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LOCAL AUTHORITIES 2017 OAG REPORT

 

 

                

REPORT

of the

Auditor-General

for the

FINANCIAL YEAR ENDED DECEMBER 31, 2017

ON

LOCAL AUTHORITIES

_________________________________________

Presented to Parliament of Zimbabwe: 2018

_________________________________________

 

 

 

 

 

 

 

 

 

 

Office of the Auditor-General of Zimbabwe

5th Floor, Burroughs House

48 George Silundika Avenue

Harare, Zimbabwe

 

 

 

 

The Hon. P. Chinamasa

Minister of Finance and Economic Development

New Government Complex

Samora Machel Avenue

Harare

 

Dear Sir,

 

 

I hereby submit my report on the audit of Local Authorities in terms of Section 309(2) of the Constitution of Zimbabwe read together with Section 10(1) of the Audit Office Act [Chapter 22:18], for the year ended December 31, 2017.

 

Yours faithfully,

 

 

 

  1. CHIRI (MRS),

AUDITOR-GENERAL

 

HARARE

June 07, 2018

 

               LIST OF ACRONYMS

  1. CEO- Chief Executive Officer
  2. EMA- Environmental Management Agency
  3. ERP-Enterprise Resource Planning
  4. IPSAS- International Public Sector Accounting Standards
  5. LAPF- Local Authorities Pension Fund7
  6. NEC- National Employment Council
  7. NSSA- National Social Security Authority
  8. OAG- Office of the Auditor-General
  9. PAYE- Pay As You Earn
  10. PSIP- Public Sector Investment Programme
  11. PSMAS- Premier Services Medical Aid Society
  12. SDL- Standards Development Levy
  13. SLB- Service Level Benchmarking
  14. SPB- State Procurement Board
  15. UCPF- Urban Councils Pension Fund
  16. UNICEF- United Nations Children Education Fund
  17. VAT- Value Added Tax
  18. WDC- Ward Development Committee
  19. ZIMDEF- Zimbabwe Manpower Development Fund
  20. ZIMRA- Zimbabwe Revenue Authority
  21. ZINARA- Zimbabwe National Roads Agency
  22. ZINWA- Zimbabwe National Water Authority
  23. ZRDCWU- Zimbabwe Rural District Council Workers’ Union

DEFINITION OF TERMS USED

 

“Local Authority” means a municipal council, town council and local board established in terms of the Urban Councils Act [Chapter 29:15] or Rural District Council established in terms of the Rural District Councils Act [Chapter 29:13]. Local Authorities are established with the overall mandate of governing respective Council areas.

 

Local authorities are categorised into two groups which are:

  1. The Rural District Councils and
  2. Urban Councils, in which a Local Authority can either be classified as a:
  3. City Council,
  4. Municipality, iii) Town Council and iv) Local board.

 

Contents

LIST OF ACRONYMS..................................................................... iv

DEFINITION OF TERMS USED..................................................... v

EXECUTIVE SUMMARY................................................................ 3

CITY COUNCILS.............................................................................. 7

HARARE CITY COUNCIL 2016........................................................ 8

KADOMA CITY COUNCIL 2014.................................................... 20

KWEKWE CITY COUNCIL 2014.................................................... 24

MASVINGO CITY COUNCIL 2014................................................. 25

MUNICIPAL COUNCILS............................................................... 26

CHEGUTU MUNICIPALITY 2013.................................................. 27

CHEGUTU MUNICIPALITY 2014.................................................. 30

CHINHOYI MUNICPALITY 2014................................................... 33

CHINHOYI MUNICIPALITY 2015.................................................. 36

CHITUNGWIZA MUNICIPALITY 2014......................................... 37

KARIBA MUNICIPALITY 2016...................................................... 40

MARONDERA MUNICIPALITY 2015............................................ 42

TOWN COUNCILS......................................................................... 45

GOKWE TOWN COUNCIL 2015..................................................... 46

KAROI TOWN COUNCIL 2015....................................................... 48

NORTON TOWN COUNCIL 2016................................................... 51

SHURUGWI TOWN COUNCIL 2013.............................................. 54

RURAL DISTRICT COUNCILS.................................................... 59

BIKITA RURAL DISTRICT COUNCIL 2016................................. 60

BINGA RURAL DISTRICT COUNCIL 2016.................................. 62

CHIKOMBA RURAL DISTRICT COUNCIL 2016......................... 63

GOKWE NORTH RURAL DISTRICT COUNCIL 2016................. 64

GOROMONZI RURAL DISTRICT COUNCIL 2017...................... 66

HWEDZA RURAL DISTRICT COUNCIL 2016.............................. 68

MATOBO RURAL DISTRICT COUNCIL 2016.............................. 69

MAZOWE RURAL DISTRICT COUNCIL 2016............................. 70

MUTARE RURAL DISTRICT COUNCIL 2015.............................. 71

MUTOKO RURAL DISTRICT COUNCIL 2016............................. 74

SANYATI RURAL DISTRICT COUNCIL 2016............................. 75

TSHOLOTSHO RURAL DISTRICT COUNCIL 2016..................... 79

APPENDIX “A”................................................................................ 80

APPENDIX “B”................................................................................ 82

 

 

 

 

 

 

 

 

EXECUTIVE SUMMARY

 

Audit mandate

 

My duties as set out in the Constitution of Zimbabwe and amplified in the Audit Office Act [Chapter 22:18] are, in addition to examining, auditing and reporting on accounts of all persons entrusted with public monies or state property, to audit all provincial and metropolitan councils and all local authorities, and at the request of Government carry out special audits of the accounts of any statutory body or government controlled entity. In fulfilling this mandate, I do contract from time to time,  some of the audits to registered public auditors in terms of the Public Accountants and Auditors Act [Chapter 27:12] as stated in Section 9 of the Audit Office Act [Chapter 22:18]. Accordingly, I have included audit findings from such auditors in this report.

Audit approach

 

I conducted my audit in accordance with International Standards on Auditing (ISAs). Those Standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatements.

 

All aspects of the Local Authorities’ activities and procedures may not have been examined. I consider maintenance of adequate internal controls to be the responsibility of Council management. My work cannot therefore, be expected to identify all weaknesses in the systems and procedures, which a special investigation directed at those areas might reveal. As to the possibility of fraud, I plan my audit to have a reasonable expectation of its disclosure if the potential effects of the fraud would be material in the financial statements. However, there are many kinds of fraudulent activities, particularly those involving defalcation, forgery, collusion and management override of controls, which would be unreasonable to expect the normal audit to uncover. The principal objective of my audit procedures is to enable me to express an opinion on the truth and fairness of the financial statements as a whole.  An audit opinion is based on the concept of reasonable assurance. It is not a guarantee that the financial statements are free from material misstatement.

 

Financial reporting framework

 

Local Authorities are responsible for the preparation and fair presentation of financial statements in accordance with Generally Accepted Accounting Practice (GAAP). Local Authorities are applying either International Public Sector Accounting Standards (IPSAS) or International Financial Reporting Standards (IFRS) as the financial reporting framework. These frameworks are considered useful both for accountability and decision making purposes and to ensure consistency and comparability of financial statements. In addition, the Local Authorities are required to use Council Fund Accounting as required by the Urban Councils Act [Chapter 29:15] and Rural District Councils Act [Chapter 29:13].

 

The report outlines material audit findings noted during the audit of Local authorities. The audit findings are classified under governance issues, revenue collection, management and debt recovery, procurement of goods and services and employment costs. Also included under each audited account are possible risks/implications associated with the audit findings, audit recommendations, management responses in respect of the findings and audit comments to management responses where necessary. Generally, some of the issues identified cut across the majority of the Local Authorities.

