

Italy No Not physically verified

13 Toyota Camry Bought by MoD No Not physically verified

14Pickup (Bullet

proof)

Turkish

Government No

It is not in the Ministry’s

control

15Pickup (Bullet

proof)

Turkish

Government No


control

16 Toyota PickupTurkish

Government No


control

17 Toyota PickupTurkish

Government No


control

18Hardtop

(Bullet Proof)Egypt Government No


control


NOVEHICLE TYPE

SOURCE OF VEHICLE

CHASSIS NOUNDER THE CONTROL OF THE MINISTRY

COMMENTS

19Hardtop

(Bullet Proof)Egypt Government No


control

20 Toyota Pickup Egypt Government NoIt is not in the Ministry’s

control

21 Toyota Pickup Egypt Government NoIt is not in the Ministry’s

control

22 Toyota Noah Italian Government NoIt is not in the Ministry’s

control

23 Toyota Noah Italian Government NoIt is not in the Ministry’s

control

24

Land cruiser

V8 (Bullet

Proof)

Emirate

Government No


control

25 Toyota Pickup Emirate

Government No


control

Management Response

Most of the vehicles are under the control of former official from the Ministry although the Ministry tried to restore these vehicles but it was not successful.

Recommendations

All vehicles should have log books, vehicle ownership books and are registered in the name of the Ministry of Defense, and stored safely by a senior responsible official.








NO CONTRACTOR CONTRACT PURPOSE CONTRACT DURATION AMOUNT US $

1 PBC 055 General Service 23April to 30 Dec.2019 28,872.00

2 PBC 038 Fuel and Oil January – October 2019 20,619.00

TOTAL $49,491.00

It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $49,491.00 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS. A summary of these contracts is set out in the table below:

Management Response

The Ministry will register the contracts from OAGS.

Recommendations



According to law 22 Article 14 of National Procurement Act says: international contracts shall be prepared in English or Arabic languages while local contracts shall be prepared in Somali language.

Contrary to the above criteria, Ministry of Defense wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The Ministry will write the local contracts in Somali language.

Recommendations

Ministry of Defense should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

20.4 INTERNAL AUDIT



It was noted that Ministry of Defense had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Ministry of Defense.


NO FINDING STATUS

1 2.1 No asset management policy guidelines & procedures Not implemented

2 2.2 Fixed Asset Register Partially implemented

3 2.3 Management of vehicles Not implemented

4 3.1 All payments should be fully supported Not implemented

5 3.2 Travel costs lack adequate supporting documents Not implemented

6 3.4 Regularity of internal audits Partially implemented

7 3.5 Registration of contracts with the Office of the Auditor General Not implemented


The Ministry did not respond on this matter.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Ministry of Defense.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry of Defense are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry policies.




SOMALI NATIONAL ARMY





As of August 2020, the financial statements for the Somali National Army for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

The Army tried to prepare the financial statements as it was the first time to prepare although we shared some separate statements to the audit team.

Recommendations

Somali National Army should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.

21.2 LEGAL FRAMEWORK

21.2.1 Lack of New Legal Framework

Article 126 (1) of the Provisional Constitution states that “The Federal Government shall guarantee the peace, sovereignty and national security of the Federal Republic of Somalia and the safety of its people through its security services” including:

(a) The armed forces; (b) The intelligence services; (c) The police force; and (d) The custodial corps.

21


Article 126 (2) of the Provisional Constitution states further that: “The deployment of the security forces shall be determined by law”.

Article 130 of the Constitution on Security Agencies Laws states that: “The two Houses of the Parliament shall enact a law governing the structure, functions and levels of the security agencies of the Federal Republic of Somalia”.

Further, Schedule one (D) of the Provisional Constitution identified priority laws to be enacted in the first term of the federal Parliament as:

→ (15) A law in terms of Article 130, concerning the security forces;

It was, however, observed that contrary to the requirement of the law, Articles 126 and 130 and as at the time of audit, SNA failed to enact the Articles and was operating under the old outdated law (Law No. 6 of 12 April, 1960) before the Provisional Constitution was promulgated.

Management Response

Two houses of the Parliament are required to enact new law for SNA and as long as the new law is not enacted, we have to comply with our current law.

Recommendations

The Federal Parliament of Somalia should take appropriate steps to enact a new law and regulation for Somalia National Army since Somalia is now a Federal Republic.

21.3 HUMAN RESOURCE MANAGEMENT (PERSONNEL MANAGEMENT)

21.3.1 Lack of approved Table of Organization and Equipment (TOE)

Best practice require that an organization should have an approved Table of Organization and Equipment (TOE) for managing and controlling recruitment, deployment, promotion and disengagement of personnel.

For the military, this will ensure that there is an appropriate, affordable, acceptable military force in place, and it will guide in ensuring acquisition of military and non-military hardware are acquired that reflect national security policy or strategy.

The TOE provides details about personnel and equipment requirements at levels of military units from the lowest to the highest organizational level.

It was however noted that, SNA did not have an approved TOE as no evidence of the approved TOE availed for audit. In this regard it was not possible to ascertain how recruitment, deployment, promotion and procurement of equipment was done.

Management Response

Two houses of the Parliament are required to enact new law for SNA and as long as the new law is not enacted, we have to comply with our current law.


Recommendations

Steps should be taken to develop an appropriate TOE which takes into account security threats, security policy and strategy for Somalia.

The TOE should be reviewed and approved by the highest military authorities of the SNA preferably by the Head of State, His Excellency the President FRS.

Like the national budget, the TOE should be reviewed and updated periodically to take into account national security threats.

21.3.2 Failure to Maintain up to date Database

Best practice requires an institution to maintain an up to date record of all personnel.

The personnel database should contain all necessary identification details of each personnel as to date of birth, education attained, duty station, rank, salary grade/level, allowances and entitlements, gender, blood group, date of engagement, ID number, next kin, parents, etc.

It was however observed although SNA maintains a computerized database for its personnel, the database is not up to date as the exact number of Somali National Army is not yet determined. Thus, there are several personnel who are not on the database, such as those who have been absent at the time of the registration, and new recruits which were only shared with us at the time of the audit by the relevant SNA officers.

1. It was further observed that, there were weaknesses in the administration of the database system such as: -2. Lack of full administration right of the database;3. Limitation of the system to record all military and non-military equipment assigned to an officer;

Weak control over data entry - this database was designed in a way that the existing records can be easily amended by data inputting staff, without alerting system administrator or leaving an audit trail. We also noted that the system administrators mixed the live and test production data, which damages the data integrity.

Management Response

There was no response on this finding from the audited entity.

Recommendations

The Ministry of Defense and the Somali National Army should have an up to date database for both personnel and equipment.

The Ministry of Defense and the Somali National Army should ensure that strong controls are put in place to manage effectively and efficiently the database.

SNA management and Ministry of Defense should carry out periodic physical counts of the personnel to remove nonactive or “ghost personnel” from the system.


21.4 MANAGEMENT FOOD AND FUEL SUPPLIES

21.4.1 Lack of Policy and Procedure in the Management of Food Supplies

Management of food supplies in security sector institutions, in particular for the personnel of the Somali National Army, is crucial for peace and stability.

Personnel of the Somalia National Army require secure, adequate and reasonable system of food supplies to enable personnel to focus on security of the nation and safety of the population.

There should be an approved food quality management policies and procedures to ensure approved quantity and quality is distributed to military personnel in a timely manner.

It was, however, observed that, there is no documented policy and procedures of quality control for ensuring distribution of the right quantity and quality of food to the personnel.

Management Response

The draft policy was submitted to security and justice committee roadmap for review and approval.

Recommendations

MoD and SNA should develop and implement approved food quality policies and procedures for food rations and ensure adequate measures are implemented.

21.4.2 Lack of Policy and Procedure in the Management of Fuel Supplies

There should be adequate internal control procedures in the management, storage and distribution of fuel. This should often lay down approved procedures for storage and distribution of fuel supplies by responsible officers.

Physical verifications of fuel supplies should be conducted periodically, and any discrepancies should be investigated and remedial taken promptly.

It was, however, observed that, there was no documented and approved policy guidelines and procedures for management, distribution and issue of fuel supplies for the operations of Somali National Army. In this regard it was not possible for us to ascertain whether the fuel was used for intended purposes aimed at serving the citizen and the nation.

Management Response

The draft policy was submitted for review and approval.

Recommendations

Develop and implement detailed policy guidelines and procedures for the management of fuel supplies with the approval of the Ministry of Defense.

Conduct periodic verification of fuel supplies, and any discrepancies investigated for prompt remedial action.






It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $1,121,483.26 were paid during the FY 2019 without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. Details of payments in question are set out in the table below:

Management Response

SNA is requesting to be asked again or the auditors to clarify payments that did not have supporting documents.

