EDITORIAL COMMENT: Stopping corruption crucial as jailing the corrupt

In the upper reaches of the private sector, the larger companies listed on the Zimbabwe Stock Exchange, the annual report of the external auditors is considered very important and has to be included in the company’s annual report so becoming a public document.

The auditors are not concerned with how money was earned or spent.

That is the job of the directors and the managers. But what they are very particular about is that the proper internationally accepted rules on a wide swathe of matters are followed.

The rules cover things like the valuation of assets, the internal procedures in receipting and purchasing, the security of IT systems, and the steps taken to ensure that thieves and embezzlers cannot drain the company dry.

Even if everyone is totally honest there are usually a pile of recommendations that need to be implemented, some minor and some major, as the accountancy rules considered best practice are turned into the detailed procedures at each company, right down to how a new pencil is bought.

In turn those rules are the result of building on decades of experience.

Audits might have just started as checking to see whether proper accounts were kept but have developed into examining how systems have been constructed and how they work.

Ideally an accounting system should provide in real time clear information of just how a company is doing and, when it comes to fighting dishonesty, make it as near to impossible as is practical for a dishonest person to do any damage.

When it comes to spending money, or choosing a supplier or contractor, not only can the accounts, and so the independent auditor, discover who made the decision, and how they made it, but can also discover if the decision-making system itself was a good one and was followed.

For a wide swathe of the public sector the Auditor General performs the identical function, going through the accounts, checking not only how they have been kept but the very systems that back them up and checking that the rules and regulations have been followed.

There was a time when these audit reports were taken very seriously indeed, in some ways even more seriously than in the private sector since careers in the public sector often could be destroyed if the rules were not followed.

In any case as the money and assets involved were the people’s money and assets, rather than belonging to some private individuals, there was a general feeling that those entrusted with public money needed to be extra careful.

We then entered a period where these reports mattered less and less, and to a large extent were ignored or even left unread gathering dust. Part of this was the “who cares?” syndrome, part of it was the decline in the watchdog systems.

There was a time when Parliament’s Public Accounts Committee would spend an entire Parliamentary years going through the Auditor General’s report, hauling in the top civil servants and other public entity managers, demanding explanations and wanting to know, in some detail, what had been done to implement remedial action.

If very little had been done by the time the committee was sharpening its claws, there was another set of harsher questions over why.

But things are now starting to return to the normal that should be expected.

The Public Accounts Committee is getting back into its stride, with even sub-committees dealing with various areas. Stopping corruption at source is in many ways even more important than catching and jailing the corrupt.

Now the Zimbabwe Anti-Corruption Commission is becoming more active in the measures needed to prevent corruption, rather than just trying to nail those who are corrupt.

This makes sense. If corruption becomes very difficult, and actions that can be considered corrupt or an abuse of public office have to leave records, then it becomes much easier to prevent corruption and to catch those who fall into temptation.

ZACC reckons a good starting point is the report of the Auditor General into each entity, and these are ministries, local authorities and parastatals.

As with the private sector such reports, even for an entity where no wrong-doing is alleged, will contain a wealth of recommendations that will bring that entity into the upper levels of modern accountancy best practice.

For obvious reasons these recommendations need to be followed and implemented, and preferably implemented willingly and enthusiastically rather than grudgingly.

In general a public entity should be a shining light when it comes to compliance, rather than second-best or tenth best.

At the same time it is necessary that the Auditor General is given the backing she needs, and that includes her staffing requirements. She should not be an “also ran” in the budget, but a critical office that is properly funded and staffed so she can do her job in preventing malpractice as much as possible and being able to establish the precise paper trail when such malpractice does occur.

ZACC is also, as part of its preventative function, setting up integrity committees in at least 26 parastatals and state-owned companies, with the first 26 to be operational by the end of next month.

Not all of these concerns use the Auditor General for their audits; some use private accountancy firms.

But all of them are audited and it seems obvious that these integrity committees will need to be work with the recommendations of their auditors, as well as with ZACC, to ensure that corporate cultures and corporate systems make corruption very difficult and make dishonesty easy to detect, a major deterrent.

ZACC are to be congratulated for their efforts to go far beyond the chasing down of criminals and to be investing time and effort on preventing crime as well.