Special Audit of Regional Structures 2016-2021 & Report Summary

Presented by Edwin F.E. Conteh, the President of Audit Committee at WCO/WCA, the special audit of regional structures from 2016 to 2021 was commissioned to align with the regional fund manager. The objectives included conducting risk assessments, assessing internal controls, and ascertaining value for money. The audit scope covered the period from April 1, 2016, to December 31, 2021, following international auditing standards. Limitations included budgetary constraints and language barriers, impacting the conduct of audits. Despite challenges, the regional structures were noted for good leadership, well-staffed teams, and solid infrastructure.

• Audit
• Regional Structures
• 2016-2021
• Risk Assessment
• Internal Controls

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1. 2016 - 2021 SPECIAL AUDIT OF REGIONAL STRUCTURES & 2022 AUDIT REPORT WCO/WCA AUDIT COMMITTEE Presented by: Edwin F.E. Conteh,FCCA,FCA,ABFA,MSc. President Audit Committee WCO/WCA

2. SPECIAL AUDIT OF THE REGIONAL STRUCTURES 2016-2021

3. CONTENTS: Introduction Audit Objectives Audit Scope Audit Approach/Methodology Audit Findings Detailed Audit Findings Major Recommendations Appreciation Question & Answer

4. INTRODUCTION On the mandate of the Director Generals of the World Customs Organization of West & Central Africa, Audit of the regional structures was commissioned with the mandate to audit all Regional Structures and report findings to the next Director General s meeting. The background to this is that the regional fund manager had been audited from 2016 to 2021 and there was need to audit the regional structures to align them with the regional fund manager, bearing in mind that the actual expenditures were undertaken by the Regional Structures.

5. OBJECTIVES Conduct Risk Assessment Assess Internal Controls Ascertain Value for Money (VFM)

7. AUDIT SCOPE The audit covered the period April 1, 2016 to December 31, 2021. AUDIT APPROACH/METHODOLOGY The audit was conducted in accordance with International Standards on Auditing (ISAs), coupled with Generally Accepted Auditing Standards and guided by the Terms of Reference of the Audit Committee of the World Customs Organization of West & Central Africa.

8. LIMITATIONS Budgetary Constraints Language Barrier Limited Time The absence of the bi-lingual Team member (RTC-B) The time allotted for the conduct of the audits was inadequate. Limited Budget Delay in remitting requested funds.

9. Snap Shot of the Regional Structures Good Leadership Well Staffed Good infrastructure

10. MAJOR AUDIT FINDINGS: 1. Lack of Standard Operating Procedures for the RTCs, ROCBs & RILOs 2. Operation of Regional Fund from Personal Account(s) 3. Lack of documentation 4. Inadequate Record Keeping 5. Delay in processing Remittances 6. Unaccounted for Funds/Non adherence to standard procedures

11. AUDIT FINDINGS: 1.0 Lack of Standard Operating Procedures for the RTCs & ROCBs Criteria: Best practice requires the operation of organizations/institutions are based on approved procedures and practices. Key amongst which is a Standard Operating Procedure (SOP). Finding: The audit noted the absence of a Standard Operating Procedures (SOPs) for the Regional Structures. Risks/Implications: The risks/implications of our findings are but not limited to the following: Lack of basis for managing activities. High risk to the going concern; and Leaves room for scapegoating.

12. AUDIT FINDINGS CONTD: 2.0 Operation of Regional Funds from Personal Account Criteria: Institutions are required to operate their financial activities from institutions accounts. This is for the purpose of fostering accountability and transparency. Findings: The audit noted the absence of an account for the Regional Structures. Bank statements requested could not be released on grounds that they are personal accounts. It was noted that the personal account of the Heads of Regional Structures was used for all financial transactions (specifically all remittances) from the Fund Manager.

13. Risks/Implications: The risks/implications of our findings are but not limited to the following: Inaccessibility of account statements for audit review; Possible misappropriation or misallocation of funds; and Lack of transparency and accountability

14. AUDIT FINDINGS CONTD: 3.0 Lack of Documentation Criteria: The importance of keeping proper records and books of accounts is at the heart of effective accounting and financial management. This is usually enabled through maintenance of a hybrid of electronic record of transactions and hard copies of relevant source / back-up documents. Findings: The audit noted the lack of documentation in all regional structures for the period under review. There was no structured handing over/ taking over between Directors of the structure and there is no readily available archive for the structure s documents. For the Regional Training Centre of Brazzaville there are no documents from April 1, 2016, to January 11, 2017 informed that the office that hosted the Regional Training Center was gutted by fire and all documents burned. A police report was requested and presented.

