Audited Consolidated Financial Statements of the GSS – 2022 – In English

This report presents the findings of the Auditor General on the financial statements of the Galmudug State of Somalia (GSS) for the year ended 31 December 2022. The audit was conducted in accordance with ISSAI standards to assess the reliability of financial reporting, compliance with the Public Financial Management (PFM) Act 2017, and the effectiveness of internal controls across government institutions.

The Auditor General issued a qualified opinion, indicating that while the financial statements generally present a fair view of the State’s financial position, significant weaknesses and irregularities limit full confidence in the reported figures.

The key issues underlying this opinion include:

• Payments totalling USD 488,522 made without adequate supporting documentation.
• Revenue amounting to USD 777,742 lacking supporting receipts, raising concerns over accuracy and completeness.
• Procurement transactions of approximately USD 2.45 million not supported by evidence of competitive procedures.
• Misclassification of expenditures amounting to USD 322,726, affecting the reliability of financial reporting.

Despite these concerns, the report notes improvement in revenue performance, supported by increased internally generated revenue and continued fiscal inflows from the Federal Government and donors. However, weaknesses remain in reconciliation processes, with inconsistencies observed between financial systems such as RMS, FMIS, and bank records.

Significant deficiencies were also identified in core financial management areas:

• Bank reconciliations are performed monthly instead of the required daily or weekly basis, increasing the risk of undetected errors. (page 7 table)
• Procurement processes are not consistently compliant with established guidelines, including absence of procurement committees and incomplete documentation. (page 11–12 findings)
• No functional asset management system exists, and physical asset verification is not conducted annually, exposing government assets to potential misuse. (page 13 findings)
• Internal audit functions remain weak, with no audit plan or reports prepared during the year. (page 14 findings)

Follow-up on prior year recommendations shows limited progress, with only 6 out of 19 recommendations implemented, indicating persistent challenges in addressing systemic weaknesses.

Overall, while Galmudug State demonstrates gradual improvements in revenue generation and some aspects of financial governance, critical gaps remain in internal controls, documentation, procurement compliance, and audit functions. Addressing these issues is essential to strengthen accountability, improve financial transparency, and ensure effective use of public resources.