 

GOVERNANCE AND SERVICE DELIVERY ISSUES

 

There has been some progress made over the years by Local Authorities in a bid to bring financial statement audits up to date. An analysis of the status of audits at the time of reporting has revealed the following;

  1. Two (2) local authorities still had the 2013 financial statements audits outstanding whilst seven (7) were outstanding for 2014.

 

  1. There were local authorities that had not submitted financial statements for particular reporting periods as at May 31, 2018. The number of non-submissions for the financial years 2014, 2015, 2016 and 2017 were 2, 8, 22 and 63 respectively.

 

The status of audits as at May 31, 2018 are shown in the bar graphs below;

 

 

 

 

The related Councils are detailed on Annexures “A” and “B” of this report.

 

I have not included the audit opinions for the 2016 financial year going backwards since most local authorities were in a transitional phase in as far as the adoption and implementation of International Public Sector Accounting Standards (IPSASs) were concerned. The presentation of audit opinions in my reports will be done for audits relating to the financial year ended December 31, 2017 prospectively.

 

Chinhoyi and Chegutu Municipalities have seen a general increase in population size over the years. The current daily demand for water has exceeded the local authorities’ capacity to supply this need. This incapacity is mostly infrastructure related. Chinhoyi Municipality has a daily water supply of fifteen (15) mega litres against a demand of thirty (30) mega litres. Chegutu Municipality water reservoirs have a carrying capacity of twelve and half (12, 5) mega litres in contrast to an expected twenty two and half (22, 5) mega litres. The reservoir situation in Kariba is so dire to the extent that water has to be pumped 24 hours a day directly from the treatment plant to consumers. Power outages worsen the situation as this implies an immediate water cut off.

 

Instances of local authorities with non-functional water meters continue to be an issue in my reports. Kwekwe City Council had 8 917 non-functional water meters against total connections of 19 030. Almost half of the City’s residential areas had non-functional meters. Of Sanyati’s 557 water connections, 199 meters were non-functional.

 

Some Councils had outdated valuation rolls which were no longer compatible with the current economic status thereby resulting in inappropriate rates being charged to residents. Notable cases were Kadoma City Council, whose roll was last updated in 2003 and Karoi Town Council’s in 2001.

 

Remittance of statutory and other obligations such as NSSA, PAYE, VAT, medical aid and pensions has continued to be an issue in my reports. The notable cases were Chitungwiza Municipality ($19 475 623), Marondera Municipality ($9 771 162), Kariba Municipality ($4 883 290), Kadoma City Council ($4 640 171) and Karoi Town Council ($1 508 922).

Goromonzi RDC and Marondera Municipality had instances where they incurred non council related expenditure. Goromonzi RDC incurred expenditure related to the repairs of the District Administrator’s vehicle whilst Marondera Municipality paid fees for the survey of a Councillor’s 38 private stands.

 

 

 

 

CONCLUSION

 

The audit findings warrant the attention of management and those charged with governance. The audit revealed that most of the weaknesses related to service delivery, infrastructure and governance issues. The need for good stewardship over public resources is a key factor required to turn around the financial performance and service delivery capabilities of local authorities. As analysed above, there is need for a paradigm shift in the business and service culture that will ensure that local authorities prioritise the transparency and accountability aspects. Accountability in this context will not just be a consideration of the financial matters but a broader account to the public over the local authorities’ delivery on mandate and stewardship over resources entrusted upon them.

 

ACKNOWLEDGEMENTS

 

I wish to pay special tribute to the audit firms, URDCORP and our valued clients who made it possible for me to submit my report for the year under review. I extend my appreciation to our development partners for their unwavering financial support and to our printers for printing the report on time. Finally, I extend my sincere appreciation to my management and staff for their continued commitment and dedication to duty.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                             CITY COUNCILS

HARARE CITY COUNCIL 2016

 

I have audited the financial statements of Harare City Council for the year ended December 31, 2016. The following are material issues that were noted during the audit.

 

  1. GOVERNANCE ISSUES

 

1.1       Mbare bus terminus.

 

Finding

 

There were no controls in place to ensure that all vehicles entering the Mbare bus terminus had paid access fees and their registration numbers had been captured by the cashier.

 

Risk / Implication

 

Loss of revenue as fraud and errors may go undetected.

 

Recommendation

 

The Council should consider introducing a surveillance system and a computerised system to record the vehicle registration number of buses as they enter the terminus.

 

Management response

 

Currently, the Traffic Enforcement is maintaining its presence in full force at Mbare Bus Terminus to ensure that only those who have paid access the terminus.

 

1.2      Mbare bus Terminus barriers

 

Finding

 

I observed that some candlesticks (barriers) that hinder unauthorised entrance into the Mbare bus terminus had been removed.

 

Enquiries with management revealed that the candlesticks (barriers) had been removed by commuter omnibus operators entering and exiting the terminus illegally without paying fees to the Council.

 

Further enquiries also revealed that some commuter omnibuses were forcibly entering and exiting the bus terminus when authorised buses would be gaining passage.

 

Risk / Implication

 

Loss of revenue.

 

 

 

Recommendation

 

The Council should consider setting up a more secure barrier such as high walls to hinder unauthorised entry.

 

Management response

 

Pulled down candle sticks are being attended to promptly.

 

As a long term plan, the Council is engaging a private partner to develop Mbare Musika and install electronic boom gates.

 

1.3       Burial space 

 

Finding

 

City of Harare uses an estimate of three hectares of land for burial purposes per annum.

 

At the time of the audit, management represented that an estimate of 18 hectares (10 hectares at Granville cemetery and 8 hectares at Mabvuku cemetery) were remaining.

According to the above estimates, the remaining burial space will cover approximately six (6) years.

 

There was no evidence to suggest that a plan was in place to secure more burial space in the future.

 

Risk / Implication

 

Service delivery may be compromised as residents may fail to secure burial space in the near future.

 

Recommendation

 

The Council should consider acquiring more land for provision of burial space.

 

Management response

 

Provisions have been made in the 2017 capital budget and currently the Council is in the process of identifying land for future burial space.

 

1.4       Cleveland dam water purification plant

 

Finding

 

I noted that the water purification plant at Cleveland dam owned by the Council is currently being used by Zimbabwe Phosphate Industries (ZIMPHOS). However, upon request I was not availed with contract documents between City of Harare and ZIMPHOS, hence I was not able to determine whether the arrangement was beneficial to the Council or not.

 

Risk / Implication

 

The Council may have no legal recourse in the event of disputes.

 

The Council may be committed to an arrangement that is not beneficial to them.

 

Recommendation

 

Council should ensure that there is a documented contract between City of Harare and

ZIMPHOS.

 

Management response

 

Management is in the process of re-engaging Zimphos on the conclusion of the agreement.

 

1.5       Cash book 

 

Finding

A review of the cash book and bank reconciliation statement as at 31 December 2016 revealed that the cash book was not being updated timeously.

 

The table below shows some transactions on the bank statement which had not been posted in the cash book as at 31 December 2016:

 

 

Date Description Bank Amount ($)
02/24/2014 Management Trust Acc Standard Chartered  125 000
10/12/2015 Harare Slum Upgrading Standard Chartered  100 000
03/02/2015 Sorghum Levy Standard Chartered  300 000
01/13/2014 Vehicle Costs Standard Chartered  130 000
06/03/2014 Cabs Capex Loans Standard Chartered  130 000
09/17/2015 Inter Account Transfer    CABS  100 000
04/24/2015 Sorghum Levy Standard Chartered  80 000
05/30/2014 Management Trust Acc Standard Chartered  127 000
07/31/2014 Management Trust Acc Standard Chartered  215 000

 

Risk / Implication

 

Fraud and errors may go undetected.

