STATE-OWNED enterprises (SOEs) and parastatals made financial losses running into millions of US dollars in procurement scams where suppliers received prepayments without delivering the goods or services, NewsDay Business can report.
In the new State-owned Enterprises and Parastatals Auditor-General report for the year ended December 31, 2022, acting Auditor-General Rheah Kujinga reported an increase in the number of issues relating to the non-delivery of goods in the procurement process.
In the report, Kujinga noted that these issues had risen to 20 from a 2021 comparative of 13.
“The enactment of the Public Procurement and Disposal of Public Assets Act [Chapter 22:23] brought an improvement in ensuring transparency in procurement of goods and services by public entities as well as ensuring fair, honest, cost effective and competitive procurement and disposal of assets,” she said.
“However, 20 issues relating to procurement of goods and services were noted and most of the issues relates to non-delivery of goods paid for.”
She said that the audit covered aspects on governance issues, revenue collection and debt recovery, management of assets, procurement of goods and services, employment and service delivery.
A look at some of the entities found major discrepancies among these State entities and parastatals.
For example, a look at the report showed that Zimbabwe Revenue Authority lost ZWL$209 million (US$1,685 million) which it paid for procurement of 35 Toyota Hilux double cab cars and 50 Toyota Corolla vehicles on February 24, 2022.
However, the supplier had delivered 15 of the 35 Toyota Hilux and none of the 50 Toyota Corolla vehicles.
Towards the end of 2021, the Tobacco Industry and Marketing Board made payments to suppliers in advance for the delivery of a bus and computers for US$50 500 and ZWL$1,7 million, respectively.
However, the goods had not been delivered by the time of the audit and the Auditor-General said management should insist on advance payment guarantees for all prepayments of significant amounts or payments after delivery.
The audit also found that the Zimbabwe Anti-Corruption Commission, charged with busting corrupt practices, paid ZWL$5,7 million (US$345 918) for the acquisition of 10 motor vehicles.
However, only five vehicles had been delivered as at December 31, 2020, with no evidence to support that the remaining five vehicles were subsequently delivered by the time of the audit. The commission failed to avail to the auditor supporting documents to validate expenditure amounting to ZWL$353 472 (equivalent to US$21 078 at the interbank rate) and there were no invoices and or supplier statements to support the expenditure.
“Revenue collection and debt recovery issues raised emanated from unclassified deposits that are a result of insufficient customer details and absence of debtors’ reconciliations due to inadequate accounting staff,” Kujinga said.
The revenue collection and debt recovery issues raised grew to 37 last year from a 2021 comparative of 12.
Kujinga said the boards of the State-owned entities needed to pay attention to matters raised to improve transparency and accountability by strengthening their internal audit units.
“In this report are instances of weak oversight over internal controls as evidenced by unsupported expenditure, nonalignment of accounting policies and processes with reporting framework (accounting standards), non-acquittal of travel and subsistence allowances, inadequate controls on fuel management, nonperformance of bank reconciliations and non-compliance with tax laws and regulations,” she said.
“I have reported 170 compared to 81 governance issues I raised in 2021.”
The acting Auditor-General said the frequent assessment of internal control systems of these public entities was needed for the governance issues to be addressed.