Monrovia — An audit by the General Auditing Commission (GAC) has revealed that the Ministry of Finance and Development Planning may be circumventing the approved salary structure by disbursing wages under the “Grants/Transfers” category in the national budget, instead of the standard “Basic Salaries” allocation.
By Gerald C. Koinyeneh, [email protected]
The GAC report warns that this misclassification of expenditures creates a “recipe for fraud”, potentially enabling fraudulent financial reporting if used to conceal over- or under-utilization of funds. It also noted that management could exploit the system to release additional salaries that do not comply with the government’s harmonized pay grade.
In response, the Ministry of Finance and Development Planning (MFDP) acknowledged the audit’s findings but provided context. The ministry explained that some institutions, including Grand Kru Technical College (GKTC), are only allocated funds under the Grants/Transfers (26) category by the Budget Department, rather than Basic Salaries (21). Both salary and operational payments for these institutions are made from their grants allocation.
“Management appreciates the audit observation. Kindly note that there are a couple of institutions that are only allotted ‘Grants/Transfers’ instead of ‘Basic Salaries’ by the Budget Department. Therefore, both salary and operational payments are made to those institutions from their allotted grants,” the ministry said.
The audit further revealed that during the fiscal year January 1, 2024, to December 31, 2024, the government disbursed US$282,846,300 in wages, salaries, and employee benefits, compared to US$301,161,000 in 2023. However, sample transactions showed that US$9,831,337.51 was disbursed to employees at several government institutions—including the National Legislature, Ministry of State for Presidential Affairs, Ministry of Internal Affairs, and MFDP—under Grants/Transfers instead of the salary code, effectively circumventing the government’s salary ceilings.
The GAC recommended that all salary payments be consolidated under Basic Salaries and operational funds under Operational Expenses in the national budget. Only non-compulsory current or capital transfers from other government units or international organizations should be classified under Grants, per the approved chart of accounts.
The MFDP agreed with the recommendations and clarified that “specialized units” within institutions allocated Basic Salaries receive Grants/Transfers because their employees are not on the main payroll. The ministry confirmed it will work with the Budget Department to create Basic Salary codes for all institutions receiving Grants/Transfers and incorporate employees of specialized units into the main payroll.
The report also flagged broader compliance issues: out of 18 ministries and 93 agencies/municipal authorities, 12 institutions—about 9% of reporting entities—failed to submit financial statements necessary for consolidation. These included the University of Liberia (US$31,113,410), Ministry of Internal Affairs (US$17,104,050), and William V.S. Tubman University (US$5,578,630). Many financial statements were not fully compliant with IPSAS Cash Basis or IFRS standards, and several were not submitted to the Auditor General as required by law.
IPSAS Cash Basis is a set of accounting standards issued by the International Public Sector Accounting Standards Board that provides guidance on how governments and public sector entities should record and report financial transactions using the cash basis of accounting. While IFRS is an acronym for International Financial Reporting Standards.
The GAC urged the Office of the Comptroller and Accountant General (CAG) to withhold remuneration of heads and comptrollers of ministries, agencies, and commissions (MACs) that fail to submit financial statements on time. The MFDP has accepted this recommendation and pledged to ensure all MACs comply going forward.
Additionally, the audit showed that reconciled cash balances as of December 31, 2024, amounted to US$27,950,000, suggesting that under-disbursement to 106 entities totaling US$78,289,600 may have limited their ability to achieve mandated objectives.
Experts warn that continued misclassification of salary payments erodes trust in public financial management and could complicate future audits, especially if misclassifications are used to approve salary increases without legislative authorization.
The audit also highlights longstanding challenges: previous GAC reports have exposed repeated shortcomings and misapplication of public resources. Despite recommendations for investigations and prosecutions, little substantive action has been taken. Many audit reports remain stuck in Legislature committees and archives, raising questions about whether the Legislature and Executive are fulfilling their shared responsibility of ensuring effective checks and balances.
As Liberia continues to grapple with fiscal constraints, observers say the audit raises urgent questions about compliance with salary laws, transparency in budget execution, and accountability in public financial management.
