2012/2013 THE UNITED REPUBLIC OF TANZANIA NATIONAL … · 2012/2013 THE UNITED REPUBLIC OF TANZANIA...

O f f i c e o f t h e C o n t r o l l e r a n d A u d i t o r G e n e r a l A G R / C G / 2 0 1 2 / 1 3

2012/2013

THE UNITED REPUBLIC OF TANZANIA

NATIONAL AUDIT OFFICE

THE ANNUAL GENERAL REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE

FINANCIAL STATEMENTS OF THE CENTRAL GOVERNMENT (MDAs) FOR THE YEAR ENDED 30TH

JUNE, 2013 The Controller and Auditor General, National Audit Office Samora Avenue/Ohio Street P. O .Box 9080 Tel: +255 (022) 2115157/8 Fax: +255 (022) 2117527 e-mail [email protected] website: www.nao.go.tz Dar es Salaam. This general report covers 60 Ministerial Votes, Departments and Agencies, 25 Regional Administrative Secretaries and 32 Embassies

mailto:[email protected]

http://www.nao.go.tz/

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In reply, please quote Ref.Na.FA.27/249/01/2012/13 28th March, 2014 Your Excellency Dr. Jakaya M. Kikwete, The President of the United Republic of Tanzania, State House, P. O. Box 9120, DAR ES SALAAM.

RE: SUBMISSION OF THE ANNUAL GENERAL

REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE CENTRAL GOVERNMENT FOR THE FINANCIAL YEAR ENDED 30TH JUNE, 2013

Pursuant to Article 143(4) of the Constitution of the United Republic of Tanzania of 1977 (revised 2005), and Section 34 (1) (c) of the Public Audit Act No. 11 of 2008. I have the honour and respect to submit to you the General Audit Report on the Central Government for the financial year ended 30th June, 2013 for your information and necessary action.

THE UNITED REPUBLIC OF TANZANIA

NATIONAL AUDIT OFFICE

Office of the Controller and Auditor General, Samora Avenue, P.O. Box 9080, DAR ES SALAAM. Telegram: “Ukaguzi", Telephone: 255(022)2115157/8,

Fax: 255(022)2117527, E-mail: [email protected], Website: www.nao.go.tz

mailto:[email protected]

http://www.nao.go.tz/

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I have provided constructive recommendations which if implemented can mitigate the incidence of irregularities and substantially improve financial accountability in the Government. I submit.

Ludovick S. L. Utouh CONTROLLER AND AUDITOR GENERAL

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TABLE OF CONTENTS

LIST OF TABLES ............................................... ix Office of the Controller and Auditor General ............. xii Vision, Mission and Core Values ............................. xii Foreword ....................................................... xiv Acknowledgement ............................................ xix LIST OF ABBREVIATIONS ..................................... xxi Executive summary .......................................... xxiv

CHAPTER ONE .................................................. 1 1.0 BACKGROUND AND GENERAL INFORMATION .......... 1 1.1. Audit Mandate and Rationale for Audit. .............. 1 1.2 Applicable Auditing Standards and Reporting

Procedures. ............................................... 5 1.3 Number of audited entities and NAOT‘s set up ...... 7 1.4 Statutory Responsibilities of the audited entities ... 9

CHAPTER TWO ................................................. 12 AUDIT OPINION OVERVIEW, TYPES, BASIS AND THE ACTUAL AUDIT RESULTS ...................................... 12 2.0 An overview of the audit opinion ..................... 12 2.1 Types of the audit opinions ............................ 13 2.2 Basis of the audit opinion and the actual audit

results .................................................... 14 2.3 Trend of Audit Opinions ................................ 24 2.4 Audited entities issued with qualified, adverse and disclaimer of opinions with their actual specific

basis of their qualifications ........................... 28

CHAPTER THREE .............................................. 56 FOLLOW UP ON THE IMPLEMENTATION OF THE PREVIOUS YEARS' AUDIT RECOMMENDATIONS .............. 56 3.0 Introduction .............................................. 56 3.1 Responses of accounting officers/ heads of

departments on individual reports submitted to them by the Controller and Auditor General ....... 57

3.2 Follow up on the PMG's structured responses upon the recommendations issued by the Controller and

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Auditor General on the general report of Central Government in 2011/2012 ............................. 60

3.3 Responses on implementation of the PAC‘s recommendations ....................................... 74

CHAPTER FOUR ................................................ 88 PUBLIC FINANCE MANAGEMENT .............................. 88 4.1 REVENUE COLLECTION AND FUNDING ANALYSIS .... 88 4.2 NATIONAL ACCOUNTS ................................. 103 4.3 EXPENDITURE MANAGEMENT ........................ 134

CHAPTER FIVE ............................................... 150 EVALUATION OF INTERNAL CONTROL SYSTEM AND GOVERNANCE ISSUES ........................................ 150 5.0 Introduction ............................................ 150 5.1 Inadequate Performance of Internal Audit Units . 151 5.2 Inadequate Performance of Audit Committees ... 152 5.3 Inadequate Risk Management process ............. 154 5.4 Weaknesses in Information Technology - General

Controls ................................................ 154 5.5 Inadequate Fraud Prevention and Control ........ 156 5.6 Inadequate utilization of IFMS/Epicor System .... 157

CHAPTER SIX ................................................. 160 HUMAN RESOURCES AND PAYROLL MANAGEMENT ....... 160 6.0 INTRODUCTION ........................................ 160 6.1 Key issues raised from audit of MDAs and RS ..... 161 6.2 Absence/Inadequate Open Performance Review and Appraisal System (OPRAS) ...................... 167 6.3 Outstanding staff claims ............................. 168 6.4 Inadequate number of staff ......................... 169 6.5 Deductions made to employees above two third

(2/3) of the gross salary ............................. 170 6.6 Problems associated with the application of Human Capital Management Information System

(HCMIS) LAWSON ...................................... 171 6.7 Absence of Important Posts of Tourist Officer .... 172

CHAPTER SEVEN ............................................. 174 REVIEW OF PROCUREMENT MANAGEMENT ................ 174 7.0 INTRODUCTION ........................................ 174

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7.1 Major Issues Identified on Procurement Audit .... 175 7.2 Procurement without competitive quotation ..... 175 7.3 Assets Procured but not operational ............... 177 7.4 Payments Made Above Invoice/Contractual Amount ................................................. 178 7.5 Procurements out of Annual Procurement Plan .. 179 7.6 Procurement without approval of Tender Board . 180 7.7 Procurement using Imprests ......................... 181 7.8 Stores procured but not accounted for in stores

ledgers .................................................. 183 7.9 Issues Identified by PPRA ............................ 184 7.10 Compliance with PPA 2004 and its regulations of

2005 ..................................................... 185 7.11 Assessment of contracts management ............. 185 7.12 Management of procurement records .............. 186 7.13 Evaluation of Procurement Information Management System (PIMS) .......................... 186 7.14 Recommendations given by PPRA ................... 187 7.15 Anomalies in procurement and stores management

observed by Directorate of Government Assets Management Division (Stock Verifier) .............. 189

CHAPTER EIGHT ............................................. 192 ASSETS MANAGEMENT AND LIABILITIES ................... 192 8.0 INTRODUCTION ........................................ 192 8.1 Non maintenance/establishment of proper Non

current asset register ................................ 193 8.2 Grounded and un-serviceable Noncurrent asset .. 196 8.3 Partial revaluation of Property, Plant and

Equipment ............................................. 197 8.4 Property, Plant and Equipment lacking ownership

documents ............................................. 198 8.5 Improper recognition of intangible assets ......... 199 8.6 Absence of monitoring devices (CCTV camera) at

weighbridge stations ................................. 200 8.7 Misclassification of Development Funds Transfer 201 8.8 Inadequate management of Ivory tusks stockpile and

other trophies ......................................... 202 8.9 Non disclosure of imprest as receivables .......... 205

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8.10 Unsettled liabilities amounting to . ..... 206

CHAPTER NINE ............................................... 208 9.0 SPECIAL AUDIT ......................................... 208 9.1 Introduction ............................................ 208 9.2 Report on the audit conducted on Designated objectives. ............................................. 210 9.3 Ministry of Works on Procurement of MV Misungwi for financial year 2004/2005 ............ 211 9.4 Ministry of Agriculture, Food Security and

Cooperatives on the National Agricultural Inputs Voucher Scheme (NAIVS) ............................. 213

9.5 Ministry of Health and Social Welfare on financial impropriety of training fees at Mkomaindo

Nursing Training Centre .............................. 217

CHAPTER TEN ................................................ 219 OTHER ISSUES ................................................ 219 10.0 INTRODUCTION ........................................ 219 10.1 Government Agency Appraisal ...................... 219 10.2 Payment of Rent Charges by MDAs …………………… 226 10.3 Challenges facing Tanzania Prison Service (TPS) . 228 10.4 The role of Controller and Auditor General in

Auditing PPP projects ................................ 234 10.5 Common issues emerging from the ongoing audit of

Political Parties‘ accounts .......................... 243

CHAPTER ELEVEN ........................................... 247 11.0 CONCLUSION AND RECOMMENDATIONS ............. 247 11.1 Non implementation of some of the previous year‘s recommendations ............................. 248 11.2 Procurement Management ........................... 249 11.3 Unattended Shortage of Workforce in MDAs and RS 251 11.4 Salaries Paid to non – Exiting Employees .......... 252 11.5 Expenditure Management ............................ 253 11.6 Operation of Embassies .............................. 255 11.7 Operations of Designated Hospitals ................ 257 11.8 National Agricultural Inputs Voucher Scheme (NAIVS).................................................. 259 11.9 IPSAS preparedness and implementation .......... 260

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11.10 Monitoring and evaluation of projects financed through debt proceeds .............................. 265

11.11 Lack of Unified Debt Management Office ........ 266 11.12 Converted Liquidity Papers into financing papers . 266 11.13 Release of funds towards the end of the financial year ......................................... 267 11.14 Management of Customs and Bonded Warehouses ............................................ 268

14.0 ANNEXURES ............................................ 270

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LIST OF TABLES

Table 1: Number of Auditees ....................................... 7

Table 2: List of the audited entities issued with unqualified opinion ..................................................... 15

Table 3: List of audited entities issued with unqualified opinion with other matters ............................ 18

Table 4: Trend of audit Opinion for the past four years ..... 26

Table 5: List of MDAs issued with Qualified Opinion and the their basis ................................................. 30

Table 6: List of audited entities issued with Adverse Opinion

and the basis of adverse opinion ...................... 55

Table 7: PMG's structured responses ............................ 61

Table 8: PAC's recommendations from the report ............ 75

Table 9: The estimates and actual revenue performance for

the financial year 2012/2013 and

2011/2012 ................................................. 90

Table 10: Analysis of Exchequer issues released for Supply

vote:........................................................ 93

Table 11: Analysis of Exchequer issues released for

Development vote: ...................................... 94

Table 12: Analysis of exchequer issues and actual

expenditure for the supply vote for the financial

years 2011/2012 1nd 2012/2013. ..................... 95

Table 13: Analysis of exchequer issues released for

development vote. ...................................... 96

Table 14: Summary of non-tax revenue .......................... 98

Table 15: Analysis of Expenditure arrears is shown below:- . 101

Table 16: Outstanding matters for TRA for 2010/2011 and

2011/2012 ................................................ 114

Table 17: TRA Revenue Performance – Tanzania

Mainland .................................................. 115

Table 18: TRA Revenue Performance - Zanzibar ............... 115

Table 19: TRA Revenue Collection Pattern - Tanzania

Mainland .................................................. 116

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Table 20: TRA Revenue Collection Pattern - Tanzania Zanzibar .................................................. 117

Table 21: Summary of tax exemptions issued to institutions 119

Table 22: TRA Exemptions against actual collection for

financial year 2011/12-2012/13 ..................... 120

Table 23: TRA Revenue Yield for Tanzania with Exemptions

considerations .......................................... 121

Table 24: Recurrent expenditure trend ......................... 126

Table 25: Exchequer issues released in each quarter ......... 127

Table 26: Long outstanding imprests ............................ 135

Table 27: Summarized results of long outstanding imprests: 135

Table 28: Summarized payments charged to wrong expenditure codes: ..................................... 136

Table 29: Overpayment ............................................ 137

Table 30: Summarized payments overcharged: ................ 138

Table 31: Summarized payments made out of approved

budget: ................................................... 139

Table 32: Summarized payments inadequate

supported:................................................ 140

Table 33: Missing acknowledgement receipts/ EFR receipts 142

Table 34: Payments without statement of expenditure ...... 143

Table 35: Summarized payments whose vouchers were

missing: ................................................... 146

Table 36: Deferred payments ..................................... 148

Table 37: List of MDAs and RS with unclaimed salaries ....... 162

Table 38: Penalty for Delayed Staff Deductions ............... 164

Table 39: Payment to employees who were no longer in

service .................................................... 165

Table 40 Unauthorized statutory deductions from ex-

government employees ................................ 165

Table 41: Absence/inadequate Open Performance Review

and Appraisal System (OPRAS) ........................ 167

Table 42: Outstanding staff claims ............................... 169

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Table 43: Deductions made to employees over and above two third (2/3) of the gross salary ................... 170

Table 44: MDAs/RSs which did procurement without

quotation ................................................. 176

Table 45: Assets Procured but not operational ................ 177

Table 46: Payments Made Above Invoice/Contractual ........ 178

Table 47: Procurements out of Annual Procurement Plan ... 180

Table 48: Procurement without approval of Tender

Board ...................................................... 181

Table 49: Procurement using Imprest............................ 182

Table 50: Stores procured but not accounted in store

ledgers .................................................... 184

Table 51: Stock Verifier Reports .................................. 190

Table 52: List of MDAs/RS noted with anomalies in asset

register management .................................. 195

Table 53: List of MDAs and RS lacking ownership documents 198

Table 54: List of MDAs and RS with Transfer of Development

funds ...................................................... 202

Table 55: List of MDAs and RS Non disclosure of receivables 205

Table 56: Insufficiency in government funding of

agencies .................................................. 222

Table 57: Under collection of own source revenue ........... 224

Table 58: Payment of Rent Charges by MDAs ................... 227

Table 59: Limited budget .......................................... 230

Table 60: Under release of funds ................................. 231

Table 61: TPS increase of liabilities from suppliers and staff

claims to 30th June 2013 .............................. 232

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Office of the Controller and Auditor General, National Audit Office, United Republic of Tanzania, (Established under Article 143 of the Constitution of the URT) The statutory duties and responsibilities of the Controller and Auditor General are given under Article 143 of the Constitution of the URT of 1977 (revised 2005) together with Sect. 10 (1) of the Public Audit Act No. 11 of 2008.

Vision To be a centre of excellence in public sector auditing.

Mission To provide efficient audit services in order to enhance accountability and value for money in the collection and use of public resources.

Core Values In providing quality services, NAO is guided by the following Core Values:

Objectivity: We are an impartial organization, offering services to our clients in an objective and unbiased manner;

Excellence: We are professionals providing the highest quality audit services based on best practices;

Integrity: We observe and maintain the highest standards of ethical behavior and the rule of law;

People focus: We focus on our stakeholders‘ needs by building a culture of good customer care and having competent and motivated work force;

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Innovation: We are a creative organization that constantly promotes a culture of developing and accepting new ideas from inside and outside the organization and

Best resource utilization: We are an organization that values and uses public resources entrusted to it in an efficient, economic, and effective manner. We do this by:

Contributing to better stewardship of public funds by ensuring that our clients are accountable for the resources entrusted to them;

Helping to improve the quality of public services by supporting innovation on the use of public resources;

Providing technical advice to our clients on operational gaps in their operating systems;

Systematically involve our clients in the audit process and audit cycles; and

Providing audit staff with appropriate training, adequate working tools and facilities that promote their independence. © This audit report is intended to be used by Government

Authorities. However, upon receipt of the report by the Speaker and once tabled in Parliament, the report becomes a matter of public record and its distribution may not be limited.

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Foreword

Mr. Ludovick S. L. Utouh (CAG)

This is the first year the MDAs and RSs are preparing their financial statements under IPSAS accrual basis of accounting. I congratulate the Government through the Accountant General for the deliberate effort undertaken to adopt the IPSAS accrual basis of accounting.

Apart from the challenging nature, it is beyond doubt that if compared with the cash basis of accounting; accrual basis of accounting provides a more comprehensive financial information that is important in guiding managements and other users of financial information in arriving at more informed decisions. While I commend this effort, I also urge the government through the Accountant General again, to correctly monitor and evaluate implementation of the roadmap towards the full adoption of the IPSAS accrual basis of accounting.

This report is being submitted to the President of the URT in accordance with Article 143 of the Constitution of the United Republic of Tanzania (revised 2005) and Section 34(1) & (2) of the Public Audit Act No.11 of 2008.

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Pursuant to Article 143(2) (c) of the Constitution of the URT, the Controller and Auditor General shall, at least once every year, audit and issue an audit report in respect of the accounts of the Government of the United Republic, the accounts managed by all officers of the Government of the United Republic, the accounts of all Courts of the United Republic and the accounts managed by the Clerk of the National Assembly.

Under Article 143(4) of the Constitution of the URT, the Controller and Auditor General is required to submit to the President of the URT every report he makes pursuant to the provisions of Sub Article (2) of the same Article. Upon receipt of such reports, the President shall direct the persons concerned to submit these reports before the first sitting of the National Assembly, preferably before the expiration of seven days from the day the sitting of the National Assembly began.

Operational independence of my office has greatly improved following the enactment of the Public Audit Act No. 11 in 2008 and the Public Audit Regulations (GN.47) of 2009. However, in accordance with international standards and best practice, there is need for further improvement in terms of control of salaries and recruitment of staff to enable me to effectively fulfill my Constitutional mandate.

It is worth noting that while my office reports on any non compliance with various laws, rules and regulations and on weaknesses in internal control

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systems across the public sector entities and in particular the Central Government, the ultimate responsibility for the maintenance of an effective and adequate system of internal control and a compliant financial management framework lies with each Accounting Officer.

The Parliament and the Tanzanian citizens look upon the Controller and Auditor General for assurance in regard to financial reporting and public resources management in the public sector in relation to efficiency and effectiveness of programs administration. My office contributes through recommendations given towards improvements in the public sector performance. In this regard, the Central Government and my office each has a role to play in contributing to Parliamentary and public confidence building in public resources management. However, while the roles of Public Sector entities and NAO may differ, the desire for efficient utilization of public resources remains a common ground. In order to meet the expectations of the Parliamentarians‘ and the public at large, NAO continuously reviews its audit approaches and processes to ensure that the audit coverage provides an effective and independent review of the performance and accountability of public sector entities. Moreover, we seek to ensure that our audit coverage is well targeted and addresses priority areas so as to maximize our contribution in improving public administration. Since our work acts as a catalyst in improving financial management, we continue to discuss with our

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auditees contemporary issues and developments that impact on public sector management, particularly financial reporting and good governance. The Public Accounts Committee (PAC), one of the oversight committees of the Parliament, has increased interactions with all Accounting Officers of MDAs and RS. With these efforts, I believe the Central Government has a crucial role to play in order to make sure that the Committee is empowered to ensure that the Accounting Officers take actions on the recommendations issued to them. The Committee should also make full use of the already existing powers they have in this regard.

I would like to acknowledge the professionalism and commitment of my staff in achieving our goals and undertaking the work associated with meeting our ambitious audit programs despite working for many hours in very difficult conditions marked with, insufficient of working tools, low salaries and sometimes working in very remote locations which are not easily accessible. I would also like to acknowledge the work done by the Division of Government Assets Management under the Ministry of Finance for preparing and submitting reports on stock verification for the sampled MDAs and RSs for the financial year 2012/13 that highlighted issues which features in this report. I appreciate the work done by this Division which I found appropriate and relevant to be incorporated in my report.

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I hope that the National Assembly will find the information in this report useful in holding the Government to account for its stewardship of public funds and its delivery of improved public services to Tanzanians. In this regard, I will appreciate to receive feedback from the users of this report on how to further improve it in the future.

Ludovick S. L. Utouh CONTROLLER AND AUDITOR GENERAL _____________________________ National Audit Office, Dar es Salaam, March, 2014

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Acknowledgement I would like to express my special appreciation and thanks to every member of my staff for their tireless efforts in ensuring that the statutory reporting deadline of submitting the report to H.E the President of URT of 31st March was met. I would like also to thank members of the Parliamentary Oversight Committee - the Public Accounts Committee, for their brilliant comments, directives and suggestions during the hearing of Accounting Officers. As an institution charged with providing assurance and confirming credibility in respect of how public funds have been utilized, we pay critical attention to the accountability role our Committee plays in facilitating common understanding of the Controller and Auditor-General‘s mandate to both internal and external stakeholders.

I acknowledge with thanks the donor community particularly the Government of Sweden through SIDA and SNAO, the World Bank through the PFMRP project, the African Development bank (AfDB), GIZ, USAID, Government of China and all well wishers who have contributed immensely towards the transformation of my office. Their contributions in developing the human resource, IT systems and physical assets of our office has had tremendous impact in our success. I am equally indebted to all other stakeholders including the Minister of Finance, the Paymaster General, all Accounting Officers of the MDAs and

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RS; Division of Government Assets Management and Public Procurement Regulatory Authority under the Ministry of Finance for their cooperation and provision of vital information needed for the preparation of this report. I would also like to thank the Government Printer for expediting the printing of this report for its timely submission. Last but not least, I would like to thank all our stakeholders including the public servants, media, activists and the public at large without forgetting the role of taxpayers of this country to whom this report is dedicated. Their invaluable contributions in building the nation cannot be underestimated. May the almighty God bless you all as we commit ourselves to promote accountability on the use of public resources in the country.

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LIST OF ABBREVIATIONS

AAG Assistant Auditors General

ADS Administrative Sector

AfDB African Development Bank

AFROSAI-E African Organization of Supreme Audit Institutional- English Speaking Countries

AGR Annual General Report

ATCL Air Tanzania Company Limited

BoT Bank of Tanzania

CAG Controller and Auditor General

CCTV Closed Circuit Television

CEO Chief Executive Officer

CG Central Government

CS-DRMS Commonwealth Secretariat-Debt Recording and Management System

DAG Deputy Auditors General

DDH Designated District Hospitals

DGAM Directorate of Government Assets Management

DMO Debt Management Office

DSA Debt Sustainability Analysis

EFD Electronic Fiscal Device

EPS Economic and Productive Sector

GIZ German International Cooperation

GN Government Notice

GoT Government of Tanzania

H.E His Excellency

HCMIS Human Capital Management Information System

IFAC International Federation of Accountants

IFMS Integrated Financial Management System

IFRS International Financial Reporting Standards

INTOSAI International Organization of Supreme Audit Institutions

IPSAS International Public Sector Accounting Standards

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ISA International Standards on Auditing

ISSAIs International Standards of Supreme Audit Institutions

IT Information Technology

LGA Local Government Authorities

MAFC Ministry of Agriculture, Food Security and Cooperatives

MDAs Ministries, Departments and Agencies

MFAIC Ministry of Foreign Affairs and International Cooperation

MoF Ministry of Finance

MoHSW Ministry of Health and Social Welfare

MTEF Medium Term Expenditure Framework

NA National Accounts

NAIVS National Inputs Voucher Scheme

NAO National Audit Office

NAOT National Audit Office of Tanzania

NHIF National Health Insurance Fund

NIDA National Identification Authority

NSSF National Social Security Fund

OPRAS Open Performance Review and Appraisal System

PA Public Authorities

PA&S Performance Audit and Specialized Audit

PAA Public Audit Act No. 11 of 2008

PAC Public Accounts Committee

PAR Public Audit Regulations

Para Paragraph

PCCB Prevention and Combating of Corruption Bureau

PE Procuring Entities

PFA Public Finance Act

PFMRP Public Financial Management Reform Programme

PFR Public Finance Regulations

PIMS Procurement Information Management System

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PMG Paymaster General

PMO-RALG Prime Minister‘s Office – Regional Administration and Local Government

PMU Procurement Management Unit

PO-PSM President‘s Office Public Service Management

PPA Public Procurement Act

PPE Property, Plant and Equipment

PPF Parastatal Pensions Fund

PPP Public Private Partnership

PPRA Public Procurement Regulatory Authority

PSPF Public Sector Pension Fund

RAS Regional Administration Secretariat

RAs Resident Auditors

REA Rural Electrification Agency

RS Regional Secretariat

Sect. Section

SES Service Sector

Shs. Tanzania Shillings

SNAO Swedish National Audit Office

SOS Social Sector

SSRA Social Security Regulatory Authority

TANROADS Tanzania Roads Agency

TCRA Tanzania Communications Regulatory Authority

TRA Tanzania Revenue Authority

TSSU Technical Support Services Unit

URT United Republic of Tanzania

USAID United State Agency for International Development

VAH Voluntary Agency Hospitals

VAT Value Added Tax

VT Vote

AccGen Accountant General

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Executive summary This general report provides a summary of the final audit results of the financial statements of Central Government (MDAs, Embassies & RS) in the country for the financial year ended 30th June, 2013. An audit of financial statements is the examination of the financial statements of an entity with the view of expressing an independent opinion on whether they present true and fair view of its operations in accordance with the adopted financial report framework. This part of the report therefore, gives an overview of the audit outcomes followed by highlights of salient features noted in the course of audit and summary of recommendations.

(i) General trend of audit opinions

The statutory audit on the financial statements for the year ended 30th June, 2013 which comprised of 60 MDAs, 25 RSs and 32 Tanzania Missions has been completed. The summary of the main findings of the audit is incorporated in this general report and the details of the same have been issued separately in the management letters to Accounting Officers. The following table shows the outcome of the audit opinion issued including the general trend:

Trend of audit opinion for the last four years

Opinion

Years Total % Total % Total % Total %

2009/10 78 76 21 21 2 2 1 1 102

2010/11 99 93 8 7 0 0 0 0 107

2011/12 103 95 5 5 0 0 0 0 108

2012/13 85 72 30 26 1 1 1 1 117

Unqualified Qualified Adverse DisclaimerTotal

Audited

entities

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The Adverse Opinion was issued to Tanzania Embassy in Muscat and disclaimer opinion was issued to National Consolidated Accounts. Generally, there has been a significant regression of the audit opinions as compared to the previous years. Entities issued with unqualified opinion regressed from 46 to 26 entities, representing a decrease of 43% as compared to last year‘s results. While entities issued with unqualified opinion with matter of emphasis increased to 59 from 57 recorded in the last year. Entities issued with qualified opinions increased from 5 entities of last year audit to 30 entities which is 6 times the last year. Also 1 entity was issued disclaimer of opinion and 1 entity was issued with adverse opinion during the year which was not the case for the last year's audit.

These audit results are not good as they signifies that, the financial statements did not sufficiently meet the requirements of the International Accounting Standards, in this case; IPSAS accrual basis of accounting. This means that, there were some areas of the financial statements which did not portray fair results of the operations of the audited entities. The possible causes of these setbacks may be due to the following factors: a) The migration to IPSAS accrual basis of

accounting. Areas that need improvement include accounting treatment of; expenses incurred during the year, recognition of capital grants received in the cash flows statement, identification and recognition of intangible assets

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and reconciliation between cash book and Bank statement.

b) Weaknesses in the IFMS, whereby the same

Epicor configurations used in IPSAS cash basis of accounting was used in IPSAS accrual basis of accounting. As a result, accounting transactions such as imprests were directly expensed, the system did not recognize accrual transactions such as payables and receivables, etc.

c) There was inadequate, capacity building through training across departments of the audited entities to staff who are either indirectly or directly involved in the preparation of financial statements.

d) Financial reporting framework is under IPSAS accrual basis of accounting while the basis of accounts of the budget is still under cash basis which has resulted into mixed concepts on accounting for various items of expenditure in the financial statements e.g. accrual expenses were not reported in the statement of financial performance.

e) Adoption of IPSAS accrual basis of accounting prior to amendment of the existing legislation e.g. Public Finance Act No. 6 of 2001 (amended 2004) contradicts with the IPSAS accrual basis of accounting philosophy.

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(ii) Highlights of the salient features in the current year’s audit During the course of the audit, we once again noted a number of weaknesses which are covered in details under the respective chapters of this report. These weaknesses are mainly on non compliance with the existing legislations/regulations, lack of proper internal control systems and where such systems exist they are to a large extent neglected. Major irregularities and weaknesses noted during the course of my audit include the following:

(a) Follow up on the implementation of audit

recommendations In my previous general reports I issued several recommendations that needed Government's responses. In last year's audit my report had 28 issues that needed PMG's structured responses. I received responses from the PMG in which five (5) issues have been cleared while the remaining 23 issues were still awaiting for responses.

I also made a follow up on the implementation of my recommendations on the individual audit reports issued to each of the Accounting Officers of the MDAs. For MDAs, there were 960 issues from 52 MDAs. Out of 960 issues, 401 (42%) were completely implemented, 276 (29%) were partially implemented and 283 (29%) were not implemented at all. For Regional Secretariats (RS), there were 578 issues from previous years' observations in 21 RAS out of which 272 (45%) were completely implemented, 105 (18%) were partially implemented and 201 (37%) were not implemented at all.

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The analysis shows that implementation of my recommendations is below 50%. This is not good pace in improving Government operations and accountability. Failure to implement audit recommendations causes the recurrence of weaknesses in future operations. I advise government to hold public officers accountable and implement the outstanding recommendations.

(b) Follow up on the PAC report

The Public Audit Act, 2008 requires the PMG to prepare responses and action plan on the reports of the CAG by taking into account observations and recommendations of the Parliamentary Oversight Committees. Last year Parliamentary Oversight Committees set and discussed observations as raised in my reports from MDAs/RS. PAC issued a total of eleven (11) recommendations to government for implementation through its report which was tabled in the National Assembly on 7th December 2013. Up to the time of writing this report, I had not received any responses from government concerning the implementation of the PAC recommendations but I expect to make follow up on their implementation in the forthcoming audit.

(c) Funds release and budget

There have been remarkable delays in release of funds from Treasury and probably development partners for implementation of development projects. This has led to delayed implementation or non implementation of

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earmarked projects and increase in project costs as well as having huge amounts of unspent balances at the year end. During the year under review, development funds to the tune of Shs.997,940,092,853 was not released while Shs.44,428,749,202 of the released funds were not spent. Recurrent account had Shs.315,463,083,291 unreleased while Shs.35,141,163,606 of the released funds were not spent. In order to tackle the challenge of late release of approved funds, the government is advised to align Exchequer Issues with budget and revenue collections to avoid release of funds close to the end of the financial period. By so doing, it is expected that planned activities will be implemented according to the approved timetable. In order for the Government to reduce reliance in the external assistance for implementation of the national development plans, the government is encouraged to explore alternative internal sources of revenue. Details of findings are in chapter four of this report.

(d) Expenditure management

On expenditure, we have noted weaknesses in internal control systems over payments, lack of supporting documents in payments, fruitless and wasteful expenditure, unauthorized expenditure, missing payment vouchers non retirement of imprests and weak budgetary controls together with, funds being used for

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unintended purposes. These weaknesses are detailed under chapter four of this report.

(e) Lack of Debt Management Office

The continuous absence of a unified Debt Management Office (DMO) is becoming a major concern in Public Debt management in the country. The records about the public debts have become scattered across various players thus making it difficult to have an accurate data without cross examining with data from other players.

Coordination, which is a key aspect of debt management, is not clearly defined as BoT, Planning Commission, AccGen, External Finance Department, and Treasury Registrar are all tasked with different functions of debt management apart from their core activities. Thus, the absence of a unified DMO has derailed smooth coordination and operations of public debt management.

(f) Government preparedness in implementation

of IPSAS accrual basis On reviewing the progress of IPSAS accrual implementation, I noted that the government still faces challenges such as backlog activities, lack of adequate coordination, high risk on property, plant and equipment, and government‘s budget system, financial procedures, and policies are still on cash basis.

On reviewing the consolidated financial statements of the United Republic of Tanzania, I

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observed that they did not include the revenue, expenditure, assets and liabilities of the Local Government Authorities (LGAs) and Parastatal Institutions which are in fact using the same IPSAS accrual financial reporting framework. This is contrary to IPSAS 6 which requires a Controlling entity to issue consolidated financial statements which consolidates all government controlled entities, foreign and domestic.

I also noted that, the government lacked actuarial valuation of benefits plan for Government retirees contrary to IPSAS 25. Without performing actuarial valuation, the government has failed to arrive at the initial liability for the Defined Benefit Plans and for that case, the Government could neither determine the amount of actuarial gains/losses, the past and current services nor interest cost of the benefit plan.

(g) Assessment of Internal control system

During the year under audit, I noted that Internal Audit and audit committees underperformed due to inadequate staffing, resources, and inadequate composition of audit committees. It was also noted that most of the MDAs/RS had no documented IT policy and IT disaster recovery plans. Details of these observations are in chapter five of this report.

(h) Human resources and payroll

Human resource is a driver of other resources and therefore, it needs a special attention. On

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Human Resource Management, we noted non updating of staff records on the payroll, shortage of staff as compared to established level, weakness in staff performance appraisal systems and delayed submission of statutory deductions. Details of these anomalies and recommendation thereon have been detailed in chapter six of this report.

(i) Procurement and contract management

On procurement and contracts management, we wish to recognize efforts made by the Public Procurement Regulatory Authority (PPRA) in capacity building programmes which have significantly contributed in enhancing Procuring entities to be more compliant with the requirements of the Public Procurement Act No. 21 of 2004 together with its underlying Regulations of 2005. However, some MDAs and RS still do not comply fully with the requirements of the Public Procurement laws in approving tenders, functioning of procurement management units, appointment of tender evaluation team and goods inspection and acceptance committees. These are detailed in chapter seven of this report.

(j) Asset and liability management

Assets management is a key function to ensure MDAs and RAS efficiently meet their objectives so as to generate economic benefits. Major problems are the lack of evidence of legal ownership of properties and equipments Non maintenance of fixed asset register, grounded and un-serviceable noncurrent assets, partial

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valuation of assets, improper recognition of intangible assets, misclassification of transfer funds and unsettled liabilities. Government through its respective accounting officers of MDAs/RS should ensure that internal controls are strengthened to avoid occurrence of the below noted anomalies in the coming years .Detailed findings are in chapter nine of this report.

(k) Special audit

Section 29 (2) of the Public Audit Act, 2008 underpinned by Regulation 78 of the Public Audit Regulations, 2009 allows me to conduct special audits. Under this mandate, therefore, during the year 2012/13 I carried out four (4) special audits for MDAs. Separate reports have been compiled and availed to the Accounting Officers concerned. However, details of the special audits conducted are in chapter eleven of this report. Salient issues raised from the special audits are summarized below:

A special audit on payrolls and other charges in respect of referral hospitals, district designated hospitals and voluntary agency hospitals for the years 2010/2011 and 2011/2012 noted payment of salaries to non-existing employees Shs.754,992,183, Unclaimed salaries retained in hospitals Shs.Shs.3,047,574,792 were used to finance other unintended activities.

A special audit on procurement of MV Misungwi noted inadequate supervision and monitoring of the contract between Permanent Secretary, Ministry of Works and Sinnautic International.

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MV Misungwi was not officially handed over to the Ministry of Works and Spare parts for MV Misungwi costing Euro 41,140 were not delivered by M/S Sinnautic International even though they have been paid for.

A special audit on National Agriculture Input Vouchers Scheme noted that people who were not in the approved list of beneficiaries received agriculture input vouchers without following formal procedures; Inadequate supervision by the Agricultural Extension officers on the seeds issued by Agro dealers and lack of seeds and fertilizers inspection. Delays in procurement and distribution of the agriculture input vouchers and lack of operational manual of the system, information on fertilizer and seed supply in the country and poor recording keeping of the systems transactions.

Another special audit on Mkomaindo Nursing Training Centre noted improper record keeping and misappropriation of fees collections.

(l) Other issues

I came up with other issues as the results of the power vested in me under Sect. 12 of Public Audit Act of 2008 and Reg. 34 of Public audit regulation, 2009 which gives me power to make recommendations to the Government for any matter that the CAG considers to be better for the management of Public monies, Stores, Securities Stamps and other Properties issues. Matters dealt with in this regard are in chapter

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twelve where I have exercised my power and have made recommendation on:

1) Operations of Government Executive

Agencies, 2) Government (MDAs) rental cost of office

buildings. 3) Issues relating to Management of Prisons

Department. 4) Role of CAG in auditing PPP Project and

Issues raised on Auditing of Political parties

Summary of Recommendations It is the duty of the Accounting Officers to ensure the existence of a sound and effective internal control system within the Vote‘s operations in order to reduce the enormous internal control deficiencies noted. Apart from the detailed recommendations issued to Accounting Officers and sub accounting officers for votes and Embassies/High commissions through the individual management letters issued to the Accounting Officer, I have the following general recommendations to make for this year of audit:

Non implementation of some of the previous year’s audit recommendations The government should put more efforts to ensure that the issued audit recommendations are attended accordingly. The Paymaster General should instruct Accounting Officers to take necessary measures to improve documentation, which is one of the main causes that contribute to missing documentation and therefore failure to reply to some of the raised audit issues.

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Accounting Officers lack clearly documented action plans to guide the implementation of the CAGs recommendations. The action plan will be specific for issues which cannot be done within a reasonable short period of time, i.e. those medium and long terms recommendations. Insistence of having a register of implementation of CAGs recommendation to be kept by every Accounting Officer is another important mechanism. A register is a good tool to record and track outstanding audit issues not attended to including the progress attained so far.

Lack of Debt Management Office The need for a unified Debt Management Office at the Ministry of Finance is one of the key issues that were addressed during the financial year 2010/2011. I advised the government to hasten the establishment of a unified DMO in order to effectively and efficiently execute the government's debt management functions. The government also needs to take proactive and bold measures including but not limited to, refraining from periodically converting liquidity papers for budget financing, improvement on government revenue collection through TRA‘s Revenue Gateway System, fiscal discipline and effective budget estimates.

Bonded warehouses The government is advised to ensure adequate controls over the operation of Customs and Bonded Warehouses in order to collect respective custom

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dues. In addition, TRA is urged to comply and enforce existing legislations. IPSAS implementation and Assets Management Since the Government has a provision of five years as first adopter of IPSAS accrual basis, the Government is advised to do the following so as to effectively use this transition period:

Allocate enough resources in terms of finances and human capital to facilitate smooth operation of the exercise.

The government through SSRA to fully comply with IPSAS 25 (Employee benefits) over accounting for Defined Benefit Plans in order to determine its initial liability for defined benefit plans due to IPSAS accrual first year adoption.

Establish IPSAS National Coordination Committee made up of professional accountants/auditors and other professions who will be overseers of the five years roadmap to make sure each step is taken seriously and on time. So far one year has lapsed remaining with four years. The committee should be chaired by the Accountant General.

DGAM should work closely with stakeholders so as to enhance the implementation of the action plan for smooth compliance with IPSAS 17, and make necessary adjustments in the financial statements by separating land and building into two distinct asset categories.

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The government is advised to initiate the process of consolidating the financial statements of LGAs, RSs and controlled entities in the financial statements of URT.

To properly configure the IFMS Epicor and the government's budget systems for these systems to process transactions and generate financial statements according to IPSAS accrual requirements.

Procurement Management Government through PPRA has to conduct several seminars with the aim of building capacity of PMUs, Tender Boards, Accounting Officers and User Departments on the importance of complying with the Public Procurement Act and its regulations. Also it‘s important to have Procurement Information Management Systems (PIMS) in effective operation. This system is hosted by PPRA. PPRA has to make sure that this system is user friendly to end users so that MDAs/RS can easily use this system to improve procurement activities. Human resource and Payroll management The PO-PSM should revisit the establishment levels of MDA and RS and come up with the ideal required level. In order to ensure good performance within the government, the audited entities noted with high level of understaffing, should find ways of filling the vacancies to comply with the establishment level. Accounting officers of MDAs and RS should work hard to ensure that they are equipped with sufficient and qualified number of

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staff. Shortage of staff should be communicated to the respective authorities including PO-PSM.

Salaries Paid to non – Exiting Employees To avoid such losses in future, Accounting Officers of the respective MDAs/RS should check their payrolls periodically to confirm validity of all entries. Communication should also be enhanced to ensure that names of retirees, absconders or terminated employees are deleted from payrolls once they cease to be in employment. Apart from that, Accounting Officers should ensure unclaimed salaries in respect of employees who are no longer in public service for one reason or another are surrendered timely to Treasury as per given instructions. Furthermore, Accounting Officers should ensure that Human Capital Management Information System (LAWSON) is fully utilized in order to obtain the anticipated value for money in installing the software package. Expenditure Management This is one of the areas noted during audit to accommodate a number of challenges. Mostly, these challenges are caused by having Internal Controls which are not correctly supervised and/or overridden by the entrusted officers. Accounting Officers of MDAs/RS/Missions should ensure all payments are authenticated by proper authorities and proper supporting documents in line with the requirement of Regulation 95(4) of the Public Finance Regulations of 2001. Internal check need to be strengthened including strengthening the pre-audit functions.

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Operation of overseas Tanzania missions A separate study is ongoing in this area. However, basing on what was noted during audit; I have the following general recommendations to make:

The respective Embassies/High Commissions, in corroboration with MFAIC should cease paying Foreign Service allowances to the retired officers who were in the missions and make arrangement for immediate repatriation to their place of domicile. I also recommend that management/relevant authority should consider recovery of the amount paid to this staff.

Embassies/High Commission‘s management should communicate with the MFAIC for the need of replacement of home based staff who overstayed in one station. This will have positive effects in the services delivery of the respect embassy/missions.

MFAIC management should consider a possibility of setting aside fund in the budget for carrying out economic diplomacy and promoting tourism attraction, taking into consideration that this is an important task to the Country‘s economy.

Special audits

The MoHSW in collaboration with the Treasury should improve communication with Hospital managements to ensure immediate deletion of ghost workers who are still in the Government Computer Payrolls. District Designated and Voluntary Agency Hospitals to adhere to the contract agreement signed between MoHSW and the respective Hospitals on Board members' appointment.

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Appropriate action should be taken against the public officers who failed to supervise and manage the execution of the Procurement contract of MV Misungwi and Legal action should be taken against M/S Sinnautic International who failed to implement all works and deliver spare parts of MV Misungwi as per contracts despite of being paid.

In respect of the National Agricultural Inputs Voucher Scheme (NAIVS), the Beneficiaries registered list should be reviewed and assessed if they truly exists and are meeting the criteria for their existence; Agricultural Extension Officers, the Agriculture Seeds Agency and Agriculture Research Institutions should be involved in the review and assessment of the seeds and fertilizers issued in the country. The procurement and distribution of vouchers should be timely done and the Ministry should to come up with a simplified Swahili version of an operational manual of the system.

In respect of special audit conducted on Mkomaindo Nursing Training Centre, the Accounting Officer is urged to strengthen internal control system including improvement of record keeping.

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CHAPTER ONE 1.0 BACKGROUND AND GENERAL INFORMATION

1.1. Audit Mandate and Rationale for Audit. 1.1.1 Audit Mandate

This report is issued in accordance with Article 143 of the Constitution of the United Republic of Tanzania, and Section 10 of the Public Audit Act No. 11 of 2008, I am required to examine, inquire into and audit Ministries, Regions, Independent Government Departments and Agencies.

