News / National
Massive fraud hits City of Harare
08 Mar 2019 at 13:12hrs | Views
AN audit has unearthed massive fraud at City of Harare where unregistered point of sale (POS) machines are being used to carry out billing transactions outside the municipality's official financial systems, raising fears of substantial revenue leakage.
The internal audit conducted by City of Harare audit manager Archibald Nyamurova has revealed that some officials supplied council's district offices with POS machines without going through the finance department.
There are fears that council did not benefit from transactions which were processed using the 19 machines, according to the findings of council's audit committee.
Minutes of the meeting seen by the Zimbabwe Independent indicate that the audit, which covered all of Harare's 43 district offices, also established that some of the machines had dual identification codes, making them vulnerable to abuse and manipulation.
The meeting, held at Town House on February 14 this year, was chaired by Ward 18 councillor Ian Makone, his deputy, Ward 43 councillor Panganai Charumbira, town clerk Hosiah Chisango and other senior municipal officials.
The unregistered POS machines have been operated for more than two years, the audit found out.
"The audit manager reported that some of the bank officials went straight to the district offices to deliver point of sale machines without going through the finance department, hence audit could not get a record of register of such machines, except for Glen View and Budiriro. A 100% stock count of 43 district offices and other council revenue-collecting centres revealed a total of 188 point of sale machines, there were 19 POS Machines that were located on district offices but could not be found on the bank list," minutes of the meeting read.
After checking individual banks against their BIQ cashbooks, council officials established that the transactions could not be traced as the POS machines were not linked to their respected cash books. BIQ is a German-developed electronic accounting system which the City of Harare adopted in 2010 to manage its financials, but has never been fully operationalised.
The system captures all of the city's transactions, from water bills and rates payments to all procurements and any other payments that the city could make.
The audit discovered that transactions made using the unregistered POS machines did not reflect in the BIQ system.
"Audit checked on all the six banks (FBC, Steward Bank, Ecobank, BancABC, CABS and CBZ) using client's duplicate receipts and merchant copies to trace sampled transactions for POS machines ID to debtor's account, bank account and cash book. However, the procedure did not yield the intended results as the POS machines were not linked to their respective cashbooks. It was noted that some of the banks did not have corresponding BIQ cashbook, hence audit could not extract the BIQ cashbook for such banks," the audit found.
The audit manager also advised that efforts to trace the FBC July 2017 transactions to the respective bank were made impossible by the book-keeping policy that allowed all transactions to be recorded in the same cashbook without highlighting which bank the money was being transferred to, hence the reconciliation for FBC Bank for that period was not checked.
"Cashiers were allowed to use one cashbook per day despite having a number of POS machines from different banks. For instance, a cashier who opened the day to use CABS BIQ Cash Book will have all transactions for the day hitting CABS BIQ cash book despite also having used FBC or Steward POS Machines. This made it impossible to reconcile the accounts.
"Some of the banks with which the city holds or is using their point of sale machines do not have corresponding BIQ cash book. Audit could not extract the BIQ cashbook for FBC, Ecobank and Steward banks. This means the transactions from such bank accounts are being posted into the cashbook which will be in use on the day."
City of Harare corporate communications manager Michael Chideme said the actual prejudice has not yet been established.
"I cannot give you an estimate figure as it can be way above or below the mark. You can only get the figures during the next committee meeting," he said.
The internal audit conducted by City of Harare audit manager Archibald Nyamurova has revealed that some officials supplied council's district offices with POS machines without going through the finance department.
There are fears that council did not benefit from transactions which were processed using the 19 machines, according to the findings of council's audit committee.
Minutes of the meeting seen by the Zimbabwe Independent indicate that the audit, which covered all of Harare's 43 district offices, also established that some of the machines had dual identification codes, making them vulnerable to abuse and manipulation.
The meeting, held at Town House on February 14 this year, was chaired by Ward 18 councillor Ian Makone, his deputy, Ward 43 councillor Panganai Charumbira, town clerk Hosiah Chisango and other senior municipal officials.
The unregistered POS machines have been operated for more than two years, the audit found out.
"The audit manager reported that some of the bank officials went straight to the district offices to deliver point of sale machines without going through the finance department, hence audit could not get a record of register of such machines, except for Glen View and Budiriro. A 100% stock count of 43 district offices and other council revenue-collecting centres revealed a total of 188 point of sale machines, there were 19 POS Machines that were located on district offices but could not be found on the bank list," minutes of the meeting read.
After checking individual banks against their BIQ cashbooks, council officials established that the transactions could not be traced as the POS machines were not linked to their respected cash books. BIQ is a German-developed electronic accounting system which the City of Harare adopted in 2010 to manage its financials, but has never been fully operationalised.
The audit discovered that transactions made using the unregistered POS machines did not reflect in the BIQ system.
"Audit checked on all the six banks (FBC, Steward Bank, Ecobank, BancABC, CABS and CBZ) using client's duplicate receipts and merchant copies to trace sampled transactions for POS machines ID to debtor's account, bank account and cash book. However, the procedure did not yield the intended results as the POS machines were not linked to their respective cashbooks. It was noted that some of the banks did not have corresponding BIQ cashbook, hence audit could not extract the BIQ cashbook for such banks," the audit found.
The audit manager also advised that efforts to trace the FBC July 2017 transactions to the respective bank were made impossible by the book-keeping policy that allowed all transactions to be recorded in the same cashbook without highlighting which bank the money was being transferred to, hence the reconciliation for FBC Bank for that period was not checked.
"Cashiers were allowed to use one cashbook per day despite having a number of POS machines from different banks. For instance, a cashier who opened the day to use CABS BIQ Cash Book will have all transactions for the day hitting CABS BIQ cash book despite also having used FBC or Steward POS Machines. This made it impossible to reconcile the accounts.
"Some of the banks with which the city holds or is using their point of sale machines do not have corresponding BIQ cash book. Audit could not extract the BIQ cashbook for FBC, Ecobank and Steward banks. This means the transactions from such bank accounts are being posted into the cashbook which will be in use on the day."
City of Harare corporate communications manager Michael Chideme said the actual prejudice has not yet been established.
"I cannot give you an estimate figure as it can be way above or below the mark. You can only get the figures during the next committee meeting," he said.
Source - the independent
