Between August to November 2022, Ecobank Kenya investigated procedural faults in its ledgers which may have led to the manipulation of transactions and possible fraud.
- According to a 2023 draft internal report seen by The Kenyan Wall Street, Ecobank Kenya’s card operations team did not upload critical transaction files as required, and there was no rigorous control over the chargeback process.
- This led to the erroneous inclusion of KSh 5.6 billion in the Merchant Acquiring General Ledger (GL) and KSh 162,346 in 347 entries were rejected by MasterCard but remained unsettled.
- Ecobank Kenya could not recover chargebacks worth KSh 234,464 and revealed that many chargebacks were not debited to the merchants’ accounts immediately as prescribed.
“There were no properly documented operating procedures and accounting entries for different card products. This led to the lumping up of different entries for different card products into the merchant acquiring GL,” the lender reported.
The review was not conclusive because it did not specify how much money was lost due to these weaknesses. This was mainly because the General Ledger was not exclusively used to record Merchant acquiring details, but was also used to settle entries of other card products like prepaid cards and ATM transactions.
“A residual balance of US$2.1 million was left outstanding in GL155000068 unsubstantiated. This balance was a reduction from the initial amount which was approximately US$15 million as of July 2022,” the report explained.
The Crack Team
Prompted to inquire into these irregularities, Ecobank Kenya constituted a team made up of its internal controllers and operations officers to determine if the outstanding debit included transactions that were not settled. To achieve this investigation, the team obtained transaction and settlement files.
However, the magnanimity of the data in the ledgers made the process tedious and the team was not entirely sure about the nature of some of the settlements because the transaction files were uploaded months after the movement of cash. Eleven entries with KSh 2.1 billion were duplicated.
“Due to this omission, it was impossible to determine the amount payable to merchants, the amount receivable from schemes and the service commission receivable from the merchants on these days,” the report said.
The team recommended that reversals of the erroneous accounting process should be advised by the CFO. They also requested an independent oversight of the maker-checker process by Ecobank Kenya’s Internal Control Department.
“The taskforce therefore recommends documentation of operating procedures and accounting entries for all the card products as well as the regular training of the card and digital operations team,” Ecobank Kenya said in the report.
News of the internal audit was first reported by tech publication TechCabal.
