Audit exposes Chegutu council rot Auditor-General Mrs Mildred Chiri
Auditor General Mildred Chiri

Auditor General Mildred Chiri

Innocent Ruwende Municipal Reporter
Chegutu Municipality did not have a database for commercial and industrial stands and its financial statements could not reconcile by a debit balance of over $2 million, posing risk of financial loss, an audit report has revealed.

According to Auditor-General Mrs Mildred Chiri’s Local Authorities Audit Report for 2015 the council was also not maintaining ledger accounts for inter-fund transactions.

“As a result, the inter-fund balances disclosed in the financial statements could not reconcile by a debit balance of $2 339 185 which could not be explained by the council. I was unable to trace the movements of this account in the absence of ledger accounts.

“Material errors and irregularities may go undetected. A suspense account balance of $19 046 was written off without establishing the cause for imbalance. There was no satisfactory explanation and supporting documentation of the write-off. Due to the absence of an audit trail, I was unable to perform any further work,” reads the report.

The audit also showed that council received donated assets, but did not record them in the asset register and their values were not included in the financial statements.

The AG said the property, plant and equipment balance was misstated due to the exclusion of donated assets in the financial statements.

She said the misstatement could not be quantified due to the absence of adequate information such as assets value.

The AG also found out that in 2012 the council received loan disbursements amounting to $1 550 000 from the Infrastructural Development Bank of Zimbabwe towards the funding of the councils’ water treatment plant.

“According to the loan agreement Section 3 (3.5), the council failed to create a sinking fund for the purpose of loan repayment when it falls due. At the time of the audit the council had not yet started paying instalments,” reads the report.

The AG said there was a risk of financial loss due to litigation, interest and penalty. The management said council had not been able to honour the loan repayment due to cash flow problems.

The report also showed that statutory deductions were not being paid and the amount had accumulated to $883 473 and in addition the municipality owed the Local Authorities Pension Fund $438 960.

You Might Also Like

Comments

Take our Survey

We value your opinion! Take a moment to complete our survey