I am required by Article 143 (2) (C) of the Constitution of the United Republic of Tanzania to audit and issue audit report at least once every year in respect of the financial statements prepared by Accounting Officers of the Government of the United Republic of Tanzania, financial Statements of all Courts of the United Republic of Tanzania and financial statements prepared by the Clerk of the National Assembly. On the other hand, Section 10 (2) (a) of the Public Audit Act No. 11 of 2008 requires the Controller and Auditor General to satisfy that all audited financial statements have been kept in accordance with generally accepted accounting principles. Currently, Ministries, Regions, Independent Government Departments and Agencies are required to prepare and present financial statements in


accordance with either International Public Sector Accounting Standards accrual basis of accounting or International Financial Reporting Standards (IFRS). The submitted financial statements of the MDAs RS and Embassies/High Missions were prepared in compliance with IPSASs -accrual basis of accounting. Also Section 25(4) (a) and (b) of the Public Finance Act require Accounting Officers to submit to the Controller and Auditor General financial statements prepared in accordance with generally accepted accounting practice and in accordance with any instructions issued by the Accountant General and approved by the Permanent Secretary to the Treasury and stating the basis of accounting used. Accounting Circular No. 11 of 2012/2013 issued by Accountant General requires Accounting Officers to prepare and present financial statement using IPSAS accrual basis of accounting. A complete set of financial statements prepared according to IPSAS - accrual basis includes the following components: i. Statement of financial position; ii. Statement of financial performance; iii. Statement of changes in net

assets/equity; iv. Cash flows statement; v. Statement of comparison of budget and

actual amount and


vi. Accounting policies and notes to the financial statements.

Section 34 of the Public Audit Act, 2008 and Regulation 88 of the Public Audit Regulations, 2009 requires the Controller and Auditor General after examination and audit of all financial statements to prepare and submit an annual general report. The annual general report shall be submitted by the Controller and Auditor General to the President of URT by 31st March each year and shall be laid by the Minister or appropriate Minister to the National Assembly within seven days of the next sitting of the National Assembly.

1.1.2 Rationale for Audit 1.1.2.1 Audit objectives

The main objective of conducting the audit is to enable the Controller and Auditor General to express an independent audit opinion on the financial statements of Ministries, Independent Government Departments, Agencies, Regional Administrative Secretariats, Tanzania Revenue Authority and Consolidated National Accounts for the year ended 30th June, 2013. Also, to establish whether the financial statements were prepared in all material respects, in accordance with the International Public Sector Accounting Standards (IPSAS) accrual basis of accounting.


1.1.2.2. Audit methodology A risk based audit methodology is used in auditing financial statements. It emphasizes the need for a detailed understanding of the entity and its environment, including its internal controls and risk assessment analytics, and seeks to place reliance where possible on governance arrangements and organization's processes. The Office‘s audit methodology is supported by a robust Regularity Audit Manual and TeamMate Electronic Working papers.

To ensure that the audit methodology is kept up to date, NAOT Management through TSSU performs an annual update to the existing audit methodology. This upgrade incorporates all relevant changes to the audit, accounting, and legal frameworks.

1.1.2.3 Audit scope

The audit was carried out in accordance with the International Standards of Supreme Audit Institutions (ISSAIs) to provide reasonable assurance as to whether the financial statements are free from material misstatement. Audit procedures include examination of records, internal controls, information systems, control procedures and statutory disclosure requirements. The general audit report summarizes findings from the audit that was conducted


on a sample basis; therefore, the findings are confined to the extent that records, documents and information requested for the purpose of the audit were made available to me.

1.2.0 Applicable Auditing Standards and

Reporting Procedures. 1.2.1 Applicable Auditing Standards

The National Audit Office of Tanzania is a member of the International Organization of Supreme Audit Institutions (INTOSAI), the African Organization of Supreme Audit Institutions (AFROSAI), and the African Organization of Supreme Audit Institutions - English Speaking Countries (AFROSAI-E). Cooperation with other Supreme Audit Institution (SAIs) allows NAOT to share knowledge and information about best practice and development in public sector auditing. For the purpose of MDAs, the National Audit Office audits in accordance with the International Standards of Supreme Audit Institutions (ISSAIs) issued by the International Organization of Supreme Audit Institutions (INTOSAI).

1.2.2 Reporting Procedures. The effectiveness of my audit relies heavily on good communication with the Management of the audited entities. Communication is necessary throughout the


audit process which involves the following steps: i. Issuing engagement letter to auditees

before the audit commences, to explain the nature, timing and scope of the audit;

ii. Preparing Overall Audit Strategy at the end of planning to explain the audit approach to be adopted basing on the preliminary evaluation of the audited entity;

iii. Conducting Entrance meeting with the management of the audited entity;

iv. Issuing an interim management letter or audit queries to provide a list of audit findings and to provide management with an opportunity to respond at the end of an audit;

v. Issuing draft management letters to inform the audited entities of all issues found during the audit and provide management with an opportunity to respond.

vi. Conducting exit meeting with the auditee to discuss audit findings.

vii. Issuing final management letters to inform the audited entities of all significant issues found during the audit and provide management with an opportunity to respond.

viii. Issuing individual audit report to provide an overall opinion on the financial statements and other aspects included in the engagement letter.


1.3.0 Number of audited entities and NAOT’s set up

1.3.1 Number of Auditees

During the financial year 2012/2013, I audited 116 government entities comprising of 59 MDAs, 25 Regional Administrative Secretariats and 32 Tanzania Missions abroad. Individual audit reports were issued for each of them. The proportional distributions of these auditees are as shown in the table below: Table 1: Number of Auditees

Auditee Total Percentage

MDAs 59 51

RSs 25 21

Tanzania Missions abroad

32 28

Total 116

Apart from audit of government entities mentioned above, I audited the Consolidated National Accounts; pre audit of terminal benefits and the accounts of Tanzania Revenue Authority.

1.3.2 Set up of NAOT The office is organized into audit teams, a framework that attempts to align related audit entities and to foster expertise in various areas of audit activities. The audit teams are headed by Resident Auditors, who oversee and are responsible for the audits


within the assigned teams. Resident auditors are assisted by the second in-charge. The auditors under each Resident Auditor are divided in teams and each team is managed by the team leader. The Resident Auditors are under the supervision of Assistant Auditors General.

We have found it is useful to group our auditees into smaller manageable locations named Zones which are headed by Assistant Auditors General who report to the Deputy Auditors General. According to NAOT structure, Deputy Auditors General report directly to the Controller and Auditor General. The extract of the NAOT organogram is as shown below:

Figure No. 1: NAOT organogram extract


1.4.0 Statutory Responsibilities of the audited entities

1.4.1 Preparation and submission of the financial statements Section 25(4) (a) and (b) of Public Finance Act, 2001 (revised 2004) requires Accounting Officers to submit financial statements prepared in accordance with generally accepted accounting practice and in accordance with any instructions issued by the Accountant General approved by the Permanent Secretary to the Treasury. Also the Accounting Officers are required to state the basis of accounting used in the preparation of the financial statements.

Further, Accounting Circular No. 11 of 2012/2013 issued by the Accountant General requires MDAs and RS to prepare and present financial statements in line with section 25 of PFA and in accordance with International Public Sector Accounting Standards accrual basis. MDAs and RS have migrated from IPSAS cash basis to IPSAS accrual basis of accounting during the financial year 2012/2013 towards achieving and improving good governance and Accountability in the management of public resources. However, the Government adopted transitional provisions and it is expected that the Government will be fully compliant with IPSAS accrual basis of accounting by the end of the financial year 2016/2017.

Management of MDAs and RS are required to establish and maintain appropriate internal


control systems to ensure that financial and other records are reliable and complete, and they adhere to management policies, orderly and efficient conduct of the MDAs business and guarantee the existence of proper recording and safeguarding of assets and resources.

Furthermore, Regulation 71(1) of the Public Audit Regulation, 2009 requires Accounting Officer to prepare and submit financial statements to the Controller and Auditor General within three months after closure of the respective financial year, i.e. 30th June. In addition, Reg. 71(2) of the Public Audit Regulations, 2009 requires the Accountant General to prepare and submit consolidated financial statements to the Controller and Auditor General within a period of four months after the end of each financial year, i.e. 30th June.

1.4.2 Preparation and submission of management responses/replies Regulation 86(1) – (3) of the PAR, 2009 stipulates that, the Controller and Auditor General shall compile the audit findings and prepare a management letter and submit the same to the management of the audited entity. The management of the MDAs shall provide responses on the audit observations and submit the same to the Controller and Auditor General within twenty one days from the date of receipt of the management letter. In case of failure by the management to respond to the management letter within


twenty one days, then such management letter will be concluded with the management responses and the issues raised may be incorporated into the CAG's Annual General Report.

In addition, Regulation 93 of the PAR, 2009 requires every Accounting Officer of the audited entity within twenty one days from the date the general report is tabled before the National Assembly, to prepare responses on the individual reports submitted to them. The accounting officers shall submit responses to the Public Accounts Committee and a copy to the Controller and Auditor General.


CHAPTER TWO AUDIT OPINION OVERVIEW, TYPES, BASIS AND THE

ACTUAL AUDIT RESULTS 2.0 An overview of the audit opinion

As started in the preceded chapters, the central government has embarked on a bold and a major transformation by migrating into IPSAS accrual basis as the framework of the preparation of the government's financial statements, which was adopted effectively from 1st July 2012. This is a very commendable milestone made by the government for the improvement of its financial reporting. Thus, this being the first time IPSAS compliant accrual financial statements are being audited, the transition provisions adopted under note 8 of the audited financial statements were taken into consideration in forming the audit opinions. However, this migration has impacted on the audit opinions issued during the year because, unlike the previous years, this year the number of MDAs issued with unqualified opinions dropped and MDAs issued with qualified opinions increased significantly. It has also resulted into Embassy of Tanzania in Muscat getting adverse opinion and National Consolidated Accounts getting a disclaimer opinion. The main objective of any audits conducted is to enable the auditor to express an independent audit opinion as to whether the


audited financial statements have been prepared in accordance with applicable financial reporting framework and that they present fairly the financial state of affairs of the audited entity. However, this being a public sector audit, the objective has been broaden to include assessment of the auditees‘ compliance with laws and regulations and the effectiveness of the internal controls systems. An audit opinion is the certification from an independent external auditor on whether the audited financial statements present fairly in all material respect, the financial position, financial performance and the cash flows of the audited entity. This certification gives the users of the financial statements an assurance on the validity and correctness of the financial statements in order for them to make appropriate informed decisions.

2.1 Types of the audit opinions Given the audit circumstances, the following types of audit opinions may be expressed. Referred to annexure 'A'

Unqualified Audit Opinion

Qualified Audit Opinion

Adverse Audit Opinion

Disclaimer Audit Opinion

Under given circumstances, I have also included salient issues which do not affect audit opinions which in my opinion I considered them to be of such importance


for the users' understanding of the financial statements. In this case I have included the following paragraphs;

Emphasis of matter paragraph, and

Other matters paragraph

2.2 Basis of the audit opinion and the actual audit results

2.2.1 Unqualified opinion This type of audit opinion is issued when I conclude that, given the sufficiency and appropriateness of the audit evidences, the financial statements of the audited entities present true and fair view. This means that the appropriate IPSAS compliant accounting policies have been applied consistently in preparing the financial statements, applicable laws and regulations have been complied with and that there are adequate disclosures of all information relevant to the proper understanding of the financial statements. During the year under review; 117 central government entities were audited which consisted of 60 MDAs, 25 RS and 321 Embassies/High Commissions, high commission and permanent missions under the Ministry of Foreign Affairs and International Cooperation. Out of these entities; 262 entities were issued with unqualified opinion which is (22%) of the

1 18 Embassies, 12 High Commissions & 2 Permanent Missions

2 21 MDAs, 2 RS & 3 Embassies


total audited entities. These recorded a decrease of 43% as compared to the last year audit. The table 2 below shows the list of audited entities issued with unqualified opinion.

Table 2: List of the audited entities issued with

unqualified opinion S/N Vote Name

1. 8 Constitutional Review Commission

2. 9 Tanzania Public Service Remuneration Board

3. 12 Judicial Service Commission

4. 13 Financial Intelligence Unit

5. 20 President's Office State House

6. 25 Prime Minister's Private Office

7. 26 Vice President's Office

8. 27 Registrar of Political Parties

9. 30 President's Office and Cabinet Secretariat

10. 31 Vice President's Office

11. 33 Ethics Secretariat

12. 34 Ministry of Foreign Affairs and International Cooperation

13. 39 National Service

14. 47 Simiyu Regional Secretariat

15. 57 Ministry of Defense and National Service

16. 58 Ministry of Energy and Minerals

17. 59 Law Reform Commission of Tanzania

18. 62 Ministry of Transport

19. 67 President's Office Public Service Recruitment

20. 84 Singida Regional Secretariat

21. 94 President's Office - Public Service Commission

22. 97 Ministry of East Africa Cooperation

23. 98 Ministry of Works

24. 2012 Tanzania High Commission in Ottawa

25. 2018 Tanzania Embassy in Washington

26. 2027 Tanzanian Embassy in Abu Dhabi Source: CAG’s individual reports for 2012/2013


2.2.2 Emphasis of matters The emphasis of matters paragraph was included in the audit report to draw users‘ attention to a matter or matters properly presented or disclosed in the financial statements that are of such importance that they are fundamental to the users‘ understanding of the financial statements. This paragraph is usually included immediately after the respective audit opinion According to the ISSAIs3, the following issues formed the basis of inclusion of the emphasis of matter in my reports; i. a substantial doubt on the sustainability

of services delivery of the audited entities,

ii. lack of consistency in application of Generally Accepted Accounting Principles,

iii. uncertainties related to future outcomes of exceptional litigation,

iv. a situation where there was an early adoption of the reporting standard, and

v. material inconsistency of fact in the annual report and commentary in the financial statements where an amendment was necessary and the entity refused to make the amendment.

3 ISSAI 1706: Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor‘s Report


During year, out of 1174 audited entities; 545 of them were issued with unqualified opinion with emphasis of matter paragraph which is 46% of the total audited entities. List of these entities is attached to this report as referred into annexure 'B'.

2.2.3 Other matters Other matters paragraph was included in the audit report to draw users‘ attention to any matter or matters other than those presented or disclosed in the financial statements that are relevant to users‘ understanding of the audit, the auditor‘s responsibilities or the auditor‘s report. This paragraph is usually included immediately after the respective audit opinion and emphasis of matter (if any). Accordingly, the following issues formed the basis of inclusion of the other matters paragraph in my audit reports; i. The identified material misstatement of

fact in other information in annual report which required amendments but the management of the audited entities refused to do so,

ii. Issues related to ineffective and inefficient audit committees, internal audits and procurement management units,

iii. Immaterial non compliance with laws and regulations.

4 60 MDAs, 25 RAS and 32 Embassies 5 24 MDAs, 6 RS & 24 Embassies


During year, out of 1176 audited entities; 57 of them were issued with unqualified opinion with other matter paragraph which is (4%) of the total audited entities. The detailed list of these entities and the basis of the other matters is shown in table 3 below:

Table 3: List of audited entities issued with

unqualified opinion with other matters S/N Vote Name

1 16 Attorney General's Chamber

2 65 Ministry of Labour

3 78 Mbeya Regional Secretariat

4 2007 Lusaka High Commission

5 2032 Kuala Lumpur High Commission Source: CAG’s individual reports for 2012/2013

2.2.4 Qualified opinion

This type of opinion was issued following my conclusions based on the audit evidence obtained that,

The identified misstatements in the financial statements, individually or in the aggregate, were material but not pervasive to the financial statements, or

In the situation where I was not able to obtain sufficient appropriate audit evidence on which to base my opinion, and concludes that the possible effects on the financial statements of undetected misstatements could be material but not pervasive.

6 60 MDAs, 25 RAS and 32 Embassies 7 2 MDAs, 1 RS & 2 Embassies


This means that, there was either; (i) a material limitation of scope imposed

by the management of the audited entities or by the circumstances which were not pervasive, or

(ii) a material disagreement due to inadequate disclosure or inappropriate accounting treatment which were not pervasive.

The concept of material pointed out here means that, the limitation of scope or disagreement is confined to a specific area of the financial statements but the rest of the financial statements show true and fair View. Specifically, the followings were issues which were considered in issuing qualified opinions;

i. Material misstatement in the financial statements,

ii. Material unsupported expenditures and revenues,

iii. Material non-compliance with laws and regulations such as; unauthorized expenditure and use of revenue, unreported accounts, breaches of procurement rules and regulations, unaccounted stocks and fixed assets, failure to maintain stores and fixed assets register and irregular or wasteful expenditure as well as material losses through criminal conduct.

iv. Material expenditure incurred for which the government did not receive the desired benefits


When forming this opinion, the requirements of ISSAI 1706 was also taken into consideration8. During the year, 309 entities were issued with qualified opinion out of 117 audited entities which is equivalent to 26%. This marks an increase of 6 times as compared to the last year‘s audit results which indicates that, these entities have regressed. Annexure 'C' shows the list of entities issued with qualified opinion.

2.2.5 Adverse opinion This type of opinion is issued after having obtained sufficient appropriate audit evidence, and concludes that financial statements contain misstatements due to disagreement (whether inadequate disclosure or inappropriate accounting treatment) which either, individually or in aggregate, are both material and pervasive. This means that, the disagreements distort the reliability of the financial statements as a whole. Under this circumstance, we conclude that, the financial statements do not present true and fair view. Specific issues leading to this type of opinion included;

8 Inclusion of other matters/and emphasis of matters 9 12 MDAs, 16 RS & 2 Embassies


i. fundamental misstatement in the financial statements,

ii. fundamental unsupported expenditures and revenues,

iii. fundamental non compliance with laws and regulations such as; unauthorized expenditure and use of revenue, unreported accounts, breaches of procurement rules and regulations, unaccounted stocks and fixed assets, failure to maintain stores and fixed assets register and irregular or wasteful expenditure as well as material losses through criminal conduct.

iv. Significance expenditures incurred for which the government did not receive the desired benefits.

During the year, one10 out of 117 audited entities, which is 1%, was issued with adverse opinion.

2.2.6 Disclaimer of opinion In the real sense over the word a disclaimer of opinion is not an opinion but a statement of fact that the audit could not form an opinion. It is issued when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the auditor concludes that the possible effects on the financial statements of undetected misstatements could be both material and pervasive. Under this

10 1 Tanzania Embassy in Muscat


circumstance, the auditor refuses to express an opinion. During the year, one 11 out of 117 audited entities, which is 1% was issued with disclaimer of opinion. The basis that has resulted to the disclaimer of opinion are as follows;

S/N Name of the Audited Entity

1. National Consolidated Account

Omission of controlled entities from the Consolidated Financial Statements. Para 20 states that "Consolidated financial statements shall include all controlled entities of the controlling entity, except those referred to in paragraph 21". Para 21 in turn provides that, an entity shall be excluded from consolidation when there is evidence that the control is temporary because the entity is acquired and held with a view to dispose within 12 months from acquisition and management is actively seeking for a buyer. Contrary to this, the prepared Consolidated financial Statements have not included consolidation of LGAs and GBEs which should have been consolidated as per requirements of para 20 of IPSAS 6. The reason for non consolidation of LGAs as given on Note 2 was that the LGs do prepare the financial statements based on IPSAS whereas the Central government has just started preparing its financial statements on IPSAS Accrual basis in 2012/13. The reason provided by the management neither satisfies the requirement of para 21 which provides for the entities which shall not be consolidated nor the requirement of transitional provision under para 65 of IPSAS 6.

As for the GBEs the management claims not to

11National Consolidated Account



consolidate them because they give dividends to the government. This is again contrary to the requirement of para 27 of IPSAS 6 which explicitly states that "A controlled entity is not excluded from consolidation because its activities are dissimilar to those of the other entities within the economic entity, for example, the consolidation of GBEs with entities in the budget sector. `Relevant information is provided by consolidating such controlled entities and disclosing additional information in the consolidated financial statements about the different activities of controlled entities'. The omission of LGAs and GBEs from the Consolidated Financial Statement makes the financial statements incomplete hence not presenting a true and fair view of the National Accounts for the year 2012/13. Application of inappropriate transition provision as basis for preparation of the Financial Statements. Para 65 and 66 of IPSAS 6 provides a transitional provision for controlling entities which have adopted IPSAS accrual accounting for the first time on the requirement of eliminating inter entities transaction, balances, revenues and expenses (as required by para 45 of IPSAS 6) for a period of three years. In line with this, para 67, requires an entity to disclose that not all such balances, transactions, revenues and expenses within economic entity have been eliminated. The management stated on Note 2, the basis for preparations of the financial statements that the Consolidated financial statements on the basis of transition provision of IPSAS 17on PPE whereby it says that full set of Consolidated financial statement will be accomplished in five years due to adoption of the provision of IPSAS 17. ". This is misleading since IPSAS 17 does not give provision for Consolidation of financial statements rather on reporting PPE.



Inadequate disclosures. Para 62(a) of IPSAS 6 requires among other things the consolidated financial statements to disclose list of all controlled entities. Contrary to this, the disclosed list in the Consolidated financial statements was not exhaustive as it excluded LGAs and GBEs. Un-reconciled differences I reviewed Bank reconciliation statements and noted discrepancies between adjusted bank balances and balance as per cash book amounting to Shs.12,724,073,617.54 The discrepancies were not reflected in the reconciliation statements nor reconciled. Unadjusted stale cheques The review of bank reconciliation statement noted stale cheques Shs.168,047,718.73 which have not been adjusted for between two to ten years. Export-Credit Guarantee Scheme The review of operations of the scheme noted long outstanding loans under Government guarantee which had been defaulted by beneficiaries with evidence of inability to repay the loans amounting to Shs.8,129,556,449.15; however the Government is yet to honour its parts despite several remainders from Financial Institutions.

2.3 Trend of Audit Opinions The chat below shows the trend of audit opinions for the past four years consecutively. They further analyse the movement of audit opinions for the past two consecutive years for the MDAs, RS and Embassies Separately.



Table 4: Trend of audit Opinion for the past four years

2009/2010 2010/2011 2011/2012 2012/2013

Category

of the

Audited

Entity Un

qu

ali

fie

d

Un

qu

ali

fie

d*

Qu

ali

fie

d

Ad

ve

rse

Dis

cla

ime

r

Tota

l

Un

qu

ali

fie

d

Un

qu

ali

fie

d*

Qu

ali

fie

d

Ad

ve

rse

Dis

cla

ime

r

Tota

l

Un

qu

ali

fie

d

Un

qu

ali

fie

d*

Qu

ali

fie

d

Ad

ve

rse

Dis

cla

ime

r

Tota

l

Un

qu

ali

fie

d

Un

qu

ali

fie

d*

Qu

ali

fie

d

Ad

ve

rse

Dis

cla

ime

r

Tota

l

MDAs 7 30 12 1 0 50 13 35 6 0 0 54 28 24 3 0 0 55 21 26 12 0 1 62

RAS 3 9 7 1 1 21 0 19 2 0 0 21 7 14 0 0 0 21 2 7 16 0 0 23

Embassies 8 21 2 0 0 31 3 29 0 0 0 32 11 19 2 0 0 32 3 26 2 1 0 32

Total 18 60 21 2 1 102 16 83 8 0 0 107 46 57 5 0 0 108 26 59 30 1 1 117

Overall % 18 59 21 2 1 100 15 78 7 0% 0 100 43 53 5 0% 0% 100 22% 50% 26% 1% 1% 100%

MDAs % 7% 29% 12% 1% 0% 12% 33% 6% 0% 0% 26% 22% 3% 0% 0% 18% 22% 10% 0% 1%

RAS % 3% 9% 7% 1% 1% 0% 18% 2% 0% 0% 6% 13% 0% 0% 0% 2% 6% 14% 0% 0%

Embassies % 8% 21% 2% 0% 0% 3% 27% 0% 0% 0% 10% 18% 2% 0% 0% 3% 22% 2% 1% 0%

Trend of audit Opinions the past four years consecutively

* Unqualified with emphasis and /other matters


Figure 2: A trend of audit opinions for the past four year


2.4 Audited entities issued with qualified, adverse and disclaimer of opinions with their actual specific basis of their qualifications

As pointed out earlier in this chapter, 117 central government entities were audited. Out of these entities, 30 entities regressed by getting qualified opinion from 5 of last year which is 6 times (520%). In the same line, 1 audited entities was issued with adverse opinion and 1 entity was issued with disclaimer of opinion against none of the last year. Generally, these are not good results as it signifies that, the prepared financial statements did not sufficiently meet the requirements of the international accounting standard, in this case; IPSAS accrual basis of accounting.

This may have been caused by the following factors;

1) Migration to IPSAS accrual basis of accounting

for the first time where by a number of financial statement item were not treated appropriately especially on the following areas;


i. Incurred expenses during the year not charged in statement of financial performance,

ii. Mistreatment of inventories as in some of the financial statements, unutilized inventories were expensed as was the case under IPSAS cash basis of accounting,

iii. Cash flows statements did not disclose the financing part,

iv. Intangible assets constituted items which did not meet the definition and recognition criteria,

v. Non preparation of bank reconciliation to support the closing figures of cash and cash equivalents,

2) Weaknesses in the IFMS, whereby the same Epicor configurations used in IPSAS cash basis were used in IPSAS accrual basis. As a result, accounting transactions such as imprests were directly expensed, the system did not recognize accrual transactions such as payables and receivables, etc.

3) Inadequate training across departments of the audited entities including the finance staff who are directly involved in the preparation of the financial statements. Also other non finance staff who greatly contribute in maintaining appropriate records from which the IPSAS accrual compliant financial statements will be prepared.


4) A road map for IPSASs implementation on the first IPSAS accrual financial statements for the central government developed by the Ministry of Finance was inadequately followed. For instance, the Ministry was supposed to update the accounting policies, the accounting manual and prepare a consolidation tree by March 2012. This deadline was not adhered to as they were still in draft form. There was also another challenge in identifying annual leave liability and other employment related liabilities as very few audited entities incorporated them in their financial statements.

The detailed list of audited entities issued with Qualified and Adverse opinion and their actual basis of their qualification is shown in Table '5' below.

Table 5: List of MDAs issued with Qualified Opinion and the their basis

Ministries Departments & Agencies S/N Name of the audited MDAs and the basis of

qualified opinion

1 Fire and Rescue Forces

Understatement of expenses by Shs.500,162,825 The Fire and Rescue Forces Department incurred an amount of Shs.500,162,825 for goods and service which were procured and received by the Department which at the end of the financial period the same were not paid for, the figure was omitted in the statement of financial performance hence the statement failed to portray a true picture of its operations.

2 Ministry of Communication Science and Technology

Overstatement of Non-current Assets by


S/N Name of the audited MDAs and the basis of qualified opinion

Shs.737,827,680 Ministry reported intangible assets of Shs.737, 827,680 as at 30th June 2013. However under Note 61 to the financial statements which explained what constitute this amount, we noted that most of the items did not meet the definition and recognition criteria for intangible assets as prescribed under IPSAS 31. Understatement of expenses in the statement of financial performance The Ministry incurred expenditures of Shs.162, 073,744 that was correctly reported in the statement of financial position as payables. However, the same was not charged into the statement of financial performance as expenses thus resulting into understatement of the reported expenses by the same amount. As a result, the Ministry recorded neither surplus nor deficit during the year. Non preparation of bank reconciliation statements Audit of cash flow statement together with statement of financial position disclosed a figure for cash and cash equivalent amounting to Shs.23, 389,759 not supported by related bank reconciliation statements contrary to IPSAS 2(56). As a result, I could not confirm the correctness of the amount of Cash and Cash equivalents.

3 Ministry of Agriculture Food Security and Cooperatives

Overstatement of Non-current Assets by Shs.6,374,281,432 The Ministry reported intangible assets of Shs.6,374,281,432. However, these amount constituted items, which did not meet the definition and recognition criteria for intangible assets as per IPSAS No.31, thus overstated the reported noncurrent assets by the same amount.



Non preparation of bank reconciliation statements Contrary to Regulation 162 of the PFR of 2001, the Ministry did not prepare bank reconciliations as a result, the correctness of the amount of cash and cash equivalent of Shs.5,648,305,420 reported in both the cash flows statement and the statement of financial position could not be established. Lack of supporting documents of accounts payable Shs.2,162,343,978 Out of Shs.44,739,685,558.75 of the payables reported by the Ministry during the year, an amount of Shs.2,162,343,978 was not supported by relevant documents, thus we could not confirm its correctness.

4 Ministry of Livestock and Fisheries Development

Unsupported Account Payables Shs.344,799,155 The Ministry reported account payables of Shs.344,799,155 related to staff claims, but relevant documents to support them were not produced for verifications. Hence, its genuineness could not be confirmed. Unreceived Remittances Shs.752,736,291 Shs.10, 091,081,130 were transferred to Tanzania Fisheries Research Institution and Tanzania Veterinary Laboratory Agency. Out of the transferred amount, the recipients did not acknowledge Shs.752, 736,291. Unsupported deposits balance of Shs.756,274,215 An amount of Shs.756,274,215 was reported as deposit balance as at the end of the financial year. However, this amount was not supported; hence we could not verify its correctness.

5 Tanzania Commission for AIDS

Expensing of unutilized inventories amounting to



Shs.222,013,632 During the year, the commission expensed unutilized inventories valued at Shs.222, 013,632 contrary to the requirements of IPSAS 12 (44). Unsupported payments amounting to Shs.79,607,500 Expenditure amounting to Shs.79,607,500 were not supported by appropriate acknowledgement receipts and retirement particulars. In the absence of these supporting documents, the authenticity of the amount paid could not be established. Contradicting information in the financial statements

There was a contradiction on the amount of exchequer issues received during the year, whereby, in the commentary to the financial statements (pg.14) and statement of exchequer received (pg.56) disclosed an amount of Shs.9,167,936,780 while the statement of vote account (pg.47) disclosed an amount of Shs.9,691,811,644, which created a difference of Shs.523,874,864.

TACAIDS disclosed that, 3 grounded motor vehicles and furniture and fittings were disposed of for Shs.31,800,000 and Shs.4,231,000 respectively. However the amount of disposed motor vehicles was not deducted at all in the PPE movement schedule to arrive at the balance as at 30th June 2013, while an amount of Shs.127,787,101 was deducted in respect of furniture and fittings instead of Shs.4,231,000 which was disclosed in the note.

6 Ministry of Home Affairs

Lack of supporting documents for account payables Shs.84,295,595 The Ministry of Home Affairs reported outstanding



accounts payable of Shs.84,295,595. However, this amount was not supported by invoice, delivery note, issue voucher and receipt voucher. For this case, we could not confirm its correctness. Accountability of fuel supply not confirmed Shs.83,000,000 Audit of the supplies and consumable component noted fuel of Shs.83,000,000 was paid to M/S CEO Government Procurement Services Agency. However, the audit team could not verify accountability and utilization of procured fuel and therefore audit scope was limited.

7 Ministry of Lands, Housing and Human Settlement

Overstatement of the Non-Current Asset by Shs.1,582,518,051 The Ministry reported intangible assets of Shs.1,582,518,050.97. However, this amount constituted items, which did not meet the definition, and recognition criteria for intangible assets as per IPSAS No.31, thus overstated the reported noncurrent assets by the same amount. Inadequate preparation of cash flows statement The Ministry of Lands received Shs.1,451,862,356 for acquisition/ construction of PPE. However, this amount was not disclosed in the cash flows statement as financing activities. Non preparation of bank reconciliation statements Contrary to Regulation 162 of the PFR of 2001, the Ministry did not prepare bank reconciliations as a result, the correctness of the amount of cash and cash equivalent of Shs.5,734,804,409.97 reported in both the cash flows statement and the statement of financial position could not be established.



Over compensation of Plot No. 2003 in Block I at Kurasini valued Shs.2,272,000,000 The Ministry intended to compensate the owner of the plot No. 12 Block 65 which was located in karikoo; with Plot No. 2009 Block 2 (371 sqm) Kurasini with reserved value of Shs.970,000,000 as it was observed in the invoice No. 8612012 of 19 September, 2011. However, this intention was later reversed and instead, he was compensated with plot No. 2003 in Block 1 (131,000 sqm) with a value of Shs.3,240,000,000 located in the industrial areas. It was further noted that, incorrect information was given to the Ministry regarding Plot No. 12 Block 65. The actual area of this plot was 371 sqm against the claimed area of 750 sqm. Certificates of titles deeds issued but not recorded in the Ministry’s Land Data Base System It was noted that, out of the 263,000 title deeds issued in the Eastern Zone, only 22,740 or (9%) were recorded in the Land Rent Data Base System leading 240,260 certificates unrecorded. This limited the audit in establishing the amount of land rent which should have been collected. Surveyed Plots totaling 59,660 were not recorded in land rent data base system It was noted that, up to October 2013; information from the directorate of Surveying and Mapping indicate that 187,896 plots in DSM city had been surveyed and obtained an approval from the Director of Survey and Mapping . However, the Ministry‘s Land Rent Data Base System shows only 128,236 plots to have been entered into the system for collecting annual land rent, which recorded un-reconciled differences of 59,660 plots. Hence the audit could not establish the amount which was supposed to be collected.



8 Prime Minister’s Office

Inadequate preparation of cash flows statement The Prime Minister‘s office received an amount of Shs.2,750,989,763 development/capital expenditure. However, this amount was not disclosed in the cash flows statement as cash flows from financing activities as required by IPSAS 2. Over payment to contractor Shs.25,947,276 The PMO contracted Stefnat Engineering and Technical Services Ltd to refurbish the old German Building and disaster management located at Oyster bay at a contract price of Shs.3,177,477,826. The final contract valuation reported a total Shs.32,954,790 as a balance due for payment to the contractor. However, the total funds paid for the final payment was Shs.58,902,066 resulting into unexplained difference of Shs.25,947,276 to the contractor.

9 Ministry of Health and Social Welfare

Un supported expenditure Shs.889,209,329 Payment vouchers amounting to Shs.889,209,329 were not fully supported by proper documents, thus we could not establish their authenticity. Unsupported medical treatment abroad (embassies) Shs.500,114,305 A total amount of Shs.500,114,304 was transferred to various Tanzania embassies for medical treatment but the expenditure return were not available at the Ministry, thus we could not authenticate them. Salaries paid to retired officers Shs.87,157,948 The Ministry paid Shs.87,157,948 to various officers who were reached compulsory retirement age range of 61 to 65 years.



10 Ministry of Education and Vocational Training

Misstatement of statement of cash flow by Shs.60,553,424,907 Development Funds amounting to Shs.60,553,424,907 was included under cash flow from operating activities in the statement of cash flow for the year ending 30th June, 2013. However, Development funds received was supported to be shown as cash inflow under financing activities as required by IPSAS – 2. Under statement of Revenue by Shs.7,978,228,228,186 According to paragraph 10 and 11 of page 24 of the Financial statements, the MOEVT collected revenue amounting to Shs.7,991,535,515 for the year ending 30th June, 2013. However, the reported revenue in the statement of financial performance is Shs.13,307,329 only, being under stated by Shs.7,978,228,186. Understatement of current assets by Shs.1,641,690,000 The management of MoEVT entered into contact with the Ministry of Education CUBA for production and delivery of teaching and learning materials for ―YES I CAN‖ Programme vide contract No. ME-024/CTR/NQ/2012-13/27 dated 27th June, 2013 at a contract sum of $1,000,000 equivalent to Shs.1,641,690,000. However, up to January 2014 goods were yet to be delivered. Furthermore, contrary to Accounting Circular No.11 para 2 (v) of 2012/2013 dated 27th May, 2013, the amount was not disclosed as prepayments in the financial statements. Un reconciled cash balance Shs.692, 955,176 According to reconciliations between MoEVT and Treasury deposits records for the year ending 30th



June, 2013; a cumulative figure since year 2008 amounting to Shs.692,955,176 being receipts in Ministry`s Deposit Cash book but were not being reflected in Treasury records. Also, the consolidated reconciliation of deposit cash balance for financial year 2012/2013 was not provided by Treasury for audit scrutiny.

Transferred funds reported as PPE in the statement of Financial Position Shs. 26,797,695,648 Transfer of funds to various institutions under the Ministry, amounting to Shs.26,797,695,648 was reported as Property, Plants and Equipments (PPE) in the MoEVT statement of financial position as at 30th June, 2013. Under such situation, the PPE figure was overstated by the same amount. Value of Intangible Assets not Meeting IPSAS recognition Criteria (IPSAS31) Shs.11,978,566,813 Management reported Shs.11,978,566,813 as Intangible Assets (Appraisal) in its statements of financial position. However the item could not comply with IPSAS 31 on recognition criteria and no adjustments were made to rectify this anomaly. Overstatement of Training expenses by Shs.16,369,208,367 The Ministry of Education and Vocational Training (MoEVT) reported a total of Shs.25,098,228,598 as training related expenses in the financial statement for the year 2012/2013. However, it was revealed that the figure included transfers to higher learning institutions amounting to Shs.16,369,208,367. Under the above circumstances, the training expenses in the statement of financial performance were over stated by Shs.16,369,208,367.



Inadequately supported expenditure Shs.2,637,856,858 During the audit it was noted that, payment vouchers amounting to Shs.2,637,856,858 were not adequately supported with relevant supporting documents. The situation is contrary to Regulations No. 95 (4) of the PFR

11 Prisons Service Department

Unproduced contracts of building and motor vehicles commitments Shs.1,542,000,000 As at 30th June 2013, Prisons Service Department reported capital commitments of Shs.1,542,000,000 in respect of expenditure for building Shs.242,000,000 and Shs.1,300,000,000 for motor vehicles. However, contracts for these commitments were not produced when requested in order to confirm their correctness, completeness and existence. Thus, the correctness of the amount presented to the financial statement could not be confirmed. Understatement of Expenses in the Statement of Financial Performance by Shs.19,020,339,744.10 It was noted that, during the year the Department incurred expenses amounting to Shs.19,020,339,744.10 that remained unpaid at the year-end. However, this amount was not recognized as expenses in the statement of financial performance as a result, there was neither profit nor loss reported during the year. Had this been reported, there could be a loss that amount. Prepayment not sufficiently supported Shs.584,255,115 As at 30 June 2013, the Prisons Service Department reported prepayments of Shs.584,255,115 in respect of funds transferred from Treasury to MSD to facilitate distribution of medicines to various prison offices. However, the procedures for transferring



funds from Treasury to MSD and MSD‘s supply of medicine to the prison office was not clear since there was no any document produced for audit verification. Unsupported payment Shs.557,243,558.80 The department made payments of Shs.557,243,558.80 to various payees from both Prisons‘ Head office and Regional Offices. However, these payments were not supported by documents such as acknowledgement receipt, cash receipt, bills etc. contrary to Regulation 95 (4) of PFR. Missing payment vouchers Shs.126,090,620 During audit, we noted that, payment vouches of Shs.126,090,620 for Prisons- Kilimanjaro Regional Office were missing, and thus we could not ascertain their authenticity.

12 Public Debt and General Service

Lack of actuarial valuation of Defined Benefits Plan Public servants retirees‘ pensions are paid from the consolidated fund and such arrangement ought to be recognized by the Government as Defined Benefits Plan. My audit review of retirement benefits noted that actuarial valuation of defined benefits was not conducted to determine the probable liabilities due to the government. This is contrary to paragraph 166 of IPSAS 25 that requires an entity to determine its initial liability for defined benefit plans as the present value of the obligations at the date of adoption. Long outstanding cheques amounting to Shs.146,173,387,027 Review of the financial statements discovered the long outstanding stale cheques amounting to TZS.146,173,387,027 which were not adjusted in the books of accounts for 12 years. Further scrutiny revealed that the amount of stale cheques originates



from three (3) accounts which are Public Debt Account, Deposit Account and Consolidated Fund Services (CFS) Account

Regional Secretariats S/N NAME OF THE AUDITED RS AND THE BASIS OF

QUALIFIED OPINION

1 RS KATAVI

Understatement of total expenses Shs.100,333,200 Outstanding acting allowance amounting to Shs.100,333,200 was not reflected in the statement of financial performance hence understating the total reported expenditure for the year by the same amount. Nugatory payment for service of Motor vehicle Shs.9,905,321 Katavi Regional Secretariat paid a sum of Shs.9,905,321 to M/s Supreme Auto Garage for service rendered to M/s DFP 8524 Toyota Hilux D4D which got an accident despite of the facts that, the vehicle had valid insurance cover. Tax payers fund adjustment not supported by related details Shs.1,244,973,625 The Secretariat reported a Tax payers‘ funds adjustment of Shs.1,244,973,624.71 for the year 2012/2013, without providing supporting detailed on such transaction to indicate what exactly the amount is comprised of. In the absence of support schedule/detail, the authenticity of taxpayers fund cannot be established.

Unconfirmed cash and cash equivalent balances reported in the financial statements Shs.59,381,779.59 During the year, the Secretariat reported total cash and cash equivalent balances of Shs.59,381,779.59. However, the reported amount could not be confirmed


S/N NAME OF THE AUDITED RS AND THE BASIS OF QUALIFIED OPINION

due to non-submission of bank reconciliation statements.

2 RS NJOMBE

Inadequately Supported Expenditure Shs.9,030,000 Payments amounting to Shs.9,030,000 were not sufficiently supported by relevant documents.

Understatement of Expenses in the Statement of Financial Performance by Shs.164,424,716 It was noted that, during the year the Secretariat incurred expenses amounting to Shs.164,424,716. However, this amount was not recognized as expenses in the statement of financial performance for the year ended. In this respect, expenses in the statement of financial performance were under stated that amount.

Non preparation of Bank Reconciliation Statements Contrary to Regulation 162 of the PFR of 2001, the Regional Secretariat did not prepare bank reconciliations as a result, the correctness of the amount of cash and cash equivalent of Shs.49,180,305 reported in both the cash flows statement and the statement of financial position could not be established. Inadequate preparation of cash flow statement The Regional Secretariat received an amount of Shs.180,122,269 for acquisition of PPE. However, this amount was not disclosed in the cash flow statement as financing activities.

3 RS TANGA

Overstatement of Intangible Assets by Shs.36,880,000 The statement of financial position as at 30th June 2013 reflected intangible assets of Shs.41,254,798. However, this balance included the consulting work as well as Reports and documents worth Shs.26,880,000



and Shs.10, 000,000 respectively items which do not qualify to be recognized as intangible assets. Since they do not meet the definition of intangible assets as para16 of IPSAS 31 they should have been expensed. Understatement of expenses in the statement of financial performance During the year under review, RS Tanga incurred expenditures of Shs.1,139,615,661 that was correctly reported in the statement of financial position as payables. However, the same was not charged into the statement of financial performance as expenses thus resulting into understatement of the reported expenses by the same amount. As a result, the Secretarial recorded neither surplus nor deficit.

Non-preparation of bank reconciliation statements RS Tanga, reported cash and cash equivalent of Shs.310,789,801.65 in its both statement of financial position and the statement of cash flows. However, as auditors we couldn‘t confirm the correctness of the reported amount as it was not supported by relevant bank reconciliations contrary to the requirements of IPSAS 2 (56). Inadequate preparation of Cash Flow Statement Review of financial statements for Tanga Regional Secretariat for the year ended 30th June, 2013 shows that, cash flows from financing activities were not disclosed. Tanga Regional Secretariat received Shs.63,972,465 for acquisition of PPE which was not disclosed in the cash flow statement as financing activities. MSD Funds During the year under review, the Ministry of Health and Social Welfare transferred Shs.260,036,084 to MSD in respect of procurement of drugs and medical supplies for Regional Hospital. However, receipt of these funds was not recognized in the financial



statements of Tanga Regional Secretariat as revenue though they formed part of the inventory figure at the year-end.

