top stories

Share

Comments from ACCA

 

 

Executive Summary

The Association of Chartered Certified Accountants (ACCA) is pleased to have this opportunity to comment on the Local Governments Financial Administration Regulations (�the draft regulations') prepared by the Public Sector Reform Unit, Sierra Leone . We consider that these regulations will provide sound guidance to local government staff and other interested parties on the role of and approach to financial management in local councils.

We have reviewed the draft regulations in the light of international standards and guidance, and have assessed their content against that of other public sector organisations' regulations. As a result we have provided a number of recommended amendments that should further strengthen and refine the content of the regulations. Although we have provided substantial and substantive comment this has been provided in the hope that we are being constructive and that our comment would improve the regulations.

We believe that the draft regulations should be reviewed with the intention of making them shorter, less formal and legalistic, and to ensure that the language will be more easily understood.

It is important that all our recommendations are considered carefully in the context of the regulatory framework of local government in Sierra Leone . This will mean that some of our recommendations may be found to be inappropriate or unacceptable.

We hope that our recommendations and the limited explanations we have provided for them are clearly understandable. If necessary, we would be pleased to provide further details and explanations of our recommendations.

Detailed Comments

THE ROLE OF THE MINISTRY OF LOCAL GOVERNMENT

•  We are surprised that the Ministry of Local Government has such an apparently minor role in monitoring the financial management of local governments. We would expect that this role should be expanded and that much of the monitoring information that the current draft regulations state should be sent to the Auditor-General should instead be sent to the Ministry of Local Government.

REPEAL OF EARLIER FINANCIAL REGULATIONS

•  Paragraph 3 (3) of the draft regulations should clearly indicate that all relevant previous regulations, instructions or rules are repealed. The relevant documents should be named in the regulations.

THE ACCOUNTABILITY OF THE ACCOUNTING OFFICERS

•  The draft regulations should clearly indicate to whom the accounting officers are to be accountable.
•  The role of an Accounting Officer should be extended to providing advice to the Council on its financial affairs (paragraph 0201).

THE ROLE OF EXTERNAL AUDITORS AND LOCAL GOVERNMENT INSPECTORS

•  An additional chapter/regulation should be added on the responsibilities of local government staff towards the staff of the Auditor-General's Office and to local government inspectors, and on the role of these agencies.

•  The final sentence of paragraph 0202 xvi should be deleted. The Auditor-General should not have an executive function and should not instruct local government officers. This role could perhaps be undertaken by a senior official in the Ministry of Local Government.

•  In addition, at several points the draft regulations require reports to be sent to the Auditor-General (for example, paragraph 0908 (3), 1007 (2) and 1207 (3)). It should not be generally necessary to issue such reports to the Auditor-General.

DESTRUCTION OF PAYMENT VOUCHERS AND RECEIPTS

•  The timing indicated in paragraph 0109 (1) should refer to the date when the relevant audit report was issued rather than the date of the transaction. In addition, this paragraph should be consistent with paragraph 0416. Thus the paragraph could read:

The originals and copies of vouchers and used receipts may be destroyed five years after the transactions to which they refer were audited and the audit report was issued. If storage difficulties make it necessary to destroy them earlier, the written agreement of the Auditor-General must first be obtained.

INTERNAL AUDIT

•  The Head of Internal Audit should report for administrative purposes to the Chief Administrator. Internal Audit final reports should be considered by the Finance Committee of the Council (acting as an audit committee). See paragraph 1102. The quarterly Internal Audit reports referred to in paragraph 1101 (2) should be addressed to the Chief Administrator and copied to the Auditor-General. These reports should not be considered by the Local Government Accounts Committee.

•  The words �Treasurer and his Unit' in paragraph 1103 should be replaced by �Head of Internal Audit'. The word �continuous' should be replaced by �periodic' each time it is used in paragraph 1103.

•  Responsibility for value for money (VFM) rests with the Accounting Officer who should ensure that this is achieved through the actions of all local government staff. The Head of Internal Audit's prime responsibility should be to facilitate improvements in internal control (and especially financial control). Internal Audit's role in achieving VFM will be rather limited and paragraph 0201 iv should be amended to reflect this. Paragraph 1104 should be amended to avoid the requirement for Internal Audit to undertake specialist value-for-money audits or reviews.

•  Reference is made, at various points in the draft regulations, to the Head of Internal Audit's routinely receiving reports, for example, paragraphs 0406 (2), 0520 (3) and 0723 (4). The role of Internal Audit should be to facilitate the improvement of internal controls, not to engage in the routine monitoring of the financial transactions of the Administration. For this reason, Internal Audit should not need to be sent routine reports of these types.

