SIERRA LEONE EMBASSY, BELGIUM FOR THE PERIOD 1^ST AUGUST, 2005- 31 APRIL, 2009

Inadequate financial system in operation

The following were observed:

The Financial and Accounting Systems in operation at the Embassy did not conform with the Sierra Leone Government Financial Systems and Regulations.  Typical instances were the fact that accounting records and books such as Payment Vouchers, Cheque Book system, monthly reconciliations etc. were not maintained/carried out by the Embassy.

The software/financial system used by the Embassy did not have the semblance of Government Accounting system, and was not used by MDAs.  The system used words like “Profit & Loss” and Turnover to classify/identify transactions carried out by the Embassy which was not in accordance with good accounting practice in the Sierra Leone Public Sector.

Furthermore, a systems documentation that should describe the systems in use and process within the system was not in operation.  This was especially important, since the actual system was not used by the Accountant General’s Department or other MDAs.

An “Online Banking” was used by the Embassy without the approval of the Financial Secretary or Accountant General.

A Temporary Finance Officer was in control of the financial operations of the Embassy and all transactions, request and approvals were solely done by him.

The knowledge of the Finance Officer in Public Sector Accounting/Government operations was unsatisfactory.

The Embassy was operating twelve (12) different Bank Accounts which made it difficult for reviews and follow-ups.  In addition, these accounts were not balanced and reconciled monthly.

Disbursements were not supported by Payment Vouchers. 

Bills, invoices and receipts were prepared in French and not translated into English    

We therefore recommended that: 

The Accountant General should be much more involved in the financial operations of the Embassy, ensuring that the right type of Financial System and Accounting staff were in operation and the regular review of the systems.

Communication should be improved between the Ministry of Foreign Affairs and the Accountant General’s Department to enhance the smooth operations of the Embassy. 

In future, authority must be sought from the Financial Secretary or the Accountant General before putting any Financial System into operation.

The Accountant General should explore the possibility of posting a competent Financial Attachѐ immediately to the Embassy so as to enhance Financial Management.

The HOC should maintain few Bank Accounts for Salary, Other Charges and Consular Income or as required by the Financial Regulation or payment structure.  Also, all the Embassy’s bank accounts must be balanced and reconciled on a monthly basis and must be checked/reviewed by a senior officer for correctness.

The HOC should reintroduce the use of a Cheque Book system for Other Charges/Expenditure and maintain a standing order with the Bank to credit the individual accounts of staff with their salaries at the end of the month.

In future, the HOC should ensure the translation into English of supporting documents such as bills, invoices and receipts. 

The HOC in his response stated the following; 

Even though the financial and accounting system in operation was electronic, it still performed the various functions referred to in the audit report. In addition, he said the system provided a financial journal for every bank account which corresponded to payment vouchers. Furthermore, he stated that reconciliations were carried out regularly on a monthly basis and advised that the users put interest in learning the system so as to move forward. 

The software being used by the Finance Officer ( Pac Systems) was widely used in the Belgian public sector and  was  adaptable and transferable to any public sector in the whole world. The system did the Accounts Payable, creation of vouchers & cash book, general ledger and transfer transaction bookings to vote book.  With the growth of the Embassy in the past year, the system had proved very effective.  

The system was user friendly in that it took a day to understand how the system worked and that the accounting information was exported from Popsy to Microsoft Exel from which reports such as Income Statements, Details of disbursement, details of payments, reconciliation of cash book were developed.  

Cash withdrawal transactions that were very difficult to trace had been discouraged due to the introduction of the disbursement form and invoices. 

The Income statement that indicated how the receipts were accounted for had been changed to “ Receipts vs payments” in accordance with the Government Accounting system, and turnover, a synonym for revenue, corresponding to Receipts in Government accounting system, had also been changed to Government language of “Income Statement”. The terms used in Popsy could be easily replaced with the equivalent term in the Government accounting system, he emphasized. 

There was no such thing as accounting system for Government accounting or corporate. Every accounting system was adaptable by the USERS and was based on the country’s general accounting principles, generally known as GAP. 

He said the Belgian banks seriously discouraged the use of checks, a system (check) which had phased out in European countries. In order for the Embassy to continue operating in the EU environment, it had to change in line with changes in the system. The Embassy had been using the Internet Banking since 1/0/2004 when IBAN (International Bank Account) system was introduced under EU recommendation adding that recently, all the Banks in Belgium had adopted the IBAN system and had limited the issuing of Bank checks. The Banks in Belgium had recently installed self bank machines which allowed individuals to perform their own payments, be it self bank or online.  

He explained that the internet banking system enabled them to perform both domestic and international payments more effectively and quickly with zero cost, while issuing, preparing and delivering checks to the bank cost them time, money and fuel, and every time the bank was asked to effect payment there was a charge.  

