1 Republic of Namibia AUDIT REPORT ON THE ACCOUNTS OF THE MINISTRY OF HIGHER EDUCATION, TRAINING AND EMPLOYMENT CREATION FOR THE FINANCIAL YEAR ENDED 31 MARCH Published by authority Price (VAT excluded): N$ Report no: 351 Office of the Auditor-General
2 REPUBLIC OF NAMIBIA TO THE HONOURABLE SPEAKER OF THE NATIONAL ASSEMBLY I have the honour to submit herewith my report on the accounts of the Ministry of Higher Education, Training and Employment Creation for the financial year ended 31 March 2004 in terms of Article 127(2) of the Namibian Constitution. The report is transmitted to the Honourable Minister of Finance in terms of Section 27(1) of the State Finance Act, 1991, (Act 31 of 1991) to be laid upon the Table of the National Assembly in terms of Section 27(4) of the Act. WINDHOEK, November 2005 JUNIAS ETUNA KANDJEKE AUDITOR-GENERAL
3 1 REPORT OF THE AUDITOR-GENERAL ON THE ACCOUNTS OF THE MINISTRY OF HIGHER EDUCATION, TRAINING AND EMPLOYMENT CREATION FOR THE FINANCIAL YEAR ENDED 31 MARCH INTRODUCTION 1.1 Report This report on the accounts of the Ministry of Higher Education, Training and Employment Creation ended 31 March 2004 is presented to the National Assembly in accordance with the terms of Article 127(2) of the Constitution of the Republic of Namibia and Section 27(1) of the State Finance Act, 1991 (Act 31 of 1991), as amended. 1.2 Powers and duties Section 25(1)(c) of the State Finance Act, 1991, provides that the Auditor-General should satisfy himself that: (c) all reasonable precautions have been taken to ensure that all monies due to the State are collected, and that the laws relating to the collection of such monies have been complied with; all reasonable precautions have been taken to safeguard the receipt, custody and issue of and accounting for, the State s assets, such as stores, equipment, securities and movable goods; the has taken place under proper authority and is supported by adequate vouchers or other proof. In addition, the State Finance Act, 1991, Section 26(1) (iv) empowers the Auditor-General to investigate and report on the economy, efficiency and effectiveness of the use of the State s resources. 2. FINANCIAL STATEMENTS The appropriation accounts were submitted to the Auditor-General in terms of Section 13 of the State Finance Act, The financial statements, notes to the financial statements and general information supplied by the Accounting Officer are attached as annexure A to this report. 3. SCOPE OF THE AUDIT 3.1 The Accounting Officer in co-operation with the Permanent Secretary of the Ministry of Finance is responsible for the preparation of the financial statements and for ensuring the regularity of the financial transactions therein. It is the responsibility of the Auditor-General to form an independent opinion, based on the audit, on those statements and on the regularity of the financial transactions included in them and to report his opinion to the National Assembly. The audit included: examination on a test basis of evidence relevant to the amounts, disclosure and regularity of financial transactions included in the financial statements; and
4 2 evaluation of the overall adequacy of the presentation of information in the financial statements. 3.2 The audit was planned and performed so as to obtain all the information and explanations considered necessary to provide sufficient evidence to give reasonable assurance that: (c) the financial statements are free from material misstatement, whether caused by error, fraud or other irregularity; in all material respects, the and income have been applied to the purposes intended by the legislator; and the financial transactions conform to the authorities that govern them. 4. AUDIT OBSERVATIONS 4.1 MAIN ISSUES/FINDINGS IDENTIFIED BY THE AUDIT Unauthorized The under-mentioned unauthorised occurred during the financial year and is reported as such in terms of Section 27(6) of the State Finance Act, 1991 (Act 31 of 1991). (i) (ii) (iii) The vote of the Ministry was exceeded with N$ which is 1.7% of the total budget and is unauthorised in terms of Section 6(i) of the Act; and Three (3) main divisions exceeded the authorised amount with N$ which is unauthorised in terms of Section 6(ii) of the Act; and Although Treasury approval was obtained to utilize certain expected savings for the defrayal of excess by way of virement during the year, thirty (30) operational subdivisions and one (1) development subdivision exceeded the authorised amount with N$ , which is unauthorised in terms of Section 6(iii) of the Act Salary advances The Accounting Officer reported seven (7) cases to an amount of N$ where salary advances were not recovered at the end of the month in which they were given. The Accounting Officer should adhere to Treasury Instruction HC 0602 which stipulates that salary advances must be deducted from the next ensuing payment of salary Non-submission of statements Although the Accounting Officer was urged by a letter dated 22 April 2005 to submit the outstanding statements before 23 May 2005, the Ministry did not provide the following statements to the Office of the Auditor-General for reporting purposes:
