Stakeholders, both internal and external needs assurance that goods and services are acquired in line with laid down procedures.
Opinion by Nyasha Chizu
To ensure expenditure is appropriately monitored, there is need for policies and procedures in both, the private and public sector, to regulate the way procurement is conducted. Due to the need to put extra control on the public purse, procurement laws regulate the procurement process.
Shareholders and management require some level of comfort in the way procurement is conducted and, therefore, a procurement compliance audit is necessary.
Flouting of procurement rules as prescribed in the laws, policies and procedures can be deliberate or by ignorance.
Opportunist and morally irresponsible cadres claim that rules are meant to be broken and that there is need to create employment for law enforcement agencies.
Egoism and self enrichment mentality has led to many buyers and their executives to contravene procurement rules for personal gain in the name of business interests.
On the other hand, lack of knowledge or pressure to resolve crisis led to buyers and their managers to break procurement rules.
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Regardless of the motivation, breaking rules can never be sanctified. Systems are there to manage all cases, normal and abnormal.
Therefore, there is no excuse to break rules because of an encounter with an abnormal case.
Compliance auditing is therefore necessary to assure all stakeholders that objectives are being met using appropriate means.
It also ensures that in the public sector, purchases are being conducted in the spirit of the procurement laws and that appropriate regulations are followed.
Apart from highlighting failures to follow rules in a procurement process, a procurement compliance audit flashes out deficiencies in procurement system and procedures.
Irregularities such as fraud and corruption are exposed in the manner goods and services are sourced.
Procurement systems deficiencies include the lack of appropriate procedures to manage a procurement process. In cases where the procedures are available, reluctances to follow those procedures might be exposed.
Human beings have a tendency of breaching procedures. In procurement, the procurement methods adopted might not be in sync with laws, policies or procedures.
Violations also arise in the approval process and the form of tendering. Issues such as tender splitting are exposed by a procurement compliance audit.
Tender splitting is normally adopted to evade a certain type of a procurement process when tender quantities are split to fit into certain thresholds. These issues are only exposed by a procurement compliance audit.
Good corporate governance requires that there is appropriate segregation of duties to allow for control mechanisms in procurement activities. Of late, many boards are taking up the executive role, making procurement decisions on behalf of management.
This dilutes the issues of responsibility and accountability in the procurement management process. To start with, it increases laxity in management since they cannot be pinned down on decisions that they did not make.
Secondly, it demotivates the managers when the board usurps the authority of the executive.
Organisational goals flatter and the nation at large suffer from poor performing economies.
A procurement auditor is interested in reviewing a procurement file. A procurement file can be reviewed pre or post award.
The audit must reveal if the file was complete and up to date, and verifies whether the correspondence tie up with no apparent omissions. Any alterations to the record are checked and verified.
Decisions and their justification need to be clearly recorded. Appropriate procedures need to be followed.
Finally, the audit checks to verify if appropriate authorisation was given.
Procurement compliances must be undertaken to capture the good practices and areas of excellence, as well as malpractice and corruption, or evidence of professionalism in procurement, all of which should be captured in the report with appropriate recommendations.
Nyasha Chizu is a Fellow of CIPS and the CIPS Zimbabwe branch chairman writing in his personal capacity. Feedback: [email protected]
