REPUBLIC OF NAMIBIA

AUDIT REPORT ON THE ACCOUNTS OF THE

OFFICE OF THE AUDITOR-GENERAL

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2005

Pubished by authority Price (Vat excluded) N$ 16.58 Report no: 397

OFFICE OF THE AUDITOR-GENERAL

2005

1 REPUBLIC OF NAMIBIA

TO THE HONOURABLE SPEAKER OF THE NATIONAL ASSEMBLY

I have the honour to submit herewith my report on the accounts of the Office of the Auditor-General for the financial year ended 31 March 2005 in terms of Article 127(2) of the Namibian Constitution. The report 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, May 2006

JUNIAS ETUNA KANDJEKE AUDITOR-GENERAL

Office of the Auditor-General

2005

REPORT OF THE AUDITOR-GENERAL ON THE ACCOUNTS OF THE OFFICE OF THE AUDITOR-GENERAL FOR THE FINANCIAL YEAR ENDED 31 MARCH 2005

1. 1.1

INTRODUCTION Report This report on the accounts of the Office of the Auditor-General for the financial year ended 31 March 2005 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: (a) 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 States assets, such as stores, equipment, securities and movable goods; and expenditure has taken place under proper authority and is supported by adequate vouchers or other proof.

(b)

(c)

In addition, the State Finance Act, 1991, Section 26(1) (b) (iv) empowers the Auditor-General to investigate and report on the economy, efficiency and effectiveness of the use of the States resources. 2. FINANCIAL STATEMENTS The appropriation accounts were submitted to the Auditor-General in terms of Section 13 of the State Finance Act, 1991. The financial statements, notes to the financial statements and general information supplied by the Accounting Officer are attached as annexure A to this report.

3. 3.1

SCOPE OF THE AUDIT The Deputy Auditor-General 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:

(a)

examination on a test basis of evidence relevant to the amounts, disclosure and regularity of financial transactions included in the financial statements; and evaluation of the overall adequacy of the presentation of information in the financial statements.

(b)

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: (a) the financial statements are free from material misstatement, whether caused by error, fraud or other irregularity; in all material respects, the expenditure and income have been applied to the purposes intended by the legislator; and the financial transactions conform to the authorities that govern them.

(b)

(c)

4.

AUDIT OBSERVATIONS

4.1

MAIN ISSUES/FINDINGS IDENTIFIED BY THE AUDIT

4.1.1 Unauthorised expenditure The undermentioned unauthorised expenditure occurred during the financial year and is reported as such in terms of Section 27(a) of the State Finance Act, 1991 (Act 31 of 1991): (i) Main division 01 Office of the Auditor-General, was exceeded with an amount of N$ 503.41 which is unauthorised in terms of Section 27(6)(a)(ii) of the Act. Although Treasury approval was obtained to utilize certain expected savings for the defrayal of excess expenditure through virements during the year, one (1) subdivision was exceeded by an amount of N$ 1 186.91 which is unauthorised in terms of Section 27(6)(a)(iii) of the Act.

(ii)

4.1.2 Audit of and report on the Office of the Auditor-General The present position of the State Finance Act (Act 31 of 1991) requires the Auditor-General to audit his Office, which puts him in a difficult position, as the Auditor-General has to report on his own Office. As recommended in previous reports, it is once again recommended that the State Finance Act (Act 31 of 1991) be amended to allow the Office to be audited and reported on by the private audit firms. However, it has been noted with appreciation that this issue has been addressed in the intended bill on the Office of the Auditor-General.

4.1.3 Outstanding revenue The following accounts in respect of audit fees have been rendered, but were still outstanding at the end of the financial year: Institution Karibib Otavi Otavi Otavi Otavi Otavi Outjo Usakos Usakos Bethanien Ondangwa Ongwediva Oshakati Development Brigade Corporation Diamond Board Diamond Board Diamond Board Namibia Press Agency (NAMPA) Sports Development Fund Total Financial year (02/03) (97/98) (99/00) (00/01) (01/02) (02/03) (02/03) (99/00) (00/01) (99/00) (00/01) (02/03) (03/04) (02/03) 1999 2000 2001 (02/03) (98/99) N$ 26 494.23 24 828.20 22 848.10 24 509.18 26 815.07 13 833.25 35 518.75 30 715.28 24 678.86 25 025.72 39 575.40 34 623.90 41 818.74 8 967.00 3 339.00 3 895.50 4 662.00 29 617.88 5 301.45 427 067.51

It is recommended that the Accounting Officer should indicate how and by when the outstanding amounts will be recovered. The following accounts were handed over to the Attorney-General for collection.

Institution Otavi Otavi Otavi Otavi Usakos Usakos Bethanien Total

Financial year 97/98 99/00 00/01 01/02 99/00 00/01 99/00

N$ 24 828.20 22 848.10 24 509.18 26 815.07 30 715.28 24 678.86 25 025.72 179 420.41

4.1.4

Suspense accounts

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

4.1.5

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

During the verification of annual report statements, an expenditure reconciliation was performed with the objective to ensure that all expenditure transactions relevant to the year of account have been recorded and to ensure that the expenditure ledger is complete. No errors or omissions were found and it was also found that the Office regularly reconciles the expenditure ledger on a monthly basis. The Office is commended for a job well done. 4.1.6 Other findings from the control environment

An audit plan was prepared prior to the audit of the Office in order to establish the risk areas which the audit needed to focus on. Various controls such as managements organisation, managements approach to controls, management override, the framework for management controls, segregation of duties, personnel considerations, and protection of assets and records were addressed. It was concluded that these controls were satisfactory. However, the following issues need managements attention: (a) there is no adequate physical protection for the computer hardware in case of destruction by fire and water. Although back-ups are kept in a fireproof safe, a sprinkler valve system should be considered, especially for the server room. It is also recommended that back-ups should be kept off-site; and although a disaster recovery plan exists, it has never been tested nor revised or updated.

