l have no doubt in my mind that by omitting to engage the affected parties to obtain their submissions on the draft findings, the Auditor General failed to consider all available audit evidence before making his final findings in the Special Audit Report.
By Sean E. Tembo. MBA, BAcc, FCPA FCCA, FZICA [Practicing Auditor].
Lusaka, April 26 – The recently released Special Audit Report of the Auditor General on External Public Debt for the Republic of Zambia for the Period 1st January 2006 to 31st December 2022 has brought about a lot of debate by several stakeholders, with some rubbishing the report while others are praising it.
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As someone who is not only a practicing auditor, but who has owned and operated an audit firm for more than 20 years, l found it necessary to add my voice to this raging debate.
From the onset, l wish to state that it is difficult to ascertain the veracity of the audit findings because we are not privy to the audit evidence that was gathered during the course of the audit.
However, there is something that is outstandingly strange about this Special Audit Report, and that is the assertion by the proprietor of Mikalile Trading Limited, Mr. Stephen Mikalile Mulenga, that his company was never consulted to explain the alleged irregularities before finalization and publication of the Special Audit Report by the Auditor General.
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If this assertion by Mr. Mulenga is true, then it renders the findings of the Special Audit Report highly questionable and further casts a dark shadow on the Auditor General’s motive for publishing such an incomplete report.
It must be noted that a Special Audit Report cannot be considered to be complete without engaging the parties on whom adverse draft findings have been made, and incorporating their explanations verbatim into the report. It is only after incorporating the submissions from the affected parties that such a Special Audit Report can be considered complete and ready for publication.
Another interesting submission by the proprietor of Mikalile Trading Limited is that the US$400 million plus loan extended to Government was pegged at an annualized interest rate of 5.35 percent over a 10 year period, with a 3 year grace period. If this submission by Mr. Mulenga is true, then it casts serious doubt on the Auditor General’s findings in his Special Audit Report that the loan was overpriced, because the 5.35 percent is far lower than the 7 percent or so interest on the Eurobonds. The Auditor General needs to explain why he thinks this loan by Mikalile Trading Limited is overpriced?
Overall, when l read the entire Special Audit Report, l get the feeling that there is an overwhelming desire by the Auditor General to make adverse findings. One of the key requirements of an Auditor is that you need to be impartial and objective.
You need to gather all available audit evidence and then consider it in it’s totality before making a finding. In this regard, l have no doubt in my mind that by omitting to engage the affected parties to obtain their submissions on the draft findings, the Auditor General failed to consider all available audit evidence before making his final findings in the Special Audit Report.
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Therefore, the Special Audit Report of the Auditor General on External Public Debt for the Republic of Zambia for the Period 1st January 2006 to 31st December 2022 is an incomplete report and is not worth the paper on which it is written.
As to whether the Auditor General specifically targeted Mikalile Trading Limited and it’s proprietor, Mr. Stephen Mikalile Mulenga to tarnish their names, l cannot tell as that would call for speculation. Suffice to mention that l find it extremely strange that an experienced and qualified Auditor General would publish an incomplete audit report , if not for sinister motives.
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