15. In the case of ROCB, the only documents available are those during the tenure of the current Director. In the case of RILO Dakar, some documents were sent which were related to the audit period prior to the term of the current director, but they were not readily available at the regional structure. Risks/Implications: The risks/implications of our findings are but not limited to the following: Inability to review the activities for the period; and High risk to the going concern of the RTC.

16. AUDIT FINDINGS CONTD: 4.0 Inadequate Record Keeping (2017-2021) Criteria: Adequate documentation of financial transactions is a key requirement for institutions or organizations wanting to promote accountability and transparency. Findings The audit uncovered inadequate documentation of expenditures relating to regional and out of region missions attended by members of the Regional Training Center of Brazzaville. Expenditure records for funds requested for regional and out of region activities were found to be mostly inadequate. In most instances, there was either no evidence of tickets, receipts for air ticket purchase, receipt of hotel expenditures, etc. the following specific instances were noted:

17. Also in 2017, two persons from RTC-Brazzaville were budgeted for the regional mission held in Dakar, Senegal from 21st April 30th April 2017 totaling 4,500 Euros; however, the audit could only verify the attendance of one delegate as per documentary evidence (air ticket); 1. In the case of ROCB Dakar, the audit could not verify use of funds for the period January 2017 to 1st January 2021 as supporting documents were not made available for audit review. 2. In RTC Ouagadougou, the observed several anomalies relating to invoicing. 3.

18. Risks/Implications The risks/implications of the audit findings are but not limited to the following: Misappropriation/misallocation of funds; and Inability to verify expenditure.

19. AUDIT FINDINGS CONTD: 5.0 Delay in processing Remittances Criteria As per the required practice of the World Customs Organization West & Central Africa Region, fund request should take a minimum of two days to get processed and remitted by the fund manager. Findings The audit noted that fund request is taken longer than required. The delays ranged between two weeks to a month before funds are remitted. The RTC-Brazzaville indicated that in most instances they have to pre-finance most of the missions.

20. Risks/implications The risks/implications of our finding are but not limited to the following: It places additional financial burden on the already struggling regional structures; and It hinders the smooth operation of the Regional Structures.

21. AUDIT FINDINGS CONTD: 6.0 Unaccounted for Funds & Non adherence to Standard procedures Criteria In normal financial practice or best practice, all financial transactions are to be properly documented. Hence, funds transfer to RTCs for regional or out of region meetings should be properly accounted for by evidence of travel/attendance. Findings It was noted during the audit Seven Thousand Euros (7,000 Euros) was transferred to RTC Brazzaville on February 21, 2020 in relations to trips to Niamey and Brussels. However, no expenditure document was made available for audit review. To substantiate funds utilization

22. In the case of RILO Dakar, a transfer of 3,120 on March 12, 2020 to the Director for RILO West Africa in respect of DG s conference in Benin in 2020, the conference was cancelled due to Covid-19. In TRC Ouagadougou, we note several issues Funds transferred in respect of accommodation costs was FCFA 13,376,570 ( 20,240) and the only documents presented to the audit team was a receipt from BRAVIA HOTELS for deposit of FCFA 10,000,000 without the/ receipt/ receipt names of the room occupants, room numbers, length of stay for each occupant, unit price, total price. The Director failed to provide any documentation detailing the use of FCFA 3,376,570 ( 5,147.52) in respect of accommodation and the funds weren t returned to the Regional fund manager.

23. We note that security issues are customarily handled by the host country. However, the team also received from the CRF the EXCELLENCE HOTEL invoice number 110 EH/OUA/2019 established on June 22, 2019, in the amount of two million twenty-six thousand six hundred and twenty (2,026,620) CFA Francs or ( 3,089.55), covering accommodation ten (10) Customs officers from Burkina-Faso Administration, to ensure the safety of the participants. This expenditure is deemed ineligible. requisitioned by the host Over invoicing of ( 571.00) by the company CONFERENCE SERVICES CORP for conference services and equipment rental.

24. We also observed that during the period under review, regional structures that organized trainings, workshops and special security operations did not pay the required 300 to participants as per budget but instead went into arrangements for accommodation and paid far less per-diems. For RILO WA, this was evident in the implementation of operation Cripharm 5 and Alamba 2. I. Same could be said of RTC Ouagadougou in respect of training conducted during the period under review, where workshop facilitators were paid 454.4 per day and the Director of the structure paid for the accommodation and gave per-diems below 300. II. In the case of ROCB documents were not presented in respect of training during the period under review. III.

