Source: Loopholes in equipment hire cost council – herald
Vusumuzi Dube, Online News Editor
THE Bulawayo City Council (BCC) could be losing a lot of revenue after an audit unearthed a number of irregularities in its hire of plant and equipment processes which could result in fraudulent activities in the hiring process.
According to a council confidential report the audit discovered that the Engineering Services Department, under whose purview the hiring of plant and equipment falls does not have a documented policy on hiring of plant and equipment.
“Such a policy would provide procedures and technical guidance on the hiring of plant and equipment. Failure by the City to have a hiring policy may lead to inefficiencies, ineffectiveness, inconsistencies, omissions or fraudulent activities in carrying out the hiring process.
“We noted that under the current system, the process of hiring plant and equipment is the prerogative of user sections instead of the transport superintendent. User sections maintain contract documents and general correspondence pertaining to hired plant and equipment with the transport superintendent having no role in the process,” reads the audit report.
It was further discovered that the audit was unable to verify the accuracy of billings for some plants hire from some companies where they noted this could create conditions that may give rise to fraudulent activities.
“We were unable to verify the accuracy of billings for some plants hired from Sembeule Transport, Care Construction, Craig Parnharm and Masters Specialists. The roads yard section was unable to provide supporting documentation, in the form of payment rates, hire terms and conditions, number of hours worked, invoices as well as usage reports for payments in order to monitor expenditure paid to companies.
“The section informed audit that for the period in question, no specific contracts were given to the companies for the hiring process, instead they hired as per quotations for the specific number of hours required. Failure to keep records creates conditions that may give rise to fraudulent activities, further, in cases of disputes, unavailability of records may weaken the city’s position,” reads the report.
The audit also uncovered a scenario where one company – Wrotherham Services – was hiring out a bulldozer, tractor and lowbed to the local authority which they were in turn hiring from another company – Earthworks – and had between February 2021 and May 2022 made $17 million from the local authority.
“Audit noted a number of weaknesses in the processes of hiring plant and equipment by City departments. Owing to the lack of a policy, user sections are performing all activities relating to the hire of plant and equipment such as sourcing, managing and controlling hired plants, thereby, violating internal controls.
“Cost benefit analysis are not done to determine whether hiring, in the given circumstances, is the optimal option for the city delays in attending to repairs and spares for broken down plants is costing the city a lot of money as expensive alternatives have to be resorted to in order to keep service delivery going. Finally, the city lacks an emergency procurement system,” reads the report.
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