The initial inquiry on state capture in South Africa claimed the scalp of an unlikely suspect-KPMG! So as the nation reviews the damning audit reports by the Auditor General, one of the questions we should be asking is ‘Who audited NSSA? What role did they play in the plunder of public resources? We fully appreciate the critical role of auditors and the limitations on fraud detection and reporting. But how far are they liable in cases where rampant corruption would have been unearthed and yet their opinions could be at variance with what would be on the ground?

Looking at NSSA, the public may be interested in knowing the composition of the audit committees at the institution. What was their role? Who were the internal audit members? Were they getting salaries? How was the corporate governance culture at the institution?

Zeroing in on the finance department-who are or were the finance directors? What are their qualifications and experience? Which accounting and auditing bodies do they belong to? Did they follow their professional ethical standards? Are professional accounting and auditing bodies going to sanction their members implicated in various fraud cases perpetrated at various entities across the country?

Around this time last year, 3 local NGOs had their funding cut by a leading humanitarian organisation. One of the directors of the organisation publicly defended her organisation saying they had recently conducted an external audit where their books were determined to be clean or unqualified. Who were the auditors of these organisations? Critically, who were managing the finances?

Are audit clerks remunerated enough? How are auditing firms handling the undue pressure on their staff to be corrupt? Do they have reporting mechanisms for stakeholders to report and bring evidence of corruption?

The Institute of Chartered Accountants in Zimbabwe is responsible for the training of local auditors, they also register auditing firms. How far is the institute going in terms of professional development and protecting the integrity of the profession?

Are they aware of the challenges and limitations in the profession? How are they responding to some of their members implicated in corruption? Do they ever solicit for input from members of the public?

The same applies to all finance professional bodies such as the Institute of Internal Auditors, ACCA, CIMA and CIS. Are they following developments in the country? Are they aware that some of their members could be facilitating fraud? Are they taking disciplinary action?

The accounting profession is well known for integrity..it is responsible for the stewardship of resources for shareholders, the government and tax payers. To what extend should the public rely on their work? How genuine are audit reports from Zimbabwe?

We expect all finance professionals to self introspect and review ethical guidelines. We hope to see action from all auditing firms reviewing how they conduct business and protecting the image of the profession.

We look forward to seeing ICAZ being hauled before the parliamentary committee and answering various questions pertaining to their members and audit firms. If the auditors of NSSA issued clean audits despite the rot at the organisation, then they too are liable. They should be penalised and forced to return back all audit fees plus a hefty fine. Some may need to be deregistered in order to send a clear warning!

A discussion within our forum on the issue showed that the rot in the auditing profession has reached alarming levels. Auditors in the country are easy to bribe with some offered free air tickets or jobs for sweeping corruption under the carpet and issuing clean audit reports. One wonders what would have happened had the Auditor General Office not carried out second audits?

How many have mechanisms to review -audits? Just how reliable are audited statements from Zimbabwe? As the country fights corruption, we need all those found guilty caged plus restoration of integrity of the accounting and auditing profession.

This is a sensitive area but South Africa did it and all audit firms are now wary of the risks associated with unprofessional behaviour. We need to start talking loudly about the rot in the sector in order to restore confidence.

We go back to our initial question-who signed off the financial statements at NSSA? Which accounting or auditing professional bodies do they belong to? Who audited them? Is the audit  firm fit to remain operational? What steps is ICAZ going to take?

Food for thought.

Often many a time entrepreneurs come up with brilliant ideas that could literary transform their livelihoods as well as add value to their respective communities and the country as a whole. However lack of written business contracts has seen many an entrepreneur losing money as well as potential business. Lack of written contracts has also seen a lot of entrepreneurs wasting time and money staving off unnecessary lawsuits.

What you need to know about business contracts

1. What is a business contract?

A business contract states the terms and conditions of any business transaction, including product sales and delivery of services. This helps the parties involved to avoid any type of misunderstanding that may arise in the absence of a written contract.

If you are collaborating with a friend on your new business, then it is all the more important to create a written contract. This will help you avoid any misunderstandings and consequently will save you from the rifts that might end your friendship.

