via Auditors bill Air Zimbabwe $500 000 by Paidamoyo Muzulu April 15, 2014 in NewsDay
THE Air Zimbabwe (AirZim) forensic auditors, BCA, have billed the troubled airline nearly $500 000 since January 2011 for an audit on the financials of the company that has since resulted in the suspension of five senior executives early this year.
The audit company is owned by Budhama Chikamhi, who is the chief forensic auditor for the company.
Sources told NewsDay that BCA was appointed the forensic auditors in January 2011 without going to tender and had been working on the AirZim books for the past three years. The auditors had billed the airline a cumulative $370 562 as of July 2013.
NewsDay failed to establish how much was billed from August to December 2013 and the potential fees to cover the audit from March to December 2013. However, insiders said the fees for that period could be as high as $100 000.
Chikamhi was evasive when contacted for comment.
“We regret to advise that our terms of engagement bind us to confidentiality and we are thus unable to relate our client’s affairs to the media,” said Chikamhi in an email. “Should you require any clarification on any matters relating to the Air Zimbabwe Forensic Audit, please refer your questions to the chairman of the board.”
New AirZim board chairman, Valentine Sinemane was not immediately available for comment.
These new revelations come as BCA was last month asked by the Transport ministry to extend its audit to the period ending December 31 2013.
NewsDay understands that BCA has not yet begun that phase.
Documents in our possession show that up to February 21 2014, BCA had received a total of $284 000 from AirZim. The amounts were paid in batches of $5 000 or $10 000 a week and at times through provision of air tickets. The documents reveal that between May 3 2013 and January 3 2014, BCA received local and regional tickets valued at $3 932.
The tickets were valid for the Harare-Bulawayo and Harare-Johannesburg trips.
All the tickets were return.
The documents further reveal that AirZim still owes BCA $82 630.
BCA has failed to complete the forensic audit in less than six months like what most audits do, sources say, because they did not have adequate and competent staff to undertake the project.
“The lead BCA auditor is not a fully qualified auditor and therefore cannot carry out that kind of work,” the sources said.
The sources added that Chikamhi was getting special treatment because of his alleged links to some senior government officials. Sources said BCA had the advantage of having sight of forensic audits by Ernst and Young (2006) and KPMG (2007) yet it still struggled to complete its audits in reasonable time.
COMMENTS
Who will audit the auditor?
Looks like the auditor is independent and impartial-ahem
US$100,000 a year is a fair price for a national airline. Additionally, the forensic nature of the work will call for a higher price. A US$500,000 audit bill uncovered a financial fraud of US$6 million. The real question should be why the auditor’s report was ignored and only brought to light during this on-going “Salarygate” scandal. If you look at it, lets assume that the average charge out rate is $120 per hour. That would mean that they did just over 4000 hours of audit work over a 5 year period. this adds up to just over 800 audit hours a year. Which is 20 weeks of work. If you have an audit team of 5 people, it would mean that it was 4 weeks of work with a 5 man team. That is pretty standard for a lot of big organizations. Some of the banks in this country take more than 2 months to audit. Of course, looking at a figure of 500k as a lumpsum makes it seem astonishingly high, but when you consider that it is over a 5 year period, it is very reasonable. Audits are expensive exercises and that is why they are usually put to the Annual General Meeting to appoint auditors. The chief forensic officer’s comment refering it to the board chairman is very proper and very professional.