25. Risks/Implications The risks/implications of the audit findings are but not limited to the following: High risk of miss-application and miss-appropriation; and Improper documentation/reconciliation.

26. Risks/Implications The risks/implications of the audit findings are but not limited to the following: High risk of miss-application and miss-appropriation; and Improper documentation/reconciliation.

27. RECOMMENDATIONS: 1. Governance Accordingly, the following are recommended for consideration by the DG s where necessary to mitigate/minimize the various risks/internal control lapses identified: 1.That through a mandate from the Director Generals of Customs for West & Central Africa, a committee be set up and charged with the responsibility of drafting for review and approval of the DG s, a Standard Operating Procedure and a Financial Policy Manual for the Regional Structures. 2.That it be made mandatory through the Financial Policy Manual that all Regional Structures conduct financial activities only through approved regional account(s) of the respective regional structures. 3.That the Financial Policy Manual should include A & B signatory requirements for control purposes.

28. RECOMMENDATIONS CONTD: 4. That the Standard Operation Procedure to be drafted should include set procedures for proper documentation. 5. That the SOP states clearly document/record retention period and method (electronic & hard copy). 6. That the Standard Operating Procedure and Financial Policy Manual upon approval, is introduced to all Heads/Senior Officials of the Regional Structures for the purpose of creating adequate awareness. 7. That the DGs set an effective date for the use of the approved Standard Operating Procedure and Financial Policy Manual by all Regional Structures which will then form the basis for audit review and serve as guide for the Regional Structures respectively. 8. That the DGs meeting considers creating adequate awareness amongst member countries on making use of the training centers.

29. RECOMMENDATIONS CONTD: 9. That the Regional Training Strategy done by the Regional Training Centers in collaboration with the WCO Capacity Building is considered for funding by the DG s in an effort to address the capacity gap and continuous professional development of Member Countries Customs Officers. 10. That the DGs issue a straight mandate to the fund manager to operate in adherence to the procedure set out in the standard operation procedure for the office of the fund manager. 11. That this serves as a major performance indicator for the office of the fund manager. 12. That the vacancy at the RTC Brazzaville is considered for review and where necessary the needful done to address the separation of duties and promote good governance.

30. RECOMMENDATIONS: 2. Accountability Accordingly, the following are recommended for consideration by the DG s where necessary to address the issues of miss-appropriation/miss-allocation identified: 1.That the Regional Training Center Brazzaville makes available expenditure document for the utilization of 7,000. 2.That the Director RILO Dakar is made to account for the 3,120. 3.That the Regional Fund Manager does bank reconciliation and follows up on issues resulting there from for adequate resolution.

31. 2022 AUDIT REPORT WCO/WCA AUDIT COMMITTEE Building Infrastructure to Enhance Revenue Collection

32. CONTENTS 1. EXECUTIVE SUMMARY 3 1.1 Internal Control 1.2 Revenue 1.3 Other Issues 1.4 Follow up on prior year audit 1.5 Overall Conclusion 3 3 3 4 4 INTRODUCTION 5 2. 2.1 Background 2.2 Scope 2.3 Objectives 2.4 Audit Approach 2.5 Appreciation 3. INTERNAL CONTROL 8 4. REVENUE 5. EXPENDITURE 5. FOLLOW UP ON PRIOR YEAR RECOMMENDATIONS 12 5 6 6 7 9 10

33. EXECUTIVE SUMMARY 1.1 There were lapses in internal control regarding reconciliation and follow up 1.2 Revenue We noted that the arrears from contribution by members countries and as year end amounted to 731,858.53 ,we consider this very significant, bearing in mind the current financial position of the organisation. 1.3 Expenditure We note issues of unbudgeted expenditure and inappropriate budget utilization by regional structures. Internal Control

34. 2.5 Follow up of prior year recommendations During the audit, we followed up on all recommendations made in previous years. A summary of the status of these recommendations is shown in the table below: Status Number of Recommendations 2 3 2 7 Implemented Partially Implemented Not Implemented Total 2.6 Overall Conclusion We note significant improvement in the Organisation s financial management system during the period under review and trust the required effort would be made implement the recommendations of the Audit Committee going forward.