4 RS SIMIYU

Incurred expenses not charged in statement of financial performance Shs.208,920,427 During the year under review, Simiyu Regional Secretariat incurred expenditures amounting to Shs.208,920,427 but these were not charged into the statement of the financial performance, thus understated the reported expenditure by the same amount.

5 RS KIGOMA

Overstatement of the Non-current Assets by Shs.76,228,380 The Regional Secretariat reported intangible assets of Shs.76,228,380 during the year. However, this amount constituted items, which did not meet the definition and recognition criteria for intangible assets as per IPSAS No.31, thus overstated the reported noncurrent assets by the same amount. Non preparation of bank reconciliation statements Contrary to Regulation 162 of the PFR of 2001, the Regional Secretariat did not prepare bank reconciliations as a result, the correctness of the amount of cash and cash equivalent of Shs.198,206,741 reported in both the cash flows statement and the statement of financial position could not be established. Inadequate preparation of cash flows statement The Regional Secretariat received an amount of Shs.151,190,140 for acquisition of PPE. However, this amount was not disclosed in the cash flow statement as financing activities.



MSD Funds not recognize in financial statements Shs.253,166,245 During the year, the Ministry of Health and Social Welfare transferred Shs.253,166,245 to MSD for procurement of drugs and medical supplies for Kigoma Regional Hospital. However, receipt of these funds was not recognized in the financial statements.

6 RS KAGERA

Omission of inventories balance in the financial statements Shs.75,971,420 The Regional Secretariat did not disclose inventories existed at the end of the year amounted to Shs.75,971,420 thus understated the current assets by the same amount.

Payment not supported Shs.31,320,000 The Regional Secretariat incurred expenditures of Shs.31,320,000 but this amount was not proper supported by relevant documents. Thus we could not establish the eligibility of those payments. Incurred expenses not charged in the statement of financial performance Shs.523,895,425 An amount of Shs.523,895,425 was incurred the secretariat during the year but was not charged in the statement of financial performance, which resulted into the understatement of the reported expenses by the same amount. This defeats the concept of IPSAS accrual basis of accounting, (Para 7 of IPSAS 1). Non preparation of bank reconciliation statements Contrary to Regulation 162 of the PFR of 2001, the Regional Secretariat did not prepare bank reconciliations as a result, the correctness of the amount of cash and cash equivalent of Shs.17,724,509 reported in both the cash flows statement and the statement of financial position could not be established.



7 RS DSM

Inadequate preparation of cash flows statement Dar es Salaam Regional Secretariat received Shs.58,081,340 for acquisition of PPE. However, this amount was not disclosed in the cash flows statement as financing activities. Non preparation of bank reconciliation statements Contrary to Regulation 162 of the PFR of 2001, the Regional Secretariat did not prepare bank reconciliations as a result, the correctness of the amount of cash and cash equivalent of Shs.1,395,251,823 reported in both the cash flows statement and the statement of financial position could not be established. Incurred expenses not charged in the statement of financial performance Shs.182,882,717 An amount of Shs.182,882,717 was incurred the secretariat during the year but was not charged in the statement of financial performance, which resulted into the understatement of the reported expenses by the same amount. This defeats the concept of IPSAS accrual basis of accounting, (Para 7 of IPSAS 1). Overstatement of the Non-Current Asset by Shs.114,000,000 The Secretariat reported intangible assets of Shs.114,000,000. However, this amount constituted items, which did not meet the definition, and recognition criteria for intangible assets as per IPSAS No.31, thus overstated the reported noncurrent assets by the same amount.

8 RS IRINGA

Incurred expenses not charged in the statement of financial performance Shs.144,940,737 An amount of Shs.144,940,737 was incurred the secretariat during the year but was not charged in the



statement of financial performance, which resulted into the understatement of the reported expenses by the same amount. This defeats the concept of IPSAS accrual basis of accounting, (Para 7 of IPSAS 1). Inadequately supported expenditure Shs.19,286,800 Contrary to the Reg. 86(1) of Public Finance Regulations 2001 the Regional Secretariat made payments amounting to Shs.19,286,800 without them be properly supported by the relevant documents.

9 RS RUVUMA

Overstatement of the Non-current Assets by Shs.194,545,500 The Regional Secretariat reported intangible assets of Shs.194,545,500 during the year. However, this amount constituted items, which did not meet the definition and recognition criteria for intangible assets as per IPSAS No.31, thus overstated the reported noncurrent assets by the same amount. Incurred expenses not charged in the statement of financial performance Shs.687,324,501.31 An amount of Shs.687,324,501 was incurred by the secretariat during the year but was not charged in the statement of financial performance, which resulted into the understatement of the reported expenses by the same amount. This defeats the concept of IPSAS accrual basis of accounting, (Para 7 of IPSAS 1). Inadequate preparation of cash flows statement The Regional Secretariat received Shs.345,019,149 for acquisition of PPE. However, this amount was not disclosed in the cash flows statement as financing activities. Non preparation of bank reconciliation statements Contrary to Regulation 162 of the PFR of 2001, the



Regional Secretariat did not prepare bank reconciliations as a result, the correctness of the amount of cash and cash equivalent of Shs.62,262,362 reported in both the cash flows statement and the statement of financial position could not be established. The regional secretariat did not reconcile an amount of Shs.180,522,758 been the difference noted between value of inventories disclosed on the stock taking sheet, Shs.210,168,538 and the amount reported on the financial statements, Shs.29,645,780.

10 RS RUKWA

Payments made without proper supporting documents Shs.11,697,050 The Regional Secretariat incurred expenditures of Shs.11,697,050 but this amount was not proper supported by relevant documents, which contrary to Reg. 95 (4) of the PFR. Thus we could not establish the eligibility of those payments. Inadequate preparation of cash flows statement The Regional Secretariat did not disclose an amount of Shs.338,903,914 in the cash flows statement under financing activities. This understated the net cash flows from financing activities. Tax payers fund adjustment not supported by related details Shs.1,645,021,768 The Secretariat reported a Taxpayers‘ funds adjustment of Shs.1,645,021,768 for the year 2012/2013, without providing supporting detailed on such transaction to indicate what exactly the amount is comprised of. In the absence of support schedule/detail, the authenticity of the reported adjustments cannot be established.



Incurred expenses not charged in the statement of financial performance Shs.356,771,074 An amount of Shs.356,771,074 was incurred by the Secretariat during the year but was not charged in the statement of financial performance, which resulted into the understatement of the reported expenses by the same amount. This defeats the concept of IPSAS accrual basis of accounting, (Para 7 of IPSAS 1). Non preparation of bank reconciliation statements Contrary to Regulation 162 of the PFR of 2001, the Regional Secretariat did not prepare bank reconciliations as a result, the correctness of the amount of cash and cash equivalent of Shs.157,532,432.49 reported in both the cash flows statement and the statement of financial position could not be established.

11 RS MARA

Understatement of Inventory balance by Shs.101,942,400 Mara Regional Secretariat reported inventory balance of Shs.130,493,400 as at 30th June, 2013. However, the physical count during stocktaking as at that date, the inventory balance was valued at Shs.232,435,800 resulting into its understatement by Shs.101,942,400.

12 RS ARUSHA

Overstatement of the Non-current Assets by Shs.246,398,410.45 Arusha Regional Secretariat reported intangible assets of Shs.246,398,410.45 as at 30th June, 3013. However, this amount constituted items, which did not meet the definition and recognition criteria for intangible assets as per IPSAS No.31, thus overstated the reported noncurrent assets by the same amount.

Understatement of expenses in the statement of financial performance Shs.617,865,810 The Regional Secretariat disclosed payables of



Shs.617,865,810.37 in the statement of financial position as at 30th June, 2013. A further review indicated that, there was neither surplus nor deficit for the period. This implies that, expenditures incurred during the year, which formed part of the payables, were not charged in the statement of financial performance contrary to IPSAS 1 Para 99. Non preparation of bank reconciliation statements Contrary to Regulation 162 of the PFR of 2001, the Regional Secretariat did not prepare bank reconciliations as a result, the correctness of the amount of cash and cash equivalent of Shs.157,514,999.42 reported in both the cash flows statement and the statement of financial position could not be established. Non disclosure of funds received from the Ministry of Health through MSD Shs.228,532,794 The regional Secretariat did not recognize in its financial statement, the amount of Shs.228,532,794 received during the year from the Ministry of Health and Social Welfare through for the procurements of drugs and other medical supplies.

14 RS SHINYANGA

Non preparation of bank reconciliation statements Contrary to Regulation 162 of the PFR of 2001, the Regional Secretariat did not prepare bank reconciliations as a result, the correctness of the amount of cash and cash equivalent of Shs.253,147,996.19 reported in both the cash flows statement and the statement of financial position could not be established. Expenditure Lacking supporting documents Shs.59,634,367.99 Contrary to Reg. 86 (1), the Regional Secretariat effected payments amounted to Shs.59,634,367 whose payment vouchers were not supported by relevant documents and therefore we could not establish their



legality.

15 RS KILIMANJARO

Inadequate preparation of cash flows statement The Regional Secretariat received Shs.987,691,895 for acquisition of PPE. However, this amount was not disclosed in the cash flows statement as financing activities. Non disclosure of received MSD funds Shs.272,233,978 During the year, the Ministry of Health and Social Welfare transferred Shs.272,233,978 to MSD in respect of procurement of drugs and other medical supplies for Kilimanjaro Regional Hospital. However, receipt of these funds was not recognized in the financial statements as revenue although they formed part of the inventory figure at the year-end. Unconfirmed utilization of fuel from GPSA Shs.27,275,000 The Secretariat deposited to GPSA an amount of Shs.27,275,000 for purchases of fuel for different activities. However, a review of the fuel deposit reports at GPSA noted that, there were neither records for such deposits nor utilization particulars of the fuel procured. In the absence of the records, the amount deposited or fuel purchase may be misappropriated. Missing Earning Revenue Receipt Books – six books The Regional Secretariat was issued with 5 local receipt books valued at Shs.2,500,000 and 1 Exchequer Receipt Voucher (ERV) during the year. However, these books were not produced for audit when called for. In the event, it could not be established whether revenue due therein was properly collected and accounted for.



Unconfirmed Receipt and Banking of Revenue Collected Shs.7,116,000 During the audit we could not confirm the collection and banking of Shs.7,116,000 related to cost sharing. Expenditure not supported Shs.57,013,470 During the year, the secretariat had expenditures of Shs.57,013,470 which were not supported by relevant documents. In the circumstance we could not confirm their genuineness. Overstatement of the Non-current Assets by Shs.265,687,412 The Regional Secretariat reported intangible assets of Shs.265,687,412 during the year. However, this amount constituted items, which did not meet the definition and recognition criteria for intangible assets as per IPSAS No.31, thus overstated the reported noncurrent assets by the same amount.

16 RS MWANZA

Missing and inadequate supported payment vouchers Shs.40,211,734 It was noted during the audit that, payments vouchers of Shs.17, 431,634 were missing while vouchers of Shs.22,780,100 were inadequately supported. In the absence of payment vouchers together with their supporting documents validity and correctness of the payments could not be ascertained thus limiting our audit scope.

Incurred expenses not charged in the statement of financial performance Shs.40,687,595 An amount of Shs.40,687,595 was incurred the secretariat during the year but was not charged in the statement of financial performance, which resulted into the understatement of the reported expenses by the same amount. This defeats the concept of IPSAS accrual basis of accounting, (Para 7 of IPSAS 1).



Non preparation of bank reconciliation statements Contrary to Regulation 162 of the PFR of 2001, the Regional Secretariat did not prepare bank reconciliations as a result, the correctness of the amount of cash and cash equivalent of Shs.1,758,249,684 reported in both the cash flows statement and the statement of financial position could not be established.

17 RS TABORA

Imprests charged directly as final expenditure Shs.99,876,016.30 Contrary to Regulation 98 (2) of Public Finance Regulations of 2001, imprests of Shs.99,876,016.30 were directly expensed. Inadequately supported payments Shs.52,347,385 Payments amounted to Shs.52,347,385 were not adequately supported contrary to the Regulations No.86 (1) of the PFR. Irregular payment made from Miscellaneous Deposit Account Shs.7,196,920 It was noted that, payment amounted to Shs.7,196,920 that were charged from Miscellaneous Deposit Expenditure Account; out of which Shs.5,000,000 was paid to settle obligation related to the previous year which also not recorded in the creditor‘s register and an amount of Shs.2,196,920 was not adequately supported. Payments made without approval Shs.13,251,180 It was noted that, Kitete Regional Hospital made payments amounting to Shs.13,251,180 for goods/services rendered in previous years. However, there was no approval for such deferred payments contrary to Regulation 85(3) of the Public Finance Regulations, 2004 (revised in 2006).



Overstatement of deferred income-revenue amounted to Shs.135,456,693 During the year under review the Secretariat has recognized Shs.191,869,823.13 in statements of financial position as deferred income revenue. However, the reported amount included Shs.135,456,693 being funds not released by the Treasury to which there is no possibility that the amount will be received contrary to IPSASs 23 Para 50. Expenditure figure reported on cash basis accounting The expenditure figure reported of Shs.6,430,648,431.96 included only cash transactions which could be traced back from the general ledger generated from the EPICOR accounting system. Understatement of revenue Shs. 518,885,778.50 During the examination of financial performance of Regional secretariat we detected that Shs. 518,885,778.50 received at Kitete Regional Hospital from sale of drugs and medicine as well as service provided through cost sharing and other funds from Tabora Municipal through Basket Fund disbursement, these entire funds have been omitted (not recognized).

Embassies and High Commissions S/N Name of the Audited Embassies/High Commission and

the Basis of Qualified Opinion

1 Embassy of Tanzania in Kinshasa

Opening balances not confirmed Shs.31,817,025 During the year under review, the Embassy reported on its financial statements prepayments amounting to Shs.31,817,025 that was paid in previous years as rental cost. The same was not supported by evidence to confirm their existence and accuracy.


2 Tanzania High Commission in Kampala

The High Commission reported opening balances on; deferred income revenue, payables, and deposit totaling to Shs.132,596,735 as at 1st July 2012. However, this figure differs with the one reported as at 30th June, 2013 of Shs.87,494,585 resulting into unadjusted amount of Shs.48,893,168. There was no explanations from the management of the High Commission.

Table 6: List of audited entities issued with Adverse

Opinion and the basis of adverse opinion

1 Tanzania Embassy in Muscat

The Embassy reported in the statement of cash flow a closing balance of Shs.150,681,699 instead of Shs.639,874,314 after omitting one transaction of cash receipt of Shs.97,065,176 and including an unanalyzed exchange loss of Shs.392,127,439 resulting into an understatement of Shs.489,192,615. Unbanked Revenue collected Shs.108,108,753 The Embassy collected Shs.564,194,173 of which Shs.456,085,421 was banked leaving Shs.108,108,753 unbanked and it is likely that the money was misappropriated. The amount misappropriated has understated the cash and cash equivalent balance reported. Non-performance of Monthly Bank Reconciliations The Embassy did not perform bank reconciliation for the all period from 1st July 2011 to 30th June, 2013. In the absence of bank reconciliation, the correctness of the cash and cash equivalent balance at the year and could not be ascertained.


CHAPTER THREE

FOLLOW UP ON THE IMPLEMENTATION OF THE PREVIOUS YEARS' AUDIT RECOMMENDATIONS

3.0 Introduction

This chapter presents results of evaluation on implementation of my recommendations given on my prior years‘ reports. Sec 12 of the PAA No.11 of 2008 gives power to CAG to make recommendations and following up for the purpose of controlling expenditure of public monies, maximizing collection of public revenue and enhance accountability of public resources. The evaluation results from MDAs and RS were on the following areas:

I. Responses of accounting officers/heads of departments on individual reports submitted to them by the Controller and Auditor General.

II. Structured responses of the Pay-Master General to the general report of the Controller and Auditor General

III. Responses on implementation of the PAC‘s recommendations


3.1 Responses of accounting officers/ heads of departments on individual reports submitted to them by the Controller and Auditor General Implementation of CAG‘s recommendations is the requirement of Sec 40 (1) of PAA No. 11 of 2008. In this year‘s audit, 52 MDAs and 32 Embassies had a total of 960 outstanding recommendations to be implemented. Accounting Officers have attempted to respond to some of my recommendations, and status of implementation of recommendations is shown in the chart adjacent.

Pie Chart: Status of Implementation of the CAG's recommendations by 52 MDAs and 32 Embassies in terms of percentage

The pie chart above amplify that it is only 42% of CAG recommendations that were fully implemented by MDAs. To improve Government operations and accountability, Accounting Officers of MDAs needs to implements all the recommendations of the CAG since these recommendations have the objectives of


enhancing accountability and transparency in the management of public resources. The non implementation of the CAG's recommendations amounts to non-adherence to the PAA No. 11 of 2008.

For Regional Secretariats (RS) This financial year, 25 RS had a total of 578 outstanding CAGs recommendations that needed immediate responses from RSs. Government through RSs responded to some of the CAG recommendations, and out of 578 issues only 272 (45%) were completely responded to by RS. Status of Implementation of the CAG's recommendations for RS is as shown in the chart adjacent.

Pie Chart: Status of implementation of the CAG's recommendations by 25 RS in terms of percentage

RSs have to increase the pace of implementing the CAG‘s recommendations. Each RS as Accounting Officers it‘s their obligation to ensure


that recommendations are implemented and improve their operations. By issuing audit observations and recommendations CAG's main objective is to improve the performance and enhance accountability of MDAs/RS. It is not the CAG‘s role, nor does the CAG have the power, to enforce the implementation of these recommendations. The primary responsibility for implementing CAG‘s recommendations rests with the Accounting Officers of MDAs/RS. As a matter of good governance, all MDAs/RS should have systems and processes in place to consider and, where appropriate, implement the recommendations of the CAG. Parliamentary Oversight Committees also have a key role of overseeing findings and recommendations reported by CAG to Parliament and to enforce Accounting Officers to take necessary actions on implementing the CAG‘s recommendations.

The consequences of not acting upon the CAGs‘ observations and recommendations are the recurrence of the anomalies observed by the CAG in subsequent years. This also reflects lack of sufficient supervision by the Accounting Officers and management of the entities concerned.

This year, the outstanding issues being queried in total amounts to Shs.636,849,769,109.34. A list of outstanding matters with the corresponding amounts from each MDAs and RS is as shown in Annexure 'D' of this report.


3.2 Follow up on the PMG's structured responses upon the recommendations issued by the Controller and Auditor General on the general report of Central Government in 2011/2012 The PAA No.11 of 2008 requires PMG to submit consolidated response of recommendations to CAG. On follow up of the CAG's recommendations, the Central Government had 28 outstanding issues from prior year‘s reports (i.e. 2009/10, 2010/11 and 2011/2012). This financial year 2012/2013 the Central Government has responded to recommendations issued in the previous year‘s reports. The number of outstanding issues has decreased by 6 from 28 issues last year to 22 issues this year.

The outstanding issues that were recommended for improvement in the previous years and their current status as at the time of writing this report (February, 2014) is given in a table below for further consideration by the Government:


Table 7: PMG's structured responses

S/N Audit

Recommendation Response by PMG

Audit comment on the PMG’s response

1. Non compliance with the International Public Sector Accounting Standards (IPSAS) – Cash Basis

The Government prepared accounting policies and draft accounting Manuals and distributed to stakeholders for comments.

Government is working hard to update fixed asset register as this is one of the requirements before being fully IPSAS compliant.

Government expect to be IPSAS fully compliant by financial year 2016/2017

PMGs has to make sure that the draft accounting manual is finalized and it should cover all necessary financial controls as required by IPSAS accrual basis that will help preparation of financial statements.

Assets register has to be prepared and timely updated before 2016/2017

2. Non compliance with the Procurement laws and related regulations

In addressing shortfalls in the PPA 2004 and its regulations of 2005, Government has done the following:

Government has procured a consultant who will identify potential areas that needs improvement.

Since there is a new PPA 2011 and Regulations in place, it is important to conduct trainings/capacity building on the new PPA 2011 and its Regulations of 2013.


S/N Audit



Capacity building by training 735 staff from MDAs and RS on area of PPA 2004 and its Regulations of 2005

Financial Year 2008/2009

3. Mismanagement of Government properties

Government conducted capacity building to all staff from all Embassies on how to operate VISA Sticker Machines and hence resolve that technical problem and any problem can be handled by in-house IT staff without engaging any consultant from outside.

I have acknowledged the effort made by PMG, and considering the importance of Visa Sticker machines on revenue collection, verification will be made in my next year audit of embassies and missions

4. Ownership of Land and Buildings in the embassies/mission

Land and buildings are owned by the Ministry of Foreign Affairs and International Cooperation and TBA is only involved in acquisition/Construction

The aim of the findings was to obtain evidence for Government ownership of all land and buildings of Embassies/ mission (i.e. Title deeds).

5. Measures taken to address Tax appeals

Management of TRA has written a letter with reference No.TRA/SB/2.1/Vol.4 dated

The PMG needs to make follow up with the Attorney General in order to conclude this pending


S/N Audit



17/01/2012 to Attorney General seeking assistance in resolving pending case. Also TRA wrote a letter with reference No. TRA/CG/L.1/Vol III dated 11th Sept 2012 to Ministry of finance seeking similar assistance.

issue.

Financial Year 2010/2011

6. Under-collection of revenue

In order to increase revenue collection, TRA under took study in 2011 to propose viable tax regime to pull the informal sector in the tax net. Also TRA developed a 2nd Medium and long term revenue mobilization strategy and the 4th Corporate Plan that illustrates the revenue mobilization strategies for the period 2013/2014 to 2017/2018 Other key strategies include: i) Introduction of a new

integrated domestic tax

Assessment of TRA developed second medium and long term revenue mobilization strategy and the 4th corporation plan that seems to increase revenue collection will be evaluated stating with coming financial year to see if there is increase in revenue collection.

However TRA is encouraged to explore available


S/N Audit



administration system. ii) Implementation of tax

compliance strategies for all tax payer population

iii) Designing/improving the tax structure on natural resources

iv) Review of corporate income tax exemptions on export processing and special economic zones

v) Enhance collections from informal sector by introducing threshold to small scale taxpayers

vi) Tax exemption to some beneficiaries

vii) Initiated process to revamp VAT act to expand tax base

viii) Inclusion of Films and Music Sub sector in tax net

ix) Expansion of tax base by introducing other items like

opportunities to expand the tax base so as to maximize revenue collection


S/N Audit



bolted water x) Increase tax registration from

1,035,281 in June 2012 to 1,514,368 in Dec 2012

xi) Expanded revenue to GDP ratio from 15.6% in 2012/2013 to 17.8% in 2015

7. Measures to improve annual collection targets

TRA provide education through Seminars to stakeholders, TV and radio to enhance Tax compliance by emphasizing the importance of using EFDs.

Other measure is carrying out abrupt tax compliance inspection and tax payers without fiscal receipts have been denied of input tax claim so as to motivate them to use EFD.

The Government should devise strategies for curbing tax evasion; expanding the existing tax base; bringing the informal sector to the tax net; eliminate unnecessary bureaucratic procedures in the current tax regime in order to encourage voluntary tax compliance etc.


S/N Audit



8. Salaries paid to non-existing employees

Verification of existing employees done between Dec 2011 and March 2012 revealed that 10,164 employees were non-existing and deleted from the payroll.

After this exercise Government collected a total of Shs. 7.56 Billion from LGAs and Government Institutional through BOT account No 9921141201 as at 6th June 2013 which would have been paid to non existing employees.

Payment to non-existing employees still noted in 2012/13. Hence there is a need to strengthen controls over payroll for MDAs, LGAs and RS.

9. Payments to ineligible pensioners

A total of 124 Pensioners accounts were suspended for further verification. Scanning of pensioners files is on progress. This will eliminate irregular payments to ineligible pensioners.

All verification reports should be submitted for audit scrutiny.


S/N Audit



10. Management of Government Guarantees

Government is conducting review of Government loans, Guarantees and Grants Act. No 30 of 1974 and its revision of 2004, as well as review the National Debt Strategy (NDS) of 2002 to accommodate major changes and amendments of some clauses in the Act and expected to be completed by August 2013 and expected to be prepared and submitted in the cabinet by September 2013

The response has been noted. Awaiting for the amended Act and review of the National Debt Strategy (NDS).

11. Outstanding commodity import support

The Treasury through a debt collector collected a total of JPY 70,621,810.98 equivalent to Shs.776,839,920.78 and remaining balance is JPY 16,628,878,047.02

Response noted. The PMG has to make sure that the remaining balance is also collected.

12. Outstanding liabilities and commitments

Government has strengthened revenue collection as the effort of

The response has been noted. TRA need to increase revenue


S/N Audit



eliminating mismatch between revenue and expenditure by educating public importance of paying tax and identifying tax loopholes and recommend best practice to maximize revenue collections

collection and Treasury should be releasing funds on time to facilitate implementation of budgeted activities

13. Assets not recorded in the fixed assets register

Codification of assets in all MDAs, RS and LGAs will be conducted by phase including speed up of automation of fixed asset register in EPICOR 9.05

PMG has to provide schedule showing phases for implementing this recommendation. Assets register need to be in full use before fully adoption of IPSAS Accrual in year 2016/2017.

14. Tax exemptions Government under TRA and MoF conducted a study on Tax exemption and came up with the following recommendations:

Streamlining VAT exemptions by limiting a number of Zero rated items to export only and reducing non-standard

PMG's responses on Tax exemptions are noted. However, the PMG need to come up with the time frame for all the strategies listed.


S/N Audit



exemptions under VAT including special relief category

Legislating for comprehensive analysis and reporting of tax expenditure for all taxes, beneficiary categories, and relevant sectors as part of budget documentation

Granting of exemption after identification of alternative revenue source to replace

Legislating a time limit for any tax concession, exoneration or exemption granted

Abolishing granting of tax waiver on imports of households consumables/food stuffs as proven evidence shows that the prices relief intended to the final consumer is never realized

Empower MoF for undertaking


S/N Audit



relevant analysis and prepare an annual tax expenditure report as a compulsory appendage to the Government budget

15. Misclassification of direct loan issued by Government as guarantees

Government through MoF, BoT and TIB are reviewing the proposals from flower companies with a view to make restructuring to enable them to start repayment of Government loans. This is expected to be completed by the end of June 2013 and submitted to Minister of Finance for approval and all companies are expected to start repayment of loan on July 2013.

PMG has to submit approved restructuring agreement entered between flowering companies and GoT and loan repayment schedule plus any evidence showing that the repayment of the loans by these companies has started

16. Inadequate Government involvement in Design and Build agreements such as UDOM and the like.

The Government will commission a consultant to carry out value for money audit to determine the actual costs involved and eligibility and legitimacy of the claims being raised by the Social Security Funds after the

The status of the implementation of the PMG's response will be verified during the next audit.


S/N Audit



receipts of the project reports.

Financial year 2011/2012

17. ATCL debt The matter of holding accountable those who violated the procedure by entering lease agreement for Airbus A320 is now under PCCB investigation.

Investigation outcome is awaited.

18. Unsupported payments for medical treatment abroad Shs.448,144,343

Government instructed respective Ambassador to insure that expenditure returns on medical treatment abroad are furnished by issuing letter with Ref No. CHA.446/564/01/06 dated August 2011 .

Also internal controls systems in all payments are being improved to make sure that all documents are available before any payment.

Clearance of this item is still awaited.


S/N Audit



19. Payments of previous year‘s liabilities using 2011/12 approved appropriations Shs.252,975,000,000

In Financial year ended 30th June 2011, GoT ended with contractual claims on Shs.420 Billion. GoT decided to fund Ministry in financial year 2011/2012 through project No 4168-special Road Construction Projects an approved budget by Parliament.

The objective of this was to pay Contractual claims for ongoing projects and funds was utilized as intended and contributed positively on progress of road works

Special Audit Commissioned by PAC is ongoing.

20. Government payments to PSPF for pension liability

No PMG responses for this matter. -


S/N Audit



21. Long Outstanding Deposits at Secondary Schools Shs.1,551,005,412


22. Long outstanding Imprests Shs.706,701,016



3.3 Responses on implementation of the PAC’s recommendations This section covers implementation status of PAC recommendations as per the requirements of the Public Audit Act, 2008. The Section requires PMG to prepare responses and action plan on the reports of CAG by taking into account observations and recommendations of the Parliamentary Oversight Committees. The chairman of PAC presented the Committee‘s report inclusive of recommendations concerning the accounts of MDAs for the financial year ended 30th June, 2012 to the National Assembly on 7th December, 2013. However, PMG's responses have not been received up to the time of consolidating this report i.e. February 2014:


Table 8: PAC's recommendations from the report

S/N Para No

Issue PAC Recommendation Audit Comments

1 4.2.1 On Issue of Not publishing Audited Accounts of Political Parties for the past four years due to lack of funds

CAG to audit accounts of political parties from the financial year 2009/2010 to 2011/2012 and reports to be completed before at 31 January 2014 and the Registrar of Political Parties publish them in the Gazette and other newspapers as required by law.

Parliament in the coming years should allocate enough money to Vote 45 - National Audit Office to enable CAG to conduct audit of the accounts of Political Parties without

CAG has started auditing political parties' accounts. As of now, the audit of political parties is on going


S/N Para No


restrictions.

2 4.2.2 On Non Compliance of Public Procurement Act of 2004

GoT has to enable PPRA to perform its activities effectively and PPRA has to ensure that before June 30, 2014 all Government institutions have Procurement Management Units (PMUs) and procurement programs of fiscal year 2014/2015 drawn up correctly;

Increase controls in procurement to ensure that all MDAs/RS comply fully with the requirements of PPA of 2004. E.g. by recruiting competent procurement personnel, conducting

We will review the enforcement of the new Act and its Regulations

PPRA has to build capacity and increase awareness of the new PPA and Regulations.


S/N Para No


capacity building and strengthening tender boards and internal audit units

Complete Regulations for the implementation of the new procurement Act in 2011 so that it can be enforceable and efficiency

Before the Government enters into any contract which involves the public interest, PPRA should do the pre-audit of contract before being signed.

To facilitate PPRA to establish electronic procurement systems

3 4.2.3 Control in the provision of tax exemptions

Finance Ministry has to give the National Audit

CAG has commissioned a detailed study on


S/N Para No


Office, a list of all the exemptions granted for each month for the purpose of conducting audit of tax exemptions;

Amend the PAA No.11 of 2008 to enable CAG to audit all tax exemptions and provide its audit reports.

tax exemptions

4 4.2.4 Handling Tax claims Court Cases.

Consider imposing disciplinary measures to all staff who are the cause of these cases.

Office of the Attorney General to function with integrity and focused on defending the Government with the aim

Court rulings on the pending cases will be followed.


S/N Para No


of winning the case.

5 4.2.5 Termination of use of meters to measure fuel load carried by TPA,

Government should explain to Parliament the underlying reasons for stopping the use of these meters.

TRA should identify impact on revenue collection resulting from termination of the use of these meters.

Response from PMG is awaited.

6 4.2.6 Management of contract on production of Driving Licenses

TRA has to make sure that it reviews the entire contract and do analysis of all the weakness of the contract for amendments.

CAG to make special Audit and then submit its

Currently, the special audit on the driving licenses is in progress.


S/N Para No


report to the Committee;

All contracts which involve the provision of tax exemptions should be reviewed by Attorney General before signing. In addition, the TRA also should be involved in order to provide professional advice by ensuring that tax relief does not affect revenue collection.

7 4.2.7 Increase revenue collection in the telecommunications sector

For the purpose of obtaining accurate information on revenues from telecom companies, TRA and TCRA should have close cooperation in exchange


S/N Para No


of information and transactions from telecom companies;

Government through the TCRA has to complete quickly testing the Telecommunication Traffic Monitoring System to identify the amount, type and actual value of transactions carried out by companies. The aim should be to launch on January, 2014 for the purpose of raising collection of TRA in the communications industry.

Government has to make amendments on laws on allowable deductions on


S/N Para No


advertisement expenses at least not to exceed 3% of revenue.

8 4.2.8 Disbursement of adequate funding to the Rural Electrification Agency (REA)

PAC recommended that in the financial year 2014/2015 Government should provide REA with enough funds from its own sources to facilitate Rural electrification

9 4.2.9 Repayment of Government debt to PSPF

The Government should continue to set aside and pay every year Sh. 71 billion to PSPF to enable the fund to continue to provide pensions for retirees without restrictions;

PSPF should invest and issue loans to various institutions by considering

Response from PMG is awaited.


S/N Para No


its financial capacity to avoid danger of failing to sustain the fund.

Social Security Regulatory Authority (SSRA) has to be proactive in managing the level of investment and loans offered by the Social Security Funds not to exceed the capacity of such funds.

10 4.2.10 Delays in funding and the budget deficit for our embassies/mission abroad.

Through the Ministry of Foreign Affairs and International Cooperation and the Ministry of Finance all Embassies/Missions have to impose an effective strategy to ensure Visa Sticker Machine are working.

Ensure that the IFMS is

Study on overseas missions‘ budgets is ongoing and report will be published as soon as it is completed


S/N Para No


working well in our embassies to create value for the cost involved in the purchase and installation of the system and also avoid losses to the Government that can be caused by not using the system.

In addition, the Ministry of Foreign Affairs and International Cooperation in collaboration with the Ministry of Finance should find a way to reduce operating costs of the IFMS in embassies.


S/N Para No


11 4.2.11 Strengthening revenue collection of the Ministry of Lands, Housing and Human Settlements Development.

Ministry of Lands, Housing and Human Settlements Development should strengthen the internal control systems over revenue collection

In order to increase controls over revenue collection, the Ministry despite using its system of Land Rent Management System (LRMS) should also start using the Electronic Fiscal Devise (EFD) in collecting government revenues.

LRMS to be linked to the Taxpayer's identification number (TIN) to


S/N Para No


determine the actual number of taxpayers with the aim of reducing current existing land disputes.

The Ministry should find specific mechanisms that would ensure taxes that are outstanding in different plots are recovered as soon as possible.


I acknowledge support that my office is getting from PAC, by taking necessary actions on recommendations that I make in my reports that makes my statutory responsibilities being useful. It is very important that all matters raised by PAC are well handled and all recommendations are properly implemented. Implementing PACs recommendations, Government will be in a position of maximizing its revenue collection, controlling expenditures and will bring about better accountability of public monies.


CHAPTER FOUR

PUBLIC FINANCE MANAGEMENT

4.1 REVENUE COLLECTION AND FUNDING

ANALYSIS 4.1.1 Overview of revenue collection

performance During the year under audit 2012/2013 total government estimates was Shs.15,191.94 billion, whereas actual collections was Shs.15,018.27 billion indicating under collection of Shs.173.68 billion equivalent to 1.1 percent. The sources of revenue include Domestic Revenue (Tax revenue), Non Tax Revenue, Financing Income, Internal borrowings and External Assistance. In the financial year 2012/2013 actual revenue collected from domestic revenue (tax revenue) was Shs.8,052.23 billion as compared to the target of Shs.8,432.36 billion showing under collection of Shs.380.13 billion equivalent to 4.51 percent. Non tax revenue collected during the year was Shs.419.56 billion as compared to a target of Shs.644.58 billion showing under collection of Shs.225.02 billion equivalent to 35 percent.


Actual collection from financing income was Shs.61.59 billion as compared to approved budget of Shs.72.26 billion, resulting into under collection of Shs.10.66 billion equivalent to 15 percent. Actual Internal Borrowing was Shs.2,492.71 billion against approved budget of Shs.1,632 billon resulting to borrowings above the estimates by Shs.860.71 billion equivalent to 35 percent. Actual External Assistance received was Shs.3,992.17 billion against approved budget of Shs.4,410.81 billion showing external assistance not received amounting to Shs.418.64 billion equivalent to 9 percent.


Table 9: The estimates and actual revenue performance for the financial year 2012/2013 and 2011/2012

Item Approved estimates

(Shs.)

Actual Collections

(Shs.)

Variance

(Under)/Over

Domestic

Revenue (Tax

revenue)

8,432,294,000,003 8,052,228,708,823 -380,065,291,180

Non Tax

Revenue644,581,942,670 419,561,845,673 -225,020,096,997

Financing

Income72,258,159,415 61,594,970,635 -10,663,188,780

Internal

borrowings1,632,000,000,000 2,492,710,243,677 860,710,243,677

External

Assistance4,410,810,197,912 3,992,172,544,006 -418,637,653,906

Total 15,191,944,300,000 15,018,268,312,814 -173,675,987,186

Approved estimates Actual Collections Variance

(Under)/Over

Domestic

Revenue (Tax

revenue)

6,228,835,792,139 6,414,806,314,206 185,970,522,067

Non Tax

Revenue692,737,853,273 719,960,110,049 27,222,256,776

Financing

Income204,874,736,788 208,132,532,126 3,257,795,338

Internal

Borrowings1,204,262,000,000 1,639,365,483,932 435,103,483,932

External

Assistance 5,195,184,967,800 3,168,234,333,111 -2,026,950,634,689

Total 13,525,895,350,000 12,150,498,773,424 -1,375,396,576,576

2012/2013

2011/2012

Source: Audited Consolidated Financial Statements of 2011/2012 and 2012/2013


Basing on the table above, there is an increase of tax revenue estimates in the financial year 2012/2013 by 35 per cent compared to the estimated of the financial year 2011/2012. Non tax revenue falls short by 7% in the financial year 2012/2013 when compared with estimate of the financial year 2011/2012. There is a decrease of estimate for financing income by 65% when compare to the estimated amount of the financial year 2011/2012. Further to the approved budget, there is an increase of tax revenue collections by 26% in the financial year 2012/2013 when compared with the collections of the financial year 2011/2012. However, non tax revenue collections decreased by 42 percent when compared to the collections in the financial year 2011/2012. There was a decrease of financing income by 70 percent when compared to the financial year 2011/2012. Internal borrowings and external assistance increased by 52 percent and 26 percent respectively in the financial year 2012/2013 when compared to the financial year 2011/2012. Despite that, there was an increase of revenue estimates by Shs.1,666.05 billion and actual collections by Shs.2,867.77 billion in the financial year 2012/2013 by 12 percent and 24 percent respectively, compared to the financial year 2011/2012. But budget


performance in the financial year 2012/2013 was not favorable as most of the targets were not achieved compared to the financial year 2011/2012.

4.1.2 Budget execution, exchequer released and

amount spent for vote accounts: 4.1.2.1 Actual exchequer released for MDAs,

Embassies and RS on Supply Vote Account

against Approved budget. A review of MDAs and RS financial statements noted a decrease of recurrent budget by Shs.615 billion equivalent to 6.7 percent in the financial year 2012/2013 compared to Shs.9,214.89 billion of the previous year. In addition, there is a decrease of exchequer issues by Shs.402.81 billion as compared to last year exchequer issues released. Exchequer issues released for the financial year 2012/13 for supply vote account was Shs.8,284.42 billion against approved budget of Shs.8,599.88 billion showing under release by Shs.315.46 billion which amounts to 3.7 percent. Exchequer issues released in the financial year 2011/2012 was Shs.8,687.23 billion against approved budget of Shs.9,214.89 billion indicating under release by Shs.527.66 billion which is 5.7 percent.


Table 10: Analysis of Exchequer issues released for

Supply vote:

F/Y 2011/12 2012/13 Variance

%

(increase)

/decrease

Approved

estimates9,214,885,955,263 8,599,882,738,758 615,003,216,505 7

Exchequer

released8,687,230,788,550 8,284,419,655,467 402,811,133,083 5

Unreleased

funds527,655,166,713 315,463,083,291 212,192,083,422 40

The decrease in exchequer issues for supply vote in financial year 2012/13 eventually affected implementation of recurrent activities in relation to the financial year 2011/12.

4.1.2.2 Exchequer issues released for MDAs and RS on Development Vote Account compared to the budget.

MDAs Development vote approved budget for the financial year 2012/2013 was Shs.4,224.70 billion while in the financial year 2011/2012 it was Shs.4,311.01 billon registering a decline by Shs.85.53 billion. There is also a decrease in exchequer issues released by Shs.136.90 billion in the financial year 2012/2013 when compared with the financial year 2011/2012.


The total of Shs.3,247.53 billion was released as exchequer issues in the financial year 2012/2013 against approved budget of Shs.4,224.70 billion being under release by Shs.977.94 billion equivalent to 23.1 percent. Table 11: Analysis of Exchequer issues released for

Development vote:

% (increase)/

decrease

Approved

estimates4,311,009,394,737 4,225,474,934,851 85,534,459,886 2%

Exchequer

released3,384,431,758,346 3,247,527,081,386 136,904,676,960 4%

Unreleased

funds926,577,636,391 977,947,853,465

Financial Year 2011/2012 2012/2013 Variance

The decrease in exchequer issues for development vote in financial year 2012/13 in relation to the financial year 2011/12, eventually affected implementation of development activities.

4.1.2.3 Exchequer Issues received compared to Actual Expenditure for Supply Votes of MDAs, Embassies and RS Recurrent expenditure for the financial year 2012/2013 was Shs.8,249.28 billion against the exchequer issues released of Shs.8,687.23 billion resulting to unspent amount of Shs.35.14 billion.

There is a decrease of actual expenditure by Shs. 436 billion in the financial year 2012/2013 when compared to the actual


expenditure reported in the financial year 2011/2012.

Table 12: Analysis of exchequer issues and

actual expenditure for the supply vote for the financial years 2011/2012 1nd 2012/2013.

Item 2011/2012 2012/2013 Variance

%

(increase)/

decrease

Exchequer

released8,687,230,788,550 8,284,419,655,467 402,811,133,083 5

Actual

Expenditure8,685,275,162,094 8,249,278,491,861 435,996,670,233 5

Unspent

funds1,955,626,456 35,141,163,606

In overall spending for supply vote, there was a decrease in spending in the financial year 2012/13 in relation to the financial year 2011/12.

4.1.2.4 Exchequer Issues received compared to Actual Expenditure for Development Vote Account for MDAs and RS In the financial year 2012/2013 exchequer issues released for development vote was Shs.3,247.53 billion whereas actual spending was Shs.3,203.10 billion resulted into unspent balance of Shs.44.43 billion equivalent to 1.4 percent.

There is a decrease of actual spending in the financial year 2012/2013 by Shs.173.20 billion as compared to last year‘s spending.


Table 13: Analysis of exchequer issues released for development vote.

Financial

year2011/2012 2012/2013 Variance

% (increase)/

decrease

Exchequer

released3,384,431,758,346 3,247,527,081,386 136,904,676,960 4

Actual

Expenditure3,376,296,146,186 3,203,098,332,184 173,197,814,002 5

Unspent

funds8,135,612,160 44,428,749,202

Source: Individual MDAs and RS audited reports of 2012/2013 and Consolidated Financial Statements of 2011/2012

In overall spending for development vote,

there was a decrease in spending in the financial year 2012/13 in relation to the financial year 2011/12.

