Confidential Audit Document Leaked: FORENSIC AUDIT OF SEVEN SOEs IN THE GAMBIA BY Ernst & Young LLP IN UK. FINAL AUDIT REPORT AUGUST 2019-Part One


Dear Pa,

Hope you are doing well.
I have attached the final audit report for GNPC, NAWEC, SSHFC, GAMTEL, GAMCEL, GCAA and GPA commissioned by the government of Adama Barrow and funded by the World Bank. If you recalled this was the audit that former finance minister Amadou Sanneh wanted his accounting firm to carry out whilst he was serving as finance minister then led the WB to intervene and cancel the award which was subsequently given to EY in UK for over USD 1.5 million.
The audit discovered significant misstatement of financial information due to missing receipts, vouchers, undocumented adjustments and incomplete accounting entries that can not be traced to verify the transactions made during the period of their audit. Without providing the complete accounting records to support and reconcile transactions to the Financial Statements, many questions remain unanswered. Here is a summary of few serious ones:-
1. It seems ALL SOEs failed to provide the required source documentation to fully support and reconcile individual transactions to the Financial Statements. This is a serious concern as auditors discovered significant gaps in the  availability of underlying source document. Whether it was deliberate or not, no action has been taken so far to remedy the situation
2. The forensic audit confirmed several of the SOEs significantly overstated their assets against the backdrop of deteriorating financial performance. It specifically highlighted NAWEC, GPA and GCAA where Fixed Assets have been recorded under ‘worki-in-progress’ categories for several years when the work have been completed many years ago which should have been depreciated annually and charged in the Income Statement.
 .(a) At NAWEC, USD 5 million of assets were wrongly classified as W.I.P for five years, resulting in understatement of depreciation of USD 900 thousand.
  (b) At GPA the auditors found USD 1.9 million about GMD 89.3 million, 4% of the total asset value relating to buildings can not be verified as the buildings had been demolished. How can they continue reporting those assets when they have been demolished.
These overstatement of asset in the Balance Sheet has further implications for the Insurance policies taken on these assets. A thorough review of the insurance charges could reveal serious overcharging for insurance at some of these SOEs.
3. Several Bank Accounts for were opened on behalf of the SOEs but were not controlled or disclosed by the enterprises. This information was obtained from the bank confirmation letters sent to the commercial banks. The forensic audit highlighted 32 bank accounts with a net positive balance of over D43 million. This is significant and warrant immediate investigations since the auditors have not made any attempts to further look into the flow and movements of funds into and outside these accounts.
4. EY  also reported on the impact of the interference by the Office of the President in the operations of the SOEs post December 2016
a). Payment directives- GPA GPA instructed by OP in 2018 to pay USD 100 thousand for carpets to be installed at the grand tent at State House
 b). GAMTEL was instructed to transfer USD 2.5 million Gateway related funds to the Central Bank
 c). NAWEC was instructed to partner with Tunkara PAK Cable manufacturing company to assist financially a weak company
 d.) The OP granting exclsusive rights to Gambia Printing and Publishing Corporation (GPPC) in 2018 for exclusive printing Government  printing jobs
5. The auditors confirmed former directors of some SOEs are still signatories to their bank accounts and two of GNPC accounts are in the control of the Office of the President with significant large cash outflows. This started during in 2013 when funds from upstream activities were diverted from their intended use. (section 8.188 page 379 of the report refers).
The report was submitted to Mamaburay Njie since August 2019 and from all indications nothing is being done by him to remedy or act on the recommendations quickly. Full details of their findings are contained in the attached,
It could be recalled that during the time of the impasse, Mai Fatty disclosed from Dakar, Senegal that they have discovered massive fraud at the public enterprises perpetrated by Jammeh and Mr. Halifa Sallah cautioned to exercise prudence as the mentioned enterprises have not been audited. The sparked off a series of actions by government and the World Bank was approached for funding to carry out the required audits. As a matter of fact, this should have been completed before the Janneh commission, but due to some administrative bottlenecks it never got off the ground until late 2018.
However, further investigation and structural reforms need to taken drastically improve governance and financial operations of the SOEs which are yet to fully meet their financial obligations to government.
#Civil Servants United Against Graft and Corruption In Government


Private and confidential

Mr Mambury Njie

19 August 2019

The Honourable Minister of Finance and Economic Affairs

The Projects Coordination Unit

The Quadrangle


The Gambia

Dear Honourable Minister,

Special Audit of seven State-Owned Enterprises in The Gambia

We are pleased to attach our final report in respect of our Special Audit of seven State-Owned Enterprises (‘SOEs’) in The Gambia. This report has been prepared in accordance with the Terms of Reference provided to us under the IFMIS-AF2 RFP.

The purpose of this report is to provide you with an update on the findings and recommendations arising from Phase 2 of our fieldwork, which has been performed in January and February 2019. This final report should be read in conjunction with our Interim Findings Report issued on December 21, 2018, and which detailed our findings in relation to our Phase 1 work focused on governance, processes and controls. This final version of the report incorporates our responses to the comments made by the SOE management teams in relation to our draft report issued in April 2019.

Scope of our work

In accordance with your instructions, we have performed the work set out in the engagement letter dated

November 8, 2019.  We have executed the Special Audit scope of work at the following seven Gambian

SOEs: National Water and Electricity Company (‘NAWEC’), Gambia Telecommunications Company

Limited (‘GAMTEL’), Gambia Telecommunications Cellular Company Limited (‘GAMCEL’), Social Security and Housing Finance Corporation (‘SSHFC’), Gambia Ports Authority (‘GPA’), Gambia National Petroleum Corporation (‘GNPC’) and the Gambian Civil Aviation Authority (‘GCAA’).

The principal objectives of the Special Audit were set out in the Terms of Reference as follows:

  1. Obtain an in-depth understanding of the SOEs’ financial performance and identify keyfinancial issues, assess how they have impacted the SOEs’ operations and establish the financial position of the seven SOEs concerned as of December 31, 2017;
  2. Conduct an internal controls review and evaluate the systems and controls in place at the

SOEs and recommend ways that these can be strengthened to improve the operations of the SOEs and to prevent leakages and fraud; and

  1. Assess the Corporate Governance structure / environment of the SOEs and the institutionaloversight arrangements, determine to what extent they are conducive to sound and transparent operational and financial management practices, and make appropriate recommendations for improvements.


The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC300001 and is a member firm of Ernst & Young Global Limited. A list of members’ names is available for inspection at 1 More London Place, London SE1 2AF, the firm’s principal place of business and registered office.


Our Interim Findings report issued on 21 December 21, 2018, focussed on objectives (2) and (3). The principal focus of this report is objective 1 of the drivers of financial performance and the financial position of the seven SOE as at 31 December 2017.

Limitations on execution of scope of our work

Our Special Audit has consisted primarily of analytical procedures applied to information and data made available to us, and explanations provided to us. We have not verified the authenticity or validity of the documentation made available to us.

Our procedures have not intended, or sought, to express a statutory audit opinion on the information and, therefore, do not constitute a statutory audit and should not be relied on as such.

Our Phase 2 report is based on our fieldwork enquiries made during the period November 17, 2018 to February 28, 2019. The receipt of further information may cause us to qualify or amend the findings reported herein. If, for any reason, we subsequently consider that the report requires further qualification or amendment, we will notify you.

As we have detailed further in the Executive Summary and the sections covering each SOE, our work was, to a greater or lesser degree across the seven SOEs, significantly affected by restrictions in the availability of reconciling and supporting financial information, underlying transaction documentation and access to individuals who could satisfactorily respond to our enquiries. Wherever possible, we have sought to develop alternative procedures and obtain additional corroboration for our findings.

