Audit Reveals MVR 2.14 Billion in Government Spending Left Out of 2023 Financial Statements

Omission Raises Serious Concerns About Transparency and Budget Oversight

A newly released audit of the Maldives government’s Consolidated Financial Statements (CFS) for 2023 has revealed a staggering omission of MVR 2.14 billion in third-party disbursements made directly to contractors for major state projects. Although these transactions were properly recorded in the government’s debt management system, they were left out of the official financial records, leading to a significant understatement of total government expenditure.

According to the Auditor General’s report, the payments were related to loan-funded development projects and were recorded in the Commonwealth Secretariat Debt Recording and Management System (CS-DRMS). However, they were never posted in the State’s accounting system (SAP) and therefore not reflected in the Consolidated Financial Statements submitted by the Ministry of Finance.

advertisement

advertisement

advertisement

advertisement

“The exclusion of these substantial third-party payments from the official books means actual government spending for 2023 was materially misstated,” the report said. The auditors warned that had these disbursements been properly recorded, total reported expenditure would have jumped from MVR 55.76 billion to MVR 57.9 billion.

Even more troubling is the fact that the Ministry of Finance had received confirmations of these payments before the statutory deadline for submitting the CFS—April 14, 2024—but failed to incorporate the data into the final statement. This lapse not only undermines the integrity of the financial statements but also raises questions about internal coordination and control.

The omission has also resulted in non-compliance with the Constitution and the Public Financial Regulations, which require that all expenditures be accurately accounted for and kept within the budget approved by Parliament. When the missing payments are added to the books, the government’s expenditure overshoots the approved budget by more than MVR 2.1 billion.

This financial misstep is part of a broader pattern of issues flagged in the audit, including the absence of basic cash balance disclosures, misrepresented budget figures, and poor asset management. But the failure to account for over two billion rufiyaa in contractor payments is seen as one of the most serious findings, given its scale and the implications for fiscal transparency.

While the Ministry of Finance has reportedly begun work on technical improvements to the accounting system, including SAP enhancements for 2024, the auditors have stressed the need for immediate and comprehensive reforms to restore public confidence in the government’s financial reporting.

With such significant funds unaccounted for in the public record, pressure is growing on the government to tighten financial controls, improve reporting standards, and ensure that all expenditures are fully and transparently disclosed in line with national laws and international accounting standards.