Support to the Mozambique Supreme Audit Institution

Project description

Title: Support for public financial management and accountability (Mozambique Supreme Audit Institution)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Mozambique
Lead executing agency: Tribunal Administrativo (TA)

Mozambique. Auditing procedures for complex construction projects and in the extractive industries. © GIZ

Context

Mozambique has enormous mineral deposits, especially in the extractives sector, which provides resources such as natural gas, coal, titanium, tantalum and graphite. So far, the profits made in this sector have been reaped by a very small number of wealthy people. To ensure that the population as a whole benefits from the country’s resource wealth, it is essential to ensure transparent management of these extractive resources.

The Mozambique Supreme Audit Institution examines the regularity of state revenues and their use, and approves public contracts. This has so far mainly been done in smaller and less complex areas of the extractives sector. No adequate processes or suitably trained staff are as yet in place for dealing with complex approvals and audits in the extractives industries and for public construction projects.

Objective

The Mozambique Supreme Audit Institution handles contract approvals and audits in the extractive industries and for public construction projects in a more effective manner.

Approach

The project supports the Supreme Audit Institution both in strengthening its internal processes and in building its capacities. To achieve this, it works in two fields of activity:

  1. building the institutional and human resource capabilities of the Supreme Audit Institution for approving contracts and conducting audits in the extractive industries and for public construction projects;
  2. improving the internal processes of the Supreme Audit Institution.

Parts of the project will be implemented by a consortium consisting of IP Institut für Projektplanung GmbH, AMBERO and NIRAS.

Results

For the first time, the Mozambique Supreme Audit Institution has included a paragraph on the extractive industry in its annual report on the government’s statement of accounts. The paragraph describes a number of contradictions and omissions, such as

  • contradictory financial reports in the budget, by the tax authority and the Supreme Audit Institution concerning six gas and coal companies
  • the failure to examine whether it is permissible for costs incurred by exploration companies to be deducted from taxes on earnings
  • outstanding payments to the government of income from concessions, licences and patents.

The annual report to parliament included the findings of two complex audits of the extractive industries, and recommendations were made related to improvements.

A further audit was conducted relating to the construction of one of the main traffic arteries in the capital city, Maputo. The report, which has not yet been completed due to a number of challenges, will describe irregularities during construction, the supervision of building works and payment, and will recommend that some sections of the road need to be replaced.

With support from the project, procedures have been developed in line with international standards for the approval of public contracts and the auditing of extractive industries and complex public construction projects.

Based on an analysis of the competencies of auditors and judges, a three-year management development plan has been agreed. Initial training measures have been carried out.

Related topics