The impact of these limitations is that in many cases we were unable to draw conclusions as to whether a key financial figure is fairly stated, or to report fully on the facts behind an event, transaction or accounting practice. Where this is the case, we have reported as such, and recommended further steps to establish to true position or fact pattern.

Our substantive findings have been validated with the management at the SOEs. Whenever possible we have sought to quantify and / or identify specific areas for financial adjustments for management review.

However, our observations translating to potential financial adjustments will need to be further discussed with the management of each SOE.

Approach, work performed and information relied on

This report details the work, findings and subsequent recommendations identified based on our review of each of SOE’s financial position as at December 31, 2017. Our work has been executed by six separate fieldwork teams working in parallel during the period January 7 to February 28, 2019.

Our work was based on records, documentation and information provided to us by various departments within the SOEs, as well as information gathered through interviews and specific enquiries with employees.

In summary, we performed the following procedures as part of our fieldwork:

►    Analysed the Profit and Loss statement and Balance Sheet of each SOE for the period under consideration;

►    Analysed relevant management reports, including management letters, Internal Audit reports and Board minutes;



► Analysed supporting ledgers and client maintained schedules for significant items in each SOE’s Profit and Loss statement and Balance Sheet;

►  Obtained relevant supporting documentation for transactions and areas of interest; and

► Held discussions with other SOE’s and Government departments to further develop our understanding of the unique situation facing each SOE.

Limitations of use and distribution of the report

The Special Audit is being carried out solely for the benefit of the Government of The Gambia, and this Report is addressed only to you. Except for the SOE management teams, the National Assembly, and the World Bank and its partners (including the International Monetary Fund), you should not show this Report to any third party without our prior written consent. This report (or any portion or summary of it) may not be quoted, referred to or shown to any other parties except as provided for in the Contract signed between EY LLP and the Ministry of Finance and Economic Affairs (‘MoFEA’).

We accept no responsibility or liability to any person other than to our client, or to such party that we have agreed in writing to accept a duty of care in respect of this report, and accordingly if such other persons choose to rely upon any of the contents of this report they do so at their own risk.

Structure of the report

Section 1 of this report sets out the background to the forensic audit. In Section 2 we set out an Executive Summary of our findings in relation to the financial status of the SOEs as at 31 December 2017 the underlying root causes and our corresponding key recommended actions.

Sections 3 to 9 set out our detailed findings and recommendations from our work at each of the SOEs.

Our commitment to you in our proposal was to perform a robust Special Audit to provide an independent view of the current financial situation of the SOEs as an input to policy decisions.  In delivering on this commitment, we have received considerable logistical and technical assistance from individuals within your Ministry and at the SOEs. The outcome is an independent Special Audit which has been enabled by Gambian colleagues whose leadership and efforts will underpin important structural reforms at the SOEs.

We appreciated the opportunity to present on the outcome of the forensic audit to you and some of your team on March 6, 2019, and look forward to working with you and your team on the SoE reform agenda in the future.

Yours sincerely

Maryam Hussain


For and on behalf of Ernst & Young LLP




Abbreviation                                                      Definition

ACE African Coast to Europe Submarine Cable
ADB Africa Development Bank
AFCAC African Civil Aviation Authority
AFD Agence Francaise de Development
AGIB Arab Gambian Islamic Bank
AMRC Asset Management & Recovery Corporation
APRC Alliance for Patriotic Reorintation and Construction
BAC Brikama Area Council
BADEA Arab Bank for Economic Development in Africa
BAG Banjul Accord Group
BANDES Banco de Desarrollo Económico y Social de Venezuela
BCC Banjul City Council
BPI BP Investment Group FZE
CBG Central Bank of The Gambia
CDMA Code Division Multiple Access
CFD Caisse Centrale De Cooperation Economique
CFO Chief Financial Officer
CIF Cost Insurance Freight
DATRAC Department of Air Transport & Commerce
DT DT Associates
EBID ECOWAS Bank for Investment and Development
EBITDA Earnings before interest, tax, depreciation and amortisation
ERP Enterprise Resource Planning
F&F Fixtures & Fittings
FAR Fixed Asset Register
FIB First International Bank
FJA Francis Jones Associates
FPF Federated Pension Fund
FPS Federated Pension Scheme
FX Foreign Exchange
GAAP Generally Accepted Accounting Principles
GAMCEL Gambia Telecommunications Cellular Company Limited
GAMCO Gambia Agricultural Marketing Company Limited
GAMTEL Gambia Telecommunications Company Limited
GBA Greater Banjul Area
GCAA Gambia Civil Aviation Authority
GFFI Gambia Food and Feed Industries
GFPA Gambia Family Planning Association
GGC Gambia Groudnut Corporation
GIA Gambia International Airlines
GL General Ledger

GMA                                                                  Gambia Maritime Administration

GMD Gambian Dalasi
GNPC Gambia National Petroleum Corporation
GPA Gambia Ports Authority
GPPA Gambia Public Procurement Authority
GRA Gambia Revenue Authority
GRN Goods Received Note
GRNI Goods Received Not Invoiced
GRTS Gambia Radio and Television Services
GSC Ltd Gambia Submarine Cable Company Limited
GSM Global System for Mobile Communications
GTB Guaranty Trust Bank
GTMI GAMTEL Training and Multimedia Institute
GTSC Gambia Transport Service Corporation
HFC Home Finance Company
HFF Housing Finance Fund
HFO Heavy Fuel Oil
HQ Headquarters
HR Human Resources
ICAO The International Civil Aviation Organization
IFRS International Financial Reporting Standards
IICF Industrial Injuries Compensation Fund
IPC Interim Payment Certificate
ITFC The Islamic Trade Finance Corporation
ITT In Tank Transfer
IVG International Voice Gateway
JFP Jammeh Foundation for Peace
KFEAD Kuwait Fund for Arab Economic Development
KGI Kanilai Group International
KMC Kanifing Municipal Council
KPIs Key Performance Indicators
LFO Light Fuel Oil
MD Managing Director
MoFEA Ministry of Finance and Economic Affairs
MOICI Ministry of Information and Communication Infrastructure
MoPE Ministry of Petroleum and Energy
MOU Memorandum of Understanding
NAWEC National Water and Electricity Company
NBV Net Book Value
NEA National Environment Agency
NIA National Intelligence Agency
NPF National Provident Fund
NRA National Road Authority
NRV Net Realisable Value

PIU                                                                     Police Intervention Unit

PM&E Plant, Machinery and Equipment
PMO Person Management Office
PO Purchase Order
PURA Public Utilities Regulatory Authority
RASCOM Regional African Satellite Communication Organization
REEP Rural Electrification Extension Project
RTC Real Time Consulting
SCB Standard Chartered Bank
SOEs State-Owned Enterprises
SSHFC Social Security and Housing Finance Corporation
TAP Transferred Account Procedure
TB Trial Balance
TOR Terms of Reference
USD United States Dollar
WIP Work in Progress


Executive Summary FINAL AUGUST 2019


  1. Introduction…………………………………………………………………………………….. 2
  2. Executive Summary………………………………………………………………………….. 3
  3. NAWEC…………………………………………………………………………………………. 82
  4. GAMTEL………………………………………………………………………………………. 144
  5. GAMCEL……………………………………………………………………………………… 193
  6. SSHFC…………………………………………………………………………………………. 247
  7. GPA…………………………………………………………………………………………….. 307
  8. GNPC………………………………………………………………………………………….. 348
  9. GCAA………………………………………………………………………………………….. 394



Introduction FINAL AUGUST 2019

1.        Introduction


1.1          The Government of The Gambia has embarked upon a wide-ranging program of reform with regard to its State-Owned Enterprises (‘SOEs’). Recognising that poor governance, weak financial management and historic state intervention at the SOEs has contributed to the wider financial issues faced by The Gambia, the Government is taking steps to examine the historic issues, assess the current situation and build a support structure that will allow the commercially viable SOEs to be successful and profitable in the future.

