BCC lacks title deeds for its properties: Auditor General…Declines to comment on unclear financial statements

The Bulawayo City Council (BCC) does not have title deeds for its land designated for both determined and undetermined future use, nor for most of its immovable properties, the acting Auditor General, Mrs Rhea Kujinga, has revealed.

In her latest audit report, Mrs Kujinga also highlighted that the local authority has not audited its revenue-generating venture, The City of Kings.

The absence of a comprehensive asset register for the year under review raises serious concerns about potential theft, fraud, and misappropriation of council properties.

The report raises critical concerns over asset management within BCC, underlining the urgent need for improved financial oversight and greater accountability in the handling of public assets.

Mrs Kujinga’s report revealed that land held for both determined and undetermined future use was not included in the council’s asset register.

Furthermore, most of the council’s immovable properties are not legally registered via title deeds. Alarmingly, some long-term assets, those over 30 years old, were recorded at a nil value.

The Auditor General’s findings extend to the City of Kings’ business venture. Management has not issued financial statements for this capital investment since 2009, contending that the venture has been fully impaired due to persistent losses and assigning it a nil value.

The council also failed to comply with section 49(2)(c) of the Public Finance Management Act (Chapter 22:19), which mandates that the financial statements of any subsidiaries be included in the council’s consolidated accounts.

In response to the damning audit report, BCC acknowledged the shortcomings in its asset management system, saying it is currently working to complete its asset register this year.

BCC said that at the time of the audit, its asset records were maintained in an Excel file, but they are in the process of upgrading their system.

As part of its transition to International Public Sector Accounting Standards (IPSAS), the council is undertaking a valuation exercise to identify all assets with service potential or future economic benefits.

The council also noted that Government-determined boundaries, established through statutory instruments such as Statutory Instrument 212 of 1999, define the land owned by the council for both determined and undetermined uses.

Moreover, for financial reporting purposes, control of assets is assessed by multiple factors, not solely legal ownership.

BCC is one of 90 local authorities red-flagged by the Auditor General for non-compliance with International Financial Reporting Standards (IFRS) and IPSAS.

The audit, carried out under Section 309(2) of the Constitution of Zimbabwe and Section 10(1) of the Audit Office Act (Chapter 22:18), reviewed governance, revenue collection, debt recovery, asset management, procurement practices, employment, and overall service delivery.

In total, the Auditor General issued two unmodified (clean) opinions, seven disclaimers, 29 qualified opinions, and 58 adverse opinions across various public entities.

Only Goromonzi Rural District Council and Marondera Rural District Council in Mashonaland East received unqualified opinions. Meanwhile, the councils in Harare, Mutare, and Masvingo received adverse opinions, and Victoria Falls’ accounts were qualified.

“The objectives of financial statement audits in the public sector are often broader than expressing an opinion on whether the financial statements have been prepared, in all material respects, in accordance with the applicable financial reporting framework, but also to address service delivery issues,” she said.

Notably, Mrs Kujinga refrained from expressing an opinion on BCC’s financial statements. She cited ambiguity over whether the statements were prepared in accordance with IPSAS or IFRS, as they were prepared with reference to the Urban Councils Act (Chapter 29:15) and the Public Finance Management Act (Chapter 22:19).

She said this lack of clarity may affect the comparability and overall usefulness of the financial statements for stakeholders such as Parliament, development partners, and the public.

“In this report, I have issued two unmodified/clean opinions, seven disclaimers of opinion, 29 qualified opinions, and 58 adverse opinions for non-compliance with the standards, in particular, IPSAS 3,” said Mrs Kujinga.

“Accounting policies, changes in accounting estimates, IPSAS 17 — Property, Plant and Equipment, IPSAS 4 — The Effects of Changes in Foreign Exchange Rates, and because of, inter alia, incomplete asset registers, unsupported journals, incomplete records of inventories, unsupported expenditure, and suspense accounts.”

In audit terminology, an adverse opinion indicates that the financial statements contain material misstatements that are not confined to specific items and are significant enough to affect the overall reliability of the reports.

A disclaimer of opinion is issued when the auditor is unable to obtain sufficient evidence to form an opinion, while a qualified opinion suggests that there are material misstatements in certain areas.

An unqualified opinion is given when the financial statements are free from any material misstatements.