The Embassy did not have a temporary Finance Officer as indicated on the report, but a part-timer who had been doing the job for fifteen years. He received a part-time wage with no other allowances but made sure all his tasks were covered. He said the gentle-man was Sierra Leonean who was educated and had lived in Belgium for over twenty four years with fifteen years of accounting experience in a number of international & financial institutions. He was currently a Deputy Chief Financial Officer who also doubled a role of supervising the sister company in London, making him familiar with the UK GAP of which Sierra Leone derive its accounting standard. The Finance Officer was not a signatory to any of the Bank accounts and did not approve payments.  

The accounting operations at the Embassy was only bookkeeping, noting that it was hard to understand that a Deputy Chief Financial Officer had no knowledge and skills of bookkeeping which was a clerical job.  

In Belgium and EU countries in general, every transaction that had a bank affiliation required the opening of a bank account to isolate and facilitate the activities. Each of those accounts had to be opened because of the need to have them operational.

The Mission had six operational bank accounts: 

KBC Main Account for Monthly Remittances;

KBC Saving Account;

KBC Consular Account for the collection of visas;

ING Main Account- Formerly used for Remittances;

ING Consular – collection of visas; and

ING Rental Guarantee – Blocked guarantee HE’s Residence

The UNESCO, Medical and Mercedes Benz Account that were non-operational had been closed down. 

Concluding, he pointed out that since they were in French/Dutch/German (multilingual society) speaking countries, translating all bills and invoices was difficult and expensive if not impossible. Notwithstanding, even though the bills were not translated, the finance officer being bilingual, usually marked on the bills the nature of business indicated. They did not deem it appropriate to have a total translation as clarification could be made as and when required. However it would be advisable that the officers representing the mission adapt to the bilingual environment in which the mission operated. 

Unauthorised salary payment 

It was observed that salary payments totalling £17,861.61 for the period February to May 2008 were made to the former Head of Chancery, when, in effect, the officer assumed duty or arrived at her post in the Embassy in June, 2008. 

It was most surprising to note that a “Last Pay Certificate” was issued to the Accountant General’s Department in January, 2008, so that salaries could be sent to the Embassy before the officer vacated her post.  

We recommended the following:

In future, the Accountant General should ensure that in addition to the Last Pay Certificate, a letter of confirmation indicating that the Officer has reported for duty is received from the Ministry of Foreign Affairs before the payment is processed.

The Director General, Ministry of Foreign Affairs should explain the reason for issuing a Last Pay Certificate to the Accountant General’s Department, when in effect the Officer had not vacated her post in the Ministry or had assumed duty at the Embassy.

The Director General, Ministry of Foreign Affairs   should recover the amount of £17,861,61 from the officer concerned and pay it immediately to the Consolidated Revenue Fund with receipts details forwarded to my office for verification failing which the former will be personally liable for making good the loss to Government. 

The HOC stated that the former HOC, on taking up duty produced a Last Pay Certificate dated January 2008 and informed the mission that because of the delay in the issuance of her entry visa which she claimed was no fault of her’s, she was not able to take up office as scheduled.  Furthermore she claimed that she did not receive any salary in Freetown after the issuance of her Last Pay Certificate until she assumed duty at post. 

Misuse of government funds to service the personal loans and unpaid bills of home based/diplomatic staff

It was observed that private/personal loans of Home Based/Diplomatic staff remained unpaid when officers were recalled from duty or transferred elsewhere. In addition, Government funds, totalling £19,340.00, were used to repay the Bank loans and other claims of officers without authority from the Ministry of Finance and evidence of repayment plans from the Ministry of Foreign Affairs. 

We therefore recommended that in future, Home Based Staff must settle their personal loans/debts whenever they were recalled in order to avoid possible sanctions on the Embassy.  It should be a normal control activity that the staff to be transferred or recalled fulfilled his/her financial obligations 

With immediate effect, the Director General must cause the necessary deductions to be made from the salaries of the officers concerned and receipt details forwarded to my office for verification. 

The HOC in his response noted that  all financial requests made by personnel were approved by the Head of Mission and that the Loan request referred to was authorized by the then Head of Mission.

He stated that the amount of 19,340.00 Euros was requested on an emergency situation and that it had long since been repaid. 

Use of consular fees without prior approval            

An examination of the Consular Fees Register and Visa Stickers disclosed that amounts totalling £ 270,572 were collected as Visa Fees and used without prior approval from the Ministries of Finance and Foreign Affairs and International Cooperation.          

We therefore recommended that the Ministry of Finance should put mechanisms in place for Consular Fees to be paid into a separate special Government Foreign Bank Account, outside the control and management of the Embassy staff. 

In future, Consular income should not be used under any circumstance without the prior approval of the Ministries of Finance and Foreign Affairs and International Cooperation. 

In his response the HOC stated that the Mission had to use Consular fees to cover essential payments, including utility bills and cost of participation at very important statutory meetings in the areas of coverage 

Loans Register not maintained  

It was observed that the Embassy did not have a policy for its loans.   