 

Recommendation

 

Management should ensure that the cashbook is updated timeously.

 

Management response

 

Progress on RTGS is now up to date except for situations where clients have not availed RTGS copies to the Council to effect appropriate postings. The situation is now computerised to cater for quicker processing.

 

  1. SERVICE DELIVERY ISSUES

 

2.1       Traffic management system 

 

Finding

 

A review of the operations department’s traffic management system revealed that the traffic central controller which monitors and controls traffic flow was not working.

 

According to management representation, the central controller was last used in 2006 when it stopped functioning. In addition, management further represented that out of a total of 195 traffic intersections, 18 had traffic controllers which needed replacement and 127 did not have traffic controllers.

 

Risk / Implication

 

Service delivery may be compromised as poor traffic flow may result in increased congestion and road accidents.

 

Recommendation

 

Management should consider replacing the central controller, outdated traffic controllers and nonfunctioning traffic lights and installing traffic controllers at intersections where these had not been installed.

 

Management response

 

The City has not had the use of a traffic control system since 1998 when the last one malfunctioned and collapsed. Traffic signals work independently because they have their own internal control mechanisms that enable the smooth flow of traffic.

 

Out of a total of 195 traffic intersections, 177 are fully functional and 18 need traffic controllers. However, the Council repairs these traffic signals as and when they malfunction. This is an on-going exercise which caters for the installation of traffic controllers.

 

2.2      Residential stands

 

Finding

 

A review of the 2016 Corporate Services and Housing Annual report revealed that there was a huge gap between demand and supply for residential stands.

 

The table below shows the number of applicants and stands allocated in the most recent years;

Year   Total applicants *Allocated stands Applicants not allocated stands
    a b c=(a-b)
  2014  177 703  2 365  175 338
  2015  36 215  5 103  31 112
  2016  59 563  9 528  50 035

 

*Allocated stands is the total of stands allocated by the Council and those allocated by housing co-operatives and private developers.

 

Risk / Implication

 

Increase in illegal settlements due to increased pressure for housing space.

 

Recommendation

 

The Council should consider acquiring more land to provide residential stands.

 

The Council should consider building residential flats or other efficient models of housing to address housing needs.

 

Management response

 

The Council is making efforts to acquire more land for residential stands as evidenced by the acquisition of Eyestone Farm which should create additional +/- 7 000 stands and Mabvuku extension with +/- 4 100 stands. A total of 13 165 residential stands have been allocated.

 

Building residential flats needs a big capital investment. Management is in the process of engaging partners to enter into Private Public Partnerships (PPP) to rehabilitate and upgrade Mbare Hostels first before building new flats.

 

2.3       Refuse Dumping 

 

Finding

 

The Pomona dumpsite was not demarcated into specific dumping zones to enable rotation and orderly disposal of waste, hence waste was being dumped anywhere within the dumpsite.

 

I further noted that the roads within the dumpsite leading to tipping points were blocked due to waste being dumped along the roads and at the entrance. The dumping of waste at the gate and along the roads hindered entry and made tipping points inaccessible.

 

 

 

The picture above shows the blocked road to one of the tipping points - Date March 8, 2017  Risk / Implication

 

Potential environmental pollution that may attract penalties from Environmental Management Agency (EMA).

 

The dumpsite’s lifespan may be shortened.

 

Recommendation

 

Management should implement proper dumping techniques at the Pomona dumpsite.

 

 

 

 

 

 

Management response

 

Funds have been provided in the 2017 budget to rehabilitate the dumpsite to enable accessibility to all tipping points.

 

  1. PROGRESS IN IMPLEMENTATION OF PRIOR YEAR ISSUES

 

I reviewed the progress made towards the implementation of prior year recommendations and found that Harare City Council has made some progress. However, there was room for improvement in respect of the following recommendations:

 

  • Council recreational and public facilities

 

Recommendation

 

Swimming pools should be repaired and the water treated.

 

Recreational parks should be maintained and non-functional public toilets and sporting facilities repaired.

 

Progress made

 

Cash flow constraints have made it difficult for the Council to maintain these facilities to acceptable standards. However, efforts are underway to address the situation. This will be prioritised under the decentralization programme.

 

  • Mbare Council owned flats

 

Recommendation

 

Council should collect refuse, repair sewer pipes and ensure adequate supply of clean water.

 

Progress made

 

Waste Management department formalised waste pickers to proper recycling clubs / associations to avoid scavenging. Residents of Mbare Council owned flats do not have adequate supply of clean water.

 

  • Water and Sewer service delivery

            

Recommendation

 

Management should ensure that burst pipes are repaired or replaced and the Council should attend to areas where sewer chokes are prevalent and improve the sewer infrastructure.

 

Progress made

 

There has been significant improvement in the service delivery as a result of the rehabilitation works being done at Morton Jaffrey water works under the China Exim bank loan facility and hence less frequent breakdowns.

 

  • Firle and Crowborough sewer treatment plants

 

Recommendation

 

Management should prioritise the repair / replacement of non-functional sewerage pumps.

 

Progress made

 

The Council contracted Sidal engineering to rehabilitate the pumps at both Firle and Crowborough treatment plants.

 

  • Management of Pomona dump site.

 

Recommendation

 

Management should prepare a fireguard around the dump site, cover and compact refuse with gravel to avoid odours, flies and pollution and screen waste at the gate to avoid inappropriate dumping of harmful waste requiring special means of disposal.

 

Management should ensure scavenging is in some way controlled.

 

Progress made

 

Finance department is currently prioritising repairs and maintenance of waste management equipment.

 

  • Council farm land

 

Recommendation

 

Management should ensure that farmland reserved for sewer reticulation is preserved.

 

Progress made

 

The Council is currently taking legal steps to evict the land occupiers.

 

 

 

 

 

  • Lease Agreements

 

Recommendation

 

Management should ensure timely renewal of lease agreements.

 

Progress made

 

The lease agreements register is being updated as and when leases expire. This is an on-going exercise.

 

  • Mbare Bus terminus property and equipment

 

Recommendation

 

The Council should repair and maintain all items of property and equipment including public toilets.

 

The Council should put measures to arrest the touting problem.

 

Progress made

 

Some structures were demolished whilst others are currently being regularised after assessment by the Council’s Development control unit.

 

  • Cleveland Dam opportunities

 

Recommendation

 

Management should consider utilising the various revenue generating opportunities.

 

Progress made

 

Cleveland Dam was previously under the management Harare Sunshine Holdings (Pvt) Ltd.  Management of the dam has since reverted to the Council and provision has been made for rehabilitation of the dam in the 2017 budget.

 

  • Billing of market customers.

 

Recommendation

 

Management should ensure efficient collection of markets revenue.

 

Management should ensure that all accounts opened in BIQ are valid and consider undertaking an account verification exercise for the markets.

Progress made

 

A clean up exercise of the billed market customer’s data base is now underway and expected to be complete by 31 December 2017

 

  • Mbare Community Halls

 

Recommendation

 

The Council should ensure that the affected residents are provided with alternative accommodation ideal for residential purposes.

 

Progress made

 

Some residents were allocated houses and the Council is still looking for an alternative place to house / accommodate the remaining residents.

 

  • Vending activities in the Central Business District (CBD)

 

Recommendation

 

The Council should find ways to enforce its by-laws to curb vending from undesignated places in the CBD.