35. INTRODUCTION 2.1 BACKGROUND The World Customs Organisation (WCO) is comprised of several regional bodies based on their geographical location. The membership is made up of Customs and Revenue Administrations of countries in each of these regional blocks. Our block is the West and Central Africa Region (WCO-WCA) comprising of twenty-three (23) member countries. It is managed through a Vice Chair, represented by a member Customs or Revenue Administration for a period of two (2) years with the possibility of an extension of another term.). The member countries of the WCO-WCA are Benin, Burkina Faso, Cameroon, Cape Verde, Central African Republic, Chad, Republic of Congo, C te d'Ivoire, Democratic Republic of the Congo, Gabon, The Gambia, Ghana, Guinea, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, and Togo. The WCO-WCA has 6 regional structures focused on managing the various issues and activities of the region. These are detailed below: Regional Training Centre (RTC) Ouagadougou. Regional Training Centre (RTC) Abuja. Regional Training Centre (RTC)- Brazzaville. The Regional Office for Capacity Building (ROCB) - Abidjan. The Regional Intelligence and Liaison Office (RILO) Dakar (West Africa). The Regional Intelligence and Liaison Office (RILO) Doula (Central Africa).

36. At the Conference of Director Generals where the Organisations operating manual was adopted, it was agreed that on an annual basis The Regional office should be audited by the Audit committee and such report be presented to the conference of Director Generals. 2.2 OBJECTIVE The main objective of the Audit Committee's work mission is to provide a report on the status of the Regional Fund, which will be presented at the Directors General Conference. 2.3 SCOPE The audit covered the period from 1st January 2022 to 31st December 2022. 2.4 AUDIT APPROACH This audit was conducted in accordance with the International Standards of Auditing (ISA s). These standards require that we conduct a risk assessment to focus resources on the areas of greatest audit risk in conducting our work. During this engagement, we: held discussions with key members of staff of the Regional fund office; reviewed key documents; tested key controls; and performed tests of financial transactions on a sample basis.

37. Detailed audit findings are presented in the following sections of the report. According to the criteria set in the table below, these findings have been prioritised as high, medium or low. Risk Rating Description High matters which may pose a significant business or financial risk to the entity; and/or matters that have resulted or could potentially result in a modified or qualified audit opinion if not addressed as a matter of urgency by the entity. Moderate matters of a systemic nature that pose a moderate business or financial risk to the entity if not addressed as high priority within the current financial year; and/or matters that may escalate to high risk if not addressed promptly. Low matters that are isolated, non-systemic or procedural in nature; and/or matters that reflect relatively minor administrative shortcomings and require action in order to improve the entity's overall control environment. 2..5 APPRECIATION We would like to take this opportunity to express our thanks and appreciation to Vice presidency and the regional fund manager for the cooperation and assistance rendered to us during our work.

38. INTERNAL CONTROL FINDING Internal Control Upon review of the Bank Statement for the above period, we observed that two transfers of 4,000 were sent to the Director RILO WA in respect 17th Global information and intelligence meeting, meeting of regional structures in Brussels. There is no evidence of such funds being returned to the regional fund by the Director RILO- WA. Also transfer of 4,500 to the Director of RTC Abuja was sent in error to another account and the bank has not refunded the amount. RISK Lack of proper reconciliation or follow up creates the risk of funds loss by the regional fund manager. RECOMMENDATION We recommend that the Director RILO-WA refunds the 4,000 and the bank does same for the 4,500 Responsible Officer: Director RILO-WA Eco-bank Abuja

39. REVENUE FINDING Contribution Arrears During our review of Bank Statements, and SWIFT reports made available by the bank, we noted outstanding contributions amounted to 731,858.53 for the period under review. (refer to appendix C) RISK Non-payment of contributions may lead to loss of much needed income to fund the activities of the organization. Furthermore, it might be difficult to track and recoup contribution arrears if up to date records are not kept and monitored. RECOMMENDATION The Fund Manager should regularly update and reconcile contributions from Member countries against the annual invoices sent. The updated Arrears list should be used by the Vice chair to follow up Member countries to pay their outstanding arrears Responsible Officer: The Find Manager The Vice Chair

40. EXPENDITURE FINDING Unbudgeted Expenditure During our review of expenditure analysis ,we noted instances were requests were made and funds authorised for unbudgeted expenditure as evidenced in the case of ROCB. As per budget, one person was supposed to attend the 13th Contact-point Meeting for capacity building in Yaound Cameroun with a budget of 3,000 instead, two person attended costing the Region 6,000 Euros. RECOMMENDATION All expenditure should be as per budget and in line with the Finance and Operations manual. In instances where Regional structures decide to increase number of participants, such costs should be borne by the host country. Also, the regional fund manager should not approve such expenditure. Responsible Officer: The Director ROCB The Find Manager

