We have audited the General-Purpose Financial Statements of the Consolidated Fund for the year ended 31st December, 2023. These Financial Statements comprise the Statement of Cash Receipts and Payments of the Consolidated Fund, the Statement of Comparison of Budget and Actual Revenue and Expenditure, the Statement of Cash Position for the year ended and notes of explanations and elaboration to the Annual Financial Statements of the Consolidated Fund as set out on pages 10 to 69.
In our opinion, the accompanying Financial Statements presents fairly, in all material respects, the cash position of the Government of Sierra Leone as at the 31st December, 2023 and its cash performance for the year then ended in accordance with Cash-basis International Public Sector Accounting Standards (IPSAS cash), the Public Financial Management Act 2016, and other applicable laws and regulations.
EMPHASIS OF MATTER
Statutory Deduction not Paid to NASSIT
We draw attention to Note 34 of the GPFS, which provides details of the Government of Sierra Leone’s NASSIT Liability. Section 25 of the NASSIT Act, 2001 requires the payment of contributions to NASSIT within 15 days after the end of each month. An agreement has been signed between the Ministry of Finance and NASSIT. Based on the agreement, contributions owed to NASSIT amounted to NLe692,134,100.75.
Contingent Liabilities
We draw attention to Note 35 of the GPFS, which provides details of the Government of Sierra Leone’s contingent liabilities, amounting to NLe975,867,800. These substantial amounts represent potential obligations due to damages for termination of contracts and human right violations that could result in significant cash flow challenges for the Government of Sierra Leone if they were to materialise. Their existence could have a material impact on the Government’s cash position in future. Our opinion is not modified in respect of this matter.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the Financial Statements of the current period. These matters were addressed in the context of the audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. There were no key audit matters for the period under review.
OTHER MATTERS
We draw attention to the undermentioned matters that are ancillary to our responsibilities in the audit of the General-Purpose Financial Statements of the Consolidated Fund.
Recurrent Expenditure without Supporting Documents
Withdrawals amounting to NLe84,344,133.11 were made from the accounts of various MDs without relevant documentary evidence like payment vouchers and other supporting documents. Without supporting documents, the purpose for which the withdrawals were incurred could not be ascertained.
Lack of Reconciliation between Prepayment Account and Consolidate Fund Accounts Reconciliations between the prepayment account in the ASYCUDA World, maintained by the Customs Department of the NRA, and the Consolidated Fund regarding petroleum transactions were not performed. In this regard, we observed that petroleum transactions by Oil Marketing Companies (OMCs) and some mining companies, totalling NLe33,000,526.91 in the prepayment accounts could not be traced back to the Consolidated Fund Account at the BSL. This constitutes a significant internal control deficiency, as it raises the possibility of inconsistencies between the data maintained by the NRA and the records held by the Accountant-General’s Department.
Non-compliance with Clauses in Contract Agreements
From our review of contracts signed between the Government of Sierra Leone and HID CID Ltd. And Zoodlabs (SL) Ltd. we observed that certain clauses were not complied with, resulting in the loss of much-needed government’s revenue. Typical among them are as follows:
- According to the contract change note, HID CID Ltd. was required to pay the Government of Sierra Leone a royalty of 9% from the sale of each e-passport. We however observed that a total royalty of US$744,993 for all e-passports produced in 2023 remains unpaid.
- Zoodlabs (SL) Ltd. owed the Government of Sierra Leone a total of US$1,440,000 in respect of annual fixed fee for the operations, Maintenance and Commercial Management of the Ace Submarine Fibre Optic Cable Landing Station and the Ancillary Infrastructure of Sierra Leone Cable Ltd.
- We observed that the Minister of Mines signed the lease agreement between the Ministry of Mines and the Kingho Railway and Port Company Limited, instead of the Minister of Finance, in contravention of the Public Financial Management Act, 2016. In addition, there is no evidence that the agreement was ratified by Parliament. The absence of parliamentary ratification and signature of the Minister of Mines raises concerns about the legality and enforceability of tax exemptions totalling US$5,275,434 granted through this agreement.
Responsibilities of the Accountant-General and the Minister of Finance for the General- Purpose Financial Statements
The Accountant-General is responsible for the preparation and fair presentation of these Financial Statements in accordance with requirements of the Public Financial Management Act, 2016. He is to ensure that the Financial Statements comply with the International Public Sector Accounting Standard
– Financial Reporting under the Cash-Basis of Accounting (Cash-Basis IPSAS) and relevant legislations; and for such internal control he determines necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the Accountant-General issues appropriate instructions applicable to accounting practices and financial reporting of budgeted agencies and other entities included in the general government. In addition, he ensures the development of efficient and effective information technology platforms for the accounting and management of public finance.
The Minister of Finance has the ultimate responsibility for monitoring and exercising control over the financial management of all bodies included in the Financial Statements.
Auditor’s Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements are free from material misstatement, whether due to fraud or error and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with International Standards for Supreme Audit Institutions will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error, and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
As part of an audit in accordance with International Standards for Supreme Audit Institutions, we exercise professional scepticism throughout the audit.
We also do the following:
- Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our The risk of not detecting a material misstatement resulting from fraud is higher than one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
- Evaluate the appropriateness of accounting policies, uses and the reasonability of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw your attention to our auditor’s report, in relation to disclosures made in the Financial Statements or, if such disclosures are inadequate, to modify our Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the entity to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicated with the Minister of Finance and the Accountant-General regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identified during our audit.