Challenges in prosecuting court cases based on forensic audit findings in Zimbabwe

PHILLIMON MHLANGA

Forensic audits have emerged as a vital tool in exposing financial misconduct and enhancing corporate governance in Zimbabwe.

Forensic auditing involves the examination of financial records to investigate and detect fraud, corruption and other financial crimes (Crowe, 2024). These audits are crucial in countries where financial irregularities are common and the need for accountability is paramount.

Forensic auditors in Zimbabwe employ a combination of auditing techniques and investigative skills to uncover financial misdeeds and provide evidence suitable for legal proceedings.

Despite the rigorous processes followed in performing forensic audits, prosecuting cases based on auditors’ findings remain a challenge in Zimbabwe. Several factors contribute to this difficulty and are discussed below, but first, the writer reminds readers of the processes forensic auditors go through when conducting the forensic audits.

Forensic Audit Processes – recap

Agreeing the Terms of Reference (ToR)

The first step in a forensic audit is to clearly define the scope and objectives of the assignment, called the Terms of Reference. This is defined by the person or organization giving the mandate. If need be, a meeting is held with forensic auditors to clarify any grey areas. This clarification involves identifying specific issues to be examined, such as financial discrepancies, potential fraud, or regulatory compliance and having the forensic auditor understand the scope of work to be performed.

Collecting Data

Forensic auditors gather relevant data for a specific timeframe from various sources, including financial statements, transaction records, emails, and other communications, in line with the scope of work defined in the ToR. Advanced tools like data mining software and forensic accounting software are often used to sift through vast amounts of information and identify patterns or anomalies.

Interviewing

Conducting interviews of key personnel is a critical procedure in forensic audits. These interviews provide insights into the internal workings of an organization and help forensic auditors gather data. Skilled interviewers use a combination of open-ended and specific questions to elicit detailed responses, often revealing inconsistencies or suspicious behavior.

Challenges in Prosecuting Court Cases

Despite adhering to established forensic audit procedures, the courts continue to encounter significant challenges in prosecuting cases. While the police play a crucial role in the initial stages of criminal cases—receiving reports, making arrests, and conducting further investigations—the focus here is specifically on judges, lawyers, prosecutors and forensic auditors and the specific challenges they face in relation to reliance on forensic audit findings. The ensuing discussion elaborates on these challenges.

Legal and Procedural Hurdles

Judges, prosecutors, lawyers, and forensic auditors play pivotal roles in prosecuting forensic audit cases and face unique challenges. Judges must understand complex forensic audit reports and ensure they meet stringent legal standards for admissibility, a task which may be complicated by lack of expertise.

Prosecutors bear the burden of proof, needing to establish guilt beyond any reasonable doubt with robust forensic audit findings. They must present these findings clearly, requiring a deep understanding of both financial data and legal context. This can be challenging if they lack specialized skills in forensic auditing. They also rely on evidence from forensic auditors as expert witnesses, but any deviation from the report on findings filed with the courts may render such evidence inadmissible leading to challenges in prosecuting the case.

Lawyers must navigate legal standards to ensure forensic audit evidence is meticulously documented and admissible. They may also need to challenge the admissibility of evidence if there are lapses in documentation, which can lead to case dismissals and questions about the authenticity of forensic audit findings. Most lawyers lack an appreciation of the subject matter and this inhibits prosecution of cases.

Forensic auditors are the authors of the forensic audit findings and in as much as they are experienced in uncovering financial irregularities, they may lack the expertise in presenting them in a legally admissible manner.

They need to follow precise audit procedures to ensure the integrity of the evidence, as any deviation can result in its exclusion, to the detriment of the prosecution’s case.

Complexity of Financial Crimes

Judges must comprehend the intricate schemes involved in financial crimes to arrive at informed court rulings, yet some schemes are so complex making it difficult for judges to fully understand the extent of the misconduct unless the evidence is clearly presented. Prosecutors may fail to translate complex forensic findings into a clear and compelling narrative for the court. Lawyers may err in interpreting and arguing complex financial evidence. Forensic auditors therefore need to cover the gap and unravel intricate financial schemes and present their findings in a manner that is easily understandable, ensuring that the evidence can be effectively used in court. However, if the forensic auditor lacks the requisite skills of an expert witness, their evidence may not provide the requisite support.

Lack of Specialized Knowledge

Judges often struggle with a knowledge gap in forensic auditing techniques, which can affect their ability to assess evidence accurately. They rely on expert testimony to understand complex financial data and its implications, which expert testimony may result in complications if not properly presented. Prosecutors, on the other hand, may find it difficult to argue cases effectively due to their limited knowledge in forensic auditing. This lack of expertise can hinder their ability to construct compelling arguments as seen in the Masvingo Province case study (Zhou, Mazhambe & Njaya, 2023).