41. EXPENDITURE FINDING Budget The audit team observed that regional structures made requests for total amounts in their budgets without detailed costing. We note that actual air ticket price changes over time and should reflect in the request made. Also, per-diem paid were in some cases for longer period than required for the workshops/conferences. EXPENDITURE FINDING Budget utilization utilization RECOMMENDATION All request for funds should include the actual cost of air ticket, and the number of days on the itinerary are the per-diem days paid for. Itineraries should normally be a day before the conference/meeting and a day after. Where there is an exceptional case, such case should be properly documented and reported. Responsible Officer: The Directors of Regional Structures The Find Manager

42. FOLLOW UP ON PREVIOUS YEAR RECOMMENDATION FINDING Bank Account operational terms: charges & Interest RECOMMENDATION The bank should state the terms of the Bank Account operation (for all charges and interest paid) on official letterhead to be sent to the Fund Manager at NCS. Henceforth, the Fund manager should do a monthly review of the charges to confirm correctness and alignment to the terms. STATUS Not implemented Accounting Issues RECOMMENDATION An electronic record of all transactions (income and expenditure) should be maintained and reconciled to the Bank statement on a regular basis. Manual files should be kept containing all the documents pertaining to income and expenditure. All documents relating to one transaction should be stapled together and referenced and securely filed in a manner that ensures easy access and availability for accounting, reporting and audit. STATUS Partly Implemented

43. FINDING Regional fund manager RECOMMENDATION Send a soft copy of the Contributions Statements and Arrears status to the Vice Chair and copy to the Finance & Audit Committee after the end of every quarter (1st week of January, April, July, and October). Send a soft copy of the Cashbook (Income and Expenditure as updated on Excel template) to the Vice Chair and copy to the Chairpersons of the Finance & Audit Committee after the end of every quarter (1st week of January, April, July, and October). STATUS Partly Implemented FINDING Regional Structures (ROCB, RILO, RTC) The Heads of the Regional structures should maintain records of all requests and utilisation of funds in respect to the budgeted activities. In the same vein, they should:

44. Prepare a report of its transactions detailing out: all funds requested and utilised during the quarter in relation to specific budget activities. Any unused funds should be reported and returned by transfer to the Regional Bank Account. Report any budgeted activity not implemented and give reasons why. Send the above reports via email to the Vice Chair and copy to the Regional Fund Manager and the Finance & Audit Committee after the end of every quarter (1st week of January, April, July, and October). STATUS Not Implemented FINDING Office of the Vice Chair RECOMMENDATION The Vice Chair should maintain records of all requests and utilisation of funds in respect to the budgeted activities. In the same vein, the Vice Chair should: Prepare a report of its transactions detailing out: all funds requested and utilised during the quarter in relation to the Contingency fund, if there was reason to use it. Any unused funds should be reported, and arrangements made to return by transfer to the Regional Bank Account.

45. Prepare a report listing all the Requests for funds approved during the period, giving details of dates, Regional Structure, amounts, Budget codes, and budget balance (as is currently done). Send the above reports via email to the Regional Fund Manager and copy to the Finance & Audit Committee and Regional Structures, after the end of every quarter (1st week of January, April, July, and October). Send the final updated report of transactions approved for the whole year, at the end of the financial period. Send the Contributions Statement to each Member country annually. If any member country has arrears of contribution, send the Contributions statement as a means notifying them of their status. Send annual Contributions invoices to Member countries at the beginning of the year (with a Statement attached) to request for payment. STATUS Partly Implemented

46. FINDING Unaudited Regional Structures RECOMMENDATION All regional structures should be audited as was done with the regional fund manager. STATUS Partly implemented FINDING Unbudgeted expenditure RECOMMENDATION All activities must be budgeted except for unforeseen expenditures. In future such costs should be borne by the vice presidency. STATUS Implemented

47. Statutory Members of the WCO-WCA Audit Committee: S/N 1 2 3 4 5 6 S/N NAME Edwin Conteh Kidema Essodina L. Daniel Jaiblai Raphael E. Njock Abdlaye Ndiaye Alhajie Denton NAME COUNTRY Sierra Leone Togo Liberia Cameroon Senegal Gambia COUNTRY POSITION Chairperson Vice Chair Member Member Member Finance Chair POSITION

48. THANK YOU!

49. THANKS FOR YOUR ATTENTION & VALID CONTRIBUTIONS!