THE Internal Control Institute of Zimbabwe (ICIZ) chief executive officer Proctor Nyemba says procurement fraud is one of the country’s biggest financial crimes.
Procurement continues to be characterised by leakages in government revenue contributing to the country losing US$1,8 billion annually, according to official estimates.
In an interview with businessdigest at the recent ICIZ’s three-day Loss Control Summit, in Nyanga, Nyemba said: “Procurement fraud is one of the biggest frauds in our country.
It is one of the biggest white collar crime cases in our country.
“(There is) procurement fraud and contract fraud. And, as you can see right now, our government has got a good vision of ‘Vision 2030’ and we are riding on contracts.
“But, some pricing of the contracts are not being done in a procedural way. And sometimes a person is quoting ZiG10 billion for a project to be done, but if you look at the real pricing of the project, it is ZiG1 million.”
He said the government was losing a lot of money.
“We are happy that PRAZ (Procurement Regulatory Authority of Zimbabwe) has come to take the ‘jaguar’. But it’s not easy for PRAZ to do it on its own. It has also to work with the loss control practitioners to make sure that we win the game.”
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Over the past few years, the Auditor General’s office has noted that poor procurement practices within the government and parastatals is causing significant amounts of revenue to disappear from Treasury coffers.
Despite the many recommendations given by the Auditor General’s office, the government and its entities have failed to implement them.
ICIZ chairperson Danisa Chinamasa said loss control facilitates the effective operation of an organisation by enabling it to respond in an appropriate manner to significant business, operational, financial, compliance and other risks to achieve its objectives.
“This includes safeguarding of assets and ensuring that liabilities are identified and managed,” he said.
Chinamasa said loss controls also ensure the quality of internal and external reporting, which in turn requires the maintenance of proper records and processes that generate a flow of timely, relevant and reliable information from both internal and external sources.
“It ensures compliance with applicable laws and regulations and also with internal policies,” Chinamasa said.
He said controls should be in place to ensure that processes flow smoothly and operations are free from disruptions.
“This mitigates against the risk of inefficiencies and threats to the creation of value in the organisation,” Chinamasa said.
“A comprehensive approach to his objective should consider all assets, including both tangible and intangible assets. An organisation cannot produce accurate financial statements if its financial records are unreliable.”
He said systems should be capable of recording transactions so that the nature of business transacted is properly reflected in the financial accounts.
“Organisations should be able to fulfil their legal obligations to submit their accounts, accurately and on time. They also have a duty to their shareholders to produce meaningful statements,” Chinamasa said.
“Internal controls may also be applied to management accounting processes, which are necessary for effective strategic planning, decision-taking and monitoring of organisational performance.”
He said even small businesses with simple organisation structures fell victim to these violations.
“But, as organisations increase in size and complexity, the nature of fraudulent practices becomes more diverse, and controls must be capable of addressing these,” Chinamasa further stated.