1.2          There a number of key operational and governance-related initiatives that make up the reform program. Some are a response to previous audits and reviews, such as the creation of the SOE Reform unit, within the Directorate of Public Private Partnership, operating from within the Ministry of Finance and Economic Affairs (‘MoFEA’).

1.3          EY has been engaged to perform Special Purpose ‘audits’ at 7 of The Gambia’s 13 SOEs. Funded by the World Bank, the audits are designed to provide the Government and donor community with a forensic, independent and current snapshot of the SOEs. The audits have assessed the historic and current control and governance environments, the strength of current operational practices, and the robustness of the reported financial position. The work also aimed to identify the magnitude, frequency and channels of historic fund diversions or leakages.

1.4          The findings from our work performed in relation to Phase 1 of the Terms of Reference, which focused on Governance, IT systems and key processes, are set out in our separate Interim Findings report dated 21 December 2018, and should be read in conjunction with this report.

1.5          In January and February 2019, we performed fieldwork in relation to Phase 2 of the Terms of Reference, principally focused on performing a forensic audit of the recent trading performance and December 2017 Balance sheet position of each SOE. The work included an examination of the inter-SOE loan and trading positions, and the extent to which funds have historically been misused or diverted as a result of Government intervention.

1.6          This report sets out our findings and recommendations in relation to the Phase 2 work. In all instances of performing our work we have attempted to identify the root cause of our highlighted audit issues, and where possible to quantify the adjustment required.

However, in many instances further work is required to fully quantify the issues. Allocating ownership for that further work within the SOE, and ensuring that there is suitable supervision and follow up in relation to the issues raised at the MoFEA level, will be critical to the impact of the Forensic Audit.

1.7          The report is being issued in draft for consideration and comment by all relevant stakeholders. Many of the audit findings have already been discussed with the SOEs. We welcome Management’s timely response to the issues raised. We envisage finalising the report by April 30, 2019.


Executive Summary


  1. Executive Summary


2.1          This Executive Summary is split into two parts. The first part presents some of the highlevel messages and themes from our Forensic Audit. We set out our findings in relation to the availability and reliability of evidence in support of the Financial Statements, we report on the overarching health of the SOEs’ financial position, and we set out the findings with respect to specific areas of the Terms of Reference, namely the inter-SOE financial position, the independent bank circularisation exercise and our work related to historical fund misuse and diversions. We suggest five strategic steps to prevent further leakage and create a fully transparent financial position, and we consider each SOE in light of five critical success factors.

2.2 In the second part of the Executive Summary we present the summary findings and recommendations from each of the seven SOEs. Further detail on each of the summary findings can be found in the respective main SOE section.

The SOE accounting cycle is broken

2.3          The fundamental basis for any forensic audit is a linked, evidentially-supported flow of transaction data that allows an examiner to trace a transaction through the accounting cycle, from an individual transaction to the final Financial Statements. This is commonly referred to as the ‘audit trail’, and is captured graphically in the diagram below.

Figure 1: The accounting cycle

2.4          The cycle depicts that source documentation relating to an event, transaction or management judgement is entered into an accounting system in the form of a journal. Journals collectively form the sub-ledgers and General ledger, from which a Trial Balance is created, which will ultimately become the basis for periodic Management Accounts or Financial Statements.


Executive Summary


2.5          In a healthy financial accounting system, there is full audit trail traceability for all transactions made during a period, from the underlying documentation for a transaction through to the Financial Statements. Any breakdown in the audit trail or accounting cycle, such as missing receipts and invoices, undocumented management adjustments, or ledgers that do not reconcile to the Trial Balance, detracts from the reliability and robustness of the final Financial Statements, and brings in to question the strength of the financial controls and processes which underpin the Financial Statements.

2.6     The Terms of Reference for this Forensic Audit included, as one of the main objectives,

a review of the financial performance of seven Gambian SOEs, and in particularly the extent to which the December 31, 2017 Financial Statements accurately reflect the financial position of each entity.

2.7 During our Forensic Audit we discovered that none of the SOEs were able to present a sufficiently complete audit trail to support the key numbers in their Financial Statements as at December 31, 2017. 

2.8          The table below sets out for each SOE in scope a summary of the audit trail. At the least mature end of the scale, GNPC, NAWEC and GAMTEL are yet to provide meaningful 2017 Financial Statements for audit by either EY or the external auditors, some 15 months after the year end. By contrast, at GPA a relatively higher proportion of the accounting records were available and presented to us.

2.9          Despite the known absence of draft 2017 Financial Statements for all three of these entities at the start of our Phase 2 work, we have undertaken procedures to test their current financial position, to the extent that information could be provided. In the case of GNPC, this meant we have reviewed the December 32017 Management Accounts. In the case of GAMTEL we have reviewed the draft Trial Balance and attempted to reconstitute the December 2017 Balance Sheet. For NAWEC we have forensically examined the numbers knowing that they too may be subject to significant change before the Financial Statements are finalised.

2.10   In all SOEs we discovered significant gaps in the availability of underlying source

documentation, both in relation to 2017 transactions but also in terms of historic key governance, debt issuance and contractual documents. Finance staff were frequently unable to provide us with explanations or analysis that would be expected in a normal functioning entity. These information gaps appear to be caused by a combination of human and system weaknesses. Our assessment of the Information Systems is detailed in our Interim Findings report dated 21 December 2018.

Table 1: Level of completeness of information by SOE

2.11 Without a complete accounting cycle that fully supports and reconciles individual transactions to the Financial Statements, there will remain questions about the accuracy and robustness of the Financial Statements as presented.



The assets of the SOEs are significantly overstated

2.12        The Terms of Reference for the Forensic Audit highlight the historic deteriorating financial performance and fiscal challenges of the SOEs under review. Several of the SOEs have been loss-making for so long that they are technically insolvent but continue to operate. Increasing losses have been attributed to flawed commercial models (onetime monopolies now operating in the private sector, such as GAMCEL and GNPC), overstaffing (considered particularly acute at NAWEC and GAMTEL) and fraud and corruption (all SOEs). Decreasing net worth has been attributed to unrecoverable interSOE debt, accumulating tax arrears and unauthorised commercial loans.

2.13 The forensic audit confirmed that these are some of the factors that have led to the deteriorating financial performance of the SOEs. It also uncovered additional factors which further erode the net asset position of the SOEs as at 31 December 2017.

2.14        The forensic audit uncovered categories of unrecognised or understated expense, which results in an overstatement of profits. From a Balance Sheet perspective, we found previously unrecorded liabilities with the impact of overstating the net asset position. By way of example:

  1. At NAWEC and GCAA we encountered Fixed Assets that have been recorded in the ‘assets under construction’ (also known as Work In Progress) categories for several years. Testing revealed that the projects under which the assets have been acquired were completed several years ago, and as such the assets should have been moved out of the zero-depreciation rate category to an asset category that would have resulted in an annual depreciation charge to the Income Statement. At NAWEC, USD 5m of assets were left in the wrong asset category for five years, resulting in a potential understatement of depreciation of USD 900k over that period.
  2. At GPA we identified out of court legal settlement costs totalling GMD 37m (USD 771k) that were paid in 2018 but that were sufficiently likely and predictable in 2017 that they should have been provided for as a contingent liability.
  3. In all SOEs our ‘unrecorded liabilities’ testing identified expenses paid in 2018 which should have been recorded as liabilities as at December 31, 2017, but were omitted.

