PwC recommends further probe in K92bn Malawi cashgate: ‘Recover deleted database’

PricewaterhouseCoopers (PwC)Advisory Services who were working on methodologies on the reconstruction of the cashbook in the wake of audit query for the K92 billion (US$204.4 million) mismanaged under the watch of the first Democratic Progressive Party (DPP) administration led by former president the late Bingu wa Mutharika, have recommended comprehensive forensic audit.

In the 52-paged report to the National Audit Office of Malawi, PwC has called for further investigations   of ministries and departments covering the period between 2005 and 2012.

Director of PwC, Lionel Van Tonder said in the report seen by Nyasa Times that the content of the data analysis is for “information purposes only and may not form the basis of any criminal, civil, disciplinary or any other actions against any party/ies.”

The auditors recommended that the “variances” identified pertaining to the reconciliation of bank statement transactions to cashbook transactions need to be further investigated.

“The daily reconciliation performed on the Epicor system, matching electronically received bank statements to the previous day’s cashbook, needs to be reviewed. This is a potential control weakness and more comprehensive controls need to be architected to identify possible irregular transactions or ‘red flags’ as they occur,” reads part of the report recommendations.

PwC recommended that the variances of the number of transactions on the bank statement versus the number of payments on the cashbook be reviewed and that the daily reconciliation of cashbook to bank statement process also be reviewed.

“It should be considered to recover all deleted and/or modified database records in order to reconstruct the Cashbook [for the period following March 2010],” recommended PwC.

The auditors noted that the exercise will be “extremely lengthy and complex “as the Auditor General will have to work through millions of transaction logs to further understand the movements of the database.

“The complexity of this task justifies a separate submission which we will do if required,” PwC said in the report.

Identifying what they called “red flags”, PwC stated that suppliers and users created data on one day but deleted either the same day or deleted the following day.

They also pointed out that payments, vouchers and invoices were being created and deleted on the same day.

PwC states that the “anomalies should be further investigated to identify the extent of the suspected irregular transactions.”

Malawi’s Auditor General Steven Kampala said the released data analysis report is a first step towards a full forensic audit which would take approximately 10 months.

Kamphasa said the data analysis had identified discrepancies between payments made from government bank accounts and cashbook records held in the Integrated Financial Management Information System (Ifmis).

“From analysis alone it is not possible to establish exact amounts or causes of the discrepancies nor how many of these funds were misappropriated,” the Auditor General said.

Germany, one of the countries that suspended aid to Malawi after a massive public sector graft scandal in 2012 known as cashgate, granted Malawi  finances about K125 million to conduct the audit into what has been known as DPP-era cashgate

PwC continued from where British auditor Baker Tilly, who uncovered traces of cashgate, left.

‘Cashgate’ denotes the systematic skimming of millions of dollars of money from the government payment system.

Following the Cashgate revelations, donors withdrew aid and Malawi has been operating on a zero-aid budget, a situation that has caused misery to Malawians economically.

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