REA ‘s over expenditure erodes its 2010 surplus

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The latest Auditor General’s report  says that the Rural Electrification Authority (REA)’s  over expenditure  eroded the organisations surplus to a deficit of over KR 13, 000 million in 2010.


The Report which was released in Lusaka yesterday disclosed that during the 2009 – 2010 period, the authority’s income increased by K2, 210, 666, 000 from K9, 975, 772, 000 in 2009 to K12, 186, 438, 000 in 2010.


It however stated that during the same period, the authority’s expenditure increased by K3, 714, 327, 000 from K8, 603, 087, 000 in 2009 to K112, 317, 414, 000 in 2010.


This resulted in the organisation’s surplus of K1, 372, 685, 000 made in 2009 to be eroded to a deficit of K130, 976, 000 in 2010.


The audit report said staff costs remained the major expenditure of REA representing 48 percent, 52 percent and 57 percent of the total income in the year 2009, 2010 and 2011 respectively.


And contrary to financial regulations number 52, it was observed that 66 payment vouchers in amounts totaling K773, 168, 332 were not supported by receipts, invoices and acquittal sheets.


Further imprest in amounts totaling K178, 022, 000 issued to six officers had not been retired as of October 2012 contrary to financial regulation number 96.


Meanwhile, it was noted that REA paid amounts totaling K11, 500, 000 in electricity bills at the Chief Executive Officer’s (CEO) residence during the period from November 2011 to August 2012 which was not provided for in the CEO’s Contract of Employment.


There was also no evidence of authority from the Board of Directors approving the payment of electricity bills, a development that has been rendered irregular.


The Audit report further unveiled irregularities where 45 vehicles that did not belong to the Authority irregularly drew fuel in amounts totaling K63, 723, 786 from the fuel operations accounts during the period from January 2009 to June 2012.


The Audit report also revealed that despite the CEO being entitled to and being paid a monthly domestic servant allowance of K1 million per month, the Authority engaged a gardener who was introduced on the payroll at a monthly salary of K632, 000.


During the period from December 2010 to September 2012, the gardener was paid amounts totaling K13, 272, 000.


According to part (d) of the contract of employment for the CEO for the period August 2009 to July 2012 and May 2012 to 2015, the CEO was entitled to a taxable domestic servants’ allowance of K1 million per month.


The audit report also disclosed that the Authority paid K867, 532, 624 for a Land Cruiser VX despite the Zambia Public Procurement Authority (ZPPA) approving the purchase of the same vehicle at a cost of K745, 695, 120 on September 21, 2009. This resulted in an over K121, 837, 504.


The report further noted that the liquidity position of REA over the two years under review showed a reduction in the working capital of K51, 520, 594, 000 in 2009 to K38, 301, 486, 000 in 2010.