The audit results show that, the overall situation of the Central Government budget implementation and other government revenues and expenditures in 2012/2013 was fine. Strengthening and improving macro-control to ensure stable and fairly rapid economic development, compliance with Acts, Regulations and different Circulars contributes to increase in Government revenue though it was below targets set. Revenue performance over the past three years shows gradual increase in domestic revenue budget/estimates coupled with increase in actual collections. Drastic measures are deemed crucial in this regard, which includes, increase domestic revenue


collections and adjust the budget structure to affordable levels. The Government has to prepare realistic budgets, disburse funds as per approved budget which will foster budget execution and minimize budget reallocations. Also, further improvements are needed in revenue predictions in both local and foreign funding including imploring on Development Partners to make their grants on time.

4.1.3 Comparison of Non-Tax Revenue collections and approved budget The approved budget for non tax revenue for MDA, Embassies and RS for the financial year 2013 was Shs.644.51 billion, Shs.15.97 billion and Shs.0.65 billion, respectively. Actual collections was Shs.461.14 billion, Shs.19.92 billion, and Shs.2.13 billion, respectively. For MDAs there was under collection of Shs.183.38 billion equal to 28 percent of the approved budget, Embassies over collection by Shs.3.95 billion equal to 28 percent of the approved budget and Regional Secretariat over collection by Shs.2.06 billion equal to 32 times above their approved budget. The approved budget during the year 2011/2012 of Non Tax revenue for MDAs, Embassies and RS was Shs.342.18 billion, Shs.13.50 billion and Shs.0.65 billion, respectively. Actual collections was Shs.361.33 billion, Shs.21.41 billion and Shs.8.13 billion, respectively.


Cumulatively, non tax revenue was Shs.483.18 billion while total budget was Shs.660.55 billion registering under collection by Shs.177.36 billion which is 26.9%.

Table 14: Summary of non-tax revenue (Amount in

Shilling millions)

Item

MDA RS EMBASSIES Total MDA RS EMBASSIES Total

Approved

estimate644,515 65 15,968 660,548 342,176 65 13,503 355,744

Actual

collection 461,138 2,128 19,918 483,184 361,334 8,130 21,413 390,877

Over/(under)

collection (183,376) 2,063 3,950 (177,363) 19,158 8,065 7,911 35,134

FY 2012/13 FY 2011/12

Sources: Individual MDAs and RS audited reports of 2012/2013

Figure 5: Revenue Trend for MDAs, RSs and

Embassies

Sources: Individual MDAs and RS audited reports of 2012/2013

The government has to improve the performance of non tax revenue by having a realistic budget and ensure that MDAs collect


all the budgeted non tax revenue, which will eventually ensure the fiscal balance.

4.1.4 Unreimbursed Shs.3,501.5 million from retention scheme The government has an arrangement with five MDAs to deposit revenue collections to the Consolidated Fund of which an agreed proportion is reimbursed to the respective ministries under the retention scheme agreement. During the audit process it came to our notice that the amount of Shs.3,501.5 million being retention funds for the Ministry of Community Development, Gender, and Children; and Ministry of Land and Human Settlement Development of Shs.225,408,501 and 3,276,065,574 respectively were not remitted to the respective ministries. The government has to implement the retention scheme policy by retaining/reimbursing funds to the appropriate MDAs based on their collections. This reimbursement will enable respective MDA to implement its targets which in turn will increase future collections.

4.1.5 Overall budget issues As a part of audit, we made a review of budget performance in the MDAs and Embassies. Focus was on revenue budget, recurrent budget and development. Results of review were reported in the management


letter of respective MDAs. In summary, the following issues were observed;

Some of the MDAs were not able to collect non tax revenue as was budgeted. This has resulted to under collection of non tax revenue by Shs.177.36 billion as reported in para 4.1.3 above. In line with revenue budgets in certain instances some of the MDAs set lower revenue budgets as a result revenue sources are not fully exploited as targets are attained easily.

Some of the MDAs spend beyond budgeted line items and expenditures are charged to wrong expenditure codes.

The treasury did not release funds i.e. recurrent and development funds to MDA as approved by Parliament. Almost in all MDAs there is under releases of both recurrent and development funds.

Despite of under releases of funds, in certain instances funds allocated is not sufficient even to meet basic operations expenses. Example in the Embassies, funds allocated for other charges are not enough even for paying utility bills.

We have observed that some of exchequer issues were released towards the end of the year. In certain instances the release was made in the last week of June. In this regard it was not easy for MDAs to plan for utilization of the respective funds. And where those funds have been utilized, financial and


procurement regulations were not observed.

Due to the challenges shown, there is a possibility for the MDAs to fail meeting their targeted objectives if those challenges will not be addressed. The government has to strengthen financial management and budgetary controls to all MDAs, such that budget could be a tool of controlling government spending.

4.1.6 Trend of Expenditure in Arrears and National Budget Compared In the financial year 2012/2013 total expenditure in arrears (liabilities) was Shs.595.57 billion based on the consolidated financial statements. The percentage of expenditure in arrears to the national budget is 3.9 percent, indicating some improvements when compared to two prior years when it was 6.7 percent and 9.1 percent in the financial years 2011/2012 and 2010/2011 respectively. Table 15: Analysis of Expenditure arrears is shown

below:-

FYExpenditure

ArrearsNational Budget

Expenditure

Arrears as % of

National Budget

2012/2013 595,568,566,057 15,191,944,300,000 3.9

2011/2012 899,000,000,000 13,525,895,350,000 6.7

2010/2011 1,058,000,000,000 11,609,557,584,000 9.1


Figure No. 6: Graphical presentation

Figures are in Billion Shillings. Source: Audited Consolidated Financial Statements 2011/2012 and 2012/2013

The impact of expenditure arrears is that it wears down the current years‘ budget and leads to budget cuts which would otherwise be used to finance other planned activities. This is due to the fact that part of exchequer issues disbursed was utilized to settle expenditure in arrears/liabilities. Clearance of expenditure in arrears has been one of the reasons for re-allocations which are a common feature during budget implementation.

The Government has to review the cash-budgeting system to allow for changing of duration of cash releases depending on the nature of activities to be financed.


4.2 NATIONAL ACCOUNTS

4.2.1 Introduction The National Accounts chapter comprises issues relating to Public Debts, Tanzania Revenue Authority, Consolidated accounts, the Treasury and Pre-Audit of Terminal Benefits.

4.2.2 Public Debt Public debt refers to the current outstanding

obligations for which the Central Government and its branches are responsible. Public Debt is governed by the Government Loans, Guarantees, and Grants Act No. 30 of 1974 (R.E 2004) whereby Sect. 3 and 6 give the authority to the Ministry of Finance to borrow both local and foreign loans on behalf of the Government.

4.2.2.1 Public Debt Portfolio

Tanzania‘s total public debt as at 30th June, 2013 stood at Shs.21,202.3 billion, an increase of Shs.4,226.4 billion equivalent to 24.9 percent when compared to Shs.16,976 billion in the financial year 2011/12. The following sub section analyses the trend and composition of both domestic and external debt of the country over the past one year.

(a) Domestic Public Debt Portfolio The domestic debt portfolio includes

marketable and non-marketable instruments of varying maturities such as Bonds and Stock, T-Bills, and un-securitized debt.


Tanzania‘s domestic debt, at the end of June 2013 reached Shs.5,775.1 billion, compared to Shs.4,545.9 billion realized in the financial year 2011/2012. This was an increase of Shs.1,229.2 billion equivalent to 27 percent of the debt registered in the previous year.

Such growth in domestic debt was mainly

attributed to conversion of liquidity papers into financing of Shs.339.5 billion and conversion of overdraft facility into a special bond of Shs.469.5 billion. The conversions together accounted for Shs.809.0 billion equivalent to 65.82 percent of the total increase in domestic debt for the year under review. This analysis is merely meant to show the impact of ineffective cash and liquidity management has on the government debt stock.

(b) External Public Debt Portfolio

The External Public Debt Portfolio includes loans from Multilateral and Bilateral Institutions & Developments partners. As at 30th June, 2013 the External debt Stock amounted to Shs.15,427.3 billion compare with Shs.12,430.1 billion reported in the financial year 2011/12, representing an increase of Shs.2,997.2 billion equivalent to 24.1% of the external debt reported the previous year. My review noted that the rise of external debt was largely attributed to the solicited funds from bilateral creditors and


commercial banks to finance the construction of the mega gas pipeline track and regional roads and other infrastructure development projects such as transportation and water. In my view, the government needs to exercise greater care before the country commits itself to the non-concessional debts as they are very costly. A trend of five years total Public Debt Outstanding is depicted in the histogram below; Figure No.7: Total Public Debt Outstanding

Given the importance of the public debt to the national economy, I have commissioned a study on public debt. The study is ongoing and the result of it will be published after its completion.

4.2.2.2 Existence of Dormant Loan accounts

A review of the debt portfolio noted dormant accounts for seven (7) lenders amounting to Shs.1,247.43 billion of which the latest


movement in the portfolio was in 1998. I was informed by Accountant General's Office that payments of these loans have ceased pending negotiation for debt restructuring or cancelation with respective lenders. However, I could not obtain sufficient evidence to substantiate the ongoing negotiations on cancelation or restructuring of the debts despite repeated enquiries.

4.2.2.3 Lack of Debt Management Office The current set-up for the Public Debt management involves a number of institutions like the Ministry of Finance (MoF), the Planning Commission, the Attorney General‘s Chamber, and the Bank of Tanzania (BoT). This set-up is detrimental to the management of public debt due to the fact that each key player has different core activity apart from public debt. In such a situation, coordination which is vital in debt management becomes difficult. The continuous absence of a unified Debt Management Office (DMO) is becoming a major concern in the overall Public Debt management in the country. The current situation is involving too many isolated players in the country's public debt management. Hand in hand with this situation, records in regard to the public debts are scattered making it difficult to have an accurate figure constituting the country's public debt. Thus, the absence of a


unified DMO has derailed a smooth coordination and operations of public debt management.

4.2.2.4 Performance Management of the Agency Agreement with PPF. The Government entered into agency agreement with PPF for provision of pension payment services to Government pensioners with effect from 1 July 2008. Audit review of the agreement revealed that it lacks important clauses like confidentiality clause, liabilities to the agent in case of non-compliance and duration of the agreement. In addition, the agreement does not provide for exact time interval for remittance of funds from government to PPF as the agreement still stipulates the interval payment for monthly pension as six (6) months while the practice has been changed to three (3) months. A further review of the agreement noted that clause 4.2.7 requires the government in collaboration with PPF to ensure that pensioners sign certificates of existence after every two (2) years. However, management has not provided evidence that the exercise took place. As a consequence to the observed deficiencies in contract administration I noted that the management could not effectively evaluate the performance of the


key components as stipulated by the Agency Agreement. Furthermore, the contract duration is not spelled out which suggest that the agreement is infinity and could lead to dire consequences to either party.

4.2.2.5 Effectiveness of the Commonwealth

Secretariat-Debt Recording and Management System (CS-DRMS) CS-DRMS is an integrated system that records various types of debt related data for both external and domestic debt, grants and government lending for day-to-day administration. The database is managed by the Accountant General (AccGen) who is the responsible custodian for public debt records. I observed that, the current backup and recovery procedures are not sufficient to guarantee the recovery of public debt data in case of disaster. I have also noted that the CS-DRMS database resides in the same database server as the EPICOR database. In addition, the office conducts backups of the public debt data in ―removable‖ hard disk drives which are stored in a storage safe which again resides just at a building opposite the AccGen‘s data center. Generally speaking, at the moment, there is no an offsite backup-facility for server and public debt data. In addition to that, no formal backup restoration tests are done to ensure that


public debt data could be restored in case of a disaster. I wish to point out that, without satisfactory back up and restoration procedures, the office may not be able to timely recover its data and systems in case of disasters.

4.2.2.6 Conversion of the Liquidity Papers into financing papers A review of outstanding domestic debt noted that revenue collection and expenditure mismatch led the government to convert liquidity papers (Treasury Bills) with Face Value of Shs.339,490,810,000 into financing papers at an interest cost of Shs.21,543,703,100. In converting the liquidity papers, domestic debt stock is increased as well as exposure to rollover risk. Moreover, liquidity paper conversion contradicts government monetary policy of curbing inflation through ‗mop out‘ of excess cash (monies) from the economy.

4.2.2.7 Long outstanding government net deficit

Sect. 34 (2)(a) of the Bank of Tanzania Act, 2006 stipulates that: ―Each advance made to the Government under this section shall be made solely for the purpose of providing temporary accommodation to the Governments and shall, accordingly, be repayable within one hundred and eighty days‖.


During the audit, I noted that the government accounts held at BoT experienced net deficit position for the entire financial years 2011/2012, and 2012/2013 to the tune of Shs.469.48 billion and Shs.263.87 billion, respectively. The deficit attracted interest of Shs.42.29 billion during the year 2011/12 and Shs.53.22 billion for the year 2012/2013. Continuous government deficit position is the outcome of ineffective cash management coupled with inadequate revenue collection and budgetary control over expenditure. As a consequence of the persistent liquidity pressure, in the financial year 2011/12, the Government had to restructure overdraft facility worth Shs.469.48 billion into a Special Bond at an interest rate of 11.44% redeemable on October 2022. Such a decision led to increase of public debt stock as well as interest charges amounting to Shs.27 billion which was not budgeted for.

4.2.2.8 Higher Concentration of Commercial Banks in the Government Stock Audit analysis on the Government stock by category noted that Stocks, Special Bonds, and Marketable Securities were Shs. 5,765.40 billion as of 30thJune, 2013. Further scrutiny of the structure revealed that Commercial Banks are the leading holders in government stock with 48 percent holding as shown in the Chart below:


Figure No. 8: Composition of Government Stocks

While I understand the government's key role in enhancing primary security market issuance, I still find that the government has a fundamental role in creating conducive environment for secondary security markets. Participation of financial intermediaries in secondary markets will strengthen government securities trading and also encourage buyers of those securities to trade them in secondary markets with confidence.

The commercial banks‘ occupancy of 48 percent in the government stock is crowding out the market by incapacitating private investors who would otherwise prefers to buy securities at the primary market and trade them in the secondary markets.

In addition, the secondary market is increasingly inactive due to the fact that most of the commercial banks‘ funds are tied


in the primary market. As a result, commercial banks become reluctant to lend to private sector partly due to low risk instruments in the market, high risk and administrative costs involved in providing loans to the private sector.

As government securities become less attractive due to the absence of active secondary markets, they become cheaper to the few available investors who are willing to hold securities to maturity. This practice further hinders the development of the secondary domestic market whereby investors can enter and exit the market at their convenience. Furthermore, the cheapness of government securities at primary market increases cost to the government in terms of coupon payments as well as Face Value. Besides, governments‘ securities are bought at discount and attract high returns due to their minimal chance of being called before maturity.

4.2.2.9 Lack of actuarial valuation of benefits

plan for Government retirees Public servants retirees‘ pensions are paid from the consolidated fund and such arrangement ought to be recognized by the Government as Defined Benefits Plan. An audit review of retirement benefits noted that actuarial valuation for defined benefits was not conducted in order to determine the probable liabilities due to the government. I am of the view that the government could


not ascertain such liability arising out of defined benefit plan. This is contrary to paragraph 166 of IPSAS 25 that requires an entity to determine its initial liability for defined benefit plans as the present value of the obligations at the date of adoption.

4.2.3 TANZANIA REVENUE AUTHORITY

Tanzania Revenue Authority (TRA) was established by Act No.11 of 1995 as amended by Act No.8 of 1996 with responsibilities of administering Central Government taxes as well as some non-tax revenues. The Authority prepares two separate sets of financial statements, one for revenue and the other for expenditure. TRA financial statements are prepared by using International Financial Reporting Standards while revenue statements are prepared under the International Public Sector Accounting Standards- cash basis of accounting.

4.2.3.1 Outstanding matters as per previous Management Letters; As at the date of issuing my report to TRA on 08th January, 2014 the Authority had outstanding matters amounting to Shs.765.76 billion and USD 65,206,109 relating to the previous years‘ management letters issued to TRA as compared to Shs.545.27 billion and USD 210,072,760 outstanding when the previous year's report of 2011/2012 was issued as summarized below:


Table 16: Outstanding matters for TRA for 2010/2011 and 2011/2012

F/Year

Department Amount (Shs.)Amount

(USD)Amount (Shs.)

Amount

(USD)

Customs &

Excise 37,969,095,172 163,000 25,019,207,641 -

Domestic

Revenue16,975,679,331 - 16,955,384,161 -

Large

Taxpayers661,727,408,695 65,043,109 503,166,532,902 105,036,380

Sub total 716,672,183,198 65,043,109 545,141,124,704 105,036,380

TRA HQS 490,892,866,468 - 132,000,104 -

Sub Total 49,089,286,468 - 132,000,104 -

Total 765,761,469,666 65,206,109 545,273,124,808 210,072,760

2011/2012 2010/2011

Revenue

Expenditure

Some of the outstanding matters are dated as far back as to the financial year 2001/2002 and most of them are waiting court judgments and approval for write off of uncollected receivables by the National Assembly.

4.2.3.2 Revenue Performance (Out-turn) Actual revenue collection for Tanzania mainland was Shs.8,117.59 billion against approved estimates of Shs.8,370.73 billion resulting in an under-collection of Shs.253.14 billion equivalent to 3 percent of the revenue estimates. On the other hand, actual collection for Zanzibar was Shs.103.87 billion against an


approved budget of Shs.106.73 billion resulting in an under-collection of Shs.2.86 billion equivalent to 2.7 percent of the estimated revenue. Details of revenue collected by TRA's specific departments against the approved estimates are as tabulated in tables 17 and 18 below:

Table 17: TRA Revenue Performance – Tanzania Mainland

DepartmentEstimated

Collection (Shs)

Net Actual

Collection (Shs)

Over/Under

Collection%

Domestic Revenue 1,411,645,400,000 1,520,625,330,860 108,979,930,860 7.7

Large Tax Payers

Department3,747,622,500,000 3,533,067,632,720 -214,554,867,280 -5.7

Customs & Excise 3,173,605,000,000 3,042,375,952,125 -131,229,047,875 -4.1

Sub –total 8,332,872,900,000 8,096,068,915,705 -236,803,984,295 -2.8

Add Treasury Vouchers 37,855,300,000 21,519,179,957 -16,336,120,043 -43.2

Total 8,370,728,200,000 8,117,588,095,662 -253,140,104,338 -3

Table 18: TRA Revenue Performance - Zanzibar

DepartmentEstimated

Collection (Shs)

Net Actual

Collection (Shs)

Over/Under

Collection%age

(a) (b) (c) = (b-a)

Domestic

revenue39,653,400,000 40,043,848,826 390,448,826 0.9

Customs &

Excise67,077,000,000 63,822,646,706 -3,254,353,294 -4.9

Total 106,730,400,000 103,866,495,532 -2,863,904,468 -2.7 4.2.3.3 Analysis of Revenue Collection pattern

Revenue performance over the past three years in respect of Tanzania Mainland shows gradual increase in revenue budget/estimates coupled with proportionate increase in actual collections. During the year under review


there was underperformance of 3 percent as compared to the performance recorded in the year 2011/2012 of 4 percent above the estimates. On the other hand, revenue estimates and actual collections in Zanzibar continued to improve. During the year under review, there was a reduction in the rate of increase of estimates compared to the last year which in turn resulted into under-collection of 2.5 percent as compared to under collection of 8.9 percent recorded in the year 2011/2012. Moreover, the overall revenue collections movement for Tanzania mainland and Zanzibar for the past three years is as depicted in tables 19 & 20 and figure 10 and 11 below:

Table 19: TRA Revenue Collection Pattern - Tanzania Mainland

F/Year Budget Shs. Actual collection

Shs.Variance Shs. %age

(a) (b) (c)= (b-a) (c/a)

2010/11 5,849,093,700,000 5,550,203,244,379 -298,890,455,621 -5.1

2011/12 6,456,832,630,000 6,703,229,704,888 246,397,074,888 3.8

2012/13 8,370,728,200,000 8,117,588,095,662 -253,140,104,338 -3

Figure 9: Graphical presentation of three years revenue

collection pattern (Tanzania Mainland)


Table 20: TRA Revenue Collection Pattern - Tanzania

Zanzibar

Financial year Budget (Shs.) Actual collection

(Shs.)Variance (Shs.) %age

(a) (b) (c)= (b-a) (c/a)

2010/11 69,240,800,000 76,357,574,602 7,116,774,602 10.3

2011/12 100,581,100,000 91,652,054,954 -8,929,045,046 -8.9

2012/13 106,730,400,000 103,866,495,532 -2,863,904,468 -2.7

Figure No.10: Graphical presentation of three years’ TRA

revenue collection pattern (Tanzania Zanzibar)


69,241

100,581 106,730

76,358

91,652

103,866

7,117

(8,929) (2,864) (20,000)

-

20,000

40,000

60,000

80,000

100,000

120,000

2010/11 2011/12 2012/13

Colle

ctio

nns

in M

illio

n

Year

Estimated Collections A Actual collection B Over/(under) collection

4.2.3.4 Tax Exemptions Shs.1,515.6 billion

The government of Tanzania through Tanzania Revenue Authority (TRA) grants tax exemptions to various beneficiaries for trade facilitation and humanitarian grounds in accordance with the applicable Laws and Regulations. The TRA revenue statements for the year ended 30th June 2013 reported tax exemptions of Shs.1,515.61 billion being granted to various categories of institutions and individuals as summarized below:


Table 21: Summary of tax exemptions issued to institutions

Total (Shs) Total (Shs)

2012/2013 2011/12

1 Mining Sector 351,926,383,883 - 351,926,383,883 140,637,400,000 211,288,983,883 150 23.2

2 Parastatal Organizations 25,290,046,478 - 25,290,046,478 15,699,616,106 9,590,430,372 61 1.7

3 Foreign Embassies/UN 15,144,779,702 - 15,144,779,702 10,194,000,000 4,950,779,702 49 1

4 Exemptions under Duty Free Shops - 9,801,420,712 9,801,420,712 7,726,106,679 2,075,314,033 27 0.6

5 Religious Institutions 513,729,447 - 513,729,447 438,967,358 74,762,089 17 0

6 Tanzania Investment Centre 300,398,017,045 - 300,398,017,045 280,961,890,898 19,436,126,147 7 19

7 Military duty free shops 2,200,383,324 - 2,200,383,324 2,454,600,000 -254,216,676 -10 0.1

8 Exemptions under VAT - 571,733,155,336 571,733,155,336 801,859,518,440 -230,126,363,104 -29 37.7

9 Government Institutions 6,680,711,987 - 6,680,711,987 9,603,414,035 -2,922,702,048 -30 0.4

10 Donor Funded Projects (DFP) 122,461,951,497 - 122,461,951,497 225,039,689,862 -102,577,738,365 -46 8.1

11 Private Companies & Individuals 72,237,968,263 - 72,237,968,263 304,045,656,449 -231,807,688,186 -76 4.8

12 NGOs 1,409,421,040 - 1,409,421,040 7,542,700,000 -6,133,278,960 -81 0.1

13 Oil/Gas Exploration * 35,809,409,085 - 35,809,409,085 Introduced in FY2012/13 35,809,409,085 100 2.4

Total 934,072,801,751 581,534,576,048 1,515,607,377,799 1,806,203,559,827 -290,596,182,028 -16 100

% of

exemption

2012/13

S/N Institution category

Customs &

Excise Dept.

(Shs)

Domestic

Revenue Dept.

(Shs)

increase

(decrease) (Shs)

% of

increase

(decreas


Generally, exemptions in respect of Tanzania Mainland have shown a decreasing trend in the year under review compared to the previous year but still poses a negative impact on the overall revenue performance. The trend shows a decrease of exemptions by Shs.290,596,182,028 or 16 percent from Shs.1,806,203,559,827 reported during the financial year 2011/2012 to Shs.1,515,607,377,799 in the financial year 2012/2013. Had the exempted revenue of Shs.1,515,607,377,799 been collected, which is 19 percent of the actual collections, the total collection would have been Shs.9,633,195,473,461 instead of Shs.8,117,588,095,662. The exemptions reported above account for almost 10 percent of the total 2012/2013 government revenue estimates of Shs.15,191,944,300,000.

Table 22: TRA Exemptions against actual collection for

financial year 2011/12-2012/13 (amounts in Shillings)

Explanation 2012/2013 2011/2012

Revenue Target 8,370,728,200,000 6,456,832,630,000

Actual Collection 8,117,588,095,662 6,703,229,704,887

Exemptions 1,515,607,377,799 1,806,203,559,827

Proportion of exemptions to

actual collection19% 27%

Surplus/( Deficit) in collection -253,140,104,338 246,397,074,887

Surplus if exemptions had not

been granted1,262,467,273,461 2,052,600,634,714


4.2.3.5 Comparative analysis of Tax Exemptions The actual tax collections have increased in the last five years from net collections of Shs.4,052 billion in 2008/09 to Shs.8,117.6 billion in 2012/2013 with slight increase in revenue yield (Net tax collections as a percentage of GDP).The ratio of tax exemptions to GDP increased from 2.7 percent in 2008/2009 to 4.3 percent in 2011/2012 before decreasing to 3.1 percent in the financial year 2012/2013. Table No.23 below indicates that the level of exemptions has been on average of 2.6 percent of GDP between 2008/09 and 2010/2011;

Table 23: TRA Revenue Yield for Tanzania with Exemptions considerations (Million Shs.)

Item 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013

Nominal GDP 26,868,213.40 31,316,223.90 35,026,679 41,125,313 48,385,100

TRA Revenue

Collections 4,051,963.80 4,437,933.40 5,315,148 6,703,230 8,117,588

Revenue Yield 15.10% 14.20% 15.20% 16.3 16.8

Total Tax

Exemptions 731,267.70 653,652.50 1,016,320.30 1,806,203.60 1,515,607.40

Exemptions as %

of GDP 2.70% 2.10% 2.90% 4.39% 3.13%

Exemptions as %

of TRA Revenue

Collections

18.00% 14.70% 19% 27% 19%

Source: CAG General Report 2011/12, TRA Financial Statements – 2012/13 and TRA 4th Corporate Plan – 2013/14 to 2017/18


The level of tax exemptions is high i.e. 3.1 percent of GDP taking into account the need to increase revenue collections. Furthermore, despite the ongoing efforts put in place to decrease tax exemptions, there has been no standard guidelines in terms of policy as to what level of exemptions should the country maintain at any given time. Given the importance and impact of tax exemptions to the economy my office is carrying out a special study on this area and report will be availed upon its completion.

4.2.3.6 Management of Customs and Bonded

Warehouses According to Part IV of the East African Community Customs Management Act (EACCM), 2004 goods imported in the country may be deposited in the customs or bonded warehouses pending payment of appropriate duties by the respective consignees. The Act also outlines specific requirements for proper management of both customs and bonded warehouses including timely clearance of goods from the warehouses.

I reviewed the operations of the selected customs and bonded warehouses for the period under review to evaluate the level of compliance with the provisions stipulated in the Act. The audit noted the following weaknesses which might render negative impact on revenue collections:


Goods attracting customs duties amounting to Shs.1,102,640,256 were found to have been stayed in the warehouses for more than the required maximum period of six months without any action to collect revenues.

TRA suspended and closed thirteen Bonded Warehouses before collecting customs duties which amounted to Shs.1,803,910,991.

Twenty seven Customs Bonded Warehouses were in operation without valid licenses from the Commissioner for Customs and Excise. No action has been taken against the owners of the customs bonded warehouses who were operating without valid licenses.

4.2.4 CONSOLIDATED ACCOUNTS 4.2.4.1 Budget and Expenditure Performance

The consolidated statement for the Supply Votes Accounts had approved estimate of Shs.11,026,416,297,537 against the total exchequer issues of Shs.10,672,471,478,499 as a result there was under release of Shs.353,944,819,038 equivalent to 3 percent of the approved estimates. Total consolidated net expenditure was Shs.10,640,607,414,988 leaving an unspent balance of Shs.31,864,063,511. The consolidated Development Votes Accounts had approved estimate of Shs.4,165,528,002,463 against the total exchequer issues of Shs.3,656,297,898,562


leading to unreleased amount of Shs.509,230,103,901 equivalent to twelve (12%) of the approved budget. Consolidated development vote account closed with unspent balance of Shs.40,066,146,199 as a result of actual expenditure of Shs.3,616,231,752,363 against exchequer issues released. My general observation is that under release of Shs. 863.174 billion equivalents to 6% of the total budget for the year was significant and affected the implementation of some of the planned activities during the year under review. I also noted late releases of funds to MDAs as the main factor for huge unspent balances at the year-end as will be analyzed in the next sub section of this report.

4.2.4.2 Financing of Development projects Audit scrutiny on the consolidated financial statement for the financial year ended 30th June 2013 revealed that total amount of Shs.3,616.2 billion were used to finance national development activities. Of the spent amount Shs.2,218,908,035,033 comes from domestic sources and Shs.1,397,323,717,329 equivalent to 39 percent of total amount spent comes from external assistance. Financing analysis of development projects for three consecutive years is as shown here under:


Financial

year2010/11 % 2011/12 % 2012/13 %

Domestic 1,308,351,876,622 59 2,095,412,910,757 62 2,218,908,035,033 61

Foreign 909,680,949,735 41 1,280,883,235,429 38 1,397,323,717,329 39

Total 2,218,032,826,357 100 3,376,296,146,186 100 3,616,231,752,362 100 Basing on the above analysis, a combination of financing in the financial year 2011/12 was 59 by 41 percent for domestic and external assistance respectively. In the financial year 2011/12 and 2012/13 the financing were 62 by 38 percent and 61 by 39 percent from domestic source and external assistance respectively. There is a slight movement of percentage of financings from domestic sources and external assistance for three years. Generally the government funding towards the development projects has remained at 61.05%, on average, over the past three years whereas external funding was 38.95% of the total development budgets.

4.2.4.3 Statement of Revenue Shs.15,018.3 billion The Consolidated statement of Revenue reflected a total revenue collection of Shs.15,018,268,312,814 against an approved estimates of Shs.15,191,944,300,000 resulting in an under collection of Shs.173,675,987,186 equivalent to 1 percent of the revenue budget.


The government is advised to enhance revenue collection in order to attain the set objectives.

4.2.4.4 Government Expenditure Shs.14,328.8

billion The Government expenditure increased to Shs.14,328,769,377,061 in the year 2012/2013 as compared to Shs.12,061,571,308,279 reported in the financial year 2011/2012 hence recorded in increase of Shs.2,267,198,068,782 equivalent to 15 percent of the total expenditure. Recurrent expenditures during the financial year 2012/2013 was Shs.10,672,471,478,499 compared to Shs.8,685,275,162,094 reported in the financial year period 2011/12 equivalent to 23% increase. Development expenditures was Shs.3,656,297,898,562 compared to Shs.3,376,296,146,186, recorded in year 2011/2012 equivalent to 7% as summarized in table 24 below:

Table 24: Recurrent expenditure trend

Expenditure Account

2011/12 (Shs)

2012/13 (Shs)

Variance (Shs)

% Chan

ge

Recurrent 8,685,275,162,094 10,672,471,478,499 1,987,196,316,406 23

Development 3,376,296,146,186 3,656,297,898,562 280,001,752,376 8

Total 12,061,571,308,280 14,328,769,377,061 2,267,198,068,782 19

4.2.4.5 Release of funds towards the end of the financial year

Audit examination and analysis of the Government exchequer issues revealed that Exchequer Issues amounting to


Shs.1,066,315,820,918 equivalent to 7.4 percent of the total exchequers were disbursed in the last week of the financial period. Moreover, exchequer released during the fourth quarter amounted to Shs.4,494,546,936,669 equivalent to 31.4% of the total exchequer issues of Shs.14,328,769,376,759. Table 25 below shows the exchequer issues released in each quarter for the year under review. Table 25: Exchequer issues released in each

quarter

Quarter Exchequer Issue, Shs. % Release

1st 3,953,903,730,993.16 27.6

2nd 2,710,184,285,943.08 18.9

3rd 3,170,134,423,153.47 22.1

4th 4,494,546,936,669.63 31.4

Total 14,328,769,376,759 100 4.2.4.6 Statement of Losses Shs.13.2 billion

The Government recorded accumulated losses in terms of public monies, stores and assets amounting to Shs.13,231,354,196 for the financial year 2012/2013 as compared to Shs.13,024,783,230 recorded during the financial year 2011/2012. This being an increase of Shs.206,570,924 equivalent 2 percent of the figure reported in the previous year. This trend implies that the Government has not taken strong effort to minimize losses occurrences, and also have delayed to initiate the process of writing off


genuine losses by the Parliament. Lack of adequate control over Government‘s assets may result into additional future losses.

4.2.4.7 Local Government Institutions not

consolidated in the financial statements On reviewing the financial statements of the government, I noted that, the consolidated financial statements of the United Republic of Tanzania did not include the revenue, expenditure, assets and liabilities of the Local Government Authorities (LGAs) and Parastatal Institutions which are using the same accounting framework of IPSAS accrual basis of accounting. This is contrary to IPSAS 6 which requires a controlling entity to issue consolidated financial statements which consolidates all government controlled entities, foreign and domestic.

4.2.4.8 Government preparedness for IPSAS accrual basis The Government of the URT financial statement has adopted the use of the International Public Sector Accounting Standards accrual basis of accounting with effect from 1st July, 2012. I understand the efforts and progress made by the Government whereby IPSAS pre-implementation plan/roadmap was prepared and specific IPSAS team comprising of finance and non-finance staff from various MDAs was established. I also recognize the efforts of the government for conducting intensive training whereby team members


were trained on the understanding of the concepts of IPSAS accrual basis. With regards to IPSAS accrual implementation progress, I have noted challenges such as lack of adequate coordination, high risk on property plant and equipment activities backlog as provided here in below:- (a) Activities Backlog in the implementation

of IPSAS Accrual Audit review of the roadmap for IPSAS implementation noted several activities which were planned to be accomplished by 30th June, 2013 to be behind schedule. Activities such as separation of grants and borrowing, preparation of the accounting manual and the chart of accounts were not completed as planned hence hindering the smooth progress of implementation of IPSAS accrual basis of accounting adoption.

(b) Lack of National Committee responsible for IPSAS implementation The Government is yet to establish a proper National Committee responsible to oversee the progress for implementation of the IPSAS adoption project. I have observed that, the responsibility for coordination of IPSAS adoption has been solely left to the Accountant General. I understand that, the IPSAS project involves various players responsible for valuation, ownership, recognition and measurement of Government assets. There is a need for the Government to


establish National Committee to coordinate and oversee the whole project. I would therefore, like to strongly urge the government through either the Chief Secretary or Paymaster General to establish a broad and comprehensive national IPSAS implementation committee to be charged with a responsibility of overseeing the successful adoption of the IPSAS accrual basis of accounting, come the financial year 2016/2017.

(c) Property, Plant and Equipment (PPE), The Government adopted five years transition provision for PPE, and I have noted that the Directorate of Government Assets Management (DGAM) have action plan that indicates activities for valuation of government assets for five years (from 2012/13 to 2016/17). However, the following challenges remained invisible and need to be addressed by the government:

Despite the valuation of government assets being done in 2005/06 under the supervision of DGAM, there is no updated PPE report disclosing assets details such as bar code, report; schedule of disposed assets.

There is no action plan for valuation of assets for Local Government Authorities and the process of capturing assets in the LGA Asset Module is yet to be defined.


The 5 year Action Plan did not take into consideration trainings of staff using Epicor 9.05 on how to use Epicor-asset management module for proper monitoring and understanding of the valuation process.

Neither action plan nor asset guideline and financial statements disclose any information about valuation of properties especially land and buildings.

(d) Land and Building not separated as per requirement of IPSAS 17 Paragraph 74 of IPSAS 17 states that Land and buildings are separable assets and are accounted for separately, even when they are acquired together. My review of the consolidated financial statements noted that land and buildings have not been separated as required by the standard. (e) Configuration of Epicor and budget systems have not being properly done to process transactions and generate IPSAS accrual basis of accounting financial statements. (f) The government budget system,

procedures, guidelines and policies are still on IPSAS cash basis while the Central Government's financial reporting has shifted to IPSAS accrual basis with effect from 01st July, 2012. This situation leads to difficulties in implementation to users.


(g) The training for Epicor, budget system

and IPSAS accrual basis of accounting was not adequately conducted to users in MDAs, taking into consideration the change of Epicor from version 7 to 9.05 and change from IPSAS cash to IPSAS accrual.

4.2.4.9 Inadequate Cash Management

Statement of Vote Account for the year ended 30th June, 2013 on the Consolidated Financial Statements shows that the Paymaster General account closed with fund balance in hand of Shs.18,152,597,859. However, during the same period the Government bank accounts held at BoT reported a net deficit position of Shs.263,866,358,436 which attracted interests of Shs.53,223,549,921. I am of the view that, Shs.18.2 bil. held by PMG at the year-end could have reduced the deficit position by 9.3% (from 263 billion to 244.9 billion) and hence lower the total Government Debt Position. This is due to the absence of sound Cash Management coupled by the abandoned National Steering Cash Management Committee, lack of coordination between cash management unit and budget department.


4.2.4.10 Monitoring and evaluation of projects funded by debt proceeds In the course of reviewing the National Debt Strategy of 2002, I noted the government‘s effort at improving fiscal sustainability. One of the ways to attain this, as mentioned in the strategy itself is by improving the utilization of project financing resources which could lead to sustained economic growth.

Furthermore, Reg. 23 of the Government Loans, Guarantees and Grants Act No. 30 of 1974 requires project coordinators of respective projects‘ implementing agency for the purpose of monitoring disbursements and utilization of loans and grants to submit monthly reports to the Ministry of Finance. Through interviews with the responsible staff at the Ministry of Finance, it was revealed that this has not been the practice so far. However, up to now, there is no department that is solely responsible for projects evaluation after being financed through loan proceeds. This could result into sub – optimal utilization of project financing resources which could in turn have a significant impact on the payback potential of the economy.


4.3 EXPENDITURE MANAGEMENT 4.3.1 Introduction

In this section, I present in details the main findings in expenditure management identified during my audit of MDAs and RSs offices in the financial year 2012/13:

4.3.2 Long outstanding Imprests Shs.319,423,337 As at 30th June 2013 six (6) MDAs and two (3) Regional Secretariats had imprests amounting to Shs.319,423,337 contrary to Reg. 103(1) of Public Finance Regulation of 2001. Non retirement of imprests may infer misuse of funds and non accomplishment of the intended purpose. Imprest must be retired within two weeks after finalization of the activity; failure to do so will necessitate the outstanding amount to be deducted from the officer‘s salary at an enhanced rate. Summarized results of long outstanding imprests for the past three (3) years are given in table 26 and 27 below:


Table 26: Long outstanding imprests

S/N Vote No. Description Amount (Shs.)

1 27 Registrar of political parties 11,905,250

2 32President‘s office public

service management84,003,578

3 98 Ministry of Works-TBA 31,410,000

4 82 RS-Ruvuma 4,244,200

5 79 RS-Morogoro 1,194,000

6 56

Prime Minister‘s Office

Regional Administration and

Local Government

21,417,669

7 46Ministry of Education and

Vocational training145,158,500

8 42 National Assembly 9,240,000

9 36 RS- Katavi 10,850,140

319,423,337Total Table 27: Summarized results of long outstanding imprests:

12 Vote 27, 34, 42, 18, 74, 27, 34 & 42 13 Vote 40, 91, 74 & 34 14 Refer table 27

Year Amount (Shs.)

MDA/RS involve

d

2010/2011 436,398,424

812

2011/2012 806,437,464

413

2012/2013 154,174,697

914


The trend compared to the last year, shows a decline in value of the long outstanding imprest by 81% from Shs. 806,437,464 to Shs. 154,174,697. I call for compliance with Reg. 103(1) of PFA, 2001 by ensuring that retirement of safari imprests is done within fourteen days, and for special imprest, upon completion of the relevant activity for which the imprests were so issued is still emphasized. In addition, for cases of non compliance, the responsible Accounting Officers should recover the outstanding amounts from imprest holder‘s salaries.

4.3.3 Payments charged to wrong expenditure

codes - Shs. 2,394,834,855 During the year under audit, the MDAs and RS did not adhere to MTEF Budget provisions and as such, contrary to Reg. 51(1-8) of the Public Finance Regulation‘s 2001, payments totaling Shs.2,394,834,855 as shown in annexure 'H' were charged to wrong expenditure items without proper authority for reallocation. This signifies diversion of funds to other expenditure items that may affect implementation of planned and approved activities. Summarized results of payments charged to wrong expenditure codes for the past three (3) years are given in the next table below:

Table 28: Summarized payments charged to wrong expenditure codes:

Year Amount (Shs.) MDA/RS


*See detailed analysis in annexure 'E'

There has been an overall decreasing trend over deviation of funds for the past three years, however I do emphasize adherence to MTEF budget and acquisition of retrospective approval from the Ministry of Finance in line with Reg. 51(1-8) of the Public Finance Regulation‘s of 2001 whenever such deviation is inevitable.

4.3.4 Overpayment- Shs. 68,089,906 During my audit I noted some weaknesses in internal controls of RS-Katavi, PMO-RALG, RS-Geita, Drug Control, and Judiciary of Tanzania which resulted to overpayment of about Shs. 68,089,906 as summarized in table 44 below:

Table 29: Overpayment S/N Vote No. Description Amount (Shs.)

1 40 Judiciary Of Tanzania 3,949,176

2 36 Katavi Regional Secretariat 22,614,478

3 56

Prime Minister‘s Office Regional

Administration and Local

Government

22,784,500

4 63 Geita Regional Secretariat 1,215,500

5 91 Drug Control Commission 17,526,252

68,089,906Total 15 Vote no. 39, 44, 46, 52, 56, 61, 75, 86 & 94 16 Vote no. 38, 42, 82, 59, 92, 33, 12, 91, 52, 27, 69, 29, & 85

involved

2009/2010 5,296,243,598 915

2010/2011 340,756,701 1316

2011/2012 6,027,429,643

2012/2013 2,394,834,855 25*


Summarized results of payments overcharged for the past three (3) years are given in the table below for comparison purposes:

Table 30: Summarized payments overcharged:

Year Amount (Shs.) MDA/RS involved

2010/2011 126,495,025 717

2011/2012 90,392,726 218

2012/2013 68,089,906 5*

Although the trend seems to decline from the past years, Management is advised to ensure that the overpaid amount is recovered from whoever caused the loss and the internal control system should be strengthened in respect of the risk caused such payments to be made.

4.3.5 Expenditure made out of the approved budget-Shs. 15,785,285,943 I noted during the course of the audit that Embassies, MDAs and RS offices paid Shs.15,785,285,943 for various activities. However this expenditure of Shs.15,270,835,209 was incurred out of the approved budgets without seeking relevant authorization which is contrary to Regulation 46 (3) of the Public Finance Regulation as detailed in annexure 'F'. Summarized results of such payments made out of approved

17 Vote no. 34, 39, 18, 44, 42, 52, & 18 18 Vote 46 & 56


budget compared to the past year are given in table 46 below for comparison purposes:

Table 31: Summarized payments made out of

approved budget:

Year Amount (Shs)

MDA/RS involved

2011/2012 2,292,796,070 1019

2012/2013 15,785,285,943 29*

See detailed analysis in annexure 'F'

The analysis from the table above depicts that, the Number of MDAs, RSs and Embassies which incurred such expenditure increased from 10 in 2011/12 to 29 in the year 2012/13. This shows that there‘s weaknesses and laxity in implementing budget commitment controls. I strongly recommend that the managements of Ministries, Embassies and RS offices should strive to formulate the realistic budgets and should strictly be properly managed, implemented and followed accordingly.