2.15        From a 2017 Balance Sheet perspective, we found asset overstatement and liability understatement at each of the SOEs reviewed. We found Fixed Assets that could not be located, assets that have been historically wrongly categorised and underdepreciated, and assets that do not belong to the entity in which they are recorded. Under-performing or dormant investments are frequently insufficiently impaired, and across all of the SOEs, significant historical receivables balances, often involving Government related debt, have not been sufficiently provided against. By way of example:

  1. At GPA our testing found that 4% of the asset value (GMD 89.3m; USD 1.9m) relating to buildings was unsupportable because the buildings had been demolished. A further 24% of the assets carried on the GPA Balance Sheet (GMD 517m; USD 10.8m) do not directly relate to GPA, and deliver economic value to related entities rather than GPA. The Fixed Asset balance needs to be reduced to reflect the true value of the assets that are held and that are providing economic benefit for GPA.
  2. At GAMTEL, an investment in the Regional African Satellite Communication

Organization (“RASCOM”) recorded for GMD 26m (USD 533k) is carried at full

investment cost, but the entity has been non-operational and dormant since 2016. A full impairment provision is required.

  1. At GNPC the Trade Receivables and other Receivables balance of GMD 1.8b (USD 37.6m) includes USD 17m due from NAWEC, an entity that has been insolvent for several years and therefore from which recovery is highly unlikely.

Of the remaining USD 20.6m, USD 12.2m relates to an unsupported balance, USD 1.7m (GMD 81.1) from the Office of the President and Government bodies, and USD 2.7m (GMD 131.9m) from fuel stations among other trade receivables which have not been reconciled.

  1. At NAWEC we discovered that 17% of the inventory lines, representing 8% of the inventory value (GMD 26.4m; USD 55.5k), have not moved since 2009. A further 36% of inventory lines (representing 14% of the inventory value; GMD 44.8m; USD 934k) have no, or a non-sensical, recorded ‘last moved’ date, casting considerable doubt over their viability. A full stock count and obsolescence exercise is required to arrive at an accurate inventory value.

2.16        These examples, and others like them set out in the report, negatively impact the reported annual trading performance and Balance Sheet positions that have been reported.

Fundamental accounting errors / incorrect accounting treatment distorting the SOEs’ Balance Sheet as at December 31, 2017

2.17        In addition to the accounting omissions noted above, our review found that the lack of accuracy and transparency of the SOEs’ financial position is further impacted by various fundamental accounting errors or incorrect accounting treatments. These have the impact of misrepresenting the true financial performance or net asset position of the SOE. We identified issues in relation to revenue recognition, accounting for related entities, and the accounting treatment of intra-SOE activity. By way of example:

  1. At GNPC we noted that the movement of fuel stocks from the fuel depot to the nine GNPC petrol stations is treated as a sale and recognised as revenue, with the petrol stations set up as customers which at year-end had a collective accounts receivable balance of GMD 131.9m (USD 2.7m). It is our view that the fuel transfers to the stations should be treated as Inventory transfers and not as sales, as the conditions for revenue recognition under International Accounting Standard 18 have not been satisfied.
  2. At GPA there are significant long-term loan and accounts receivables balances (collectively totalling GMD 1.5b / USD 32.2m i.e., 39% of the net asset position) due from three Related Entities. As GPA effectively provides the management oversight and working capital for the three entities to operate, reporting assets due to GPA from these Related Entities which are unlikely to be paid and can only be financed from GPA, is misleading. An absence of Group consolidated accounting is presenting a false picture of the financial strength of GPA, and preventing the full disclosure of the liabilities of the Related Entities.
  3. AT GAMTEL there is a GMD 4.861m (USD 101k) accounts receivable balance due from GTMI, which is not a customer but rather an internal training division of GAMTEL. In effect as currently stated, GAMTEL owes money to itself, and so is a falsely stated asset. Inter-department internal debts of this nature should not be shown in the statutory accounts, and should be written off.
  4. At SSHFC there has been no actuarial valuation performed since December
  5. Accounting best practice requires actuarial valuations to be performed

every three years. A valuation is overdue at SSHFC, and given the level of reported non-performing investment assets at SSHFC as highlighted in this report and World Bank reports from 2015 and 2018, we recommend, that an independent actuarial valuation is performed as an urgent priority.

  • During our audit we were informed by the IMF and the Directorate of Public Private Partnership that there is a desire within the MoFEA to migrate the financial reporting at the SOEs to International Financial Reporting Standards (IFRS). IFRS provide a common global language for business affairs so that company accounts are understandable, consistent, transparent and comparable across international boundaries.
  • One of the findings of this forensic audit is that adoption of IFRS is not achievable as a short-term goal. The first critical steps are to establish the current financial position of each SOE based on a common set of accounting principles.
  • To date our work has not included discussion with the External Auditors of each SOE to further understand their views on the current accounting treatments or the potential adjustments we have proposed. In some of the instances that we highlight in this report, the External Auditors have already challenged the accounting treatment or even determined the incorrect treatment to be grave enough to qualify the audit opinion, as evidenced in the Audit Management letters. But in others, the External Auditors appear not to have challenged the accounting treatment or the lack of supporting documentation in arriving at an audit opinion on which stakeholders will then rely. The table below sets out the External Auditors for each SOE, along with the audit opinion issued for the last set of audited Financial Statements.

Table 2: Summary of External Auditors and the most recent Audit opinion issued

External Auditor               Last set of signed audited Financial

SOE Statements Audit opinion
NAWEC DT Associates 2015 Adverse
GAMTEL Augustus Prom 2016 True and Fair
GAMCEL Real Time Consulting 2016 True and Fair
SSHFC DT Associates 2016 Qualified
GPA Augustus Prom 2016 True and Fair
GNPC DT Associates 2016 No Opinion
GCAA PKF 2016 True and Fair

2.21        Five strategic steps to enhance transparency and protect public funds

2.22        We have identified five strategic steps, relevant to all SOEs, which we believe are critical to protecting public funds, and to establishing an accurate view of the financial position of the SOEs. We have categorised these strategic steps into actions that should Stop, Continue and Start.

2.23        We recommend that the following activities are stopped:

  1. Halt Government interference via Executive Directives
    • Our review highlighted multiple historic instances of political interference across all of the SOEs, often in the form of written or verbal Executive Directives issued by the Office of the President. The SOEs that were historically cash rich were the most affected.
    • Our work also highlighted that post-regime change the SOEs continue to be used as a resource for central Government, be it to provide resources or cars for Presidential trips, to make unsolicited donations for charitable causes, or as direct requests for funds (e.g., financing new carpets at the State House, at GPA). While the frequency of the demands appears to have decreased, the continued interventions by central Government sets the wrong tone.
    • From a Governance perspective, SOE Boards and Management teams must be at liberty to make their own decisions about how the entity’s assets are deployed, free from interference. From a transparency perspective, it is imperative that the reported Financial Statements are a true reflection of the economic activity of the SOE in furtherance of its core objectives, and that they do not mask activity that was beyond Management’s control or includes expenditure unrelated to the core economic performance of the entity.
    • We note the undertaking made by the President in this regard, which was communicated to us via the Minister of Finance on February 27, 2019, to take all necessary steps to cease any further intervention by his office in the finances of the


