By Abraham Kapambwe

In a recent audit report for the year ending 2022, the Office of the Auditor General in Zambia unveiled a series of financial irregularities and inefficiencies within local authorities. These findings underscore the urgent need for robust financial oversight and accountability mechanisms. As Zambia strives for greater transparency and efficiency in public sector operations, real-time auditing emerges as a powerful solution. Leveraging advanced Big Data systems like Microsoft Fabric, real-time auditing can revolutionize financial management and ensure the integrity of public funds.

Unveiling the Financial Irregularities

The Auditor General's report paints a concerning picture of financial mismanagement across various local authorities. Key issues identified include:

• Unsupported Payments: Payments totaling K60,648,701 were made without adequate supporting documentation, casting doubt on their legitimacy.
• Failure to Collect Revenue: A staggering K656,899,225 in revenue went uncollected, impacting the financial health of local authorities.
• Failure to Recover Salary Advances: Salary advances amounting to K416,231 were not recovered, leading to financial losses.
• Irregular Use of Accountable Imprest: K421,771 was used for purposes other than those intended, indicating financial mismanagement.
• Unretired Accountable Imprest: K1,198,200 in accountable imprest was not retired within the stipulated time frame, resulting in discrepancies.
• Failure to Collect Revenue from Billboards: K458,325 in billboard revenue was not collected, leading to financial losses.
• Failure to Settle Statutory and Other Obligations: Statutory and other obligations amounting to K3,583,720,728 were not settled, leading to non-compliance and potential legal issues.
• Failure to Settle Staff Obligations: K366,318,647 in staff obligations were not settled, causing employee dissatisfaction and potential legal issues.
• Unaccounted for Stores: Inventory worth K13,857,436 was unaccounted for, leading to financial discrepancies.
• Misapplication of Funds: K11,640,012 was used for purposes other than those intended, indicating financial mismanagement.
• Failure to Reimburse Borrowings: K17,174,909 in borrowings were not reimbursed, resulting in discrepancies.
• Overpayment to Contractor: An overpayment of K23,000 to a contractor had not been recovered.
• Maintenance of Township Roads: Despite a budget provision of K9,406,287, several township roads remain in a deplorable state.
• Irregular Offer of Plots: Plots offered to employees at a discount resulted in a loss of K138,600.

The Promise of Real-Time Auditing

Addressing these financial irregularities requires a transformative approach to auditing and financial oversight. Real-time auditing, powered by advanced Big Data systems like Microsoft Fabric, offers a comprehensive solution. By continuously monitoring financial transactions and operational activities, real-time auditing provides immediate insights and enables prompt corrective actions.

Implementing Real-Time Auditing

Neosoft is ready to assist the Office of the Auditor General in implementing real-time auditing using Microsoft Fabric. By connecting financial and operational databases to Microsoft Fabric, we can provide a comprehensive and integrated view of financial activities. Additionally, we will utilize Power BI tools to monitor financial and operational data in real-time, enabling immediate insights and prompt corrective actions.

Enhancing Documentation and Record-Keeping

Proper documentation and record-keeping are essential for verifying the authenticity and purpose of financial transactions. Neosoft will help the Office of the Auditor General ingest PDF files and Word documents using Large Language Models (LLMs) like OpenAI to assist in monitoring non-compliances. This will ensure that all financial records are properly maintained and easily accessible for auditing purposes.

Strengthening Internal Controls

Local authorities must strengthen internal controls over financial transactions, including payment processing, revenue collection, and fund allocation. Regular audits should be conducted to ensure compliance with established policies and procedures. Real-time auditing will enable continuous monitoring and immediate detection of irregularities, ensuring financial integrity and efficiency.

Improving Revenue Collection Mechanisms

Strengthening revenue collection mechanisms is crucial for the financial health of local authorities. By implementing real-time monitoring systems, local authorities can track revenue collection activities and ensure timely collection of revenue. This will help reduce financial losses and improve overall financial management.

Ensuring Timely Settlement of Obligations

Timely settlement of statutory and staff obligations is essential for compliance with legal requirements and maintaining employee satisfaction. Neosoft will implement automated systems to track and manage these obligations, ensuring timely settlement and reducing the risk of non-compliance.

Conclusion

The Auditor General's report for the year ending 2022 highlights several critical financial irregularities within local authorities in Zambia. Addressing these issues is crucial for ensuring the integrity and efficiency of public sector operations. By implementing real-time auditing, strengthening internal controls, enhancing documentation and record-keeping, improving revenue collection mechanisms, and ensuring timely settlement of obligations, local authorities can significantly reduce financial irregularities and improve financial management and accountability.

Neosoft stands ready to support the Zambian government in implementing these advanced systems, paving the way for a more transparent and accountable public sector. Together, we can build a more accountable and efficient financial system for Zambia, ensuring that public funds are used effectively and transparently.

By adopting real-time auditing, Zambia can significantly reduce financial irregularities, ensuring that every citizen benefits from a more transparent and accountable public sector. Neosoft is committed to providing the expertise and technology needed to make this vision a reality. Together, we can build a healthier and more prosperous future for Zambia.