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123 J.L. Pol'y & Globalization 1 (2022)

handle is hein.journals/jawpglob123 and id is 1 raw text is: Journal of Law, Policy and Globalization www.iiste.org ISSN 2224-3240 (Paper) ISSN 2224-3259 (Online) Vol.123, 2022 111 An Analysis of the Causes of Financial Irregularities in State-Owned Institutions in Zambia Alex Chola Kafwabulula Windu Matoka2 1. Department of Business Studies, School of Business, ZCAS University, Dedan Kimathi Road, P.O. Box 35243, Lusaka, Zambia - 10101, DBA Candidate, ability.always@gmail.com 2. Department of Business Studies, School of Business, ZCAS University, Dedan Kimathi Road, P.O. Box 35243, Lusaka, Zambia - 10101, windumatoka@gmail.com or windu.matoka@zcasu.edu.zm Abstract The aim of this study was to determine the predictors of the frequency of being cited for financial irregularities. This cross-sectional study employed a self-administered standard structured questionnaire. One hundred and eight respondents comprising directors and deputy directors, heads of accounting, budget and audit units. The findings are that sixty-four (59.3o) of the participants indicated that there institutions were cited frequently for financial irregularities as compared to n = 44 (40.7%) being cited always. There was, however, no statistically significant association between type of institution and the frequency of being cited for financial irregularities (Pearson Chi-Square obs = 0.917; df = 2 and p = 0.632). The Parliamentary Accounts Committee and the Institutional Audit Risk Committees did not perform oversight functions as the composite scores were below the thresholds. The causes of financial irregularities in State Owned Institutions and ministries show two of the predictor variables (a) Audit and Risk Committee and (b) The Parliamentary Accounts Committee have an effect on the institutions being cited for financial irregularities. However, the findings point to the fact that ongoing budget performance monitoring during the fiscal year (of a living and executed budget) in the public sector in these institutions should be done. It is concluded that the findings point to the fact that negative reports by the Auditor General are due to The Parliamentary Accounts Committee and the Board's Audit and Risk Committee inability to undertake oversight functions. The findings may contribute to the further study of causes of financial irregularities in state owned institutions in Zambia and serve as a reference for policy makers and institutional managers in mitigating financial irregularities and reduce the frequency of being cited for financial irregularities. Keywords: Oversight, Financial Irregularities, State Owned Institutions, Zambia DOI: 10.7176/JLPG/123-01 Publication date:August 31st 2022 Research Background There is a history to the problem of effecting the outcomes of the Zambian Parliamentary Accounts Committee's oversight functions particularly relating to the budget life year (the year within which the budget is being operationalised. A review of Hansards in Zambia has shown that the functions of the Parliamentary Accounts Committee (PAC) are among many other functions, is to examine the accounts of the previous year showing the appropriation of sums granted by the National Assembly to meet the demands of public expenditure. Parliament has since its inception been concerned with budget approval and post expenditure appraisal only. There is however, lesser attention by Parliament in having oversight on ongoing budget performance monitoring during the fiscal year (of a living and executed budget) in the public sector within the year. As a result, year in and year out, the Office of the Auditor General has lamented the ever present and increasing incidences of misapplication and misappropriation of funds in the Zambian public sector (Republic of Zambia Auditor General's Report, 2017). The difficulty with what has been observed by the Office of the Auditor General rests with failure by oversight bodies like PAC to come up with the framework to mitigate determinants of financial mismanagement. Oversight functions which are vested in the legislature as a fundamental principle of the separation of powers ought to include within the expenditure monitoring mechanism and safeguards. Research on PACs have shown this important part of the oversight expectations gap (W , 2005; and Nanjegowda, 2006) which research by now ought to resolve. In Zambia, despite officers having been trained in financial management and guidelines, especially budgeting and spending guidelines, there is non-adherence to them (Republic of Zambia Auditor General's Report, 2017, 2017; 2018). The 2008, 2009 and 2010 Audit Reports lined a minimum of seventeen (17) kinds of public finance irregularities. The irregularities, expressed in financial terms, included: Misappropriation of Funds; Unaccounted for Revenue; Delayed Banking; Unaccounted for Funds; Misapplication of Funds; Unretired Imprests; Unvouched Expenditure; Unaccounted for Stores; Irregular Payments; Non-Recovery of earnings Advances and Loans; Failure to follow Tender Procedures; Undelivered Materials; Non-Submission of Expenditure returns; Unauthorized Expenditure. In 2010, these irregularities combined amounted to a complete value of ZMK1.3 Billion. This was regarded as 9.8% of the country's total government income (i.e., revenue 1

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