Malawi Finance And Audit Act

The Malawi Public Finance Management Act (PFMA) and the Public Audit Act (PAA) form the cornerstone of financial governance in Malawi. These acts, alongside their associated regulations, are designed to promote transparency, accountability, and efficiency in the management of public resources.

The Public Finance Management Act provides a comprehensive framework for the budgeting, expenditure, and control of public funds. It establishes the legal basis for the national budget process, outlining the roles and responsibilities of various government entities, including the Ministry of Finance, line ministries, and spending agencies. Key provisions of the PFMA include:

• Budget Preparation and Execution: The act details the procedures for preparing the national budget, parliamentary approval, and subsequent execution. It emphasizes the importance of alignment between policy priorities and resource allocation.
• Expenditure Control: The PFMA prescribes strict rules for controlling public expenditure, including requirements for commitment controls, procurement procedures, and payment approvals. It aims to prevent overspending and ensure value for money.
• Revenue Management: The act covers the collection, management, and accounting of public revenue, including taxes, fees, and other sources of income. It emphasizes the importance of revenue forecasting and preventing revenue leakages.
• Financial Reporting and Accountability: The PFMA mandates regular financial reporting by government entities, including the preparation of annual financial statements. It emphasizes the principle of accountability, requiring public officials to be responsible for their financial decisions.

The Public Audit Act establishes the legal framework for the independent audit of government accounts and operations. The Act empowers the National Audit Office (NAO) to conduct audits of all public entities, including ministries, departments, agencies, and local authorities. The NAO is headed by the Auditor General, who is independent and reports directly to Parliament.

Key provisions of the PAA include:

• Scope of Audit: The act grants the Auditor General broad powers to audit all aspects of public finances, including financial statements, compliance with laws and regulations, and the efficiency and effectiveness of government programs.
• Independence of the Auditor General: The PAA safeguards the independence of the Auditor General by providing security of tenure and ensuring adequate resources for the NAO to carry out its mandate.
• Audit Reporting: The act requires the Auditor General to submit audit reports to Parliament, highlighting any irregularities, weaknesses in internal controls, or instances of non-compliance. These reports are public documents and are subject to parliamentary scrutiny.
• Follow-up and Implementation: The PAA emphasizes the importance of follow-up action on audit recommendations. The government is required to respond to audit findings and implement corrective measures to address identified weaknesses.

Together, the PFMA and the PAA are critical for maintaining sound financial governance in Malawi. While the legal framework is robust, effective implementation remains a challenge. Strengthening the capacity of government officials, improving internal controls, and ensuring timely follow-up on audit recommendations are crucial for maximizing the benefits of these important pieces of legislation. These acts aim to curb corruption, improve service delivery, and promote sustainable development through efficient and responsible use of public funds.