  1. Ensure SOEs have complete and exclusive control over all bank accounts
    • We conducted a bank circularisation of 16 Gambian banks (14 commercial banks, 2 non-commercial banks) and 2 non-Gambian banks. The banks were requested by the Minister of Finance to respond to us directly with details of all bank accounts, loans, guarantees, signatories and other relevant information in relation to the SOEs in scope. This exercise revealed 32 accounts which are not included in the Balance Sheet of the SOEs.
    • For example, there are bank accounts at GNPC that are included in the Trial Balance but which we were informed were historically controlled by the President’s office. Based on our review of the nominated signatories, full control now appears to rest with GNPC. Initial investigation work suggests the accounts were historically used to channel funds directly to the Office of the President. Further work is required to ascertain the size of the money flows through the accounts.
    • GAMTEL’s 2017 Balance Sheet included USD bank accounts with Guaranty Trust Bank (“GTB account”) amounting to GMD 122m (USD 2.5m). These GTB accounts included the revenue generated from the management of the Gateway contract. In November 2017, MoFEA instructed GAMTEL that all funds generated by the Gateway contract were to be transferred to a Central Bank account. In February 2018, GAMTEL received further clarification from MoFEA that:
  2. GAMTEL was not to utilise any funds generated through the Gateway, despite thesefunds being held in its GTB account; and
  3. GAMTEL should transfer these funds to the Central Bank account.
    • The instruction resulted in GAMTEL transferring USD 2.5m to the Central Bank account and the ‘ringfencing’ of funds relating to the GATEWAY held in its GTB accounts that have been generated since. Since the November 2017 instruction from MoFEA, GAMTEL has lost control over the funds generated from the management of the Gateway, as these funds are effectively controlled by MoFEA.
    • The bank accounts of all SOEs must be included in their financial statements to ensure accuracy of disclosure. The management of SOEs must have the freedom to use the assets, including the cash assets, of the organisation to achieve its objectives. The absence of this transparency and control will be a major impediment to protecting public funds and enabling the SOEs to succeed.
    • We recommend that the following activities are continued:
  4. Monitor large procurement contracts and apply GPPA regulations
    • The Gambia Public Procurement Authority (“GPPA”) regulations are intended to ensure a competitive market for suppliers and a transparent process which stands the test of public scrutiny. The challenge is to ensure that the procurement process if efficient to enable the SOEs to respond in a timely manner to market conditions. For example, Board minutes and management discussions at GAMCEL cited the impact of the slow procurement process relative to their competitors.
    • Public procurement is a major source of SOE expenditure and therefore transparency and rigour of the process is critical to protecting public funds. We recommend the continued requirement for the application of GPPA regulations in relation to major contracts, with a review of the process to consider and address root causes of delays. The December 2017 acquisition of land at GNPC for GMD 17m is a good example of expenditure that requires independent oversight and approval.
  5. Encourage open comment on SOEs’ performance
    • By and large we observed open commentary by SOE management and government officials in relation to the matters under review. For example, individuals volunteering information as to how the reality of financial flows and accounting differ from policies and procedures. The open commentary was particularly noticeable at middle and junior levels of the organisations. Maintaining a culture of openness and for example ensuring that individuals who raise issues are not persecuted, will be critical to ensuring that problems are raised so that they can be addressed as part of the reform agenda for the SOEs.
    • We recommend that the following activity is commenced:
  6. Create a clean opening Balance Sheet relevant to the SOE and consistent witha clear strategy

Our forensic audit has identified the need for significant further work to establish an accurate position of each SOE’s Balance Sheet, and to give the current Management teams an opportunity to execute against agreed KPI’s without being burdened by historic decisions that were out of their control. The pre-requisite for this is the creation of an opening Balance Sheet that has been cleansed of any non-recoverable assets and augmented for all liabilities for which the SOE should be held accountable. For example, any loans indebtedness for which the SOE is not expected, or will likely never be able, to repay the Government, should be annulled or transferred to equity.

Identification of bank accounts not controlled and/or disclosed by the SOEs

2.38        We performed an independent confirmation of the bank account balances recorded in the Financial Statement of the seven SOE’s as at December 31, 2017. The aim of the exercise was two-fold. The first objective was to confirm the cash position of the seven SOEs in relation to the numbers used by the SOEs in their bank reconciliations. The second objective was to make enquiries about any undocumented loan positions or loan guarantees.

2.39        EY sent bank confirmation letters to all the 14 Commercial Banks in The Gambia, two non-commercial Banks and two non-Gambian Banks identified in the Financial Statements of the respective SOEs. The request letters were accompanied by authorization letters from the respective SOEs and an introduction letter by the MoFEA.


2.40        We requested information on the financial relationship of the Banks with each SOE and a ‘nil’ return for each SOE where no relationship existed. The responses from the banks were sent direct to, or collected by, EY. For the most part we received timely cooperation and responses from the banks.

2.41        Our bank confirmation exercise did not identify any new loans not already recognized in the Financial Statement of the respective SOE. We however noted that three of the newly identified accounts based on our confirmation exercise had a negative balance of GMD 25,113 (USD 523).

2.42        The bank confirmation letters identified that the seven SOEs held 32 accounts that were not reflected in the 2017 Financial Statements of the respective SOE. A summary of the SOEs and the number of newly identified accounts is set out in the table below.

Table 3: New bank accounts identified by SOE

SOE                                 Number of new accounts identified

Total 32

Source: Compiled from Bank Confirmation letters

2.43        Out of the 32 accounts identified, we noted that 11 of the accounts had a positive balance amounting to GMD 43,303,091 (USD 902,003) while 3 of the accounts had a negative balance amounting to GMD 25,093 (USD 523) as at December 31, 2017. Furthermore, 18 accounts had a nil balance as at December 31, 2017.

2.44        We have not made attempts to further investigate the usage and pre/post December 31, 2017 balance of the newly identified bank accounts. We recommend a separate exercise is commissioned to assess the nature of the account usage and the reason why these accounts have not been included in the SOEs’ Trial Balance.

2.45 We did not receive responses from all the banks in relation to all of the SOEs, despite the request for ‘nil’ returns. Further follow up work should be performed to complete the exercise for the following SOEs and bank accounts:

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Table 4: Outstanding bank confirmations by SOE
Central Bank First Bank Nigeria Access Bank First Bank Nigeria Central Bank AGIB
Skye Bank Zenith Bank Gambia AGIB Standard Chartered
Standard Chartered BSIC Zenith Bank Gambia
Central Bank
Eco Bank
First Bank Nigeria
Skye Bank

Source: EY independent bank confirmation exercise

The Inter-SOE financial position

2.46        As part of our Forensic Audit we have looked to identify the investment, loan and trading positions between the 7 SOEs in scope, as well as the other SOEs, Central Government and local municipalities. Operating within each of the SOEs provided us with the ability to identify how both sides of the same inter-SOE financial relationship have accounted for the event. We would expect the two positions to be equal and opposite but as the inter-SOE positions are never consolidated, any differences would not be immediately apparent.

2.47        As at December 31, 2017, there are inter-SOE debtor balances i.e., inflating the net asset position of the relevant SOEs which are not recognised as a creditor by the counter-party SOE. Clearly, in the absence of the counter-party SOEs recognising the liability, the debtor balances are not recoverable. At a consolidated level, the irrecoverable loan and trading balances are GMD 79m (USD 1.6m) and GMD 1.2b (USD 24.6m) respectively.

2.48  Our mapping of the relationships confirmed that there is a high level of inter-connectivity

between the seven SOEs in scope, the other unaudited SOEs, and other governmental bodies. In some cases, such as NAWEC’S USD 17m debt to GNPC, the outstanding debt position is large enough to influence whether the recipient will remain solvent. If

GNPC is not paid, it will in turn not be able to pay its creditors. The solvency of each SOE should be reconsidered once the exercise to impair any unrecoverable Government receivables has been completed.

Interference by the Office of the President in the operations of the SOEs

2.49        Through our review of Executive Directives, other evidence such as Board minutes, and follow-up enquiries with key stakeholders at the SOEs, we have identified instances of direct interference in the operations of the SOEs by the Office of the President.