•  Paragraph 0204 (5) should be extended to include reference to the Head of Internal Audit. Similarly, a reference to Internal Audit should be added to paragraph 1201 (3) to enable Internal Audit to undertake inspections of Chiefdom Councils. Finally, paragraph 0706 (3) should also include reference to the Head of Internal Audit.

USE OF BROUGHT FORWARD FUNDS

•  Paragraph 0309 (2) should be extended to include reference to any funds that the local government may have brought forward from the last financial year. These, if available, could be used to fund additional expenditure in the current year.

SURCHARGING STAFF OF LOCAL GOVERNMENT

•  In a number of places in the draft regulations it is suggested that staff of the administration should be surcharged for any losses of or damage to council assets or property (for example, paragraphs 0311 (1), 0412 (2), 0418 (2), 0506 (3), 0521, 0529 (3) and 0803). Consideration should be given to the suitability of such requirements in the context of local government in Sierra Leone . It may be considered more appropriate for staff in such circumstances to be subject to disciplinary action, which could include a deduction from their salaries.

•  If Councillors, officers or employees are to be surcharged for any losses, etc. then the procedures outlined in Chapter 10 of the draft regulations should apply. Thus each of the paragraphs listed above should refer to this chapter.

•  Losses of unused receipts, etc. referred to in paragraph 0408, should be treated in the same way as general losses and the procedures outlined in Chapter 10 should be followed.

•  Paragraph 1002 indicates that both the officer in possession of public assets and his/her supervisor are responsible for any losses. In addition, this paragraph suggests that the supervisor will be guilty of failure to avoid the loss unless he/she can show otherwise. This paragraph should be amended to avoid these two anomalies.

•  Paragraph 1003 makes no mention of materiality. Losses below a specified minimum value should not have to be reported to the Treasurer or be subject to an assessment. Paragraph 1003 (2) refers to the Treasurer undertaking an assessment and the following paragraph refers to Internal Audit's assessment. Losses above a minimum threshold should be reported to the Treasurer (with a copy to Internal Audit) and Internal Audit should be requested to undertake a preliminary assessment. The results should be reported to the Treasurer with copies to the Chief Administrator and the relevant head of department.

•  None of the procedures in paragraph 1005 should apply to minor losses.

•  The authorisation of a surcharge or similar should be reconsidered (paragraph 1009). We consider that surcharges for minor losses should be authorised by the Chief Administrator with the possibility of an appeal to the Finance Committee and a final appeal to the Council. Non-minor losses should be authorised by the Personnel Committee, with appeals being allowed to the Council and then to the Minister for Local Government, on the advice of the Local Government Finance Committee.

REICEPT OF INCOME

•  In paragraph 0406 (2) as the advantages of double-sided carbon paper are not clear. As a result, this reference should be deleted.

•  Receipt books would have to be only in triplicate if there is no need to send one copy is not to be sent to internal audit as suggested by paragraph 12 above (see paragraph 0413 of the draft regulations).

•  Part C of Chapter 4 of the draft regulations should make reference to the need for a regular reconciliation of the receipt books, tickets, licences, etc. that have been issued and those for which income has been received. This should be undertaken at least four times a year.

•  Paragraph 0526 should be made more flexible and the Treasurer should only be required to consider refusing to accept cheques from anyone who has previously presented a dishonoured cheque.

BANKING PROCEDURES

•  The requirements of paragraph 0411 (2) should be tightened to indicate that revenue should normally be banked or lodged with a treasury on the same day. The procedures in the draft regulations would result in revenue collectors regularly holding collected revenue overnight. Only where same-day banking is not possible, or only small amounts of money are involved and prompt banking would be inconvenient, should revenue collectors be allowed to hold money overnight. In any case, this money should be banked or lodged with a treasury at least once a week.

•  In contrast, the requirement of paragraph 0501 (1), for a safe to be provided in every location where cash is handled, appears to be unnecessary. The provision of safes in sub-treasuries and other places where cash and other valuables are regularly handled should, however, be considered by the Treasurer and the advice of the Head of Internal Audit should also be considered.

•  It should not be necessary for the relevant treasury to have its own personal copy of each paying-in slip (see paragraph 0519 (1)). Thus it should be necessary to have paying-in slips in triplicate only.