4.3.6 Inadequately supported payments- Shs.14,498,110,341 During the year of audit I noted payments amounting to Shs.14,498,110,341 which were made without being supported by proper documents contrary to Reg. 95(4) of the Public Finance Regulations of 2001. As such, the authenticity of the payments made could

19 Sub Vote (SV) 2003, SV 2020, SV 2006, SV 2016, SV 2017, SV 2014, SV 2005, SV 2010, SV 2032, SV 2007


not be ascertained therefore, limiting the scope of audit. Summarized results of payments inadequately supported for the past three (3) years are given in table 32 below for comparison purposes:

Table 32: Summarized payments inadequate supported:

* See annexure 'G' for further details.

From the table above, compared to last year, 2011/12 the amount of unsupported payments has increased from Shs.2.1bn to Shs.14.4bn, while entities involved have increased from 8 to 29 respectively, this indicates that controls to ensure proper accounting records are demanded before payments are made are weak, therefore Accounting Officers of responsible MDAs should strength pre-audit units and other relevant controls to ensure that all payments are authenticated by proper supporting documents before such payments are effected.

4.3.7 Missing acknowledgement receipts and EFD

receipts Shs.47,935,509,285

20 Vote no. 18, 19, 21, 22, 29, 32, 40, 42, 46, 50, 52, 69, 82, 85, 92, 94, & 95 21 Vote no. 18, 19, 42, 58, 60, 39, 92, 93, 61, 52, 32, 24, 43, 94, 29, 46, 70, 72, 78, 79, 84, 88, & 95 22 Vote no. 57, 85, 37, 38, 39, 51, 52, & 81

Year Amount (Shs.) MDA/RS involved

2009/2010 362,026,933,382 1820

2010/2011 8,076,574,791 2321

2011/2012 2,122,925,171 822

2012/2013 14,498,110,341 29*


Government has been losing a lot of money by not collecting tax from suppliers due to tax avoidance done by business men. I acknowledge the efforts of the Government of introducing EFD machines. These machines records all transactions made for tax purposes. There is a saying which says that "if you purchase demand receipts, if you sale give receipts". This has not been observed by Government entities themselves by not demanding EFD receipts from purchases made from various suppliers. By not demanding EFD receipts it means these suppliers would be collecting taxes including VAT and not remitting to TRA. This might expose Government in a risk of losing money from tax collected. Government entities have to demand EFD receipts from any purchase that they make with the suppliers. This would help to increase revenue collections. See table 33 below for all payments that were made without getting EFD/ERV receipts.


Table 33: Missing acknowledgement receipts/ EFR receipts

S/N Vote No.DescriptionDoc.

missingAmount (Shs.)

1 38 Tanzania Peoples Defence Forces (Ngome) EFR 45,248,767,272

2 93 The Immigration Service Department ERV 6,990,000

3 89 RUKWA Regional Secretariat ERV 4,345,000

4 83 Shinyanga Regional Secretariat ERV 32,100,000

5 58 Ministry of Energy and Minerals EFR 306,000,000

6 71 Coast Regional Secretariat ERV 7,155,419

7 43Ministry of Agriculture Food Security and

CooperativesEFD 127,297,755

8 69 Ministry of Natural Resources and Tourism ERV 429,382,980

9 2031 Embassy of Tanzania-Brasilia ERV 2,744,371

10 46Ministry of Education and Vocational

TrainingERV 1,029,990,000

11 51 Ministry of Home Affairs EFD 268,658,738

12 29 Prisons Service Department ERV 308,058,820

13 56Prime Minister‘s Office Regional

Administration and Local GovernmentEFR 164,018,930

47,935,509,285Total I have been recommending to the Government to increase its revenue by exploring new sources of revenue and to insist on tax compliance. I advise Government to put more effort to provide education on the voluntary compliance with the Income Tax (Electronic Fiscal Devices) Regulations, 2012 and use of EFD machines which would directly increase revenue if every purchase will be accompanied with an EFD receipts. Also Management of the MDAs and RS involved should strengthen Internal Controls over payments which requires bonafide


payee to issue ERV by making a follow up immediately after effecting payments to confirm the receipt.

4.3.8 Payments without statement of expenditure -Shs. 3,288,257,291 During the financial year 2011/2012 four (4) MDAs and two (2) RSs incurred payments amounting to Shs. 3,288,257,291 for various activities; however, the payments lacked relevant and sufficient information to establish their validity to be treated as proper charge against public funds. A detailed analysis of these payments is given in table 34 below:

Table 34: Payments without statement of expenditure

S/N Vote no. Description Amount (Shs.)

1 85 Tabora Regional Secretariat 14,079,710

2 39 National Service 1,419,608,750

3 38Tanzania Peoples Defence Forces

(Ngome)1,082,728,526

4 50 Ministry of Finance 259,266,000

5 87 Kagera Regional Secretariat 12,460,000

6 52 Ministry of Health and Social Welfare 500,114,305

3,288,257,291Total Accounting Officers should discharge their stewardship role by ensuring that they fully embrace the best financial discipline in managing the limited resources placed under

their jurisdiction. Accordingly, appropriate action should be taken by the Accounting Officers to justify the expenditure and value realized from such payments.


4.3.9 Nugatory expenditure - Shs. 620,002,236

Fruitless and wasteful expenditure is expenditure that was made in vain and that could have been avoided had reasonable care been taken. In this case eight (9) MDAs/RS incurred fruitless expenditure amounting to Shs. 620,002,236 as summarized in annexure 'H'. It is recommended to the MDAs' managements to strengthen their systems of internal controls, as many weaknesses pointed out above originates from the existence of inadequate Internal Controls within the MDAs.

4.3.10 Funds used for unintended activities -

Shs.1,770,390,504 Examination of payment vouchers and related records revealed that payments totaling Shs.1,770,390,504 were charged to fund unintended activities contrary to Reg. No. 115 of the Public Finance Regulations, 2001 requires voted funds to be applied only for the purpose for which they were intended, otherwise may lead to misappropriation of such funds and the purpose for which the funds were purported to have been used for might not be implemented. Summarized results of payments made for unintended purposes is given in annexure 'I'.


To ensure that all funds as approved by Parliament were received and used exclusively and judiciously for eligible expenses as per approved budget and with the provisions of existing laws, regulations and prescribed procedure, I advise the managements of the audited entities (MDAs) to strengthen budgetary controls from its preparation to its execution, any deviations should be identified, documented and dealt with accordingly. However, in order for the intended activities to be achieved, I do recommend that all monies used for unintended activities be refunded back and used for the purpose they were intended for in the first place.

4.3.11 Missing payment vouchers –

Shs.70,195,394 Payment vouchers with their supporting documents amounting to Shs.70,195,394 were not produced for audit scrutiny contrary to Reg. No.86 (1) of the Public Finance Regulations, 2001, which requires expenditure of public money to be properly vouched. In the absence of the payment vouchers and their supporting documentation, the legitimacy, nature, type and purpose of the expenditure of Shs.70,195,394 could not therefore be ascertained as indicated in table 35 below. Table 35: Missing vouchers

S/N Vote no.

Description Amount (Shs)

1 10 Joint Finance Commission

6,501,200


Ta

Summarized results of payments inadequately supported for the past three (3) years are given in table 51 below for comparison purposes: Table 35: Summarized payments whose vouchers

were missing:

Year Amount (Shs) MDA/RS involved

2010/11 250,796,986 323

2011/12 922,974,797 224

2012/13 70,195,394 325

From the table above, the trend shows that the problem of missing vouchers has been recurring year after year despite the reduction in the amounts involved in 2012/13 (Shs.70,195,394) compared to last financial year 2011/12 (Shs.922,974,797), while the number of entities involved has increased to 3 this year from 2 last year. However, persistence of this weakness gives a picture of ineffective control system, therefore I would like to remind the MDAs' management that it is their primary responsibility to establish sound internal controls to ensure all accountable documents including vouchers

23 Vote no. 42, 52, & 54 24 Vote 81 & 34 25 Refer table 35

2 81 RS-Mwanza 17,431,634

3 29 Prisons Service Department

46,262,560

Total 70,195,394


are properly safeguarded in order to avoid the government incurring these cash losses as regarded by Reg. 18 (f) PFR, 2001.

4.3.12 Payments of previous year’s liabilities

using the funds appropriated for 2012/2013 Shs.371,879,693 During the year under audit, I noted payments amounting to Shs.371,879,693 in respect of five (5) MDAs and four (4) RS which were required to be properly chargeable in the financial year 2011/2012, but were charged in the financial year 2012/2013. In addition, there is no evidence that, the payments formed part of creditors for the financial year 2011/2012. This is contrary to regulation no. 85 of Public Finance Regulations (2001). Details are summarized in the table 37 below:


Table 36: Deferred payments

Vote No. Description Amount (Shs)

32President‘s office public service

management84,417,208

82 RS-Ruvuma 3,950,270

70 RS-Arusha 34,557,000

85 RS-Tabora 15,151,180

56

Prime Minister‘s Office Regional

Administration and Local

Government

13,960,208

91 Drug Control Commission Vote 3,752,000

53Ministry of health and social

welfare184,522,474

81 RS-Mwanza 17,543,300

34Foreign Affairs and International

Cooperation14,026,053

371,879,693Total I understand that, currently central government has adopted IPSAS Accrual as a bases for preparation of its financial statement, however, the budget is still prepared under cash basis, therefore care should be taken to insure that deferred payments are being carefully recorded and incorporated in the current financial year‘s Budget to avoid the use of current year‘s fund to pay previous year‘s activities and cause the intended activities not to be achieved. Generally, The main cause of these weaknesses identified in this chapter, were mainly absence of documented risk analysis,


sound internal controls to mitigate identified risks, also negligence in monitoring the existing controls and noncompliance with the existing legislations/regulations without any actions taken (carrot and stick approach) has contributed as well the persistence of these weaknesses. More effort should be put forth to conduct risk analysis on entity level, establishment of risk management policy and risk register. Only effective controls will ensure all expenses incurred are correctly paid, recorded and reflect reality.


CHAPTER FIVE

EVALUATION OF INTERNAL CONTROL SYSTEM AND

GOVERNANCE ISSUES

5.0 Introduction Internal control is an integral process that is designed and effected by an entity‘s management and personnel to address risks and provide reasonable assurance regarding the achievement of its objectives in the effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations. For the purpose of this report, Internal controls refers to how MDAs and RS can reasonably assure themselves that their financial reporting is reliable, their operations are orderly executed, they are ethical, economical, effective and efficient and that they comply with laws, regulations and applicable standards and procedures.

This part highlights audit findings relating to various elements of MDAs and RS's internal controls including; establishment of effective internal audit units and audit committees, risk management processes, information and communication technology, accounting systems and fraud prevention and controls.


5.1 Inadequate Performance of Internal Audit Units Reg. 28 (1) of the Public Finance Regulations, 2001 requires the Accounting Officers of each MDA/RS to establish and maintain an effective Internal Audit Unit throughout the MDA and any other reporting unit including Regional Secretariats. An effective Internal Audit Unit is required to appraise on the soundness and application of accounting, financial and operational controls within the MDAs and RS by performing systematic review, reporting of the adequacy and effectiveness of the managerial, financial, operational systems and budgetary controls. Contrary to the above requirements, the following weaknesses were noted from the assessment of the performance of the Internal Audit Units in 22 MDAs and RS as detailed in annexure 'J' i. The Unit continues to be understaffed,

with some having only one or two staff. Taking into account the scope of the MDAs/RS‘s activities, one or two auditors are not adequate for effective audit coverage.

ii. The audit scope of internal audit functions during the year was limited due to inadequate resources. As such financial and operational controls were not properly evaluated; therefore I could not rely on the works of the Internal Audit Units in order to reduce the extent of my audit tests.


iii. The position of internal audit in the governance framework as well as roles and responsibilities were not clearly articulated in the Internal Audit Charters.

I emphasize my recommendation that, MDAs‘ management in collaboration with the Internal Auditor General‘s Department under the Ministry of Finance strengthen the internal audit function through increased financial and qualified human resources provisions.

5.2 Inadequate Performance of Audit Committees A significant recent corporate governance development in the public sector has been the introduction of audit committees. Audit committees contribute to a strengthened oversight of the financial and ethical integrity of publicly held entities and are essential to effective governance. The primary role of the audit committee is to oversee the development and implementation of policies, system of internal control, financial reporting and risk control framework. Reg.30 of the Public Finance Regulations, 2001 requires each MDA including RS to have an audit committee.

During review of the performance of Audit Committees, it was noted that, 28 MDAs/RS as per annexure 'J' were ineffective due to the following weaknesses:


i. Weak performance of Audit Committees which failed to oversee the role of Internal Audit Unit;

ii. In some instances, the composition of Audit Committee was not adequate as per the requirement of Reg.31(1) of Public Finance Regulations, 2001 which requires an Audit Committee to be composed of senior members, nominated by the respective Accounting Officer and at least one member appointed by the Permanent Secretary from external sources.

iii. The Committees had not reviewed the financial statements and internal and external audit reports of the MDAs/RS;

iv. In some cases there was no proof that, the annual committee reports had been prepared and submitted to the Accounting Officers for taking appropriate action on the Committees‘ recommendations;

The inadequate performance of Audit Committees leads to inefficiencies in the overall control environment and good governance within MDAs/RS. It is important that the audit committee of all MDAs and RS to have a documented and approved Terms of Reference making provision for the membership of the committee, attendance and frequency of meetings, roles and responsibilities and reporting procedures.


5.3 Inadequate Risk Management process Risk management is an inherent part of an entity‘s controls framework to manage business risks, as it involves understanding the organizational objectives, identifying, analyzing and assessing risks associated with achieving such objectives and consistently developing and implementing programmes/procedures to address identified risks. The review of MDAs/RS noted that, 11 MDAs and 14 RS as shown in annexure 'J'; had no documented Risk Management Policy and had not recently undertaken formal risk assessment to identify existing risks and those emerging as a result of the changing environment and methods of services delivery. MDAs/RS should develop and implement the documented risk management processes and ensure that risk profiles and related controls are regularly being revisited in order to have assurance that the risk profile continues to be valid, that responses to risk remain appropriately targeted and proportionate, and mitigating controls remain effective as risks change over time.

5.4 Weaknesses in Information Technology -

General Controls Most government entities use computerized systems to process transactions, financial or non-financial alike. This poses a challenge for


auditors as the influence financial systems have on the financial statements need to be evaluated and understood. As part of understanding of the operations of the auditee, there is also a need to evaluate its IT environment. During the assessment of IT control environment, the following shortcomings were observed in 10 MDAs and 13 RS as shown in Annexure 'J'; i. Most of the MDAs/RS had no IT policy

which may lead to improper management and handling of IT equipment including computer software and hardware.

ii. There were no access controls to computer resources (data, programs, equipment, and facilities), for protecting the MDAs/RS resources against unauthorized modification, loss, and disclosure. Servers were found to be located in the rooms where other normal operations are carried out contrary to IT best practices which require servers to be kept in isolated, secured, clean and free from dust rooms.

iii. There was no IT disaster recovery plan in place. In the absence of disaster recovery plan it will be difficult to restore the system in a timely manner and there will be no tested sources of data for restoration and no specific persons responsible for the restoration. This poses a risk to business continuity of the MDAs/RS.


5.5 Inadequate Fraud Prevention and Control

According to ISSAI 1240, ―fraud is an intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception to obtain an unjust or illegal advantage.‖ The primary responsibility for the prevention and detection of fraud rests with those charged with governance and employees of the MDAs/RS. However, as the Controller and Auditor General, I planned my audit in such a way that I could have reasonable expectation of detecting material errors and misstatements in the financial statements resulting from irregularities including fraud. Our 2012/2013 audit noted that Regional Secretariats of Dodoma, Mbeya, Morogoro, Tanga and Manyara had no documented and approved fraud prevention plans. There were no processes put in place by the Secretariats‘ management for identifying and responding to the risk of fraud in their working areas. The following indicators/red flags which are viewed as symptoms of fraud were noted:

Payments made without supporting documents,

Misstatement of financial statements,

Inadequate management, recording and valuation of non-current assets,

Improper segregation of incompatible duties.


The responsibility for detection, prevention of irregularities and the maintenance of an effective and adequate system of internal control rests with the management; the above noted loopholes should be rectified by devising mitigating factors besides formulation of fraud policy. The policy should have a documented and approved Fraud Prevention Plans and regular risk assessment processes.

5.6 Inadequate utilization of IFMS/Epicor

System All Government transactions are expected to be processed on the Integrated Financial Management System (IFMS). The new release of Epicor 9.05 has got various modules including account payables, account receivables, Cash management, General ledger and Purchasing.

However, our review of IFMS noted that, Epicor accounting package was not fully utilized by some of the MDAs and RS since, cheques were not printed by the Epicor system nor the generation of bank reconciliation statements. Weaknesses were mostly noted in 8 MDAs/RS as shown in annexure 'J'. This was caused by the following weaknesses:

No customization of some modules so as to be compatible with the operating environment of the MDAs and RS,


Inadequate training to the staff on the new released version, Epicor 9.05

It is recommended that, Management of MDAs/RS in collaboration with Treasury ensures that all modules of IFMS are properly customized and the accounting system is fully utilized. Training should also be conducted whenever the need arises such as the release of new version and newly recruited staff.

5.6.1 Use of Manual Accounting Systems

During the year under review it was noted that, out of 32 Embassies, High Commissions, and Tanzania Permanent Missions to the United Nations (Foreign Missions), only one Mission in Pretoria is using the Epicor accounting package. In addition it was found that installation of the system in six Missions namely; Paris, Washington DC, New York, London, Ottawa and Brussels was not successful. The Missions therefore are operating on manual accounting system. I am of the view that, the use of manual accounting system exposes the Missions account records into risk of errors and manipulation without a proper audit trail and hence reducing the level of integrity of the reports being generated. The use of manual system also impairs accuracy, speed and brings about ambiguity in reporting at all levels.


It is of paramount importance to ensure that the Epicor accounting package is installed in all Foreign Missions and that, accounting staff in the Missions are adequately trained on the use of all the modules in the Epicor accounting package to bring about consistence in the financial reporting regime in the government. In addition, the Ministry of Foreign Affairs and International Cooperation together with the Ministry of Finance should ensure that, the use of this system is mandatory to Foreign Missions, and that there is a proper supervision for its implementation.


CHAPTER SIX

HUMAN RESOURCES AND PAYROLL MANAGEMENT

6.0 INTRODUCTION Human resource management In essence, human resource audit involves identifying issues affecting an entity's manpower and finding solutions to the observed challenges before they become unmanageable. It is an opportunity to assess what an organization is doing right, as well as how things might be done differently, more efficiently or at a reduced cost. A human resource audit involves devoting time and resources to taking an intensely objective look at the entity‘s human resource policies, practices, procedures and strategies to protect the organization, establish best practices and identify opportunities for improvement. An objective review of the organization can help to evaluate whether specific practice areas are adequate, legal and/or effective. The results can provide decision-makers with the information necessary to decide what areas need improvement. A human resource compliance audit generally consists of the following: (i) An evaluation of the entity‘s operational HR

policies, practices and processes, with a focus on key HR department delivery areas (e.g., recruiting—internal and external—


employee, compensation, performance management, etc.).

(ii) A review of current HR indicators (e.g.,

number of unfilled positions, the time it takes to fill a new position, turnover, number of legal complaints, absenteeism rates, etc.). Payroll management In a payroll audit, the auditor inspects all the documentation related to the payroll, verifying that it is correct and looking for signs of issues such as gaps between payroll and personnel records, employees with incomplete payroll records, deductions which do not match to contributions, and so on. Internal controls over payroll should be sufficient to ensure accuracy of data, detection and prevention of fraud.

6.1 Key issues raised from audit of MDAs and RS The following are the summarized issues raised from the audit of MDAs and RS. The details of these observations are in the individual management letters issued separately to the Accounting Officers of MDAs and RS:

6.1.1 Unclaimed salaries not remitted to

Treasury Shs.269,312,496 As at 30th June 2013, a sample of three MDAs and Seven RASs had unclaimed salaries amounting to Shs.269,312,496 payable to employees who were no longer working with the MDAs/RS for various reasons including


death and retirement. This amount was yet to be surrendered to Treasury as unclaimed salaries as indicated in table 38 below. Table 37: List of MDAs and RS with unclaimed

salaries

S/No Vote MDAs/RAS Amount (Shs)

1. 10 Joint Finance Commission 12,818,737

2. 37 Prime Minister's Office 16,183,592

3. 63 RAS Geita 3,668,079

4. 65Ministry of Labour and

Employment22, 466,761

5. 74 RAS Kigoma 27,136,507

6. 76 RAS Lindi 157,364,863

7. 82 RAS Ruvuma 2,843,275

8. 89 RAS Rukwa 3,879,907

9. 75 RAS Kilimanjaro 15,197,151.70

10. 79 RAS Morogoro 7,753,623

269,312,495.70Total Source: Individual reports for the financial year 2012/2013

Unclaimed salaries not remitted to Treasury faces a risk of being spent contrary to the original purpose of the funds. Management of the respective votes should ensure remittance of the same to the Treasury.

6.1.2 Delay in remitting unclaimed salaries to Treasury and deductions to financial Institutions Shs.79,328,681 (i) Delay in Remitting Unclaimed salaries Reg.113 (3) of the Public Finance Regulations 2001 and the circular number EB/AG/5/03/01VOL.VI/136 of 31 August 2007 from Ministry of Finance requires the Accounting Officers to remit unclaimed


salaries to the Treasury without delay and that, funds should not be used for any other activity even if the expenditure is genuine. To the contrary, salaries totaling Shs.25,611,306 relating to financial year 2007/08, 2008/09, 2009/10 and 2011/12 at Regional Secretariat Iringa (Vote 73) were submitted to Treasury on 2nd May, 2013 vide Payment voucher no. 1/5 and cheque no.322885 dated 02/05/2013. Furthermore, there was no acknowledgement receipt to justify that the same were received by Treasury. (ii) Delay in remitting salary deductions

to financial institutions Review of salary deductions remitted to various lending institutions for the financial year 2012/13 revealed that RS Iringa remitted Shs.48,060,982 to several financial institutions as repayment of loans and contributions. However, it was noted that the Secretariat did not remit the deductions on time, as there was a delay of up to five (5) months. We further noted penalties which were imposed to National Electoral Commission (Vote 61) due to delay in remitting the Statutory Deductions, Shs.5,656,393 paid to the Director General of Public Services Pension Funds (PSPF) in this regard.


Table 38: Penalty for Delayed Staff Deductions

P/vPayment

DateParticulars Amount (Shs.)

2822163 from July

1999 to March 2000

061VC12001253 07-05-13 3165452 386,393

5, 656,393

061VC12000253 29-10-12 5,270,000

Total

Source: NEC Payroll Information

Apart from the risk of being penalized for the remittances to financial Institutions; unremitted unclaimed salaries and deductions faces the risk of financing unplanned activities. Hence, Management of the votes facing these challenges should ensure timely remittances to the appropriate Institutions.

6.1.3 Payments related to employees who were no longer in service Shs.793,283,755 I noted payments amounting to Shs.779,329,181 in respect of retired, terminated and absconded employees without being detected and deleted from payroll timely after expiry of their service contrary to Sect. 17 of Public Service Retirement Benefit Act No.2 of 1999. The payments related to four (4) MDAs, four (4) RS and three (3) Embassies as indicated in table 40 and 41 below;


Apart from that, three Regional Secretariats had salary deductions amounting to Shs.13,954,573 made at source by Treasury with subsequent remittances to various financial institutions. However, these deductions were in respect of the employees who were no longer in government service for different reasons like retirement, death or resignation. This amount of funds incorrectly paid to the various beneficiaries should be refunded to the Treasury.

Table 39: Payment to employees who were no

longer in service

S/NoVote/sub

voteMDAs/RAS Amount (Shs

1. 34Ministry of Foreign Affairs and International

Cooperation (MFAIC)7,904,151

2. 40 Judiciary of Tanzania 26,724,156

3. 70 RAS Arusha 28,696,726

4. 52 Ministry of Health and Social Welfare 87,157,948

5. 69 Ministry of Natural Resources and Tourism 32,394,926

6. 81 RAS Mwanza 5,873,645

7. 85 RAS Tabora 14,512,701

8. 87 RAS Kagera 591,600

9. 2005 Tanzania High Commission in Abuja 157,814,844

10. 2013 Embassy of Tanzania in Paris 289,666,694

11. 2021 Tanzania High Commission-Kampala 127,991,790

779,329,181Total

Table 40: Unauthorized statutory deductions from ex-government employees

S/N Vote MDA/RS Amount (Shs)

73.00 RS Iringa 2,166,974

81.00 RS Mwanza 10,340,527

85.00 RS Tabotra 1,447,042

13,954,543 Total Source: Individual reports for the financial year 2012/2013


Analysis of payment to employees who were no longer in service for central government for the period of three years consecutively from 2010/2011 to 2012/2013 is as summarized below

Financial Year 2010/2011 2011/2012 2012/2013

Ineligible payments 142,715,827.99 55,917,338 779,329,181.21

Entities involved 7 MDAs 3 MDAs 7MDAs &4 RAS

Source: Individual reports for the financial years 2010/11-2012/13

Figure No. 11: Employees who are no longer in

service

The above situation indicates that there is inadequate Internal Control over payment of salaries which leads to substantial loss of Government funds. Hence management should strengthen Internal Controls by ensuring that salaries paid to un-existing employees are recovered and should design strong controls through the use of the LAWSON software packages to ensure that salaries are only paid to verified employees.


6.2 Absence/Inadequate Open Performance

Review and Appraisal System (OPRAS) Regulation 22 (1) of the Public Service Regulations, 2003 requires every organization within the Public Service to operate an Open Performance Appraisal System for all its public servants; this requirement is in line with the requirements of Standing Orders for the Public Service D.63 (1) of 2009. Further, Regulation 22 (2) of the Public Service Regulations, 2003 explains the purpose of the performance appraisal of public servants with a view to discovering, evaluating and documenting the potential and shortcomings of individuals to enable measures to be taken for continuous improvement in efficiency and effectiveness of public service. However, during the audit on payroll and human resource records for the year under review, it was found that a number of offices were not carrying out Staff Open Performance Appraisal with a view of measuring staff performance. A sample of these offices is shown in table 42 below: Table 41: Absence/inadequate Open Performance Review and Appraisal System (OPRAS)

S/No

Vote MDAs

1. 34 Ministry of Foreign Affairs and International cooperation

2. 35 Directorate Of Public Prosecutions (DPP)

3. 72 RS Dodoma

4. 75 RS Kilimanjaro


Source: Individual reports for the financial year 2012/2013

For improvement of service delivery, it is important for the management of the respective votes to adhere to the cited Regulations by supervising the exercise of Performance evaluation of employees.

6.3 Outstanding staff claims Shs.1,116,040,060 Review of the MDAs in terms of meeting staff‘s claims noted that there was an outstanding amount of Shs.1,116,040,060 which was due and payable to the employees. This situation has a repercussion in terms of employees‘ motivation and productivity. A sample of MDAs experienced this problem is shown in table 43 below:


Table 42: Outstanding staff claims Shs.1,116,040,060

S/No Vote MDAs Amount (Shs) Remarks

1. 49 Ministry of Water 929,139,870

Staff claims consisted of

promotion, unpaid salaries and first

appointment allowances.

20 staff got promotion during the

year 2008 and 2009.

However, no salaries or allowances

which became due following their

promotions were paid.

Claims related to expenses that

were supposed to be paid by the

Ministry of Foreign affairs and

International cooperation. These

claims includes:-

Medical expenses, School fees,

Electricity charges, Natural gas

charges, Rent (Residential house),

Internet and Water charges

2. 58

Ministry of

Energy and

Minerals

34,618,822

3. 2032

Tanzania High

Commission

Kuala Lumpur

152,281,368


As earlier on pointed out, long outstanding claims have negative impact on staff motivation. Hence, such staff outstanding claims could affect the expected level of service delivery. Management of the respective votes should ensure that the rightful claims are settled as per existing procedures.

6.4 Inadequate number of staff Human resource is a significant factor for effective performance of any organization. During the year under review we noted major shortages of staff at MDAs and RS which


hinder efficiency at work place. The staff shortages for a sample of selected MDAs/RS are shown in annexure 'K': Inadequate number of staff as compared to the approved establishment is a challenge to the required level of service delivery. Hence, the Government need to strengthen its financing abilities with the aim of employing the required number of staff with the ultimate goal of improving the service delivery.

6.5 Deductions made to employees above two third (2/3) of the gross salary Debt Recovery Act No.7 of 1970 Sect.3 requires that, total deductions to government employees should not exceed two third of the basic salary. Furthermore, this was emphasized again by the Government circular with Ref: No.C/CE.45/271/01/I/87 dated 19th March, 2009. During the year 2012/2013 I noted 12 cases in a sample of four (4) MDAs and eight (8) RS whereby employees continued to receive net salaries below one third of their basic salary. MDAs/RS are summarized in table 44 below Table 43: Deductions made to employees over and above two third (2/3) of the gross salary

S/N. Vote MDAs/RS

1. 24 Cooperatives Development Commission

2. 39 National Service(JKT)

3. 58 Ministry of Energy and Minerals

4. 70 RS Arusha


S/N. Vote MDAs/RS

5. 72 RS Dodoma

6. 74 RS Kigoma

7. 78 RS Mbeya

8. 81 RS Mwanza

9. 84 RS Singida

10. 86 RS Tanga

11. 91 Drug Control Commission

12. 75 RS Kilimanjaro Source: Individual reports for the financial year 2012/2013

Excessive deductions could adversely affect employees' performance and ultimately affect the vote's service delivery. Management of the respective votes should take necessary action (including limiting borrowing) in order to protect employee's welfare.

6.6 Problems associated with the application of

Human Capital Management Information System (HCMIS) LAWSON The government invested in Human Capital Management Information System (LAWSON) to control government employees‘ salaries. The application of this new system is in compliance with Circular No. 1 of 2010 issued by the Chief Secretary, in which the Government stated its position to embark on e-government particularly in this area of human resource, salaries and related benefits management. Despite some reported plausible improvement in the human resource and salary management as a result of LAWSON 9.05 application, there are still persisting


problems in some selected votes including RS Singida and Ministry of Education and Vocation Training which hinder the effective performance of the system some of the problems being:

Network failure problems have been hindering the effective operation of the system;

Bureaucratic tendencies in the authorization of personnel data submitted through the system;

Delay in providing feedback on the information transferred through the system;

Officers running the system being not sufficiently conversant with how it works; and inadequate number of Officers involved with the system at the higher decision making level.

Specific votes having challenges in using HCMIS - LAWSON should collaborate with PO-PSM and the Ministry of Finance to ensure the system is efficiently and effectively used in processing employees information.

6.7 Absence of Important Posts of Tourist Officer The Embassy of Tanzania in Berlin is among the Embassies with multi-functions in areas of tourism, trade and investments. The Embassy of Berlin serves other eight accreditation countries which are Poland, Austria, Hungary, Switzerland, Republic of


Czech, Romania, Bulgaria and Slovakia. The economic opportunities in the areas highlighted above are expanding in each year. Hence, having experts in tourism is very crucial for enhancing and exploiting the economic diplomacy activities in Berlin and other accredited countries. An audit review has noted that, the existing staff cannot adequately serve huge areas under the Embassy. We also noted that the Embassy management had requested the MFAIC to allocate it with tourist expert, commercial officer and investment analyst. However, none of the above posts has been filled. Given the available opportunities which can be exploited by the embassy; the Embassy's Management should continue reminding the MFAIC management on the issue of allocating appropriate staff who can bring changes in various areas including the ones cited above.


CHAPTER SEVEN

REVIEW OF PROCUREMENT MANAGEMENT

7.0 INTRODUCTION

This chapter is in view of my responsibility on the procurement legislation, as stated in the Public Audit Act No. 11 of 2008 Sect 26 (c) and (d) Sect. 44(2) of the Public Procurement Act, 2004 and Reg. 31 of the Public Procurement (Goods, works, non consultant services and disposal of Public Assets by Tender) Regulations, 2005 which specifically require the CAG to include an evaluation and examination of public procurement procedures and processes as well as compliance with procurement laws and regulation in the regularity audits. The procurement audit seeks to determine whether the procedures, processes and documentations for procurement and contracting adopted by MDAs were in accordance with the provisions in the PPA of 2004, Public Procurement Regulations (GN.No.97 and 98 of 2005, and the standard documents prepared by the Public Procurement Regulatory Authority, and that procurement carried out achieved the expected economy and efficiency and effectiveness in the use of public resources (value for money).


7.1 Major Issues Identified on Procurement Audit Based on this year's audit and the last years, I observed that procurement has continued to be an area of controversy in ensuring best value for public monies. While efforts have been made by Government to enhance procurement rules and procedures across the public sector through implementation of my previous recommendations together with PPRA‘s recommendations, there are indications that some entities are not sufficiently diligent in ensuring compliance with procurement rules in the areas that I have audited. I observed instances of non-compliance with procurement rules and regulations in ensuring transparency, fair competition, and value for money have been achieved. The Procurement irregularities noted in this year's audit are as follows:

7.2 Procurement without competitive quotation Shs.235,855,610 The aim of Reg. 63 of PPR 2005 and Part (a) of the first Schedule is to enhance economy and value for money during procurement process. For a procurement to be done economically it is of paramount importance to have competitive bidding from various suppliers. This would help to get high quality of products at lower price through competition. Government through its selected sample of MDAs/RSs conducted procurements of Shs.235,855,610 without using competitive bidding, this might cost


the Government by paying high for low quality products due to lack of competition. The table 45 below shows instances where the sampled MDAs/RS did procurements without competitions;

Table 44: MDAs/RSs which did procurement without quotation VT No Name of MDA/RS Observation Amount (Shs)

94President‘s Office Public

Service Commission

Procurement of consultancy services

which did not undergo competitive

tendering

50,000,000

75 RS Kilimanjaro

Procurement of goods and services

not supported by competitive

quotations

47,091,190

2031 Tanzania Embassy - Brasilia Procurement made on the cash basis without competitive price quotations 42,016,072

86 RS TangaIrregular procurement through Single

Source 25,000,000

76 RS Lindi Maintenance of Motor Vehicles not competitively made 22,368,110

70 RS ArushaProcurement of goods and services

not supported by quotations 20,334,500

56 PMO-RALGProcurement of goods without

competitive bidding 13,413,380

63 RS GeitaProcurement made without

competitive tendering 6,500,000

77 RS MaraMaintenance of Motor Vehicles made

without competitive quotations 9,132,358

235,855,610Total Source: Individual management letters

The problem of making procurement without competitive quotation was also reported in my previous general reports. Last year procurement without quotation of Shs.530,386,985.00 was observed in 10 MDAs. This year, two MDAs, one oversees Mission and 6 RS with total sum of Shs.235,855,610. This shows that Government has positively dealt with this problem in a very relative small percentage. This challenge still exists and more efforts are needed to eliminate.


7.3 Assets Procured but not operational

Shs.239,908,449 It is important for the Government to plan its procurement so that it adds value to its operations. To get value for money from procured assets, all assets have to be used to perform the intended activities. If Government procures assets and do not use them in its daily operations to increase efficiency then there is no value for money gained from those assets. Government procured assets worth Shs.239,908,449 and after being delivered these assets were not put into use operation to add value in government operations. Hence there was no need of using tax payers‘ money to buy assets and leave them idle. See table 46 below.

Table 45: Assets Procured but not operational

VT No Name of MDA/RS ObservationAmount

(Shs)

72 RS Dodoma

Assets procured three

years back still not in

use

220,136,665

30President‘s Office and

Cabinet Secretariat

Asset Management

Software purchased in

2011 not in use

19,771,784


Tying Government money into assets that do not generate any economic benefits in terms of service delivery and which do not express its value for money of the tax payers‘ funds amounts to misuses of public funds. If an


accounting officer does not have uses of any assets, it is better not to procure the assets and instead use the same amount on activities that would generate economic benefits and add value to Government operational.

7.4 Payments Made Above Invoice/Contractual

Amount Shs.674,331,273 Sect. 122 (1) of PPR 2005 requires a procuring entity to obtain reports (invoice, delivery note, inspection reports) on acceptance of goods that have been delivered and if are satisfactory, shall authorize promptly payment to the supplier. Review in compliance with this regulation, I noted that Government has been paying its suppliers' amounts in excess of the invoice/contract. As a result the government incurred a loss of Shs.674,331,273, in this financial year by paying above the invoiced amount for which efforts should be exerted to recover the money. See a table 47 below: Table 46: Payments Made Above Invoice/Contractual


(Shs.)

40 Judiciary of Tanzania

Payments exceeding invoiced

amount in the procurement of

Motor Vehicles

609,523,267

36 Rs Katavi Overpayment to Toyota Ltd 21,334,478

37 Prime Minister‘s Office

Over payment to Contractor for

refurbishment of Old German

Building and Disaster

Management Office

25,947,276

91 Drug Control Commission Overpayment to contractor 17,526,252

674,331,273 Source: Individual management letters


This shows that there are weak controls over management of Government money. By paying extra from what has been delivered is a sign of weak controls and it shows that there is no coordination between accounting department and procurement unit. This problem has to be dealt with to avoid recurrence of over payments in the future.

7.5 Procurements out of Annual Procurement Plan Shs.2,748,885,871 Procuring entities are required to prepare Annual Procurement Plan in accordance with the regulation 46 (9) of the PPR 2005. It helps suppliers to be aware of what items government will be procuring and it might help Government in saving money by opting bulk procurement which might attract discount from suppliers. Failure to accommodate all procurement needs in one plan might result to emergency procurements which might not reflect the actual value for public monies. In this year Government spent a total of Shs.2,748,885,871 to make procurement out of the annual plan contrary to the cited regulation above. See table 48 below:


Table 47: Procurements out of Annual Procurement Plan

VT NoName of

MDA/RSObservation Amount (Shs.)

38 Tanzania Peoples

Defense Forces

(Ngome)

Procurement were made

without being included in

the procurement plan

2,477,842,091

82 RS RuvumaProcurements of goods not in

the annual procurement plan26,320,000

79 RS Morogoro Procurement made beyond the procurement plan 244,723,780

2,748,885,871Total Source: Individual management letters

In year 2012/13 and 2011/2012 according to PPRA the overall average level of compliance with the preparation and implementation of annual procurement plans improved to 68% as compared to the compliance level of 54% in 2010/2011. But this year again the same problem reoccurred, Government has to comply with recommendations given by PPRA and by my office so as for this problem not to appear again in the future.

7.6 Procurement without approval of Tender Board Shs.480,000,000,000 It is a requirement of Reg. 41 of PPR of 2005 for a Tender Board to examine draft tender by passing them through requirement of tender and approve it. Before approving it Tender Board has to make sure that all necessary requirements that would lead to achieve value for money are incorporated in tender document. Also Tender Board is responsible to deliberate on the tender and decide whom to award the tender. Issuing


tender to a supplier without Tender Board approval might lead to award contract not to a perfect supplier or contract that would not produce value for money. Government entities has entered into various contracts worth Shs.480,000,000,000 without tender board approval as shown in the table 49 below.

Table 48: Procurement without approval of Tender Board

VT No Name of MDA/RS Observation Amount (Shs.)

57 Defense And National

Service

Procurement

contract without

MTB approval

480,000,000,000

480,000,000,000Total Source: Individual management letters

In my 2011/2012 report, I also reported this problem which appeared in RS-Kilimanjaro amounted to Shs.107,171,592. This year the amount has increased to Shs.480,000,000,000. This shows that in few MDAs Tender Boards are not working independently. Government has to look the way to empower Tender Boards and make them operate independently.

7.7 Procurement using Imprests Shs.470,907,577 Sect 58(2) of the PPA 2004 requires procurements to be conducted in a manner that maximizes competition and achieve economy, efficiency, effectiveness transparency and value for money. Using


cash to make purchase without advertising the work or without competitive price quotations from at least three suppliers will be violating Sect. 58 (2) of PPA 2004. By violating this section of the act, Government might be involving in making purchase not in an economy way and thus will be costing higher than it would have cost when calling for competitive quotations. Government through its MDAs/RS purchased different items using cash which directly implies that the method used was not economical, efficient and transparent. See table 50 below showing MDAs/RS which uses cash method to make procurement.

Table 49: Procurement using Imprest


(Shs.)

38

Tanzania Peoples

Defense Forces

(Ngome)

Using imprest to effect

procurements410,808,973

36 RS Katavi Procurement made through Imprest 9,000,750

74 RS Kigoma Procurement of fuel on cash basis 2,797,685

95 RS ManyaraProcurement of goods and services

on cash basis10,727,600

47 RS Simiyu Procurement made by cash 3,830,000

86 RS TangaProcurement made through the use

of Imprest6,067,400

63 RS Geita Procurement made through Imprest 15,275,169

85 RS Tabora Procurement made vide imprest 12,400,000



For government to make procurement in an economical way and get real value for money, all major procurements should be made through competitive bidding and quotations. This will increase value for money of items procured by Government and will reduce any possibility of using government money to procure items that will be substandard.

7.8 Stores procured but not accounted for in stores ledgers Shs.147,691,351 Reg. 198 of the Public Finance Regulation requires all stores received to be brought on charge without delay in stores ledger and to be supported by relevant receipts, issues and physical balances. Government put this regulation as a control on monitoring of stores. Failure to comply with this regulations means that the entire management of stores is in danger of mismanaging stores purchased and stores issued for utilizations. Few MDAs/RS violated this regulation by failing to keep records of stores purchased and issues of stores to final users. Sums of Shs.147,691,351 of stores materials were purchased and not accounted in Government stores ledger and hence their accountability could not be ascertained due to lack of records. Details of procurements are summarized in the table 51 below:


Table 50: Stores procured but not accounted in store ledgers

VT No Name of MDA/RS Observation Amount

(Shs)

51Ministry Of Home

Affairs

Accountability and utilization of fuel supply not

confirmed 83,000,000

47 RS Simiyu Stores not taken on ledger charge 12,807,900

82 RS Ruvuma Stores not taken on store Ledger 2,316,500

71 RS Coast Stores items purchased not recorded into stores ledger 5,500,000

87 RS Kagera Unconfirmed utilization of fuel 23,854,778

85 RS Tabora Supplies delivered but not taken on ledger charge 20,212,173

147,691,351Total

Source: Individual management letters

This problem has been reported in my previous reports, and some accounting officers have been reluctant to implement my recommendations about keeping records of purchases and issues in store ledgers. This year the same problem has occurred again. This shows that the MDAs store sections are not fulfilling their core responsibilities. It‘s important to look at this section and ascertain the causes for this unit not properly handling their responsibilities and determine the necessary actions to be taken against all store keepers who are not performing their duties appropriately.

7.9 Issues Identified by PPRA Public Procurement Regulatory Authority (PPRA) is a regulatory body established under the Public Procurement Act 2004. The Authority is charged with regulatory functions and vested with oversight powers


and responsibilities on all public procurement activities carried by all public bodies. Its objectives among others is to monitor compliance of procuring entities by ensuring the application of fair, competitive, transparent, non-discriminatory and value for money procurement standards and practices. Here below are some of the audit findings from the PPRA Annual Performance Evaluation Report which I have found worth to include in this year‘s General Report.