2.50        We identified instances of gross interference by the Office of the President in all of the SOEs prior to December 2016, through a range of channels. Full details are provided in each respective SOE section of the report, but examples include:

  1. Payment directives – GPA instructed by the Office of the President in 2014 to pay approximately USD 300k of freight charges for 26 buses donated by Spain.
  2. Loan/guarantees directives – SSHFC required to provide a loan to GCAA of USD 4.5m in 2012.

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  1. Investment directives – GNPC required to invest approximately USD 0.6m in the Rice and Feed Mill in 2010.
  2. Employment directives – GAMCEL, GAMTEL, NAWEC, GCAA instructed to

hire or maintain specific individuals who were appointed directly by the Office of the President.

  1. Services directives – NAWEC instructed to provide water/electricity to specific regions and towns.
  2. Donation/sponsorship directives – GAMCEL instructed to donate USD 2.2k to Gambian hospitals, to be distributed by the ex-First Lady.
    • Where possible we have looked to quantify these diversions or fund misuse. However, in many instances quantification was not possible because there is not a readily available value associated with the event. E.g., using an SOE driver for three days to join a Presidential journey, or the cost associated with the diversion of electricity infrastructure to a town nominated by the ex-President.
    • Our review also identified that the majority of SOEs in scope have continued to receive Executive Directives post-December 2016. Based on the available evidence NAWEC, GPA, GAMTEL, GAMCEL and GCAA are the most impacted by Government intervention post-December 2016. Examples include the following:
  3. NAWEC was instructed to partner with a cable company, Tunkara PAK Cable Manufacturing Company, to assist a financially weak company.
  4. GPA was instructed to pay approx. USD 100k in 2018 for carpets to be installed at the grand tent at the State House.
  5. GAMTEL was instructed to transfer USD 2.5m Gateway related funds to the Central Bank in 2017, and to refrain from using the remaining available funds that are in its own bank account.
  6. The Government’s decision to cancel the GAMTEL Gateway contract with MGI in 2017, ultimately resulting in the billing crisis at GAMCEL.
  7. The Office of the President granting exclusivity rights to the Gambia Printing and Publishing Corporation in 2018 for printing of Government revenue/receipt books.

2.53        Interference by the Office of the President in the operation of the SOEs distorts their performance and overrides governance mechanisms intended to protect public funds. The examples we have identified are illustrative and are not exhaustive. As referenced earlier, the Minister of Finance conveyed to us that the President is taking steps to half the historical practice of interference in the operations of the SOEs by the Office of the President.

Our view of the root causes of the findings of the forensic audit to inform future policy decisions

2.54        We remain cognizant that the Forensic Audit of the seven SOEs in scope is a part of a wider review of the commercial viability of state-owned infrastructure. The Government, with support from the international development partners, is continuing to assess the options for each entity, which range from debt restructuring, public-private partnerships, and the orderly wind-down of operations.

2.55        In conducting the forensic audit, we sought to identify the common root-causes of our findings to inform future policy decisions. We also considered the gap between the

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current emerging picture and the aspirations set out in the 2018 SOE Bill which sets out the primary objectives of SOEs as follows:

“(a) to provide quality public service delivery that is accessible to all citizens in an effective and efficient manner;

  • to protect and promote the public interest;
  • to be a successful business and, to this end, to be at least as profitable andefficient as comparable businesses; and
  • to maximize the net worth of the public investment in the state-ownedenterprise.”
    • The current picture is that SOE management describe facing conflicting commercial and socio-economic objectives – for example, a conflict between a perceived requirement to employ individuals versus the requirement to maximise efficiency and profitability which would involve reducing unnecessary staff numbers (and corresponding costs). Clearly defining the commercial and socio-economic objectives of each SOE will enable them to prioritise and focus efforts. Translating these objectives into a strategy and operational plan for each SOE requires an effective governance and leadership structure – an independent and qualified board, free from government interference, to make the right strategic decisions and provide both oversight and support for management to put them into action.
    • This requires establishing a “clean” starting position for each SOE, including financial restructuring to deal with and unravel the legacy of the past – e.g., where SOEs were compelled to make investments, take out loans or contract with specified entities and suppliers – and an effective accounting function and clear accounting policies to enable timely and reliable reporting of SOE performance. The effectiveness of the accounting and other management reporting functions to inform policy decisions and promote transparency and accountability will be heavily dependent on the implementation of integrated information systems across the SOEs.
    • In each section of the report we set out our specific findings and recommendations for each SOE, however it is these fundamental pillars that need to be in place to underpin sustainable improvements in the operations of the SOEs. In Table 5 we set out key recommended actions (referenced into the detailed report) under each pillar, by SOE.

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Executive Summary


Table 5 – An overview of prioritised critical success factors for each SOE in scope
SOE Define commercial and socio-economic objectives Establish an effective Governance and Leadership structure Implement key financial and re-structuring steps Establish an effective

Accounting function and policies

Implement an integrated information system

(Page 82)

•         Separate Water and

Electricity accounts

•         Revise and track KPIs for each

•       Empower the new Board and ensure management are aligned •       Implement debt restructuring MOU Strengthen the Finance team capability •       Align multiple disparate ledgers into single ERP system

(Page 142)

• Clarify rationale for existence – commercial v social enterprise •         Provide a formal Terms of Reference to the Board

•         Evaluate the Board’s performance

• Acquisition of funding through Government / Huawei agreement Perform full review of accounting policies and

practices with international GAAP standards

•       Align multiple disparate ledgers into single ERP system

(Page 190)

• Clarify rationale for existence – commercial v social enterprise •         Establish standalone Board

•         Appoint General Manager to Board

•         Repositioned and

restructured with independent management

•         Update of infrastructure to 3G / 4G

Perform review of accounting practices in the Roaming division •         Migrate to new billing system

•         Receivables functionality

•         Align multiple disparate ledgers into single ERP system


(Page 243)

•         Create greater independent oversight over investment strategy and performance

•         Empower current leadership following management unrest

•       Urgent actuarial valuation required Implement initiatives to address significant audit trail gaps

(Page 301)

•       Support the execution of the Port expansion program • Related entities – define ownership structure and reassess liabilities Account for Related Entities appropriately •       Consider migration from ACCESS to fit-for-purpose platform

(Page 341)

•         Consider future commerciality of downstream model

•         Re-focus following loss of HFO revenue

•       Support period of consistent and steady leadership at Board and

Management level

•       Assess solvency position following key reconciliation completion and NAWEC / fuel station debt

Complete the key account reconciliations for 2017 Ensure revenues correctly accounted for, throughout year • Accelerate and complete migration to new ERP system (FinEx)

(Page 387)

•       Confirm commercial expectations and set KPIs •         Consider non-national Board input

•         Involve management in future financing arrangements

•         Confirm loan liability position with Government

•         Alleviate historic debt burden

Improve Receivables collection to aid cash flow management •       Consider migration from ACCESS to fit-for-purpose platform

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NAWEC – Summary findings and recommendations

2.59 NAWEC has been loss making for six out of eight years under the review[1]. The profit currently shown in 2016 and 2017 Financial Statements may change as the Financial Statements are still in draft format.

2.60        NAWEC has been increasingly reliant on externally obtained debt to finance not just its capital expenditure, but also its day to day operations to service its current debt. NAWEC’s Fixed Assets’ Net Book Value increased by 32% from 2010 to 2017 to GMD 5.5b (USD 115m), or over 72% of the Total Assets[2]. However, its Total Debt increased by 256% to GMD 9.1b (USD 190m), i.e., 82% of Total Liabilities[3].

2.61 As a result, since 2011[4] NAWEC has consistently been in a negative Equity position which means that the company’s Total Labilities have exceeded its Total Assets. Therefore, on the Balance Sheet test, it has been insolvent for seven out of eight years under review.

