Controversy has erupted over the legality of Minister of Finance Dr. Situmbeko Musokotwane awarding foreign owned and private audit firms Grant Thornton – GT and PriceWaterhouseCoopers – PwC multi million Kwacha audit and arrears verification contracts that includes audits related to defense and security wings of Zambia.
The contracts have been awarded at the expense of using government’s own Office of the Auditor General – OAG, after revelations that the office is unable to conduct the required works within expected timelines. A source at OAG told the Zambian Business Times – ZBT that it’s misleading to say the OAG is unable to do the work.
The use of the Office of the Auditor General would not only have saved the government some funds as private audit firms are generally more costly, but would have ensured that access to sensitive government information is safeguarded with the audit reports rendered being reported via the established governance channels and be made public through existing legal provisions.
Concerns were raised in parliament that Zambia risked its national security by engaging foreign owed, foreign associated and privately owned audit firms that may end up passing on sensitive information to their foreign associates.
These concerns relate to the private firms are part of a global network and their systems are that information is shared and this risks Zambia exposing its sensitive information that may in future be used against the country.
In responding to public concerns, Finance Minister Dr. Situmbeko Musokotwane revealed when giving his ministerial statement that the total contract value awarded to private audit firms is about $1 million (about K16.8 million). He Stated that a total of six audit firms and not just GT and PwC were engaged.
The Finance Minister stated that audit firms were engaged to verify domestic arrears are Grant Thornton – GT will audit arrears related to goods and services, PriceWaterhouseCoopers – PwC will audit arrears on road contracts and Ernst Young – EY that will audit fuel arrears.
Other firms engaged are local and include CYMA chartered accountants will audit arrears related to Farmer Input Support Program , Mark Daniels will audit Value Added Tax – VAT refunds and Client Focus will evaluate awards and compensation
The finance minister did not however reveal details of how much each firm contract value was but some local audit firms that were left out say the government disproportionately gave preference to foreign owned or foreign associated firms. Other concerns relate to related party transactions due to the fact that the head of state President Hakainde Hichilema once served as Managing Partner at GT.
Leader of Opposition Brian Mundubile however stated that the real issue is not the audit of arrears but the audit of defense forces, security wings and sensitive institutions by foreign owned or foreign associated private firms.
A ministry of finance source who is not authorized to speak to the press and asked for their details to be withheld told ZBT that opposition members of parliament especially from the former ruling party – PF are jittery over the audit as some of the illegal deals were done through the security wings. Efforts to get comments from the foreign owned or associated audit firms, ministries of defense and home affairs are underway by press time.
