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Auditor General’s report reveals irregular payments at UTH, ZNBC

Auditor General’s report reveals irregular payments at UTH, ZNBC
By Chibaula Silwamba
Fri 20 Aug. 2010, 04:00 CAT

THE University Teaching Hospital (UTH) irregularly paid over K4.5 billion to officers that had no employment contracts with the hospital, the Auditor General’s report has revealed. And the Auditor General’s report has revealed that Zambia National Broadcasting Corporation (ZNBC) incurred over K8 billion loss between 2006 and 2008.

According to the report of the Auditor General for 2008 on the accounts of parastatal bodies, during the period under review, the hospital paid K4,545,711,360 to 20 officers as salaries, gratuity, housing allowance and accumulated leave days.

“However, the payments were irregular in that 20 officers had no contracts of employment with the hospital,” it revealed. “As of December 2008, the hospital owed staff amounts totaling K26,069,982,749 in leave travel benefits, salaries and terminal benefits, gratuity, long service bonus and settling in allowances.”

It also revealed that contrary to financial regulation number 52(1), there were 10 payments totalling K17.4 million made during the period April to October 2008 that had no supporting documents such as receipts, invoices among others.

It further stated that contrary to the financial regulation number 96 (1), imprests totaling K5.5 million to five officers between February and December 2008 had not been retired as of March 2010.

“A scrutiny of the Hospital records revealed that during the period under review, UTH paid amounts totalling K3,876,545,325 as rentals for post graduate doctors, intern doctors and pharmacists on behalf of the Ministry of Health (MoH). However, as of March 2010, the Ministry had not refunded the money,” it stated.

“During the period from 2006 to 2008, the Hospital paid amounts totaling K454,400,000 as salary advances to 61 doctors and pharmacists employed by Ministry of Health (MoH). However, as of March 2010, the money had not been reimbursed to UTH by the MoH.”

The report revealed that according to the hospital’s financial statements, statutory contributions totalling K1,244,761,045 were not remitted.

The hospital owed Zambia State Insurance Corporation (ZSIC) K7,488,076, Zambia Revenue Authority (ZRA) K 371,742,328,
NAPSA K777, 393,600 and Pensions Board K88, 137,041.

“As of December 2008, UTH was operating below its authorised establishment in that the strength of doctors and nurses stood at 314 and 696 respectively as opposed to the required numbers of 373 and 1,367 respectively. The staff levels were therefore insufficient to meet the demands placed on the Hospital,” the audit report stated.

On ZNBC, the Auditor General stated that a review of the income statement revealed that the Corporation incurred losses of K1,821,145,000 in 2006 and K5,071,969,000 in 2007 and there was a projected loss of K1,780,001,000 for 2008.

It stated that the losses were mainly due to administrative expenses, which increased from K30,640,272,000 in 2006 to K37,431,353,000 in 2008 representing an increase of 22 per cent.

“However, in arriving at the overall financial performance, the corporation had included Government grants of K4,598,727,000 in 2006, K4,490,741,000 in 2007 and K2,840,000,000 in 2008,” it stated.

“Whereas revenue increased by 45 per cent from K25,009,035,000 in 2006 to K36,178,264,000 in 2008, staff costs increased by 51% from K18,783,549,000 to K28,290,603,000 over the same period.”

In this regard, the report revealed that the staff costs to turnover ratio ranged between 75 per cent and 85 per cent over the three-year period.

“It is discernable from the above that the huge resources were being channelled towards staff costs. In his response dated 22nd June 2009, the Controlling Officer agreed with the observation that most of the financial resources are being spent on staff costs,” it stated.

“ZNBC’s current assets were insufficient to cover the current liabilities. The liquidity position continued to worsen from a deficit of K30,302,258,000 in 2006 to K46,482,591,000 in 2008. The increase in current liabilities is mainly attributed to the statutory contributions which stood at K29,465,189,000 in 2006, K37,561,107,000 in 2007 and K47,522,221,000 in 2008.

“In his response dated June 22, 2009, the controlling officer stated that the statutory debt burden at ZNBC over the years had grown as a result of a serious mismatch in terms of revenue and operational costs largely occasioned by the mandate of ZNBC to carry out more public broadcasting programmes than commercially driven ones.”

The report stated that the controlling officer added that while management had over the last three years managed to contain commercial debt and started dealing with statutory payments to NAPSA as they fell due, Pay As You Earn (PAYE) and Value Added Tax (VAT) due to ZRA had continued to be difficult to deal with and had been accumulating in huge quantums annually rising to over K47 billion as at March 31, 2008.

The report stated that the controlling officer further observed that over the years and realising the magnitude of the problem and the realities at ZNBC, the board tried to vary the financing model obtaining at ZNBC and challenged management to gear up the commercial arm of the corporation in an attempt to keep its operations afloat and that as a result, the financing model of ZNBC had progressively been tilting towards a more commercially driven operation.

The audit report revealed that contrary to the provisions of the Act which stipulates that board members should be appointed by the minister, the board at its meeting of May 8, 2006 resolved that the sitting director of finance should be a full board member to assist the board with information on the financial status of ZNBC.

“In this regard the finance director was irregularly paid board allowances in amounts totalling K31,700,000. In his response dated 22nd June 2009, the Controlling Officer stated that although the board was fully aware that section 9 (1) of the ZNBC Act refers to the appointment to sub committees, the board was of the firm view that finance in any institution is so critical that the presence of the director of finance at full board meetings was so vital hence the decision to incorporate the sitting director of finance on the board,” the report stated.

“The sitting director of finance was therefore invited on the basis of a board resolution. However, section 9 (1) of the ZNBC Act quoted by the controlling officer refers to the appointment of members to Sub-committees while the appointment of board members is the responsibility of the minister.”

Labels: AUDITOR GENERAL, UTH, ZNBC

posted by MrK @ 7:09 PM