The Institute of Internal Auditors (IIA) Malawi Chapter says the PricewaterhouseCoopers (PwC) cashbook reconstruction report has once again exposed the Malawi Government’s failure to keep records and reluctance to embrace and respect the role of internal auditors.
The analysis details all payments, number and value of payments on the Ifmis greater than K1 million (US$2 222) and those not on the Ifmis greater than the same amount, among other things.
In an interview yesterday, IIA Malawi Chapter president Andy Chitete observed that the root of the problems is poor record keeping and management.
Despite most government departments having internal audit functions, the PwC handed over a cashbook reconstruction report that revealed most departments, including the Reserve Bank of Malawi (RBM), that could not supply the auditors with necessary documents for the expenditure transaction totalling K577 billion (US$1.3 billion).
Chitete said the role of internal auditors in institutions was providing assurance that systems are working as expected, risk management and properly advise the powers that be.
He said in the case of government departments and ministries it was the Cabinet and principal secretaries (PSs) of ministries that are responsible for the implementation of risks and red flags that have been noted by internal auditors.
Said Chitete: “Most of the recommendations made by internal auditors are not implemented by those that are charged with duties to implement. Internal auditors have no powers to implement recommendations made.”
An auditor speaking on condition of anonymity also said the report has exposed weak internal controls in public finance management that could have been avoided if authorities acted on red flags raised.
The auditor added that the report also exposes elements of fraud, especially where transactions were created, paid and deleted consistently.
PwC cashbook reconstruction report subtly picked on the RBM for failure to provide enough documents for verification.
Reads the report in part: “Upon completion of the aforementioned exercise, we identified that bank statements for May 2012 were missing and that the statements for December 2013 only contained transactions for 31 December 2013. These aforementioned missing bank statements were requested and the Reserve Bank provided us with additional data.
Even the Baker Tilly forensic audit report also had observed: “We were initially provided with bank statements by the RBM in electronic format whose extraction was not independently supervised by the audit team. In addition we requested extraction of the same data under supervision.”
RBM spokesperson Mbane Ngwira said most of the documents said not to be supplied are just human error omissions not necessarily that the central bank intends to hide information.
He said both Baker Tilly and PwC auditors were given access to all bank’s information without any hindrance.
German Ambassador Peter Woeste told Capital FM radio yesterday that the PwC report pointed out that general public finance management does not work in Malawi.
But Ministry of Finance spokesperson Nations Msowoya said government was not failing to account for such huge money, but rather following the release of the report Capital Hill will provide missing information.
He said: “Where this information is missing it [government] will provide recommendations on how the auditors should deal with the missing information.”