It was therefore recommended that a Loans Policy should be developed and implemented in order to enhance the management and control of loans 

In addition, a Loans Register should be put into operation and regularly updated.

The HOC noted that loans were now being completely discouraged and that the mission, in dire emergencies, extended salary advances, on very short term basis usually against the next month’s payment. A register had been opened to record the details, he added. 

Salaries paid to local staff 

An examination of the Salary Vouchers and other records disclosed that salaries were not signed for as received by all staff. 

In addition, interviews of officers revealed the occurrences of short payment of salaries to officers amounting to £38,851 for the period August, 2004 to December, 2007 with no evidence produced to confirm that the differences were paid into the Consolidated Revenue Fund. 

We therefore recommended that with immediate effect, officers should sign or initial the salary vouchers as evidence of receipt of their salaries and the short payment of salaries must be paid back to the officers concerned or the Consolidated Revenue Fund and a receipt forwarded to this office for verification. 

In his response the HOC stated that salaries, allowances and wages were paid to members of staff of the Mission based on the monthly remittance vouchers sent by the Ministry of Foreign Affairs & International Cooperation in Freetown and that all payments were done via  bank transfers to each member of staff’s bank accounts which served as an electronic signature. 

Unauthorised expenditure 

It was observed that the sum of £2470 was used out of the Other Charges allocation to buy official costumes/suits for Diplomatic and Home Based staff on the occasion of the presentation of the Ambassador’s credentials, even though Diplomatic staff were paid Clothing Allowance on first appointment.  

In addition, expenditures totalling £21,000 for the period under review were undertaken for the purchase of  sundry items for the Residence without authorization from the Ministry of Foreign Affairs. 

We therefore recommended that the Director General should recover the amount involved from the officers/staff concerned and the Ambassador and Diplomatic staff must request for loans to cover such expenditure in future.

The HOC gave the following responses: 

No clothing allowance was paid to the Ambassador and Diplomatic Staff on their first  appointment.

No official costume was purchased for staff to attend the presentation of credentials.  Rather, these costumes were rented and there were receipts to the effect.

One costume was purchased for the Ambassador as it was deemed cost effective to purchase the costume at 2000 Euros, rather than rent for 900 Euros for three days, very time the Ambassador had to present his credentials in the five countries that he was accredited to.

The two other officers who accompanied the Ambassador, at 300 Euros per day for a period of 3 days per presentation.  In addition, the Ambassador had to use the same costume at least five times per accredited country (5 countries) per year.

He deemed it cost effective to buy rather than rent which amounted to 67,500 Euros per annum. 

Fixed Assets and Inventory Register 

The following were observed:                       

The Embassy did not have a policy for its assets. 

A proper Assets Register which should include all the assets of the Embassy, (Chancery and Residence) stating clearly the number of assets, cost, date of acquisition, additions, locations and other relevant details was not maintained.   

The assets at both the Chancery and Residence were not marked with a durable identification label or tag.

It was therefore recommended that:

The Head of Chancery should design and develop an Assets policy; 

With immediate effect, the Embassy should maintain an Assets Register with details of date of acquisition, cost, description, serial number, additions and other relevant details;

The Head of Chancery should ensure that assets belonging to the Embassy must have their existence checked periodically, as well as their state and must be matched to the Assets and Inventory Registers which must be kept updated at all times; and 

All assets must receive an efficient and durable identification label or mark indicating the order/invoice number assigned to them. 

The HOC stated that an Inventory Register had been opened with all Government property registered therein and updates done for new purchases. 

General Issues

An outstanding obligation amounting to £40,457 for the period January, 1992 to July, 2005 due to UNESCO still remained unpaid up to the time of the audit inspection. 

There was no evidence to confirm that acting allowance was paid to the former Acting Head of Chancery for the period 1^st November 2007 to 16^th June 2008.  

There was no compliance with the ceiling on payment and format for the use of telephones assigned to the Ambassador and Diplomatic staff. 

The following were therefore recommended: 

The Director General of the Ministry of Foreign Affairs should regularise these anomalies observed during the course of the audit inspection; 

The Director General, Ministry of Foreign Affairs & International Cooperation, should effect recoveries of overpaid telephone bills; and 

The Circulars/Memoranda No. 206 of 29^th April, 1997, 7^th December, 1999 and 22^nd June, 2000 on the use of telephone must be brought to the notice of all Diplomatic staff to ensure compliance. 

The HOC responded by stating that the Mission had requested the MFAIC in Freetown on several communications to settle the outstanding amount.

He also stated that the Embassy had started implementing the directive in the memorandum of 7^th December, 1999 adding that a Log was kept to record all calls made by officers from the Mission’s telephone.  A limit had also been placed on telephone payments by the Mission in favour of home based staff, he added.