Oil, gas industry audits slippery, dons warn

24Jan 2016
Guardian On Sunday
Oil, gas industry audits slippery, dons warn

THE Government has been advised to utilize highly experienced and technical auditors in oil and gas sector to avoid loss of revenue collected from companies exploiting hydrocarbon resources.

People demonstrate recently on gas related issues in Mtwara region

In an exclusive interview with The Guardian on Sunday, Dr Siasa Mzenzi from the University of Dar es Salaam Business School, said most auditors lack experience in auditing oil and gas.
He said that since auditing of oil and gas has high detention risks and its operations are too technical, enough and experienced auditors are needed to control mesing up of revenues.
Private sector auditors in the oil and gas sector are more understanding of appropriate auditing techniques than government-related audit firms lacking experience related to oil and gas auditing, he said.
Unless efforts are made to build their capacity the nation cannot realize substantial profit from the resources compared to other countries in the same operational activity.
“It is for sure that the nation has a number of auditors and they are capable, but not in auditing related to the oil and gas industry. It is still a challenge,” the lecturer asserted.
Elaborating, he said the sector is still new therefore more time is needed to build capacity among auditors in handling oil and gas to ensure that all revenues collected in the sectors are audited.
Dr Mzenzi pointed out that in order to manage the auditing process effectively, law expertise is needed since the sector itself involves a multiplicity of activities.
Echoing these sentiments, the head of accounting in UDBS, Dr Henry Chalu said that broad knowledge and competence relating to oil and gas is compulsory.
According to Dr Challu, it involves complex operations especially in up-stream processes.
Citing one example, he said auditors cannot manage auditing in oil and gas firms without using geologists, and failure in pursuing that leads to frauds.
“To cope with it, it is better for auditors to be sufficiently instructed in the legal and regulatory framework governing oil and gas operations to avoid frauds and bribes,“ he pointed out
Commenting further, he said in order to register more success, the correlation between auditors’ competitiveness and auditors’ effectiveness is most important.
“Auditing of oil and gas firms has high exposure to fraud where upstream activities are more risky, or comparing offshore and onshore risks,” he cautioned.
There is danger to increased procurement risks and bribes in relation to licenses, permits, customs duties and split orders. Unless there is adequate legal and audit competence it might lead to losses and cause incessant quarrels, the don underlined.