Recommendations






NO. SUB-HEAD PAYEE MONTH AMOUNT US $ COMMENTS

1 2213 SNA Jan, Feb & Jun 19 123,000.00 These payments did not


2 2214 SNA Jan - July 19 205,700.00These payments did not




4 2251 SNA Jan - Jun 19 106,174.86These payments did not




TOTAL $1,121,483.26



It was however observed that the Somalia National Army did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Somalia National Army to follow.



It was, however, observed that contrary to the requirement of the law, the Somalia National Army did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that all assets were not tagged with unique identification numbers for control and monitoring.

Also, we were also not given titles for land claimed to have been given to the SNA which are in private use. Some of the land spaces belonging to the SNA were being used by private individuals without authority.

Management Response


Recommendations

The authorities of the SNA should establish two asset registers of assets, one for military items, and the other for non-military items with clear guidelines to ensure particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Somalia National Army and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.



Best practice requires all vehicles to have log books, vehicle ownership book and vehicles are registered in the name of the entity.

It also requires that an approved policy for management of vehicles is in place and adhered to. Furthermore, all vehicles should be recorded in the asset register as above.It was however observed that the SNA were not able to provide all vehicle ownership books for physical verification. All of the vehicles were not physically produced for physical verification. The absence of ownership books and asset register for the motor vehicles belonging to SNA, made it not possible to ascertain if the vehicles were being used for the intended purpose.

Management Response

The vehicles are provided by donners and there is no vehicle bought by SNA. The Directorate receives report every month from the vehicle users and donners do not bring vehicles with the ownership books. There is a draft policy that is waiting to be approved by the cabinet Ministers. There is no any record we shared with the Ministry of Finance and it’s not part of the requirements in the draft policy.

Recommendations

All vehicles should have vehicle ownership books and registered in the name of Somalia National Army and stored safely by a senior responsible official.




21.6.4 Weakness in Management of Other Non-Military Supplies

There should be adequate internal control procedures for management, storage and distribution of these non-military supplies. Such procedures include maintenance of adequate stock records or inventories which are updated periodically.

There should be regular physical verification of these items and reconciled with stock records.

It was, however, observed that, there was no documented and approved policy guidelines and procedures for management, distribution and issue of non-military supplies for the Somali National Army.

There were no updated stock records (or inventory system) maintained for such items.

There was no evidence provided to indicate that there were periodic verifications of the items and reconciled with inventory records.


AMOUNT US $

1 PBC 057 Food and hygiene supplies 1 year


Management Response


Recommendations

Develop detailed policy guidelines and procedures for the management of non-military supplies, and approved by the Ministry of Defense for implementation.

Establish an effective inventory system for recording and accounting for all movements of other non-military items.

Conduct periodic verification of other non-military supplies, update inventory records, and discrepancies investigated for prompt remedial action.


AMOUNT US $

2 PBC 058 Repair

3 PBC 059 Travel 8 months

4 PBC 060 General services

5 PBC 061 Oil and lubricants 1 month 54,760.00




9 PBC 065 Oil and lubricants 12 months 808,140.00

10 PBC 063 Dry food supplies 1 month 136,379.23

11 PBC 064 Dry food supplies 256,502.40


13 PBC 065 Oil and lubricants 90,170.00

14 PBC 103 Dry food supplies 1,921,236.84


16 PBC 067 Dry food supplies 1 month 25,733.25


TOTAL $4,705,475.82





It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $4,705,475.82 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS. The table below provides a summary of these contracts for FY 2019:

Management Response

SNA is working to register the contracts from OAGS.

Recommendations


21.8 INTERNAL AUDIT



It was noted that Somali National Army had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Office of the Somali National Army.

Management Response

There was no written response on this finding from the audited entity.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including the Somalia National Army.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Somalia National Army are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and SNA policies.


NO FINDING STATUS

1 4.1 No annual accounts submitted for audit Not implemented

2 5.1 Laws and Regulations for the Somalia National Army Not implemented

3 6.1 Table of Organization and Equipment (TOE) Not implemented

4 6.2 Personnel database for the SNA Partially implemented

5 8.1 Adequacy of management of food supplies to the SNA Partially implemented

6 8.2 Management of Fuel supplies Partially implemented

7 8.3 Management of other non-military supplies Partially implemented

8 9.1 Adequacy of procedures for vehicle management Not implemented

9 10.1 Adequacy of fixed asset registers Partially implemented

10 11.1 Whether procurement laws are followed by SNA Not implemented







MINISTRY OF INTERNAL SECURITY






NOSUB-HEAD

PAYEE MONTHSAMOUNT

US $COMMENT

1 2211 PBC 022 Jan- July 19 12,789.00 This payment did not have receipt voucher

2 2213 PBC 038 Jan- July 19 19,250.00This payment did not have receipt voucher and

details of the vehicles the fuel was given



5 2261 PBC 050 January 19 9,000.00This payment did not have receipt voucher and

contract

6 2261 PBC 066 February 19 35,480.00 This payment did not have receipt voucher

7 2261 PBC 014 February 19 9,020.00 This payment did not have receipt voucher

8 2261 PBC 011 March 19 8,180.00 This payment did not have receipt voucher

9 2261 PBC 105 June 19 52,500.00 This payment did not have receipt voucher

10 2261 PBC 018 August 19 36,763.00 This payment did not have receipt voucher

11 2261 PBC 106 Sept 19 39,600.00This payment did not have receipt voucher

and contract

12 2261 The Ministry Nov 19 121,888.00 This payment did not have receipt voucher

13 2261 PBC 0118 Dec 19 39,400.00 This payment did not have receipt voucher

TOTAL $409,408.00

22


Management Response


Recommendations





Supporting documents vary depending on the type of payment, and could include purchase orders, signed contracts, invoices, delivery notes; goods received notes, acknowledgement receipts and travel documents.

It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $16,500.00 were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. These payments were made to various recipients. The payments did not have one or more of the following supporting documents such as:


Management Response


Recommendations


NOSUB HEAD

BENEFICIARY MONTHSAMOUNT US $

COMMENTS

1 2216 PBC 069 Jan 2019 5,500.00This payment did not have tickets, boarding

pass and receipt voucher

2 2216 PBC 024Feb - March

201911,000.00

This payment did not have tickets, boarding

pass, receipt voucher and invitation letter

TOTAL $16,500.00



22.1.3 Unauthorized Internal Re-allocation of Funds

Law no. 2 of the Financial & Accounting Procedure of the State of 29 December 1961 and Article 16 states “if during the financial year it becomes necessary to use budget provided for sub-head to be used for another purpose, that change shall be processed in accordance with the law no. 317 of 17 December 1962 article 6 (A)”

That law requires that if a government agency needs to transfer funds to one head to another, the re-allocation of funds shall go through the legal process by officially writing to the Ministry of Finance and if the Minister of Finance approves, then the changes be affected.

It was, however, observed contrary to the requirements of the above-mentioned law, funds for sub-head 2261 of the Ministry budget was used for expenditures that were not originally budgeted for.

The procedure described above law for internal re-allocation of funds was not followed since there was no evidence that the approval of the Minister of Finance was granted.

The total amount in question was US $77,692.00. Besides, there were no adequate supporting documents for some of the payments. The table below gives a summary of these payments.

Management Response


Recommendations

All internal re-allocation of funds without following laid down procedures and obtaining necessary approvals should stop.

Strong budgetary procedures should be put in SFMIS to prevent internal re-allocations of funds without authorizations of the Minister of Finance.

NOORIGINAL SUB- HEAD

BENEFICIARY MONTHS AMOUNT US $WHAT WAS USED FOR

1 2261 PBC 107 March 2019 4,320.00 Used for travelling

2 2261 PBC 108 April 2019 12,600.00 Used for travelling

3 2261 PBC 109 May 2019 10,020.00 Used for travelling

4 2261 PBC 110 2,640.00 Used for travelling

5 2261 PBC 011October

201938,112.00 Used for travelling

6 2261 PBC 038January

201910,000.00 Fuel & oil

TOTAL $77,692.00





It was however observed that the Ministry Internal Security did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry Internal Security to follow.



It was, however, observed that contrary to the requirement of the law, the Ministry Internal Security did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that all assets were not tagged with unique identification numbers for control and monitoring.

Management Response


Recommendations

Ministry Internal Security should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry Internal Security and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.





It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $501,589.47 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS. A summary of these contracts is set out below:

Management Response


Recommendations




Contrary to the above criteria, Ministry Internal Security wrote its local contracts in English language, instead of writing them in Somali language.


