Councils' books a mess

A picture of chaotic bookkeeping emerges from the audited reports of village and town councils recently tabled in parliament.

Four financial reports for different financial years had qualified audit opinions – meaning there was insufficient evidence of transactions, inadequate disclosures, uncertainties in estimates, and insufficient documentation provided for auditing purposes.

It speaks of assets and money unaccounted for, inventories not done, of late payments and penalties due on such late payments, unsupported adjustments and journals posted, or over- and understatements of properties. In short, it is a recipe for fraud and corruption to thrive with impunity.



Kalkrand

According to the report of the auditor-general on the accounts of Kalkrand for 2014 and 2015, the auditors were unable to confirm provisions amounting to more than N$2 million because of a lack of supporting documentation.

Supporting documents were also not submitted for payments amounting to N$367 310 in 2014. The village council disclosed an amount of N$353 970 as a subsidy of electricity charges, but the auditors could not trace this amount to bank statements.

Also in 2014, financial statements reflected N$255 088 paid for contractual work but again the auditors could only confirm N$106 800 while the rest remains unaccounted for.

While the council claimed that N$88 040 was spent on repairs, only N$4 679 could be traced; the remaining N$83 971 is unaccounted for.

The auditors were also unable to confirm the completeness and accuracy of acquisitions of property, plant and equipment amounting to N$101 497 during the 2015 financial year because supporting documentation was not supplied.

S&T payments made in 2015 amounting to N$65 866 and leave gratuity of N$25 289 could not be verified.

There was also an unexplained difference of more than N$3.5 million between the cash book and general ledger in 2015. Other unexplained differences between supplier statements and financial statements were found: N$552 205 for bulk electricity purchases and N$77 403 for bulk water purchases.

Suspense accounts amounting to N$570 325 were not cleared and statutory deductions were not made on time in 2014.



GIBEON

At Gibeon the picture looks similarly dismal. For the financial years ending in June 2012 and 2013 capital projects worth N$367 310 could not be explained, suspense accounts to the value of N$658 442 (2012) and N$769 708 (2013) were not cleared, and bank reconciliations and cash books were not provided for auditing purposes.



There was no fixed asset register in place, the storeroom was not properly administered, bank statements for the investments accounts were not provided, and there were misstatements for the purchase of bulk water amounting to more than N$1 million (2012) and more than N$600 000 (2013).



There was a lack of supporting documents for consultancy fees of N$97 123 (2012) and N$759 534 (2013). There was no submission of approved tariffs used for private electricity supply, no submission of final provisional earnings reports, some VAT returns were not submitted, and deficits were understated.

The Build Together programmes at both Kalkrand and Gibeon were not properly administered.



MUNICIPALITIES

While municipalities seem to be run in a less chaotic fashion than village councils, there still remain huge anomalies in the manner financial accounting is conducted.



OUTJO

For the financial year that ended in June 2015 the Outjo municipality did not repay external government loans of more than N$2 million.

The council wrote off more than N$22 million in bad debt, which includes more than N$1.7 million due to fraud in earlier years.

There was an unexplained difference of N$95 584 between earning reports and the payroll stated in financial statements. Bonus expenses of N$206 364 could not be explained and no supporting documents were supplied.

Close to N$3 million in deposits could not be linked to debtors and inventories worth more than N$73 000 could not be verified.

Housing fund advances of more than N$6 million were outstanding and consumer deposits for services were insufficient to cover monthly service fees.



GOBABIS

For the financial year ending in June 2015 the Gobabis municipality made provision for bad and doubtful debts of more than N$28 million. A significant portion of the debt was handed over to lawyers for collection, though.

There was, however, an understatement of the provision for doubtful debts by more than N$1.2 million.

There were no supporting documents for material adjustments amounting to more than N$22 million, inventories were not properly conducted, and the municipality did not provide meter readings which formed the basis for electricity expenses for own consumption amounting to close to N$1 million.

CATHERINE SASMAN