WINDHOEK – The National Council public hearing committee on public accounts has given the City of Windhoek 14 days to respond to some serious key findings pertaining to its finances by the Auditor General Junias Kandjeke in the report for the municipality for the financial year ended June 30, 2016.
These key findings range from issues of property, plant and equipment, to long-term loans and creditors, debtors and other receivables and related financial statements, provision for normal staff leave, going concern and commercial insolvency, suspense account, public-private partnership (PPP) profit sharing, sale of erven, compliance with applicable financial reporting standards and revenue from fines.
Kandjeke found that the council’s fixed asset register could not be provided for audit purposes and it was then recommended that such a register that agrees to the annual financial statements must be prepared and provided for audit purposes.
He also found that there is a N$19.5 million share of profit from a PPP project that the council did not account for in the council books at the year end.
Another burning issue is that Kandjeke found that there is a difference of N$91.2 million between sale of land recorded in the financial statements and the list of erven sale transactions that were successfully concluded during the year under review.
However, the council could not provide reasons relating to this matter.
Further, the auditors draw attention to the going concern of the municipality as the 2017 financial budget indicates that management foresees a loss of N$148.9 million for the year ended June 30, 2017.
“These conditions indicate the existence of material uncertainties, which may cast doubt on the city’s abilities to continue as a going concern. The municipality is currently commercially viable and this is due to implementation of the International Public Sector Accounting Standards whereby certain accounts were re-classified and written down to N$ nil value.
However, if losses are allowed to continue unabated, these operating deficits will eventually erode the equity base, which will result in the municipality being factually insolvent. The municipality should implement measures to reduce its financial losses,” Kandjeke recommended.
It is against this background that the public hearing committee on public accounts of the National Council under the chairmanship of Nudo member of parliament, Peter Kazongominja, gave the council 14 days to respond to the committee’s questions pertaining to its finances during 2016.
Another issue of concern by Kandjeke is that on November 8, 2016, management took a decision to approve the disposal of 149 motor vehicles, plant and equipment and acquired 316 vehicles through hire purchases over the next five years. The replacement cost is expected to be N$307.5 million.
Kandjeke noted this exercise is expected to save the municipality N$39.9 million in service costs.
However, the council did not disclose these events in the annual financial statement.
The public accounts committee therefore wants to find out what mechanisms have been put in place by the council to ensure that compliance with applicable reporting standards is adhered to at all times without compromise.
Equally, Kandjeke discovered that cut-off of revenue from fines was not accurately applied on revenue from fines on both receipts from fines paid in the general ledger and fines in the total client system by the City Police department.
The public accounts committee also wants to know the mechanisms put in place in this regard to ensure the situation is rectified.
The auditor general also uncovered that there is an uncleared suspense account balance of N$45.2 million which is included in the receivables from non-exchange transactions.
Furthermore, the auditors found sufficient audit evidence could thus not be obtained regarding the completeness of receivables from non-exchange transactions and the related income statement accounts in the annual financial statements.
Council also overprovided for leave by N$50.4 million and there is a difference of N$8.1 million between bonus balance as disclosed in the annual financial statements and the balance as per the payroll records.
Kandjeke found that the net effect is an overstatement of N$42.3 million of which the public hearing committee wants to know the mechanisms put in place to ensure that the provision for normal staff leave as disclosed in the annual statements agrees to the payroll records and is calculated accurately as at year end.
2018-11-29 09:14:30 7 months ago