Seedy Keita, the minister of finance, declared that they will support and collaborate with the Auditor General’s probe into the D34.7 million net deviation found in the National Water and Electricity Company’s (NAEC) 2019 report. The Minister made this statement at his presence on Tuesday, September 17, 2024, in response to the resolutions of the Public Enterprise Committee (PEC) of the National Assembly.
The aforementioned PEC resolutions suggested that the Board look into the D34.7 million net variances and make the necessary bookkeeping adjustments by June 30, 2024, at the latest. If this deadline is missed, the Auditor General will look into the problem and report back to the Committee by October 31, 2024. He clarified that the adjustment was a component of the D196.542 million that was written off or corrected in relation to trade payables as part of the clean-up in 2019. He continued by saying that the explanations were contained in a memo that was given to the NAWEC Board of Directors.
He stated that the accompanying memorandum and the Board’s permission are attached. It was mentioned that the necessity of clearing the balances before migrating to a new integrated management system made this write-off necessary.
He claimed that in a way that the prior system was never able to, this can ensure the integrity of financial reporting. He said that since they now have a regular vendor reconciliation system in place that monitors outstanding accounts and guarantees that they are promptly corrected, the problem has been rectified.
The Board of Directors believes that sufficient measures have been taken to avoid such occurrences. He stated, “We will, however, welcome and assist with any probe in this respect by the Auditor General.
Finance Minister Keita informed parliamentarians that NAWEC had no overdraft facility at the time of writing the report, in response to the management’s decision to cancel the D77.2 million overdraft facility because the company has a sizable cash position that may be used for its operations.
The Finance Minister stated that the amount is D604,041.841 and not D569,895,320 in response to the resolution requiring the Board to look into the manual journal postings made into the account totaling D569,895,320 with supporting documentation. She also pointed out that the table provided by the auditors on page 20 of the Management letter contained a mathematical error. He stated that there are supplementary journals with an explanation for the adjustments, one of which is the write-off of D34.7 million covered in the previous point, as shown in the trade payables reconciliation that is attached.
The Board of Directors believes that sufficient measures have been taken to avoid such occurrences. Mr. Keita stated, “We will, however, welcome and assist with any investigation from the Auditor General in this regard as mentioned.”
Regarding the resolution stating that by June 30, 2024, the GoTG must update the NAWEC Memorandum of Association to reflect the debt conversion to equity of D2.6 billion, adjust the authorized share capital structure, and notify the company registrar, the Finance Minister announced that the NAWEC Memorandum has been updated to reflect the debt conversions to equity of GMD2.6 billion. PEC also decided that the Board would look into the overstatement of D4.8 million that was posted in the cost of sales account and provide the Auditor General with details for confirmation by May 31, 2024, at the latest. If this deadline was missed, the Auditor General would then look into the matter and report to the Committee by October 31, 2024, at the latest.
The Minister retorted that, as was previously mentioned, the former ERP system relied on manual journal entries made by finance department employees, with a supervisor’s approval before posting. He explained that this was done to make sure the four eyes approach was followed while accounting for transactions. But regrettably, he stated, there seems to have been a control lapse in this specific transaction that should have identified the mistakes in the original postings.
Minister Keita stated, “Human error and the ensuing failure of manual control is the reason why the document (invoice) which forms the basis of the transaction had one zero less than the posted amount.”
Minister Keita stated: “NAWEC will fully cooperate with the Office of the Inspector General of Police to investigate the contract awarded to Kutejumble Electrical Engineering Services.” The contract, which is owned by a staff member and totals D1.036 million, was highlighted in the 2020 report of NAWEC. The IGP will investigate the matter and report to the Committee by the end of June 2024. The IGP’s Office had not been in touch with NAWEC at the time this report was written. Thus, we are looking for direction on how to move forward with this resolution.
In response to PEC’s demand that NAWEC find and reconcile the understated amount of D236,479,109 by no later than May 2024, failing which the IGP may investigate and report back to PEC, the Minister stated that reconciliations have been carried out on a monthly basis; regrettably, the previous billing system permitted the retroactive adjustment of revenue amounts in the event that an error was discovered. He continued by saying that this creates the possibility that adjustments will be made later to the finance and customer service teams for the periods that have already been reconciled, even if the reconciliation is completed for a certain month and the balances between the two departments match at that point.
“We shall, however, be happy to assist and collaborate with any inquiry in this regard that the Inspector General of Police may conduct,” the Minister stated.