-Over Financial Mismanagement
Monrovia—The National Housing Authority (NHA) of Liberia is facing intense scrutiny following the release of an audit report detailing significant deficiencies in financial management for the fiscal year ending June 30, 2017.
An audit conducted by the General Auditing Commission (GAC) has revealed significant financial management deficiencies at the National Housing Authority (NHA) of Liberia for the fiscal year ending June 30, 2017.
The report implicates the authority’s former management, led by then Acting Managing Director, Prince A. Wreh. Mr. Wreh was recently appointed by President Joseph Nyuma Boakai and he currently serves as the Executive Chairman of the Liberia Special Economic Zones Authority.
The audit, which covers the Period July 1, 2016 to June 30, 2017, highlighted inconsistencies in financial statements, including discrepancies in reported appropriation amounts and payroll figures.
The audit report, for instance, showed that the total authorized appropriation was listed as $1,757,000, but the notes indicated amounts of $1,758,046.48 and $1,756,000. Additionally, discrepancies were found in reported wages, salaries, and employee benefits that did not match the figures in the notes.
Audit Analysis
The GAC audit reported huge disparities between amounts recorded on the face of the Financial Statement and in the note to the financial statement.
An amount of US$535,000 is recorded in the financial statement as other transfer payments without an associated disclosure in the note to the financial statement.
Note 9 on the face of the financial statements is considered capital expenditure and has a total value of US$635,000; whereas, note 9 in the notes to the financial statements contains capital expenditure amounting to US$175,352.03; thereby, resulting in a variance of US$459,647.97.
Note 11 on the face of the financial statements is considered external assistance and has a total value of US$2,047,000; whereas, note 11 in the notes to the financial statements contains external assistance amounting to US$243,000; thereby, resulting in a variance of US$1,804,000.00.
Note 12 on the face of the financial statements is considered capital expenditure and has a total value of US$3,480,000; whereas, note 12 in the notes to the financial statements contains capital expenditure amounting to US$108,000; thereby, resulting in a variance of US$3,372,000.00.
1.1.9.3 During the audit, GAC observed from extracts of confirmed bank statements that Management deposited revenue amounting to US$672,904 and L$2,728,289.40 and failed to provide supporting documents such as Daily Collection Form, Deposit Slip, Revenue Registry, and copies of NHA’s Official Cash Receipt issued to authenticate the accuracy and completeness of the transactions. These transactions were extracted from the various bank statements for the period under audit. See Table 3 for a summary and Annexure 1A-1E for details of transactions.
During the audit, the GAC observed that total cash receipts controlled by NHA in the financial statements did not reconcile with NHA’s bank statements received. The bank statements were used as an alternative as NHA failed to provide a general ledger for the year ended June 30, 2017. See Table 4 below for details.
Description of
Financial Statements
Bank Statement
Variance
Total Cash Receipts
$2,269,000.00
$697,159.77
$1,571,840.23
During the audit, GAC observed that Management disclosed in the notes to the financial statements’ liabilities totaling US$850,034.14 and LRD$2,594,500 respectively, and receivables which could not be definitively determined. Further, there was no evidence of supporting documents provided. See Table 6 below for details.
The audit report reported the below Revenue amounts deposited at various banks with no evidence of supporting documents since management destroyed evidence and the GAC had to use bank statements to audit(section 1.1.9.3 of AG’s report).
Annexure A-1- Eco bank USD 2,810
Annexure A-1B Eco bank LRD1, 318,454.20
Annexure A -1C GTB US$ 102,500
Annexure A-1D LBDI USD 567,593.40
Annexure A-1E LBDI LRD 1,409,855.20
GAC Audit reported the below-listed expenditures without supporting documents at various banks since management destroyed evidence and the GAC had to rely on bank statements to do the audit (section 1.1.9.3 of AG’s report).
Annexure 2A Eco bank US$ 31,067.40
Annexure 2B Eco bank LRD 1,327,821.18
Annexure 2C GTB USD 107,199.41
Annexure 2D LBDI USD 578,441.57
Annexure 2E LBDI LRD 1,417,897.27.
Adverse Opinion
According to the GAC, it audited the accompanying financial statement of the National Housing Authority (NHA) for the Fiscal Period ended June 30, 2017, which comprises the Statement of Receipts and Payments, a Statement of Comparison of Budget and Actual Amounts, and a summary of other accounting policies and explanatory notes.
In the GAC’s opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion Section of our report, the accompanying financial statements do not give a true and fair view of the financial position of the National Housing Authority as of June 30, 2017, and of its statement of receipts and payments, Statement of Comparison of Budget and Actual Amount for the year then ended by International Public Sector Accounting Standards (IPSAS) Cash Basis.
Basis for Adverse Opinion
The GAC alleged that there was a net unexplained variance of US$619,216 in expenditures reported in the financial statements as compared to accounting information provided in the Integrated Financial Management Information System (IFMIS).
Meanwhile, the GAC said further critical findings from the audit encompass unsupported revenue generation, failure to remit national social security contributions, and a significant lack of a cash book or general ledger for the assessed fiscal year. The NHA’s failure to perform bank reconciliations led to a considerable variance of more than $6 million between reported cash outflows and actual figures.
The report also pointed out the absence of essential documentation, including expenditure records and contracts, which the reports indicated are vital for the accurate representation of the NHA’s financial activities. Moreover, the lack of a functional audit committee and inadequate asset management policies were identified as significant risks that undermined the authority’s financial integrity.
The former NHA leadership, headed by Wreh, is yet to react to the audit report. Wreh didn’t answer calls placed to him by this writer yesterday and today. He did not also respond to a WhatsApp message requesting his reaction to the audit report.
However, GAC sources indicate that the then NHA management admitted to the errors and discrepancies raised in the audit, pledging to implement corrective measures. They committed to conducting a thorough review of their financial statements and reconciling all identified discrepancies moving forward.
The Auditor General in his report emphasized the importance of ongoing oversight to ensure the implementation of the recommendations, underscoring that accurate and reliable financial reporting is essential to maintaining public trust and effectively managing national resources.
