M3.49 billion unaccounted for in 2023 audit report

… Auditor General delivers an “Adverse Opinion” on the nation’s Consolidated Financial Statements, the worst possible verdict.

An audit report tabled in Parliament yesterday reveals that the government cannot account for a staggering M3.49 billion discrepancy in its cash balances.

The report, tabled in the Parliament of Lesotho on Thursday, delivers an “Adverse Opinion” on the nation’s Consolidated Financial Statements, the worst possible verdict.

It was submitted to Finance and Development Planning Minister Dr Retšelisitsoe Matlanyane on May 9, 2025, but was only tabled in Parliament yesterday – a delay of more than 10 months.

“I submit my report on the Consolidated Financial Statements of the Government of Lesotho for the year ended 31st March 2023 in accordance with Section 117 (4) of the Constitution of Lesotho, and Section 27 of the Audit Act, 2016,” Auditor General, ‘Mathabo Makenete, wrote in May last year.

“Please arrange to lay the report before each House of Parliament in terms of the above Sections of the Constitution and the Act,” Makenete added.

Before it was audited in August last year, Section 117(4) of the Constitution stated: “The Auditor-General shall submit every report made by him to the Minister for the time being responsible for finance who shall, not later than seven days after each House of Parliament first meets after he has received the report, lay it before that House.”

The report found that the government’s financial statements for the year ended 31 March 2023 “do not present fairly the financial position of the Government.”

In the audit certificate, the Office of the Auditor-General stated that the financial statements failed to meet the requirements of the International Public Sector Accounting Standards (Cash Basis IPSAS).

“Because of the significance of the matters discussed in the Basis for Adverse Opinion paragraphs, the accompanying Consolidated Financial Statements (CFS) do not present fairly the financial position of the Government as at 31st March 2023, its financial performance and cash flows for the year then ended,” the report states.

Among the most striking findings was a M3.49 billion discrepancy in the government’s reported cash balances.

The consolidated statement of cash receipts and payments indicated that the government had M5.71 billion in cash as of 31 March 2023. However, supporting notes reflected a significantly lower figure.

“The Consolidated Statement of Cash Receipts and Payments showed that the Government had a cash balance of M5.71 billion… whereas Note 15 showed a total cash balance of M2.22 billion, thus resulting in a discrepancy of M3.49 billion between the two balances,” the report states.

The report repeatedly notes that issues flagged in previous years remain unresolved. Appendix 1 details how the M3.49 billion discrepancy is actually an improvement from previous years, the 2021/22 report flagged a M5.3 billion difference, and 2020/21 showed M6.16 billion.

Further inconsistencies were identified in the government’s reported decline in cash balances. While the notes suggested a decrease of M1.61 billion, the consolidated statement reflected a drop of only M597 million.

“Note 15… revealed a cash decrease of M1.61 billion… whereas the Consolidated Statement of Cash Receipts and Payments reflected a cash decrease of M597 million, thus a discrepancy of M1.01 billion,” the Auditor General noted.

Unsupported liabilities and debt discrepancies

The audit also found that some financial figures could not be substantiated.

For example, the government reported M237.94 million in external liabilities related to debt assumed after the termination of a public-private partnership with Netcare.

However, auditors found no supporting evidence.

“The opening balance of external liabilities owed to commercial banks was adjusted and restated as new borrowing of M237.94 million… However, there was no evidence to substantiate this,” the report says.

Loan guarantee records also raised questions.

“The closing balance of guaranteed loans of M48.78 million did not have details that supported the movement of principal and interest repayments for loan guarantees,” the report notes.

Foreign debt repayments overstated

The Auditor General further found discrepancies in the repayment of foreign debt.

While official statements recorded payments of M916.31 million, the actual cash paid was significantly lower.

“Cash paid amounted to M784.87 million, resulting in the overstatement of payments by M131.44 million,” the report states.

Auditors also warned that the balance of domestic debt could not be relied upon because previous errors had not been corrected.

“The balance of domestic debt is unreliable, as the prior year balances… has not been corrected for the effect of net basis preparation as against that of gross basis.”

Government assets poorly managed

The audit raised serious concerns about the management of government assets, noting the absence of a proper asset register.

Despite the creation of an asset management function within the relevant ministry, basic accountability measures were still lacking.

“It failed to maintain a register of Government assets. There was no asset management plan and performance report,” the report says.

Auditors also found that equipment worth M9.9 million purchased for the AUSC Region 5 Youth Games hosted by Lesotho in 2020 was never recorded in the asset register of the Ministry of Gender, Youth, Sports and Recreation.

Completed infrastructure lying idle

The report also flagged inefficiencies in public infrastructure spending.

A health care centre built for the Lesotho Correctional Services (LCS) remained unused years after completion.

“The Health Care Centre at the Lesotho Correctional Services, which was fully completed and furnished in 2020, remained non-operational as at the time of the audit in December 2024 despite being fully equipped.”

Conflicting revenue and expenditure figures

Auditors also identified inconsistencies across different government financial reporting systems.

The consolidated financial statements recorded M16.75 billion in revenue, but the totals differed across ministries’ reports and the government’s financial management system.

“The CFS reflected total collection of M16.75 billion whereas ministries’ financial statements totalled M16.74 billion, and the IFMIS ledger had a total figure of M16.66 billion.”

The report further found that expenditure figures for eight ministries in the IFMIS system were M140 million lower than those reflected in the consolidated statements.

Missing litigation records

Another concern was the disappearance of legal liabilities previously disclosed in government accounts.

Fourteen court cases worth M51.35 million that appeared in the 2021/22 financial statements of several ministries and the Independent Electoral Commission (IEC) were no longer reflected in the following year’s reports.

“The movements had no supporting evidence,” the report states.

Minister responsible for financial reporting

Under the Public Financial Management and Accountability Act, the Minister of Finance is responsible for preparing the government’s consolidated financial statements and ensuring they comply with international accounting standards.

The Auditor General emphasised that the role of the audit is to provide independent scrutiny as required under the Constitution.

The Constitution requires the Auditor General “to audit and report on these Statements,” the report notes, adding that reasonable assurance does not guarantee that all misstatements will be detected but is intended to identify material errors that could influence economic decisions.

Staff Reporter

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