CONTRACT DURATION AMOUNT US $

1 PBC 018 Rent 1 Year from Jan 2019 21,996.00

2 PBC 111 General service 6 months from Feb 2019 81,000.00

3 PBC 038 Fuel & oil 10 months from Mar 2019 27,500.00

4 PBC 049 Stationery 10 months from Mar 2019 18,330.00

5 PBC 106 General service 4 months from Sep 2019 158,400.00

6 PBC 018 General service 4 months from Sep 2019 157,600.00

7 PBC 018 General service 36,763.47

TOTAL $501,589.47


Management Response


Recommendations

Ministry Internal Security should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

22.4 INTERNAL AUDIT



It was noted that Ministry of Internal Security had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Ministry of Internal Security.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including Ministry of Internal Security.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry of Internal Security.



There is no audit follow-up this year as this is the first year of conducting a compliance audit of the Ministry of Internal Security.


SOMALI POLICE FORCE

23.1 SUBMITION OF ANNUAL ACCOUNTS




As of August 2020, the financial statements for the Somali Police Force for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response


Recommendations

Somali Police Force should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.






23





→ (17) A law in terms of Article 130, regulating the structure and functions of the federal police;

→ (18) A law in terms of Article 130, regulating the relationships between the federal police service

and the police services of the Federal Member States;

It was, however, observed that contrary to the requirement of the law, SPF continued to operate under the old law before the Provisional Constitution was promulgated. The law was enacted at the time Somalia was a unitary state; now it is a federal state. There were no law and regulations defining formally the structure and functions of the Federal Police.

There was lack of clarity on the mandates and formal relationships between the federal police service, the police services of the Federal Member States and Banadir Regional Administration (BRA).

Management Response


Recommendations

Parliament should take appropriate steps to enact laws, regulation and Structure for formally establishing the Somalia Police Force in accordance with Article 130 of the Provisional Constitution.

Parliament should take appropriate steps to enact laws and regulations for regulating the relationships between the federal police service, the police services of the Federal Member States and Banadir Regional Administration in accordance with Article 130 of the Provisional Constitution.

23.3 HUMAN RESOURCE MANAGEMENT (PERSONNEL MANAGEMENT)

23.3.1 Lack of approved Table of Organization and Equipment (TOE)

Best practice require that an organization should have an approved Table of Organization and Equipment (TOE) for managing and controlling recruitment, deployment, promotion and disengagement of personnel.

For the police, this will ensure that there is an appropriate, affordable, acceptable police force in place and it will guide in ensuring acquisition of military and non-military hardware are acquired that reflect national security policy or strategy.

The TOE provides details about personnel and equipment requirements at levels of police units from the lowest to the highest organizational level.

It was however noted that, SPF did not have an approved TOE as no evidence of the approved TOE availed for


audit. In this regard it was not possible to ascertain how recruitment, deployment, promotion and procurement of equipment was done.

Management Response


Recommendations

Steps should be taken to develop an appropriate TOE which takes into account security threats, security policy and strategy for Somalia.

The TOE should be reviewed and approved by the highest authorities of the SPF preferably by the Head of State, His Excellency the President.

Like the national budget, the TOE should be reviewed and updated periodically to take into account national security threats.

23.3.2 Failure to Maintain up to date Database

Best practice requires an institution to maintain an up to date record of all personnel.

The personnel database should contain all necessary identification details of each personnel as to date of birth, education attained, duty station, rank, salary grade/level, allowances and entitlements, gender, blood group, date of engagement, ID number, next kin, parents, etc.

It was however observed although SPF maintains a computerized database for its personnel, the database is not up to date as the exact number of Somali National Army is not yet determined. Thus, there are 9 personnel who were registered but their fingerprints could not appear in the database and 40 personnel who are not on the database, such as those who have been absent at the time of the registration, and 569 personnel who are newly registered in the database but did not receive any salary or allowance which were only shared with us at the time of the audit by the relevant SNA officers.

1. It was further observed that, there were weaknesses in the administration of the database system such as: -2. Lack of full administration right of the database;3. Limitation of the system to record all military and non-military equipment assigned to an officer;

Weak control over data entry - this database was designed in a way that the existing records can be easily amended by data inputting staff, without alerting system administrator or leaving an audit trail. We also noted that the system administrators mixed the live and test production data, which damages the data integrity.

Management Response


Recommendations

The Ministry of Internal Security and the Somali Police Force should have an up to date database for both personnel and equipment.


The Ministry of Internal Security and the Somali Police Force should ensure that strong controls are put in place to manage effectively and efficiently the database.

SPF management and Ministry of Internal Security should carry out periodic physical counts of the personnel to remove nonactive or “ghost personnel” from the system.

23.4 MANAGEMENT FOOD AND FUEL SUPPLIES

23.4.1 Lack of Policy and Procedure in the Management of Food Supplies

Management of food supplies in security sector institutions, in particular for the personnel of the Somali Police Force, is crucial for peace and stability.

Personnel of the Somali Police Force require secure, adequate and reasonable system of food supplies to enable personnel to focus on security of the nation and safety of the population.

There should be an approved food quality management policies and procedures to ensure approved quantity and quality is distributed to military personnel in a timely manner.

It was, however, observed that, there is no documented policy and procedures of quality control for ensuring distribution of the right quantity and quality of food to the personnel.

Management Response


Recommendations

SPF and the Ministry of Internal Security should develop and implement approved food quality policies and procedures for food rations and ensure adequate measures are implemented.

23.4.2 Lack of Policy and Procedure in the Management of Fuel Supplies

There should be adequate internal control procedures in the management, storage and distribution of fuel. This should often lay down approved procedures for storage and distribution of fuel supplies by responsible officers.

Physical verifications of fuel supplies should be conducted periodically, and any discrepancies should be investigated and remedial taken promptly.

It was, however, observed that, there was no documented and approved policy guidelines and procedures for management, distribution and issue of fuel supplies for the operations of Somali Police Force. In this regard it was not possible for us to ascertain whether the fuel was used for intended purposes aimed at serving the citizen and the nation.

Management Response


Recommendations

Develop and implement detailed policy guidelines and procedures for the management of fuel supplies with


the approval of the Ministry of Internal Security.

Conduct periodic verification of fuel supplies, and any discrepancies investigated for prompt remedial action.






Management Response


Recommendations



23.5.2 Unauthorized Internal Re-allocation of Funds

Law no. 2 of the Financial & Accounting Procedure of the State of 29 December 1961 and Article 16 states “if during the financial year it becomes necessary to use budget provided for sub-head to be used for another purpose, that change shall be processed in accordance with the law no. 317 of 17 December 1962 article 6 (A)”

That law requires that if a government agency needs to transfer funds to one head to another, the re-allocation of funds shall go through the legal process by officially writing to the Ministry of Finance and if the Minister of Finance approves, then the changes be affected.

NO SUB-HEAD RECIPIENTS MONTHS AMOUNT US $ COMMENTS

1 2256 Various Jan – Dec 2019 405,981.00 The payment did not have invoice and

receipt voucher

2 2251 Various Jan – Dec 2019 11,964.00 The payment did not have invoice and

receipt voucher

TOTAL $417,945.00


It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $280,621.00 was paid for allowance and expenditures for Heegan Sports Club, rent, maintenance, travel and procurement for office equipment but was charged from wrong sub-heads. This did not make it possible for us to verify the authenticity of these payments. The payments were wrongly charged to sub-head of 2251 and 2256, which were meant for health and operational costs.

There was no evidence made available during the course of the audit that the Minister of Finance made an explicit approval to use wrong sub-heads for these expenditures. Details of internal re-allocation of funds is provided below:

Management Response


Recommendations

All internal re-allocation of funds without following laid down procedures and obtaining necessary approvals should stop.

Strong budgetary procedures should be put in SFMIS to prevent internal re-allocations of funds without authorizations of the Minister of Finance.




NOSUB-HEAD

USED FOR MONTHS AMOUNT

US $COMMENTS

1

2251

and

2256

AllowanceJan, May, July, Aug

and Oct and Dec 2019128,423.00

Approved internally by the

SPF commander

2 Office materials &

other consumables

Feb - July, Sep, Nov

and Dec 20196,050.00

Internally approval by the SPF

commander

3 Rent Jan, Feb, April, May,

June and Aug 201932,548.00

Internally approval by the SPF

commander

4 Repair April to July 2019 31,596.00 Internally approval by the SPF

commander

5 Travel

Jan, Feb, April, May,

July, Aug and Dec

2019

82,004.00 Internally approval by the SPF

commander

TOTAL $280,621.00


It was however observed that the Somalia Police Force did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Somalia Police Force to follow.



It was, however, observed that contrary to the requirement of the law, the Somalia Police Force did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that all assets were not tagged with unique identification numbers for control and monitoring. Land spaces belonging to the SPF were being used by private individuals.

Management Response


Recommendations

The authorities of the SPF should establish two asset registers of assets, one for military items, and the other for non-military items with clear guidelines to ensure particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Somalia Police Force and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.



