Billions Unaccounted as Auditors Watch Recovery Rates Stall in Bureaucratic Quagmire

Jun 15 , 2025. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

A three-year effort by the Audit Stakeholders Forum to restore fiscal discipline across federal institutions has yielded meagre returns. Despite broader coordination among oversight bodies, enforcement remains weak, with recovery rates stagnating below 15pc, exposing systemic failures in financial accountability.

In its first audit year, the Forum identified 6.8 billion Br in recoverable assets but recouped only 44 million Br, a mere 0.6pc. The subsequent year showed slight improvement, with 11pc recovered, and last year saw this figure inching up to only 14pc. The consistently low recovery rate remains a pressing concern for authorities, due to limitations in enforcement.

Strategic procurement decisions from 12 years ago continue to affect current financial management. An expenditure totalling 222 million Br, linked to those past choices, remains partially unresolved. Authorities managed to recover 130 million Br, leaving 92 million Br pending reapproval or reclamation, which is currently under review by the Ministry of Finance.

Beyond financial recovery, the Forum has escalated specific cases to criminal investigations, involving six institutions. The Immigration & Citizenship Service faces probing for alleged mismanagement totalling 1.2 million Br and an additional 1.9 million dollars. Aqaqi Basic Metals Industry is under investigation for discrepancies amounting to three million Birr. The Wollo Tertiary Care Medical & Teaching Hospital Project is being probed over 17 million Br, Wolayta Sodo University for 16.7 million Br, and the University of Gambella faces questions about 12.4 million Br in financial irregularities.

Comprising federal agencies such as the ministries of Justice, Planning and Development, and Education, as well as the Anti-Corruption Commission, the Procurement Authority, and the Federal General Auditors, the Forum has pushed for the imposition of administrative penalties. The Director General of the Ethiopian Public Service Support Agency, the President of the Ethiopian Police University, and the Director General of the Road Safety & Emergency Fund Service received formal written warnings. Each federal official involved paid a disciplinary fine of 10,000 Br.

Seven additional institutions, including three universities, the Ministry of Foreign Affairs, Immigration & Citizenship Services, and select civil society agencies, received reprimands due to similar audit findings. Financial literacy training was mandated for administrative officers from universities that were repeatedly cited for poor financial compliance.

Minister of Justice Hanna Arayaselassie disclosed that ongoing criminal investigations require further details from implicated institutions.

"These investigations would be complemented by civil cases in certain scenarios," she told Parliament.

State Minister for Finance, Eyob Tekalegn (PhD), attributed a shift in policy, disclosing that future budget allocations will depend directly on each institution's effectiveness in utilising previously allotted funds.

However, the Forum faces significant challenges in obtaining compliance from audited institutions. Tesfaya Daba, the state minister for Justice, voiced concern over the limited follow-up action, noting that of the 12 institutions directed to report their progress, only two responded.

The Ministry of Planning, responsible for integrating audit recommendations into institutional frameworks, has notably lagged in its contributions to the Forum's work. Its representative, Tirumar Abate, acknowledged this shortcoming, vowing to fully integrate audit findings into their planning and budgeting process from the next fiscal year.

For Deputy General Auditor Abera Tadesse, concerns abound about the scope of compliance measures.

"Institutional compliance assessments often narrowly focus on financial recovery, neglecting equally crucial recommendations addressing organisational management and operational practices," he said.

Federal lawmakers, including MPs Fatuma Ali and Zenaya Negash, echoed these concerns, voicing dissatisfaction with the persistently low recovery ratio. They called for stricter administrative actions to incentivise compliance and deter future financial misconduct.

Yeshimebet Demesa (PhD), chairwoman of the Standing Committee on Public Expenditure Administration & Control Affairs, noted a shortfall in clear communication about audit findings. She pressed for the restructuring of report methods, arguing that many government projects stall due to inadequate feasibility studies and insufficient environmental assessments.

“Parliament expects execution from the Ministry of Finance for internal auditors of institutions to be accountable for them,” she said.

In the latest 2023 audit report covering 124 federal agencies, the Forum identified 14 billion Br in receivables remaining uncollected. The Ministry of Health topped the list, accountable for an unrecovered six billion Br. Other major contributors include the ministries of Irrigation & Lowland Environment and Education, as well as the Federal Buildings Construction Project Office, St. Paul's Hospital Millennium Medical College, Jijiga University, and the Ethiopian Agricultural Research Institute.

Tax collection also suffered notably, with the Ministry of Revenue failing to collect 225 million Br in corporate tax across nine branches. Another 14 million Br in various taxes, ranging from income tax, customs duties, VAT, withholding, and dividend taxes, remained outstanding. Customs authorities notably fell short, with a failure to collect 4.4 billion Br across 10 branches. Individuals owed 410 million Br from the complaint settlements against customs have yet to receive their money.

Procurement irregularities remain an ongoing issue. The audit documented 43 million Br worth of procurements lacking sufficient supporting evidence. No less than 73 federal institutions and 15 branches violated government procurement rules, incurring irregular spending totalling 2.5 billion Br. Twenty institutions overspent their allocated budgets by 1.3 billion Br from various internal and external income sources, while conversely, 101 institutions failed to utilise more than 10pc of their allocated capital budgets, leaving 19.2 billion Br idle.

Getnet Haile, a financial analyst and managing partner at Target Business Consultants Plc, observed that many developed countries empower internal auditors to operate independently from the institutions they oversee. According to him, this autonomy enhances transparency, strengthens compliance, and accelerates financial recovery.

Getnet attributed the persistently low compliance rates partly to lacklustre consequences for non-compliance.

"If there are no consequences, it also means an incentive for others," he warned.

He blamed outdated financial directives affecting audit effectiveness. According to Getnet, these outdated regulations undermine applicability, yet institutions continue to be evaluated against these obsolete standards.

"The directives should evolve with the times and circumstances and remain up to date," Getnet said.

PUBLISHED ON Jun 15,2025 [ VOL 26 , NO 1312]