Harare City Council rot exposed

Published: 9 hours ago

The Auditor-General has raised red flags over Harare City Council's financial records for the year 2021, citing major inconsistencies and missing documentation that hindered a proper audit of the city's finances.

According to the 2024 Auditor-General's report, tabled in Parliament recently, the city's financial statements for 2021 did not accurately reflect actual receipts and payments, while crucial accounting practices such as bank reconciliations were not carried out.

Acting Auditor-General Rheah Kujinga said the local authority reported cash and cash equivalents amounting to ZWL$458.3 million as at December 31, 2021. However, these figures could not be verified due to incomplete records and poor financial reporting.

"Receipts and payments made during the year were not being accurately and completely captured in council's accounting records, and no bank reconciliations were prepared for the year ended December 31, 2021," said Kujinga.

"As a result, I could not satisfy myself on the completeness and accuracy of the valuation of cash and cash equivalents balances disclosed in the financial statements."

The report also revealed that council failed to provide a payables listing amounting to ZWL$5.18 billion, while other liabilities remained unexplained. Out of ZWL$15.96 billion in current liabilities, ZWL$10.7 billion was unsubstantiated, with no supporting documentation for several journal entries and provisions.

"I was not availed of journals amounting to ZWL$2.89 billion supporting the suspense account, employee obligations of ZWL$0.35 billion, and schedules supporting leave pay of ZWL$1.1 billion and VAT provision of ZWL$1.18 billion," Kujinga noted.

Further concerns were raised about the council's failure to disclose its investments in key municipal entities including Harare Sunshine Holdings (Pvt) Ltd, Rufaro Marketing (Pvt) Ltd, and Harare Quarry (Pvt) Ltd. A ZWL$4.96 million loan to Harare Quarry also lacked any accompanying loan agreement.

Additionally, the report highlighted that revenue from Council Parking (Pvt) Ltd was understated by ZWL$73.21 million, with a further ZWL$15.88 million not accounted for.

"Due to these issues, I was unable to obtain sufficient appropriate audit evidence to confirm that related party balances at December 31, 2021, and transactions for the year then ended were fairly stated," the report stated.

In violation of accounting standards, the council also failed to assess its property, plant, and equipment for impairment as required by International Public Sector Accounting Standard (IPSAS) 21, which mandates such assessments at each reporting date.

Responding to the findings, Harare City Council management said steps were being taken to improve internal systems, including integrating an asset management module into the SAGE enterprise resource planning (ERP) system.

"Management will ensure that bank reconciliations are prepared on time and reviewed monthly," the response read. "We will review and sign off reconciliation reports to confirm accuracy and completeness and ensure timely follow-up on any discrepancies or unusual items."

The council also promised to improve document filing and retrieval systems to retain records supporting liabilities and payments and to reconcile creditor accounts to confirm the accuracy of payables.

Management acknowledged that the remuneration of key management staff had previously been bundled with the general payroll but committed to improving disclosure going forward.

"Management is addressing these risks through the implementation of the recommended actions, including regular reconciliations and the creation of a comprehensive database to capture all relevant businesses and permit holders in the city," the council said.

The findings mark yet another chapter in a series of audit concerns raised over the years, calling into question governance and financial transparency at one of Zimbabwe's largest municipal authorities.
- Newsday

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