2.62 We have summarized the current draft versions of the 2016 and 2017 Balance Sheets in the table below.

Table 6: Summary draft Balance Sheet as at December 31, 2017[5][6]



2016 (USD’000) % of asset /

liability total

2017 (GMD’000) 2017 (USD’000) % of asset /

liability total

Fixed Assets 4,931,393 112,682 78% 5,511,519 114,805 72%
Investment 5,500 126 0.1% 5,500 115 0.1%
Intangibles 9,321 213 0.1% 9,321 194 0.1%
Inventories 414,563 9,473 7% 559,742 11,659 7%
Receivables 803,725 18,365 12% 1,199,472 24,985 16%
Cash 181,734 4,153 3% 325,827 6,787 4%
Total Assets 6,346,236 145,012 100% 7,611,381 158,545 100%
Borrowings due after 1 year 8,257,167 188,676 79% 8,557,393 178,250 77%
Deferred capital grants 574,658 13,131 6% 574,658 11,970 5%
Borrowings due within 1 year 556,771 12,722 6% 574,737 11,972 5%
Trade and other payables 862,481 19,708 8% 1,176,228 24,501 11%
Bank Overdraft 3,255




11,076,789 4,036 2%
Total Liabilities 230,729 100%
Net Liabilities / Equity (4,047,281) (92,480)   (3,784,765)6 (78,837)

Source: Compiled by EY based on the 2016 and 2017 Draft Financial Statements. We applied exchange rates of GMD 43.764:USD 1 for 2016 and GMD 48.008:USD 1 for 2017. The GMD depreciated by almost 10% between the two dates.

2.63       We received little or no documentation to support the balances in NAWEC’s Financial

Statements. Most of the documentation that we did receive was provided in week ending January 18, 2019, several weeks after it was first requested. The Finance team’s explanation for the lack of information, and delay in the limited information that was provided, ranged from lack of functionality in the system to produce reports, to documents simply not being found. For example, neither the finance or commercial teams could produce a list of debtors to support the balance in the draft Financial Statements.

2.64        The impact is that it was not possible for us to examine the validity of the figures in the financial statements with reference to supporting information. We sought to adopt alternative procedures where possible to specific focus areas for building a clean Balance Sheet for NAWEC as at December 31, 2017.

Financial impact of the issues identified

2.65        The approximate financial impact of the issues highlighted in our work to date are captured in the tables below, shown against the net equity position of the draft Financial Statements as at December 31, 2017. Issues that cannot be or have not yet been quantified are explained more fully in the commentary:

Table 7: Financial impact of issues uncovered during the Forensic Audit

            Brief description of issue 2017




            Net Liabilities / Equity as at December 31, 2017 (3,784,765) (78,837)
Section 1 – Adjustments that could be quantified (above USD 20k):
       1     Write-off of Inventory (1,619) (34)
       2     Unrecorded Liability Baumuller Services (4,036) (84)

Section 2 – Adjustments that could not be quantified, however could be broadly estimated:

       3     REEP depreciation (33,000) (693)
       4     Kotu Ring Water Supply depreciation (10,000) (204)
       5    ‘Non-existent’ Fixed Assets (55,000) (1,100)
6 Capitalization of exchange losses for completed Assets Under Construction (36,000) (763)
7     Inventory write-off (items which have not been issued for over 10 years) (26,426) (550)
       8    Unposted invoices resulting in understated costs and


(175,000) (3,600)
       9     Amortization for Intangible Assets (3,495) (73)

Section 3 – Adjustments that cannot currently be quantified nor estimated, but likely to be above USD 20k:

      10    Unsupported balances TBC TBC
      11    Unrecorded REP loan TBC TBC
      12    Interest on loans TBC TBC
      13    Depreciation of Land TBC TBC

14    Additional Trade Debtors provision                                                              TBC                TBC

   Suggested revised Net Liabilities / Equity following

(4,129,341)      (85,938) adjustments in Section 1 and Section 2 only

2.66 As NAWEC has still not closed the 2017 financial year in the accounting system, any issues highlighted both in the table and before can be adjusted for.

Significant findings

2.67 Our significant findings in relation to our Special Audit of NAWEC as at December 31, 2017, which are explained more fully in the main NAWEC section of the report, are as follows:

Fixed Assets (GMD 5.5b, USD 115m / 72% of Total Assets) (Financial impact table items 3,4,6)

►    Three out of eight ‘Assets Under Construction’ tested have been completed but not transferred to an appropriate asset category. For some of the assets, the depreciation charge should have started from as early as 2014. 2017 depreciation charge for these assets is at least GMD 43m (USD 897k); and

► NAWEC has a policy of capitalizing exchange losses incurred on loans obtained to build Fixed Assets. Such losses accumulate for as long as the asset is under construction. Keeping three out of eight Assets Under Construction in this category after their completion resulted in the value of these assets being overstated by at least GMD 36m (USD 763k).

►    NAWEC needs to move all the completed Assets Under Construction into the correct asset category using the correct value, i.e., net of any revaluation losses capitalized post assets’ completion and reduced by the amount of current year and accumulated depreciation.

Loans (Current and Non-current) (GMD 9.1b, USD190m / 82% of Total liabilities) (Financial impact table item 11)

►    NAWEC was unable to provide support for a number of loans. These included loans from the Government (GMD 2.7b or USD 55.7m). Accordingly, there is uncertainty as to the nature and terms of significant amounts of the recorded borrowings; and

►    There were multiple inconsistencies between the balance per the Trial Balance and the supporting documentation. For example, NAWEC has not accounted for the Rural Electrification Extension Project (“REEP”) loan and asset correctly, understating both.

The current value booked for the loan is GMD 227,328,756 (USD 4,735,258).

However, based on the ECOWAS Bank for Investment and Development (“EBID”) reconciliation provided, the total disbursements made in relation to the project were USD 17,830,294 or GMD 855,991,070.

►    We recommend that a reconciliation of the outstanding loan amount is performed with all lenders and any differences are investigated.

Trade Creditors (GMD 867m, USD 18m / 8% of Total Liabilities) (Financial impact table item 8)

►    There were 21 suppliers which had a net debit balance with NAWEC. The total amount of the debit balances was GMD 175m (USD 3.6m). The balance accumulated as a result of the journal entries made to ‘debit’ Trade Creditors and ‘credit’ Cash that were posted on receipt of a proforma invoice or when a prepayment for a particular supply was made. No invoices have subsequently been posted, mostly due to

oversight. The consequence of such an oversight is that there is a potential understatement of costs and liabilities as high as GMD 175m (USD 3.6m), i.e., the total debit balance in the Creditors Ledger.

►    NAWEC should make a comprehensive analysis of all debit balances and post all corresponding expenses unless it can be proven that the service paid for has not yet been delivered. Senior Management need to ensure that the Finance team does not make similar postings in the future by providing appropriate training and review mechanisms.

Cash at bank (GMD 132m, USD 2.7m / 2% of Total Assets)

►    At the end of 2017 NAWEC held 60 bank accounts with 15 banks. This number of bank accounts requires a substantial amount of time to manage and reconcile on a monthly basis, as required by NAWEC’s accounting policy. The number of bank accounts has been reduced to 16 in 2019;

►    The Finance team was unable to provide some basic information about at least three Trial Balance codes, each representing a separate bank account. The information requested included the bank account numbers, the date of the last reconciliation exercise, and a copy of such reconciliation; and

►    Reconciliations have not been performed at all or there was a backlog of such reconciliations for multiple accounts. Some reconciliations which have been performed have not been done in accordance with good practice;

NAWEC needs to close as many bank accounts as possible and regularly perform bank reconciliations for any open bank accounts.

