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Establishing effective audit and control structures

Project Details

CLIENT

Untu Capital

YEAR

2016-2019

COUNTRY / REGION

Zimbabwe / Sub-Saharan Africa

EXPERTISE

Banking & SME Finance

Inclusive Finance

KEY TOPICS

Risk-Based Process Audit

Microfinance

CONTACT

Dörte Weidig

Founded in 2009, Untu Capital provides credit to MSMEs in Zimbabwe. By November 2016, the institution was operating through eight branches with a loan portfolio of over USD 3.5 million and over 3,000 active clients.

Untu was subject to one of the early attempts to conduct an institutional risk assessment under the guidelines of the Risk Management Initiative (RIM). By the end of the assessment phase, a graduation path was generated listing the action steps and priority areas of improvement to help Untu reach Tier 1 classification.

Untu sought technical assistance from IPC to build on the outputs of the assessment phase and operationalise the elements of the graduation path by strengthening the risk management practices at both the board level and the specialised risk management units.

Specifically, IPC support focused on improving the process of risk identification, assessment, and monitoring on several levels. First, the consultants were engaged in capacity building for the Internal Audit function and in establishing a Credit Control Unit (CCU). The aim of the CCU is to provide management with constant oversight on the prudency of the lending cycle through both post-disbursement client verification and constant and timely monitoring of concentrations and quality levels within the loan portfolio. The unit is set to serve as a corner stone for the later establishment of a specialised risk management department.

On a second level, the Board of Director reporting templates were revised in order to allow a deeper analysis of the institution’s risk profile from a strategic perspective. In addition, the consultant participated in several board committees to provide guidance on risk monitoring and then follow up in subsequent meetings.

IPC’s experts bring RIM certification to the project and are implementing the following tasks in line with Untu’s graduation path:

  • reviewing output of RMGM’s graduation path to define action steps about the Board of Directors, Internal Audit and credit risk management
  • assisting Internal Audit in establishing Untu’s audit universe
  • coaching internal auditors in mapping activities and processes
  • revising the reporting package for different committees and introducing dashboards and reports providing deeper insight into the risk profile
  • providing guidance on risk assessment and monitoring in Board committees
  • diagnosing data and reporting quality in the loan management system
  • interviewing, selecting, and coaching CCU officers on the assessment of credit appraisal quality
  • introducing data collection and credit risk reporting tools to provide timely, accurate and comprehensive indicators on different credit risk areas
  • operationalising Management’s risk committee role by maintaining constant feedback from Management’s credit committees
  • coaching CCU officers on sampling, assessment, and reporting techniques
  • designing a credit control manual to document the role of the CCU, and updating the credit policy to accommodate CCU integration

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