5 Statement number Description 12 Operating/Trade accounts 12.1 Balance sheet/statement of revenue and 20 Subsistence advices 22 Unit costs 23 Bursary and study assistance 30 Debts to the Government 3 It is for the third consecutive year that the Accounting Officer fails to submit all requested statements to the Office of the Auditor-General. Once again no explanation was given for the non-submission of the statements, which is viewed in a very serious light. It is in contradiction with Section 12(2) of the State Finance Act, 1991 (Act 31 of 1991) which stipulates that the Permanent Secretary shall transmit the statements and accounts referred to in subsection (1) to the Auditor-General for investigation, examination and auditing. It is recommended that the Accounting Officer adheres to the stipulations of the mentioned Act Internal control Documents not submitted for audit The following documents were not submitted for audit: The personnel file and leave card of one staff member; A claim of one staff member, amounting to N$ ; (c) A payment of N$ made to Nored Electricity; (d) Three revenue journals with an absolute value of N$ were submitted for audit without supporting documents; and (e) Three other journals with an absolute value of N$ were not submitted. The Ministry should adhere to Treasury Instruction FE 0301 that stipulates as follows: all the necessary documents should be provided to the auditors or any competent person from the Auditor-General s Office on time Signatures of approval The audit test to confirm whether purchases were properly authorised could not be carried out for the fourth consecutive financial year during the audits, as there are no specimen signatures of the authorised officials for the approval of. The Accounting Officer did not implement the recommendation made in the previous management letters and annual reports. It is once again recommended that the Accounting Officer should open a file with specimen signatures for the authorised officials/staff members for the approval of. The file should be provided to the audit team during the audit Revenue Payment schedules collected in respect of boarding fees indicated an amount of N$ while records at the Ministry indicated an amount of N$ Registration fees collected were N$ while records at the Ministry indicated only an amount of N$ It is recommended that measures be taken to ensure that all collections by the Ministry from the various Colleges on behalf of the State are done timely and all collections due are received.
6 Suspense accounts The Ministry had outstanding balances on eighty-nine (89) suspense accounts, twenty-seven (27) with debit and sixty-two (62) with credit balances at the end of the financial year under review. It is strongly recommended that the Accounting Officer should take the necessary steps in order to have the suspense accounts reconciled and cleared where possible. The following suspense accounts had outstanding balances of more than N$ at the end of March 2004: Account code Description Debit Credit N$ N$ Rejection account Income tax (PAYE) Unknown account codes on Unknown accounts on revenue Employee s contribution to GIPF Subsistence advance suspense account Old mutual group scheme PSUN SWA Building Society (Other) Standard Bank Katutura RD cheques S&T cash transactions Bills payable Students financial assistance trade account It is noted with grave concern that the unknown account codes on and the rejection account have such high balances. The high balance in the students financial assistance trade account should also be explained. It is recommended that more efforts should be made to clear and analyse the suspense accounts Departmental revenue The figures as reported in the General Ledger do not agree with the records kept at the Ministry for the following Revenue heads: Revenue head Cash-book General Ledger 001 Trade test monies for apprentices N$ N$ Private telephone calls Class and examination fees Hostel fees Miscellaneous Youth Centres It is recommended that proper records are kept at the Ministry and that reconciliations between the General Ledger and the cash-book are carried out on a regular basis.
7 5 5. ACKNOWLEDGEMENT The co-operation and assistance of management and staff of the Ministry during the audit is appreciated. 6. QUALIFIED AUDIT OPINION I certify that I have audited the financial statements of the Ministry of Higher Education, Training and Employment Creation for the year ended 31 March 2004 in accordance with the terms of Article 127(2) of the Namibian Constitution and Section 25(1) of the State Finance Act, 1991 (Act 31 of 1991). Except for my remarks in paragraphs Unauthorised, Non submission of statements, Internal control, Suspense accounts and Departmental revenue, in my opinion the financial statements fairly represent the receipts and payments of Vote 27 for the year ended 31 March 2004, and in all material respects the receipts and payments have been applied to the purposes intended by the National Assembly and conform to the authorities which govern them. JUNIAS ETUNA KANDJEKE AUDITOR-GENERAL OFFICE OF THE AUDITOR-GENERAL Metropolitan Building, 5th floor c/o Dr Frans Indongo/Werner List Street Private Bag WINDHOEK NAMIBIA