•  The Treasurer should review all bank reconciliations and other reconciliations to ensure that these have been undertaken promptly and properly. The Treasurer should initial and date the reconciliations as evidence of his/her review. In addition, Internal Audit should review reconciliation procedures periodically (as a key internal control) to ensure that they are undertaken properly. As a result, the Treasurer and the Head of Internal Audit should not require their own copies of these documents and so paragraph 0520 (3) should be deleted.

PROCUREMENT

•  Chapter 6 of the draft regulations should include the general principles and at least an outline of the Government's guidelines on procurement which local governments are required to apply. In addition, the reference to the �Procurement Regulations' in paragraph 0202 x should be replaced by a reference to Chapter 6 of the draft regulations.

•  Paragraph 0701 should include a reference to the Accounting Officer's responsibility for ensuring that all expenditure incurred is for relevant goods and services.

•  Paragraph 0701 (2) should enable the Chief Administrator to delegate authority to any appropriate member of staff, not just to his or her deputy.

•  In paragraph 0704 (1), departmental heads should complete the reconciliation and certification within 10 (rather than 30) days of the receipt of the extracts from the Treasurer.

•  Paragraph 0707 should also include a reference to the responsibility of the authorising officer for ensuring that the procurement guidelines have been followed.

•  Paragraph 0713 (4) appears to be unnecessarily onerous. If a voucher is removed it should be necessary to record only the name of the officer who has custody of the voucher.

PRE-PAYMENT CHECKING

•  Paragraph 0708 makes reference to the Treasurer undertaking pre-payment checks, without indicating who is actually to be responsible for undertaking these checks. In addition, paragraph 0707 iii makes reference to the authorising officer's checking that the balance in the budget is adequate to cover the payment. Which officer will be held to be responsible if two officers are to undertake a check on budgetary availability?

•  In addition, paragraph 0712 (2) makes reference to payment vouchers being sent to the Treasurer after pre-payment checking. This appears to conflict with paragraph 0708.

IMPREST

•  Paragraph 0714 should indicate that imprests should only be issued with the written authority of the Treasurer. The Treasurer should also be required to undertake an annual review to ensure that all standing imprests are still required and that their values are appropriate. He/she should also undertake an annual review of all unretired special imprests and ensure that they are retired promptly if appropriate.

•  Imprest holders should not normally be allowed to bank their imprests (see paragraphs 0513 (1) and 0715 (2)). In the unusual circumstances where this would be appropriate, the written authorisation of the Treasurer should be required.

•  Paragraphs 0716 (2) and 0724 should refer to payment vouchers rather than revenue vouchers, because the relevant transactions are negative expenditure rather than revenue.

PAYROLL

•  Paragraph 0717 should require there to be an annual reconciliation between the central personnel records (maintained by the Personnel Officer), and the pay records and the nominal roles (maintained by the Treasurer). This process should include the certification by each departmental head of an agreed list of personnel for his/her department, to the effect that they are still working for the local government and that their posts are still required for the efficient working of the Administration.

•  The reference to the Internal Audit Unit in paragraph 0717 (2) should be changed to a reference to the Personnel Officer.

•  Paragraph 0720 should refer to the approval of the head of department being in writing. Paragraph 0721 should also include an employee's leaving his or her post and all such changes should also be reported to the Personnel Officer. Similarly paragraph 0722 (1) should also refer to the Personnel Officer. The phrase �or notified to the Internal Audit Unit' should be deleted from paragraph 0723 (4).xf

FUNDS AND ACCOUNTS

•  Chapter 8 should provide reference to procedures that must be followed in relation to bank and other reconciliations and to the operation of suspense accounts. Paragraph 0801 should also refer to agency accounts (see paragraph 0806). Paragraph 0802 should form a separate part of Chapter 7 on revolving funds.

•  Paragraph 0807 (4) should refer to consultation with the Ministry of Local Government and the ministry responsible for finance (rather than the Auditor-General) and it should also refer to compliance with procurement regulations. This draft regulation should also ensure that the procedures outlined in this paragraph are also applied to aid funded capital projects.

STORES

•  Paragraph 0905 should refer to all stores, not just allocated stores. Paragraph 0906 should be significantly shortened and sub-paragraph iv should refer to the need to obtain written authority from the Treasurer.

•  Paragraphs 0908 (3) and (4) should refer to the Treasurer not the Chief Administrator. The annual inspection of title deeds (paragraph 0914) should be undertaken by the Treasurer rather than the Auditor-General. Similarly, paragraph 0919 (1) should refer to the Treasurer rather than the Auditor-General. Paragraph 0921 should refer to the Council rather than the �LCPC', this would provide consistency with paragraph 0919 (2).