It also requires that an approved policy for management of vehicles is in place and adhered to. Further, all vehicles are recorded in the in the asset register as above. It was however observed that the SPF were not able


to provide all vehicle ownership books for physical verification. All the vehicles were not physically produced for physical verification. The absence of vehicle ownership books and asset register for the motor vehicles belonging to SPF, made it not possible to ascertain if the vehicles were being used for the intended purpose.

Management Response


Recommendations

All vehicles should have log books, vehicle ownership books and are registered in the name of the SPF and stored safely by a senior responsible official.




23.6.4 Weak Management of other Non-Military Supplies

There should be adequate internal control procedures for management, storage and distribution of these non-military supplies. Such procedures include maintenance of adequate stock records or inventories which are updated periodically.

There should be regular physical verification of these items and reconciled with stock records.

It was, however, observed that, there was no documented and approved policy guidelines and procedures for management, distribution and issue of non-military supplies for the Somali Police Force.

There were no updated stock records (or inventory system) maintained for such items.

There was no evidence provided to indicate that there were periodic verifications of the items and reconciled with inventory records.

Management Response


Recommendations

Develop detailed policy guidelines and procedures for the management of non-military supplies and approved by the Ministry of Internal Security for implementation.

Establish an effective inventory system for recording and accounting for all movements of other non-military items.


Conduct periodic verification of other non-military supplies, update inventory records, and discrepancies investigated for prompt remedial action.

23.7 CONTRACT MANGEMENT



It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $828,328.20 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS. A summary of these contracts is set out below:

Management Response


Recommendations




Contrary to the above criteria, SPF wrote its local contracts in English language, instead of writing them in Somali language.

Management Response


NO NAME OF CONTRACTOROBJECTIVE OF CONTRACT

DURATION AMOUNT US $

1 PBC 070 Fuel and Diesel One Year 506,400.00

2 PBC 071 Foodstuffs One Year 321,928.20

TOTAL $828,328.20


NO FINDING STATUS


2 14.1 Laws and regulations for the Somalia Police Force Not implemented

3 15.1 Table of Organization and Equipment (TOE) Not implemented

4 15.2 Personnel database for the SPF Partially implemented

5 15.3 Physical verification of personnel Partially implemented

6 17.1 Adequacy of management of food supplies to the SPF Partially implemented

7 17.2 Management of Fuel supplies Partially implemented

8 17.3 Management of other non-military supplies Partially implemented


Recommendations

SPF should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

23.8 INTERNAL AUDIT



It was noted that SPF had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the SPF.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across FGS including the Somalia Police Force.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the SPF are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and SPF policies.




NO FINDING STATUS

10 19.1 Fixed Asset Management Policy Guidelines Not implemented




14 20.3 Internal re-allocation of funds Not implemented



NATIONAL INTELLIGENCE AND SECURITY AGENCY





As of August 2020, the financial statements for the National Intelligence Security Agency (NISA) for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

National Intelligence Security Agency have agreed the finding verbally but there was no written response from NISA.

Recommendations

NISA should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.





24






It was, however, observed that contrary to the requirement of the law, there is an outdated law under which the National Intelligence Security Agency. The law was enacted when Somalia was a unitary state.

According to the Provisional Constitution, NISA is required to operate under a new law for intelligence services.

There was no new legal and regulatory framework to define formally the structure and functions of NISA.

Management Response


Recommendations

Parliament should take appropriate steps to enact laws and regulation for formally establishing the National Intelligence Security Agency in accordance with Article 130 of the Provisional Constitution.

The law should regulate the mandate, structure and functions of the National Intelligence Security Agency in accordance with Article 130 of the Provisional Constitution.





It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $1,219,276.00 were paid during the FY 2019 without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.



NO SUB-HEAD PAYEE MONTHS AMOUNT US $ COMMENTS

1 2211 PBC 117 Jan – Jun 2019 328,938These payments did not have receipt

voucher

2 2211 PBC 119 July – Aug 2019 56,580These payments did not have receipt

voucher

3 2213 PBC 001 Jan – Aug 2019 402,152These payments did not have receipt

voucher

4 2215 PBC 019 Jan – Aug 2019 55,136These payments did not have receipt

voucher

5 2261 PBC 020 Jan- May 2019 188,235These payments did not have receipt

voucher

6 2261 PBC 106 Jun – Aug 2019 188,235These payments did not have receipt

voucher

TOTAL $1,219,276.00

Management Response


Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, payments that were made during the year of 2019 that were not adequately supported. Total payments of US $ 237,055.00 were made Travel Agency during the months of January to August 2019 lacked supporting documents This did not make it possible for us to verify the authenticity of these payments.

• Boarding pass; • Tickets; and• Acknowledgement receipt


Management Response


Recommendations






It was however observed that NISA did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including NISA to follow.



It was, however, observed that contrary to the requirement of the law, the NISA did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that all assets were not tagged with unique identification numbers for control and monitoring.


Management Response


Recommendations

NISA should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


NISA and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.



It also requires that an approved policy for management of vehicles is in place and adhered to. All vehicles are recorded in the in the asset register as above.

It was, however, observed that, the NISA were not able to produce a list of all vehicles and vehicle ownership books for physical verification. None of the vehicles were physical verified.

Management Response


Recommendations

All vehicles should have log books, vehicle ownership books and are registered in the name of the NISA and stored safely by a senior responsible official.






Law No. 2 of the Financial and Accounting Procedure of the State issued on 29 December 1971 makes it mandatory to register all contracts with the Magistrate of Accounts (the Office of the Auditor General).


Article 33 states that “contracts entered into on behalf of the Government and of other organs of the public administration shall require prior registration by the Office of the Auditor General”.

It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $1,343,812.32 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS. The details are as shown in the table below:

Management Response


Recommendations




Contrary to the above criteria, NISA wrote its local contracts in English language, instead of writing them in Somali language.

Management Response


Recommendations

NISA should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

NO. CONTRACTOR PURPOSE PERIOD END AMOUNT US $

1 PBC 117 General services 31-06-2019 328,938.00

2 PBC 117 General services 31-12-2019 328,938.00

3 PBC 119 Office furniture 31-12-2019 82,704.00

4 PBC 119 Fuel 1 year 603,232.32

TOTAL $1,343,812.32


NO FINDING STATUS


222.1 Laws and regulations for the National Intelligence Security

AgencyNot implemented








IMMIGRATION & NATURALIZATION DIRECTORATE





It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $195,065.00 were paid during the FY 2019 without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.


Management Response

The entity agrees and will implement the recommendations.

Recommendations


NOSUB-HEAD

BENEFICIARY MONTHSAMOUNT

US $COMMENTS

1 2213 PBC 072Jan –

March 1929,700.00

These payments did not


2

2211 /

2212 /

2213 /

2214 and

2215

PBC 072 and PBC 123July - Sep

19165,365.00



TOTAL $195,065.00

25






It was, however, observed contrary to the requirements of the above-mentioned law, payments for travel costs totaling US $132,000.00 that were made during the year of 2019 that were not adequately supported. This did not make it possible for us to verify the authenticity of these payments. The payments were made to Private Business Company (PBC 073) during the months of January, July, December 2019 not adequately supported as the following:


Management Response

The entity agrees and will implement the recommendation.

Recommendations






It was however observed that Immigration & Naturalization Directrate did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.


Management Response


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including IND to follow.



It was, however, observed that contrary to the requirement of the law, the IND did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that all assets were not tagged with unique identification numbers for control and monitoring.

Management Response


Recommendations

IND should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


IND and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.



It also requires that an approved policy for management of vehicles is in place and adhered to. Further, all vehicles are recorded in the in the asset register as above.

It was however observed that there were several vehicles reportedly belonging to the NID, the management of NID provided a list of 7 Cars, 1 motorcycles and 1 Boat. Ministry only provided 3 vehicles for physically verification and the remaining 6 were never brought for physical verification. None of these vehicles were registered in the name of the Ministry for ownership. The summary is set out below:


Management Response

The entity agrees and will implement the recommendations although we registered the vehicles.

Recommendations

All vehicles should have logbooks and registered in the name of the IND and stored safely by a senior responsible official.







It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $1,438,800.00 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts.

NO VEHICLE TYPE SOURCE OF FUNDS

CHASSIS NO. LOCATIONS COMMENTS

1 Toyota Noah FGS SR50-0084425 MogadishuThe vehicle was not registered

with name of the Entity.

