• June 25, 2022 5:20 pm

EDF lied in justifying hiring of unregistered Auditors 

Mar 31, 2022

By Senior Business Editor 

On 26 March, 2022, Malawians woke to the news in the weekend papers which carried forensic audit report carried out by Handsome Mbwana under the banner Fletcher & Evance. 

First thing before anything was to check if the Mbwana firm was registered with Malawi Accountants Board (MAB) or not. 

It was found that his firm was not registered with no any Accountants body in Malawi. But both EDF and Fletcher & Evance have backed the move of hiring Mbwana to conduct forensic Audit.

However a seasoned licensed Audit Expert, who is also a practicing accountant working as an Audit Partner with one of the international audit firms in the country registered with the Malawi Accountants Board (MAB) has punched holes in the press statements issued by both Flether & Evance and Export Development Fund (EDF) accusing them of not only being liars but also charlatans to the public, saying that auditors that are not licensed by MAB in the country are a fraud themselves.

He claims that the statements issued by the two entities is a mockery to efforts made by the then Society of Accounts in Malawi (SOCAM) currently known as the Institute of Chartered Accounts in Malawi (ICAM) together with the Government of Malawi of establishing ICAM and strengthening the Malawi Accountants Board as the Regulatory Authority for all accountants, accountancy profession as well as auditing services in Malawi in order to preserve integrity of accountancy profession in the country. 

He further claimed that MAB has clearly pressed numerous adverts with the local media advising the public to avoid hiring undocumented auditors as they cannot only damage reputation and bring shame to the institution but also cannot stand legal test in any court of law. 

The Audit Expert who apart from possessing a Bachelor of Accountancy Degree from Polytechnic, University of Malawi, FCCA qualification with the Association of Chartered Certified Accounts (ACCA) in England also holds ACFE designation with the Association of Certified Fraud Examiners, (South Africa), refuted the assertions that forensic Auditors are not supposed to be regulated by the Malawi Accountants Board. 

He passionately informed our Reporters that any appropriately qualified accountant would seek to be registered and licensed by MAB and those who are not registered by the Regulator, MAB, are simply fraudsters as they do not meet eligibility criteria for practicing as an auditor in the country and any report issued by such auditors can be challenged in courts. He wondered how appropriately qualified accountants would set up a firm and choose to provide only forensic audit services when they also have a chance of providing other audit services and earn more revenue by being a licensed practicing accountant. In Malawi all the audit firms registered with MAB are capable of providing forensic audit services and therefore, it is not true that provision of the service is exclusive to Fletcher and Evance in the country.

It is disappointing to note that a public institution like EDF decided to engage undocumented firm and an accountant who does not possess practicing license with MAB to provide auditing services as there is a higher risk that taxpayers’ money has been stolen. It is sad to note that reputation of a strategic institution under the Central Bank is greatly impaired because of carelessness of the Board of Directors. EDF should have done the right thing by hiring a licensed auditor and an audit firm registered with MAB. 

The Audit Expert has requested Government not to condone malpractices by unscrupulous accountants as such abuses are intended to undermine the Authority of Malawi Accountants Board which SOCAM already worked tirelessly to deal with by the establishment of MAB and ICAM. He described the press statements as a sham.

It is a requirement by the laws of Malawi to have all accountants in the country registered with MAB through ICAM including student accountants. 

According to the Audit Expert who is also a member of Governance Committee at ICAM, the anchor qualification in any financial forensic audit is accounting skill and other qualifications provided by such professional bodies as Association of Certified Fraud Examiners (ACFE), Institute of Internal Auditors (IIA), Institute of Certified Forensic Accountants (ICFA), Institute of Certified Forensic Auditors (ICRA) are just evidence of additional skills obtained by the auditor. Any audit work is planned and designed by an experienced auditor in accordance with the reporting objectives of the assignment and audit procedures are carried out necessarily in response to the assessed risk.  

Procurement Experts at the Public Procurement and Disposal of Assets Authority (PPDA) have further punched holes in the press statements indicating that the provisions of the Public Procurement and Disposal of Assets Act were not complied with by the EDF as the tender was a restricted tender, when it shouldn’t have been, also solicited by the Board of Directors instead of an Internal Procurement Committee which was not in line with the law. 

A Board of Directors cannot solicit tender, conduct evaluation and approve the same themselves. 

A corporate governance expert at Catholic University has described the press statements as a smoke screen created by an irresponsible Board in order to divert public attention on the serious issues reported to the ACB. He observed that cases of abuse of office and resources at public institutions are ever increasing. 

He demanded that in line with the efforts of fighting corruption being made by His Excellency the state President Dr Lazarus Chakwera, the Board of Directors of EDF must be suspended immediately to allow the ACB to carry out their investigations as it is feared that such Board should be capable of tampering with evidence. 

He further observed that the press statements by the two institutions did not refute or deny the fact that 
Fletcher & Evance is not registered with MAB. 

the people behind Fletcher & Evance are not licensed by MAB. 

the people behind Fletcher & Evance are not members of good standing with MAB and ICAM Members of EDF Board have illegally been receiving tax fringe benefits without even deduction of income tax.

Without regard to abuse of office and conflict of interest, Mr Tim De Borde, Board member, was awarded a commercial contract to sell agricultural commodities on behalf of EDF and has pocket tax free commission of about K20 million.

Tax experts at Income Tax Division of Malawi Revenue Authority (MRA) have since confirmed that fringe benefits are taxable and any non-compliance with the provisions of Taxation Act is punishable by law.

The MRA is yet to confirm actions to be taken by the Authority following the revelations that some officials at EDF have been illegally enjoying tax free status. 

The faulted Management of EDF, informed our reporters that they were not aware of the content of the said report as the Board of Directors of EDF did not share the report with them. 

The Management of EDF also complained and expressed disappointed in the manner in which the report has been handled, mainly as it was deliberately released to the media houses and hence, public at large without being given any chance of looking at the audit queries and provide necessary responses, as should have been the case if the audit was conducted in good faith and with good intentions. 

Management was also surprised to hear from the press that the purported report strangely contains specific recommendations bordering on administrative actions contrary to the professional format in which a meticulous and proficient Forensic Audit Report is written.

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