Urgent call to strengthen government grants regime after ESP Audit reveals major fraud risk, weak administration and poor transparency

The Auditor General, David Dennis today called for the urgent strengthening of the legal and regulatory regime for the administration of government grants.

Dennis made the call after an audit into the COVID-19 Economic Stimulus Package (ESP) revealed major fraud risk, poor to non-existent administrative controls and almost zero transparency in the disbursement of $309 million in government funds.

“The ESP lacked underlying legislative or procedure guidance for issuing grants on the scale involved for the ESP,” the Auditor General said.

“This coupled with the allocation of insufficient resources needed to adequately receive, process, pay and document the thousands of applications, led to weak internal controls,” he said.

This weakness in administrative controls, combined with missing documentation led to a very serious lack of transparency as to how ESP funds were dispersed and ultimately used.

“In most cases here was little or no documentation so it was not always possible to determine whose hands the funds ended up in or how they were actually used,” Mr Dennis said.

“In many cases documentation to support the validity of actions and transactions were not available. This area remains a concern across Government which requires urgent attention.”

The abuse of the Government Imprest account was particularly concerning and raised a high risk of fraud with many payments being signed for by Government officials on behalf of beneficiaries without documented authorisation, including payments totaling over $6 million being signed for by one officer.

The ESP was rolled out by the Government during the recent pandemic, and was intended to inject funding into the domestic economy to stimulate economic activity. The scope of the Office of the Auditor General (OAG)’s audit did not include assessing the impact of the ESP but focused on how the funds were administered.

Mr Dennis said it was important to acknowledge the extraordinary circumstances created by COVID19 which heightened the inherent risk for expediting procurements and delivery of payments and services at the expense of following established procedures.

The Minister of Finance was briefed on the findings and recommendations of the ESP audit report following its tabling with the National Parliament Office. The OAG has also extended an invitation to the Chairman of the Public Accounts Committee, the Leader of Opposition and the Leader of Independents for a briefing on ESP Audit findings.

The audit – the last by the OAG into Government COVID-19 expenditure – was conducted at the request of the Government following their commitment to the International Monetary Fund for all COVID-19 spending to be audited. OAG intends to follow up on commitments made in future audits of the Ministry.

The OAG is one of the key accountability institutions established under the Solomon Islands Constitution which requires the Auditor General to audit and report on the public accounts of Solomon Islands, including all Ministries, offices, special funds, courts and authorities of the Government, and of the government of Honiara City and of all provincial governments.

The full ESP Audit Report can be downloaded at: ESP Audit Report 2024.pdf (oag.gov.sb)

For further Media Enquiries please contact the Office of the Auditor General on 28886 or email: admin@oag.gov.sb.

ENDS//

– Office of the Auditor- General Media Release