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Saturday , December 3 2022

‘Traditional Cafe Fund vulnerable to fraud and corruption’

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KUWAIT CITY, Aug 24: The supervisory authorities of the Ministry of Social Affairs affirmed the absence of an accounting system for the collection and exchange operations of the “traditional café fund”, with the matter being limited to the bank account statement.

Al-Shurai’an

This confirms the absence of an internal control system, which makes the fund vulnerable to fraud and corruption, reports Aljarida daily. According to informed sources, the Ministry of Social Affairs recently sent an official letter to the Civil Service Commission (CSC) asking it to create an organizational unit to supervise the traditional cafes, and determine the specializations and job titles within them in order to avoid the financial and administrative observations and drawbacks registered against the fund by the state’s supervisory authorities, which emphasized that the fund’s continued supervision of cafes makes them outside the scope of the civil service system.

The sources explained that the report issued by the State Audit Bureau regarding the audits, inspections and reviews of the ministry’s 2021/2022 fiscal year confirmed that the decision to dissolve the board of directors of the cafes and appoint a temporary manager without any competencies reflects the extent of the severe weakness in the internal control systems of the ministry, and in the follow-up of the financial and administrative affairs of the fund or the supervision of cafes.

The State Audit Bureau’s inspection work showed that the ministry had not issued a detailed and clear financial and administrative regulation for the fund since its establishment in 1996 (26 years ago), and that the regulation issued by the ministerial resolution No. 110/A for the year 2012 only specified the work of the board of directors and the functions of the president and secretary. Also, it mentioned the appointment of the manager and the secretary, but was devoid of any financial controls regulating the work of the investing branches or determining their rental value. It also did not include regulations of the process of disbursing the needs of cafes in terms of guards, cleaners, handlers, correspondents, and periodic and radical maintenance work. They are free of any administrative controls regulating the disbursement of rewards and appointment procedures from the fund’s budget.

The sources highlighted that the absence of an accounting system for the collection and disbursement of the fund and the limitation to the bank account statement to control the operations of receipts and payments confirms the absence of internal control, which makes the fund vulnerable to fraud and corruption. They said the audit showed that the ministry did not subject the fund to an accounting system that includes revenues, expenses, records, books and daily entries for the collection of revenues and expenses, so that it can know the current expenses and capital expenditures of the fund. The sources highlighted its inability for periodic inventory of its assets (movable and real estate), and the absence of annual appraisals, which reveals the absence of a system for internal control.

They said, “The auditor’s annual report does not clearly express the financial position of the fund. It does not stress the need to refer to the Ministry of Finance in the event of adopting the application of an accounting system for the fund. This will be in compliance with item (4/records) of the budget implementation rules”. The sources affirmed that the ministry’s move to open four accounts with local banks without obtaining the approval of the Ministry of Finance came in violation of item (32/accounts) of the rules for implementing government agencies’ budgets for the 2021/2022 fiscal year.

They added that the Ministry of Social Affairs did not take the necessary measures to settle the observations of the supervisory authorities monitored by the department of internal control and audit, which submitted a detailed report on the observations and concerns of the fund’s work to the Minister of Social Affairs, without any new developments regarding the avoidance of these observations.

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