Government of Malawi Action Plan - 27 November 2013

MALAWI GOVERNMENT ACTION PLAN TO IMPROVE PUBLIC FINANCIAL MANAGEMENT AS AT 26TH NOVEMBER 2013 RESULT AREA ACTION Short
Term Sep Dec 2013 1. INVESTIGATIO 1.1. NS AND PROSECUTION S 1.2. The Director of Public Prosecutions (DPP) to set up a dedicated team to respond to the requirements of the investigators. Analysis and isolation of possible charges which are likely to be proffered on the suspects. Investigators and prosecutors from AntiCorruption Bureau (ACB), Police, Financial Intelligence Unit (FIU), Malawi Revenue Authority (MRA) and Director of Public Prosecutions (DPP) strategize on how to approach these issues. Strengthening of DPP office by engaging Technical Assistance (short term and long term). X TIMELINE Medium Term Jan Jun 2014 Long Term Jul 2014 onward DPP RESPONSIBLE INSTITUTION BUDGET & FUNDING SOURCE STATUS/ REMARKS & CHALLENGES
MG
Done
DPP/ACB
MG
On- going
1.3.
DPP X
MG
On-going
1.4.
DPP
Short term TA EU Long term TA yet to be identified
Short term TA expert in fraud and corruption cases, Mr Kamdoni Nyasulu, has been engaged for three months. This has been done with financial support from European Union Financial and human
Challenges
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MALAWI GOVERNMENT ACTION PLAN TO IMPROVE PUBLIC FINANCIAL MANAGEMENT AS AT 26TH NOVEMBER 2013 RESULT AREA ACTION Short Term Sep Dec 2013 TIMELINE Medium Term Jan Jun 2014 Long Term Jul 2014 onward RESPONSIBLE INSTITUTION BUDGET & FUNDING SOURCE STATUS/ REMARKS & CHALLENGES
1.5. Set up forensic investigation unit within ACB to work with all key stakeholders on these emerging issues. Verification of all deleted (suspicious) transactions with suppliers of goods and services. Profiling properties of public officers connected with the suspicious transactions. X ACB MG Done
resources Mobility
1.6.
ACB/DPP/AGD
World Bank MG
On-going
1.7.
ACB
On-going The Bureau continues to profile properties of suspects which include houses, vehicles and farms So far we have identified 81 companies in connection with the investigations and 60 of these have already been profiled
Challenges
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Timing for cases in court as there are other competing cases
1.8.
Beefing up the investigation team at ACB.
ACB
MG Further support required
Done Staff moved from ACB satellite offices.
1.9.
Elevation of the corruption cases to high court (where there are more competencies than in the lower courts).
DPP/ACB
MG
On-going. Over 35 persons committed to High Court through DPP 32 bail applications processed, 6 cases committed to High Court and 18 cases pending committal to High
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Court (on the Cash Gate) through ACB 15 Suspects on bail on the K400 million Accountant General Case
1.10. ACB dialogue with Judiciary to prioritise the corruption cases.
ACB
MG
Done Dialogue held September 2013 on 23rd
1.11. Identification and follow up of components of cases that are ready for prosecution and effecting arrests.
ACB/DPP
MG
On-going Already filed charges for some of the cases. Over 35 persons committed to High Court through DPP 32 bail applications processed, 6 cases committed to High Court and 18 cases pending committal to High Court (on the Cash Gate) through ACB 15 suspects on bail with regards to the Accountant General K400 million Case Refer to separate report
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provided 1.12. Strengthening of the Fiscal and Fraud Unit of the Malawi Police Service by developing capacity in investigations 1.13. Develop capacity for tackling cyber based crimes X X X Police Funding yet to be identified Funding yet to be identified Financial and Technical assistance required Police currently has no capacity to handle cyber based crimes Financial and technical assistance required
Police
2. AUDITING
2.1. 2.2. 2.3.
Internal review meeting to prepare for the forensic audit. Develop TORs for the forensic audit. Engage a fact finding short term expert.
X X X
NAO NAO NAO
MG DFID DFID
Done Done Done Initial comprehensive assessment of the IFMIS control and operational systems and identification of areas of significant risk of fraud and abuse was carried out. This helped in defining the
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scope of the second phase (preliminary forensic audit) Report produced and ACB already has started acting on it Way forward A Reference Team was formed to provide regular support to the consultants and monitor progress on the audit Members of the Reference Team include NAO (Chair), FIU, ACB, Police, DFID, BHC and World Bank
2.4.
Undertake preliminary forensic audit
NAO
DFID
Audit is underway Covering 6 months from April 2013 to September 2013. This could be extended to cover 9 0r 12 months i.e. covering additional 3 or 6 months in the previous fiscal year Information gathering and data analysis, which will provide clues in how the misappropriation of cash was
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carried out, is in progress The report is expected in January 2014. The Auditor General has also taken on board the investigation of the K400 million. ToRs have been developed The situation is being reviewed to accelerate the commencement period for comprehensive Forensic Audit work to be in January 2014 other than June 2014 previously reported. The Initial discussion between Treasury and Auditor General on the funding either from internal sources or from Development Partners will commence this week and once agreed will immediately
2.5.
Undertake comprehensive forensic audit.
NAO
Funding yet to be identified
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facilitate the realistic date for commencement of the forensic audit. 2.6. Identification of understudy team within the NAO. X X NAO MG/DFID ?? On- going The NAO Team was already identified and is working alongside the Forensic Auditors. The team shall be increased to ensure smooth transfer of skills. This will be in the next phase of comprehensive Forensic Audit. The plan of transferring of skills is being worked out so that next phase of the comprehensive forensic audit up to 2005 should be in place. This coincides with the appointment of the consultant under FROIP whose terms of reference are similar to those applied in Forensic Audit. Among others to train staff on
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2.7.
Transfer of the forensic audit skills.
NAO/Consultant
World Bank
usage of Audit Management System Software and Computer Aided Audit Techniques (CAATs) to interrogate the IFMIS software system. Once the consultant is in place it is one of his responsibility in order to procure the IT Audit Software and train staff on its usage to commence by December, 2013 This will be covered on adhoc basis to facilitate surprise checks on IFMIS and will in future be a continuous process once the staff is trained on uses of Audit Management Systems and CAATs by December, 2013.
2.8.
Procure audit management system.
NAO/FROIP
World Bank
2.9.
Undertake spot/surprise audits
DFID
2.10. Acquisition of Computer- Aided Audit
NAO/FROIP
World
CAATs to be procured under

