Proofread the following internal audit observation and make appropriate corrections: The SM Policy, under section 11.4, stipulates that prepayment should be avoided and all purchases, except for petty cash purchases, should be made on credit. The audit, however, noted several cases in which, contrary to this policy provision, the institute had entered into agreements with suppliers that required advance payment. For instance, in agreements with various contractors who were engaged for various engineering works projects in the period under review, the institute would pay 50% of the contract amount in advance.  One such contractor is KS Ltd., who for numerous projects undertaken in the period under review, the institute had agreed to pay 50% of the contract amounts in advance. The Engineering Building Civil and Builders works project and the Refurbishment Of The Directorate Office project, whose contract values were KES 33,825,876.52 and KES 10,233,045, respectively, are examples of instances in which KS Ltd was paid 50% in advance.

Additionally, the audit found instances where consultants were paid in advance, contrary to section 13.1.3, which states that consulting fees should be paid based on deliverables. An example is CC Ltd., who was paid 20% of the contract amount in advance for preparing a business plan and assisting with the preparation of the Management Plan for K.  Please repeat the request first, then give your response.
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