• How about an oral agreement?

If you have an oral agreement, you might forget some points that you have agreed on verbally with the passage of time. But with a written agreement, all the terms and conditions are crystal clear at any point in time. Further, you can always amend the agreement with the consent of both the parties.

Many people are unrealistic when it comes to creating contracts. You should not take it for granted that the threads of your relationship (business, personal or otherwise) may not be strong enough to face crises. The fact is that disagreements can and do arise, especially between friends and family members and especially when a close personal relationship is intertwined with a business one.

When you get into a verbal contract, you may not mention things that seem to be obvious. It is these issues that usually create trouble in the future when you want to enforce any agreements that have been made. Conversely, when you get into a written contract, you and all the parties involved are cautious enough to include all the details, making disagreements later on far less likely.

Written contracts are also much easier to enforce should you end up in court.

• Essential elements of a Contract

A contract consists of an offer and acceptance and sometimes, a counteroffer. The offer constitutes a statement that specifies that a person or business is ready to enter into an agreement on some specific terms and conditions. The acceptance comes from the person who accepts the offer on the basis of those terms and
conditions.

A person might not agree to the specified terms and might present a ‘counteroffer’ within the clauses. When the person who made the offer, accepts the counteroffer only then is the contract is formed. You should also check whether the person who is signing the contract is authorized to do so or not.

Also, both the parties that are getting into the contract should be mentally competent. In other words none of them should be a minor. The agreement should have a lawful purpose.

The essential elements of a business agreement are:

1. The parties to the agreement

 In other words, the contract lists your business name and the name of the other party, whether it is a customer or a vendor.

• What each party is going to gain from the agreement

This is referred to in legal vocabulary as “consideration.”

• The main terms of the contract

 For example, what each party is promising to do. Obviously, it is extremely important that this part of the contract be very specific and include such things as the work to be performed, the price to be paid for the work, how and when payment will be made, when the work will be completed, how long the contract will be in effect and whether either party is “warranting” anything.

• Additional terms

These should probably include conditions under which either party can terminate the contract, whether either party can transfer or assign the contract to another person or company, whether disputes arising from the contract may be arbitrated or mediated, payment of Lawyer’s fees if one party breaches the contract, an address where legal notices can be sent to each party, and which country law applies if questions about the contract arise.

•  Execution

 Be sure both parties sign the contract and that the person signing (if he or she is representing a company) has the authority to sign.

• Delivery

 Make sure each party receives a copy of the final signed agreement.

• Date

 This is the date the contract is signed.

• Why contracts for your Small Business

All entrepreneurs who had bigger visions such as Strive Masiyiwa formalized their business at an early stage. Entrepreneurs need to have a ‘bigger picture mentality’ in order to reap rewards later on. As a business owner, it is very important that you get into the habit of always using written contracts, especially when it comes to performing services for clients. This is because you probably do not have deep pockets should you be sued. You also probably do not have much time to expend on litigation as you should be spending a lot of time setting up your business and building your brand.

If you use written contracts, it is also far less likely that you will end up in court. Your clients will be much more inclined to work with you to find a solution and work things out. Also business contracts do and should contain dispute resolution clauses which aim to make litigation or arbitration the last resort in solving problems.

Conclusion

Business contracts are an important part of doing business, but they must be carefully worded to ensure everything is exactly how you want it and the other party agrees to, before you both sign on the dotted line. That way you avoid getting into trouble and business can be done quickly and efficiently as per the contract with everyone knowing exactly what is expected.

The fine details in verbal agreements can easily be forgotten over time and then there will be disagreement and discord with no one knowing what they have to do. It is important to read all the fine print in every business contract and make sure you understand it before you sign on the dotted line. Written contracts are for your protection. Use them diligently, and your customers will see that you are serious about doing business the right way.

About Author

Namatirai Muzarakuza is a holder of a Bachelor of Laws (LLB) from the University of Zimbabwe and a Post- Grad in Corporate Governance and Strategic Leadership. She has over 8 years’ experience in private practice, banking and finance as well as corporate law. Her contact details are namaruzvidzo@gmail.com