8 6 1. FINANCIAL STATEMENTS ANNEXURE A 1.1 APPROPRIATION ACCOUNT Service 01. Office of the Minister: Original budget / /2003 Authorized Actual Variations Under/ (Excess) Percentage Actual N$ N$ N$ N$ % N$ Plus: Virement ( ) Administration: Original budget Less: Virement ( ) Higher Education, Senior Education, Human Resources and Development: Original budget Additional budget Plus: Virement ( ) Vocational and Technical Training: Original budget Additional budget Plus: Virement Namibia Qualification Authority: Original budget Less: Virement ( ) Research, Science and Technology: Original budget Less: Virement ( ) Youth Development: Original budget Less: Virement ( ) (continued)
9 7 ANNEXURE A (continued) Service 08. Youth Training and Employment: Original budget / /2003 Authorised Actual Under/ (Excess) Variations Percen- tage Actual N$ N$ N$ % N$ Plus: Virement Namibian National Commission for UNESCO: Original budget Less: Virement ( ) Human Resource Development Planning and SFAS: Original budget Less: Virement ( ) ( ) Total: Original budget Additional budget ( )
10 8 ANNEXURE A (continued) 1.2 STANDARD SUBDIVISIONS 2003/ /2003 Under- Subdivision Authorized Actual / Actual (Excess) N$ N$ N$ N$ Operational Current : Personnel 001. Remuneration Employer s contribution to staff s pension fund Other conditions of service Employer s contribution to the MPOOBPF Total Current : Goods and other services 021. Travel and subsistence expenses ( ) Materials and supplies Transport ( ) Utilities ( ) Maintenance Property rental and related charges Other services and expenses Total ( ) Current : Membership fees and subscriptions 041. Fees and subscriptions: International Total Current : Subsidies, grants and other transfers 043. Government organisations Individuals and non-profit organisations ( ) Public and departmental enterprises and private industries Total Total: Current Capital : Acquisition of assets 101. Furniture and office equipment Operational equipment, machinery and plant Total: Capital Total: Operational Development Capital : Acquisition of assets 113. Operational equipment, machinery and plant Feasibility studies, design and supervision Construction, renovation & improvements Total: Development GRAND TOTAL ( )
11 9 ANNEXURE A (continued) 1.3 DEPARTMENTAL REVENUE Revenue for the year is as follows: Revenue heading Estimate Actual revenue 2003/2004 More/(Less) than estimated Actual revenue 2002/2003 N$ N$ N$ N$ 001. Trade test moneys for apprentices Private telephone calls ( ) Unclaimed cheques Class and examination fees ( ) Hostel fees ( ) Lost equipment and stores ( ) Letting of facilities ( ) Skills training and upgrading fees ( ) Miscellaneous ( ) Youth centres ( ) Total ( ) (Also see paragraph 4.1.6) 1.4 NOTES TO THE FINANCIAL STATEMENTS Appropriation account: Explanations of variations exceeding 2% between the authorized and actual. (i) Over- Main division 01 Office of the Minister An excess of N$ on personnel was due to a double payment on GIPF in March An excess of N$ on goods and other services was due to an amount of N$ that was spent on S+T in March 2004 and delayed transport expenses that were debited to the vote after the final virements. Main division 10 Human Resource Development Planning and SFAS An excess of N$ on subsidies and other current transfers was due to the fact that after transferring N$ from the vote, for scholarships to the new account (SFAS), the Division continued making transfer payments through the Ministry of Finance of about N$ (ii) Under Main division 04 Vocational and Technical Training An under of N$ on personnel was due to vacant posts which could not be filled during the year.
12 10 ANNEXURE A (continued) (c) (d) An under of N$ on goods and other services was due to savings made on materials and supplies, transport, maintenance expenses and other services and expenses. An under of N$ on subsidies and other current transfers was due to virements and a subsidy to Ramatex which was not paid. An under of N$ on acquisitions of capital assets was due to an over-estimation on furniture and office equipment, operational equipment, machinery and plants. Main division 06 Research, Science and Technology (c) An under of N$ on personnel was due to vacant posts which were not filled. An under of N$ on goods and other services was due to savings made on S+T, materials and supplies, maintenance expenses and other services and expenses. An under of N$ on acquisitions of capital assets was due to savings made on furniture and office equipment which was over budgeted. Main division 07 Youth Development (c) (d) An under of N$ on personnel was due to posts not filled and virements which were not utilised. An under of N$ on subsidies and other current transfers was due to virements that were not utilised. An under of N $ on acquisitions of capital assets was due to over-estimation. An under of N$ on acquisition of capital assets (capital projects) was due to virements of N$ to the Katima Mulilo Multi Purpose Youth Resource Centre that was not utilised. Main division 08 Youth Training and Employment An under of N$ on personnel was due to posts that were not filled. An under of N$ on the acquisition of capital assets was due to virements and over estimation of the budget. Main division 09 Namibia National Commission for UNESCO (c) An under of N$ on personnel was due to vacant posts which were not filled. An under of N$ on goods and other services was due to the fact that it was a small component whose expenses on goods and services were minimal. An under of N$ on acquisitions of capital assets was due to over-estimation of the budget.
