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National Audit Office, Germany defend report

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The National Audit Office (NAO) and the Germany Embassy have dismissed claims by some quarters that the recently released data analysis report of the government accounts transactions has been fiddled with.

Early this week, government released the initial report on the audit process into government’s transactions spanning the period between 2009 and 2014.

But the data analysis report has received uproarious reaction with some Malawians, including Members of Parliament, claiming that the report is fake and irregular.

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However, both Nao and the German Embassy, which financed the exercise to the tune of €250,000, have come out in defence of the document, arguing that it has not been doctored.

“You may wish to note that the audit report is always signed by the one who prepared it and it is also encrypted to ensure that no one doctors it.

“These safeguards were taken by the preparer (PricewaterhouseCoopers). No one doctored it and this can be confirmed by the preparer,” said Lawrence Chinkhunda, Public Relations Officer for the National Audit Office.

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On the other hand, the German Embassy said the data analysis is not a forensic audit as such “but only the first stage of such [an] audit which does not provide information about the causes, individuals or companies and the amount of money concerned”.

“From the data analysis alone it is not possible to establish the exact amounts or causes of the discrepancies between the government cashbook and other financial records.

“There may be different explanations to the discrepancies and shortfalls uncovered by the analysis. It will require forensic investigations to establish how much of the volume uncovered

in the report has actually been misappropriated and for which variances there are other explanations,” said Katrin Pfeiffer, Deputy Head of Mission and Head of Development Cooperation at the Embassy in Lilongwe.

Pfeiffer said the overall report does not point a finger at any government administration.

Instead, she said, it documents serious weaknesses in Malawi’s public financial management over the entire six-year period covered by the analysis.

“The German Embassy believes that it is in the interest of all Malawians to uncover these weaknesses in order to prevent a further continuation or repetition of cashgate.

“The data analysis is not the end, but only the first stage of the process, which needs to be and will be followed-up by forensic investigations into the causes, individuals/ companies involved and the amount of money concerned,” she said.

Initially, it was understood that the investigation would cover the period between 2009 and 2012 and not 2009 and 2014.

But the Germany Embassy said at no time were the terms of reference for the exercise restricted to 2012.

On its part, the Nao said it has been working according to its 2012 plan to investigate the government accounts all the way from 2005.

The investigation would be split in two phases: between July 2009 and March 2013, which has now been extended into 2014, and between July 2005 and June 2009.

“We identified the risk that if 2014 was not covered some transactions could escape investigation since the period was not covered by the Baker Tilly report [of the investigation of the period between April and September 2013].

“The Auditor General normally assesses these risks and he is empowered by Public Audit Act to reconsider such elements to minimise the risks as has been the case,” Chinkhunda said.

According to the Nao spokesperson, the recently released reconstruction of cash book report could not have contained names until sufficient and reliable evidence is revealed by a full forensic audit that some people committed the crime.

“For your information, if anything happens based on the evidence gathered, these will immediately be referred to law enforcement agencies,” he said.

The German Embassy said Germany is willing to support Malawi in conducting a forensic audit.

“The German Embassy welcomes the Government’s commitment to follow-up the data analysis by forensic investigations into the causes, individuals/companies involved and the amount of money concerned and stands ready to support the Auditor General in this work.

“Germany trusts that the Malawian Government swiftly implements all recommendations to improve public financial management in Malawi to ensure that the national budget is used to the benefit of all Malawians and the development of the country,” Pfeiffer said.

The 52-page data analysis report, titled ‘Final Analysis Report: Reconstruction of the Malawi Government Cashbook for Purposes of Further Investigation’, found that at least K577 billion cannot be accounted for, according to the examined records for the period between January 2009 and December 2014.

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