 

Progress made

 

The Zimbabwe Republic Police, which is the arresting authority in terms of the Constitution, is no longer participating in the enforcement activities. The Harare Municipal Police does not have arresting powers. However, engagement with political leadership and Government continues with a view of finding a solution.

 

  • Old and burst water pipes

 

Recommendation

 

Management should ensure that aged pipes are replaced.

 

Progress made

 

Pipe replacement is an on-going exercise and efforts are being made to replace the pipes. The current cash flow constraints have however hampered the exercise and provisions have been made in the 2017 capital budget to procure the pipes subject to the availability of loan funding.

 

 

 

 

  • Unregistered taxis

            

Recommendation

 

Council should put in place measures to curb the emergence of unregistered taxis.

 

Progress made

 

Council is in the process of clearing Mushika-shika and has set up committees under 100 days Rapid Results Initiative (RRI) to deal with the Trafficable Roads Thematic Committee. Furthermore, the By-laws which outlaws the illegal taxis are now in place and the ZRP and Municipal police have been engaged to enforce these bylaws.

 

  • Coventry road holding bay

            

Recommendation

 

Management should ensure commuter omnibuses make use of the holding bay to reduce traffic congestion in the central business district.

 

Progress made

 

The holding bay is being utilised, although to a lesser extent than the previous years.

 

  • Potholes

 

Recommendation

 

The Council should prioritise the repair and maintenance of roads.

 

Progress made

 

Cash-flow constraints on the City’s side, lack of funding by ZINARA and the incessant rains have made it difficult for the City to attend and clear potholes. However, significant pothole patching has been done throughout the City. Decentralised teams are also working on pothole patching in the various suburbs.

 

  • Build-Operate-Transfer arrangement.

 

Recommendation

 

The Council should ensure that the Parkade shops are transferred to City of Harare.

 

 

 

Progress made

 

The legal department is in the process of regularising the transfer. This should be complete in the 2017 financial year.

 

  • Fuel and oil expenses

 

Recommendation

 

Management should ensure that all supporting documents are availed for audit.

 

Progress made

 

Management is in the process of implementing all internal audit recommendations to strengthen the internal control systems.

            

 

 

 

KADOMA CITY COUNCIL 2014

 

I have audited the financial statements of Kadoma City Council for the year ended December 31, 2014. The following are material issues noted during the audit.

  1. GOVERNANCE ISSUES

 

1.1.      Valuation Roll

 

Finding

 

The Council did not have an updated valuation roll in compliance with requirements of Urban Councils Act [Chapter 29:15] section 253(a)-(f). The one in place was designed in 2003, and was no longer compatible with current economic changes that occurred from 2009.

 

New properties and improvements that were made between 2003 up-to the current period were not included in the valuation roll or supplementary roll, consequently these were not being billed.

 

Risk /Implication

 

Financial loss due to loss of potential revenue.

 

Recommendation

 

The Council should maintain an updated valuation roll.

 

Management response

 

Management have now appointed Ministry of Local Government Valuation officers whom we have given our draft. The Government Valuers highlighted missing information which we supplied. The team came to Kadoma in July 2016 to verify and collect some additional information.  Public Works department is now working on the Draft Valuation roll which will be tested in October 2016 and Gazetted in November 2016. The actual dates for testing and gazetting will be determined by Ministry of Public Works.

 

1.2.      Bank and Ecocash reconciliation statements

 

Finding

 

The General Fund account had long outstanding un-cleared deposits of $26 943 dating back to 2012. Furthermore, the Eco-Cash balance disclosed in the financial statements amounting to $5 273 could not be reconciled to the supporting reconciliation statement with a cashbook balance of $ 1 234 hence a variance of $ 4 039 was noted.  I could not establish how the funds were utilised.

 

 

Risk / Implication

 

Misappropriation of the Council’s funds due to inadequate financial controls.

 

Recommendation

 

The Council should investigate the variances noted and take corrective action.

 

I recommend further investigation on long outstanding un-cleared deposits as well as the eco-cash variance and give finality on the issue.

 

Management response  

 

UNCLEARED DEPOSITS- The list of un-cleared deposits is constituted of cheques dating back to 2011-12 that were cashed at the rates halls but were not effected on the bank statements. The cheques had debit and credit effect on the bank statements.   Follow-ups with the bank have been made and these have been reduced from the $50 000 in the last report.  Management is still liaising with the bank for their final clearance. The major hindrance has been the bank’s filing system.

 

ECOCASH- The comment is noted and the issue is under investigation as it may also affect other bank accounts.

 

1.3.      Statutory Deductions

 

Finding

 

The Council had outstanding statutory deductions amounting to $4 640 171 as at December 31, 2014.

 

The following is a list of the outstanding statutory obligations;

 

Statutory authority/creditor Amount ($)
LAPF 1 756 317
NSSA 126 894
PAYE 1 179 788
ZIMDEF 13 741
VAT 1 563 431
TOTAL 4 640 171

 

I also noted that the Council was not preparing returns for submission to the relevant authorities.

 

Risk / Implication

 

Financial loss due to fines and penalties that may be levied by the relevant authorities.

 

Employees may fail to access benefits upon termination of employment.

 

Recommendation

 

Statutory deductions should be remitted timely to avoid penalties.

 

The Council should arrange for payment plans with the authorities to clear debts.

 

Management response

 

Agreed. The Council is operating in a very unfavorable environment thereby failing to meet its obligations as they fall due.  Due to the current economic situation, the Council is unable to collect enough revenue to cover both recurrent expenditure and prior period creditors. The Council has engaged creditors and has running payment plans, some of which the Council is unable to meet.

 

1.4.      Payment vouchers 

 

Finding

 

There were missing supporting documents such as quotations, receipts and invoices on some payment vouchers.  I also noted that some payment vouchers were missing.

 

Missing Payment Vouchers and Invoices

 

Date PV Number

as per ledger

Amount ($) Comment
12/09/14 56 4 407 Chemicals and medicines
28/03/14 563 2 000 Licenses
20/01/14 622 1 000 Licenses
12/10/14 800             2 375 Vehicle repairs
07/11/14 871 1 150 Postages, printing and stationery
24/03/14 3636 2 322 Transport, fuel and oils
24/04/14 45 1 878 Uniforms
15/04/14 3684  500 Uniforms
19/11/14 4218  1 437 Licenses
25/10/14 89 4 407 Chemicals and medicine
30/10/14 801 5 000 Chemicals and medicine
3/12/14 84 5 000 Chemicals and medicine
12/11/14 1470 827 Equipment repairs
6/11/14 865 1 040 Postage, printing and stationary
11/6/14 3737 3 690 Travelling and Subsistence

 

Risk/Implication

 

Fraud may go undetected.

The payment may not be a proper charge to Council.

 

Recommendation

 

All relevant supporting documents should be attached to the payment vouchers.

 

Management response

 

The missing documents are a result of lack of manpower to follow up on the unsubmitted receipts and invoices. Management has tasked an officer to review all vouchers for the supporting documents and do follow-ups.

 

  1. REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY

 

2.1.      Grants and Donations

 

Finding

 

There was no evidence to support the grants and donations that were disclosed in the Council’s financial statements amounting to $180 123.

 

Risk / Implication

 

Misstatement and misappropriation of grants and donations.

 

Recommendation

 

All grants and donations should be adequately supported.

 

Management Response

 

In future we will request for supporting documents for all our disbursements.

 

 

            

 

KWEKWE CITY COUNCIL 2014

 

I have audited the financial statements of Kwekwe City Council for the year ended December 31, 2014. The following are material issues noted during the audit.

