Audited Annual Financial Statements FY 2024, English Version
Puntland State Government (Whole of Government) · Published June 30, 2025
Executive Summary
The audited Annual Financial Statements of the Puntland State Government for the fiscal year ended 31 December 2024, prepared by the Office of the Accountant General and audited by the Office of the Auditor General in accordance with ISSAIs. The Auditor General issued a Qualified Opinion. The basis for qualification includes expenditures of $12,489,662.38 not fully supported by appropriate documentation, and misclassification of expenditure. The report's emphasis-of-matter section highlights discrepancies in closing and opening balances, absence of bank reconciliation, weaknesses in government procurement (single-source awards bypassing open bidding), off-budget funds excluded from the Central Treasury Account, the approved 2024 budget was $395,359,029 while the financial report submitted by the Accountant General reflected only $156,778,675, a lack of a comprehensive debt registry, an incomplete government asset register, and incomplete revenue documentation. Nine UN agencies reported implementing projects worth $123,401,500 in Puntland for which no audited financial statements were provided.
Audit Findings
Incomplete Supporting Documentation of Expenditures ($12.49M)
High RiskAll government expenditure must be fully supported by appropriate documentation identifying the correct beneficiary.
Expenditures amounting to $12,489,662.38 were not fully supported by appropriate documentation and were recorded under incorrect beneficiary names, including $7,564,770.00 confirmed paid by central bank officials but lacking adequate documentation, $1,434,051.70 for travel and medical assistance, $1,173,588.68 processed without the required Expenditure Authorization, and $1,450,000.00 improperly charged to the wrong budget head.
Weak expenditure documentation and authorization controls.
Auditors could not verify that the funds were used for their intended purposes, a basis for the qualified opinion.
Enforce complete supporting documentation and correct beneficiary recording for every payment before processing.
Misclassification of Expenditure
Medium RiskExpenditure must be recorded against the correct budget heads and classifications.
Expenditure was recorded under incorrect classifications, including $1,450,000.00 improperly charged to the wrong budget head.
Weak controls over expenditure coding and budget-head discipline.
The financial statements do not accurately reflect the nature of spending, a basis for the qualified opinion.
Strengthen review of expenditure classification at entry and during monthly closes.
Off-Budget Funds Excluded from the Central Treasury Account ($238.58M)
High RiskThe approved budget should be executed through the Government's Central Treasury for full accountability.
The approved 2024 budget was $395,359,029.00, but the financial report submitted by the Accountant General reflected only $156,778,675.00. The $238,580,354.00 difference arose from funds that did not pass through the Central Treasury, particularly international agencies and local governments.
Donor and local-government funds executed outside the Treasury Single Account framework.
A majority of the approved budget falls outside the audited central accounts, limiting accountability over public resources.
Bring off-budget flows progressively into the Central Treasury Account and require accountability reporting from implementing agencies.
UN Agency Projects Without Accountability Reports ($123.4M)
High RiskFunds implemented on behalf of the public should be supported by audited financial statements or accountability reports.
Nine UN agencies reported implementing projects in Puntland worth a total of $123,401,500.00, but the Auditor General received no supporting financial documentation or audited statements and did not audit those funds.
No framework obliging implementing agencies to submit accountability reports to the supreme audit institution.
Significant development resources remain outside any local audit assurance.
Establish reporting and audit-access arrangements with international implementing agencies.
Weaknesses in Government Procurement
High RiskPublic contracts must be awarded through competitive open bidding unless a documented exception applies.
Contracts including renovations and road works were awarded using non-competitive (single-source) methods, bypassing the required open bidding process.
Procurement rules not consistently applied.
Reduced value for money and elevated corruption risk in public contracting.
Subject qualifying contracts to open bidding and document justifications for any exception.
Discrepancies in Closing and Opening Balances
Medium RiskClosing balances must roll forward accurately into opening balances of the following year.
The audit identified discrepancies between closing and opening balances.
Weak year-end closing procedures.
Reduced reliability of the financial statements.
Implement controlled year-end close with documented reconciliation of carried-forward balances.
Absence of Bank Reconciliation
High RiskGovernment bank accounts must be reconciled regularly against the accounting records.
Bank reconciliations were not performed.
Reconciliation function not operating.
Errors or misappropriation affecting cash balances may go undetected.
Institute monthly bank reconciliations with independent review and sign-off.
Lack of Comprehensive Debt Registry
Medium RiskGovernment must maintain a comprehensive register of public debt.
The Government lacks a comprehensive debt register to track its obligations.
Debt recording framework not established.
Public debt cannot be reliably reported or managed.
Establish and maintain a complete, regularly verified debt registry.
Incomplete Asset Register and Revenue Documentation
Medium RiskGovernment must maintain complete asset registers and revenue documentation.
The government asset register and revenue documentation were incomplete.
Weak record-keeping over assets and revenue collection.
Risk of asset loss and unverifiable revenue.
Complete physical asset verification and enforce full revenue documentation.
Recommendations Tracker
| Ref | Action Required | Status |
|---|---|---|
| R-001 | Channel budget execution through the Central Treasury Account and obtain accountability reports from implementing agencies | In Progress |
| R-002 | Enforce complete supporting documentation and Expenditure Authorization for all payments | In Progress |
| R-003 | Institute monthly bank reconciliations across government accounts | Outstanding |