City's employee costs hit N$1.53 billion

The City of Windhoek spent N$1.53 billion on employee costs, about 31% of total revenue of N$4.98 billion in the 2023/24 financial year — meaning almost one third of the city’s spending went toward salaries.

This figure emerges at the centre of an audit that also recorded total expenditure

of N$4.91 billion and a deficit of N$66.34 million, while the Office of the

Auditor-General declined to express an opinion on the credibility of the

financial statements.

In his report tabled in Parliament on Thursday, Junias Kandjeke issued a

disclaimer of opinion, stating he was unable to obtain sufficient appropriate

audit evidence to provide a basis for an audit opinion.

“Accordingly, I do not express an opinion on these financial statements,” Kandjeke wrote.

A disclaimer is the most severe audit outcome an organisation can obtain.

Salary increments exceeded approved limits

Auditors found that the municipality implemented a 5% salary increment agreed with the Namibia Public Workers Union (Napwu), despite only a 3% increase being approved by the line minister at the time. This resulted in employee costs being

overstated by N$19.8 million in 2024, N$72 million in 2023 and N$24 million in

2022. The overstated amounts indicate that the higher increment had financial

implications beyond what was authorised.

Kandjeke noted that auditors were not satisfied with the occurrence of the expenditure, effectively questioning whether the payments complied with the required approval framework. The finding raises governance concerns about adherence to financial controls and whether council exceeded its authority in determining remuneration adjustments.

PPP transactions missing

Kandjeke said the financial statements did not disclose the accounting policy for

public-private partnership (PPP) transactions and related balances. He further

noted that the municipality did not account for transactions and related

balances of PPP arrangements because the related financial statements were not

made available by the PPP partners.

Auditors were therefore unable to obtain sufficient appropriate audit evidence regarding the transactions and balances related to PPP arrangements.

Data manipulation concerns

The audit report also highlighted concerns regarding deleted client transactions

and weaknesses in the municipality’s IT control environment.

Kandjeke said the impact of deleted client transactions and related balances was not assessed or quantified because no forensic investigation was conducted.

Instead, a review of payment mismatches was performed, noting discrepancies

between the Archive and Solaris systems, including delayed transaction postings

and missing receipts in the Cash Drawer system.

The root causes were identified as outdated security policies, password parameters

not configured in line with industry best practice, inadequate user access

management, lack of audit logging trails to monitor changes, and insufficient

privileged access management.

“The auditors therefore could not ascertain the impact of the data manipulation on the 2023 and 2024 financial statements,” Kandjeke said.

Auditors were also unable to determine whether adjustments might have been necessary in respect of the impact of the data manipulation on the relevant financial statement areas.

Land records and asset verification

In addition, while the municipality provided a land reconciliation detailing total

land size under its jurisdiction and its allocation by land use, auditors could

not satisfy themselves with the accuracy and completeness of land recognised

under property, plant and equipment, investment property and inventory.

Revenue and expenditure breakdown

Revenue from non-exchange transactions amounted to N$870.82 million, while exchange transactions totalled N$4.11 billion. Property rates generated N$773.04 million and levies contributed N$24.19 million. Other government entities added N$24.97 million, with public contributions and donations totalling N$14.39 million.

Fines, penalties and levies brought in N$27.18 million, while licences and

permits accounted for N$7.07 million.

Service charges remained the largest contributor under exchange transactions at N$3.90 billion. Rental of facilities and equipment brought in N$33.29 million,

dividends yielded N$958,400, gains on continued operations stood at N$3.97

million, profit on the sale of land reached N$6.79 million, other income

amounted to N$70.01 million, interest on investments N$31.75 million, and

interest on outstanding debtors totalled N$66.02 million.

On the expenditure side, bulk purchases accounted for N$2.13 billion, employee

costs N$1.53 billion, remuneration of councillors N$8.55 million, depreciation

and amortisation N$499.24 million, general expenses N$337.99 million, finance

costs N$159.96 million, contracted services N$117.31 million, and repairs and

maintenance N$311.01 million. Grants and subsidies amounted to N$5.64 million.

Debt impairment reflected a negative N$182.63 million, while impairment of

assets was N$52,410 and losses from other operations N$57,636.