 

  1. REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY

 

1.1.      Water meters

The Council had a total of 8 917 non-functional water meters. The water meters were subject to fixed charges at pre-determined fixed consumption of 20 kiloliters per month. The following table shows a list of functional and non-functional meters:

 

Category   Number             of

connections

Functional meters Non

Functional meters

Percentage (%) of non-

functional water meters

Domestic (High        
density)   15 381 7 996 7 385 48%
Domestic (Low        
density)   2 437 1 396 1 041 43%
Commercial   215 126 89 41%
Industrial   261 143 118 45%
Institutional   736 452 284 39%
TOTAL   19 030 10 113 8 917 47%

 

Risk / Implication

Consumers may be charged amounts that are more or less than their usage resulting in revenue leakages and abuse of water resource.

Council reputation may be negatively affected.

Recommendation

The Council should install functional water meters so that it can effectively collect what is due to it.

Management response

We have also started rolling out pre-paid water meters in phases so as to reduce the risk.

 

 

 

MASVINGO CITY COUNCIL 2014

 

I have audited the financial statements of Masvingo City Council for the year ended December 31, 2014. The following are material issues noted during the audit.

 

  1. SERVICE DELIVERY ISSUES

 

1.1.      Dump site

 

Finding

 

The Victoria Range dumping site was no longer suitable as the site was now too close to the residential location. In addition, the Council was not carrying out all appropriate waste management procedures such as compacting litter posing a serious health hazard to the nearby residents.

 

Risks / Implications

 

Residents are exposed to health hazard.

 

Financial loss due to penalties and fines that may be levied by the Environmental Management Agency.

 

Recommendations

 

The Council should have a dumping site that complies with Environment Management Agency regulations.

 

Management Response

 

Noted. New dumpsite/landfill site identified and mobilisation of resources for its development is underway.

 

Noted. Equipment breakdowns and shortages hampering efforts.

 

Progress was derailed as the identified land was diverted to other uses by the land authorities after an EIA and designs had already been done. The city had to look for other suitable land and is currently in the process of acquiring that land.

 

 

 

 

 

 

 

 

 

 

 

                                              MUNICIPAL COUNCILS

CHEGUTU MUNICIPALITY 2013

 

I have audited the financial statements of Chegutu Municipality for the year ended December 31, 2013. The following are material issues noted during the audit.

 

 

  1. GOVERNANCE ISSUES

 

1.1.      Vehicles registration

 

Finding

 

Most Council vehicles purchased by the Council from 2010 to date were not registered in the Council’s name. Below is a table of some vehicles which were not yet in the Council’s name.

 

Vehicles with no registration plates:

 

Make/Description Department Year Of Purchase
Motorised Cat 140 K Grader Engineering 2013
DE Watering Pump Tractor Engineering Not indicated
Nissan Safari Fire Central Admin Not indicated
Nissan Hardbody-Ambulance Central Admin Not indicated
Honey Sucker Engineering Not indicated
JCB Backhoe Loader Engineering 2010
Tipper Trucks  UD’s x2 Engineering 2012
Tractor TT75 New Holland No 6 Engineering 2012
John Deere Tractor 7 Engineering Not indicated
MF Tractor 440 No 3 Engineering Not indicated
MF Tractor 440 No 2 Engineering Not indicated
Tafe Tractor MF 440 No 8 Engineering Not indicated

 

Risk / Implication

 

Financial loss due to fines and penalties that may be incurred for non-registered vehicle.

 

Misappropriation of assets may occur.

 

Recommendation

 

The Council should register all its vehicles in compliance with the statutory requirements in terms of the Vehicle Registration and Licensing Act [Chapter 13:14].

 

 

 

 

 

Management response

 

Noted. Resource challenges affected timeous registration of the vehicles. Registration will now be done in batches. The backlog of unregistered vehicles, plant and equipment is being cleared on a piece-meal basis as resources become available.

 

1.2.      Water supply

 

Finding

 

The Council’s water treatment plant with an estimated carrying capacity of 12.5 mega-litres was constructed sometime back when the population could match with the carrying capacity. However, due to the growing size of the Municipality, the Council is faced with serious water shortages resulting in other locations going for days without water. Some of the areas affected included Hintonvile and Kaguvi phase 3.  From a discussion with the town engineer, it was pointed out that there was need to have a supplementary supply of 10 mega-litres of water to match the demand.

 

Risk / Implication

 

Service delivery is compromised.

 

Failure to provide enough water may lead to water borne diseases.

 

Recommendation

The Council should consider constructing a supplementary water treatment plant to cope with the water demands of the Municipality.

 

Management response

 

Management is in agreement with the observations. The Council is trying to mobilize resources to expand the Water Treatment Plant and repair the network. A budget of $8 million is required for this task which is difficult to mobilize in this economy.

 

1.3.      Fire department 

 

Finding

 

The Council had one fire tender with a carrying capacity of 400 litres of water and apparently they used a motorized water bowser to supply water when attending to fire incidents. The fire rescue equipment in use was donated in 1991 and was now in a dilapidated state hence could no longer serve its intended purpose effectively.

 

 

 

Risk / Implication

 

Service delivery may be compromised.

 

Recommendation

 

The Council should fully equip the fire section with adequate resources to ensure quality service provision as far as general safety of the public and employees is concerned.

 

Management response

 

Financial challenges have hampered efforts to fully equip the division. However, the current budget has also taken care of this requirement.

 

  1. EMPLOYMENT COSTS

 

2.1.      Salaries and wages 

 

Finding

 

There was a variance of $170 417 between the payroll balance and the balance in the financial statements which management could not explain. The financial statements had an amount of $2 598 285 and the payroll had an amount of $2 768 703.

 

Risk / Implication

 

Financial loss due to fraud.

 

Recommendation

 

The Council should investigate the variance and take corrective action.

 

Management response

                        

Council is going to establish the causes for the variance and make corrective  action.

 

 

CHEGUTU MUNICIPALITY 2014

 

I have audited the financial statements of Chegutu Municipality for the year ended December 31, 2014. The following are material issues noted during the audit.

 

  • GOVERNANCE ISSUES

 

1.1.      Cash book reconciliations

 

Finding

 

The Municipality could not reconcile the cashbook balance to the ledger balance. The total variance noted between these two records amounted to $377 662. In addition, there was no evidence that bank reconciliations were being reviewed by a senior officer.

 

Risk / Implication

 

Financial loss due to errors and irregularities that may go undetected.

 

Recommendation

 

The Council should reconcile its cash books to the ledger and bank reconciliations should be reviewed.

 

Management response

 

The system provider was engaged to enable the Council to correct the anomaly so that the general ledger and the cash book reconcile. We shall also provide a control measure so that there will be an independent person to check the bank reconciliations. The bookkeeper will prepare the bank reconciliations while Revenue Accountant will be responsible for the cash book.

 

1.2.      Expenditure vouchers

 

Finding

 

Payment vouchers for expenditure amounting to $1 423 117 were not availed for my inspection hence, I could not verify the validity and accuracy of the related expenditure.

 

Risk / Implication

 

Financial loss due to fraud.

 

The Council may pay for goods not received.

 

 

 

Recommendation

 

The Council should ensure that all payments are adequately supported and authorised.

 

Management response

 

Supporting documents in the form of payment vouchers, invoices and stores requisition for A.I Davis and Lendel Trading are available but goods received notes/ vouchers were not yet in place. Contracts for rentals will be made available. ZESA and TELONE follow ups are in progress. 

 

Council uses control registers to acknowledge goods received which are then used for issuing purposes.