Lawyers also face significant risks of misinterpreting forensic evidence without adequate training in forensic accounting and financial crimes. This misinterpretation can undermine the effectiveness of forensic audits in detecting fraud, as illustrated by the ZESA case (Wadesango, Tshuma & Sitsha, 2023).

Forensic auditors themselves must bridge the knowledge gap by presenting their findings in a clear and understandable manner.

Their ability to articulate complex cases in court is crucial and the skill should be acquired if missing.

Collaboration and Coordination

Effective prosecution requires collaboration between forensic auditors and law enforcement agencies. Lack of coordination can lead to fragmented efforts. Timely sharing of forensic audit findings with relevant authorities is crucial for successful prosecutions.

Recommendations

To enhance the effectiveness of forensic audits in prosecuting financial crimes, several measures can be implemented per specific players as indicated below:

Organizations requiring forensic audits

• Organizations need to hire forensic auditors who are not only skilled in uncovering financial irregularities but are also knowledgeable about legal requirements for evidence admissibility. This dual expertise is crucial in presenting findings that can withstand legal scrutiny.
• Organizations need to clearly define ToR relevant to the issues to be audited, to facilitate a comprehensive and effective forensic audit, ensuring that the findings are relevant, reliable and actionable.

Forensic Auditors

• Ensure that the forensic audit procedures comply with Zimbabwe’s legal and regulatory frameworks
• Keep comprehensive records of all forensic audit activities. This includes detailed notes, logs and reports that document the entire audit process, ensuring that every step can be verified and traced back to its source.
• Protect the integrity of the evidence by following strict protocols for handling and storing documents and data.
• Forensic auditors need to work closely with legal experts during the forensic audit process to ensure that the findings are presented in a manner that meets legal standards. This collaboration can help in framing the audit results in a legally admissible format and enables thorough appreciation of legal requirements for giving expert evidence in court.

The Legal Professionals (including judges, lawyers and prosecutors)

• There is need to update and strengthen legal frameworks to ensure that forensic audit procedural requirements are clear. Courts must also carefully evaluate the weight and credibility of forensic audit findings to ensure justice is served.
• There is need for specialized training for legal professionals in forensic audits to improve their understanding and ability to prosecute such cases effectively. Additionally, forensic auditing training should be made available as an option for ongoing professional development so that those interested keep abreast of the latest professional developments in the area.
• Encouraging collaboration between forensic auditors and legal professionals to bridge the knowledge gap. Joint workshops, seminars, and continuous professional development programs can foster a better understanding of each discipline’s intricacies.
• Policymakers should consider integrating forensic accounting modules into the curriculum for legal studies.

In summary, the courts in Zimbabwe face significant challenges when dealing with forensic audit findings. Most of the challenges emanate from legal and procedural hurdles, complexity of financial crimes, lack of specialized knowledge, interference and corruption and lack of collaboration and coordination.

By addressing these challenges and implementing these recommendations, Zimbabwe can improve the prosecution of financial crimes and enhance corporate governance, thereby fostering a more transparent and accountable business environment.

References

Transparency International Zimbabwe. (2021). Judicial Corruption in Zimbabwe. Retrieved from https://tizim.org/wp-content/uploads/2021/11/Judicial-Corruption-in-Zimbabwe.pdf.

Forensic Auditing: A Guide for Practitioners. (2021). Institute of Forensic Auditors Zimbabwe. Retrieved from https://ifa.org.zw/sitepad-data/uploads/2021/12/Forensic-Auditing.pdf.

Wadesango, N., Tshuma, Z., & Sitsha, L. (2023). An Analysis of Effects of Forensic Auditing in Detecting Fraud in State Owned Enterprises: A Case Study of ZESA. Journal of Accounting and Finance, 9(3), 45-60. Retrieved from https://jafas.org/articles/2023-9-3/5_FULL_TEXT.pdf.

Zhou, S., Mazhambe, Z., & Njaya, T. (2023). An Evaluation on the use of Forensic Accounting in Curbing Fraud in the Public Sector: A Case Study of Local Authorities in Masvingo Province. Great Zimbabwe University. Retrieved from http://ir.gzu.ac.zw:8080/xmlui/bitstream/handle/123456789/620/An%20Evaluation%20on%20the%20use%20of%20Forensic%20Accounting%20in%20Curbing%20Fraud%20in%20the.pdf?sequence=1.