Audit finds widespread abuse of COVID-19 funds

An audit report into the COVID-19 funding released today has found widespread abuse and non-compliance to government rules on spending with contracts been given to unregistered companies amongst its key findings.

The Office of the Auditor General’s Report into the $90.5m has revealed stunning findings in the three ministries the audit was carried out.  They found the ministries had not complied with financial requirement in tendering and awarding of contracts including the required competitive quotation/tendering process without an appropriate waiver, awarding contracts to businesses which did not have a valid or current business registration and failing to maintain adequate supporting documentation for transactions.

Background

In response to the international COVID-19 pandemics, the Solomon Islands Government developed the SIG COVID-19 Preparedness and Response Plan. Various Ministries were tasked with implementing different aspects of the Plan and were funded to allow them to do so. This funding was formally appropriated in the 2020 Supplementary Appropriations Bill with the Ministry of Environment, Climate Change, Disaster Management and Meteorology (MECDM) was allocated $33.6 million for disaster relief, the Ministry of Health and Medical Services (MHMS) was allocated $26.8 million and the Ministry of Infrastructure Development (MID) was allocated $13.3 million. These funds were used to procure goods and services associated with each Ministry’s specific responsibilities under the Plan.

Audit

The audits were conducted of the COVID-19 procurement at the three ministries only from April-November 2020— with the objective to assess whether the agencies managed COVID-19 procurement in accordance with relevant laws, policies and regulations of the government. They include the Public Finance Management Act 2013, the Interim Financial Instructions currently in force the SI Procurement and Contract Manual.

And the audit’s findings were revealing including internal control failure.

Some of them include: sole source procurement before approval of bid waver

-bid waivers approved by permanent secretary or Ministerial Tender Board (MTB) not Central Tender Board as required

-procurement completed before purchase requisition approved, not receiving one written quote (required with bid waiver),

– work completed before contract signed,

– work commissioned without adequate specifications

– no evidence of receipt of procured items

– funds expended before lawful appropriation

– use of imprest for large procurements;

– no conflict of interest declaration for officers makig key procurement decisions

– inadequate documentation of source selection decisions.

Based on the findings, the Office of the Auditor General amongst its recommendations suggested that MoFT should prepare guidelines to inform Ministries of the steps they can take to enhance procurement opportunities for minorities and vulnerable groups in accordance with the Equity principle in the PCAM (Procurement & Contract Administration Manual 2013)

It also suggested that MoFT bring to the attention of Ministries that the approval of a bid waiver does not remove the need to comply with the requirements of the Procurement Standards that do not relate to competitive tendering, and issue further guidance requiring procurement decision makers to complete a conflict-of-interest declaration even if they are not members of a Tender Board. 4.7 The new Financial Regulations make it clear that officers should obey procurement requirements but based on the experience of procurement during the pandemic, should make it clear that applying controls after the fact is not compliant behaviour.

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