 

As for invoices and delivery notes the issue has been discussed at length in the Procurement Committee of April 7, 2017 and modalities have been put in place for implementation to ensure that invoices and delivery notes which also serves as acknowledgement of goods received are made available for all goods and services procured.

 

A goods received voucher (GRV) document is now in place and all receiving/ stores personnel are required to acknowledge receipt of goods delivered.

 

  • REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY

 

2.1.      Land stock

 

Finding

 

The Council had unsold pieces of land under various schemes, however, there was no record of the land stock in the system.

Risk / Implication

 

Financial loss due to fraud.

 

Misstatement of land inventory.

 

Recommendation

 

All stands should be recorded in the accounting system.

 

Management Response

 

Noted. 

 

The Council is now updating its housing stock (capturing in to the system) at the point of creation of the stands.

 

The Valuation and Estates Section is mandated to control the land bank, however, since its creation there has not been a hand over of the Land bank from the Engineering Department despite correspondences to do so.

 

The procedure is that all land within the municipality should be recorded in the Data base

System whether Institutional, Commercial, Industrial, Housing or Agro-residential and Open Spaces. When local plans, layout plans and general plans are created by the Engineering Department, the same should be handed over to the Valuation and Estates, Housing Department and Financial Services Department to be recorded in the Housing Module.

 

When stands are sold to beneficiaries then same is deducted from the stock and continuous reconciliations are done by the same Departments to have correct records. This system will curb abuse of land by any one section.

 

However this procedure is not happening at the moment. The scenario obtaining is that the Engineering department gives in batches stands to the administrative departments as and when it sees fit. This makes the control of land stock cumbersome where departments have to beg for information. 

 

               

CHINHOYI MUNICPALITY 2014

 

I have audited the financial statements of Chinhoyi Municipality for the year ended December 31, 2014. The following are material issues noted during audit.

 

 

  1. GOVERNANCE ISSUES

 

1.1.      Council houses

             

Finding

 

The staff members were being provided with rent free Council accommodation whilst also being paid housing allowances. According to their employment conditions of service, employees can only have either rent free accommodation or housing allowance.

 

Risk / Implication

 

Financial loss due to double payment of benefits to employees.

 

Recommendation

 

The Council should regularise the anomaly.

 

Management response

 

The issue is going to be discussed at Works Council before implementation. We are introducing stop order system for all staff occupying Council houses

 

1.2.      Payroll payables

 

Finding

The Council owed workers $5 082 648 in outstanding salaries, bonuses and back pay as at December 31, 2014. Tabulated below is a breakdown of the staff arrears: Outstanding salaries as at December 31, 2014

Description Amount ($)
2014 Salaries arrears 973 865
Ex- ZINWA employees 139 978
Reinstated workers 34 020
Deceased employees 22 269
Arbitration award 3 827 131
Total 5 082 648

 

 

Risk / Implication

Service delivery may be compromised due to low staff morale, high staff turnover, job action and absenteeism.

Recommendation

The Council should intensify revenue collection so as to ensure that employees are paid their salaries on stipulated pay dates.

Management response

The Council is always intensifying revenue collection but the rate payers are not responsive and the Council ended up handing over defaulters to Mangwana and partners. Due to cash flow challenges being experienced by the Council it is not in a position to clear all salary arrears. The current macro-economic conditions cannot be overlooked as well we need to be realistic in terms of the current operating environment. 

 

1.3.      Valuation roll

 

Finding

 

The Council did not have an updated valuation roll in compliance with the requirements of Urban

Councils Act [Chapter 29:15] section 253(a)-(f). The one in place was designed during Zimbabwean dollar era, and is no longer compatible with current economic changes since 2009.  In addition, there were new properties and improvements that were made between the Zimbabwean dollar era to date that were not included in the valuation or supplementary valuation roll.

Risk / Implication

Financial loss due to potential revenue loss as a result of the absence of the valuation roll.

Recommendation

The Council should maintain an up to date valuation roll.

Management response

The Ministry of Local Government, Public Works and National Housing (Valuations and Estates Division) carried out a General Valuation of all properties in Chinhoyi in 2015. We await certification of the valuation Roll.

 

  1. SERVICE DELIVERY ISSUES

 

2.1.      Water supply

 

Finding

 

Chinhoyi Council water treatment plant was highly incapacitated in terms of supplying adequate water to the residents. At the time of audit, demand for portable water for a population estimated at 77 729 people (2012 census) was 30 mega litres per day while the production capacity of the plant was estimated at 15 mega litres per day.

 

Risk / Implication

 

Service delivery is compromised.

 

Water borne disease outbreaks.

 

Recommendation

 

The Council should put concerted effort to improve water supply.

 

Management response

 

The Council has drawn a project proposal to address water demand, however there is a challenge of financing the proposed interventions. On the same note the Council has deliberately intensified water loss reduction so as to minimize the little water produced to minimize wastage of the little water produced.

 

CHINHOYI MUNICIPALITY 2015

 

I have audited the financial statements of Chinhoyi Municipality for the year ended December 31, 2015. The following are material issues noted during the audit.

 

  1. REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY

 

1.1.      Stands Sales

 

Finding

 

The financial statements of the Council indicated that $5 825 220 was realized from stands sales during the year under review. However, this differed by $2 649 194 from the availed list of stands sold which showed a total of $3 176 026. In addition, the allocation register did not indicate the dates of sale for the stands, making it difficult to establish stands issued during a particular period.

 

It was also noted that customer accounts were not created in the Council database for Mapako stands that had been repossessed.

 

Risk / Implication

 

Financial loss due to fraud and errors.

 

Recommendation

 

The Council should investigate the variance and make necessary corrections.

 

The stands list and database should be updated.

 

Management response

 

Observation noted.  Stand register in place. Council has held interviews for Estates Manager to bridge skills gap and s/he will start duty soon. Council is using Promun housing module to capture all new stands enhancing coordination between Housing and Treasury department.

 

CHITUNGWIZA MUNICIPALITY 2014

 

I have audited the financial statements of Chitungwiza Municipality for the year ended December 31, 2014. The following are material issues noted during the audit.

 

GOVERNANCE ISSUES

            

1.1       Council Leases

 

Finding

 

The Council did not have an updated lease register for all leased Council properties. A total of 464 properties were being leased out during the year under review, however, most of them were not being billed for rent except for 48 which were billed a total of $296 402 from July to December 2014. In addition, a number of lease agreements had since expired, however, the tenants continued operating and some were even sub-letting the properties.

 

Risk / Implication

 

Financial loss due to revenue leakages.

 

Recommendation

 

The Council should update its lease register and regularise all expired leases.

 

The Council should put in place monitoring mechanisms to ensure that tenants adhere to the terms of the lease.

 

Management response

 

We are currently in the process of updating the lease register and the leases are being reviewed.

 

On improving revenue collection, we are in the process of handing over all Council properties to a legal firm.

 

1.2       PSIP loan

 

Finding

 

The Council received a loan of $650 000 in 2011 from the then Ministry of Local Government, Rural and Urban Development for water and sewer infrastructure rehabilitation. This loan was payable over two years and had an interest of 5% per annum with a late payment charge of 1% per annum. The repayment of the loan was scheduled to be done through a sinking fund to which the Council was supposed to make payments using revenue generated from rates. However, the Council did not create this account and repayments were still outstanding as at December 31, 2014.

 

Risk / Implication

 

Failure to honour obligations when they are due compromises the Council’s credit worthiness and ability to access loans in the future.

 

Recommendation

 

The Council should honour its obligations when they fall due.

 

Management response

 

We take note of the recommendations and corrective action will be taken.

