CWA Audit Reveals, 44% Funds Misused

A former Chief Internal Auditor of the Central Water Authority (CWA) has submitted a scathing report criticizing the authority’s financial management practices, particularly in relation to the Internal Pipes Replacement Programme (IPRP).

The report highlighted a series of irregularities and non-compliance with good governance rules.

The auditor was tasked with examining the financial practices and procedures surrounding the IPRP, which was launched by the CWA under the direction of Prakash Maunthrooa.

However, the auditor found that funds allocated for the programme were not exclusively used for that purpose.

Initially, it was clearly stipulated that the Ministry would provide funds exclusively for the IPRP. However, the auditor found that until December 11, 2023, 44% of payments made with these funds were for projects funded by subsidies.

The Finance Division explained that the account would be replenished once ministry funds were received, but no separate bank account was maintained.

The auditor noted that one of the conditions was to maintain a separate bank account to monitor funds allocated to the IPRP.

However, no such account was used. Instead, a general bank account was used that included revenues from clients and transfers for non-project expenses.

Although a new bank account has recently been opened at Absa Bank for the project, payments for the programme are not made directly from this account.

Instead, funds are transferred from this account to the CWA’s SBM account, where all other payments are made.

This process is more costly due to bank fees and more time-consuming as conciliation is required since project and other CWA expenses are mixed in the SBM account.

For example, on October 19, 2023, Rs 20.9 million were transferred from BCP to SBM to pay bills on the SBM account.

The auditor also found deficiencies in maintaining financial records and other relevant documents.

There is no monthly treasury forecast for the programme to show expenses already incurred and expenses to be expected for the project.

The transactions related to the programme have not been recorded using a specific project code.

Consequently, it was not possible to obtain a generated list of all purchases and sales for this project.

The auditor further noted that daily records of materials used for pipe replacement were not kept on site.

Although a project code has recently been created to record transactions related to the internal project separately, it was still not possible to obtain a comprehensive list of all purchases and sales.

The auditor also observed that some contracts did not follow traditional tendering procedures.

According to the procurement department, it was not practical to use e-Procurement for these contracts.

Furthermore, a performance review committee was not established as stipulated in the agreement signed on September 25, 2023.

As a result, it is recommended that the second tranche of ministry funds not be applied until these recommendations and necessary actions are taken by the concerned division.

The report concluded that the CWA has failed to comply with the terms and conditions of the agreement and therefore did not recommend applying the second tranche of ministry funds at this stage.

Source: Defi Media