Auditor general Junias Kandjeke has given the Opuwo Town Council a disclaimer opinion for its failure to fully account for public resources entrusted to it. 

Supremely, they were found to be in the habit of selling land without ministerial approval, or failing to provide documentary evidence for verification purposes.

The council also failed to perform a valuation and inventory count for three financial years (FYs).

The auditor general (AG)’s report on Opuwo covers the FYs 2019, 2020 and 2021.

“Because of the significance of the matters described in the basis of disclaimer of opinion paragraph, I have not been able to obtain sufficient and appropriate audit evidence to provide a basis for an audit opinion. Accordingly, I do not express an opinion on the financial statements,” the country’s chief auditor said. 

When an auditor issues a disclaimer of opinion report, it means they are distancing themselves from providing any opinion at all related to the financial statements.

Compiled and completed in August, the report was tabled in the National Assembly for scrutiny earlier last week. 

Land woes

Kandjeke was also not impressed by Opuwo’s financial statements. 

The Office of the Auditor General found that in 2019, the recomputed permission to occupy (PTO) income based on the registers provided by management and the tariff rates amounting to N$786 454 do not correspond with the financial statement balance of N$375 703. This resulted in a difference of N$410 751. 

“The council is recommended to ensure that it reconciles the information recorded in the accounting system to the supporting documents,” Kandjeke observed. 

On land sales, the recognition of sale of erven is not clear, as the council only records the amount paid by customers as sales of erven income, and not the full amount of the erven purchased. 

“The council was unable to provide agreements of sale and ministerial approval letters for the auditors to verify the sales of erven income amounting to N$1 million (2019), N$2.5 million (2020) and N$1.1 million (2021),” Kandjeke uncovered. 

He thus recommended that the council ensures that there is a clear policy on the recognition of sale of erven, and that supporting documents are properly filed and provided for audit verification.

The sale of erven without  ministerial blessing is nothing new to the town. 

Earlier this year, New Era reported that the town council sold the only local sporting facility to property mogul Erastus ‘Chicco’ Shapumba for around N$1.3 million.

In exchange, he would allegedly develop a shopping mall - a first of its kind - on the land where the stadium is situated.

The properties located on the land belonged to the youth and sports ministry. That ministry was never consulted when the council moved to sell the land.

For the 2021 FY, open market fees’ listing was not provided for the auditors to verify the financial statements’ balance amounting to N$1.7 million. 

“Council is recommended to ensure that open market fees’ listing is maintained and provided for audit verification,” the AG said. 

Financial woes 

Delving deeper into the report, Opuwo’s financial woes become even clearer. 

In particular, the council could not fully account for the government subsidy it receives. 

“Government subsidy receipts recomputed based on the bank statements amounting to N$12.4 million (2019), N$7.6 million (2020) and N$8.9 million (in 2021) do not agree to the financial statements’ balance of N$10.4 million (2019), N$7 million (2020) and N$6.9 million (in 2021), resulting in a difference of N$2 million (2019), N$579 393 (2020) and N$2 million (2021), respectively,” the auditors found. 

The situation is no different when it comes to the subsidy Kunene’s regional capital receives from the Road Fund Administration. 

“Road Fund Administration subsidy receipts recomputed based on the bank statements amounting to N$3.3 million (2020) and N$1.1 million (2021) do not agree to the financial statements’ balance of N$4.5 million (2020) and N$528 893 (2021), resulting in a difference of N$1.2 million (2020) and N$594 667 (2021), respectively,” the report further reveals.

“The council is recommended to ensure that the subsidy received and recorded in the accounting system is reconciled to the supporting documents,” reads another recommendation.

Water woes 

The council’s trend of failing to provide supporting documents continues throughout the report, as trade payables’ listing and supporting schedules were not availed for auditors to verify financial statements’ balances amounting to N$2 million (2019), N$5.3 million (2020) and N$14.4 million in 2021. 

Again, consumer deposits recomputed based on one-month water sales amounting to N$948 045 (2019), N$658 937 (2020) and N$101 234 in 2021 is different from the financial statements of N$846 811 (2019), N$451 251 (2020) and N$805 128 in 2021. 

This, Kandjeke said, “indicates that consumer deposits are not adequate in terms of monthly water purchases”. 

Tax woes

In addition, value-added tax (VAT) reconciliation based on the opening balance and returns submitted to the Namibia Revenue Agency (NamRA) amounting to N$2.4 million (2019), N$2.1 million (2020) and N$5 million (2021) do not agree to the financial statements’ balances of N$3.7 million (2019), N$4.6 million (2020) and N$681 586 for 2021. 

It resulted in a difference of N$1.3 million (2019), N$2.6 million (2020) and N$5.6 million in 2021, respectively.

Meanwhile, six returns for the 2019 FY, returns for March and July 2020, and five returns for 2021 were submitted late to the receiver of revenue. 

“The council is recommended to ensure that it reconciles value-added tax returns to the financial statements, and that all the returns are submitted to NamRA on time, and properly filed for ease of access,” Kandjeke urged strongly.

Cash money 

Also on Opuwo’s finances, the auditors found that the current balance amounting to N$127 387 and N$265 533 for the 2019 and 2021 FYs do not correlate with the management report balances of N$2.7 million for the 2019 FY and N$6.4 million for the 2021 FY. This ambiguity resulted in a difference of N$2.5 million in 2019 and N$6.1 million in 2021. 

Also noted was the unavailability of the cash book at year-end for payments’ cut-off testing. 

“For the 2021 FY, the total recomputed cash, and cash equivalent balance per the management report amounting to N$15.7 million differ from the financial statements’ balance amounting to N$7.8 million, resulting in N$23.5 million. The council is recommended to ensure that it reconciles the management report to the financial statements,” it was suggested. 

-  emumbuu@nepc.com.na