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Errors give Omuthiya disclaimer audit opinion

2021-11-03  Obrien Simasiku

Errors give Omuthiya disclaimer audit opinion
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Obrein Simasiku

OMUTHIYA – The finance manager for Omuthiya Town Council Taimi Lungameni has saved council further trouble from the auditor general as well as members of the parliamentary standing committee on public accounts after admitting and having shown determination in correcting the wrongs.

Council showed that it has been running losses year after year, having recorded a loss of N$4. 7 million in 2016, which ballooned to N$14.5 million before soaring to a high of N$16.6 million for 2018.

This Lungameni apportioned to wrongly entered figures by services of a consultant who was compiling financial reports for the council then.

“The problem was that figures were wrongly entered both on expenses and assets,” she said. “Also, our depreciation amount was quite high, hence making the losses seem higher. Also, on our system, we had wrong interest figures, especially on assets, however, all these have been rectified, as of 2019,” said Lungameni.

She acknowledged there were some errors in entering figures during the process of compiling the financial statements, to which she added such mistakes have been picked up and are being addressed.

This, the AG Junias Kandjeke concurred through records that some such erroneous mistakes have been addressed.

A disclaimer of opinion means that the auditors are distancing themselves from providing any opinion at all related to the financial statements. They may not have been able to decipher the correct nature of some transactions or to secure enough evidence to support good financial reporting.

The committee was grilling the council after the audit report found out that council had understated, by N$7.6 million on land compensation, due to continuous losses being reported, trade creditors overstated by N$305 821, including an omitted sum of N$1 554 287 on trade payable listings. Other issues included opening balances which were understated by N$6 232 137, property, plant and equipment understated by N$519 308, as well as council’s failure to have a fair presentation of financial reporting frameworks.

Furthermore, the committee wanted to find out what council has done and whether there is an action plan in place to rectify and resolve the issues, to which Lungameni said, council had none, but assured that they pinpointed the problem, thus from 2019/20 financial year, the issues were corrected.

“Regarding the variance on the land compensation, the N$1.5 amount was paid after the financial year has closed on 30 June 2018, and it was for the purposes of paying invoices which were already approved prior to closing of financial year,” she said.

“So, this too, we have proof and has been rectified as such. On the opening balance, we realised a wrong formula was used, therefore, reflecting a different percentage in the system on the asset register,” further explained the finance manager.

Parliamentary committee member Harald Kambrude added the council would have walked away with an unqualified audit opinion had it corrected mistakes earlier.

“We recognise your zeal in trying hard to find the wrongs and correct them considering that you just started doing it yourselves,” he said.

Kandjeke on the other hand requested the local authority to immediately convene a special council meeting to address issues raised.  “As per Section 87, Subsection 3 and 4 of the Local Authorities Act, you are mandated within two months of receiving the audit report to convene a special council meeting outlining the action plan, which responds to the issues outlined, and that should be with the minister,” advised Kandjeke, while instructing council to do so beginning with the latest financial years.

Meanwhile, the chairperson of the committee Peter Kazongominja wanted to find out whether the finance department was fully capacitated with relevant skills, and implored the officials to seek necessary competencies so that the work can be done diligently.


2021-11-03  Obrien Simasiku

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