MASERU — The most explosive number in Lesotho’s latest public audit is not a budget allocation, not a debt issue, and not even the admitted fraud case. It is a discrepancy. A staggering M3.49 billion gap sits between two parts of the same set of government financial statements.
The Auditor-General’s report on the Consolidated Financial Statements for the year ended 31 March 2023 delivers an adverse audit opinion, the most severe audit judgement possible. In simple terms, it means the financial statements do not fairly present the financial position of the Government of Lesotho.
The audit found that the Consolidated Statement of Cash Receipts and Payments shows that government had a cash balance of M5.71 billion at the end of the financial year. Yet Note 15 in the same financial statements reports a cash balance of only M2.22 billion. The difference between these figures is M3.49 billion.
This contradiction lies at the centre of the Auditor-General’s findings and is one of the key reasons the national accounts were judged unreliable.
“Because of the significance of the matters described… the financial statements do not present fairly the financial position of the Government.” — Auditor-General
The report also reveals inconsistencies in how changes in government cash were reported during the year. Note 15 indicates that cash fell by about M1.61 billion between March 2022 and March 2023. However, the Consolidated Statement of Cash Receipts and Payments reports a decline of only M597 million. The difference between those two figures amounts to roughly M1.01 billion.
The discrepancy suggests that even the basic question of how much government cash increased or decreased during the year cannot be clearly established from the financial statements themselves.
Key figures highlighted in the audit report are summarised below:
| Issue | Amount | Explanation |
| Cash balance discrepancy | M3.49 billion | Difference between M5.71 billion reported cash and M2.22 billion recorded in supporting notes |
| Difference in reported cash decrease | M1.01 billion | Cash decline reported differently in financial statements and notes |
| Problematic opening balance adjustments | M3.476 billion | Adjustments identified during reconciliation of historic balances |
| Overstated cashbook balances | M1.402 billion | Historic cashbook balances found to be overstated |
| IMF PRGF account balance | M973 million | Account later determined to belong to the Central Bank rather than government |
| Blocked Treasury Bills account | M575 million | Balance included in cashbook although transactions were not recorded in government books |
| Domestic debt payments outside IFMIS | M524 million | Debt transactions processed by the Central Bank outside the accounting system |
| Fraudulent payments not accounted for | M8 million | Fraudulent payments awaiting accounting treatment |
| Fraud detected in Consolidated Fund | Over M50 million | Fraud case uncovered during reconciliation of bank accounts |
| Funds recovered from South Africa | M18 million | Money recovered following fraud investigations |
The audit suggests that the billions appearing in discrepancies do not necessarily represent a single missing transaction but rather a pattern of unresolved reconciliation issues accumulated over several years.
Treasury itself acknowledges that a reconciliation exercise uncovered multiple large historic distortions affecting opening balances. These include overstated balances in the government cashbook, accounts later found not to belong to government, and debt payments processed outside the main accounting system.
“These differences compromise the integrity of the consolidated financial statements.” — Auditor-General’s report
The report also indicates that government maintained nearly 300 bank accounts across commercial banks, the central bank and mobile network operators. A large number of accounts can complicate reconciliation and make financial oversight more difficult.
Compounding the concerns, the Accountant General disclosed that more than M50 million was fraudulently taken from the Consolidated Fund during the financial year. Investigations resulted in multiple arrests and approximately M18 million has been recovered.
In addition to the cash discrepancies, the audit identified weaknesses in the reporting of public debt and loan guarantees. Certain liabilities lacked supporting evidence while foreign debt repayments were overstated by more than M131 million.
What an ‘Adverse Audit Opinion’ Means
An adverse audit opinion is the most serious conclusion an auditor can issue on financial statements.
It means the auditor believes the financial statements are materially incorrect and do not accurately reflect the organisation’s financial position.
For a national government, this implies that the reported figures on revenue, expenditure, cash balances or debt cannot be relied upon with confidence.
In practical terms, it signals that major accounting errors, unsupported balances or inconsistencies exist in the financial records.
Adverse opinions are rare and usually indicate deep structural problems in financial reporting and financial controls.
