Published: 5 hours ago

The Tsholotsho Rural District Council (RDC) in Matabeleland North has been flagged by the Auditor General (AG) for failing to comply with International Accounting Standards (IAS) in its financial reporting for the period 2021 to 2023, raising concerns about accountability and transparency in the management of public funds.

According to the AG's latest report tabled in Parliament, the council failed to review the useful lives and residual values of its assets as of December 31, 2021, in violation of IAS 16 on Property, Plant, and Equipment. The council also neglected to depreciate property, plant, and equipment (except land), contrary to IAS 16, paragraph 43, which requires such depreciation to ensure accurate financial representation.

"This omission materially distorted the financial statements," the report warned. "Had council reviewed the useful lives and residual values of assets and depreciated assets, the financial statements would have been materially different."

The AG further revealed that the council misclassified investment properties held for rentals and capital appreciation as property, plant, and equipment, breaching IAS 40 on Investment Property. "This was contrary to IAS 40, paragraph 5, which requires properties held to earn rentals or for capital appreciation or both to be classified as investment property," the report stated.

Additionally, Tsholotsho RDC failed to establish a policy to assess the recoverability of receivables and did not recognize allowances for expected credit losses, contravening IFRS 9 (Financial Instruments).

The report also exposed irregularities in revenue recognition. The council recorded ZWL$34,2 million from property rentals and land levies on a cash basis, contrary to IFRS 15 (Revenue from Contracts with Customers), which mandates that revenue should only be recognized when performance obligations are fulfilled.

The findings highlight deep-rooted weaknesses in Tsholotsho RDC's financial management systems, raising fears that poor compliance with international standards could mask inefficiencies, mismanagement, or potential misuse of public resources.

The AG's recommendations are expected to push the council to urgently align its accounting practices with global standards to restore credibility and ensure proper stewardship of public funds.
- Southern Eye