7.10 Compliance with PPA 2004 and its regulations of 2005 This year PPRA conducted procurement audit in thirty two (32) MDAs. On the basis of its compliance criteria, PPRA indicated an average level of compliance of 66% compared to 69% reported in the last year‘s audits. There is a decrease of 3% on the level of compliance compared to year 2011/2012 and major weakness noted was (i) Appropriateness of contract management (66%) (ii) Management of procurement records (56%) (iii) Implementation of systems prepared by PPRA (23%), and (iv) Handling of complaints in procurement process (-5%).

7.11 Assessment of contracts management

The audits revealed significant performance gaps on contracts management which had serious negative consequences in the delivery of services, goods and infrastructure facilities including; delivery delays, cost overrun, poor


quality of services, goods and works, and loss of public funds through fraud. The compliance on general contract administration, time, quality and scope control were relatively low at 60% of all 32 MDAs audited.

7.12 Management of procurement records

On the management of procurement records, the audits revealed that only 45% of the audited contracts were found to have complete and properly arranged records. This deficiency, to a large extent, affected the efficiency of the audit exercise as well as the compliance level of the audited PEs.

7.13 Evaluation of Procurement Information

Management System (PIMS) Procurement Information Management System (PMIS) and Checking and Monitoring system aim simplifying the management of large volume of procurement data and efficient monitoring of procurement activities. However, the audits have revealed that about 57% of the audited PEs complied with the requirement for submitting Annual Procurement Plans, 5% on the submission of tender process reports, 8 % on contract completion reports, 3% on monthly procurement reports, 18% on quarterly procurement reports and 34% annual procurement reports. The reasons cited for low compliance included the system not being user friendly, the system being time consuming, unreliable


internet access, lack of internet facilities, lack of computers, and inadequate knowledge in implementing the systems.

7.14 Recommendations given by PPRA In order to address weakness on generally compliance of PPA the following were recommended and approved by the Board of Directors of PPRA; I) All PEs with good performance be

commended for their performance and all Accounting Officers, TB Chairmen and Heads of PMUs of the PEs with poor performance to be summoned before the Board of Directors of PPRA to give reasons for the poor performance and to discuss strategies to address the observed shortfalls.

II) All 68 PEs with performance below the 65% target be required to organize training to their staff on the application of PPA, Regulations and, guidelines and systems prepares by the Authority. The training should be conducted by PPRA and be tailored to each PE (or a group of PEs) depending on the weaknesses observed during the audits.

In order to address weaknesses observed in contracts management, the following was recommended; I) To strengthen the capacity of PPRA to

monitor the procuring entities in terms of adequate staff, working tools (including


measurement tools), vehicles and training to staff.

II) PPRA should prepare a contracts management manual/guideline to guide procuring entities while managing procurement contracts.

III) Capacity of Internal Audit Units should strengthen to enable them to audit adequately procurement issues and implementation of works contracts.

In order to address weaknesses observed in the management of procurement records, the following is recommended; I) PPRA to prepare a guideline/manual for

management of procurement records in procuring entities.

II) PPRA Board of Directors to issue stern warning to the PEs which refused to avail to the auditors‘ procurement documents for audit purposes.

III) Procuring entities to be required to ensure that adequate space and storage facilities are provided for PMUs for them to work efficiently.

In order to address weaknesses observed in the implementation of PPRA‘s procurement information management systems (PIMS), PPRA should critically assess the causes for non-compliance and improve the systems to make them more user friendly.


7.15 Anomalies in procurement and stores management observed by Directorate of Government Assets Management Division (Stock Verifier) Part XV of the PFR deals with the need for having an Independent Stock Verification in the stores of MDAs/RS. In this regard, I have received Stock Verification reports in accordance with Reg. 245 (3) of PFR of 2001 that ―The Stock Verifier shall retain one copy of the report for his own record and send one copy to each Accounting Officer concerned, the Permanent Secretary, Accountant General and to the Controller and Auditor General.‖ In compliance with the above requirements, for the year ended 30th June, 2013 the Division of Government Assets Management under the Ministry of Finance conducted stock verification exercise in various MDAs and RS offices and noted the following anomalies:


Table 51: Stock Verifier Reports S/N Weaknesses Amount(Shs)

1. Unsupported Issues of Stores and Fuel 926,306,813

2. Unsupported Receipts of Stores 2,726,633,911

3. Unaccounted Receipts of Stores 732,686,791

4. Unmaintained Loan Register 46,326,412

5. Excessive Issue of Fuel 4,362,065

6. Unapproved Additional Works 37,128,000

7. Improper Posting 1,910,000

8. Uncompleted Works 242,100,440

9. Payment of Works not Completed 44,857,928

10. Deficient Stores 436,713,066

11. Unaccounted Purchases of Stores 5,342,194,700

12. Unreceipted Issues of Stores 3,779,659,039

13. Issues against Nil Balance 41,363,200

14. Irregular Procurement 1,115,000

15. Procurement Without Competitive Quotation 237,754,344

16. Stores Neither in Master Inventory Register nor Inventory

Sheets

570,887,400

17. Unauthorized Payment of Works 3,240,000

18. Irregular Issues Of Stores 3,625,000

19. Improper Posting 7,500,000

20. Un-transferred Balance Of Stores 1,160,934,158

21. Outstanding Stores On Loan 133,509,210

22. Fuel Not Recorded In The Log Book 216,789,901

23. Fuel Not Taken On Ledger 433,858,166

24. Unaccounted Issues Of Stores 110,066,640

25. Maintenance And Repair Of Government Vehicles To Private

Garage Without Prior Approval From E & M Division

94,922,669

26. Undelivered Stores 1,773,377,965

27. Un posted Receipts Of Stores 93,015,600

28. Un posted Issues Of Stores 866,525,065

29. Exhibit Items Not Handed Back To Respective Owners 2,614,000

30. Expired Drugs/Chemicals 31,312,095

20,103,289,577Total

See annexure 'L' for further details and MDAs/RS offices involved. Significant proportion of public funds is still being spent on procurement. T here is need for all MDAs and RSs to exert intensive efforts to comply with the Public Procurement Act and i t s regu lat ions by


improving controls on how procurement is done including ensuring proper asset management of the government. Among the controls which are worth pursuing include; equipping PEs with qualified procurement personnel, strengthening PMUs, strengthening learning institutions involved in building procurement capacity of Central Government, strengthening Tender Boards and Internal Audit Units.


CHAPTER EIGHT

ASSETS MANAGEMENT AND LIABILITIES 8.0 INTRODUCTION

Process flow in Asset Management The Asset Management process defines work flows, processes and methods for the management of assets in support of MDAs/RS objectives in compliance with the public laws and regulations. It involves managing all the stages in the life cycle of an asset: acquiring the asset, receiving the asset, maintaining the asset (including tagging and physical inventory count), and disposal of the asset as shown below:

The overall objective of the audit was to assess the adequacy and efficiency of Asset Management policies and procedures as they relate to asset procurement, tracking monitoring, recording, reporting, disposal of assets, and depreciation and compliance with IPSAS, Government laws and regulations. In order to safeguard assets; controls should be in place to secure them from theft or misuse.


Observations arising from the audits of MDAs and RS are summarized in the paragraphs below. Details of these observations are contained in their individual management letters issued separately to the Accounting Officers. The summary of weaknesses below indicates mismanagement of assets which are mostly needed public resources in service delivery:

8.1 Non maintenance/establishment of proper Non current asset register An asset register is described as a complete and accurate list of assets owned by an entity that is regularly updated and validated. It records the opening and closing balances of classes of property, plant and equipment and is used to support the reported figures in the financial statements. The asset register is a critical component of an asset management information system. The size and complexity of an asset register will depend on the number and type of assets held by an entity and the volume of movements on the asset register (additions, disposals or transfers). The asset register should be regularly reconciled to the balances in the general ledger. As a minimum, an effective asset register should contain the following information: Name of asset; Physical description; Serial Number, unique identifier, or other asset identity tag; Date of purchase (date asset


was brought into life); Physical location; Responsible persons (charged with stewardship of the asset); Expected useful life; Date of last impairment review (and assessment of useful life); Historic cost; Depreciation method; Book Value; and Date of disposal. All assets need to be recorded in the asset register for easy of references. I noted anomalies in the asset register management as follows: (i) Necessary information discussed above

were not shown. (ii) Assets were not recorded in the asset

register. (iii) Unique identifier or code number was

not indicated in the asset register. (iv) Amount of PP&E disclosed in the

financial statement differs with amount shown in the fixed asset register.

(iv) Disposed assets still appearing in the register.

The following MDAs/RS shown on table 53 did not maintain a proper fixed asset register as explained above:


Table 52: List of MDAs/RS noted with anomalies in asset register management

S/No Vote MDAs/RAS

1. 10 Joint Finance Commission

2. 13 Financial Intelligent Unit

3. 35 Director of Public Prosecutions (DPP)

4. 37 Prime Minister‘s Office

5. 38 Tanzania Peoples Defence Force

6. 52 Ministry of Health and Social Welfare

7. 61 National Electoral Commission

8. 73 RAS Iringa

9. 75 RAS Kilimanjaro

10. 78 RAS Mbeya

11. 80 RAS Mtwara

12. 81 RAS Mwanza

13. 82 RAS Ruvuma

14. 85 RAS Tabora

15. 91 Drug Control Commission


17. 99Ministry of Livestock and Fisheries

Development18. 2005 Tanzania High Commission in Abuja

19. 2021 Tanzania High Commission-Kampala

20. 2023 Tanzania Embassy Bujumbura

21. 2004 Tanzania embassy Kinshasa

22. 2024 Embassy of Tanzania in Riyadh

23. 65 Ministry of Labour and Employment



Review of asset management noted 23 MDAs/RSs which is equivalent to 26% of the total audited MDAs have been maintaining improper asset management register. Central Government adopted IPSAS accrual basis of accounting in preparation of their financial statements, although there is a provision of five years to become fully compliant with the IPSAS accrual, I insist for the government to identify all its assets and record them in the asset register with complete information concerning these asset and all disposed assets to be removed from the asset register.

8.2 Grounded and un-serviceable Noncurrent

asset According to Regulation 254(1) of the Public Finance Regulations of 2001 where it is considered that stores, vehicles, plant, or equipment, have reached the end of their useful life or are beyond economical repair or are unserviceable for any other reason or have become redundant through obsolescence they must be retained until a sufficient quantity has accumulated to merit convening of a Board of Condemnation to inspect to and report on the items. However, during the year under review we noted that various assets were grounded for too long without taking disposal procedures. I strongly advise the government assets management division under Treasury to work and accomplish disposal procedures.


Grounded noncurrent assets which are in good condition needs to be repaired so as to continue getting benefits from them. Those assets which are unserviceable I recommend to the government through respective Accounting Officers to dispose them in order to avoid future loss through deterioration or outrights theft. Referred annexure 'M'.

8.3 Partial revaluation of Property, Plant and Equipment IPSAS No.17 Paragraph 53 states that; ―the items within a class of property, plant, and equipment are revalued simultaneously in order to avoid selective revaluation of assets and the reporting of amounts in the financial statements that are a mixture of costs and values as at different dates‖, but to the contrary the MDAs/RS had made valuation for some of its buildings and leaving others without being valued and therefore, the amounts presented in the financial statements will have a mixture of costs and re-valued amount as at different dates. A review of supporting schedules for Property, Plant and Equipment related to buildings, motor vehicles and motor cycles of MDAs/RS revealed items on those categories disclosed assets without values contrary to Para 49 of IPSAS 17 resulting to underestimated figure of PP&E. Omission of asset value signifies that proper valuation is yet to be done. The relevant votes with this challenge are as shown in the annexure 'N'.


Although Central Government has adopted IPSAS accrual basis of accounting and a five years provision has been granted, there‘s a need of revaluing their assets so as to accommodate them in the financial statements and all assets which will not be revalued need to be disclosed.

8.4 Property, Plant and Equipment lacking ownership documents As at 30th June 2013, I noted that land and buildings owned by the MDAs and RS had no title deeds in order to confirm rights and obligation of the reported PPEs on legal status and ownership as shown on table 54 below.

Table 53: List of MDAs and RS lacking ownership documents

S/No Vote MDAs/RAS Remarks

1. 68 Ministry of

Communication, Science

and Technology

Building situated at plot no. 1168/19 along

Jamhuri Street has no title deed

2. 72 RAS Dodoma Missing title deeds Mpwapwa DC‘s Office

Block A ;Bahi-Building plot No.30 block H;

Bahi-DC House Plot No.4 Block H, Chamwino

DC Office Plot No 902 Block D; Chamwino

DC Office Plot No.997 Block D;RC Residential

Plot No 42 -43 Mlimani

3. 88 RAS – Dar Es Salaam Lack of title deeds of the land owned by

RAS – Dar Es Salaam

5. F75 RAS Kilimanjaro Building located at DAS Office Rombo

(Mashati), DAS office Rombo (Usseri) and DC

OFFICE –Mwanga acquired in the year

1971,1972 and 1988 respectively

Missing title deeds of the following buildings

allocated at plots Nos

28,29,30,31,32,45,46,112,113,114,115,

116,117 and 118 at Kilimatinde in Tabora

4. 93 Immigration Service

Department



Ownership of assets is confirmed through having legal documents. The government should ensure that title deeds to confirm that land and buildings are owned by their respective MDAs/RS are processed immediately and held as evidence of ownership of the assets.

8.5 Improper recognition of intangible assets Shs.31,681,109,928 Included in the sampled MDAs and RS statement of PPE are intangible assets of Shs.31,681,109,928 which are wrongly classified and recognized in the system generated financial statements. Explanatory notes in the financial statements described these intangible assets as reports, documents, appraisal cost as summarized in the annexure 'O'. Information contained in the financial statements are not reliable and may mislead potential users of the reports. The noted financial system‘s anomaly of capitalizing transfers and other items shown above as intangible assets of these Ministries needs to be resolved by the Ministry of Finance by providing these with the new items to replace the previous ones. True value of intangible asset needs to be reflected in the financial statement hence the government to ensure that the value of intangible assets is as per IPSAS 31 requirements.


8.6 Absence of monitoring devices (CCTV camera) at weighbridge stations TANROADS CEO issued letter of 07.06.2011 to TANROADS Regional Managers requiring them to ensure prompt repair of defective remote displays, CCTV Cameras and weigh ticket printing system at the weighbridge stations. CCTV Camera and external remote weight display needs to be repaired so as to enhance transparency on weighbridge operations and reducing to the minimal if not eliminating unnecessary complaint from transporters, comply with the Weight and Measures Agency rules which emphasize on transparency to stakeholders to view and confirm the weight displayed during the weighing process. However, during audit visit, it was noted that the CCTV Cameras were not yet installed on the following sampled weighbridge stations: a) Namanga and Makuyuni (Arusha) b) Mikese , Kihonda and Mikumi

(Morogoro) c) Uyole and Mpemba (Mbeya) d) Makambako (Iringa)

Monitoring devices enhance transparency on weighbridge operations. The government should ensure that these devices exist and are functional in all weighbridge stations for improving transparency.


8.7 Misclassification of Development Funds Transfer Shs. 696,991,606,941 Para 13 of IPSAS 17 defines Property, Plant, and Equipment as tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and are expected to be used during more than one reporting period. Also para 14 of IPSAS 17 provides recognition criteria for Property, plant, and equipment that shall be recognized as an asset if, and only if it is probable that future economic benefits or service potential associated with the item will flow to the entity; and the cost or fair value of the item can be measured reliably.

During the year under audit I noted that to two (2) MDAs reported transfer of development funds amounting to Shs.696,991,606,941 under Property, Plants and Equipment as at the end of the financial year 2012/2013. However, the reported amount of Shs.696,991,606,941 in the financial statement was transfer of funds to Ministry institutions to meet development activities whereby the item of transfer does not meet the definition of Property, Plant and Equipment as well as the recognition criteria as stated above. Information contained in the financial statements is not reliable and may mislead potential users. The affected Ministries are as shown on table 55 below:


Table 54: List of MDAs and RS with Transfer of Development funds

S/No Vote MDAs Transfer included in

the PP&E (Shs)

Remarks

1 46 Ministry of

Education and

Vocational Training

(MoEVT)

26,797,695,648 Transfer to Colleges and Universities

2 98 Ministry of Works 670,193,911,293 Transfer to Ministry Institutions (i.e.

TANROADS, TBA and TEMESA) to carry

out construction and rehabilitation of

roads works, building of government

houses and purchase of ferries and

heavy plants.

696,991,606,941Total Source: Individual reports and Financial Statement for the financial

year 2012/2013

Rectification in the Chart of account to separate items of recurrent and capital nature in the Epicor system needs to be done by the Ministry of Finance through the Accountant General.

8.8 Inadequate management of Ivory tusks stockpile and other trophies During audit and verification of inventories held at Ivory room-Dar es salaam and outstations under the Ministry of Natural Resources and Tourism, I noted that there is no register maintained to record all inventories held in the main store (ivory room) at the Ministry‘s headquarters-Dar es Salaam. Local inspection conducted in upcountry stations revealed a large number of trophies were kept at various outstations for more than a year instead of being transported to the Ivory room at the


Ministry‘s headquarters for safe custody. I also noted the following shortcomings;

(i) 108 large elephant tusks and 20Kgs of

tusks were missing from Kilwa Police Station-Lindi Review of documents at Miguruwe Game Reserve noted that, during the period from 5th June 2012 to 8th June 2012, 108 large elephant tusks among others were held as exhibits at Kilwa Police Station. Out of 108 impounded tusks, 7426 were totally missing and 34 tusks which were relatively large were interchanged with other pieces which were relatively small compared to the impounded ones (Case no. ECO 3/09/2009 and Case no. KLM /IR/43/2010 (ECO 2/2010). Furthermore, we noted that 20 Kgs of impounded tusks were also missing (refer case KLM/IR/184/2009 (7 KGS), KLM/IR/235/2009 (3KGS), KLM/567/2010 (10 KGS)).

(ii) Elephant tusks with large size illegally exchanged with tusks of smaller size resulting into a loss of 203.66 kilograms at Kilwa Police station Elephant tusks of large size with total of 498.3 kilograms were impounded in different occasions and kept at Kilwa

26 Refer case no. KLM/IR/144/2009 (4 PCS), KLM/498/2008(4 PCS), KLM/501/2008(10 PCS) KGS 15, KLM/4/2007(46 PCS), KLM/IR/277/2007(10 PCS)


police station as exhibit. However, a review of the related documents revealed that the tusks of large size were exchanged with tusks of small size resulting into a loss of 203.66 kilograms.

(iii) 103 elephant tusks kept at Liwale

Police Station without awareness of the Director of Wildlife Site visit at Liwale game reserve disclosed that, there are 103 elephant tusks in possession of Liwale police station. However, the aforesaid elephant tusks have no any corresponding records in the office of Liwale Game Reserve.

(iv) Improper release of exhibit of Vehicle No. T903 AGF by Police at Kilwa which was captured with 26 kilograms of elephant tusks (valued at Shs.135,000,000) whose case is still at the court.

In the absence of proper records tusks may be misappropriated without management's knowledge. The government should ensure effective controls are in place for managing ivory stockpile and other trophies in the whole country.


8.9 Non disclosure of imprest as receivables Shs.288,923,451 Reg. 103(1) of the Public Finance Regulations, 2001 requires imprests to be retired as soon as the necessity for them ceases to exist. A verification of imprest related records revealed that imprest amounting Shs.288,923,451.45 were yet to be retired contrary to the prescribed public finance regulation. In addition, the imprests were not disclosed as receivables in the Statement of financial position contrary to Accounting Circular No.11 of 2012/2013 and IPSAS 1 accrual basis on presentation of the financial statements, consequently, the financial position of the MDAs may not portray financial affairs as at 30th June, 2013. This anomaly was noted in the following Ministries:

Table 55: List of MDAs and RS Non disclosure of

receivables S/No Vote MDAs Amount(Shs)

1. 49 Ministry of Water 158,875,201

2. 51 Ministry of Home Affairs 119,515,961

4 95 RAS Manyara 1,800,000

52007

Tanzania High Commission Lusaka

Zambia3,800,989

288,923,451Total Source: Individual reports for the financial year 2012/2013

The government to ensure that accounting officers play their part by preparing financial statement which shows a true and fair view. Receivables to be disclosed as per Accounting Circular No. 11 of 2012/2013 and IPSAS 1 accrual basis. The government is advised to


put in place the policy for collecting its receivable on time.

8.10 Unsettled liabilities amounting to Shs.277,728,051,810. As at 30th June 2013, the MDAs/RS had an outstanding accounts payable balance of Shs.277,728,051,810. The aging analysis indicated that this amount has been outstanding for more than 12 months. The Ministry of Water reported Shs. 6,152,485,146 as liability for the year under review, Included in the figure of liabilities is Shs.5,152,376,652 equivalent to 80% of the total liabilities being unsettled bills due to TANESCO. Out of the reported liabilities of the Ministry of Home Affairs-Police Force Department, Shs.13,333,345,896 equivalent to 11% of the total liabilities were interest and penalty. A huge interest and penalty on loan were charged on outstanding liabilities due to failure of the Department to honor its obligations, as a result of contractual agreements entered with the National Health Insurance Fund (NHIF) and National Social Security Fund (NSSF) for purchase of Motor vehicles in years 2010 and 2012. We are concerned with the liquidity problem of respective MDAs/RS as failure to discharge their maturing obligation on time will affect its future plans as they fall due. The MDAs/RS with unsettled liabilities are shown in annexure 'P'


Government through PMG should ensure that Accounting Officers in MDAs/RS put in place sound budgetary controls over expenditure and ensure budgets for settling the long outstanding liabilities are set aside in the coming year. The Government is further advised to increase its budget allocation and fund releases in order to avoid debt accumulations. In future, all obligations need to be paid on time with a view of avoiding paying interests and penalties.


CHAPTER NINE 9.0 SPECIAL AUDIT 9.1 Introduction

The Controller and Auditor General may undertake special audit in accordance with section 29 of the Public Audit Act, 2008. In addition, Regulation 79(1) of Public Audit Regulation, 2009 state that ―a special audit may be conducted where an Accounting Officer or any person, institution, Public Authority, Ministry, independent Department, Agency, Local Government Authority and such any other body, requests in writing to the Controller and Auditor General; provided that, the Controller and Auditor General shall not be bound to accept such request‖. The scope of audit shall be determined by the person requesting the special audit; however Regulation 80(2) allows the Controller and Auditor General to modify the scope of the audit as he shall deem necessary. During the financial year under review, I carried out four (4) special audits. Key issues from the special audits are summarized below; however individual special audits reports have been issued to respective authorities in accordance with Regulation 81 of the Public Audit Regulations, 2009.


9.2 Report on the audit conducted on Designated Referral Hospitals and Designated Voluntary Agency Hospitals for 2010/11 and 2011/12 The following are key findings from the special audit conducted on Payrolls and Other Charges in respect of 4 Referral Hospitals, 48 District Designated Hospitals and 39 Voluntary Agency Hospitals for the years 2010/2011 and 2011/2012. The findings have been grouped into two main areas of payroll audit and other charges (OC).

Payroll

Payment of salaries to non-existing Employees Shs. 754,992,183 Salaries paid to retirees, absentees and ineligible officer‘s through personal bank accounts - Shs. 754,992,183. This was noted in 10 out of 91 hospitals.

Unclaimed salaries retained in Hospitals of Shs. 3,047,574,792 Unclaimed salaries amounting to Shs.3,047,574,792 pertaining to retirees, absentees and ineligible officers retained in various hospitals‘ instead of remitting this amount to Treasury. The hospital management paid salaries to staff who are not in the Government Payroll and other amounts were used in other hospital charges.


Unpaid Salary arrears Shs. 2,323,084,860 Accumulation of salary arrears that have been outstanding for a long period of time Shs. 2,323,084,860.

Other charges

Non maintenance of separate accounts for grants received from the Ministry of Health and Social Welfare (MoHSW) with other hospital receipts. Some Hospitals' managements mixed the Government grants with other sources of hospital revenue in a single account. Also, some of these hospitals did not maintain vote books to separate funds received from the Ministry (Government) and this from other various hospital sources.

Outstanding Liabilities and Commitment Shs. 2,511,881,024 We noted outstanding liabilities of Shs. 2,511,881,024 relating to arrears of salaries, on leave allowances and supplier‘s claims. There is a high risk of spending the next years' budget to settle previous years commitments, hence, affecting planned objectives.

Amount not confirmed to have been received by Hospitals - Shs.304,075,145 Shs. 304,075,145 disbursed to various hospitals were not confirmed to have been received by those hospitals. The Ministry of Health and Social Welfare will


have to write on this and establish the whereabouts of this funds.

Un-reconciled difference of funds released to DDH and VAH by MoHSW Shs.84,996,355. Shs. 823,870,474 was transferred to DDH and VAH by MoHSW. However, Shs.738,874,119 was verified to have been received leaving a difference of Shs. 84,996,355 which will have to be recovered to establish precisely whereabouts of the funds.

Disbursement of funds to Hospitals without breakdown according to their nature of expenditure. MOHSW transferred funds for other charges without being itemized. Hence, the hospitals utilized funds without having guidance.

9.3 Ministry of Works on Procurement of MV

Misungwi for financial year 2004/2005 The Ministry of Works is responsible through Tanzania Electrical Mechanical and Electronics Service Agency (TEMESA) to regulate ferries in the country. In the fiscal year 2004/2005, The Permanent Secretary, Ministry of Works entered into contract No.10014/2004/2005 on 10th May, 2005 with M/S Sinnautic International of P.O. Box 234, 4900 Oosterhout, Netherlands for the Supply of new ferry to be plying between Kigongo-


Busisi at a contract price of Euro 2,483,441-CIP Mwanza. Summary of findings from the special audit conducted at the Ministry of Works on Procurement of MV Misungwi were as shown below:

One caterpillar engine works after direct connection of circuits engine to the propulsion unit without going through the clutch. This practice will cause early engine damage.

Inadequate supervision and monitoring of the contract No.10014/2004/2005 with Sinnautic International.

Changes in the contract terms without prior approval of the Accounting Officer and Tender Board.

MV Misungwi was not officially handed over to the Ministry of Works.

Nugatory expenditure amounting to Shs. 29,402,371.80 for clearing spare parts despite the fact that the contractor had already been paid for the same tasks.

Late delivery of the ferry, and non delivery of spare parts amounting to Euro 41,140.

Non appointment of inspection and acceptance committee in accordance with regulation 127 of the Public Procurement Regulation, 2005.

Sinnautic International has not completed works as per contract; we noted non installation of removable checkered plates, hand operated injector testing


machine, echo sounder, Global Positioning System - GPS device and non provision of Navigation Charts.

Registration of MV Misungwi with registration number MZ/P 032 at Mwanza port in 2008 without having seaworthiness certificate.

9.4 Ministry of Agriculture, Food Security and Cooperatives on the National Agricultural Inputs Voucher Scheme (NAIVS) The National Agricultural Inputs Voucher Scheme (NAIVS) was formed in 2008 for implementation of the Accelerated Food Security Project (AFSP) by the Government of the United Republic of Tanzania. The objective of NAIVS is to contribute to higher food production and productivity in the Targeted Areas by improving farmers‘ access to critical agricultural inputs. The Government of the United Republic of Tanzania is implementing the project through the Ministry of Agriculture, Food Security and Cooperatives (MAFC) summary of the findings from the special audit broken down to three administrative level as explain below.

9.4.1 Ministry Level

Delays in procurement of the agriculture input vouchers as a result input vouchers reaches the beneficiaries after the rainfall seasons.

Improper storage and inadequate recordkeeping of agriculture input


vouchers. Hence, there were no record showing redeemed vouchers at the Ministry for 2010/2011 and 2011/12 and stores ledger of unused and returned vouchers from District do not indicated serial numbers of the vouchers used.

Lack of adequate information on fertilizer and seed supply in the country. The importation and distribution of Agricultural inputs are in the hands of Private Sector dealing with agricultural inputs including seeds and fertilizer companies.

Lack of operational manual of the system.

9.4.2 Region Level

Lack of adequate records of agriculture input vouchers at Arusha and Rukwa Regions.

Delays in distribution of agriculture input vouchers to the districts at Arusha, Lindi and Rukwa Regions.

9.4.3 District level

Insufficient records maintained for Agro-dealers at Karatu, Meru, Karagwe, Lindi and Mpanda.

Lack of basis for selection of Agro-dealers at Karatu, Lindi, Nkasi and Mpanda District.

Poor recordkeeping at Karatu, Chato, Ruangwa, Meru and Kilosa districts.

Karatu, Meru, Lindi, Ruangwa and Kilosa districts delays distribution of vouchers to villages.


Lack of seeds and fertilizers inspection in accordance with section 5(i) of the Fertilizer Act, 2009 at Karagwe and Mpanda districts.

Delays in receipt of agriculture input vouchers at Ulanga and Nkasi districts.

Fraud allegations on vouchers that were not delivered to the beneficiaries at Chato District.

56,121 agriculture input vouchers with the value of Shs.1,159,834,000 were not used at the Chato District and were returned to the Ministry.

9.4.4 Village level

Lack of adequate supervision from the districts.

At Laghangareri village in Karatu District, 300 out of 900 beneficiaries were not provided with agriculture input vouchers in 2010/2011.

The Agro-dealer at Jobaj village in Karatu District, Eagle Agrovet was handled over with original agriculture input vouchers by VEO, which is contrary to the circular issued by the Ministry.

Beneficiaries at Jobaj in Karatu received Hybrid seeds 10kg to 12kg only or UREA only for the years 2010/11 and 2011/12 in exchange for signed agriculture input vouchers of fertilizers (UREA and MRP) this implied that value of agriculture input vouchers redeemed was not matching to the value of inputs supplied to beneficiaries.


People who are not in the approved list of beneficiaries at Ngaibara, Jobaj and Kilimamoja in Karatu District and Nyabishenge and Kaisho village in Karagwe District receive agriculture input vouchers and agriculture inputs without following formal procedures.

Lack of records of beneficiaries at Mawilo village in Lindi District

Beneficiaries were not financially able to pay for the top up on agriculture input vouchers

At Inchankima and Msilale the Village in Chato district agriculture input vouchers were being purchased by Agro-dealers for Shs. 10,000 each in the year 2010/11.

Lack of awareness of the scheme by farmers/beneficiaries at Karagwe and Ulanga District.

Fake seeds were distributed to farmers at mamba village in Mpanda, Kaisho and Nyabishenge villages in Karagwe and Idunda village in Ulanga District.

Delays in receipt of agriculture input vouchers in 2011/12

The Village Agriculture Input Voucher Committee member at Ntene Village in Lindi district was appointed by Agro dealer to be his salesman.

Chinongwe and Litima in Ruangwa did not receive agriculture input vouchers from the district.

At Mamba village, there were complains on the quality of the maize seeds and


fertilizers that they do not yield the expected outputs.

9.5 Ministry of Health and Social Welfare on

financial impropriety of training fees at Mkomaindo Nursing Training Centre During the year 2012/2013, a special audit was conducted on training fees collection and its accountability at Mkomaindo Nursing Training Centre and the following is the summary of the audit findings:

Non maintenance of cash book for recording training fees received; hence no Bank reconciliations were prepared, contrary to Regulation 162(1) of Public Finance Regulation, 2001 which states that the balance of bank account as shown in the bank statement must be reconciled with the corresponding cash book balance at least monthly, the reconciliation statement being filed or recorded in the cash book.

Improper maintenance of counter foil register as the actual dates of receiving receipt books from Sub Treasury differs from the dates shown in counter foil register, (8) receipt books and two (2) deposit slips were not recorded in the counter foil register.

Training fees received amounting to Shs.31,056,000 was neither banked nor available in the cash office, contrary to Regulation 60 of Public Finance Regulation of 2001.


Existence of forged admission letters in the academic year 2010/2011


CHAPTER TEN

OTHER ISSUES 10.0 INTRODUCTION

In this chapter, I am coming up with other issues arising from the powers vested in me under Section 12 of the Public Audit Act, 2008 and it‘s Regulations of 2009. In Reg. 34 of the Public Audit Regulation, 2009 it gives power to the Controller and Auditor General to make recommendations to the Government for any matter that CAG consider to be better for the management of Public monies, Stores, Securities Stamps and other Properties issues. In this chapter I have exercised my power and make recommendations on matters concerning: 1. Operations of Government Executive

Agencies, 2. Government renting office building

space, 3. Issues relating to Management of Prison

Service Department, 4. Role of CAG in auditing PPP Projects and 5. Issues raised on Auditing of Political

parties. 10.1.0 Government Agency Appraisal

Executive Agencies are semi-independent public institutions that are designed to operate at a arm‘s length from their parent Ministries. Prior to their formation, Agencies existed as departments under Ministries but government decided to create them under ambit of parent ministries for the aim of,


among others to (a) Improve delivery of public service (b) improve quality of delivered service and (c) to promote continuous improvement of service. To achieve the cited objective above, government gave agencies greater autonomy, like hiring from outside the public service and they can retaining the revenues they generate. All these incentives were mainly given so as to motivate workers of the agencies to work harder, professionally, and with higher integrity in order to achieve the goals of providing public services in a more efficient and effective manner.

If you compare performances of agencies and departments, you can clearly see that:

I. The level of service delivered has been improved by existence of agencies compared to the time they operated as government Ministry departments.

II. Quality of service provided to public has also increased, most of the agencies are providing improved services compared to the services that they were providing as department under ministries.

III. Compared to departments, revenue collection has improved under the set-up of agencies.

IV. Administration expenses on operations of agencies have increased compared to the administration expenses during the set-up of Ministerial department.


Despite of the above comparison between agencies and departments, over the period of time agencies have been facing several challenges which need government's intervention to sort them out. The following are some of challenges which crosscut the majority of agencies.

10.1.1 Financial dependence from government

Most of the agencies still depend on subsidies from the Government against the spirit of their establishment. Agencies were established with the views of having financial dependence as stated in Sect. 12 of the Executive Agency Act (Cap.245 Revised Edition 2009). In this section, it is stated clearly that funds of agencies consists of money gained from provision of goods and services, charge of fees or commission that will enable agency to meet their expenditures. But it has been revealed that most of the agencies are to a large extent still dependent on government funding to cover their operating expenses like Personal emoluments and some of their development activities. This imposes a great risk on viability and sustainability of their services due to this dependence and also overburden the government in funding this agencies.

10.1.2 Insufficient funds to finance agencies

Most of the agencies are financed by the Government of Tanzania and few by external donors. There is shortage of funds to finance


agencies budgets. Despite the fact that agencies were initially established for the aim of providing improved services to the public using their own funds obtained from charge of fees, commissions, proceedings from sales of goods or services, these agencies are still being financed by the government. It has been revealed that the funding of agencies is highly below their budget. The table 57 below shows a sample of agencies that have received funds below the approved budget for the year 2012/2013.

Table 56: Insufficiency in government funding of agencies

Name of Agency Budget (Shs)Actual Release

(Shs)

Under release

(Shs)%age

REA 139,608,473,000 43,832,473,000 95,776,000,000 69%

Agriculture Seed

Agency3,905,348,918 688,472,050 3,216,876,868 82%

TEMESA 16,517,804,783 5,212,086,776 11,305,718,007 68%

TBA 7,854,766,677 2,500,848,001 5,353,918,676 68% Source: Individual Management letters

From the table above we can see clearly that there is an acute shortage of funds from government to the agencies. Also, this to a great extent affects achievement of expected Agency's goals. It is very difficult for a government to provide quality service if funds are under released. In order to achieve the main goal of establishing the executive agencies of providing sufficient and quality services, it is important for the government to release funds as budgeted. Since government funding is seen as a major constraint, the Government should for the


time being curtain the further formation of additional Agencies.

10.1.3 Delay on release of funds from

Government Despite there being shortage of government funding of Agencies, also release of funds has been significantly delayed. Funds not released on time have great effect on the achievement of Agency's targeted objectives. For a service to be of quality, it has to be efficient and hence has to be on time. If you cannot release funds on time then there in no way you can get quality and timely service. Agencies have been receiving funds not in accordance with their action plan requirements and this is affecting the implementation of their intended objectives.

10.1.4 Insufficient number of staff and working

tools There is insufficient number of staff and working facilities. Agencies were established for the purposes of improving quality of public services. Quality of services goes hand and hand with a sufficient work force and other necessary working tools like motor vehicles. It is difficult to provide quality service if you don‘t have right caliber of staff and working tools. If Agencies are meant to provide quality and timely service it is very important for them to have the appropriate number of qualified staff as well as necessary working tools.


10.1.5 Under collection of own source revenue Sect 12 (2) (a) of the Executive Agency Act (Cap .245 Revised Edition 2009) states that agencies shall perform their functions in accordance with modern commercial principles and shall ensure that, as far as possible, their revenue are sufficient to meet their expenditure properly chargeable to revenue. During this year's audit it has been noted that, some of the Agencies have being collecting revenue below their approved budgets. This makes it difficult for the Agencies to meet their own expenditure and settle their own liability without depending on funds from the government. See table 58 below which shows Agencies under collection of revenue.

Table 57: Under collection of own source revenue

Name Agency Budget (Shs)Actual Collection

(Shs)

Under collection

(Shs)

%age

of

under Agriculture Seed

Agency4,031,144,000 3,243,186,175 787,957,825 20%

TEMESA 27,922,064,400 22,732,726,218 5,189,338,182 19%

Tanzania forest

services (TFS) agency74,628,558,879 62,668,602,055 11,959,956,823 16%

Source: Individual Management letters

One of the roles of the Agencies is to provide quality services to the public and get revenues from the quality services that they are providing. It simply implies that revenue collected should go hand in hand with the service that Agencies are providing. For Agencies to be financially independent they


should be able to provide quality service to the public that will enable them to get enough revenue to settle their liabilities as the satisfied public would be willing and able to pay for the service enjoyed.

10.1.6 Recommendation

From the challenges that I have explained above, I recommend the following to the government and to the executive agencies.

All executive agencies which were established with the aim of providing service to the public and gain revenue from their service, it is time for them to compete in the commercial world by being more innovative and increasing the quality and level of service. This will improve their revenue collections and will minimize their independence from the central government in funding matter.

Agencies which were established with the aim of taking service to a large number of customers should maximize on taking advantage of the big customer base to maximize their revenue collection potentials.

In order to provide quality service it is important to have qualified staff and working tools. Parent Ministries in collaboration with the Public Service Commission have to make sure that their agencies are well equipped with competent staff and necessary working


tools that will enable them to increase the level of service and to improve their service delivery to the public.

Due to the current serious government fund constraint of the agencies the government should for the time being stop creating additional agencies until when the government financial position improves.

10.2.0 Payment of Rent Charges by MDAs

Shs.7,895,872,337 Government of Tanzania has 59 MDAs, audit of MDAs in this financial year revealed that there are some MDAs which do not have their own office buildings. These MDAs have been renting various buildings and pay a lot of money for rent office accommodation. Audit examination of MDAs on sample basis, revealed that nine (9) MDAs in the financial year 2012/2013 paid a total of Shs. 7,895,872,337 as rent charges per year. The analysis shows that some of these buildings belong to private companies. Table 59 below shows the amount paid as rent by each MDAs.


Table 58: Payment of Rent Charges by MDAs Vote No. Name of MDAs Amount (Shs.)

Ministry Of Information, Youth, Culture and

Sports 1,038,809,034

Department of Information Service 216,000,000

Ministry of Works 482,219,184

TANROADS 1,432,616,640

Road Fund Board 531,300,000

10 Joint Finance Commission 159,264,127

61 National Electoral Commission 937,200,000

35 Directorate of Public Prosecutions 654,506,859

43 Modern Farmer -Ministry of Agriculture 81,120,000

NIDA 1,423,142,893

97 Ministry of East African Cooperation 435,585,600

12 Judicial Service Commission 129,708,000

40 Labour Court 116,400,000

40 Land court 258,000,000

7,895,872,337

96

98

Total Source: Individual Financial statement

The above analysis shows that for this financial year in the sampled 9 MDAs only, Government has been paying a huge sum of money for office accommodation. If Government could have its own buildings to accommodate its ministries and agencies, the mentioned amount could have been allocated elsewhere in important development activities. Accommodating government ministries/departments in buildings of other owner/landlords imposes a great financial burden to Government in terms of rental charges. Rents in real world market tends to raise every time depending on demand which is also increasing with time, so it is expected that the government will continue to pay high rental charges to accommodate its ministries and departments.


As a government it is very important to invest on its own office buildings. I do advice the government to build its own office buildings to accommodate ministries, departments and its agencies. Government can do the following to implement this:

Government through the Ministry of Land and TBA to find areas for Ministries buildings of all ministries that do not have their own buildings.

Government to make arrangements with social security funds to secure loans for construction of these office buildings.

Government can also make arrangement with development partners like Africa Development Bank, World Bank, etc to get loans/grants for the construction of its office buildings.

The spirit of constructing government buildings should be extended to our Embassies/Missions where it is very costly to rent offices or staff houses.

10.3 Challenges facing Tanzania Prison Service

(TPS) Prison Department is one of the important department which deals with lives of many Tanzania Citizens. Normally, Prisons have three basic functions firstly, is to secure and control offenders, secondly is to punish offenders and thirdly is to rehabilitate or reform offenders. Currently there are 122 institutions (Prisons) including male prisons, female prisons and Youth Prisons. All 122


prisons are responsible for the custody and care of more than 45,000 prisoners while the accommodation capacity is 22,669. This implies that the prison facilities are overcrowded by more than 100% and this makes it very difficult to control and monitor prisoners in congested prisons. I conducted a visit in some of the prisons and I observed that a lot of issues that I now recommend to Government to take necessary steps to rescue the current situation found in many of our prisons in Tanzania. The followings are some of my recommendations to the government for the plight of our prisoners.

10.3.1 Limited budget It is true that a lot of departments have problems in financial resources; most of institutions operate under deficit. But prisons and other institutions which deal with lives of people directly like Hospitals etc need special treatment when it comes to the government budget ceiling. Prisons need to feed prisoners, to dress them and to take care of their health. Not only prisoners this institution also needs to buy uniforms to its officers, to pay for leave allowance, moving allowance and many more. In the financial year 2012/2013 TPS budgeted to spend Shs. 131.5 Bil on Other charges and Shs. 51.6 Bil for development activities. Due to budget deficit TPS was given budget ceiling of Shs. 51.4 Bil for other charges and


Shs. 1.3 Bil for development. Taking few items as example of items that were highly affected by budget cut down are prisoners clothes, prisoners food and staff uniform. See table 60 below.

Table 59: Limited budget

ItemActual

Requirements (Shs)

Approved

Budget (Shs)-Variance %

A B C= (B)-(A)

Prisoners food 32,400,320,000 8,000,001,000 -24,400,319,000 75%

Prisoners

Clothes 1,583,198,200 500,000,000 -1,083,198,200 68%

Staff Uniforms 3,707,888,000 350,000,000 -3,357,888,000 91% Source: Budget book and Budget Proposal from management

From the above table it shows that the three items were highly affected. The actual requirements were not met even by half of the requirement. The picture we are getting here is that prisoners might not be getting required ration of food, staffs are not getting uniforms as required and hence this makes their working environment not conducive and also it shows that prisoners do not have the required pairs of clothes let alone assurance of their medical care in case of sickness.

