Requirement for external audit reports stirs Malawi NGO Board consultative meeting
Non Governmental Organisations (NGOs) in Malawi say the requirement to submit externally audited annual financial reports to the NGO Board of Malawi, is the main reason some of them are not reporting to the board because they cannot afford fees for hiring independent auditors.
External auditors fees is allegedly very high, ranging from MK2 million to MK4 million.
Sometimes they reportedly charge depending on the hugeness of the amount of money they are auditing.
Representatives of the NGOs have since asked the NGO Board to allow some local organisations especially “smaller ones” to be submitting internally audited financial reports as they are cheaper to prepare.
They said this on Wednesday in the Capital Lilongwe during the third consultative meeting for the development of reporting regulations for NGOs organized by NGO Board of Malawi with technical support from the Ministry of Justice and Constitutional Affairs.
“The requirements for reporting in the NGO Act are clear and I think NGOs would always comply. Maybe the main deterrent factor especially to many local organisations is the fees they must pay for the audited financial reports,” observed Jeannette Wijnants, Country Director for Trocaire.
Robert Mbanga, Executive Director for Youth and Community Development Organization, concurred with Wijnants, adding that NGOs handling less than MK100 million must be considered.
“Just allow them to be submitting internally audited financial reports or attach project audit reports to the other relevant documents. Otherwise, they will continue not to comply,” he said, attracting approval from many other NGO representatives.
Section 22 of the NGO Act compels NGOs in Malawi to submit their audited annual financial reports accompanying returns and technical reports to the NGO Board of Malawi–a state agency which registers NGOs in the country and regulates their operations.
The board then consolidates all the reports of the NGOs and brings them to the attention of the public, development partners and relevant authorities including Parliament in the spirit of promoting transparency and accountability in the NGO sector.
The board is currently complaining of high levels of non compliance to reporting requirements by many NGOs, a situation which prompted it to warn that it would stop issuing annual operating licences to non compliant organisations.
For instance, available information shows that out of 671 registered NGOs in Malawi, only about 184 submitted their reports to the NGO Board in the period covering June 2017 to June 2018.
The current consultative meetings will enable the board to develop reporting regulations to enable NGOs understand the reporting requirements.
NGO Board of Malawi Chief Executive Officer, Voice Mhone, assured the representatives that the concerns of the NGOs will be considered.
“The external audit report fees are indeed exorbitant. In these regulations, we will consider allowing “smaller organisations” to submit internal audit reports as long as they are done by qualified personel within.
“The regulations will also deal with the issue of deadline. The NGO Act is not clear on that one. How many months, grace period should an NGO be given to submit its audited annual financial report and other documents. At what point in time should they now face penalties,” Mhone said.
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External auditing must be a must.
Koma kuba pa Malawi kwafikapo. NGOs operate on gifted funds. They do not generate income. Chovuta ndi chani kupanga include in their budget proposal a provision for external audit fee? Kupepera Basi ndikumaganiza kuti aliyense ndi opusa
If you want to have fake figures you can proceed on the exemptions. There was a reason why external audit requirement was put in the Act. It is just a matter of proper budgeting and how much value is put on the need for the external audit.