German Funder Finds Financial Discrepancies at WeHub

Hyderabad: A financial audit conducted by a German organisation has revealed major discrepancies and internal control weaknesses in WeHub's management of funds that the former had allocated for the 'Economic Empowerment of Women Entrepreneurs and Start-ups by Women' (EEWESW) project.

WeHub, which works for women entrepreneurs, took up this project through a grant of 2,10,234 euros from Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). Out of these funds available for the project, WeHub showed an expenditure of 189,351 euros. However, the German organisation’s audit revealed that nearly one-third (30.77 per cent) of the expenditure reported by WeHub was ineligible for the grant as it was spent using incorrect procurement procedures.

Payments amounting to 42,270.11 euros (Rs.37.3 lakh) for external experts and consultants, and 12,090.17 euros (Rs.10.7 lakh) for transportation expenses, were flagged for non-compliance with GIZ's procurement policies.

WeHub did not obtain the necessary number of quotations, and the documentation provided was either missing or inadequate, the audit said.

Additionally, the audit reported expenditures totalling 2,910.17 euros (`2.57 lakh) not based on actual costs. These included expenses related to events and training sessions without sufficient supporting evidence, such as invoices or receipts for event spaces and services.

The audit also highlighted excessive use of cash transactions, which constituted a significant portion of the project payments. These cash transactions, amounting to substantial sums, lacked proper documentation, increasing the risk of fund misappropriation and reducing traceability.

There were also instances of missing or inadequate documentation, such as the absence of purchase orders and discrepancies between vendor names on invoices and payments made.

Internal control weaknesses were another major finding. WeHub did not maintain a robust time recording system, with staff failing to keep timesheets as required. This deficiency hampered accurate monitoring of project resource allocation and expenditure, the report said.

Additionally, WeHub's internal policies did not meet the minimum requirements set by GIZ, leading to further non-compliance issues. The staff responsible for financial oversight were not adequately trained in relevant policies and procedures, contributing to the financial management lapses.

The audit noted significant delays in submitting financial and progress reports to GIZ. The first progress report was delayed by 169 days, and the final narrative report by 18 days, impairing GIZ’s ability to monitor and evaluate the project's progress effectively.

The audit recommended several corrective actions, including improving procurement procedures, ensuring compliance with procurement policies, obtaining the necessary number of quotations, and maintaining proper documentation.

Enhanced record-keeping practices were also advised, such as establishing systematic filing and documentation to ensure all financial transactions are supported by appropriate evidence. Additionally, the audit suggested reducing reliance on cash transactions and implementing stricter controls to enhance traceability.

Deccan Chronicle has previously reported that during the tenure of previous CEO Deepthi Ravula, a political appointee of the previous BRS government, there were several allegations regarding the politicisation of WeHub's operations.

Employees reported that public funds were misused for political events, and there was a lack of statutory audits. There were instances of employees being reprimanded for not aligning with the political directives of the BRS leadership.