 

1.3      Statutory deductions arrears

 

Finding

 

The Council had payroll related obligations amounting to $19 475 623. No meaningful payments had been made to significantly reduce these obligations. Below are the balances owed to statutory creditors as at December 31, 2014.

 

Statutory creditor Amount Outstanding as at 31.12.14 ($)
NSSA 1 131 709
Pension- UCPF 5 831 900
               -LAPF 4 759 539
ZIMRA-PAYE 7 752 475
Total 19 475 623

 

Risk / Implication

 

Financial loss due to penalties and interest being levied.

 

Retirees may not access their pensions.

 

Recommendation

 

The Council should negotiate payment plans with the respective creditors in order to clear the obligations.

 

Remittance of obligations should be done in time.

 

Management response

 

The Council has made agreements with the statutory organisations and individuals on feasible payment plans until the revenue situation improves.

 

 

  • PROGRESS IN IMPLEMENTATION OF PRIOR YEAR ISSUES

 

I reviewed the progress made towards the implementation of prior year recommendations and found that Chitungwiza Municipal Council has made some progress. However, there was room for improvement in respect of the following recommendations:

 

  • Risk assessment policy

 

Recommendation

 

The Council should come up with a risk policy for identifying the risks associated with its operations and providing ways to mitigate such risks.

 

Progress made

 

The policy is being drafted.

 

  • Policy documents status

 

Recommendation

 

The Council should finalize the drafting of policies and ensure that they have been approved and adopted by full Council.

 

Progress made

 

Most Council policies and procedure manuals were adopted although some are still waiting adoption except for the following which are not yet in place: waste management policy, environmental management policy, security policy, accounting policy and procedure manual and records management policy.

 

  • Water meters

 

Recommendation

 

The Council should ensure that all non-functional meters are replaced to accurately account for water consumption and avoid wastage and misuse. Checks for anomalies by senior personnel before billing statements are issued out to consumers should be done to ensure accurate billing.

 

Progress made

 

The Council has received 4 500 water metres from Zimfund phase II. A testing machine for water metres has also been received which will be used to test and repair the non- functional metres.

 

KARIBA MUNICIPALITY 2016

 

I have audited the financial statements of Kariba Municipal Council for the year ended December 31, 2016. The following are material issues noted during the audit.

 

  • GOVERNANCE ISSUES

 

1.1.      Statutory and pension deductions

 

Finding

 

The Council had outstanding statutory and pension deductions amounting to $4 883 290 as at December 31, 2016.

 

The following is a list of the outstanding statutory obligations;

 

 

Name of payroll creditor Amount owing as at December 31, 2016

                                                               ($)

Local Authorities Pension Fund 2 655 674
National Social Security Authority 25 527
Zimbabwe Revenue Authority (PAYE) 1 944 627
Zimbabwe Manpower Development Levy 37 919
Zimbabwe Revenue Authority (VAT) 219 543
Total 4 883 290

 

Risk / Implication

 

Financial loss due to fines and penalties which may be levied by the relevant authorities.

 

Employees may fail to access benefits upon termination of employment.

 

Recommendation

 

Statutory deductions should be remitted timely to avoid penalties.

 

The Council should arrange for payment plans with the authorities in order to clear debts.

 

Management response

 

The observation is noted and Council has since introduced various strategies to enhance revenue collection. Nonetheless Council has suffered low revenue collection since the introduction of the multicurrency regime in 2009, owing to the decline in cash circulation and general local business activity downturn.  Council has also come up with payment plans with statutory creditors like ZIMRA, NSSA, ZIMDEF and Standard Development Fund and this has since normalized the garnish order threats which used to be there.

 

1.2.      Water reservoirs 

 

Finding

 

The Council`s two water reservoirs (Mahombekombe and Gibb Coyne) have not been functioning since 2008 as they need rehabilitation. The non-functioning of these reservoirs entailed continuous pumping of water which resulted in an escalation of electricity bills for the Council. In addition, the supply of water would be affected by power cuts.

 

Risk / Implication

 

Constant water supply is affected during power outages due to lack of water storage facilities.

 

Recommendation

 

The Council should consider repairing non-functional water reservoirs so as to ensure a continuous supply of water.

 

Management response

 

The observation is noted. The Council has since put in place a Non-Revenue Water steering committee to spearhead all issues pertaining water losses. The water loss reduction team is doing leak surveys to identify the materials required for repairs. Plans are under way to repair the Gibb Coyne water reservoir.  

 

               

MARONDERA MUNICIPALITY 2015

 

I have audited the financial statements of Marondera Municipality for the year ended December 31, 2015. The following are material issues noted during the audit.

 

  1. GOVERNANCE ISSUES

 

1.1.      Vacant posts 

 

Finding

 

A review of the Council’s organogram showed that a number of key posts within the Council have been vacant. These included Audit Manager, Accountant Revenue, Accountant Expenditure and Senior Revenue Officer.

 

In addition, following retrenchment exercise by the Council in 2016, the accounts department was left with no substantive staff except the Finance Director.

 

Risk / Implication

 

Decision making may be compromised due to gaps in the Council’s manning levels.

 

Recommendation

 

The Council should appoint substantive personnel to key posts.

 

Management Response

 

The Council is going to advertise and fill these key strategic posts during the course of the year. Further it is imperative to point out that effective service delivery can only be realized and attained if Council is manned by personnel with the requisite skills, aptitudes and competencies considered necessary to perform their duties adequately. 

 

  1. PROCUREMENT OF GOODS AND SERVICES

 

2.1.      Survey Charges

 

Finding

 

The Council paid $10 890 as fees for the survey of a Councillor’s 38 personal stands. This amount was included in $148 743 being fees which the Council had incurred on survey of its own stands together with those of the Councillor. I was not availed with evidence supporting either the payment made by the Councillor or an acknowledgement of the debt.

 

 

 

 

Risk / Implication

 

Survey fees paid on behalf of the Councillor may not have been a proper charge to the Municipality.

Recommendation

 

The Council should recover the amount from the Councillor.

 

Management Response

 

Noted the necessary engagements with the developer are currently ongoing and the necessary documentation will be availed by the Engineering Section.

 

  1. REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY

 

3.1.      Treated water

 

Finding

 

An analysis of water treated and billed during the year under review showed that out of 2,6 million m3 treated water produced, only 1,3 million m3 was billed to consumers. There was no satisfactory explanation given for the variance of 1,3 million m3 (50%) unbilled water.

 

Risk / Implication

 

Financial loss due to unbilled water and leakages.

 

Recommendation

 

The Council should investigate the cause of the variance and take corrective action to reduce the loss of treated water.

 

Management Response

 

Non-revenue water is acknowledged and a Non-Revenue Water Committee will be set to spearhead the investigations and compile an informed report on the variance noted.

 

  1. EMPLOYMENT COSTS

 

4.1.      Remittance of statutory deductions

 

Finding

 

A review of the Council’s payment system revealed that statutory deductions and other third party remittances were not being made on time. As a result, the Council had accumulated debts totaling $9 771 162 as at December 31, 2015 as shown in the table below;

 

 

 

CREDITOR AMOUNT OWED ($)
NSSA 243 525
Pension-LAPF 2 742 620
ZIMDEF 119 478
ZIMRA-PAYE 4 282 385
Standards Development Levy 103 377
ZIMRA-VAT 2 279 777
TOTAL 9 771 162

 

Risk / Implication

 

Financial loss due to fines and penalties.

 

Employees may not access retirement benefits.

 

Recommendation

 

The Council should endeavor to pay current obligations in time and at the same time, putting in place measures to reduce the accumulated debts.

