Client: Department for International Development (DFID)
Requirement: Risk Advisory
Location: Southeast Africa
Lead Partner: Richard Smith
Complex financial review
RSM were engaged by DFID to provide forensic audit and system security audit services support to the corresponding national audit office (NAO) following the discovery that over 500 lines of accounting entries had been deleted from the financial system.
During the course of the audit work, analysis was conducted of 11 main bank accounts across a six month period which contained in excess of 360,000 transactions.
We identified high value, duplicate and suspicious payments and case files were prepared for 59 businesses.
Potential thefts of up to $42m were also identified and audit work included reviewing complex financial transactions and asset tracing through multiple bank accounts across various jurisdictions.
Identifying the mechanics of fraud and mitigating risk
- International aid worth $150m was suspended pending investigation
- Quantification of loss by the identification of different types of ineligible expenditure
- A list of all the businesses to which ‘Cashgate’ cheques were paid and instances where individuals paid or received these monies from more than one business linked to ‘Cashgate’
- Links between businesses that banked ‘Cashgate’ cheques and parliamentary candidates running in the 2014 General Elections
- The names of individuals who received, withdrew or paid monies linked to ‘Cashgate’ cheques
- Analysis of the cheque numbers that linked to the deleted accounting entries
- A detailed breakdown of the cash withdrawals made across all the businesses that received and banked ‘Cashgate’ cheques then withdrew the funds in cash
- Identification of 16 transfers between businesses that received ‘Cashgate’ cheques, a total of USD 1,410,722
- Lack of withholding tax (WHT) payments
- Significant weaknesses in the IT control environment
Our work assisted local law enforcement in assessing quantum for criminal benefit, securing successful convictions and recovering misappropriated assets.
During and following completion of the assignment, presentations were delivered to the donor community and NAO detailing the mechanics of the fraud.
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