Export Development Fund embroiled in a bogus forensic audit report scandal

The Board of Directors of the Export Development Fund (EDF), a subsidiary of the Reserve Bank of Malawi (RBM), have been embroiled in a bogus forensic audit report scandal following revelations that they hired a non-auditing and not-registered firm to conduct auditing at the institution.

This was deliberately done to cover up some financial misappropriations, Nyasa Times understands.

The forensic report, which was leaked to media houses to test Malawians’ level of understanding of financial matters and their reaction to the revelations, was done by an non-auditing firm – Fletcher and Evance.

An inside source at EDF told us that the Board of Directors hand-picked Fletcher and Evance, who are not registered as an audit firm in Malawi and also not certified and licensed as Certified Public Accountants by the Regulator, Malawi Accountants Board (MAB) to provide auditing services in Malawi.

Fletcher and Evance were also tasked to conduct forensic audit only on selected transactions, instead of all the transactions EDF undertook during the review period from 2017 and 2020, without following a competitive bid process as required by the EDF procurement procedures. EDF is a public institution and is required to comply with the provisions of the Public Procurement and Disposal of Assets Act.

The documents we have seen shows that Handsome M’bwana, who personally conducted the audit and signed the Forensic Audit Report, is behind Fletcher and Evance, which is not registered as an audit firm in Malawi.

M’bwana is only registered by ICAM and MAB as a resident non-practicing member.

The formal written communication on the matter by both ICAM and MAB further state that the proprietor of Fletcher and Evance has not only been an active member of both MAB and ICAM, but he has also not been renewing membership as an accountant for a number of years including the one for the year 2022.

The purported forensic audit report has made serious accusations against EDF Management of not following laid down procedures in processing lending transactions. It has further faulted the EDF Directors who were holding office that time, for approving such transactions and showing gaps in corporate governance as well as oversight role during the review period.

The report has also condemned RBM Internal Auditors for failing to identify and report serious issues to the Board of EDF during the audit of EDF’s transactions. Fletcher and Evance was paid not less than K25 million taxpayers’ money by the EDF Board as audit fees.

When contacted, the faulted management of EDF informed Nyasa Times 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 has been 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 such as taking disciplinary action against Management and staff of the Fund contrary to the professional format in which a meticulous and proficient Forensic Audit Report is written.

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