2 Moto LTM FGS LDAPAK0B3JGD46729 MogadishuThe vehicle was not registered

with name of the Entity

3 Toyota Hardtop IOM Not provided Dhoobley Not physically verified

4 Toyota Hardtop IOM JTEEB71J007037309 MogadishuThe vehicle was not registered


5 Toyota Hardtop IOM Not provided Dolow Not physically verified



8 Toyota Hardtop IOM Not provided B/Hawo Not physically verified

9 Sea Sprit 36 Boat IOM Not provided MogadishuThe vehicle was not registered



Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS. The details are as shown in the table below:

Management Response


Recommendations




NO FINDING STATUS



3 29.2 Adequacy of fixed asset register Partially implemented

4 30.1 Regularity of internal audits This was partially implemented


AMOUNT US $

1 PBC 072 General Service 1 Year 1,240,800.00

2 PBC 073 Travel Cost 1 Year 198,000.00

TOTAL $1,438,800.00


ECONOMIC SECTOR


MINISTRY OF PETROLEUM





As of August 2020, the financial statements for the Ministry of Petroleum for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response


Recommendations

Ministry of Petroleum should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.





It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $80,229.00 were made to some companies without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.

26


These payments were made to Private Business Companies (PBC 038, PBC 106, and PBC 112). The payments were charged a number of sub-heads: 2211, 2213, 2214, 2215, and 2255.

Management Response

All the supporting documents are in the SFMIS and can be found there and no payment that would have released by the Accountant General without adequate supporting documents.

Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $7,332.00 were spent as travel costs without adequate supporting documents. These payments were made to Private Business Company (PBC 039) for months of January to May 2019. This did not make it possible for us to verify the authenticity of these payments. The payments did not have one or more of the following supporting documents such as:


Management Response


Recommendations







It was however observed that the Ministry of Petroleum did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Petroleum to follow.



It was, however, observed that contrary to the requirement of the law, the Ministry of Petroleum did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that all assets were not tagged with unique identification numbers for control and monitoring.

Management Response

Assets of the Ministry are registered and counted although there were challenges.

Recommendations

Ministry of Petroleum should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry of Petroleum and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.





It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $87,561.00 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS. Details of these contracts are set out in the table below:

Management Response

All the contracts signed can be found from the commitment control in the Accountant General’s Office although the Ministry will register contracts from the Office of the Auditor General.

Recommendations




Contrary to the above criteria, Ministry of Petroleum wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The Ministry followed the procedure that the Office of the Accountant General shared which was writing the contracts in English Language.



AMOUNT US $

1 PBC 038 Fuel and Oil Not specified 8,249.00

2 PBC 049 General Service Not specified 21,980.00

3 PBC 112 Repairing Not specified 50,000.00

4 PBC 039 Travel Not specified 7,332.00

TOTAL $87,561.00


Recommendations

Ministry of Petroleum should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

26.5 INTERNAL AUDIT



It was noted that the Ministry of Petroleum had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Office of the Ministry of Petroleum.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across the FGS including in the Ministry of Petroleum.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry of Petroleum are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry policies.



There is no follow-up as this was the first year of compliance audit (FY 2019).


MINISTRY OF FISHERIES & MARINE RESOURCES





As of August 2020, the financial statements for the Ministry of Fisheries for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

Auditors from the Office of the Auditor General were shared with the files of the Admin and Finance department.

Recommendations

Ministry of Fisheries should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.





It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $37,814.00 paid during the months of March, August, October and November were charged to sub-heads of 2261 and 2314 without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.

27


The payments lacked supporting documents such as purchase orders, authorization order or contracts, approved supplier invoices, good received notes, acknowledgement receipts from the supplier. The payments were drawn against a bank account held with Dahabshiil International Bank, Account No.104106583. Most of the payments were made to staff of the Ministry without adequate supporting documents.


During the audit process, all travel supporting documents have been shared with the audit team by email.

Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $27,712.00 were spent without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. These payments were made to Private Business Company (PBC 024) for various travels and all costs were charged to sub-head 2216.



Management Response

During the audit process we have shared with the audit team all travel supporting documents that were in the files, we have again attached the supporting documents to the email.

Recommendations







It was however observed that the Ministry of Fisheries did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

The Ministry owns Assets, all assets have tag number/ID and they are attached to this email.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Fisheries to follow.



It was, however, observed that contrary to the requirement of the law, the Ministry of Fisheries did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that all assets were not tagged with unique identification numbers for control and monitoring.

Management Response

The Ministry owns Assets, all assets have tag/ID number and are attached to this email.

Recommendations

Ministry of Fisheries should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.

The Ministry of Finance should establish a central register of national assets and also to conduct periodic physical verification and update the asset register. The Ministry of Fisheries and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.





It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $144,765.00 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS. Details of the contracts are set out below:

Management Response

There was no official notice before that the Ministry of Fisheries is required to register all contracts with the Office of the Auditor General. Instead, the Ministry has made the Office of the Auditor General’s team share the agreements, both hard and soft, which can be found in the email of the audit team.

Recommendations




Ministry of Fisheries should write its local contracts in Somali language in accordance with the laws and get them translated into English if necessary.

Management Response

Generally the official documents such as “Warranty, Vouchers”, etc. are all written in foreign languages, The Director General’s Office has not yet received any proposal to compile all official government documents in Somali, but we are ready to comply with the Office’s recommendations if it issues an order or law that prohibits the use of another language.

Recommendations

NO CONTRACTOR PURPOSE OF THE CONTRACT DURATION OF CONTRACTSAMOUNT

US $

1 PBC 113 Fuel and Oil 9 Months 31,500.00

2 FOA Coordination for anti-piracy efforts 1 Year 113,265.00

TOTAL $144,765.00


Contrary to the above criteria, the Ministry of Fisheries has written the local contracts in English language, instead of writing them in Somali language.

27.5 INTERNAL AUDIT



It was noted that Ministry of Fisheries had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Ministry of Fisheries.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across the FGS including in the Ministry of Fisheries.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry of Fisheries are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry policies.



NO FINDING STATUS


2 11.2.1 Payments amounting lacked adequate supporting documents Not implemented


411.3.2 There are no Fixed Asset Management Policy Guidelines &

ProceduresNot implemented


6 11.5.1 Regularity of internal audit function Partially implemented


NOSOURCE OF REVENUES

AMOUNT COLLECTED US $

COMMENTS

1 Rent 52,400.00Revenue collected using Ministry receipts, used at source without

depositing into the TSA at the Central Bank of Somalia

TOTAL $73,760.00

MINISTRY OF TRANSPORT & CIVIL AVIATION

28.1 REVENUE

28.1.1 Irregularities in the Collection and use of Revenue

Law number 317 of Approbation of Regulation for the Accounts of the State of 17 December 1962 article 46 requires that revenue can be only collected using receipts from the Accountant General’s Office. Also, article 34 of the law says that no public money shall be made use whatsoever; nor shall any officer lend any sum for which he is answerable to the State.

It was, however, observed that contrary to the requirement of the law, the Ministry collected and used at source total revenue of US $52,400.00. The Ministry collected this revenue using books that is not issued by the Accountant General, instead the Ministry printed its own books.

Management Response

The overall management of the Aden Adde International Airport (AAIA) does not fall under the Ministry therefore, AAIA management is not aware of collected revenue but we have written to the relevant authorities to stop collecting these concerned funds.

Recommendations

Regularize revenue collections in accordance with the law or regulation and ensure revenues collected are deposited in a Treasury Single Account of the FGS held with the Central Bank of Somalia.





28


It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $251,282.00 that were without adequate supporting documents to justify reasons for payments. This did not make it possible for us to verify the authenticity of these payments. Details of payments in question are set out in the table below:

Management Response

• Invoice• Authorization letter • Receipt payment.

As a result, OAGS can find all funds from the concerned entities from the attached documents.

Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $14,760.00 were spent as travel costs for the months of January to September 2019 without adequate supporting documents. These payments were made to a Travel Agency. This did not make it possible for us to verify the authenticity of these payments. The payments did not have one or more of the following supporting documents such as:

• Boarding passes;• Invitation letters.

NO SUB-HEAD PAYEES MONTH AMOUNT US $ COMMENT

1 2213 PBC 075Jan –

Nov 201911,968.00



2 2256 PBC 076Jan –

Nov 2019174,240.00



3 2261 PBC 077Jan –

Nov 201965,074.00



TOTAL $251,282.00


Management Response

We can confirm that all the travel costs had supporting documents.

Therefore, we are providing proofing documents as per the attachments to this email.

1. Letter from the office of the Prime Minister 2. Letter for ordering for advance

Recommendations






It was however observed that although the Ministry of Transport did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

The Ministry has implemented list of the assets with tag numbers but they are not updated. However, we plan to assign someone to undertake the asset registration.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Transport to follow.




It was, however, observed that contrary to the requirement of the law, the Ministry of Transport did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that all assets were not tagged with unique identification numbers for control and monitoring.

Management Response


Recommendations

Ministry of Transport should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry of Transport and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.




It was, however, observed that contrary to the requirements of the above-mentioned law, contracts as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS.

Details of these contracts are in the table below:

Management Response

We submit. to you all the contracts for 2020 to register.