10.3.2 Under release of funds Despite the fact that the budget ceiling that was given to Tanzania Prison Service was almost half of the requirement, yet the approved budget of this institution was not financed as it was approved. In this year there was under release of Shs. 23,683,463,320 on recurrent expenditure which is equivalent to 16% of the budget and


for development under release was Shs.525,485,285 equivalent to 34% of the budget. Analysis of budget against actual release is as in table 61 below:

Table 60: Under release of funds

ItemApproved

Budget (Shs)

Actual release

(Shs)Variance %

Recurrent budget 143,414,319,789 119,730,856,469 -23,683,463,320 -16%

Development budget 1,535,655,285 1,010,170,000 -525,485,285 -34%

Source: financial statement of Prison Service

The above table shows that it is very challenging for this institution to serve more than 45,000 prisons and its officers and this will automatically affect issues of uniforms to officers and prisons, staff leaves, moving expenses and in large extent will affect settlement of liabilities from suppliers.

10.3.3 Increase of liabilities from suppliers and

staff claims To provide for food, uniforms officers, medicine and medical treatment to prisoners you need to have good relationship with suppliers. From year 2009/2010 up to 2012/2013 TPS has failed to pay a total liability of Shs.46,559,702,987 made up of maintenance costs, uniforms, utilities and other supplies of goods and services from various suppliers. See table 62 below to see the composition of this liability.


Table 61: TPS increase of liabilities from suppliers and staff claims to 30th June 2013

Item Amount (Shs.) %

Supplies of Goods and Service 25,997,391,544 56%

Staff claims 16,010,580,484 34%

Utilities 4,540,930,958 10%

Total 46,559,702,987

Source: Financial Statement of Prison Service

56% of the liability comes from the suppliers of TPS. This indicates that TPS has unfavorable credit worthiness at any time litigation may be imposed against them by suppliers.

10.3.4 Poor Infrastructures and congestions in

Prisons Most of existing prisons were built over 50 years ago, infrastructure of these prisons (e.g. sewage systems) was meant to accommodate a certain number of prisoners. As I stated above, now prisons have more that 45,000 prisoners while actual infrastructures are capable of accommodating only about 22,669 prisoners. To accommodate this number of Prisoners, TPS need about 156 prisons and not 122 which is the existing number of prisons in the country to date. This means that there is a need to find facilities that will be able to accommodate more inmates to avoid the extremely over crowded situation which could have health and social consequences.


10.3.5 Recommendation on the existing situation of our Prison From above challenges facing prisons in Tanzania I recommend the following to the government and to the Prison Service Department itself. On Number of Inmates to be high in Prisons

The Judicial system of Tanzania will have to speed up the ruling of pending cases. There is a large number of inmates in prisons whom are waiting for their case to he heard and justice to be given by courts of law by speeding concluding cases facing inmates will help to reduce the number of inmates in prisons.

Government has to opt to use other methods of punishing inmates after being found guilty. Government can choose to use alternative methods of punishments like extra mural labour, community service and parole. This will significantly reduce the number of inmates and prisoners in prisons.

For minor offenders and defaulters it is better to use fines and if they fail to pay the fine, they should be handled to their township leadership, or district and given communal based labour.

Issues of limited budget

Maintaining inmates and prisoners imposes a great cost to the government. To feed, dress and medical treatment to inmates is a very expensive undertaking


on the part of the government. The management of prison Service is advised to improve quality of their productive activities like carpentry, agricultural activities, tailoring, construction of houses and mechanics. The Prison Service Department should comment its Prison Cooperation Sole to a strong and viable economic way of the department which through the use of available labour in prisoners would be very profitably.

Prison Service is encourage to write up several development proposals and find various donors like Africa Development Bank (ADB), USAID, etc that will be willing and ready to finance their proposal of expanding and improving the prisons.

Management of Prison Service Department is advised to call for a visit to members of PAC and other leaders of Government to visit Prisons and see the actual situations in the prisons. This will help them to make informed decisions concerning resources allocations to the vital organ of the state.

10.4 The role of Controller and Auditor General

in Auditing PPP projects Public Private Partnership (PPP) arrangements are innovative methods used by the public sector to partner with private sector companies that bring capital and their ability to deliver public projects on time, while the public sector retains the responsibility to provide these services to the


public in a way that benefits the public. Realizing the need to partner and create synergies between public sector and private sectors, the Government came up with the National Public-Private Partnership (PPP) policy in November, 2009 and enacted a PPP Act No. 18 of 2010. However, to a greater extent the role of CAG with regards to auditing PPP projects has been limited; and that poses a lot of risks to public resources that might have been otherwise might mitigated had the CAG been involved.

10.4.1 Addressing risks in PPP arrangements PPP Act is among the key laws that was enacted to embark Tanzania into various reforms that are aimed at transforming the economy from Public Owned Central Planned Economy into Private Sector Owned Market Driven Economy. PPP has to a greater extent overcome the government capital budget constraints , where the public and private sectors can work together to get better value for money for the taxpayer in delivering public services through profit gain to the private sector and efficient service delivery to the public sector.

Key development projects such as the construction of a blood bank in the lake zone at Bugando Medical Centre in the health sector, Songas in the energy industry, and Mlimani City Complex Mall in the social-economic sector are some of the few examples which have been executed through


PPP. The partnership has supplemented limited public sector capacities to meet the growing demand for infrastructure development, extracting long-term value-for-money through appropriate risk transfer to the private sector over the life of the project – from design/ construction to operations/ maintenance etc.

Despite the benefits that may be derived from PPP arrangements, there are some risks associated with PPPs of which government intervention is of vital importance. PPPs can drive up costs, under-deliver services, harm the public interest, and introduce new opportunities for fraud, collusion, and corruption.

To address these risks, the International Standards of Supreme Audit Institutions ISSAI 5220 and ISSAI5240 provide guidance on how Supreme Audit Institutions should be involved in the review of the process involving Public Private Partnership. It is my desire to recommend to the government to ensure strong measures are taken to reduce the extent of risks which can be borne by the government through these agreements. Among the risks PPPs can pose include;

Poor decision-making processes may result in the wrong partner being selected, or an inappropriate partnership vehicle being used for the project. In some cases private partners are single


sourced without using competitive bidding process thus limiting the advantage of the government from enjoying the best economical prices.

The government should design thorough procurement and appraisal processes which assesses the dependability and probity of potential partners. Such appraisal should focus on choosing a viable partner with proven track record in project development through a competitive bidding process.

The unavailability of state financed feasibility studies could become a costly arrangement to both parties. Key projects development are managed through solid feasibility studies whereas the required costs and value to be attained are analyzed and projected. However, lack of facilitation fund and awareness hinders a realistic means to determine the cost benefit analysis pertaining to a particular project.

Recognizing the importance of feasibility studies so that interests of both parties are served and optimal achievement is attained, the government should create a PPP Facilitation Fund to finance feasibility studies on key projects implementation. In addition, the government is urged to launch a full scale sensitization program in order to fully engage the private sectors to identifiable national priority projects. The


continuous absence of state financed feasibility studies could become a very costly affair.

There are instances where a private partner determines the amount of profit to be shared from unanticipated utilization of assets, or capitalizing costs which are not allowable in the contract.

The government should ensure that issues of

profit sharing (including possible future gains from property sales or refinancing) are addressed as clearly as possible in the partnership agreement. It should also ensure that the state‘s interests are protected if contributed assets are disposed off by the partnership (e.g. guaranteeing the state a share of the proceeds). The government should also be able to verify the total costs being capitalized in the project which are subject for recovery during the lifetime of the project.

Under the current arrangement, there is a possibility of the government to lose control of its assets. The government or public entity may agree to transfer some of its assets to the ownership of the private partner, as it is the case with Tanzania Broadcasting Corporation (TBC) and StarMedia Tanzania Ltd. It is worthwhile to note that once assets have been transferred to the private sector,


the public sector is likely to lose ownership over them.

It is advised that the government should consider whether assets of national importance can be leased to the private sector rather than transferred outright. The partnership agreement could give the public sector ―step-in‖ rights in the event of a major failure in the delivery of services or the bankruptcy of the partner.

Project development, bidding and ongoing costs in PPP projects are likely to be greater than in traditional government procurement processes. In most PPPs there is a risk of costs attached to debt given the fact that private sector can efficiently accesses funds and use the financed funds effectively in order to maximize their investment (portfolio) returns. The guarantees and indemnities given to the private sector partner may not be fully priced into the agreement which may lead to the state losing the value of its investment.

The government should therefore determine

whether the greater costs and risks involved are justifiable. Careful and thoughtful analysis should be tailored to address appropriate allocation of project risks between the public and private sector parties affected by the project. In all the PPP arrangements, the public entity should


look for the optimum transfer of risks by ensuring that the individual risks are allocated to those best placed to manage them.

Given the long-term nature of the PPP Projects and the complexity associated to them, it is difficult to identify all possible contingencies during project development and events or issues may arise that were not anticipated by the parties at the time of the contract. It is more likely that the parties will need to renegotiate the contract to accommodate these contingencies.

The government should be keen in contract design and negotiation in order to ensure that any risk resulting from unforeseeable events are fairly shared between the two parties and according to the predetermined and agreed sharing risk levels.

Public sector partner may be prevented from obtaining sufficient information about the partner‘s performance because the partnership‘s articles of association or general legislation may not allow information to be provided to one partner on demand that is not supplied to all partners. The government should ensure that the articles of association allow for


performance information to be supplied, on demand, to the public sector partner. Where the government is acting as a lender or guarantor it should request additional information from the partnership in order to ensure the security of its loan.

There are instances where the partnership may become bankrupt or the government may wish to withdraw from the agreement. If the government has not identified such scenarios before entering into the agreement, there is a danger that the government could find itself unable to exit except at highly punitive costs.

In its risk analysis before entering the partnership, the government should carefully consider these possibilities and make provision for them - either in the terms of the agreement (e.g. the power to withdraw in the event of poor performance without unreasonable financial loss) or by way of contingency planning (e.g. share disposal).

In the event the government/public entity makes large contractual payments up front, it may be effectively financing the private partner. If a large percentage of the contract price is paid initially, the private partner may have less incentive to deliver quickly or to a high standard. The


government could also lose its limited resources if there is a change of situation on the ground.

The government should link contractual payments to the achievement of the agreed milestones and the standard of services delivered.

The Public Private Partnership Act does not provide for CAG‘s access to all PPP records and information. The Act does not state whether the private partners are supposed to keep proper books of accounts and records in relation to the project and whether the books should be open for scrutiny by the contracting authority or government. The Act does not require the private partner to submit duly audited financial accounts and any other information as could reasonably be required by the contracting authority.

The Act should ensure that all PPP contracts and Production Sharing Agreements (PSAs) provide for the Controller and Auditor General to have access to financial records and other information of the private partner or company in all the PPP arrangements.

In addition, the government should avail and provide to CAG all the relevant PPP information throughout the project life from the tendering phase, contract


awards and the operational phase. Guideline 3 of ISSAI 5220 provides that, examining a project by a Supreme Audit Institution throughout these stages has the advantage that any weaknesses identified can be corrected before the contract is signed and so more serious difficulties avoided at later stages.

The government should also provide regular information on project performance clearly showing whether the private partner is meeting its obligations to the public sector partner so that any risk of loss is identified as early as possible, enabling the government/public sector partner to consider how best to protect its interests.

10.5 Common issues emerging from the ongoing

audit of Political Parties’ accounts For the first time, the CAG has started the implementation of the audit of Political Parties in the country which is in accordance with the requirement of section 14 (1) of the Political Parties Act No.5 of 1992. The exercise is still going on as we prepare this general report, hence this brief report is on what has been observed generally so far. On completion of the whole audit exercise, I will be in a position of giving a more detailed report on the audit of political parties in the country with a view of advising the Registrar of Political Parties on how best to regulate


these parties and ensure the existence of accountability and transparency in the management of the funds entrusted to them. In the audit of nine (9) Political Parties currently being conducted, we have observed the following:

a) The submitted financial statements have

differing accounting basis and financial reporting frameworks. The format and accounting period of the Political Parties are different and do not disclose pertinent information about the basis of preparation of the financial statements and also accounting policies and notes to the financial statements were missing hence limiting the audit scope.

b) Financial Reporting framework for four (4) political parties could not be established because the submitted financial statements were only a list of receipts and payments and the statements did not contain general party information and notes to the financial statements. A sound accounting framework is an important ingredient for promoting accountability and transparency in reporting on the stewardship of the resources entrusted to the political party.

c) Eleven (11) out of twenty one (21) Political Parties with permanent registration did not submit their annual financial statements as required by


Section 14 (1) (i) of the Political Parties Act No.5 of 1992.

d) Seven (7) out of the nine (9) audited Political Parties do not maintain proper books of accounts of the funds and property of the party as required by Section 14 (1) of the Political Parties Act No.5 of 1992. Instead the Political Parties do record receipts and payments only.

e) Four (4) out of nine (9) audited Political Parties do not maintain bank accounts as required by Section 15 (1) of the Political Parties Act No.5 of 1992.

f) Our review noted that no political party has so far submitted to the Registrar of political Parties annual declaration of all property owned by the Party as required by Section 14 (b) (ii) of the Political Parties Act No.5 of 1992.The law lacks the required date for submission of such declaration.

10.5.1 Recommendation

To enhance disclosure, presentation and comparability of Political Parties‘ performance, parties should prepare their financial statements in accordance with International Accounting Standards. The adoption of common reporting framework of accounting will also lead to consistency and uniformity of recording transactions and preparation of the financial statements of the political parties. This is where the Registrar of Political Parties in conjunction with the Accountant General should come in


giving guidance on the type of reporting framework to be adopted and format of financial statements to be prepared by the Political Parties.

10.5.2 Challenges

By virtual of section 14 (1) (i) of the Political Parties Act No.5 of 1992 it requires me to audit political parties. However, during audit I encountered challenges in auditing non public funds collected by political parties. According to the constitutional obligation under article 143(2)(c) of the constitution of the United Republic of Tanzania, I am required to audit public funds and resources. Under the circumstances it is not so clear as to whether it is justified for me to audit the non public funds of the Political Parties. Section 14(1)(i) of The Political Parties Act No. 5 1992 requires political parties to submit to me audited financial statements on 30 October each irrespective of which is the end of the financial year of the party. The Act assumed that all political parties will have a common year end and which is not the case so far, while the Public Audit Act of 2008 requires the accounting officers to submit to me financial statements for audit purpose three months after closure of accounts that is 30 September each year I recommend to the government to revise the Political Parties Act No. 5 1992 (amended 2009) in order to resolve the challenges


CHAPTER ELEVEN 11.0 CONCLUSION AND RECOMMENDATIONS

The detailed audit findings in this General Report were communicated to the respective Accounting Officers for action. The Accounting Officers and Sub-Accounting Officers of MDAs, Embassies and RS are required to prepare responses on the CAG‘s audit findings and recommendations and submit them to the Paymaster General as per requirement of the Public Audit Act No.11 of 2008. In this report, I have pointed out several weaknesses in internal control systems which have resulted in financial mismanagement. These matters call for immediate intervention from the Accounting Officers by establishing sound internal control systems that will prevent future recurrence of the same deficiencies. In order to effectively address the weaknesses pointed out in this report, I have made several recommendations which, if implemented will enhance sound financial management within the Government. After presenting the salient features from audit findings for the year 2012/2013 for the MDAs, Embassies and RS in preceding chapters, I am now in a position of coming up with the following general conclusions and recommendations, which if implemented will enhance sound financial management on operations of the Central Government as stipulated hereunder:


11.1 Non implementation of some of the previous year’s recommendations I noted responses from the Government through the Paymaster General and the Accounting Officers. However, some of the recommendations issued in the previous year‘s General Report of Central Government and the Individual reports issued to Accounting Officers were not responded to. In this year‘s audit, 77 MDAs/RS had previous years‘ outstanding issues amounted Shs.636,849,749,109 with the Ministry of Works having the largest share of Shs.253,777,000,000 followed by the Ministry of Finance (Vote 50) having Shs.244,919,408,265 while Treasury (Vote 21) is the third in the ranking having Shs.72,668,447,899. As earlier pointed out, Inadequate follow up in ensuring that previous years recommendations are implemented could lead to recurrence of the same anomalies in the subsequent years. Recommendation The government should put more efforts to ensure that the recommendations are attended to accordingly. The Paymaster General should instruct Accounting Officers to take necessary measures to improve documentation and records keeping , which is one of the main causes that contribute to missing documents and therefore failure to reply to some of the raised audit issues.


Accounting Officers coming up with clear documented action plan is another option which needs to be taken on board. The action plan will be specific for issues which cannot be done within a reasonable short period of time. Insistence of having a register of audit recommendations to be kept by every Accounting Officer is another important mechanism. A register is a good tool to record and track outstanding audit issues not attended to including the progress attained so far in the implementation of this recommendation.

11.2 Procurement Management Compliance with Public Procurement Act and its regulations is of paramount importance in getting the best value for money out of public funds. My office together with PPRA, have been advising Government through the Accounting Officers on the best ways of conducting procurement activities. PPRA have been issuing various circulars to MDAs/RS on how to improve compliance of Procurement Act and its Regulations. In this year‘s audit there is recurrence of some matters that were recommended in last years‘ reports. The recurring weaknesses include and not limited to Procurements made without being in the annual procurement plan, procurements without competition, assets procured but not in operations, payments made above Invoice/Contractual amount, procurements


without approval of Tender Board and procurements using Imprests. Taking into consideration that Procurements takes a huge part of Government spending, and the fact that there is inadequate supervision in procurement transactions and existence of non compliance with the procurement law and its regulation inevitably such situation will lead to the government suffering huge losses. Recommendation As earlier pointed out, Procurement takes a huge part of Government resources in order to implement its planned activities. Hence, the government has to improve compliance with the Procurement Act and its Regulations to avoid repetition of anomalies noted. The following need to be taken into consideration in order to improve compliance;

Government through PPRA has to conduct several seminars with the aim of building capacity of PMUs, Tender Boards, Accounting Officers and User Departments on the importance of complying with the Public Procurement Act and its Regulations.

It is also important to have a Computerized Procurement Information Management Systems (PIMS) in effective operation. This system is hosted by PPRA. PPRA has to make sure that this system is user friendly to end users so that MDAs/RS can easily use this system to improve procurement activities.


Government should see the need of establish of the procurement and contract management committees in MDAs to oversee the procurements and contracts undertaken by the government the committee should have legal power to review and resend Tender Board decision where it can be establish that such action with the result into major servings to the government.

11.3 Unattended Shortage of Workforce in MDAs and RS Human resource is a significant factor for effective performance of any organization, this includes efficient delivery of services to the intended community. During the audit of 2012/13 I noted a huge shortage of staff as compared to the approved establishment levels within MDAs. For the sample of 28 MDAs & RSs tested, I noted a shortage of 12,646 staff equivalents to 57% of the establishment level of 22,159 staff. I am concerned with this huge shortage of staff which could imply either the approved establishment is incorrect or there is serious shortage of staff in all the MDAs which inevitably will affect service delivery. Recommendation The noted shortage of 12,646 staff equivalent to 57% of the establishment level of 22,159 staff in a selected sample of 28 MDAs & RSs tested is so huge that inevitably


will seriously affect the service delivery of an entity. The PO-PSM should revisit the establishment levels of MDA and RS and come up with the ideal required level. Accounting officers of MDAs and RS should work hard to ensure that they are equipped with sufficient and qualified number of staff and they should plan for staff incentive and retention policy and by having workable training programme. Shortage of staff should be communicated to respective authority including PO-PSM.

11.4 Salaries Paid to non – Exiting Employees

I have noted the Government‘s efforts through the PO –PSM and the Ministry of Finance to solve the existing challenge of paying salaries to non-exiting employees. The efforts noted include and not limited to carrying out the exercise of verification of existing employees and investing in Human Capital Management Information System (LAWSON). Inspite of the Government efforts in this regard, I have once again observed this year the existence of salaries being paid to non-existing employees amounting to Shs.779,329,181 which was paid to non-existing employees in 11 sampled MDAs and RSs. This observation demonstrates that the challenge of paying ghost workers is still in existence.


Recommendation To avoid such losses in future, Accounting Officers of the respective MDAs/RS should check their payrolls periodically to confirm validity of all entries. Communication should also be enhanced to ensure that names of retirees, absconders or terminated employees are deleted from payrolls once they cease to be in employment. Apart from that, Accounting Officers should ensure unclaimed salaries in respect of employees who are no longer in public service for one reason or another are surrendered timely to Treasury as per given instructions. Further, Accounting Officers should ensure that the Human Capital Management Information System (LAWSON) is fully utilized in order to obtain the anticipated value for money on its investments.

11.5 Expenditure Management Establishment of sound Internal Control

systems is one of the management responsibilities. I have been addressing the same in my reports every year. Some of the MDA/RS have been able to implement my recommendations and have improved their operations remarkably but always there are those who lag behind. Because of existence of weak internal controls systems, I have again noted various weaknesses in expenditure management. This includes Shs.14,498,110,431 which was made without proper supporting documents as noted in a sample of 29 MDAs/RSs; expenditure made out of approved


budget Shs.15,785,285,943 noted in 29 MDAs and RSs and missing payment Vouchers Shs.70,195,394 noted in three MDAs/RSs; Other observations and the MDAs/RS involved in brackets are- Long outstanding imprests Shs.319,423,337 (9 MDAs/RSs); Payments charged to wrong Account codes Shs.2,394,834,855 (25 MDAs/RSs);

Overpayment Shs.68,089,906 (5 MDAs/RS); Missing acknowledgement receipts and EFD receipts-Shs.47,935,509,285 (13 MDAs/RSs); Payments lacking accountability Shs.3,288,257,291 (6 MDAs/RSs); Nugatory expenditure Shs.687,169,796 (10 MDAs/RSs); The funds used for unintended activities- Shs.1,770,390,504 (17 MDAs/RSs); Payments of previous year‘s liabilities using the funds appropriated for 2012/2013 Shs.371,879,693 (9 MDAs/RS).

As pointed out above, I observed a number of anomalies that could otherwise have been resolved had my earlier recommendations being taken on board. Issues like payments charged to wrong account codes, expenditures made out of the approved budget, improperly vouched expenditures, missing payment vouchers and nugatory/fruitless expenditures have continued to recur regardless of the recommendations given to resolve the issues.

Recommendation This is one of the areas noted during my audit which accommodates a number of challenges. Mostly, these challenges are caused by not


having adequate Internal Controls, and where the controls do exist they are not being correctly supervised and/or overridden by the entrusted officers. Accounting Officers of MDAs/RS should ensure that all payments are authenticated by proper authorities and proper supporting documents in line with the requirements of Regulation 95(4) of the Public Finance Regulations of 2001. Internal checks need to be strengthened including strengthening the pre-audit functions.

11.6 Operation of Embassies

Embassies and High Commissions operate as Independent Sub-votes under the Ministry of Foreign Affairs and International Cooperation. I managed to audit 32 of these Offices and noted the following challenges; About 1627 Embassies/Missions out of the 32 audited made payments above the approved amounting to Shs.6,227,749,594; Payment of salaries to retired officers amounting to Shs.575,473,328 involving 328 embassies; Some of the home based staff have overstayed contrary to conditions given in their appointment letters which specifically states that home based staff shall have the maximum stay of four (4)

27 Refer annexure 2 (under expenditure management) 28 Tanzania High Commission in Abuja-Sh. 157,814,844; Embassy of Tanzania in Paris – Sh. 289,666,694; Tanzania High Commission-Kampala – Sh. 127,991,790


years in the work station abroad; Another challenge is lack funds for carrying out diplomacy duties especially in the economy sector in the countries the Embassies/Missions are representing. From the summary of findings above, it shows that non compliance with approved budgetary provisions for most of Embassies/Missions is alarming and responsible management should strengthen budgetary controls at the same time insuring that prepared budgets are realistic. Also, we call for working on the rest of the issues as addressed in the individual management letters issued to each Ambassador of High Commissioner in their capacity as Sub-Votes holders. Recommendation A separate study is ongoing in this area. However, basing on what was noted during audit; I have the following general recommendations:

The respective Embassies/High Commissions, in collaboration with MFAIC should cease payment of Foreign Service allowances to retired officers and make early arrangements for immediate transfers of the ex-officers to their places of domicile.

Embassies/High Commission‘s management should communicate with the MFAIC for the need of replacement of home based staff who have overstayed in


one station. This will have positive effects in the services delivery of the respective embassies/missions.

MFAIC management should consider a possibility of setting aside funds in its budget for carrying out economic diplomacy and promote tourism attraction, taking into consideration that this is an important task to the Country‘s economy.

11.7 Operations of Designated Hospitals

There were various challenges noted in the audit of Designated Health facilities. These challenges included salaries of Shs.754,992,183 paid to retirees, absentees and ineligible officer‘s through personal Bank Accounts; Unclaimed salaries amounting to Shs.3,047,574,792 were utilized by various hospitals to pay salaries of staff who were not yet enrolled in the Government payrolls and to cater for other hospital‘s activities; Non maintenance of separate accounts for grants received from MoHSW with other hospital receipts. The noted challenges require serious interventions by the MoHSW to see the deficiencies are rectified and do not recur. Recommendation After auditing two items of Payrolls and Disbursement of funds for other charges (Grants) to the respective Centres/Hospitals,


the following needed to be taken into account:

The MoHSW should ensure that all funds transferred to hospitals are itemized according to their nature of expenditure instead of being transferred in block amount as noted during the audit.

The MoHSW in collaboration with the Treasury should improve communication with the Hospital managements to ensure immediate deletion of ghost workers who are still in the Government Computer Payrolls.

I urge the District Designated and Voluntary Agency Hospitals to adhere to the contract agreement signed between MoHSW and the respective Hospitals on adherence to the terms and conditions of Board members appointment.

I recommend to the MoHSW in collaboration with the managements of the Hospitals to ensure that in future separate bank accounts are maintained in respect of Government funds instead of the current situation of mixing up these funds with other hospital funds. Furthermore, hospital managements should be made to be accountable on the public funds by preparing periodic accounts/reports to the Ministry. Alternatively the MoHSW together with MoF could work out accordingly system which will allow the use of bank account but clearly capturing the transaction


related to the government funds received by the hospitals.

11.8 National Agricultural Inputs Voucher Scheme (NAIVS) An audit on the National Agricultural Inputs Voucher Scheme (NAIVs) which operate under the Ministry of Agriculture, Food Security and Cooperatives noted existence of some challenges which need attention for smooth operation of the scheme. These noted challenges in the scheme include delays in procurement of the agriculture input vouchers, Lack of adequate information on fertilizer and seed supply in the country, Lack of operational manual of the system, quality of seeds that do not yield the expected outputs and delays in distribution of agriculture input vouchers. While the Government is actively implementing the National Agricultural Input Scheme aimed at increasing production of food crops, audit findings indicate that there are fundamental operational and control issues that urgently need to be addressed by the major implementers of the scheme including the Ministry of Agriculture, Food Security and Cooperative and RSs and District Councils. Recommendation Following the challenges noted during the audit, I recommend improvements of the NAIVS to be made in the following areas:


Involve Agricultural Extension Officers, Agriculture Seeds Agency and Agriculture Research Institutions in reviewing and assessing seeds and fertilizers issued in the country who should also monitor on counterfeit seeds and fertilizers.

Make sure that procurement and distribution of vouchers are done timely. Adequate soil analysis is done in various parts of the country and fertilizer vouchers are issued strictly in accordance with the type of soil.

To come up with a simplified version (preferably Swahili version) of an operational manual clearly illustrating how the basic records should be kept and maintained, reconciliations to be done and the periodical reports to be prepared from the village to district and regional level. Farmers should be made aware and provided with information on the voucher system on how it operates and the benefits to be derived from the use of quality seeds and fertilizers and the operation of the NAIVS.

11.9 IPSAS preparedness and implementation

The Central Government has adopted accrual basis of accounting in preparation of the financial statements with effect from 2012/13 accounts. Apart from having provision of five years as first time adopters of IPSAS accrual basis of accounting, various challenges have been noted including Non maintenance/establishment of proper Non-


current asset register (this weakness has been noted in 22 sampled MDAs and RSs), existence of grounded and un-serviceable Non-current asset (noted in 16 MDAs & RSs), Un revalued Property, Plant and Equipment (noted in 17 MDAs & RSs) and lack of ownership documents.

The few challenges noted on IPSAS 17 and 25 demonstrates a need to those in Government charged with the responsibilities of financial management to address issues in connection with IPSAS accrual implementation particularly in the following areas;

Activities Backlog in the implementation of IPSAS Accrual Audit review of the roadmap for IPSAS implementation noted several activities which were planned to be accomplished by 30th June, 2013 to be behind schedule. Activities such as separation of grants and borrowing, preparation of the accounting manual and the chart of accounts were not completed as planned hence hindering the smooth progress of implementation of the adoption of IPSAS accrual.

Lack of National Committee responsible for IPSAS implementation The Government is yet to establish a proper National Committee responsible to oversee the progress on the implementation of the IPSAS project. I observed that, the responsibility for


coordination of IPSAS activities has been solely left to the Accountant General. I understand that, IPSAS project involves various keep players responsible for valuation, ownership, recognition and measurement of Government assets. However, the Government has no national committee in place to coordinate and overseen the successful implementation of the whole project.

Property, Plant and Equipment (PPE) In adopting the IPSAS accrual basis of accounting, the Government has opted for five years transition provision for PPE, and I have noted that the Directorate of Government Assets Management (DGAM) has an action plan that indicates activities for valuation of government assets for five years (from 2012/13 to 2016/17). However, various challenges need to be addressed. These challenge include the issue of valuation of government assets being done in 2005/06 under the supervision of DGAM, however there is no updated PPE report disclosing assets details such as bar code, report, schedule of disposed assets etc; also there is neither action plan nor asset management guideline and financial statements disclose any information about valuation of properties especially land and buildings.


Lack of actuarial valuation of benefits plan for Government retiree Pension for the public service retirees are paid from the consolidated fund and the arrangements is recognized by the Government as Defined Benefit Plan. In the course of audit, I noted that the government lacked actuarial valuation of the benefits plan for Government retirees contrary to IPSAS 25. Without performing actuarial valuation, the government has failed to arrive at the initial liability for the Defined Benefits Plans and for that case, the Government could neither determine the amount of actuarial gains/losses nor, the past and current services nor interest cost of the benefit plan.

Local Government Authorities and Institutions not consolidated in the financial statements On reviewing the consolidated financial statements of the United Republic of Tanzania, it was noted that they did not include the revenue, expenditure, assets and liabilities of the Local Government Authorities (LGAs) and Parastatal Institutions which are in fact using the same IPSAS accrual financial reporting framework. This is contrary to IPSAS 6 which requires a Controlling entity to issue consolidated financial statements which consolidates all government controlled entities, foreign and domestic.


Recommendation Since the Government has a provision of five years as first time adopters of IPSAS accrual basis, the Government is advised to do the following so as to effectively use this transition period:

Allocate enough resources in terms of finances and human capital to facilitate smooth operation of the IPSAS accrual project.

The government should fully comply with IPSAS 25 (Employee benefits) over accounting for Defined Benefit Plans in order to determine its initial liability for defined benefit plans due to IPSAS accrual first year adoption

Establish IPSAS National Coordination Committee composed by professional accountants and other professions who will be the overseers of the five years roadmap to make sure each step is taken seriously and on time. So far one year has lapsed remaining with four years.

DGAM should work closely with stakeholders so as to enhance the implementation of the action plan for smooth compliance with IPSAS 17, and make necessary adjustments in the financial statements by separating land and building into two distinct asset classes.

The government is advised to initiate the process of consolidating the financial statements of LGAs and controlled


entities in the financial statements of URT.

To properly configure Epicor and the government budget systems for these systems to process transactions and generate financial statements according to IPSAS accrual requirements.

11.10 Monitoring and evaluation of projects

financed through debt proceeds In the course of reviewing the National Debt Strategy of 2002, I noted the government‘s effort at improving fiscal sustainability. One of the ways to attain that, as mentioned in the strategy is by improving the utilization of project financing resources which could lead to sustained economic growth.

However, up to now, there is no department that is solely responsible for evaluation of funded projects being financed through loan proceeds. This could result into sub – optimal utilization of project financing resources which could in turn have a significant impact on the payback potential of the economy. Recommendation As borrowings for development projects is increasing by becoming a nation‘s priority, I advise the government to consider establishing a mechanism for monitoring and evaluation of projects for which funds raised through loans are. This will help in the continuous evaluation of the impact of funded projects and also minimize the


expectation gap between stakeholders and the government.

11.11 Lack of Unified Debt Management Office

The continuous absence of a unified Debt Management Office (DMO) is becoming a major concern in the Public Debt management in the country. The current set-up which involves Ministry of Finance (MoF), the Planning Commission, the Attorney General‘s Chamber, and the Bank of Tanzania (BoT) is detrimental to the management of public debt due to the fact that each key player has different core activity apart from dealing with public debt which is seen as a secondary function. In such a situation, transparency which is vital in debt management is a far reaching point and accountability is being compromised to a great extent. Recommendation The need for a unified Debt Management Office is one of the key issues that were addressed during the financial year 2010/2011. I advise the government to fasten the establishment of a unified DMO in order to effectively and efficiently coordinate debt management activities in the country.

11.12 Converted Liquidity Papers into financing

papers During the year I noted that the government had mismatch between revenue collection and expenditure which led the government


to convert liquidity papers (Treasury Bills) with Face Value of Shs.339,490,810,000 into financing paper at an interest cost of Shs.21,543,703,100. In converting liquidity papers, domestic debt stock is increased as well as exposure to rollover risk. Moreover, liquidity paper conversion contradicts the government monetary policy of curbing inflation through ‗mop out‘ of excess cash (monies) from the economy. Recommendation I advise the government to refrain from converting liquidity papers in order to avoid likelihood of future debt stock stress. Proactive and bold measures need to be taken by the government including but not limited to improvement on government revenue collection through TRA‘s Revenue Gateway System, fiscal discipline and effective budget estimates.

11.13 Release of funds towards the end of the financial year I noted that Exchequer Issues of Shs.1,066,315,820,918 equivalent to 7.4 percent of the total exchequers were disbursed in the 52nd week i.e the last week of the financial period. Moreover, exchequer released during the fourth quarter were Shs.4,494,546,936,669 equivalent to 31.4 percent of the total exchequer issues during the year 2012/2013 of Shs.14,328,769,376,759 whilst exchequer


Issues for the 3rd, 2nd, and 1st Quarter were 22.1%, 18.9%, and 27.6% respectively. This demonstrates the existence of challenges in timely releases of Exchequer Issues and hence, delaying timely implementation of planned activities. Recommendation In order to tackle the challenge of late release of approved funds, the government is advised to align Exchequer Issues with budget and revenue collections to avoid release funds close to end of the financial period. By so doing, it is expected that planned activities will be implemented according to the approved action plan.

11.14 Management of Customs and Bonded Warehouses I reviewed the operations of the selected customs and bonded warehouses for the period under review to evaluate the level of compliance with the provisions stipulated in Part IV of the East African Community Customs Management Act (EACCM), 2004. I noted that goods with custom duties amounting to Shs.1,102,640,256 had been overstayed in the warehouses and no action was taken to collect the outstanding revenues. Also, TRA suspended and closed thirteen Bonded Warehouses before collecting customs duties totaling Shs.1,803,910,991. Apart from that, twenty seven Customs Bonded Warehouses were in operation without valid licenses from the


Commissioner for Customs and Excise and no action has been taken against the owners of the customs bonded warehouses who were operating without valid licenses. Recommendation The government is advised to ensure adequate controls on the operation of Customs Warehouses and Customs Bonded Warehouses and collect the appropriate customs duties accordingly. In addition, TRA is urged and insisted to be in the fore front of ensuring there is compliance and enforcement of the existing tax legislations in the country.


14.0 ANNEXURES Annexure A

Audit opinions for the past four years

Colors Used

Definition of colors used Unqualified

Unqualified with Emphasis/Other matters Qualified

Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

1 9 Remuneration Board N/A N/A N/A Unqualified

2 8 Constitutional Review Commission N/A N/A N/A Unqualified

3 10 Joint Financial Commission N/A N/A N/A

Unqualified with Emphasis

4 12 Judicial Service Commission Unqualified Unqualified Unqualified Unqualified

5 13 Financial Intelligence Unit N/A N/A N/A Unqualified

6 14 Ministry of Home Affairs - Fire and Rescue Force

Unqualified with Emphasis Qualified Unqualified Qualified

7 15 Commission for Mediation and Arbitration (CMA) N/A Unqualified Unqualified



Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

8 16 Attorney General's Chambers




Unqualified with other matters

9 20 President‘s Office, State House Unqualified Unqualified Unqualified Unqualified

10 21 Treasury Qualified Unqualified Unqualified


11 22 Public Debt and General Services

Unqualified with Emphasis Unqualified Unqualified Qualified

12 23 Accountant General‘s Department

Unqualified with Emphasis Unqualified Unqualified


13 24 Cooperatives Development Commission (CDC) N/A Qualified Unqualified


14 25 Prime Minister‘s Private Office Unqualified Unqualified Unqualified Unqualified


Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

15 26 Vice President‘s Office (VPO)



16 27 Registrar of Political Parties



17 28 Police Force





18 29 Prison Service Department (PSD)



Unqualified with Emphasis Qualified

19 30 President‘s Office and Cabinet Secretariat

Unqualified with Emphasis Unqualified Unqualified Unqualified

20 31 Vice President‘s Office Unqualified Unqualified with Emphasis Unqualified Unqualified


Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

21 32 President‘s Office Public Service Management

Unqualified with Emphasis Unqualified



22 33 Ethics Secretariat Qualified Unqualified with Emphasis Unqualified Unqualified

23 34 Ministry of Foreign Affairs and International Cooperation


Unqualified with Emphasis Qualified Unqualified

24 35 Directorate of Public Prosecutions N/A Unqualified Unqualified


25 37 Prime Minister‘s Office Unqualified Unqualified with Emphasis


26 38 Tanzania People‘s Defense Forces






Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

27 39 National Service




28 40 Judiciary of Tanzania N/A N/A N/A


29 41 Ministry of Constitutional and Legal Affairs





30 42 National Assembly





31 43 Ministry of Agriculture, Food Security and Cooperatives


Unqualified with Emphasis Unqualified Qualified

32 44 Ministry of Industry and Trade Qualified Unqualified with Emphasis Unqualified



Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

33 46 Ministry of Education and Vocational Training



34 48 Ministry of Lands, Housing and Human Settlements Development Qualified



35 49 Ministry of Water




36 50 Ministry of Finance Qualified Unqualified Unqualified


37 51 Ministry of Home Affairs Qualified Unqualified with Emphasis


38 52 Ministry of Health and Social Welfare Qualified Unqualified with Emphasis



Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

39 53 Ministry of Community Development Gender and Children Qualified




40 55 Commission for Human Rights and Good Governance





41 56 Prime Minister‘s Office Regional Administration and Local Government





42 57 Ministry of Defense and National Service




43 58 Ministry of Energy and Minerals




44 59 Law Reform Commission of Tanzania (LRCT)




Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

45 61 National Electoral Commission





46 62 Ministry of Transport N/A N/A Unqualified Unqualified

47 65 Ministry of Labour and Employment




48 66 President‘s Office Planning Commission (POPC)





49 67 Public Service Recruitment Secretariat N/A


50 68 Ministry of Communication, Science and Technology

Unqualified with Emphasis Unqualified Unqualified Qualified

51 69 Ministry of Natural Resources and Tourism Qualified



Unqualified with Emphasis & other


Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

52 91 Drugs Control Commission





53 92 Tanzania Commission for Aids (TACAIDS) Qualified Qualified Unqualified Qualified

54 93 Immigration Service Department




55 94 President‘s Office Public Service Commission Qualified Qualified Unqualified Unqualified

56 96 Ministry of Information, Youth, Culture and Sports Qualified




57 97 Ministry of East African Cooperation Unqualified Unqualified Unqualified Unqualified

58 98 Ministry of Works




Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

59 99 Ministry of Livestock and Fisheries Development Unqualified



60 N/A National Consolidated Accounts Adverse Qualified Qualified Disclaimer

61 70 Regional Secretariat Arusha




62 71 Regional Secretariat Coast Qualified Unqualified with Emphasis



63 72 Regional Secretariat Dodoma Disclaimer Unqualified with Emphasis Unqualified


64 73 Regional Secretariat Iringa




65 74 Regional Secretariat Kigoma




Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

66 75 Regional Secretariat Kilimanjaro Qualified Unqualified with Emphasis


67 76 Regional Secretariat Lindi Adverse Unqualified with Emphasis



68 77 Regional Secretariat Mara Unqualified Unqualified with Emphasis


69 78 Regional Secretariat Mbeya




70 79 Regional Secretariat Morogoro





71 80 Regional Secretariat Mtwara






Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

72 81 Regional Secretariat Mwanza




73 82 Regional Secretariat Ruvuma


Unqualified with Emphasis Unqualified Qualified

74 83 Regional Secretariat Shinyanga Unqualified Unqualified with Emphasis Unqualified Qualified

75 84 Regional Secretariat Singida Qualified Unqualified with Emphasis


76 85 Regional Secretariat Tabora Qualified Unqualified with Emphasis Unqualified Qualified

77 86 Regional Secretariat Tanga Unqualified Unqualified with Emphasis


78 87 Regional Secretariat Kagera Qualified Qualified Unqualified Qualified


Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

79 88 Regional Secretariat DSM




80 89 Regional Secretariat Rukwa Qualified Unqualified with Emphasis


81 95 Regional Secretariat Manyara Qualified Unqualified with Emphasis Unqualified Qualified

82 63 Regional Secretariat Geita N/A N/A N/A


83 47 Regional Secretariat Simiyu N/A N/A N/A Unqualified

84 54 Regional Secretariat Njombe N/A N/A N/A Qualified

85 36 Regional Secretariat Katavi N/A N/A N/A Qualified

86 2018 Tanzania Embassy in Washington




Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

87 2011 Tanzania Permanent Mission to UN in New York Unqualified



88 2029 Tanzania Embassy in Muscat


Unqualified with Emphasis Qualified Adverse

89 2024 Tanzania Embassy in Saudi Arabia




90 2012 Tanzania High Commission in Ottawa Unqualified Unqualified with Emphasis Unqualified Unqualified

91 2019 Tanzania Embassy in Brussels Qualified Unqualified



92 2022 Tanzania High Commission in Harare





93 2030 Tanzania High Commission in Lilongwe





Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

94 2007 Tanzania High Commission in Lusaka





95 2008 Tanzania High Commission in Maputo Unqualified Unqualified with Emphasis Unqualified


96 2004 Tanzania Embassy in Kinshasa




97 2021 Tanzania High Commission in Kampala Qualified Unqualified with Emphasis


98 2025 Tanzania High Commission in Pretoria Unqualified Unqualified with Emphasis



99 2014 Tanzania Embassy in Beijing





100 2032 Tanzania High Commission in Kuala Lumpur





Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

101 2017 Tanzania Embassy in Tokyo





102 2028 Tanzania Embassy in Bujumbura Unqualified Unqualified with Emphasis



103 2023 Tanzania High Commission in Nairobi




104 2026 Tanzania Embassy in Kigali





105 2020 Tanzania Permanent Mission to UN in Geneva Unqualified Unqualified



106 2009 Tanzania Embassy in Moscow





Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

107 2016 Tanzania Embassy in Stockholm





108 2001 Tanzania Embassy in Addis Ababa




109 2005 Tanzania Embassy in Abuja





110 2003 Tanzania Embassy in Cairo N/A Unqualified with Emphasis



111 2027 Tanzania Embassy in Abu Dhabi



112 2010 Tanzania High Commission in New Delh






Colors Used



Adverse/Disclaimer

S/N Vote No. Name

Financial year

2009/10 2010/11 2011/12 2012/13

113 2031 Tanzania Embassy in Brasilia Unqualified Unqualified with Emphasis Unqualified


114 2013 Tanzania Embassy in Paris




115 2002 Tanzania Embassy in Berlin Unqualified Unqualified with Emphasis



116 2006 Tanzania High Commission in London





117 2015 Tanzania Embassy in Rome






Annexure 'B':

List of audited entities issued with unqualified opinion with emphasis of matters

S/N Vote No. Name

1. 10 Joint Finance Commission

2. 15 Commission for Arbitration and Mediation

3. 21 Treasury

4. 23 Accountant General's Department

5. 24 Cooperative Development Commission

6. 28 Police Force Department

7. 32 President's Office - Public Service Management

8. 35 Directorate of Public Prosecution

9. 38 Tanzania People‘s Defense Force

10. 40 Judiciary of Tanzania

11. 41 Ministry of Constitutional and Legal Affairs

12. 42 National Assembly

13. 44 Ministry of Industries and Trade

14. 49 Ministry of Water

15. 50 Ministry of Finance

16. 53 Ministry of Community Development Gender and Children

17. 55 Commission for Human Rights & Good Governance

18. 56 PMO – RALG

19. 61 National Electoral Commission

20. 63 Regional Secretariat Geita

21. 66 President's Office - Planning Commission

22. 69 Ministry of Natural Resources and Tourism

23. 71 Regional Secretariat Coast

24. 72 Regional Secretariat Dodoma

25. 76 Regional Secretariat Lindi

26. 79 Regional Secretariat Morogoro

27. 80 Regional Secretariat Mtwara

28. 91 Drugs Control Commission

29. 93 Immigration Department

30. 96 Ministry of Information, Youth, culture and Sports

31. 2001 Embassy of Tanzania in Addis Ababa


S/N Vote No. Name

32. 2002 Tanzania Embassy in Berlin

33. 2003 Tanzania Embassy in Cairo

34. 2005 High Commission of Tanzania in Abuja

35. 2006 Tanzania High Commission in London

36. 2008 Tanzania High Commission in Maputo

37. 2009 Tanzania Embassy in Moscow

38. 2010 Tanzania High Commission in New Delhi

39. 2011 Permanent Mission to UN - New York

40. 2013 Tanzania Embassy in Paris

41. 2014 Tanzania Embassy in Beijing

42. 2015 Tanzania Embassy in Rome

43. 2016 Tanzania Embassy in Stockholm

44. 2017 Tanzania Embassy in Tokyo

45. 2019 Tanzania Embassy in Brussels

46. 2020 Permanent Mission to UN – Geneva

47. 2022 High Commission of Tanzania in Harare

48. 2023 Tanzania High Commission in Nairobi

49. 2024 Tanzania Embassy in Saudi Arabia

50. 2025 Tanzania High Commission in Pretoria

51. 2026 Embassy of Tanzania in Kigali

52. 2028 Embassy Tanzania in Bujumbura

53. 2030 High Commission of Tanzania in Lilongwe

54. 2031 Brasilia Source: CAG’s individual reports for 2012/2013


Annexure 'C': List of entities issued with qualified

S/N Vote Name

1. 14 Fire & Rescue Forces

2. 22 Public Debt and General Service

3. 29 Prisons Service Department

4. 36 Regional Secretariat Katavi

5. 37 Prime Minister's Office

6. 43 Ministry of Agriculture Food Security and Cooperatives

7. 46 Ministry of Education and Vocational Training

8. 48 Ministry of Lands, Housing and Human Settlement

9. 51 Ministry of Home Affairs

10. 52 Ministry of Health and Social Welfare

11. 54 Regional Secretariat Njombe

12. 68 Ministry of Communication Science and Technology

13. 70 Regional Secretariat Arusha

14. 73 Regional Secretariat Iringa

15. 74 Regional Secretariat Kigoma

16. 75 Regional Secretariat Kilimanjaro

17. 77 Regional Secretariat Mara

18. 81 Regional Secretariat Mwanza

19. 82 Regional Secretariat Ruvuma

20. 83 Regional Secretariat Shinyanga

21. 85 Regional Secretariat Tabora

22. 86 Regional Secretariat Tanga

23. 87 Regional Secretariat Kagera

24. 88 Regional Secretariat DSM

25. 89 Regional Secretariat Rukwa

26. 92 TACAIDS

27. 95 Regional Secretariat Manyara

28. 99 Ministry of Livestock and Fisheries Development

29. 2004 Tanzania Embassy in Kinshasa

30. 2021 High Commission of Tanzania in Kampala

Source: CAG’s individual reports for 2012/201



Annexure D

A list of outstanding matters Shs.636,849,769,109 Vote No Name of MDAs/RSs Amount (Shs.)

