Sunday, October 25, 2020

Internal Auditors poised to break investment barriers and build accountability bridges

Fairly accurate internal audits on the Botswana Stock Exchange and other capital markets, including pension funds and venture capital hold huge potential for attracting foreign direct investment (FDI), Vice President Dr. Ponatshego Kedikilwe has said.

Kedikilwe advised that since capital markets consider economic information a ‘lifeblood’, deliberate attempts to feed investors with falsified data, will not only corrupt market interpretations but create investor anxiety and distort share prices.

Officially opening the Botswana Chapter of the Institute of Internal Auditors Symposium in Gaborone, Kedikilwe said: “The ebullient BSE subsistence on accurate information underscores the importance of a harmonious relationship between Internal Auditors (IAs) to ensure the integrity of information of listed companies. There is no iota of doubt that auditors play a critical role in Botswana’s free market economy, which seeks to attract domestic and foreign investment.

“According to the World Bank and International Finance Corporation co-authored Annual 2013 Doing Business Report, one of the criteria of protecting investors, relates to the strength of minority shareholders’ protection against directors’ misuse of corporate assets for personal gain. The essence of monitoring the possible abuse of assets would be impossible …without IAs. More so, in economies with stronger investor protection, investment in firms is less sensitive to financial constraints and leads to greater growth in revenue and profitability. Due to the crucial role played by auditors, Botswana ranked 49/185 countries in the category of Protecting Investors, during the review timeframe.”

In his state of the nation address in November last year, President Khama commended the positive results which have been attributed to close scrutiny by the high quality of local audit teams.

Kedikilwe added that audits conducted from December 2010 to March 2013, uncovered 62, 717 minor and major defects, resulting in the Government saving well over P100 million in the first year of inspections. “In this regard, auditors should be friends of all sundry; for the promotion of transparency, best practice, ethical standards, efficiency and viability”

As parastatals play crucial economic developmental roles, due to, in some instances, inherent job security and remuneration packages for meeting profit targets, the pressure at times to meet certain levels of revenue can be too much to bear for management.

Kedikilwe said therefore this calls for sustained vigilance by IAs to ensure that what the Government receives as financial performance is fairly accurate.

He further noted that IAs should be pro-active to ensure the development of fraud response strategies and establishment of whistle-blowing structures.

Based on the 2014 theme: “Breaking Barriers; Building Bridges”, if employees and customers appreciated the whistle-blower benefits, they would with relative ease “break barriers and create bridges” with stakeholders. “As such the mere existence of a whistle-blowing facility should deliver a pre-emptive deadly strike against fraud and unethical behaviour,” he said.

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