Recent audits have highlighted significant concerns over the fiscal management practices of local councils in the Maldives, revealing discrepancies, inadequate record-keeping, and potential financial misconduct that threaten to undermine public trust. As the Maldives continues to decentralise governance, enhancing the financial management and accountability of local councils has become a crucial challenge.
Inadequate Financial Oversight and Management
One of the most pressing issues identified is the failure of local councils to maintain proper financial records, leading to substantial discrepancies in their financial statements. For example, the Maafushi Council’s 2021 financial statement reported an annual revenue of MVR 14.2 million, yet only MVR 1.1 million was recorded in their daily financial ledger, a difference of over MVR 13 million. The council’s reliance on an Excel-based record-keeping system, instead of the mandated ‘Viya’ accounting module, raises serious questions about the transparency and authenticity of its financial reporting.
Similar issues were found in the Thaa Atoll Dhiyamigili Council, where an audit revealed that over MVR 600,000 had gone missing from the council’s safe. The audit report pointed out a lack of documentation to account for these funds, suggesting long-standing problems with financial oversight. The council’s leadership, newly elected in 2021, claims that these issues are a legacy of the past and has pledged cooperation with relevant authorities to rectify them.
Mismanagement and Unauthorised Financial Practices
The Auditor General’s Office has also flagged several councils for engaging in unauthorised financial practices. For instance, Maafushi Council was found to have large amounts of cash stored in its safe, which was used for expenses without being properly deposited into the bank. Additionally, the council failed to manage its bank account balances or conduct necessary reconciliations, complicating efforts to verify its actual financial status.
Issues have also been noted in the management of state assets, such as properties leased by councils without valid agreements and revenues collected from services like issuing National ID cards not being properly credited to central government accounts. This lax management approach has led to significant amounts of money being unaccounted for, with potential repercussions for the local communities that depend on these funds for development projects and services.
Calls for Strengthened Internal Audits and Accountability
In light of these findings, there have been calls to strengthen internal audit processes across all local councils. Minister of Cities, Local Government, and Public Works, Adam Shareef Umar, has highlighted the need to enhance the internal audit mechanisms to detect and rectify errors promptly. He believes that many of the mistakes made by the councils are not intentional but are due to weak financial management capabilities. To address these issues, the ministry has launched a training programme for council employees, aimed at improving their understanding of financial management, state procurement, and administrative practices.
However, these efforts must go beyond capacity-building initiatives. The persistent problems identified by the Auditor General’s Office suggest a need for more rigorous oversight and legal accountability. The government has been urged to conduct regular audits, enforce stricter penalties for non-compliance, and take swift action against any identified misconduct to restore public confidence in local governance.
Towards Greater Transparency and Accountability
The fiscal responsibilities of Maldivian councils are under intense scrutiny, and the current approach to governance needs a radical overhaul to align with principles of transparency and accountability. While some councils have started to take corrective measures, the systemic issues of financial mismanagement, poor record-keeping, and a lack of oversight remain pervasive. As the Maldives continues on its path of decentralisation, ensuring that local councils are fiscally responsible and transparent is not just a bureaucratic necessity but a fundamental requirement for effective governance and sustainable development.
Addressing these challenges is crucial for maintaining public trust and ensuring that local councils are equipped to manage resources effectively for the benefit of their communities.