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MALAWI GOVERNMENT ACTION PLAN TO IMPROVE PUBLIC FINANCIAL MANAGEMENT AS AT 26TH NOVEMBER 2013 RESULT AREA ACTION Short Term Sep Dec 2013 Techniques (CAATs) 2.11. Introduction Committees of Independent Audit X X X OPC TIMELINE Medium Term Jan Jun 2014 Long Term Jul 2014 onward RESPONSIBLE INSTITUTION BUDGET & FUNDING SOURCE Bank FROIP STATUS/ REMARKS & CHALLENGES
$261,622 On-going Funding Decision already approved yet to be OPC to issue circular by 27th identified November, 2013 World Bank MG Capacity building on going under FROIP e.g. IT auditors CIAU to design some checklists/reports and provide coaching to MDAs by midDecember, 2013 [Non auditing staff to be doing this function]. The reports shall be available as soon as they are it finalized. They are expected to be ready as a preliminary interim report by December, 2013 but the final to be presented to Parliament in January, 2014 Done and the exercise is
2.12. Strengthen the role of Central Internal Audit 2.13. Institutionalize pre-auditing
X X
CIAU CIAU/AGD
2.14. The Auditor General to table all reports from investigations and special audits in Parliament for action by PAC as soon as they are released.
MG
3. ACCOUNTING
3.1.
Engage the systems supplier, SofTech, to
AGD
World
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MALAWI GOVERNMENT ACTION PLAN TO IMPROVE PUBLIC FINANCIAL MANAGEMENT AS AT 26TH NOVEMBER 2013 RESULT AREA ACTION Short Term Sep Dec 2013 collate all suspicious transactions that have been tempered with in the system TIMELINE Medium Term Jan Jun 2014 Long Term Jul 2014 onward RESPONSIBLE INSTITUTION BUDGET & FUNDING SOURCE Bank STATUS/ REMARKS & CHALLENGES
continuing. The supplier was engaged and has assisted in the recovery of suspected fraudulent transactions for the months of July to September 2013. An interim report is being finalised and will be submitted to OPC by end of November 2013
Way Forward
3.2.
Recover all the transactions that have been deleted in the system
AGD
World Bank
On-going Deleted transactions from July to September 2013 have been recovered and restored back into the system. The affected institutions will register over expenditures that may affect their future payment processing.
Way forward
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The AGD and Treasury engage on how to remedy the over expenditure situation. The confirmed loss to be processed through the legal system
3.3.
Review the systems security gaps and recommend areas of improvement
AGD
World Bank
Done A preliminary report has been submitted. Security features enhanced
Way forward For accountability purposes, Government and Softech to sign of all the system enhancements. There is need to conduct a thorough Penetration and vulnerability Testing for the IFMIS and Interfacing with government wide systems.
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3.4.
Engage the system supplier to implement the security recommendations and enhance system controls
AGD
World Bank
Done Access rights have been allocated at user level as opposed to group level previously. Restrictions have been made to only allow users to have access to modules/ areas of the system where they have been granted access Processing of all transactions has been centrally configured to be carried out at Capital Hill. However, the remote sites of Mzuzu, Blantyre and Zomba will be generating vouchers , printing cheques at their respective sites; Remote access to the database has been disabled therefore no transaction can
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be deleted from the system. Users will only access the system through a web console through citrix. Way forward Malawi Defence Force and State House will be engaged to have their transactions processed centrally at Capital Hill. Alternatively, a standalone system should be implemented.
3.5.
Enter into Service Level Agreement with Soft-tech for provision of functional and technical support including overseeing IT functions with skills transfer to local officers Re-opening of IFMIS
World Bank/GIZ ?
Drafting a Service Level Agreement
3.6.
AGD
MG
Done. Circular on allocation of user rights issued
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The system is live and users are allocated rights upon authorization and approval by Controlling Officers Softech temporarily undertaking this task.
3.7. Engage an ICT Security Officer X AGD GiZ
ToRs for the ICT Security Officer drafted
3.8.
Appoint an IFMIS Manager to oversee the application side
MG
Done TORs for the IFMIS manager developed IFMIS Manager at Deputy Director level appointed DPs to finance the appointment of IFMIS advisor
3.9.
Revoke all IFMIS user rights in the system and request for new users to be created in the system
AGD
MG