Trade Receivables (GMD 1.3b, USD 27m / 17% of Total Assets)

►    NAWEC is unable to produce Trade Debtor ageing reports. In absence of such a report, NAWEC cannot calculate a reasonable provision and Trade Receivables can be significantly overstated;

►    There are a number of accounts for which there is a concern whether the debt outstanding will be recovered in full. For instance, no payments have been made for some of them since at least 2017. There are also a number of disputes between NAWEC and its customers (for example, Brikama Area Council and Central Bank). No specific provision is booked against these balances; and

►    NAWEC’s Bad Debt provision policy is not adequate. The provision for bad debts should reflect a prudent estimate of the extent to which amounts owed may not be paid by NAWEC’s debtors. Under the current policy, government receivables are not provided against, and other detbs have to be outstanding for over seven years to be considered irrecoverable. This does not reflect the reality of likelihood of recoverability and results in the overstatement of debtors.

►    NAWEC needs to re-assess the recoverability of a number of Trade Receivable balances. This is especially the case for the debtors which do not have a repayment plan in place, where no payments have been made since 2017 or where there is a dispute between NAWEC and the customer;

►    NAWEC needs to perform the reconciliation of the major balances outstanding from each customer, directly with the customers in question;

                        ►    NAWEC needs to revise its Bad Debt provision to make it more prudent; and

►    NAWEC needs to replace the existing billing system with a system which produces all basic reports, including ageing.

Inventory (GMD 560m, USD 11.6m / 7% of Total Assets) (Financial impact table item 1)

►    EY was unable to reconcile the Inventory balance per the Inventory Valuation Report and the Balance Sheet. The difference was GMD 131m (USD 2.7m). The difference between the Inventory Valuation Report and the Balance Sheet is a recurring issue highlighted by the auditors in 2015 but not resolved by NAWEC;

► The accounting system is not updated for any movements in Inventory throughout the year. The Inventory is only entered into the system at the end of the year based on the stock take results. This system poses significant risks to the accuracy of the balance as it is a manual exercise and does not provide accurate information throughout the year to allow for adequate planning;

► We performed a physical count of a sample of Inventory items. Of the 18 items tested,

4 did not exist and need to be written-off. The value of these items was GMD 1.6m

(USD 33k). While we have not extrapolated these observations over the whole Inventory balance, the finding suggests that the Inventory balance could be significantly overstated;

►    The costs of Inventory are not updated. The price an item is first purchased at is the price which is entered into the system and remains the one used for the Inventory valuation going forward. This is likely to result in the value of the Inventory being misstated as costs often change;

►    NAWEC needs to start following its accounting policy and update the system with any Inventory movements throughout the year. NAWEC needs to start relying on the system, rather than the bin-cards; and

►    NAWEC needs to update the costs of stock on a regular basis and ensure stock is valued at the lower of cost or Net Realisable Value.

Staff Loans (GMD 23m, USD 483k / less than 1% of Total Assets)

►     No annual reconciliation is performed between the staff loans sub-ledger and the

Balance Sheet as the accounting policy dictates;

►    Staff Loans are given to people not meeting the eligibility criteria;

►    Based on the Limitation Act, NAWEC might not be able to recover staff loans for which it has been over six years since either the staff left the employment or last paid the loan. Our calculations suggest that up to 3% of the total receivable balance may not be recoverable; and

► While attempts are being made to recover some ex-staff loan receivables, their recoverability has not been considered by the Finance team and no corresponding provision made.

►    The Payroll Team and the Finance team need to adhere to the NAWEC policy and reconcile the Staff Loans Receivable to the accounting system on a regular basis;

NAWEC needs to re-assess the recoverability of ex-staff loans and provide for or write-off the balances accordingly; and

►    NAWEC needs to ensure that all employees provided with loans meet the eligibility criteria.

Other Assets (Financial impact table item 9)

►    Intangible Assets represent less than 1% of Total Assets or GMD 9m (USD 194k). NAWEC’s policy is to depreciate them over 10 years despite their useful economic life often being significantly shorter. Two of nine intangible assets should have been fully depreciated as early as in 2015. In addition, the amortization has not been calculated

correctly for the rest of the assets. The total overstatement of the Intangibles value was GMD 3.5m (USD 73k), or 37%; and

► Investments represent less than 1% of the Total Assets or GMD 5.5m (USD 115k). NAWEC made the payment of GMD 5.5m on behalf of the Government but does not hold the investment in its name.

We recommend that the NAWEC amortization policy is amended to allow for the situations where an Intangible Asset’s useful economic life is shorter or longer than 10 years; and

►    We propose to reclassify the Investment as a Government Receivable. NAWEC should then assess the recoverability of the Receivable and adjust its value accordingly.

Loans (current and non-current) (GMD 9.1b, USD190m or 82% of Total Liabilities) (Financial impact table item 12)

►    Over several years NAWEC has not accounted for Interest Payable on any loans other than NAWEC’s Bond, ING Bank Loan and the commercial banks, even though these loans are on its Balance Sheet. Given the relevant information has not been provided, it is not possible to estimate this interest. However, given the total value of the loans, the amount is likely to be substantial; and

►    NAWEC does not have a list of securities held with different lenders and, from the conversations held, is often not aware if a particular asset was given as security to a lender. No such securities in relation to the bank loans were identified in the course of the circularisation.

►    We recommend that NAWEC accounts for all the interest due to lenders for 2017 and before; and

►             We recommend that NAWEC creates a list of securities provided to lenders.


► One of the findings of the 2015 staff audit at NAWEC was a lack of technical capacity of individuals in relation to their roles. The HR team at NAWEC confirmed that this is still a key issue for the organisation;

►    EY identified two employees paid twice in the same period because there was no effective controls in place to prevent or detect this type of anomaly. The amount of overpayment was GMD 22, 273 (USD 474.12) over the period June-August 2016; and

►    EY viewed a sample of records for joiners and leavers, where five of the employees were employed or terminated as a result of Government directives. There were two directives to employ graduate students who studied overseas, the directive of reinstatement and later dismissal of an employee who was part of a former fraud scheme and the directives for the dismissals of two employees, who were then later compensated by NAWEC at a total amount of GMD 1.8m (USD 38k). Some of these directives were given during the new regime.

►    NAWEC should review its current staff levels and skills to ensure the business has the right combination of staff skills and numbers to optimize its performance;

►    NAWEC needs to investigate the reasons behind the duplicate payments and address these;

NAWEC should review its staff listing for any duplicates to avoid making duplicate payments going forward; and

►    NAWEC needs to follow its recruitment and termination policies.

Staff Benefits

►    Across the 2015-2017 period, Staff Allowances represented 54% of the overall Wages and Salaries cost, and on average 146% of the Basic Salary. Most of the Staff Allowances originate from Government. However, there was one allowance called

‘Other’ for which the Payroll team did not know the purpose;

►    We expected that either the Transport or Residential allowances would account for the largest proportion of the total staff allowance expense. This is because these allowances are available to all staff. However, we noted that Responsibility allowances were the largest proportion of the total despite these only being available to staff who are Grade D or above. A small group of managerial staff receive the highest proportion of Staff Allowances;

►    EY identified at least five people who were paid stipend allowance in combination with other allowances. This is not in accordance with the policy which dictates that staff are not entitled to other allowances until they come back to full-time employment; and

►    EY observed an example of a Staff Allowance which did not follow the process, where Payroll authorized the Staff Allowance without the proper authority from the HR Director.

► NAWEC and the Government should review the Staff Allowances to confirm purpose and validity of all allowances available and to which grades of staff; and

►    The Payroll team should follow its policy in awarding any allowances. This includes obtaining authorization by HR before adding or deducting Staff Allowances from the Payroll.


►               Where quantifiable, the total amount of diverted or misused funds was estimated at GMD 32m (USD 0.7m) and GMD 60k (USD 1k) pre- and post-December 31, 2016 accordingly.

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