FY 2025 Annual Audit Report (Xisaab-Xirka 2025), Somali Version

All government expenditure must be fully supported by complete documentation identifying the correct beneficiary, per Articles 11(2) and 33(4) of the Public Financial Management Law No. 09 of 15 August 2023.

Expenditures totalling $21,390,477.60 were not fully supported. Of this, $5,876,195.55 was recorded in PFMIS as transiting the Government Bank for onward transfer to the beneficiary — the system did not show the final recipient. A further $15,514,282.05 lacked complete documentation: $7,360,743.00 was paid without the required payment or expenditure request, and $8,153,539.05 was paid on incomplete requests missing required signatures and approvals.

Weak controls over expenditure authorisation, documentation requirements, and PFMIS data entry discipline.

The existence, accuracy, and purpose of the affected expenditure could not be fully verified — the primary basis for the Qualified Opinion.

Government must maintain a complete and accurate register of all public debt obligations in accordance with Articles 36, 40, and 42 of the PFM Law.

Debts formally submitted to audit totalled $16,354,587.86 (construction contracts: $4,907,423.17; personnel rights arrears: $12,273,115.69). However, additional obligations not recorded in official debt registers were identified during audit, including amounts owed to Hantaara, electricity, water, internet service providers, and Gondogooye company.

Absence of a unified, comprehensive debt register and weak controls over recognising and recording all government liabilities.

The financial statements do not fully present all government liabilities, understating actual public debt and limiting debt management oversight.

Financial management information systems must produce data that accurately matches actual cash balances, revenue collected, and expenditure paid.

The audit found that PFMIS and PUNTCAS data did not fully reconcile with actual revenue, expenditure, and bank balances. The financial statements rely heavily on outputs from these two systems, making their accuracy critical.

Insufficient system controls, incomplete data entry, and lack of regular automated or manual reconciliation between system records and bank statements.

Reduced reliability of financial reporting; potential for undetected errors or misstatements in government accounts.

Government contracts must be awarded through competitive open bidding with full documentation (planning, competition, evaluation, selection committee reports) per Article 5(1) of Procurement Law No. 8 of 16 August 2000.

Contracts totalling $7,098,793.00 related to infrastructure development and government services were processed without the required procurement documentation — no planning records, competition evidence, evaluation reports, or selection committee minutes were available.

Non-application of procurement rules and insufficient oversight of contracting processes across ministries.

Reduced value for money, elevated corruption risk, and legal non-compliance in public contracting.

Required withholding taxes must be deducted from applicable government payments per Tax Law No. 11 of 20 December 2023. Revenue must be fully documented and deposited promptly per Revenue Law No. 10 of 1 October 1999.

Withholding taxes were not deducted from some government payments. Revenue documentation for a portion of collected revenue was incomplete. Some government revenue was held in cash beyond the legally permitted period before being deposited into government accounts.

Gaps in payment processing controls, incomplete enforcement of revenue regulations, and inadequate supervision of revenue collection officers.

Loss of government revenue, non-compliance with tax legislation, and reduced accountability over collected funds.

Government revenue collection should meet approved budget projections; significant shortfalls require investigation and corrective action.

Revenue collected in Raas Caado (Raascasayr) declined by approximately 61% compared to the prior year. Mudug declined by approximately 11% and Nugaal by approximately 6%. Some districts had zero revenue recorded in FY 2025 despite having reported revenue in FY 2024.

Possible combination of economic conditions, weaknesses in regional revenue administration, and gaps in oversight of district revenue collection.

Material shortfall in regionally-sourced government revenue, reducing funds available for public services.

Management is expected to implement audit recommendations in a timely manner to strengthen financial controls and reduce recurring risks.

Of the eight recommendations issued in the FY 2024 audit report, six were not implemented at all and two were only partially implemented. The unimplemented recommendations cover expenditure documentation, bank reconciliation, procurement compliance, Central Treasury channelling, and debt register completion.

Insufficient prioritisation of audit follow-up, lack of accountability mechanisms for implementing recommendations, and capacity constraints.

Recurring weaknesses in financial management — the same deficiencies identified in FY 2024 reappeared in FY 2025, compounding fiscal risk.