Rundu council under fire over finances

The Rundu Town Council’s financial management has come under sharp criticism from MPs this week, who slammed the local authority for being about seven years behind on financial reporting and having tens of millions of dollars in expenditure and accounting entries unsupported by documentation.

The concerns raised by members of parliament serving on the National Assembly’s Public Accounts Committee centre on a consolidated financial report covering the financial years ending 30 June 2018, 2019 and 2020, all of which received adverse audit opinions.

Committee member Job Amupanda pointed out that the council had also not submitted financial statements for 2021, 2022, 2023, 2024, 2025 and 2026.

“We are seven years behind because the CEO did not take responsibility for what the CEO was supposed to have done before,” Amupanda said.

MP Michael Mwashindange described the situation as a “crisis”, saying the financial problems went beyond the outstanding statements.

He criticised council for outsourcing the compilation of financial statements to private firms despite having senior financial officials employed and paid with public funds.

Mwashindange said this had continued for close to 10 years, with council reportedly paying N$2 million for the service.

“People are not receiving services because the town council should every year pay two million to a consultant to come and just do a financial statement,” he said.

He said the committee could not complete its hearing because the council had failed to provide sufficient evidence showing how public resources had been spent.

“We cannot rely on hearsay and word of mouth. We want concrete proof as to really what has happened over the years and how the money for the people of Namibia has been used,” Mwashindange said.

The committee subsequently sent the council back to “put their house in order”, Mwashindange said.

Council CEO Olavi Nathanael acknowledged the backlog in the council’s financial reporting but said some of the issues raised by the committee predated his appointment in 2021.

He told MPs that the council outsourced a consultant in June last year to complete the outstanding audits covering seven years, with the work expected to be submitted by October this year.

Questions need answers

Amupanda said the audit report contained about 26 or 27 serious issues, including unsupported expenditure of approximately N$67 million across the three years under review.

"Basically it means that N$67 million has been spent, but it's not documented proof that speaks to that,” he said.

Amupanda also questioned whether the council was complying with statutory obligations governing the responsibilities of its accounting officer.

The auditor general’s findings, released last year, found that the Rundu Town Council failed to provide expenditure invoices totalling about N$58.5 million for the three years under review.

It also identified an unexplained N$52.8 million difference between the council’s cash book and bank statement in 2018. The council also failed to perform bank reconciliations in 2018 and 2019, according to the report.

The auditors further found that the council could not provide supporting documents for entries amounting to N$60.3 million in 2020, N$44 million in 2019 and N$14.4 million in 2018 that were credited to the general reserves account.

A further N$78.2 million journal entry credited to accumulated surplus in 2018 was also unsupported.

The auditors said inadequate controls over journals, including the absence of complete records, supporting documents and evidence of review and approval, meant they could not confirm the integrity of the entries or their impact on the financial statements.

The audit also raised concerns over receivables, with no supporting documents provided for exchange transactions amounting to N$381.8 million in 2020. It also flagged major discrepancies in the council’s reported debt impairment figures.

The council further failed to substantiate a N$5.26 million Roads Authority subsidy received in 2018, while a N$5.86 million subsidy received in 2020 was not reflected in the financial statements.