INSIDE FORENSIC ANALYSIS REPORT

Forensic auditors will now have to further pore over Malawi Government data to investigate what happened to payments amounting to K577 billion (US$1.3 billion) that are shown in bank statements, but cannot be traced in Capital Hill’s cashbook.

This is one of the key findings of the PricewaterHouseCoopers (PwC) examination of public finances from January 1 2009 to December 31 2014.

The National Audit Office (NAO) subcontracted PwC to carry out the exercise that would lead to a forensic audit that could take as long as 10 months.

The data analysis that has culminated into a 52-page report titled Final Analysis Report: Reconstruction of the Malawi Government Cashbook for Purposes of Further Investigation, which The Nation saw on Tuesday is dated May 15 2015.

Finance, Economic Planning and Development Minister Goodall Gondwe submitted the report—initially assumed to be the ‘K92 billion (US$204.4 million) Forensic Audit Report’—to Parliament yesterday.

The submission came amid accusations that the Democratic Progressive Party (DPP) administration wanted to downplay the report ostensibly because part of the potential mismanagement may have happened under their watch with the late Bingu wa Mutharika as president.

To arrive at the unaccounted for K577 billion, PwC says it analysed 1 788 295 bank statement payments between January 1 2009 and December 31 2014 and matched this against the total number of payment entries on the cashbook, which were found to be 1 007 075. Thus, 781 220 transactions were not accounted for in the Cashbook.

The report says the total value of payments on the bank statement during the five-year period amounted to K1.85 trillion (US$4.11 billion) while the total value of cashbook entries during the same period stood at K1.27 trillion (US$2.82 billion).

This, says PwC, amounts to a shortfall of K577. 2 billion or 31 percent of payments reflected on the bank statements, but not on the cashbook. Of this amount, K217 billion (US$48 billion) involved payments above K1 million (US$2 222).

The analysis report details all payments, number and value of payments on the Integrated Financial Management Information System (Ifmis) greater than K1 million and those not on the Ifmis, among other things.

PwC, hired by the German government to work with the Auditor General’s office, assigned two teams—one from South Africa and another from the Malawi office.

The firm also said it analysed various ministries and government departments, with the Ministry of Agriculture, Irrigation and Water Development having the highest amounts of payments missing from the cashbook in 2009.

Other major culprits were ministries of Lands and Local Government and Rural Development.

The analysis also notes deliberate efforts to delete important data from the system and specifically mentioned the following suspicious actions as “red flags” requiring further investigation:

• Suppliers created on one day but deleted either the same day or the following day;
• Payments created and deleted on the same day;
• Invoices created and deleted on the same day; and,
• Vouchers created and deleted on the same day.

The report has come into the public sphere after pressure from opposition legislators.

Gondwe’s proposed 2015/16 National Budget currently being scrutised in Parliament faced threats of being shot down by mainly opposition members of Parliament (MPs), who demanded the ‘K92 billion forensic audit report’ be debated in the National Assembly first.

However, yesterday the MPs were still in the dark about its contents as Parliament adjourned.

In a June 19 statement, Auditor General Stephenson Kamphasa said the analysis had identified significant discrepancies between payments made from government bank accounts and cashbook records held in Ifmis.

The report comes hot on the heels of a forensic audit report by British firm Baker Tilly that established that K24 billion was looted from Capital Hill between April and September 2013 under the administration of Joyce Banda and her People’s Party (PP).

AUDIT REPORT MALAWI.pdf by John Richard Kasalika