98 Ministry Of Works 253,777,000,000

50 Ministry Of Finance 244,919,408,625

21 Treasury 72,668,447,899

72 RS Dodoma 9,991,961,854

2010 Tanzania High Commission In New Delhi 5,382,527,223

2015 Tanzania Embassy In Rome – Italy 4,600,825,745

43 Ministry of Agriculture Food Security and Cooperatives 3,815,969,749

2017 Tanzania Embassy In Tokyo 3,429,872,984

95 Regional Secretariat Manyara 3,303,426,486

52 Ministry Of Health And Social Welfare 2,913,573,127

87 Regional Secretariat Kagera 2,605,614,715

2002 Tanzania Embassy In Berlin – German 2,453,805,737

28 Ministry Of Home Affairs-Police Force Department 2,075,030,964

84 RS Singida 1,924,588,306

77 RS Mara 1,732,142,728

48 Ministry Of Lands, Housing And Human Settlements Development 1,694,732,183


Vote No Name of MDAs/RSs Amount (Shs.)

2014 Tanzania Embassy In Beijing 1,642,445,371

40 Judicial Of Tanzania 1,579,576,663

29 Prisons Service Department 1,574,752,633

57 Ministry Of Defense And National Service 1,533,315,317

61 National Electoral Commission 1,467,872,154

2013 Tanzania Embassy In Paris 765,365,030

80 Regional Secretariat Mtwara 735,820,882

46 Ministry Of Education And Vocational Training 690,139,477

79 RS Morogoro 633,121,982

85 RS Tabora 600,381,196

34 Ministry Of Foreign Affairs And International Cooperation 571,061,728

2022 Tanzania Embassy In Harare 564,000,000

73 RS Iringa 524,352,884

56 Prime Minister‘s Office Regional Administration And Local Government 469,328,336

27 Registrar Of Political Parties 444,442,497

81 RS Mwanza 435,634,069

2025 Tanzania High Commission Pretoria 326,535,838

2005 Tanzania High Commission In Abuja 301,624,570

78 RS Mbeya 273,165,167

2019 Tanzania Embassy In Brussels 267,930,497

83 RS Shinyanga 263,258,692

31 Vice President‘s Office 249,221,700



86 RS Tanga 244,439,837

76 RS Lindi 216,318,045

75 RS Kilimanjaro 211,544,454

2024 Tanzania Embassy Saud Arabia 195,412,800

69 Natural Resources And Tourism 191,017,785

74 RS Kigoma 173,663,747

99 Ministry Of Livestock And Fisheries Development 159,709,282

65 Ministry Of Labor And Employment 157,950,573

2021 Tanzania High Commission –Kampala 154,145,814

68 Ministry Of Communication, Science And Technology 150,908,539

37 Prime Minister‘s Office 143,773,537

92 Tanzania Commission For Aids 137,923,693

49 Ministry Of Water 132,598,919

32 President‘s Office Public Service Management 131,299,820

88 RS Dar Es Salaam 129,989,639

2030 Tanzania High Commission In Lilongwe 120,372,615

2006 Tanzania High Commission In London 113,929,389

25 Prime Minister‘s Private Office 110,382,035

89 RS Rukwa 90,940,112

93 Immigration Service Department 83,344,000

2008 Tanzania Embassy Maputo 80,424,530

2020 Tanzania Embassy In Geneva 74,799,725



53 Ministry Of Community Development Gender And Children 74,672,005

2027 Embassy Of Tanzania Abu Dhabi 70,151,117

2018 Tanzania Embassy Washington Dc 46,420,015

71 RS Coast 36,587,800

2016 Tanzania Embassy In Stockholm 35,564,430

42 Office Of The National Assembly 34,721,330

82 RS Ruvuma 29,996,830.00

2007 Tanzania High Commission In Lusaka 23,441,989

38 Tanzania Peoples Defense Forces (Ngome) 20s,648,800

2004 Tanzania Embassy Kinshasa-Congo 18,957,683

67 Public Service Recruitment Secretariat 13,426,000

44 Ministry Of Industry And Trade 10,881,863

94 President‘s Office Public Service Commission 10,513,000

51 Ministry Of Home Affairs 7,215,500

91 Drug Control Commission 5,546,277

10 Joint Finance Commission 3,800,000

2011 Tanzania Permanent Mission To The United Nations - New York 60,562.24

636,849,769,109



Annexure 'E'

Payments charged to wrong Account codes-Shs.2,394,834,855

S/N

Vote no. Description Amount (Shs.)

1 Vote 32 President‘s office public service management

38,107,000

2 Vote 97 Ministry of East African Cooperation

2,746,800

3 Vote 9 Public Service Remuneration Board

22,640,000

4 Vote 92 Tanzania Commission for Aids

6,475,000

5 Vote 15 Commission for Mediation and Arbitration

59,003,000

6 Vote 88 RS DSM 48,150,000

7 Vote 36 RS-Katavi 83,686,811

8 Vote 78 RS-Mbeya 10,693,692

9 Vote 82 RS-Ruvuma 27,751,306

10 Vote 83 RS-Shinyanga 6,569,280

11 Vote 86 RS-Tanga 45,262,247

12 Vote 73 RS-Iringa 7,020,000

13 Vote 85 RS-Tabora 79,595,647

14 Vote 63 RS-Geita 40,017,625

15 Vote 24 Cooperatives Development Commission

4,887,352

16 Vote 56 Prime Minister‘s Office Regional Administration and Local Government

148,720,000

17 Sub Vote 2024

Embassy of Saudi Arabia

97,722,020

18 Vote 75 RS-Kilimanjaro 32,165,170

19 Vote 52 Ministry of health and social welfare

80,169,526

20 Vote 29 Prisons Service 5,313,153.67


S/N


Department

21 Vote 25 Prime Minister‘s Private Office

14,093,000

22 Vote 74 RS-Kigoma 159,216,400

23 Vote 87 RS-Kagera 896,948,228

24 Vote 39 National Service 450,139,500

25 Vote 27 Registrar of Political Parties

27,742,098

Total 2,394,834,855


Annexure 'F': Expenditure made out of the approved budget S/N Vote

No. Description Amount (Shs.)

1 Vote 55 Human Rights and Good Governance

104,746,978

2 Sub Vote 2001

Embassy of Tanzania-Addis Ababa

108,138,176

3 Sub Vote 2003

Embassy of Tanzania-Cairo

63,457,672

4 Sub Vote 2014

Embassy of Tanzania-Beijing

904,038,218

5 Sub Vote 2022

High Commission of Tanzania-Harare

105,089,537

6 Sub vote 2030

High Commission of Tanzania-Lilongwe

90,025,650

7 Sub vote 2007

High Commission of Tanzania-Lusaka

40,660,635

8 Sub Vote 2013

Embassy of Tanzania-Paris

680,393,389


51,925,387

10 Vote 72 RS-Dodoma 50,279,887

11 Vote 74 RS-Kigoma 35,555,000

12 Vote 95 RS-Manyara 24,551,200

13 Vote 77 RS-Mara 32,028,000


15 Vote 76 RS-Lindi 119,477,909

16 Sub Vote 2019

Embassy of Tanzania-In Brussels

644,433,885

17 Sub Vote 2020

Permanent Mission to the UN-Geneva

176,868,506

18 Sub Vote 2004

Embassy of Tanzania-Kinshasa

54,038,085

19 Sub Vote 2010

High Commission of Tanzania-New Delhi

353,838,152

20 Sub Vote 2008

High Commission of Tanzania-Maputo

117,400,068

21 Sub Vote 2025

High Commission of Tanzania-Pretoria

1,381,285,962

22 Sub Vote Embassy of Tanzania- 314,491,556


S/N Vote No.

Description Amount (Shs.)

2015 Rome

23 Sub Vote 2016

Embassy of Tanzania-Stockholm

748,364,575

24 Vote 25 Prime Minister‘s Private Office

12,612,770

25 Vote 87 RS-Kagera 10,450,000

26 Vote 38 Tanzania Peoples Defence Forces (Ngome)

8,403,574,214

27 Vote 69 Ministry of Natural Resources and Tourism

463,901,674

28 Vote 82 RS-Ruvuma 42,002,067

29 Sub Vote 2002

Embassy In Berlin – German

445,225,527

30 Vote 70 RS-Arusha 198,394,273

Total 15,785,285,943


Annexure 'G' Inadequate supported payments S/N Vote

No. Description Amount (Shs.)

1 Vote 39 National Service 855,725,500

2 Vote 55 Human Rights and Good Governance

9,181,200

3 Vote 98 Ministry of Works-TBA 41,687,500


760,332,921

5 Vote 93 Immigration Service Department

493,692,835

6 Vote 74 RS-Kigoma 2,000,000

7 Vote 95 RS-Manyara 8,180,955

8 Vote 54 RS-Njombe 9,030,000

9 Vote 89 RS-Rukwa 11,697,050

10 Vote 82 RS-Ruvuma 9,202,900

11 Vote 83 RS-Shinyanga 59,634,368

12 Vote 73 RS-Iringa 19,286,800

13 Vote 70 RS-Arusha 700,000

14 Vote 85 RS-Tabora 59,544,305

15 Vote 63 RS-Geita 8,758,975

16 Vote 87 RS-Kagera 31,320,000

17 Vote 47 RS-Simiyu 38,313,867


169,698,380

19 Vote 91 Drug Control Commission Vote

1,359,600

20 Vote 99 Ministry Of Livestock and Fishereis Development

344,799,155


22 Vote 46 Ministry of Education and Vocational training

9,857,952,830

23 Vote 52 Ministry of health and social welfare

889,210,229

24 Vote 42 National Assembly 34,810,980

25 Vote 81 RS-Mwanza 29,764,600

26 Sub Tanzania Permanent 31,350,792


S/N Vote No.


Vote 2011

Mission to The United Nations - New York

27 Vote 29 Prisons Service Department

613,317,559

28 Vote 38 Tanzania Peoples Defence Forces (Ngome)

23,487,000

29 Vote 69 Ministry of Natural Resources and Tourism

27,056,570

Total 14,498,110,341


Annexure 'H' Nugatory expenditure

S/N Vote no.


Nature of expenditure

1. Vote 36

RS-Katavi 9,905,321 Car accident repair cost despite having insurance cover

2. Vote 47

RS-Simiyu 4,485,000 Fuel expenses not confirmed in log books

3. Vote 89

RS-Rukwa 20,650,000 Payment for service wrongly ordered (PFR 21(C ))

4. Sub Vote 2031

Embassy of Tanzania-Brasilia

36,755,782 Payment for accommodation rented and renovation but not used

5. Sub Vote 2018

Embassy of Tanzania-Washington DC

271,229,771

Use of taxpayers' monies for Settlement of the civil case against the private offence committed by mission's officer and payment of allowances to personnel beyond their stay

6. Sub Vote 2001

Embassy of Tanzania-Addis Ababa

4,280,078 Penalty due to delay to pay rent for 14 months

7. Vote Ministry of 8,164,692 Penalty due to


S/N Vote no.


Nature of expenditure

43 Agriculture Food Security and Cooperatives

delay to pay rent for 7 months

8. Vote 72

RS-Dodoma 220,136,665 Asset procured 3 years back not yet in use to date

9. Vote 89

RS-Rukwa 44,394,927 Unjustifiable extraordinary cost for maintenance of STK 5508

10. Total (Shs.) 620,002,236


Annexure 'I' The funds used for unintended activities

s/n


1 Vote 54 RS-Njombe 2,600,000

2 Vote 88 RS-DSM 11,547,400

3 Vote 74 RS-Kigoma 58,961,000

4 Vote 80 RS-Mtwara 59,319,887

5 Vote 87 RS-Kagera 42,093,134

6 Vote 97 Ministry of East African Cooperation

980,000


8 Vote 85 RS-Tabora 22,725,000

9 Vote 79 RS Morogoro 1,867,000

10 Vote 95 RS-Manyara 101,470,625

11 Vote 81 RS-Mwanza 155,943,347

12 Vote 86 RS-Tanga 44,837,145

13 Sub Vote 2011

Tanzania Permanent Mission to The United Nations - New York

943,169,232


15 Sub Vote 2018

Embassy of Tanzania-Washington DC

34,051,735

16 Vote 76 RS-Lindi 88,485,000


89,500,000

Total 1,770,390,504



Annexure 'J'

Evaluation of Internal Control System

VOTE

MDA/RS

Inefficiency Performance of Internal Audit

Unit

Inadequate IT Control

Environment

Inefficiency Performance

of Audit

Committee

Lack of Risk

Management Assessment

Lack of documented

Fraud Prevention

Plan

Epicor accounting package not fully utilized

MINISTRIES, DEPARTMENTS AND AGENCIES (MDAs)

9

Public Service Remuneration Board

_

_

_

_

_

12

Judicial Service Commission

_

_

_

_

13 Financial Intelligence Unit

_

_

_

_

_

20 President‘s Office – State House

_

_

_ _

_

23 Accountant General


VOTE

MDA/RS


Unit


Environment


of Audit

Committee

Lack of Risk


Lack of documented

Fraud Prevention

Plan


Department _

_ _ _ _

24 Cooperatives Development Commission

_

_

_

_

_

27

Registrar of Political Parties

_

_

_

28 Police Force Department

_ _ _ _ _

30 President‘s Office and Cabinet Secretariat

_

_ _

_

31

Vice President‘s Office

_

_

_

_

_

33 Ethics Secretariat

_

_

_


VOTE

MDA/RS


Unit


Environment


of Audit

Committee

Lack of Risk


Lack of documented

Fraud Prevention

Plan


37

Prime Minister‘s Office

_ _

_

_

_

38

Tanzania Peoples Defence Force

_

_

_

39 National Service

_

_

_ _

44 Ministry of Industry and Trade

_

_

_

49 Ministry of Water _ _ _ _ _

50 Ministry of Finance

_ _ _

_ _

55

Commission for Human Rights

_ _

_ _ _

57 Ministry of Defense

_

_

_

59

Commission for Human Rights and


VOTE

MDA/RS


Unit


Environment


of Audit

Committee

Lack of Risk


Lack of documented

Fraud Prevention

Plan


Good Governance _ _ _ _ _

65

Ministry of Labour and Employment

_

_

_

_

_

66 Planning Commission

_

_

_ _

67

Public Service Recruitment Secretariat

_

_

_

_

_

68

Ministry of Communication, Science and Technology

_

_

_

96

Ministry of Information, Youth, Culture, and Sports

_

_

_

_


VOTE

MDA/RS


Unit


Environment


of Audit

Committee

Lack of Risk


Lack of documented

Fraud Prevention

Plan


97

Ministry of East African Cooperation

_

_

_

_

_

98

Ministry of Works _ _ _

_ _

94

President Office_Public Service Commission

_

_

_

_

REGIONAL SECRETARIATS (RSs)

36 RS Katavi _ _

47 RS Simiyu _ _ _

54 RS Njombe _ _ _ _

63 RS Geita _ _

70 RS Arusha _ _ _

72 RS Dodoma _ _ _

73 RS Iringa _ _ _ _ _

74 RS Kigoma _ _


VOTE

MDA/RS


Unit


Environment


of Audit

Committee

Lack of Risk


Lack of documented

Fraud Prevention

Plan


75

RS Kilimanjaro

_ _ _ _ _

76 RS Lindi _ _ _ _ _

77 RS Mara _ _ _ _

78 RS Mbeya _

79 RS Morogoro _

80 RS Mtwara _ _ _ _ _

81 RS Mwanza _ _ _ _ _

82 RS Ruvuma _ _ _ _ _

83 RS Shinyanga _ _ _ _ _

84 RS Singida _ _

85 RS Tabora _ _ _

86 RS Tanga _

89 RS Kagera _ _ _ _

88 RS DSM _ _ _ _

89 RS Rukwa _ _ _ _


VOTE

MDA/RS


Unit


Environment


of Audit

Committee

Lack of Risk


Lack of documented

Fraud Prevention

Plan


95 RS Manyara _


Annexure 'K' Inadequate number of staff

S/No

Vote/Su

b vote

MDAs/RS

Staff Requirements as

per establish

ment

Current Staff Level

Staff Shortage

Staff Shortage

%

1. 13 Financial Intelligence Unit (FIU)

52 17 35 67

2. 14 Fire and Rescue Force department

4064 1156 2908 72

3. 27 Registrar of Political Parties 196 51 145

74

4. 35 Directorate of Public Prosecutions (DPP)

1,019 419 600 59

5. 36 RS Katavi 146 44 102 70

6. 47 RS Simiyu 281 51 230 82


5,513 1,141 4372 79

8. 55 Commission for Human Rights and Good

249 208 41 16


S/No

Vote/Su

b vote

MDAs/RS


per establish

ment

Current Staff Level

Staff Shortage

Staff Shortage

%

Governance

9. 63 RS Geita 324 169 155 48

10. 68 Ministry of Communication, Science and Technology

22 8 14 64

11. 72 RS Dodoma 79 26 53 67

12. 73 RS Iringa 793 555 238 30

13. 74 Regional hospital-RS Kigoma

432 204 228 53

14. 77 RS Mara 738 529 209 28

15. 83 RS Shinyanga 269 149 120 45

16. 84 RS Singida 1059 455 604 57

17. 86 RS Tanga 701 467 234 33

18. 87 RS Kagera 801 522 279 35

19. 88 RS Dar –es-Salaam 230 180 50 22

20. 89 Sumbawanga Regional Hospital – Rukwa

470 147 323 69


S/No

Vote/Su

b vote

MDAs/RS


per establish

ment

Current Staff Level

Staff Shortage

Staff Shortage

%

21. 89 RS Rukwa 473 288 185 39

22. 95 RS Manyara 530 253 277 52

23. 96 Ministry of Information, Youth, Culture and Sports

331 286 45 14

24. 2005

Tanzania High Commission in Abuja

5 2 3 60

25. F75 RS Kilimanjaro 1155 745 410 35

26. 79 RS Morogoro 969 735 234 24

27. 85 RS Tabora 587 481 106 18

28. 85 Kitete Regional Hospital-RS TABORA

671 248 423 63

Total 22,160 9,536 12,624

57




ANNEXURE 'L' Stock verification report by office of stock verifier for financial year (I) UNSUPPORTED ISSUES OF STORES AND FUEL-SHS. 926,306,812

Vote Ministry/Department/Region Amount (Shs.)

46 Ministry of Education and Vocational Training 30,209,319

44 Ministry of Industries and Trade 3,642,000

47 Ministry of Works 317,868,872

69 Ministry of Natural Resources and Tourism 44,562,260

58 Ministry of Energy and Minerals 20,853,980

99 Ministry of Livestock Development and Fisheries

11,575,152

53 Ministry of Community Development, Gender & Children

17,149,350



28 Tanzania Police Services 95,979,520

16 Attorney General Chamber's 9,545,000

40 Judiciary 63,137,060

93 Tanzania Immigration Service 39,615,000

29 Tanzania Prison Services 69,037,736

79 Regional Administrative Secretary- Morogoro 57,804,757

83 Regional Administrative Secretary- Shinyanga 54,403,007

72 Regional Administrative Secretary- Dodoma 6,048,000

95 Regional Administrative Secretary-Manyara 1,133,000

75 Regional Administrative Secretary-Kilimanjaro 5,291,500

77 Regional Administrative Secretary-Mara 55,722,500

74 Regional Administrative Secretary- Kigoma 6,860,000

85 Regional Administrative Secretary- Tabora 1,657,800

87 Regional Administrative Secretary- Kagera 4,147,500

52 Ministry of Health and Social Welfare 10,063,500

TOTAL 926,306,813

(II) UNSUPPORTED RECEIPTS OF STORES-SHS.



2,726,633,911

VOTE MINISTRY/DEPARTMENT/REGION AMOUNT

37 Prime Minister's Office 640,048,000






43,100,960

53 Ministry of Community Development,Gender & Children

42,522,350


48 Ministry of Land, Housing and Human Settlement

7,000,000

32 President Office-Public Service Management 81,635,000






40 Judiciary 62,167,266

85 Regional Administrative Secretary - Tabora 5,691,200

54 Regional Administrative Secretary - Njombe 8,040,080

81 Regional Administrative Secretary - Mwanza 3,856,000

75 Regional Administrative Secretary - Kilimanjaro

14,377,700

77 Regional Administrative Secretary - Mara 288,666,410

74 Regional Administrative Secretary - Kigoma 9,755,000

TOTAL 2,726,633,911

(IV) UNACCOUNTED RECEIPTS OF STORES-SHS. 732,686,791




34 Ministry of Foreign Affairs & International Cooperation

3,420,000



48 Ministry of Land & Human Settlement 10,033,745

50 Ministry of Finance 27,743,700

65 Ministry of Labour and Youth Development 2,000,000


66 Planning Commission 128,069,869



40 Judiciary 5,055,000


91 Drugs Control Commission 4,355,000

93 Tanzania Immigration Services 22,313,100


85 Regional Administrative Secretary - Kagera 4,315,400

77 Regional Administrative Secretary - Mara 34,440,877

TOTAL 732,686,791

(V) UNMAINTAINED LOAN REGISTER-SHS. 46,326,412.00



Vote Ministry/Department/Region Amount

81 Regional Administrative Secretary - Pwani 46,326,412

TOTAL 46,326,412

(VI) EXCESSIVE ISSUE OF FUEL-SHS. 4,362,065.00



TOTAL 4,362,065

(VII) UNAPPROVED ADDITIONAL WORKS-SHS. 37,128,000.00



TOTAL 37,128,000

(VIII) IMPROPER POSTING - SHS. 1,910,000.00





TOTAL 1,910,000

(IX) UNCOMPLETED WORKS - SHS. 242,100,440.00



TOTAL 242,100,440

(X)PAYMENT OF WORKS NOT COMPLETED -SHS. 44,857,928.00



TOTAL 44,857,928

(XI) DEFICIENT STORES-SHS. 436,713,066

VOTE MINISTRY/DEPARTMENT/REGION Amount(Shs)



43 Ministry of Agriculture and Cooperatives 35,258,534

53 Ministry of Community Development, Gender and Children

3,223,150





62 Ministry of Transport 4,196,890









TOTAL 436,713,066



(XII) UNACCOUNTED PURCHASES OF STORES-SHS. 5,342,194,700

Vote Ministry/Department/Region Amount(Shs)


46 Ministry of Education and Vocational Training 1,186,315,654


149,607,210







99 Ministry of Livestock Development 62,966,779




48 Ministry of Land and Human Settlement 5,625,000




40,039,300





40 Judiciary 110,635,832




79 Regional Administrative Secretary-Morogoro 11,904,150

82 Regional Administrative Secretary-Ruvuma 2,108,850

75 Regional Administrative Secretary-Kilimanjaro 5,294,020


81 Regional Administrative Secretary-Mwanza 72,576,481

71 Regional Administrative Secretary- Coast 26,140,120

74 Regional Administrative Secretary-Kigoma 4,050,000

72 Regional Administrative Secretary-Dodoma 11,493,158



87 Regional Administrative Secretary-Kagera 250,965,274

TOTAL 5,342,194,700

(XIII) UNRECEIPTED ISSUES OF STORES-SHS. 3,779,659,039








15,239,010




32,041,117







32 President Office- Public Service Management 5,332,500



29 Tanzania Prison Service 184,607,550


79 Regional Administrative Secretary- Morogoro 830,000



75 Regional Administrative Secretary- Kilimanjaro 4,907,000

81 Regional Administrative Secretary- Mwanza 6,881,840

77 Regional Administrative Secretary- Mara 44,038,450

71 Regional Administrative Secretary- Coast 4,926,\9

95 Regional Administrative Secretary- Manyara 2,854,060





TOTAL 3,779,659,039

(XIV) ISSUES AGAINST NILL BALANCE -SHS. 41,363,200



TOTAL 41,363,200

(XV) IRREGULAR PROCUREMENT -SHS. 1,115,000

Vote Ministry/Department/Region Amoun(Shs.)


TOTAL 1,115,000

(XVI) PROCUREMENT WITHOUT COMPETITIVE QUATATION-SHS. 237,754,344

Vote Ministry/Department/Region Amount(Shs.)








16 Attorney General Chambers 20,024,600



TOTAL 237,754,344

(XVII) STORES NEITHER IN MASTER INVENTORY REGISTER NOR INVENTORY SHEETS-SHS. 570,887,400


53 Ministry of Community Development, Gender and Children

23,255,000



18,685,000






46 Ministry of Education and Vocation Training 87,749,000

40 Judiciary 19,500,000



TOTAL 570,887,400

(XVIII) UNAUTHORIZED PAYMENT OF WORKS-SHS. 3,240,000.00



TOTAL 3,240,000

(XIX) IRREGULAR ISSUES OF STORES -SHS. 3,625,000.00





TOTAL 3,625,000

(XX) IMPROPER POSTING -SHS. 7,500,000



TOTAL 7,500,000

(XXI) UNTRANSFERRED BALANCE OF STORES-SHS. 1,160,934,158.00












TOTAL 1,160,934,158

(XXII) OUTSTANDING STORES ON LOAN-SHS. 133,509,210.00



43 Ministry of Agriculture, Food Security & Cooperatives

49,736,000



53 Ministry of Community Development,Gender & Children

2,032,500




74 Regional Administrative Secretary- Kigoma 15,623,500

TOTAL 133,509,210



(XXIII) FUEL NOT RECORDED IN THE LOG BOOK-SHS. 216,789,901.00






4,640,400

48 Ministry of Land, Housing and Human Settlement

3,380,000






TOTAL 216,789,901



(XXIX) FUEL NOT TAKEN ON LEDGER - SHS. 433,858,166





90,021,841



40 Judiciary 73,359,285




75 Regional Administrative Secretary- Kilimanjaro 9,589,000


95 Regional Administrative Secretary- Manyara 4,969,800


TOTAL 433,858,166



(XXV) UNACCOUNTED ISSUES OF STORES - SHS. 110,066,640.00



TOTAL 110,066,640

(XXVI) MAINTANANCE AND REPAIR OF GOVERNMENT VEHICLES TO PRIVATE GARAGE WITHOUT PRIOR APPROVAL FROM E & M DIVISION-SHS. 94,922,668.81














TOTAL 94,922,669

(XXVII) UNDELIVERED STORES-SHS. 1,773,377,965








312,185,641








TOTAL 1,773,377,965

(XXVIII) UNPOSTED RECEIPTS OF STORES-SHS. 93,015,600.00




TOTAL 93,015,600

(XXIX) UNPOSTED ISSUES OF STORES-SHS. 866,525,065










65,506,944


1,876,000



















82 Regional Administrative Secretary- Ruvuma 971,500

TOTAL 866,525,065

(XXX) EXHIBIT ITEMS NOT HANDED BACK TO RESPECTIVE OWNERS -SHS. 2,614,000.00



TOTAL 2,614,000

(XXXI) EXPIRED DRUGS/CHEMICALS -SHS. 31,312,095





TOTAL 31,312,095

GRAND TOTAL 20,103,289,577

Annexure 'M' List of MDAs, RS and Embassies with Grounded and un-serviceable Non current asset

S/No Vote/sub vote

MDAs/RS Grounded and un-serviceable asset

1) Agency

TANROADS Arusha The crusher machine has not been serviced and repaired for more than two years now

2) 34 Ministry of Foreign Affairs and International cooperation

Motor vehicles with cost value of Shs. 517,500,000

3) 42 National Assembly Motor vehicles with cost value


S/No Vote/sub vote


of Shs.110,480,100

4) 43 Ministry of Agriculture Food Security and Cooperatives

Motor vehicles with cost value of Shs.359,500,000

5) 53 Ministry of Community Development Gender and Children

Toyota L/C Station Wagon(STJ 6012), Nissan Patrol SGL (STK 76) and Nissan Patrol Station Wagon (STK 2262)

6) 61 National Electoral Commission

Motor vehicles with cost value of Shs.165,539,382

7) 63 RS Geita One motor vehicle TOYOTA LAND CRUSER S/W with Registration No. STK 9547 was grounded from 30 November,2012

8) 66 Planning Commission Computers, printers and


S/No Vote/sub vote


photocopy machines.

9) 68 Communications Science and Technology

Isuzu Mini Bus grounded for one year

10) 78 RS Mbeya Hilux Double Cabin with registration No.DFP 4682 and Nissan Patrol with registration No.STK 6575

11) 89 RS Rukwa two (2) Motor Vehicles and three (3) motor cycles

12) 95 RS Manyara Three motor vehicles and nineteen motorcycles with total acquisition cost of Shs.130,867,766 had been grounded without being repaired.


S/No Vote/sub vote


13) 2006 Tanzania High Commission in London

Motor vehicle with registration number 2620206 Type M-BENZ-E240 was acquired in the year 2004 at a cost price of Shs.105,823,000 and is grounded since 2009.

14) 2022 Tanzania Embassy in Harare

(i) Mercedes Benz E 240 with registration number 76 CD purchased in the year 2001

(ii) Toyota Hiace (Service car) with registration number 76 CD 3 purchased in the year 2004

15) 2004 Tanzania embassy Kinshasa

Suzuki with registration no. 034 CD 02

16) 2024 Embassy of Tanzania in Riyadh

Toyota Mini Bus, Ford Tempo, Toyota


S/No Vote/sub vote


Camry and Toyota Camry with registration number CD-44/3; CD-44/2; CD-44/1 and CD-44/5 respectively

17) 29 Prisons Service Department

20 motor vehicles in Prisons Regional Office –Kilimanjaro



Annexure 'N' List of MDAs RS and Embassies with partial revaluation of Property, Plant and Equipment

S/No Vote/Sub vote

MDAs/RS Remarks

1 Agency TANROADS 74 motor vehicles disclosed in the Financial statement have no value hence PP&E figure was underestimated

2 10 Joint Finance Commission

Despite the asset valuation being done in 2005/06, Values shown in the reports for all assets are of Financial Year 2003/04.

3 13 Financial Despite the asset valuation being


S/No Vote/Sub vote

MDAs/RS Remarks

Intelligent Unit

done in 2005/06, Values shown in the reports for all assets are of Financial Year 2003/04.

4 36 RS Katavi 6 Motor Vehicles, 1 Motor Cycle and 7 buildings disclosed with no value

5 54 RS Njombe 8 buildings located at Njombe Makete, Makambako and Ludewa were not valued.

6 65 Ministry of Labour and Employment

27 Labour Office buildings were not valued as shown below:

1 Labour office building located in DSM

26 Labour Office buildings located up country stations namely Songea, Njombe,


S/No Vote/Sub vote

MDAs/RS Remarks

Tukuyu, Mbeya, Morogoro, Ifakara, Kilosa,Tanga, Korogwe, Lushoto, Muheza, Same, Moshi, Arusha, Lindi, Mtwara, Dodoma, Singida, Tabora, Kigoma, Mwanza, Kagera, Mafinga, Shinyanga, Kahama and Musoma

7 78 RS Mbeya A total of 25 Motor vehicles out of 38 vehicles available have no value and 25 buildings out of 30 buildings available have no value.

8 88 RS Dar es Salaam

8 buildings (Ilala DC‘s office (Ilala Boma), Kinondoni DC‘s office ,Temeke DC‘s office, Kariakoo Division Office, Mbagala Division Office ,Kigamboni Division Office


S/No Vote/Sub vote

MDAs/RS Remarks

,Kigamboni Ward Office, Mbagala Ward Office);12 motor vehicles and three motor cycles had do value.

9 2002 Embassy of Tanzania in Berlin

The Embassy building has not been revalued since it was acquired in 2003 at a total cost of Shs. 2,449,037,200 equivalent to Euro 1,250,000.

10 2003 Tanzania Embassy In Cairo – Egypt

4 buildings were not valued, one of them was valued in year 1976 and another one in year 2001

11 2005 Tanzania High Commission in Abuja

Two (2) plots ( There is no valuation of the land since 19th October, 2004 when the properties were allocated by the Government of Nigeria ) also two motor vehicles with zero value


S/No Vote/Sub vote

MDAs/RS Remarks

were not re-valued

12 2014 Tanzania Embassy in Beijing – China

Government of Tanzania building, situated at 53, Dong Liu Jie, San Li Tun having a total area of Seven thousand and twelve square metres (7,012 m2) bought at USD 1,980,000) has not been valued. The contract for purchase was signed in 12th January, 1989.

13 2021 Tanzania High Commission-Kampala

five buildings located at Plot No.6 Kagera/Shimon Rd, Plot No.7 Katonga Rd, Plot No.4 Ridgeway Drive, Plot No.6 Abu Qarga (Khartoum) and Plot No.5 MAC-NIMIR(Khartoum) were not valued

14 2030 Tanzania High Commission in Lilongwe

Five (5) buildings and one (1) plot: neither land nor buildings were valued since when these


S/No Vote/Sub vote

MDAs/RS Remarks

properties were acquired. Land and buildings were acquired in 2003 and 2004 respectively

15 2011 Tanzania Permanent Mission to the United Nations

one building (Flat) located at 30 Over hill Mount Vernon NY 10552 acquired in 1964 (approximately 50 years ago) and two buildings (Apartments) located at 30 Street NY 10016 and 33 Street NY 10010,acquired in 1982 (approximately 30 years ago) were not revalued

16 2018 Tanzania Embassy -Washington DC

three buildings i.e. House No.1 acquired in 1973 (approximately 40 years ago), House No. 2139 acquired in 1977 (approximately 36 years ago), and House No.9914 acquired in 1981 (approximately


S/No Vote/Sub vote

MDAs/RS Remarks

32 years ago) were not revalued.

17 2015 Embassy of Tanzania in Rome

Two buildings one was acquired in 2002 at a cost of Shs.2,370,024,000 equivalent to Euro 1,200,000 and another building was acquired for Shs.2,040,025,413 equivalent to Euro 1,032,914.



Annexure 'O' List of MDAs and RS with Improper recognition of intangible assets

S/No Vote MDAs/RS Amount(Shs.)

Remarks


5,842,805,973

Note 61 to the financial statements disclose reports and documents as intangible assets



Remarks

2. 46 Ministry of Education and Vocational Training (MoEVT)

11,978,566,813

Transferred to various institutions under the Ministry to cover appraisal costs.

3. 70 RS Arusha 246,398,410 Note 61 to the financial statements disclose reports and documents as intangible assets

4. 71 RS Coast 540,436,610 Note 61 to the financial statements disclose reports and documents as intangible assets

5. 68 Ministry of Communication, Science and Technology

737,827,680 Note 61 to the financial statements disclose reports and documents as intangible assets

6. 81 RS Mwanza 114,731,482 Note 61 to the financial



Remarks

statements disclose reports and documents as intangible assets

7. 82 RS Ruvuma 194,545,500 Appraisals 15,000,000 and Reports, Documents etc 179,545,500 were disclosed as intangible assets


11,760,110,047

Transfer of funds to meet the following expenses; (i) Consulting works

Shs.2,067,418,000 (ii) Land damage

compensation payments Shs.9,692,692,047.13



Remarks

was disclosed as intangible assets

9. F75 RS Kilimanjaro 265,687,412 Expensed for SLM project was recognized (grouped) as Intangible Assets. activities for SLM project include:-Development expenditure incurred to restore Kilimanjaro climate conditions, soil fertility, increase crop productivity, introduce income generating activities like bee and poultry keeping, refrain



Remarks

people from deforestation, preserve water sources, prevent soil erosion by constructing check dams and sub soiling, and all land related activities.

Total 31,681,109,9258



Annexure 'P' List of MDAs, RS and Embassies with unsettled liabilities

S/No. Vote MDAs/RS Amount (Shs.)

1. 12 Judicial Service Commission 3,813,000

2. 14 Fire and Rescue Force department 345,659,803

3. 15 Commission for Mediation and Arbitration

144,481,616

4. 16 Attorney General‘s Chambers 650,471,593

5. 24 CooperativeDevelopment Commission

13,523,134

6. 28 Ministry of Home Affairs-Police Force Department

123,707,877,057

7. 30 President‘s Office And Cabinet Secretariat

1,386,821,720

8. 31 Vice President‘s Office 723,500,261

9. 32 President‘s Office Public Service Management

2,782,667,533

10. 33 President‘s Office - Ethics Secretariat

158,486,224



11. 34 Ministry of Foreign Affairs and International Cooperation (MFAIC)

8,509,231,003

12. 35 Directorate of Public Prosecutions 173,292,904

13. 37 Prime Minister's Office 516,276,499

14. 38 Tanzania Peoples Defence Forces 47,263,538,902

15. 39 National Service 16,941,427,457

16. 40 Judiciary of Tanzania 1,733,559,659


44,739,685,559

18. 44 Ministry of Industry and Trade 602,221,147

19. 47 RS Simiyu 208,920,427

20. 49 Ministry of Water 6,152,485,146

21. 51 Ministry of Home Affairs 813,158,107


2,823,393,281

23. 61 National Electoral Commission 2,246,616,280

24. 65 Ministry of Labour and Employment 683,831,493

25. 66 Planning Commission 516,898,837



26. 67 Public Service Recruitment Secretariat

310,430,327

27. 68 Ministry of Communication Science and Technology

162,073,744

28. 69 Ministry of Natural Resources and Tourism

567,186,431

29. 70 RS Arusha 617,865,810

30. 72 RS Dodoma 1,749,791,442

31. 74 RS Kigoma 199,219,197

32. 86 RS Tanga 1,139,615,661

33. 77 RS Mara 752,083,766

34. 78 RS Mbeya 151,533,000

35. 82 RS Ruvuma 687,324,501

36. 83 RS Shinyanga 136,681,304

37. 84 RS Singida 357,504,940

38. 85 RS Tabora 684,820,669

39. 88 RS Dar Es Salaam 182,882,717

40. 89 RS Rukwa 356,771,074



41. 93 Immigration Service Department 456,498,496

42. 94 President‘s Office Public Service Commission

432,610,713

43. 95 RS Manyara 277,245,314

44. 96 Ministry of Information, Youth, Culture and Sports

717,088,528

45. 98 Ministry of Works 2,873,864,166

46. 99 Ministry of Livestock and Fisheries Development

716,596,341

47. 2007 Tanzania High Commission Lusaka Zambia

171,301,003

48. 2022 Tanzania Embassy in Harare 126,896,880

49. 2023 Tanzania Embassy in Bujumbura 40,327,496

50. 2028 Tanzania High Commission Nairobi 17,999,650

Total 277,728,051,812 Source: Individual reports for the financial year 2012/2013

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