Official bank accounts register in shambles  

NEO SENOKO

MASERU – Monica Besetsa, the Acting Auditor General (AG), has said inconsistent information provided by banks, coupled with discrepancies between financial statements and bank confirmations have impaired the reliability of the reported cash position of the government. In her report, the AG shows that there are discrepancies between the consolidated financial statements and bank confirmations with regard to a number of bank accounts and cash balances as at March 31, 2020.

“There are 374 accounts held at different banks reported in the financial statements totaling M5.311 billion whereas bank confirmations reflect 362 accounts with a total balance of M5.313 billion resulting in a variance of 12 accounts totaling M2 million. The variances were mainly on the accounts held at Standard Lesotho Bank,” Besetsa reported. Bank confirmations are said to be the most reliable type of audit evidence that auditors can obtain with regard to the existence, accuracy and ownership of bank accounts and bank account balances of the audited entity.

The banks have provided confirmations of cash balances as at March 31, 2020 and confirmations of opened accounts and closed accounts during the financial year 2019/20. “The total number of accounts held at different banks as at 31 March 2019 was 387. The information provided by the banks revealed that during financial year 2019/20, 69 new bank accounts were opened, 40 were closed and therefore the expected number of bank accounts at the end of the year was 416.

“However, the bank certificates showed a total number of 362 accounts as at 31 March 2020 and thus resulting in a shortfall of 54 accounts,” Besetsa further noted. Out of the seven accounts reported by Standard Lesotho Bank to have been closed during the year 2019/20, six accounts still appeared on the bank certificates as at March 2020. Two accounts, namely; Capital Project Leribe and Decentralisation Local Auth. Recu Leribe were reported by Lesotho Post Bank to have been opened and closed on September 4, 2019.

The audit established that a total of 25 accounts reported by Nedbank, Standard Lesotho Bank and Lesotho Post Bank to have been opened during the year 2019/20 did not appear on bank certificates as at March 31, 2020. For instance, of the three accounts opened during the year by Nedbank, only two appeared on the bank certificate. At Standard Lesotho Bank, accounts opened during the year were 34 but only 13 appeared on bank certificate, while out of 19 accounts opened at Lesotho Post Bank only 16 appeared on the bank certificate.

It was further noted that 28 accounts totaling M198 million were not part of the reported accounts at March 31, 2019 and had appeared on bank confirmations as at March 31, 2020. However, these accounts did not appear on the confirmations from the banks for the new accounts opened during the year 2019/20. “The comparison of previous year’s bank confirmations and current year’s bank confirmations revealed that 64 accounts with a total balance amount of M48.3 million appeared on bank confirmations as at 31 March 2019 but no longer appeared on bank confirmations as at 31 March 2020 nor appeared on lists of closed accounts,” the AG further showed.

Asked about the missing bank accounts, the Central Bank of Lesotho (CBL) said three accounts totaling M5 304 070 could not be closed due to challenges encountered in their system.For the remaining three accounts, treasury confirmed that they had been closed though it is still not clear why the accounts were not included in the accounts closure confirmation from the banks.

Ned Bank Lesotho, on the other hand, said an account with a balance of M86 834 was mistakenly omitted, while Standard Lesotho Bank showed that 38 accounts with a total balance of M44 230 888 had been closed. The bank said four accounts with balances totaling M3 464 870 were dormant whereas seven accounts totaling M7 494 631 were reported to be still active. The bank further stated that as at March 31, 2020, those active accounts had a total balance of M7 285 553 and there was one dormant account with a balance of M203 757.

Lesotho Post Bank, on the other hand, reported that the loan bursary fund account with a balance of M708 173 was omitted and another account was closed but its date of closing was not included.

Section 74 (2) of Treasury Regulations 2014 requires the Accountant General to maintain a register of official bank accounts showing the ministry or office responsible, the name of the bank, the account number, the purpose of the account, date opened and date closed, if applicable.

The audit, however, established that the Accountant General has not maintained the register for official bank accounts properly. As a result, the acting Auditor General could not verify the number of accounts against the information provided by the banks. The Acting Auditor General could also not confirm the accuracy and completeness of 362 accounts with a total bank balance of M5.313 billion per bank confirmations. The poorly maintained register also compromises ownership management of bank accounts.

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