PAC calls for forensic audit into disputed M6bn

…as accounts committee scrutinises Auditor-General reports

Mohloai Mpesi

PARLIAMENT’S Public Accounts Committee (PAC) has called for a forensic audit into the M6 billions flagged in successive Auditor-General reports, arguing that the government must conclusively account for the money and restore public confidence in public finances.

The proposal emerged during this week’s PAC hearings, where Auditor-General, ’Mathabo Makenete, and her team appeared before the Committee to explain findings contained in the audit reports for the financial years ending 31 March 2023 and 31 March 2024.

In both reports, the Auditor-General issued adverse audit opinions, stating that the consolidated financial statements did not fairly reflect the government’s financial position.

The reports highlighted unreconciled balances amounting to M3.49 billion in 2022/23 and M3.09 billion in 2023/24.

However, the figures remain the subject of debate after Minister of Finance and Development Planning, Dr Retšelisitsoe Matlanyane, recently rejected suggestions that the money had disappeared or been squandered.

Dr Matlanyane has maintained that the M3.09 billion reflected in the latest report was not new missing money but the remaining balance of the M6.1 billion discrepancy first flagged in the 2020/21 audit report.

According to the minister, the government reconciliation efforts had gradually reduced the unexplained amount from M6.1 billion in 2020/21 to M3.5 billion in 2022/23 and further to M3.09 billion in 2023/24.

She attributed the discrepancies to delayed recording of transactions, debt payments processed through the Central Bank of Lesotho (CBL), unrecorded payments by missions abroad and local councils, exchange-rate losses, inter-ministerial transactions, administrative errors and, in some cases, fraudulent transactions.

Addressing PAC, Ms Makenete echoed part of that explanation, saying the amounts reflected in the reports formed part of the broader reconciliation exercise initiated after the M6.1 billion discrepancy was discovered.

She explained that some transactions had been processed through the CBL but were never captured in the government’s Integrated Financial Management Information System (IFMIS), which serves as the official government accounting ledger.

“IFMIS is supposed to contain all transactions that appear at the bank. During reconciliation, they discovered transactions that had not been recorded in IFMIS,” Ms Makenete said.

“It means payments may have been made by the bank while they were not reflected in the accounting system. That is why the bank balance appears lower.”

PAC chairperson, ’Machabana Lemphane-Letsie, questioned how such payments could have been processed and demanded clarity on the legal authority under which the CBL executes transactions.

“What should have been the correct procedure for CBL to make payments? Is it possible for the bank to act on anyone’s directive?

“We previously experienced a M50 million payment processed without the Accountant General and later identified as fraudulent.

“If payments were made, there should be documents showing where the money went. There must always be a trail,” Ms Lemphane-Letsie said.

She argued that the prolonged reconciliation process had become unacceptable.

“M3 billion is a lot of money for this country. We cannot simply put it aside. We have to know exactly where it went.

“If the Central Bank made payments, there should be documentation proving it,” she said.

Responding to the concerns, Ms Makenete said CBL payment instructions ordinarily originated from Treasury and the public debt office.

“For the Central Bank to process payment, it checks authorised signatories and confirms availability of funds.

“Public debt used to make instructions directly to the bank outside IFMIS around 2021 and 2022. I do not know when that was corrected because public debt now also transacts through IFMIS,” she said.

Deputy Auditor-General, Paul Letlela, attributed part of the problem to weaknesses within the Office of the Accountant General.

He said the government had failed to carry out regular reconciliations between ministries and bank accounts.

“There was supposed to be monthly reconciliation to stop issues from accumulating.

“The biggest challenge is that the Accountant General did not reconcile transactions with ministries on time,” Mr Letlela said.

Following the deliberations, PAC proposed that the Office of the Auditor-General prepare a plan and budget proposal for a dedicated forensic audit.

Ms Lemphane-Letsie said Parliament could consider allocating funds through future budget processes to support the exercise.

“We need a strategy that explains the best approach to conducting this forensic audit.

“If funding is required, Parliament should consider making provisions so that this issue can finally be closed,” she said.

Ms Makenete warned that progress remained slow.

“From 2020 until now, only about M3 billion has been reconciled. At this pace, we may still be dealing with these balances years from now.

“Perhaps a special budget allocation can be considered to support this work,” she said.

Another PAC member, Montoeli Masoetsa, said unresolved audit findings could undermine investor confidence.

“Investors assess security, political stability and audit outcomes. If the government appears reckless with public finances, investors will naturally ask what would happen to their money. This cannot inspire confidence unless it is corrected,” Mr Masoetsa said.

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