(b)

5.

ACKNOWLEDGEMENT

The co-operation and assistance given by the management and staff of the Office of the Auditor-General during the audit is appreciated. 6. AUDIT OPINION

I certify that I have audited the financial statements of the Office of the Auditor-General for the year ended 31 March 2005, 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). In my opinion the financial statements fairly represent the receipts and payments of Vote 04 for the year ended 31 March 2005 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 Cnr Dr Frans Indongo / Werner List Streets Private Bag 13299 WINDHOEK NAMIBIA

ANNEXURE A 1. 1.1 FINANCIAL STATEMENTS Appropriation Account

2004/2005 Variations Authorized expenditure N$ 01 . Office of the Auditor-General: Original budget Less: Virement 1 138 000 (81 000) 1 057 000 1 057 503.41 (503.41) 0.0 N$ Actual expenditure N$ Underexpenditure/ (Excess) N$ Percentage %

2003/2004

Service

Actual expenditure N$

4 488 582.60

02. Administration: Original budget Plus: Virement 03. Auditing: Original budget Plus: Virement Total: Original budget 16 647 000 16 647 000 16 594 473.89 52 526.11 0.3 15 169 055.32 11 327 000 41 000 11 368 000 11 331 774.92 36 225.08 0.3 4 182 000 40 000 4 222 000 4 205 195.56 16 804.44 0.4 10 680 472.72

1.2

Standard subdivisions
2004/2005 UnderAuthorised Subdivision expenditure N$ Actual expenditure N$ expenditure/ (Excess) N$ Actual expenditure N$ 2003/2004

Operational: Current expenditure: Personnel 001. 002. 003. Total Remuneration Employers contribution to staffs pension fund Other conditions of service 10 678 000 1 367 000 63 000 12 108 000 10 670 046.56 1 364 275.68 58 988.49 12 093 310.73 7 953.44 2 724.32 4 011.51 14 689.27 9 689 352.02 1 212 550.59 107 148.70 11 009 051.31

Current expenditure: Goods and other services 021. 022. 023. 024. 025. 027. Total Travel and subsistence expenses Materials and supplies Transport Utilities Maintenance Other services and expenses 737 000 150 000 294 000 963 000 106 000 2 079 000 4 329 000 735 833.54 149 928.91 295 186.91 961 945.85 101 663.24 2 048 141.57 4 292 700.02 1 166.46 71.09 (1 186.91) 1 054.15 4 336.76 30 858.43 36 299.98 484 972.88 119 795.48 272 272.49 746 374.91 69 547.51 2 037 604.11 3 730 567.38

Current expenditure: Membership fees and subscriptions 041. 044. Total Total: Current expenditure Capital expenditure: Acquisition of assets 101. Total Total: Operational expenditure GRAND TOTAL Furniture and office equipment 120 000 120 000 16 647 000 16 647 000 119 925.14 119 925.14 16 594 473.89 16 594 473.89 74.86 74.86 52 526.11 52 526.11 356 756.74 356 756.74 15 169 055.32 15 169 055.32 International Grants & subsidies 40 000 50 000 90 000 16 527 000 38 538.00 50 000.00 88 538.00 16 474 548.75 1 462.00 52 451.25 1 462.00 22 679.89 50 000.00 72 679.89 14 812 298.58

1.3

Departmental revenue

Revenue for the year is as follows: 2004/2005 Actual revenue N$ 1 559 818.74 45 862.52 16 301.11 1 621 982.37 2003/2004 More/(Less ) Actual than estimated revenue N$ N$ 359 818.74 1 394 283.51 (4 137.48) 49 040.84 1 301.11 28 098.81 356 982.37 1 471 423.16

Revenue heading 001. Audit fees 002 Private telephone calls 003. Miscellaneous Total

Estimate N$ 1 200 000 50 000 15 000 1 265 000

1.4 1.4.1

NOTES TO THE FINANCIAL STATEMENTS Appropriation account: Explanations of variations exceeding 2% between the amounts voted and the actual expenditure.

No variations exceeding 2%were recorded during the 2004/05 financial year, therefore no explanations were required. 1.4.2 Departmental revenue: Explanations of deviations exceeding N$ 100 000:

Underestimated 001. Audit fees More revenue was received than expected.

2. 2.1 (i)

GENERAL INFORMATION Gifts/Donations Given by the Government

The undermentioned donations and free services valued at N$ 59 911.06 were given by the Office with the necessary Treasury authorisation: Beneficiary Public Accountants and Auditors Board News Media Libraries Universities Foreign Missions SADCC Countries A.G Complimentary Archives Nature Donation Free Services Free Services Free Services Free Services Free Services Free Services Free Services Value N$ 50 000.00 36.28 3 858.57 2 572.38 1 991.70 165.94 1 286.19 59 911.06 Authorization 2004/05 Budget 20/13/1/1/04 (DB 01/262) d.d. 4 September 2001

(ii)

Received by the Government

The following foreign aid was received by the Office during the year: Nature of donation Training / Technical support

Name of donor Swedish International Development Agency

Amount N$ 614 889.87

Purpose/objective To enhance the ability of the Office of the Auditor General to fulfil its obligation as a supreme audit institution.

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

2.2

Losses to the Government

Vehicle accidents Seven (7) accidents were reported during the financial year 2004/2005 and were repaired at a cost of N$ 9 496.23.

WINDHOEK, 2005-11-23

W P BARTH ACCOUNTING OFFICER