Unreconciled financial data, absence of approved fixed assets policy, invoice processed in the wrong financial period and undisclosed bank accounts with amounts of over N$3 million were among the key factors that led to auditor-general Junias Kandjeke slapping the Omaheke Regional Council with an adverse audit opinion for the financial year ended 2020.
In his audit report published this month, Kandjeke observed that the council still does not have an approved fixed assets policy in place, as also previously reported in the financial audit reports of 2018 and 2019.
He highlighted that an absent fixed asset register made it difficult for the auditors to ascertain themselves with the assertion of completeness and existence.
In essence, an adverse audit opinion states that the financial statements do not present fairly the financial position, results of operations, or cash flows of the entity in conformity with generally accepted accounting principles.
Furthermore, it noted that an invoice amounting to N$222 606 relating to stationeries and cartridges dated 29 March 2019 was processed in the 2019/2020 fiscal period instead of the 2018/2019 period.
Having observed the above misrepresentations, Kandjeke recommended that council should ensure that all transactions are processed in the correct financial period and that council should approve and implement a fixed assets policy, which will cater for important components such as assets valuation policies, depreciation policies, maintenance of fixed asset register, control and security of assets, regular inspection arrangements of assets and disposal of assets.
The auditors further placed attention to the report from the Public Service Commission on the embezzlement of funds at the regional council, which found evidence indicating that employees in the human resources department have engaged in fraudulent activities.
Specifically, they have identified instances of employees inflating their working hours, claiming false overtime payments and misappropriating funds for personal use. At the end of the financial year under review, this case as strongly raised by the Public Service Commission was not yet resolved and the employees in question were dismissed and repaid the money back to council at the end of the 2020/2021 financial year.
“However, the ineffectiveness of controls that allowed for the embezzlement have not yet been addressed. It is recommended that the council takes immediate action to address the findings in the human resources department. Additionally, it is recommended that council should implement more robust internal controls to prevent such fraudulent activities from occurring in the future. It is crucial that council takes this findings seriously and takes appropriate action to prevent any further financial losses and uphold the integrity of their financial statements,” said Kandjeke.
It was disclosed that council does not have a debt collection policy in place to guide it with the treatment of debtors and debt recovery, while a difference of N$65 067 003 was noted between the balance disclosed in the financial statement and the general ledger for the period under review.
It was particularly noted that council disclosed the accumulated funds as three separate line items in the balance sheet, instead of an aggregated accumulated retained earnings amount for the period under review.
Meanwhile, procurement documents amounting to N$23 618 264 were not submitted for audit purpose. As a result, it was recommended that council should ensure that mechanisms are in place to guide the treatment of outstanding debts and should also develop a debt collection policy.
The auditors also pointed out that council does not have a demarcated area for a dumpsite in the Omitara settlement and waste management processes are not in place. Waste is disposed of by fire in an area that is not fenced off and is accessible to everyone and it is near the residential area.
It is recommended that the council should ensure that there is an area demarcated for waste disposal and a waste management system is established for the Omitara settlement that is secured with a fence and that only authorised persons have access to it.
Caption: A mess… The auditor general has declared the Omaheke Regional Council’s books a shambles.