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E192M MISSING AT MASTER’S OFFICE

02/03/2024 08:55:00 Sabelo Ndzinisa

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MBABANE – As the Commission of Inquiry into the Master’s Office continues, a serious red flag on the administration of monies at the office has been revealed by the Auditor General (AG) Timothy Matsebula.

The red flag is in the form of about E192 306 237.52 which the AG said he discovered to be unaccounted for in the bank statement of both the Guardian Fund Deposit and Guardian Fund Disbursement accounts under the Master of High Court. This is contained in AG’s financial audit report for the financial year ended March 31, 2023, which was tabled by the Minister of Finance Neal Rijkenberg on Monday.

In his report, the AG highlighted that the Collections Account showed E379 356 126.21 while the bank statement reflected E187 017 423.69, which he said, resulted in unaccounted-for collections or missing cash. These are allegations whose varacity will be tested when the public accounts committee reviews the report. “I further reported that the accountant does not perform monthly reconciliations, thus could not reconcile the cash book with the bank account balance.

Reconcile

“The two accounts must always reconcile and report the same information including the balance,” the AG said.
In response, the AG stated that the controlling officer (principal secretary) acknowledged and noted the recommendation by stating that the reconciliation of the cash book and the bank statement would now be done on a monthly basis.

The officer’s assurance, according to the AG, was that management would ensure that all cash amounts were accounted for and that the funds from the General Account were requested monthly from the AG to the Guardian Fund bank account. The AG said the controlling officer promised that management would ensure reconciliation of the accounts on a monthly basis.

The purpose of the Guardian’s Fund is to protect the funds of minors, persons lacking legal competence and capacity, known or unknown, absent as well as untraceable heirs. The Guardian’s Fund is a trust account held and administered by the Office of Master of the High Court on behalf of minor beneficiaries (less than 21 years).
It also consists of monies received by the master in trust for unknown persons and people who are not capable of controlling their own affairs. The fund is controlled by the master of the High Court and administered by the accountant general.

Transmitting

The fund is opened as soon as money is received by the master. The master is also the registrar of the High Court.
The money could be from any institution or organisation in the country. On paying money into the Guardian’s Fund, the person transmitting the money must give the master the details of the persons on whose behalf the money is paid.
If it is for the benefit of a person whose whereabouts are unknown, the notice must state so.

The details must include, in the case of minors, their names, age and the names of the person(s) in whose custody the minors are in. In the case of an unknown person, the master requires their names and last known address. If the money received is in relation to a person incapable of managing their own affairs, their names, age and the name of the appointed curator must be provided.

The controlling officer’s response was noted by the AG, but mentioned that, since the reconciliation of the cash book and the bank statement were still not done, the matter remained reportable.

Highlighted

Furthermore, the AG also highlighted in his report that there were cash collections of E6 061 514.72, which were not deposited into the bank account of the Guardian Fund. “The bank account reported total cash collections of E31 914 367.07, yet the cash collections per the government accounting system were E37 975 881.79, hence the bank balance was understated,” states the report in part. The AG did not hide his concern that the accountant was not performing monthly reconciliations of the cash book with the bank statement.

“As a result, the accountant could not easily realise that these funds were not remitted to the respective Guardian Fund bank account during the year under review, hence the funds remained in the General Account,” Matsebula added. The AG also noted Section 202 (vii) of the Financial and Accounting Instructions, which states that the controlling officer is responsible for ensuring in each month that his accounts are reconciled with Treasury records by obtaining a certificate to this effect from his chief accounting officer.

“I am concerned that the missing cash might have been misappropriated. The Guardian Fund bank account may be deprived of earning higher interest due to being understated. I recommended that the controlling officer should account for the unbanked funds,” the AG stated. In addition, the AG called upon the controlling officer to adhere to the financial and accounting instructions by ensuring that the deposit account is always reconciled with the investment account.

Acknowledged

“In response the controlling officer acknowledged my observation, and stated that the reconciliation of the cash book and the bank statement will be done on monthly basis. Management will ensure that all cash amount is accounted for and that the funds from the General Account are requested monthly from accountant general to the Guardian Fund bank account. Management will also monitor that reconciliation of the accounts in done on monthly basis,” Matsebula further said.

The AG also reported non-remittance of E434 646.84 cash collections, which were receipted into the collection account from different revenue stations of the Treasury Department on behalf of the Master of the High Court during the year ended March 31, 2023. He said these cash collections were not remitted to the Guardian Special Fund and as a result, the funds were not disclosed in the Guardian Fund statement.

The AG further reported that a correspondence from the registrar of the Supreme Court to the Accountant General dated July 28, 2022, revealed that Guardian Fund receipts amounting to E7 784 514.98 collected through the Treasury Department Revenue centres were not remitted to the Guardian Fund Account. These, according to Matsebula, date back from the financial year 2018, to 2022. According to the Judiciary, these funds were not remitted to the Guardian Fund bank account, as stated in the AG’s report.

The receipts collected over the years are depicted in the following table:
Year                   Amount Receipted
2018         -     E1 415 802.48
2019         -     E1 732 877.12
2020         -     E1 618 542.39
2021         -     E1 790 719.64
2022         -     E1 226,573.64
TOTAL    -     E7 784 514.98

“The Controlling Officer did not promptly bring to the Guardian Fund Account all public monies collected by the Treasury Department on behalf of the Master of the High Court and the beneficiaries,” the AG said.

Provision

He added that he drew the attention of the controlling officer to paragraph 99 of the Administration of Estates Act of 28/1902, which stipulates that, “all monies paid to the master under the provision of any law for the purpose of being placed to the credit of the Guardian’s Fund shall be paid into the Consolidated Fund to the credit of the Guardian’s Fund ‘Special Fund’ and the master may, from time to time; withdraw any part of such moneys through the accountant general in accordance with such financial regulations as the minister for Finance may approve.”

Also, in accordance with Financial and Accounting Instruction number 203 (ii), an accounting officer must promptly bring to account all public monies. “I warned the controlling officer about delays in the payment of beneficiaries, which in the long run, may lead to the lapse of funds and forfeiture to the government, thus depriving rightful beneficiaries of their benefits. Making payments to beneficiaries when funds have not been remitted to the Special account may lead to accumulated deficit,” he said. The AG further warned strongly that the lack of reconciliation may result to distorted accounts.

Discrepancies

“I advised the controlling officer to ensure that all funds collected from the various revenue centres are promptly remitted into the Guardian Fund Account. “Further, reconciliations of the two accounts must be performed on a monthly basis to avoid discrepancies,” the AG said.

In response, the controlling officer acknowledged the AG’s observation and further mentioned that the reconciliation of the Guardian Fund Special Bank account will now be done monthly. She also promised to request that all funds are deposited in revenue accounts to be remitted to the Guardian Fund Special account monthly.