NO CONTRACTOR PURPOSE OF CONTRACTCONTRACT DURATION

AMOUNT US $

1 Decale Hotel Hotel building that will be handed over to DFS 25 Years

2 Favori LCC Collection revenue from Aden Adde

International Airport9 Years

TOTAL $105,450.00


Recommendations




Contrary to the above criteria, Ministry of Transport wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The Ministry followed the procedure for writing contracts of which have been shared by the Accountant General Office, for 2020 the Ministry is translating the contracts and will be delivered to OAGS.

Recommendations

Ministry of Transport should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

28.5 INTERNAL AUDIT



It was noted that Ministry of Transport had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Ministry of Transport.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across the FGS including in the Ministry of Transport.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry of Transport are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry policies.


NO FINDING STATUS

1 6.2.1 Total payments amounting to lacked supporting documents Not implemented

2 6.2.3 Payments for overseas travels were not adequately supported Not implemented

3 6.2.4 Revenues collected by the Ministry was used at source Not implemented


56.3.2 There is no Fixed Asset Management Policy

Guidelines & ProceduresNot implemented






SOMALI CIVIL AVIATION AUTHORITY





As of August 2020, the financial statements for the Somali Civil Aviation Authority for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

SCAA shared the financial statements both the Accountant General Office and the audit team.

Recommendations

Somali Civil Aviation Authority should prepare a fully reconciled accounts for every year and submit for audit.

29.2 REVENUE

29.2.1 Irregularities in the Collection and use of Revenue

Law No. 317 of the Regulation for the Accounts of the State issued on 17 December 1962. Article 46 requires that revenue can be only collected using receipts from the Accountant General’s Office. Also, there was a violation of article 34 of the law which says that no public money shall be made use whatsoever; nor shall any officer lend any sum for which he is answerable to the State.

It was, however, observed that contrary to the requirement of the law, that Somali Civil Aviation Authority collected US $62,670.00 and used at source without banking with the Central Bank of Somalia. This did not make it possible for us to verify the authenticity of these payments.

29


The revenue was collected by the Civil Aviation Authority in revenue collection books not published by the Office of the Auditor General. Details are set out in the table below:

Management Response

The revenue was banked to the Central Bank of Somalia, The Ministry of Finance allowed SCAA to use 40% of the revenue collected as expenditure as the SCAA did not have enough budget to operate. As of October 2019, SCAA did not use, and we got enough budget for the institution to work. For the 40% of the that SCAA used was in line with the financial procedure.

OAGS Response

There is no in any way that Ministry of Finance can give such approval for the revenue to be used at source before banked and if so, the approval of the Ministry of Finance and the action of SCAA using the revenue was a violation of the law.

Recommendations

All revenues collected at source should be banked intact with the Central Bank of Somalia as by law prescribed.

Provide adequate operational budget for Somali Civil Aviation Authority, create a specific sub-head for the Agency and ensure adequate funds are made available on a timely basis.




NO. MONTH AMOUNT US $ COMMENTS

1 January 9,400.00 Revenue was not deposited in the Central Bank of Somalia

2 February 6,200.00 Revenue was not deposited in the Central Bank of Somalia

3 March 9,740.00 Revenue was not deposited in the Central Bank of Somalia

4 April 8,190.00 Revenue was not deposited in the Central Bank of Somalia

5 May 4,560.00 Revenue was not deposited in the Central Bank of Somalia

6 June 8,730.00 Revenue was not deposited in the Central Bank of Somalia

7 July 2,950.00 Revenue was not deposited in the Central Bank of Somalia

8 August 7,580.00 Revenue was not deposited in the Central Bank of Somalia

9 September 5,170.00 Revenue was not deposited in the Central Bank of Somalia

10 November 150.00 Revenue was not deposited in the Central Bank of Somalia

TOTAL $62,670.00


NO CONTRACTOR PURPOSE OF THE CONTRACTDURATION OF THE CONTRACT

AMOUNT US $

1 PBC 114 Office equipment 10 months 15,000.00

2 PBC 038 Fuel 10 months 12,000.00

TOTAL $27,000.00


It was however observed that Somali Civil Aviation Authority did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

SCAA shifted under the control of the United Nation and there are many documents mentioned above that the institution uses although SCAA was working on the translation of those documents as they were written in English.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Somali Civil Aviation Authority to follow.




It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $27,000.00 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS. These contracts are set out in the table below:

Management Response

We have shared the contracts with the audit team.


Recommendations




Contrary to the above criteria, Somali Civil Aviation Authority wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The contracts are written in English language as there were foreigners who were working with SCAA and could not understand the Somali language.

Recommendations

Somali Civil Aviation Authority should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

29.5 INTERNAL AUDIT



It was noted that Somali Civil Aviation Authority had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Somali Civil Aviation Authority.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across the FGS including in the Somali Civil Aviation Authority.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Somali Civil Aviation Authority are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Somali Civil Aviation Authority policies.




NO FINDING STATUS


212.3.2 There is no Fixed Asset Management Policy Guidelines &

ProceduresNot implemented


4 12.5.1 There is no regularity of Internal Audit Partially implemented

5 12.6.1 SCAA did not follow procurement law This was partially implemented


MINISTRY OF COMMERCE & INDUSTRIES





As of August 2020, the financial statements for the Ministry of Commerce and Industries for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

The Ministry submitted the financial statements to the Accountant General Office.

Recommendations

The Ministry of Commerce and Industries should prepare a fully reconciled set of accounts for every year and submit it for audit.



Law no. 2 of the Financial & Accounting Procedure of the State of 29 December 1961 obligates that every payment shall have supporting documents attached to payment requests to justify the payment. Supporting documents vary depending on the type of payment, and could include purchase orders, signed contracts, invoices, delivery notes; goods received notes, acknowledgement receipts, etc.

It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US 11,385.00 were paid during the FY 2019 without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. The payments did not have one or more of the following supporting documents such as:

30



Management Response

The Ministry will implement the recommendations.

Recommendations






It was however observed that the Ministry of Commerce and Industries did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

The Ministry will implement the recommendations.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Commerce and Industries to follow.




It was, however, observed that, contrary to the requirement of the law, the Ministry of Commerce and Industries did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that all assets were not tagged with unique identification numbers for control and monitoring.

Management Response

The Ministry will implement the recommendation.

Recommendations

Ministry of Commerce and Industries should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry of Commerce and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.



It also requires that an approved policy for management of vehicles is in place and adhered to. Further, all vehicles are recorded in the in the asset register as above.

It was, however, observed that, there were 1 vehicle reportedly for the Ministry but were not registered in the name of the Ministry. Details of these vehicles are in the table below.

Management Response

The vehicle is not registered with the name of the Ministry due to security reasons but will be provided for physical verification.

Recommendations

All vehicles should have log books, vehicle ownership and are registered in the name of the Ministry of Commerce and Industries and stored safely by a senior responsible official.



1 Toyota Carib FGS fund DE115-0053995The vehicle was not registered in the name of the

Ministry.







It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $33,000.00 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS.

Management Response

The Ministry submitted the two contracts to the Accountant General Office.

Recommendations




Contrary to the above criteria, Ministry of Commerce and Industries wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

The Ministry agrees to that local contracts should be written in Somali language but the Accountant General Office directed us to write the contracts in English and shared with us a template of contracts.

NO. CONTRACT PURPOSE PERIOD AMOUNT US $

1 PBC 038 Fuel 11 months 16,500.00

2 PBC 087 Equipment 11 months 16,500.00

TOTAL $33,000.00


Recommendations

Ministry of Commerce and Industries should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

30.5 INTERNAL AUDIT



It was noted that Ministry of Commerce had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Ministry of Commerce and Industries.

Management Response

The Ministry of Commerce and Industries has no Internal Auditor.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across the FGS including in the Ministry of Commerce and Industries.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry of Commerce and Industries are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry policies.



There is no audit follow-up this year as this is the first year of conducting a compliance audit of the Ministry of Commerce and Industries.


SOCIAL SECTOR


MINISTRY OF HEALTH





As of August 2020, the financial statements for the Ministry of Fisheries for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response


Recommendations

Ministry of Health should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.

Alternatively, the Accountant General should prepare the accounts of the Ministry of Health and submit for audit as required by Article 41 of the law.




It was however observed that the Ministry of Health did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

31


Management Response


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Health to follow.



It was, however, observed that contrary to the requirement of the law, the Ministry of Health did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that all assets were not tagged with unique identification numbers for control and monitoring.

Management Response


Recommendations

Ministry of Health should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry of Health and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.


Best practice requires all vehicles of the of the Ministry of Health have log books, vehicle ownership books and vehicles should be registered in the name of the Ministry of Health.

It also requires that an approved policy for management of vehicles is in place and adhered to. All vehicles are recorded in the in the asset register as above.

