Okahandja returns N$10 million to treasury despite stalled projects
Over 50 positions unfilled
Money earmarked for infrastructure development was returned unspent after the municipality failed to implement the project within the financial year.
The Okahandja municipality returned N$10 million in unused infrastructure funds to the treasury during the 2020/21 financial year, while paying over N$6 million to its senior management team and failing to fill 54 critical staff positions.
These findings are contained in a scathing audit report by auditor general Junias Kandjeke, who issued a disclaimer of audit opinion - the most severe form of audit verdict - indicating that the municipality’s financial statements could not be relied upon.
“Because of the significance of the matters described in the basis for disclaimer, I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion,” Kandjeke wrote. “Accordingly, I do not express an opinion on the financial statements.”
Executive payouts amid breakdown
Despite a breakdown in internal controls, the municipality’s top executives and managers received a total of N$6 067 343 in benefits. This included N$3.1 million in basic salaries, N$541 838 in car allowances, and N$1.2 million in housing benefits. Additional payments in bonuses, pension contributions, and other allowances pushed the overall figure even higher.
Meanwhile, basic service delivery faltered. A N$10 million central government subsidy, earmarked for infrastructure development, was returned unspent after the municipality failed to implement the project within the financial year.
“The council was unable to implement the project... and therefore the money reserved for construction of services was returned to Treasury,” Kandjeke noted.
Staffing and spending concerns
The audit further reveals that the municipality exceeded the 35% ceiling on employee costs, effectively freezing new appointments and leaving 54 vacancies unfilled. According to Kandjeke, the council continues to operate below capacity because it cannot recruit within the current cost structure.
The then-CEO, Martha Mutilifa, received N$623 721 in remuneration during the financial year, despite her contract ending in October 2020 - just over three months into the year. An acting CEO was appointed from within senior staff, but the municipality did not redirect funds to improve service delivery or address governance shortcomings.
Overall, Okahandja spent N$39 million on employee costs, even as it grappled with significant financial constraints. It also failed to budget for depreciation and debt impairment, and submitted its financial statements three months later than legally required.
Lapses in financial discipline
Kandjeke criticised the municipality’s weak financial discipline. Excessive leave balances, uncapped in violation of government policy, led to an overstatement of N$3.1 million in the leave pay provision. The auditor noted that the municipality failed to cap leave days at 60, as required by Government Gazette No. 4621 on personnel rules.
Additionally, the municipality failed to properly account for N$4.4 million owed to the Otjozondjupa Regional Council. Kandjeke noted a significant discrepancy between the confirmed liability and the amount reflected in the financial statements, stemming from the municipality’s failure to record the mandatory 5% contribution to the regional authority.
Governance and oversight failures
Compounding the governance concerns, council meeting minutes for several months in 2022 were not made available for audit. This omission made it impossible for auditors to verify key decisions or assess post-balance sheet events that could have an impact on the financial statements.
“There were no alternative procedures that the auditors could perform to obtain audit evidence supporting numerous key balances,” Kandjeke warned. “Consequently, I was unable to satisfy myself as to the completeness, accuracy, and valuation of several material items.”
These findings are contained in a scathing audit report by auditor general Junias Kandjeke, who issued a disclaimer of audit opinion - the most severe form of audit verdict - indicating that the municipality’s financial statements could not be relied upon.
“Because of the significance of the matters described in the basis for disclaimer, I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion,” Kandjeke wrote. “Accordingly, I do not express an opinion on the financial statements.”
Executive payouts amid breakdown
Despite a breakdown in internal controls, the municipality’s top executives and managers received a total of N$6 067 343 in benefits. This included N$3.1 million in basic salaries, N$541 838 in car allowances, and N$1.2 million in housing benefits. Additional payments in bonuses, pension contributions, and other allowances pushed the overall figure even higher.
Meanwhile, basic service delivery faltered. A N$10 million central government subsidy, earmarked for infrastructure development, was returned unspent after the municipality failed to implement the project within the financial year.
“The council was unable to implement the project... and therefore the money reserved for construction of services was returned to Treasury,” Kandjeke noted.
Staffing and spending concerns
The audit further reveals that the municipality exceeded the 35% ceiling on employee costs, effectively freezing new appointments and leaving 54 vacancies unfilled. According to Kandjeke, the council continues to operate below capacity because it cannot recruit within the current cost structure.
The then-CEO, Martha Mutilifa, received N$623 721 in remuneration during the financial year, despite her contract ending in October 2020 - just over three months into the year. An acting CEO was appointed from within senior staff, but the municipality did not redirect funds to improve service delivery or address governance shortcomings.
Overall, Okahandja spent N$39 million on employee costs, even as it grappled with significant financial constraints. It also failed to budget for depreciation and debt impairment, and submitted its financial statements three months later than legally required.
Lapses in financial discipline
Kandjeke criticised the municipality’s weak financial discipline. Excessive leave balances, uncapped in violation of government policy, led to an overstatement of N$3.1 million in the leave pay provision. The auditor noted that the municipality failed to cap leave days at 60, as required by Government Gazette No. 4621 on personnel rules.
Additionally, the municipality failed to properly account for N$4.4 million owed to the Otjozondjupa Regional Council. Kandjeke noted a significant discrepancy between the confirmed liability and the amount reflected in the financial statements, stemming from the municipality’s failure to record the mandatory 5% contribution to the regional authority.
Governance and oversight failures
Compounding the governance concerns, council meeting minutes for several months in 2022 were not made available for audit. This omission made it impossible for auditors to verify key decisions or assess post-balance sheet events that could have an impact on the financial statements.
“There were no alternative procedures that the auditors could perform to obtain audit evidence supporting numerous key balances,” Kandjeke warned. “Consequently, I was unable to satisfy myself as to the completeness, accuracy, and valuation of several material items.”
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