The forensic audit conducted by the RSM Risk Assurance Services LLP of the United Kingdom covering the period 2009 to 20114 has recommended further work on 38 of the 50 cases the firm examined.
In its 10 key findings, the audit report, which Weekend Nation has seen says it was engaged to provide support to the National Audit Office (NAO) production of 50 case files of businesses suspected of receiving Government of Malawi (GoM) funds without supplying legitimate goods or services or works and in so doing using artificially inflated invoices.
The report says using the reconstructed cashbook the firm applied risk criteria to identify organisations and payments of interests for further investigation.
“Businesses and transactions selected do not indicate guilt or innocence but merely provide possible warning signs of fraud,” it says.
To date, it says, NAO had issued 166 subpoenas and 31 requests for information from MDAs. However, of these a total of 208 bank accounts based in Malawi relating to the 50 suppliers have been identified.
To protect the legal integrity of this process, it has not released the names of the businesses subject of this audit work. At the time of issuing this report, 13 cases files had been referred to the Auditor General for onward transmission to the Anti-Corruption Bureau (ACB), says the report.
“Although in relation to the current assignment, our work has now been concluded, we believe that further support should continue the on the remaining 38 cases,” it says.
Subpoenas were issued to all 11 commercial banks to determine how many bank accounts the 50 suppliers held. To this effect, it received responses from all the 11 banks operating in the country with the first and last one being on March 4 2016 and April 20 2016, respectively.
From this exercise it found that the 50 suppliers held 208 bank accounts.
It says with regard to specific subpoenas, it received responses from seven commercial banks which also provide the audit firm varying levels of cooperation.
“Of those which supplied information, the RSM received varying degrees of cooperation in tracing transactional information such as cheque images and foreign exchange information.
But the audit firm did not receive email or written replies from NBS, OIBM and MSB and recommends that the government should therefore consider how it deals with the non-compliance of these banks, it says.
In an interview NAO spokesperson Rabson Kagwamminga said initially all the banks appearing in the report did not respond to the NAO call.
“However, some have now started responding following the issuance of fresh subpoenas. The Auditor General decided to issue fresh subpoenas because some of the banks indicated that they did not get the initial ones. We have since given them a timeframe within which to respond. The AG will, therefore, wait until the lapse of that time before any action can be taken on those that do not comply.