Your audit firm, Kimani and Associates has been contracted by the government to audit the procurement system followed by the government. Required: Identify the likely risk areas that your firm may encounter in the audit .and Suggest possible measures the government can implement to strengthen the internal control system on procurements

i) Kimani and associates
i) Key risk areas in government procurement system
– Fraudulent payments to suppliers
– Excessive fees for goods and services procured
– Inaccurate payments for goods and services
– Delays in paying for purchases resulting in damage to government reputation
– Breach of regulations, legal or company requirements

– Collusion between government procurement officers and suppliers for fictitious payments.
– Inflated prices for goods and services through collusion between suppliers and government procurement officers
– Payment for goods that were never ordered and delivered
– Non-compliance to procurement processes and procedures
– Lack of clearing defined procurement policies, processes and procedures
– Complex procedures not communicated to relevant procurement officers

ii) Possible measures to improve procurement system.
– Establish policy and procedures for procurement
– Policies, procedures for procurement properly communicated at all levels of management
– Set authorisation and approval procedures for procurement with different levels covering different cost levels
– Procedures for negotiating the best deals in the market place for a place for specific bulk purchased
– Set up of a dedicated procurement section in which case all procurement requests should be made through this unit to maximize the benefit of any negotiated deals
– Have an approved list of suppliers, ensuring that no purchases made outside of that list without authorisation
– Effective payment procedures
– Exception reports showing where transactions have not been authorized, where they fall outside of the established procedures.



Share through

Leave a Reply

Your email address will not be published.