Done All IFMIS user rights were revoked. A form has been designed to be used for
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granting access rights. Access will be granted after necessary approvals have been made 3.10. Issue a circular to all MDAs on controls surrounding processing of transactions in the system X AGD MG Done. A circular reference number OA/1/15/13/270 dated 19th September 2013 was issued by the Secretary to the Treasury Circular issued by Accountant General Done
3.11. Issue and enforce internal circular emphasizing controls surrounding payments and printing of cheques within Accountant General Department. 3.12. Improving competencies of accounting officers X AGD MG
AGD
World Bank
AAT UK has been engaged to conduct training using local institutions to enhance ethical accounting principles Way forward, An MoU between GoM and ICAM and AAT to be signed
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by December 2013 3.13. Improving competencies of relevant ICT officers. X X AGD / EGovernment Dept. World Bank A training program has been developed and submitted to FROIP for financing. However, the training programme has to be rere-visited in view of the current changes at AGD A training program has been developed and submitted to FROIP for financing. However, the training programme has to be revisited in view of the current changes at AGD On-going Way forward A team currently working to clear backlog of bank reconciliation and future transactions in IFMIS on a daily basis.
3.14. Develop a comprehensive capacity building plan for the team that is supporting the system
AGD
World Bank
3.15. Reconciliation of all Government accounts at RBM and commercial banks by December 31, 2013
AGD
MG/World Bank
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A consultant being engaged through FROIP to assist AGD team to set up a framework for bank reconciliation after clearing the backlog. ToRs for the consultant are being drawn. The Consultant will be place early January 2014
3.16. Embark on daily bank reconciliation
AGD
MG
Way Forward Engage RBM to provide bank statements on a daily basis
3.17. Circulate daily IFMIS- generated cheque list to RBM and commercial banks. 3.18. Develop and implement IFMIS ICT Security Policy
MG
Accountant General and RBM to review the MOU including the banking arrangements
AGD
MG/GIZ Way forward, Set a task force and engage consultants on IFMIS Security Policy by December 2013
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MALAWI GOVERNMENT ACTION PLAN TO IMPROVE PUBLIC FINANCIAL MANAGEMENT AS AT 26TH NOVEMBER 2013 RESULT AREA ACTION Short Term Sep Dec 2013 3.19. Improve dialogue between RBM, Accountant General and Treasury X TIMELINE Medium Term Jan Jun 2014 X Long Term Jul 2014 onward X AGD RESPONSIBLE INSTITUTION BUDGET & FUNDING SOURCE STATUS/ REMARKS & CHALLENGES
MG
On- going. Meetings commenced have already
3.20. Implement systems to enforce ceilings of funding with IFMIS and Reserve Bank of Malawi.
AGD, RBM, Ministry of Finance
MG
Way forward Put up proper structures for segregation of duties between AGD, Treasury (Budget Division) and RBM including appropriate internal controls and risk management procedures
3.21. Implement new enhanced IFMIS
AGD
World Bank
1st July 2014 Business Process Reengineering has been concluded Functional requirements based on the revised business processes have been developed An evaluation of potential IFMIS solutions Epicor and Serenic Navigator applications
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have been concluded Way forward, Make recommendation to government of a new IFMIS application
3.22. Independent verification of the IFMIS system 3.22.1. Appoint 4- 5 consultants to the AGD to provide oversight and preaudit services 3.23. Carry out an independent audit for payments made during the tenure of the manual system by end December 2013
EU
EU has offered to finance this action point. The independent consultant will work with a team comprising officers from Central Internal Audit Unit.
$60,000
Central Internal Audit Unit to carry out the audit as soon as the Funding yet to be financial resources are made identified available. MG
3.24. Verify the end June stock of arrears and monitor thereafter
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MALAWI GOVERNMENT ACTION PLAN TO IMPROVE PUBLIC FINANCIAL MANAGEMENT AS AT 26TH NOVEMBER 2013 RESULT AREA ACTION Short Term Sep Dec 2013 4. ADMINISTRATI VE MEASURES 4.1. Take disciplinary action on officers implicated including interdiction and dismissal in line with the MPSR 4.1.1. Disciplinary action, including suspension and administrative inquiry, against the approvers of fraudulent payments and cheque signatories 4.2. Re-deployment and rotating of staff within the civil service. X X TIMELINE Medium Term Jan Jun 2014 X Long Term Jul 2014 onward X Human Resource Units in various ministries RESPONSIBLE INSTITUTION BUDGET & FUNDING SOURCE STATUS/ REMARKS & CHALLENGES
