City in shambles
Auditors in 2017 cast doubt on the City of Windhoek's ability to continue as a going concern, placing services to its hundreds of thousands of residents in jeopardy.
The City of Windhoek had forecast losses of N$148 million last year, amid a financial shambles that is threatening to plunge it into bankruptcy.
This, among the revelations in a report by the auditor-general, which also found a serious lack of proper financial reporting by the City for the 2015/16 financial year, while recommending that it tighten its belt and reduce ongoing losses.
The municipal council could not provide supporting documentation or reasons for long-term loan redemptions of more than N$469 million being transferred to creditors. The auditors, BDO Namibia Chartered Accountants, on behalf of the AG, could not establish the specific loan to which this amount relates.
Another discrepancy of N$91 million was recorded between land sales and the list of concluded transactions of sold erven, for which the municipality did not give reasons.
The audited report was tabled by deputy finance minister Natangue Ithete in parliament on Tuesday.
While most other towns blame poor financial reporting, the City of Windhoek, the biggest municipality in the country, boasts some of the highest-paid staff, and presumably has skilled people at its disposal.
Yet, the AG report finalised in February this year concluded that it could not give its financials a clean bill of health.
For auditing purposes, the City could not produce a fixed asset register.
Moreover, the auditors found a material difference of nearly N$71 million between long-term loans and the confirmations received from financial institutions.
More than N$60 million in bad debt written off was not supported by any listing or basis of calculation. Trade debtors above 90 days outstanding amounted to more than N$417.5 million and debtors and other receivables were materially understated by more than N$187 million.
It was also found that the City management had overprovided for leave by more than N$50 million. A difference of just over N$8 million from 2015 between the City's bonus balance that was disclosed in its annual financial statements and the balance on the payroll records was reported, which means that there was an overstatement of more than N$42 million.
In its 2017 financial budget the municipal management foresaw a loss of over N$148 million, which the auditors said cast doubt on the City's ability to continue as a going concern if losses were allowed to continue unabated.
The audit further reported an uncleared suspense account balance of more than N$45 million, reduced from N$144 million in 2015. The auditors recommended that suspense accounts be cleared on a timely basis, so that any suspicious transactions could be investigated immediately and corrective action taken to safeguard the resources of the municipality.
The auditors also recommended that the City ensure that all profit sharing from public-private partnership projects is recognised and accounted for, when they found that more than N$19 million in profit for such a project was not accounted for in the council's books at the end of the 2015/16 financial year.
During the year under review the City's management approved the disposal of 149 council cars, plants and equipment and acquired 316 cars through hire purchase agreements over the following five years. The replacement cost was expected to be more than N$300 million.
The expected saving of this exercise was estimated at close to N$40 million, but the City did not disclose this in its annual financial statement.
CATHERINE SASMAN
This, among the revelations in a report by the auditor-general, which also found a serious lack of proper financial reporting by the City for the 2015/16 financial year, while recommending that it tighten its belt and reduce ongoing losses.
The municipal council could not provide supporting documentation or reasons for long-term loan redemptions of more than N$469 million being transferred to creditors. The auditors, BDO Namibia Chartered Accountants, on behalf of the AG, could not establish the specific loan to which this amount relates.
Another discrepancy of N$91 million was recorded between land sales and the list of concluded transactions of sold erven, for which the municipality did not give reasons.
The audited report was tabled by deputy finance minister Natangue Ithete in parliament on Tuesday.
While most other towns blame poor financial reporting, the City of Windhoek, the biggest municipality in the country, boasts some of the highest-paid staff, and presumably has skilled people at its disposal.
Yet, the AG report finalised in February this year concluded that it could not give its financials a clean bill of health.
For auditing purposes, the City could not produce a fixed asset register.
Moreover, the auditors found a material difference of nearly N$71 million between long-term loans and the confirmations received from financial institutions.
More than N$60 million in bad debt written off was not supported by any listing or basis of calculation. Trade debtors above 90 days outstanding amounted to more than N$417.5 million and debtors and other receivables were materially understated by more than N$187 million.
It was also found that the City management had overprovided for leave by more than N$50 million. A difference of just over N$8 million from 2015 between the City's bonus balance that was disclosed in its annual financial statements and the balance on the payroll records was reported, which means that there was an overstatement of more than N$42 million.
In its 2017 financial budget the municipal management foresaw a loss of over N$148 million, which the auditors said cast doubt on the City's ability to continue as a going concern if losses were allowed to continue unabated.
The audit further reported an uncleared suspense account balance of more than N$45 million, reduced from N$144 million in 2015. The auditors recommended that suspense accounts be cleared on a timely basis, so that any suspicious transactions could be investigated immediately and corrective action taken to safeguard the resources of the municipality.
The auditors also recommended that the City ensure that all profit sharing from public-private partnership projects is recognised and accounted for, when they found that more than N$19 million in profit for such a project was not accounted for in the council's books at the end of the 2015/16 financial year.
During the year under review the City's management approved the disposal of 149 council cars, plants and equipment and acquired 316 cars through hire purchase agreements over the following five years. The replacement cost was expected to be more than N$300 million.
The expected saving of this exercise was estimated at close to N$40 million, but the City did not disclose this in its annual financial statement.
CATHERINE SASMAN
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