THE Auditor-General (AG) has flagged gaffes in the Harare City Council’s financial records where receipts and payments made during the year 2021 were not accurately and completely captured.
According to the 2024 Auditor-General report tabled before Parliament recently, Harare’s accounts did not match receipts and payments made during the year 2021.
Acting Auditor-General Rheah Kujinga said council had cash and cash equivalents amounting to ZWL$458,3 million as at December 31, 2021.
“However, receipts and payments made during the year were not being accurately and completely captured in council’s accounting records, and no bank reconciliations were prepared for the year ended December 31, 2021,” Kujinga said.
“As a result, I could not satisfy myself on the completeness and accuracy of the valuation of cash and cash equivalents balances disclosed in the financial statements.”
The report said the Auditor-General was not given a payables listing amounting to ZWL$5,18 billion with some investments in its business units, raising concerns about the potential for unauthorised transactions.
“Included in the current liabilities balance of ZWL$15,96 billion was an unsubstantiated balance of ZWL$ 10,7 billion. I was not availed of the payables listing of ZWL$5,18 billion, journals amounting to ZWL$2,89 billion supporting the suspense account, employee obligations of ZWL$0,35 billion, and schedules supporting leave pay of ZWL$1,1 billion and VAT provision of ZWL$1,18 billion,” she said.
“The council did not disclose its investments in Harare Sunshine Holdings (Pvt) Ltd, Rufaro Marketing (Pvt) Ltd and Harare Quarry (Pvt) Ltd. Council could not substantiate a loan to Harare Quarry (Pvt) Ltd amounting to ZWL$ 4,96 million as no loan agreement was availed.
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“In addition, council understated its share of revenue from Council Parking (Pvt) Ltd by ZWL$73,21 million and did not account for ZWL$15,88 million due from Council Parking (Pvt) Ltd.
"As a result, I was unable to obtain sufficient appropriate audit evidence to confirm that related party balances at December 31, 2021 and transactions for the year then ended were fairly stated.”
The report further indicated that council failed to assess property and investment assets for impairment, which violated accounting standards for non-cash generating assets.
“The council did not assess its property, plant, and equipment and investment property for indicators of impairment. This was contrary to IPSAS 21 — ‘Impairment of Non-Cash Generating Assets’ paragraph 26, which requires assessment of assets for indications of impairment to be made at each reporting date,” the report said.
AG said council should assess its assets for indicators of impairment at each reporting date.
In response, Harare City Council management said it was taking necessary measures to have a module in the enterprise resource system (ERP).
“Recommendation noted and management is taking necessary action to integrate an asset management module into the SAGE ERP system, to implement a system for proper accounting and reporting of property, plant and equipment.
“Management will ensure that bank reconciliations are prepared on time and reviewed monthly. Management will review and sign the bank reconciliation reports to confirm the accuracy and completeness of the reconciliations.
“Management will monitor the completion of bank reconciliations and ensure timely follow-up on any discrepancies or unusual items identified during the reconciliation process.”
In her recommendations, Kujinga said council should retain relevant documents to adequately support records in respect of its liabilities.
“Steps to improve the document filing and retrieval process will be put in place to ensure that documents can easily be retrieved together with the supporting documents when they are required for future reference,” council said.
“A creditor reconciliation process has been put in place to confirm the accuracy of the payable balances. We will ensure that all payments and expenditures are captured promptly and accurately, with no delays or errors in the recording process.
It further indicated that remuneration of key management staff had been included in the general payroll, while efforts will be made to disclose it in the future.
“Management is addressing these risks through the implementation of the recommended actions, including regular reconciliations and the creation of a comprehensive database to capture all relevant businesses and permit holders in the city,” council said.