MG
On-going. Upon being arrested by law enforcement agencies and charged by courts of law, suspects are interdicted without pay until their cases are concluded
MG A number of postings effected Some officers are being posted to fill posts in ministries where suspects have been interdicted to close gaps created In certain cases, some civil servants whose roles are not very clear or where investigations are on-going, or where negligence has been proved. Officers are posted to other ministries to pave way for full
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investigations Some deployments have been done to strengthen capacity of ministries where it is required
4.3.
Convene a meeting of the National Institutional Integrity Committee to map up a way forward on the Institution Integrity Committees
ACB
MG
Done National Integrity Committee Meeting convened on the 20th November, 2013. It was attended by the Minister of Good Governance. Important agreements were made on building a National Integrity System and strengthening Institutional Integrity Committee.
4.4.
Provide training and resources to Institutional Integrity Committees Introduce Ethics training in the Public Service through the United Nations Capacity Building Programme
ACB/DPs
Funding yet to be identified UNDP The Department of Public Sector Reforms Management in OPC is drawing up a programme for all ministries, to Controlling Officers and their staff in Ethics. A Public Service Code of Ethics and
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4.5.
OPC
Conduct was produced and launched during the Public Service Day in June, 2013 and will be used during orientation. 4.6. Independent oversight on the implementation of this action plan 4.6.1. Establishment of credible and effective feedback mechanisms to allow independent monitoring and evaluation of progress achieved in implementing the action plan 5. REFORMS 5.1. Accelerate the implementation of the Public Finance and Economic Management (PFEM)Reform Program Money laundering Act amendment including civil assets forfeiture regime X X X Ministry of Finance World Bank/ AfDB/GIZ Irish?? TORs for the independent verifiers developed The Ministerial committee endorse the TORs to
On-going
5.2.
FIU/Law MG Commission/Jus tice
On-going Process already started with a draft in place Core Team to meet end of November.
5.3.
Set up a Forfeiture Unit in the DPP office
DPP/DHRMD
MG/DP
On-going
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MALAWI GOVERNMENT ACTION PLAN TO IMPROVE PUBLIC FINANCIAL MANAGEMENT AS AT 26TH NOVEMBER 2013 RESULT AREA ACTION Short Term Sep Dec 2013 5.4. Enforce the Malawi Public Service Code of Conduct X TIMELINE Medium Term Jan Jun 2014 Long Term Jul 2014 onward OPC/DHRMD RESPONSIBLE INSTITUTION BUDGET & FUNDING SOURCE STATUS/ REMARKS & CHALLENGES
MG/UND P
On-going Controlling Officers, with the guidance by the Department of Human Resource Management and Development and the Department of Public Sector Reforms Management, are encouraged to orient their staff on the Code. The new office of the Minister of responsible for Good Governance will take the lead in advocating ethical behaviour by Public Servants.
5.5.
Initiate a process of the law review including protection of whistle blowers
ACB/Law Commission
On- going A law review process has been initiated and a submission has been made to Ministry of Justice for professional scrutiny
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Lobbying with the Legal Affairs Committee of Parliament done All Principal Secretaries and Controlling Officers shall be given copies of the laws and oriented in the provisions of the tree Acts Independent Audit Committees will be established and rolled out Candidates have been identified
5.6.
Strengthen enforcement of Financial Management Accountability of Controlling Officers and other heads of Department and Agency, as well as enforcing personal accountability for wrongdoing in line with the Public Finance Management Act, Public Audit Act, and Public Procurement Act.
OPC
MG Funding yet to be identified
5.7.
Tabling of the Assets Declaration bill
Justice
MG
Done Assets Declaration bill was passed in Parliament
5.8.
Restriction of accounts and move towards asset recovery
ACB
On-going 50 bank accounts involved in illegally transacting Government cheques have so far been identified and restriction is underway
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AC continues to restrict access to related bank accounts and the disposal of such properties as houses, vehicles and land under investigations
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Government of Malawi Action Plan - 27 November 2013