It was however observed that the Ministry provided a list of 9 vehicles reportedly owned by the Ministry. Out of the 9 vehicles that the Ministry only provided 8 vehicles for physically verification and the remaining 1 were never brought for physical verification. None of these vehicles were registered in the name of the Ministry for ownership.


Management Response


Recommendations

All vehicles should have log books, vehicle ownership and are registered in the name of the Ministry of Health and stored safely by a senior responsible official.




NO VEHICLE TYPE

SOURCE OF FUNDS

CHASSIS NO. COMMENTS

1 Toyota V8 DFS JTMHV09JOB5016950This vehicle was physically verified but we have not

seen vehicle ownership book and plate number

2 Toyota V8 DFS Not seen clearlyThis vehicle was physically verified but we have not

seen vehicle ownership book

3Toyota

Pick Up WHO AHTF22G403095335

This vehicle was physically verified but we have not


4

Toyota

Hard top

(Ambulance)

UNFPA JTERB71J100082995This vehicle was physically verified but we have not


5

Fiat Auto

Pucato

(Ambulance)

Amcubo

Italy

This vehicle was physically verified but not

registered the name of the ministry.

6

Fiat Auto

Pucato

(Ambulance)

Amcubo

ItalyZFA23000005416212

This vehicle was physically verified but not

registered the name of the ministry.

7

HYUNDAI

Minibus

(Ambulance)

Physicians

Across

Continents

KMHWG81R4CU362326This vehicle was physically verified but we have not


8

HYUNDAI

Minibus

(Ambulance)

PBC 124 KMJWA37KBLU115680This vehicle was physically verified but we have not


9TOYOTA

PICK UP DFS Not seen clearly

This vehicle was physically verified but we have not

seen vehicle book





It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $199,758 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS. Details of these contracts are set out in the table below:


AMOUNT US $

1

Human Service and Save the

Children International

in Somalia

Improve access to serve prevention treatment

and reducing mortality rate in children under

5, pregnant and lactating mothers in Hamar

wayne, Wabari, Dharkinley and Dayniile IDPS

7 Months 118,300.00

2Human Service and Save the

Children International in Somalia

Reduction of venerability of displaced people

specially Woman and Children in Mogadishu9 Months 52,200.00

3

Human Service and Action

Against Hunger on behalf of shine

consortium

To support and improve services provided

by the Ministry of Health and Human Services

of FGS

One Year

4Human Service and

PBC 125

Health response in districts of Afgoye, Balcad,

Badhadhe, Cadalle, Dayniile, Hawlwadaag,

Kaaraan and Kismayo

6 Months

5

Human Service on behalf of

Banadir Maternal and Child

Hospital, International Rescue

Committee, and Banadir Maternal

and Child Hospital

Part spacing services within the reproductive

health unit in Banaadir

One Year

and 10

months

6Human Service and

ZamZam Foundation

The Health response in districts of Balcad of

Middle Shabelle region of Somalia will be

carried out in accordance with the project

documents in annex I to this MOU

10 Months

7Human Service and American

Refugee Committee

To reduce mobility and mortality among

IDPs drought effected and venerable host

community populations through the provision of

comprehensive primary health care and nutrition

services.

One Year

8 PBC 018 Service Contract 29,258.00

TOTAL $199,758.00


Management Response


Recommendations




Contrary to the above criteria, Ministry of Health wrote its local contracts in English language, instead of writing them in Somali language.

Management Response


Recommendations

Ministry of Health should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

31.4 INTERNAL AUDIT



It was noted that Ministry of Health had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Ministry of Health.

Management Response

The Ministry agreed that there is no Internal Audit unit and function and assured will establish the internal audit.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across the FGS including in the Ministry of Health.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry of Health are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry policies.


NO FINDING STATUS


2 9.3.1 There was no register Assets register Partially implemented


4 9.3.4 Vehicle Management Not implemented

5 9.4.1 Some contracts were not registered with the OAG Not implemented

6 9.5.1 There is no regularity of Internal Audit Partially implemented




MINISTRY OF EDUCATION





It was, however, observed contrary to the requirements of the above-mentioned law, payments amounting to US $17,845.20 were paid during the FY 2019 without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments.

These were payments to several companies and were charged to sub-heads: 2215. Details of payments in question are set out in the table below:

Management Response

The documents of the payments were stamped as paid to prevent not be used again.

Recommendations






NOSUB-HEAD

PAYEE MONTH AMOUNT US $ COMMENT

1 2215 PBC 078 Nov 19 12,465.20 This payment did not have receipts voucher

2 2215 PBC 087 Oct 19 5,380.00This payment did not have delivery notes and

receipts voucher

TOTAL $17,845.20

32



It was however observed that the Ministry of Education did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

The Ministry did prepare draft asset management policy which is included in the financial management policy which was shared with the audit team.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Education to follow.




Contrary to the above criteria, Ministry of Education wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

They produce project contracts in English when these agreements are stipulated between donors and the Ministry of Education.

Only when contracts are funded by FGS, the language used is Somali.

However, they request that templates in Somali are provided to them to facilitate the drafting of contracts.

Recommendations

Ministry of Education should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

32.4 INTERNAL AUDIT




NO FINDING STATUS

1 10.2.1 Running costs do not have adequate supporting documents Not implemented

210.3.2 There is no Fixed Asset Management Policy Guidelines

& ProceduresPartially implemented

310.4.1 There are no formal contracts or memorandum with private

individuals for management of government owned schoolsNot implemented

4 10.5.1 There was no internal audit function in the Ministry Partially implemented

It was noted that Ministry of Education had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Ministry of Education.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across the FGS including in the Ministry of Education.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry of Education are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry policies.




SOMALI NATIONAL UNIVERSITY






Management Response

The payments had the supporting documents required.

Recommendations






33

NO SUB-HEAD BENEFICIARY MONTHSAMOUNT

US $COMMENTS

1 2221-2221 PBC 009 and PBC 034 July- Aug 19 67,887.39The payment did not have

receipt voucher

2 2213-2213 PBC 038 and PBC 009 July- Aug 19 3,201.00The payment did not have

receipt voucher

TOTAL $71,089.39



It was however observed that the Somali National University did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

There is no centrally approved policy for asset management as mentioned but the University has an internal procedure for the management of assets.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Somali National University to follow.

33.3 INTERNAL AUDIT



It was noted that Somali National University had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Somali National University.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across the FGS including in the Somali National University.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Somali National University are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and SNU policies.


NO FINDING STATUS


2 13.5.1 There is no internal audit function Partially implemented




MINISTRY OF LABOUR & SOCIAL AFFAIRS





As of August 2020, the financial statements for the Ministry of Labour for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response

The financial statement is draft and will be shared with you.

Recommendations

Ministry of Labour should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.




Supporting documents vary depending on the type of payment, and could purchase orders, signed contracts, invoices, delivery notes; goods received notes, acknowledgement receipts, etc.


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Management Response

The payments had all the supporting documents required.

Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $21,996.00 were spent as travel costs without adequate supporting documents. Several payments were made to Private Business Company (PBC 076) for the months of January to April 2019 without adequate supporting documents.

This did not make it possible for us to verify the authenticity of these payments. The payments did not have one or more of the following supporting documents such as:


NO.SUB-HEAD

PAYEE MONTHAMOUNT

US $COMMENTS

1 2213 PBC 041Jan, Feb, March and

April 20197,994.00

These payments did not have receipt voucher log

sheet for the vehicles that used the fuel

2 2211 PBC 003Jan, March and April

20193,150.00 These payments did not have receipt voucher

3 2215 PBC 091Feb, March and

April 20195,955.00 These payments did not have receipt voucher

4 2211 PBC 022April and

May 20191,690.56 These payments did not have receipt voucher

$18,789.56


Management Response

The supporting documents are attached to the payment voucher which can be found in the SFMIS.

Recommendations






It was however observed that the Ministry of Labour did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in managing, storing or disposing of the assets.

Management Response

We are currently working on the asset management policy which will be finalized soon.

Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Ministry of Labour to follow.

Failure to Maintain up to date Asset Register


It was, however, observed that contrary to the requirement of the law, the Ministry of Labour did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that the assets were not tagged with unique identification numbers for control and monitoring.


Management Response

All the assets are registered.

Recommendations

Ministry of Labour should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Ministry of Labour and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.




It was, however, observed that contrary to the requirements of the above-mentioned law, contracts totaling USD $211,838.31 as shown in the table below were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS. details of which are in the table below:

Management Response

Two of the contracts mentioned above is registered from Accountant General Office.

Recommendations


NO CONTRACTS PURPOSE PERIOD AMOUNT US $

1 UNIDO and PBC 092 Repair 3 months 169,838.31

2 PBC 041 Fuel & Oil 1 year 22,000.00

3 PBC 091 Office Supply 1 year 20,000.00

TOTAL $211,838.31




Contrary to the above criteria, Ministry of Labour wrote its local contracts in English language, instead of writing them in Somali language.

