THE National Assembly has adopted the report of the Public Accounts Committee on Bulawayo City Council (BCC)’s Audited Accounts for 2019 and 2020 following recommendations made by the Auditor-General (AG)’s report on local authorities for 2023.
The report was presented to the National Assembly by the chairperson of the Public Accounts Committee on Bulawayo’s audited accounts last week.
The committee resolved to enquire into issues raised by the AG on the 2019 and 2020 financial statements for BCC.
According to the report, the AG noted that council’s reporting framework was not explicit as to whether it was International Public Sector Accounts Standards (IPSAS) or International Financial Reporting Standards (IFRS).
However, prior to the adoption of IPSAS, councils were guided by the Urban Councils Act to produce financial statements.
The Act requires a council to prepare separate balance sheets and income and expenditure accounts as may be necessary to reflect a true and fair view of its financial position and transactions.
The Parliamentary comment expects the financial statements for subsequent years to comply with IPSAS.
The committee also observed that BCC has made commendable progress towards migration to IPSAS.
- Bulawayo struggles to clear housing backlog
- Bulawayo struggles to clear housing backlog
- Egodini developer changes tune
- Outcry over city’s new rates, tariffs
Keep Reading
“The Auditor-General noted that council did not maintain a comprehensive asset register during the year. Land was also not included in the asset register and immovable property was not registered by way of title deeds and some long-term assets that are above 30 years old were carried at nil value,” the report said.
“The committee gathered that BCC has a deed of grant which proves ownership of land given to council. The committee was advised by BCC that considerable financial resources were required to obtain title deeds for all council land, which the city did not have at the time of audit.”
The report said Bulawayo required government intervention to meet the costs.
“In relation to the asset register and asset valuation exercise, the committee found that BCC had an asset register which met the Zimbabwe Financial Reporting Manual in Excel format, which was in the process of being loaded into the Enterprise Resource Planning (ERP).
“BCC submitted the Excel asset register before the committee as evidence. As far as valuation was concerned, BCC indicated that it had the capacity to conduct valuation of buildings and vehicles and has further complemented this capacity with the assistance of the Ministry of Local Government and Public Works’ valuation and estates directorate,” the report said.
The committee commended council for having an asset register in Excel format saying it is imperative for the asset register to be uploaded into its Enterprise Resource Planning System.
On capital investment, the AG noted that it was included in the financial statements in City of Kings Business Ventures carried at nil value and council did not comply with the Public Finance Management Act.
“The committee found that BCC’s capital investment in City of Kings Business Ventures was set up through a charter to run non-core council operations.
“These operations include Mzilikazi Pottery, Mzilikazi School of Arts, Parks Nursery, Caravan Park and later the sewerage farm, known as Aisebly Farm.
“The committee gathered that BCC was seeking the services of an independent evaluator of capital investment in the City of Kings Business Ventures.”
The committee observed that the evaluation of capital investments in City of Kings Capital Ventures had taken too long to be implemented in order to address the observations made by the Auditor-General.
It was noted that the City of Kings Business Ventures does not have a balanced board of directors in terms of good corporate governance ethics.
“The oversight by a management committee over the business affairs of the City of Kings Business Ventures can create a conflict of interest and undermine effective checks and balances,” the report said.
The AG observed that council had an equity investment in Tetrad Investment Bank Limited carried at ZWL$526 220 for 2019 and 2020.
The provisional judicial management of the bank was lifted in October 2018 following the successful conclusion of a scheme of the arrangement involving conversion of debt to equity.
The committee, in its findings, said BCC invested ZWL$526 220 of its excess funds with Tetrad Investment Bank prior to it entering liquidation before the maturity of the investment.
BCC further explained that the liquidation process gave birth to shares which were valued at 10c each and yielded an investment of 5 262 200 shares.
The value of the shares is too small compared to the initial investment, which was worth US$500 000 and an interest of US$26 220.
“The committee observed that due diligence was not done by management and councillors of BCC in approving equity investment in Tetrad Investment Bank.
“The committee observed that BCC made a significant loss of investment as a public entity in this equity investment in Tetrad Investment Bank Limited.’’
The committee also discovered that the local authority faced challenges with some of its suppliers who did not have Enterprise Resource Planning (ERP) to generate statements and perform creditor reconciliations.
It said BCC should place a mandatory condition on the suppliers’ contracts for the production and submission of ERP-generated statements to address this audit observation.