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MALAWI GOVERNMENT ACTION PLAN TO IMPROVE PUBLIC FINANCIAL MANAGEMENT AS AT 26TH NOVEMBER 2013 RESULT AREA ACTION Short

Short term TA EU Long term TA yet to be identified

Timing for cases in court as there are other competing cases

Beefing up the investigation team at ACB.

MG Further support required

Done Staff moved from ACB satellite offices.

1.10. ACB dialogue with Judiciary to prioritise the corruption cases.

Done Dialogue held September 2013 on 23rd

2.1. 2.2. 2.3.

NAO NAO NAO

Undertake preliminary forensic audit

Undertake comprehensive forensic audit.

Funding yet to be identified

Transfer of the forensic audit skills.

Procure audit management system.

Undertake spot/surprise audits

2.10. Acquisition of Computer- Aided Audit

CAATs to be procured under

Engage the systems supplier, SofTech, to

Review the systems security gaps and recommend areas of improvement

Done A preliminary report has been submitted. Security features enhanced

Drafting a Service Level Agreement

Done. Circular on allocation of user rights issued

3.7. Engage an ICT Security Officer X AGD GiZ

ToRs for the ICT Security Officer drafted

Appoint an IFMIS Manager to oversee the application side

3.16. Embark on daily bank reconciliation

Way Forward Engage RBM to provide bank statements on a daily basis

On- going. Meetings commenced have already

AGD, RBM, Ministry of Finance

3.21. Implement new enhanced IFMIS

FIU/Law MG Commission/Jus tice

Set up a Forfeiture Unit in the DPP office

Initiate a process of the law review including protection of whistle blowers

MG Further support required

MG Funding yet to be identified

Tabling of the Assets Declaration bill

Done Assets Declaration bill was passed in Parliament

Restriction of accounts and move towards asset recovery

MG Further support required

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