AG red flags local authorities for failure to account

Rutendo Nyeve, Sunday News Reporter

THE Auditor General’s office has raised a red flag over local authorities’ failure to submit financial statements for audit, citing governance issues as well as irregularities in management of assets, revenue collection, employment costs as well as procurement.

The Auditor General (AG)’s office is mandated to audit the accounts, financial systems and financial management of all departments, institutions and agencies of government, all provincial and metropolitan councils and all local authorities. At the request of the government, the AG carries out special audits of the accounts of any statutory body or government-controlled entity.

Addressing participants at a two-day public sector convention of the Institute of Chartered Accountants of Zimbabwe (ICAZ) held in Bulawayo recently, acting deputy auditor-general Mr Laiza Chikowore revealed that 71 local authorities had not submitted their financial statements for audit.

“There have been delays or non-submission of financial statements for audit where 53 state-owned entities and 71 local authorities have not submitted financial statements. Four entities have arrears of more than three years.

“Governance issues were the most outstanding issues for both local authorities and SOEs. Out of 114 issues, 81 related to governance issues, 33 related to management of assets, revenue collection, employment costs and procurement. Other challenges include weak internal controls, non-alignment of entities’ accounting processes with accounting standards, non-compliance with tax laws and regulations in respect of management benefits, board fees and allowances,” said Mr Chikowore.

He said local authorities have failed to account for infrastructure assets, land reserves and stands inventory in the financial statements. 

“There are also challenges of absence of key policies for some local authorities and SOEs, non-compliance with laws and other regulatory provisions, poor contract management (procurement), mismanagement of assets, procurement irregularities which involves adoption of wrong procurement method as well as poor record keeping of unsupported expenditures,” said Mr Chikowore.

He said that the local authorities continue to have challenges in service delivery regardless of Inter-Governmental Transfer (IGTF) which had seen funds being released to improve service delivery. IGTF are funds that the treasury gives local authorities and these include devolution funds, ZINARA disbursements and any other grants.

“Service delivery issues continue to affect most local authorities over the years despite Inter-Governmental Transfer (IGTF) released to local authorities towards financing of service delivery capital projects,” said Mr Chikowore.

Turning to environment issues, he said councils were not practicing effective solid waste management as they did not have engineered landfills and were using illegal dump sites for their solid waste disposals.

Mr Chikowore said Government had implemented reforms to improve public sector transparency and accountability which include the enactment of the Public Entities Corporate Governance Act [Chapter 10:31], establishment of the Corporate Governance Unit (CGU) in the Office of the President and Cabinet, establishment of the Central Internal Audit Unit in the Ministry of Finance and Investment Promotion as well as the adoption of IPSAS as the reporting framework in Public Sector (Ministries, Departments and agencies).