Management Response

As from now the Ministry will write local contracts in Somali language.

Recommendations

Ministry of Labour should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.

34.5 INTERNAL AUDIT



It was noted that Ministry of Labour had no internal audit unit or function. In this regard, no periodic internal audits were conducted in the Ministry of Labour.

Management Response

We have Internal Auditor at the Ministry of Labour and Social Affairs at the moment.

Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across the FGS including in the Ministry of Labour.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Ministry of Labour are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and Ministry policies.



There is no audit follow-up this year as this is the first year of conducting a compliance audit of the Ministry of Labour.


BANADIR REGIONAL AUTHORITY





As of August 2020, the financial statements for the Banadir Regional Administration for the year ended 31st December 2019 had neither been prepared nor been submitted for audit.

Management Response


Recommendations

Banadir Regional Administration should prepare a complete set of accounts for every year, fully reconciled and submitted for audit.




Supporting documents vary depending on the type of payment, and could include patient request, approval, health documents, invoices and acknowledgement receipts.

It was, however, observed that, there was an expenditure of US $1,713,213.00 which were charged against Central bank accounts (717) and (1007) of BRA without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. The following payments did not have purchase

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orders, authorization order or contracts, approved supplier invoices, goods received notes, acknowledgement receipts from the supplier. Details of the payments are set out in the table below:

→ Table of the 15% revenue from Mogadishu seaport (Account 717)

NO.CHEQUE NO

PAYEE MONTH AMOUNT COMMENT

1 128539 BRA senior official 13/10/2019 35,000.00Lack of invoice and receipt

voucher

2 130701Purchase of office equipment

and internet devices27/10/2019 13,440.00

Lack of invoice, receipt voucher

and contracts

3 130710 Purchase of vehicle 26/10/2019 55,000.00 Unidentifiable of payee

4 130711 Purchase of sanitary equipments 27/10/2019 31,625.00Lack of invoice, receipt voucher

and contracts

5 128513 Deyniile Road Construction. 13/10/2019 20,000.00 Lack of contract

6 130682 PBC 093 20/10/2019 36,675.00 Lack of contract

7 130740Rent Expense for the BRA

Secretary general31/10/2019 15,000.00 Lack of invoice, and contracts

8 128960 Rents from August to Novemebr 3/10/2019 30,000.00 Lack of invoice, and contracts

9 128573 PBC 094 16/10/2019 20,000.00 Lack of invoice, and contracts

10 128953 PBC 095 2/10/2019 52,800.00 Lack of contract

11 130744Renovation of Engineer Yarisow

Stadium02/11/19 28,500.00 Lack of invoice, receipt voucher

12 130703 PBC 096 23/10/2019 31,444.00 Lack of invoice, receipt voucher

13 130778 Support for the security sector 05/11/19 10,000.00lack of request for the support,

and proof of payments.

14 130769 Social activities 17/11/2019 15,000.00In-adequate description, vague

payee

15 130700 PBC 095 31/10/2019 35,355.00Lack of invoice, receipt voucher

and contracts


and contracts


and contracts

18 130754 Macallim Jamac School 19/11/2019 18,000.00Lack of invoice, receipt voucher

and contracts


and contracts

21 131026 Legal consultations 5/12/2019 12,000.00Lack of contracts and proof of

payment and payee

22 130775 PBC 098 20/12/2019 7,095.00Lack of receipt voucher and list

of attendees

TOTAL $555,435.00


NO. CHEQUE NO

PAYEE MONTH AMOUNT COMMENT

1 88007 PBC 099 17-Apr-19 11,000.00 Lack of invoice and receipt voucher

2 88009Organization for regional

youth development5-Nov-19 94,450.00 Lack of invoice and receipt voucher


youth development20-Nov-19 120,000.00 Lack of invoice and receipt voucher


youth development19-Dec-19 94,000.00 Lack of invoice and receipt voucher

5 88016 PBC 005 25-Dec-19 49,465.00Lack of invoice, receipt voucher

and details of vehicles

6 88015 PBC 076 23-12-2019 180,209.00Lack of invoice, receipt voucher

and contract

7 88014 PBC 076 23-12-2019 319,791.00Lack of invoice, receipt voucher

and contract

8 S88020 PBC 076 12-Dec-19 231,663.00Lack of invoice, receipt voucher

and contract

9 88019 PBC 101 31-Dec-19 50,200.00 Lack of invoice and receipt voucher

TOTAL $1,150,778.00

→ Table of total cost from supplementary budget (Account No 1007)

Management Response


Recommendations






It was, however, observed contrary to the requirements of the above-mentioned law, total amount of US $71,631.00 were spent as travel costs without adequate supporting documents. This did not make it possible for us to verify the authenticity of these payments. This did not make it possible for us to verify the authenticity of these payments.




Management Response


Recommendations






It was however observed that Banadir Regional Administration did not have an approved policy and procedures on storage and accounting for the assets. This did not make it possible to assess the criteria the office is using in procuring, storing or disposing of the assets.

Management Response


Recommendations


The Ministry of Finance should take the lead in developing these policy guidelines and procedures for all ministries, departments and agencies including Banadir Regional Administration to follow.




It was, however, observed that contrary to the requirement of the law, the Banadir Regional Administration did not maintain up to date asset register making it difficult for us to verify the asset owned by the office. Further, of the physical verification revealed that the assets were not tagged with unique identification numbers for control and monitoring.

Management Response


Recommendations

Banadir Regional Administration should establish a comprehensive register of assets with clear guidelines in order to ensure that particulars of all assets of the entity are entered into the register and updated on a periodic basis.


Banadir Regional Administration and or the MoF shoud conduct periodic physical verification of assets of the entity and update the asset register.

35.4 WEAK MANAGEMENT OF VEHICLES

Best practice all vehicles of the of the Banadir Regional Administration have logbooks, and vehicles are registered in the name of the Banadir Regional Administration.

An approved policy for management of vehicles is in place and adhered to. All vehicles are recorded in the in the asset register as above.

It was however observed that the Banadir Regional Administration were not able to produce for our audit a list of all their vehicles and logbooks of the vehicles for verification. None of the vehicles were physically produced for physical verification.

Management Response


Recommendations

All vehicles should have log books, vehicle ownership and are registered in the name of the Banadir Regional


Administration and stored safely by a senior responsible official.




35.5 35.4 CONTRACT MANAGEMENT



It was, however, observed that contrary to the requirements of the above-mentioned law, contracts which were not registered with the Office of the Auditor General. This did not make it possible to quantify potential contingent liabilities and assets from these contracts. Besides, the Office of the Auditor General could not confirm independently whether contract articles have been implemented in the interest of FGS.

Management Response


Recommendations




Contrary to the above criteria, Banadir Regional Administration wrote its local contracts in English language, instead of writing them in Somali language.

Management Response


Recommendations

Banadir Regional Administration should write its local contracts in Somali language in accordance with the laws; and get them translated into English if necessary.


NO FINDING STATUS

1 14.1.1 No annual accounts submitted for audit for FY 2019 Not implemented


3 14.2.4 There are weak controls over BRA vehicles Not implemented

4 14.3.1 Some contracts were not registered with the OAGS Not implemented


35.6 INTERNAL AUDIT



It was noted that Banadir Regional Administration had no internal audit function. In this regard, no periodic internal audits were conducted in the BRA.

Management Response


Recommendations

The Executive and Parliament should take steps to ensure that the Public Finance Management law is fully implemented and there should be establishment of effective internal audit functions across the FGS including in the Banadir Regional Administration.

In the meantime, they should take necessary steps to ensure that periodic internal audits of the Banadir Regional Administration are conducted. Such audits should aim at strengthening internal controls and ensuring compliance with laws, regulations and BRA policies.




VIIIOVERALL CONCLUSION

The Supreme Audit Institution of Somalia (SAIS) has discretion to conduct compliance audit according to the SAI mandate as enshrined in the constitution. The SAI has conducted compliance audits for 35 MDAs on the following subject matters:

1) Annual Accounts2) Expenditure Control3) Asset Management 4) Contract Management5) Procurement Management6) Revenue7) Debt Management8) Hajj and Umrah Services 9) Human Resource Management (Personnel Management)10) Management of Food and Fuel Supplies

The above subject matters were evaluated for compliance against suitable criteria as detailed in the findings in this report for each respective subject matter. The evidence obtained by the course of the audit confirms that the conclusions on this subject are not compliant with the applicable criteria.

Yours sincerely,

H.E. Mohamed M. Ali “Afgoi”Auditor General, JFS November, 2020Mogadishu, Somalia


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Consolidated Compliance Audit Report of the Federal ...

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