This report presents the findings of the audit of the Jubbaland State of Somalia (JSS) financial statements for the year ended 31 December 2024, conducted by the Office of the Auditor General in accordance with the Public Financial Management Act 2017 and the Audit Act 2016 . The audit provides an independent assessment of financial performance, compliance, and internal control systems.

The financial statements report total revenues of USD 43,746,596 and total expenditures of USD 44,627,691, resulting in a budget deficit of USD 881,093 . Despite the preparation of the statements in accordance with IPSAS cash basis standards, the Auditor General issued a modified (qualified) audit opinion, indicating that material issues affect the reliability and completeness of the financial information.

The audit identified significant weaknesses in revenue management. Approximately USD 4.19 million (10%) of total revenue was only partially supported, while an additional USD 1.09 million (2%) lacked any supporting documentation. Revenue collection processes remain largely manual, exposing the system to risks of leakage, inaccuracies, and misreporting.

Expenditure controls remain inadequate. A total of USD 2.83 million (6%) in expenditures lacked evidence of occurrence, while USD 1.17 million (3%) lacked evidence of delivery or service completion. Additionally, security-related expenditures amounting to USD 4.04 million (9%) were unsupported and could not be traced to beneficiaries. Salary payments for teachers and health workers also lacked supporting timesheets, further weakening accountability.

Procurement practices were found to be non-compliant with established regulations. Several transactions that required competitive procurement methods were processed through single sourcing without justification. Similarly, concession agreements reviewed during the audit lacked evidence of competitive selection and adequate government oversight.

Budget execution and financial management processes exhibit notable deficiencies. A significant variance between budgeted and actual revenues was observed, alongside the absence of required contingency provisions and weak bank reconciliation practices. These shortcomings undermine fiscal discipline and planning credibility.

Institutional control systems remain weak. The audit identified the absence of a centralised fixed asset register, ineffective internal audit functions, and critical gaps in ICT governance, including the lack of an IT strategic plan, disaster recovery framework, and formal system management procedures.

Follow-up on prior audit recommendations remains limited, indicating weak enforcement and accountability mechanisms. Overall, the findings demonstrate that while a legal and regulatory framework exists, compliance and implementation remain inadequate, and internal controls have not significantly improved.

The report concludes that these weaknesses pose substantial risks to financial integrity, transparency, and effective public resource management, thereby justifying the modified audit opinion issued by the Auditor General.