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Vusumuzi Dube, Municipal Reporter
THE Bulawayo City Council which owns numerous properties in the city is not aware of the net worth of their properties, exposing the local authority to possible defrauding and undervaluing if these properties are to be sold.
Commenting on the recently completed audited council accounts for 2012, the local authority’s Town Clerk, Mr Christopher Dube, said they only had a list of assets but did not have any assets register. Ernst and Young Chartered Accountants were engaged by council to audit the 2012 accounts.
The local authority was forced to fast track its audited results after the Government noted that they were more than five years behind thus warned them that they will not approve their annual budget if they did not bring their house in order. According to the latest council report, Mr Dube was put on the edge by auditors and councillors on why the city administrators did not have any assets register.
An assets register contains pertinent details about each fixed asset to track their value and physical location. The register shows the quantity and value of the assets, while a list of assets is just a compilation of assets owned by an individual or corporation.
The town clerk was responding to a question raised by the auditors that the local authority had failed to produce evidence, through an assets register, to prove their financial position.
“During the year ended 31 December 2012, management did not maintain a comprehensive fixed asset register. The auditor was not able to obtain sufficiently appropriate audit evidence about the existence and completeness of property, plant and equipment balances included in the statement of financial position of $126 913 680,” reads the report.
In his response, Mr Dube noted that their books were thrown off the rail when they had to revalue due to the introduction of the multi-currency regime in the country.
“Council revalued its assets in 2009 and a list of assets was created which was used in the preparation of financial statements from 2009. Additions in the subsequent years were accounted for cumulatively. Although council does not have an asset register, a list of assets is available,” said Mr Dube.
He said the local authority was in the process of working on the assets register, revealing that they had appointed a whole council section to look into the matter. Mr Dube expressed hope to have come up with the assets register by December.
“Council is in the process of coming up with a comprehensive asset register for all council assets. Some assets which were previously not included in the list have been identified through the GPS system. What is outstanding now is the valuation of these assets and these will be added to the asset list. A section has been appointed to look into the appropriate headings for the register. It is hoped that the register will be fully updated by 31 December 2017,” said the Town Clerk.
Commenting on the matter a properties expert based in the city, who declined to be named said it was dangerous for the city to operate without knowing its net value noting that anyone could just come in and defraud the council by purchasing a property or asset at a cost below its actual cost.
“At least they now have the list of their assets but it is essential for them to come up with a proper assets register because right now they do not even know how much they are worth. How would they determine a cost of their assets, clearly someone is sleeping on duty,” said the properties expert.
Last year the municipality had said they were failing to account for its inventory, with the local authority attributing this to the lack of suitable qualified personnel to effect the assets audit. Ernst and Young had even gone to the extent of ordering the local authority to urgently address the anomaly.
“The valuation of fixed assets necessitated the services of suitably qualified, experienced and skilled individuals to come up with the values to be attached to assets. Council utilised the services of the city valuer to revalue assets such as buildings and fixtures since he was qualified to do so. For motor vehicles and plant the services of the transport superintendent were utilised as he was also qualified.
“However, for roads, subways, dams, over and underground pipes, bridges and items of a similar nature the revaluation was not carried out as council did not have suitable expertise to undertake such an exercise. Therefore, Council did not have the value of these assets. Ernst and Young who were council auditors had raised concern on this issue and had implored council to revalue these assets and come up with a comprehensive asset register,” reads a council report.
The 2009 audit on council properties was made following revelations that tenants, some of whom were given 10-year leases in the 1970s, were still occupying the properties and are no longer paying rentals to the local authority. Late former Town Clerk Mr Stanley Donga died while in the middle of pushing for an inventory of all council properties.
Meanwhile, commenting on the auditing of council accounts for the years 2013 to 2016, council’s acting finance director, Mr Cyprian Dabengwa said they were working towards completing the process by the end of this year.
“As per our plan, by year end 2017, 2013 to 2015 final accounts would be ready. The 2013 and 2014 final accounts have already been audited and 2015 audit has just resumed. However, what causes the delay is that auditors are waiting for 2012 final accounts to go through council and be signed then they can release the 2013 audited final accounts for the same procedure to take place, noting that the audited final accounts are submitted one at a time,” said Mr Dabengwa.
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