CHIEFDOM COUNCILS

•  The requirements of paragraph 1202 (2) and 1203 (3) should be changed so that all revenue collected by a Chiefdom Council is banked intact and the amount of the precept should be sent to the Treasurer of the relevant district council by cheque.

•  We believe that it is unlikely to be practical for all payments made by a Chiefdom Council to be made by cheque (see paragraph 1204 (1)). Thus the regulations should allow standing imprests to be used by Chiefdom Councils.

•  The bank reconciliations referred to in paragraph 1206 (5) should be prepared by the Finance Clerk, checked, signed and dated by the Chief and reviewed by the Council. In addition, these reconciliations should be reviewed at least once a quarter by the District Treasurer.

•  Paragraph 1210 should refer to an investigation by the District Head of Internal Audit. In addition, councillors or officers (and members of the public) should be able to report suspected financial irregularities to the relevant District Head of Internal Audit or the Auditor-General (this requirement should also be applicable to suspected financial irregularities at district councils).

Minor Drafting Points

•  We believe that the current format for the numbering of the chapters and regulations could be confusing. The two numbering systems should be reconciled so that Chapter 1 outlines regulation 1, Chapter 2 outlines regulation 2 and so on.

•  We believe that acronyms should be used as little as possible in this document to minimise possible misunderstandings. Where they are retained they should be used consistently and detailed at the front of the document. Thus HIA should be used for Head of Internal Audit (rather than CIA for Chief Internal Auditor).

•  Paragraph 6. (c): this paragraph is not clearly drafted. The Finance Committee should be responsible for giving �appropriate directives to the Chief Administrator'.

•  We question whether paragraphs 7�17 are needed, as they add little information that is not available in the chapter headings.

•  Paragraph 18 should be moved into chapter 7, section D. Chapter 13 appears to be a repetition of this paragraph and should be deleted. This paragraph should indicate what is meant by being �up-to-date with salary payments', for example, does it mean ensuring that all salary payments are made by the 15 th day of the following month?.

•  The draft regulations should be edited to ensure gender sensitivity. Thus, for example, �chair' should be used in place of �chairman' and terms such as �he' or �his' should be avoided as far as possible.

•  Paragraph 0105 should be moved to the end of this chapter.

•  The term �monitors' in paragraphs 0108 (3) and 0203 x is not clear � should this refer to local government inspectors?

•  Paragraph 0201 should be amended to read:

The duties and responsibilities of the Chief Administrator, as Accounting Officer in accordance with the Local Government Act, 2004, include -

•  In paragraph 0201 iv, �Auditor' should be replaced by �Audit' and �(ii)' by �(iii)'.

•  The last line of paragraph 0202 iv should be revised to make it clearer.

•  In paragraph 0202 v the word �auditors' should be replaced by �audits'.

•  In paragraph 0202 xii the word �separate' should be replaced by �oversee'.

•  The term �Vote Controllers' in paragraph 0311 and paragraph 0701should be defined in Regulation Three.

•  In paragraph 0403 the word �money' should be inserted after the word �collect'.

•  Paragraph 0404 v. should be amended to read �ensure that all revenue collected is banked in full and to refrain from�'

•  The last sentence in paragraph 0409 (1) should be re-written so that it reads: � In the latter case they will write the cheque number on the receipt and on the bank paying-in slip and the receipt number on the back of the cheque'.

•  There does not appear to be a paragraph 0505 and so the reference to this paragraph in paragraph 0508 should be checked.

•  The reference to the Ministry of Finance in paragraphs 0513, 1008 (2) and 1009 (4) should instead be to the minister responsible for finance.

•  Paragraph 0703 (3) should be split into two paragraphs, one relating to the reporting of commitments and the other to the recording of payments.

•  Paragraph 0715 (2) should refer to Chapter 5B (rather than 5C).

•  Paragraph 0801 should clearly indicate that the accounts referred to are the financial accounts in the general ledger of the Administration (rather than a bank account). �LGC' in this paragraph should be replaced by �Administration'.

•  Paragraph 0805 (1) should refer to paragraph 0801 (iii) rather than FR 0801 (iv).

•  Paragraph 1008 should be moved to Chapter 8.

•  Paragraph 1105 i should refer to paragraph 1004 (1) rather than paragraph 1003.

Back to top