13 11 ANNEXURE A (continued) Departmental revenue: Explanations of deviations of N$ and above. (i) Over-estimated 005 Hostel fees Receipts for hostel fees were erroneously issued for class and examination fees. Reconciliation was not done to rectify the errors. 010 Miscellaneous There was an over-estimation in the budgeting process. 011 Youth Centres There was an over-estimation based on the previous year s receipts of N$ (ii) Underestimated 001 Trade test moneys for apprentices There were variations in the receipts from one year to the other. The indication was that it was difficult to accurately estimate receipts on this revenue subhead.
14 12 2. GENERAL INFORMATION 2.1 Development projects The following were development projects of the Ministry exceeding N$ 1 million: Approved appropriation 2003/04 Total at 31/03/03 Actual 2003/2004 Total at 31/03/2004 Project Approved total budget Year of completion N$ N$ N$ N$ N$ Polytechnic Resource Centre /03/2005 Ongwediva College renovations /04/2004 UNAM regional expansion program /03/2005 Windhoek College of Education /03/2004 Henties Bay Research Centre /03/2005 Polytechnic Science Laboratory /03/2005 Hotel school /03/2005 Eenhana VTC /12/2004 Zambezi VTC /03/2003 Windhoek VTC /01/2003 Frans Dimbare Integrated Rural Youth Development Centre /06/06 National Youth Service Scheme /10/2008 International guest house /03/2005 Pearl Millet /12/2005 Farm du Plessis Rural Development Centre /06/2006 Usakos MPYRC /03/2004 Total
15 13 ANNEXURE A (continued) 2.2. Aid/pledges /gifts/assistance/free services to / by the Government (i) Received by the Government The Ministry received computer equipment with Treasury approval valued at N$ from the Deutscher Entwicklungs Dienst and Espoon Teknikan Alan Oppilaitos for the Valombola Vocational Training Centre. (ii) Contributions / grants / financial aid by the Government. The Ministry made contributions to the value of N$ to the following institutions: Beneficiaries Nature Value N$ NEMAS Contributions UNAM Contributions, subsidy Polytechnic of Namibia Contributions subsidy Councils: Colleges of education Subsidy Community skills development centre Subsidy Windhoek VTC Subsidy Vocational training fund Subsidy Scholarship: NIMT Contributions, Loans Scholarship: EHAFO Contributions Baumgartsbrunn BLEKS Foundation Contributions DAPP VTC Contributions Namibia Maths/ Science Teachers Association Contributions Namibia Biotechnology Association Contributions Mathematics & Science clubs Contributions Tertiary Science education support Contributions Mathematics & Science computer centre Contributions Commission on science and technology Contributions National science & technology fund Contributions National Youth Council Subsidy AID: Namibian students in foreign countries Loans TUCSIN: Bursaries Subsidy Scholarship: SFAS Loans Private providers in education Subsidy Administration of scholarship Subsidy Commonwealth of Learning (COL) Contribution UNAM faculty of Science China agreement Contribution UNAM (EU project) Contribution Polytechnic of Namibia Contribution Council for Higher Education Contribution Namibia Federation of the Visually Impaired Contribution Ramatex Contribution Research Council Contribution Research and Development support Contribution Value added project Contribution
16 14 ANNEXURE A (continued) 2.3. Losses and damages There were eleven (11) vehicle accidents reported during the year under review at the Ministry. Eight (8) of these vehicles were repaired at a cost of N$ Three (3) vehicles with damages amounting to N$ still need to be repaired. The Ministry reported losses in respect of theft of various items to a total value of N$ All these cases are reported to the Police Vocational Training Fund The audit of the Fund was tendered to a private audit firm, Neuhaus & Co who conducted the audits on behalf of the Auditor-General although this was for the previous financial years. The audit of the accounts of the current financial year was still outstanding Deviations from normal tender procedures The Ministry obtained an Annual General Tender Board Exemption which amounted to N$ of which N$ was actually spent. Details are as follows: Service Exempted amount Actual N$ N$ Chemicals, apparatus for laboratories and technical equipment Advertisements Maintenance and rental of labour saving devices and computer equipment Production supplies for photocopiers and fax machines Air transport Purchase and repair to gymnastic, sport and technical equipment Gazette purchases, subscriptions and periodicals for libraries and resource centres Workshops, meetings and seminars Rail and road transport Purchase of sport equipment Bank accounts Two bank accounts were kept at First National Bank in respect of the Namibian Qualification Authority. The call account had a credit balance of N$ at 31 March The cheque account had a credit balance of N$ at 31 March No money was spent during the financial year under review. WINDHOEK, I.V. ANKAMA ACCOUNTING OFFICER
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