 

Management response

 

The Council has concluded the retrenchment exercise that has direct impact on the accruals on all statutory obligations. The retrenchment exercise will save in excess of $1 million annually with 50% of these being statutory obligations.

 

Failure to pay was caused by a historical financial plan that failed to align the cost with the Government policy of 70/30 making all payment plans unsustainable. 

 

Council has payment plans with most statutory bodies, ZIMRA, ZIMDEF, NSSA and efforts are now complete to improve sustainability of the plans. All the statutory obligations are human resources based.

 

 

 

 

 

 

 

TOWN COUNCILS

            

GOKWE TOWN COUNCIL 2015

 

I have audited the financial statements of Gokwe Town Council for the year ended December 31, 2015. The following are material issues noted during the audit.

 

  1. GOVERNANCE ISSUES

 

1.1.      Balance written off

 

Finding

 

There was an unexplained balance of $491 871 in the financial statements which the Council wrote off during the year under review.

 

Risk / Implication

Financial loss due to fraud.

 

Recommendation

 

The Council should investigate unexplained balances before they are written off.

 

Management response

 

The write off is based on a ledger balance that has been running from previous years under debtors, which could not be substantiated. There was no other way except to create an expense account which affects the Statement of Financial Performance. The debtors journals made during year 2014 do not have any corresponding debtors listing. This means had we not created the expense account, the figure would continuously affect the Council Statement of Financial Position.

 

  • SERVICE DELIVERY ISSUES

 

2.1      Ambulance and fire department

 

Finding

 

I noted that the Town Council had no fire department. In addition, the Council had no ambulance to augment and aid its health services department.

 

Risk / Implication 

 

Service delivery is compromised.

 

Recommendation

 

The Town Council should ensure that critical and essential service departments are part of its structures. In addition, these should be resourced and functional.

Management response 

 

The noted issue is a fact, however to address the issue, the Gokwe Town Council has budgeted for the ambulance vehicle with an idea of purchasing one by December 2017. Currently the clinic is using the fleet from the Ministry of Health and Childcare.

 

KAROI TOWN COUNCIL 2015

 

I have audited the financial statements of Karoi Town Council for the year ended December 31, 2015. The following are material issues noted during the audit.

 

  1. GOVERNANCE ISSUES

 

1.1.      Leases

 

Finding

 

The Council did not maintain a record of leased properties and there were no lease agreements for sitting tenants. Consequently no ledger accounts were maintained to account for these leases.

 

Risk / Implication

 

Financial loss due to fraud and non-collection of lease rentals.

 

Council may have no legal recourse in the event of disputes.

 

Recommendation

 

The Council should maintain a lease register for all leased properties and ensure that sitting tenants have lease agreements.

 

Management response

 

Noted and we will correct.

 

  1. PROCUREMENT OF GOODS AND SERVICES

 

  • Withholding tax

 

Finding

 

The Council did not deduct 10% withholding tax for payments made to suppliers without valid tax clearance certificates.

 

Risk / Implication

 

Financial loss due to fines and penalties that may be charged.

 

Recommendation

 

The Council should withhold 10% tax on all payments made to suppliers without tax clearance certificates.

 

 

Management response

 

Noted and we will correct.

 

  1. REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY

 

  • Valuation roll

 

Finding

 

The Council’s valuation roll was last updated on March 2, 2001. A valuation roll is used as a basis for the rates to be charged in different areas. As a result, the Council did not take into account the size and location of land and improvements done to properties. Fixed rates were being charged for low and medium density suburbs, commercial stands and industrial stands.

 

Risk / Implication

 

The Council may not realise maximum potential revenue.  

 

Recommendation

 

The Council should have an updated valuation roll to enable it to bill its rateable properties accurately.

 

Management response

 

This will be corrected and the Council will have a current valuation roll. 

 

  1. EMPLOYMENT COSTS

 

4.1.      Statutory and other obligations

 

Finding

 

The Council was not up to date with payments of statutory obligations as evidenced by the arrears as at December 31, 2015. The table below refers; 

 

DESCRIPTION AMOUNT (US$)
LAPF 943 461
NSSA 16 044
ZIMDEF 58 179
ZIMRA 448 079
Standard Development levy 43 159
TOTAL 1 508 922

 

 

Risk / Implication

 

The Council is exposed to potential garnishes and penalties from statutory bodies.

 

Recommendation

 

The Council should endeavor to pay current obligations on time.

 

Management response

 

Yes.  Council will work hard to clear all outstanding statutory obligations and we have payment plans in place.

 

NORTON TOWN COUNCIL 2016

 

I have audited the financial statements of Norton Town Council for the year ended   December 31, 2016. The following are material issues noted during the audit.

 

  1. GOVERNANCE ISSUES

 

1.1.      Accounting system

 

Finding

            

The Council, was still using the manual accounting system, despite having acquired a computerised accounting system.

 

Risk / Implication

 

The manual system is susceptible to errors and can be easily manipulated.

 

Recommendation

 

The computerised accounting software should be put to use.

 

Management response

 

The implementation of the computerized accounting software / package is an on-going exercise and staff will be further trained so that most modules are operational before the end of the year.

 

  1. EMPLOYMENT COSTS

 

  • Statutory obligations

 

Finding

 

The Council owed Zimbabwe Revenue Authority $1 302 122 in Pay as You Earn and National Social Security Authority $56 270 as at December 31, 2016.

 

Risk / implication 

 

Penalties and interests may be levied.

 

Recommendation

 

The Council should ensure that outstanding statutory obligations are settled on time.

 

 

 

Management response

 

Besides payment plans, the Council has set-off arrangements which will be vigorously pursued.

 

  • Payroll accruals

 

Finding

 

The Council had outstanding payroll obligations amounting to $2 334 026 as at December 31, 2016, most of which were emanating from prior periods. The following is a list of the outstanding payroll obligations;

 

Details Amount owing ($)
Employees’ Pension Fund 1 241 797
Salaries 798 969
ZIMDEF 102 056
Health staff motivation allowance 60 616
Moonlight funeral assurance 53 877
Health promoters allowance 39 873
Burial Society 20 325
First Mutual 10 499
Nyaradzo funeral services 3 621
Zimbabwe Urban and Rural Councils Workers Union 2 391
Total 2 334 026

 

Risk / implication

 

Suspension of services by service providers.

 

Service delivery may be compromised as a result of low staff morale.

 

Recommendation

 

Payment plans should be negotiated with service providers so that services are not suspended.

 

Management response

 

Where payment plans are not already in place, the same will be negotiated. Where  the Council fails to meet the agreed payment plans, service providers will be advised of the challenges being faced so that services will be provided even though there will be arrears.

 

  1. SERVICE DELIVERY ISSUES

 

3.1.      Health staff

 

Finding

 

The Council had two (2) doctors and forty eight (48) nurses at its hospital. The Council had a population of over 71 810 people (according to the 2016 public health estimates) who need health service. The staff compliment was inadequate to service the population.

 

Risk / Implication

 

Service delivery is compromised as health practitioners may be overwhelmed by the workload.

 

Recommendation

            

The Council should approach Ministry of Health and Child Care for additional staff (doctors and nurses).

 

Management response

 

Proposals for increasing staff were made in 2014. To date, we have been given 6 nurses and 1 doctor and expect 1 doctor and at least 4 more nurses in 2018. Realistic tariffs should be effected in 2018.

 

SHURUGWI TOWN COUNCIL 2013

 

I have audited the financial statements of Shurugwi Town Council for the year ended December 31, 2013. The following are material issues noted during the audit.

 

  1. GOVERNANCE ISSUES

 

  • Billable Properties

 

Finding

 

An analysis of the Engineering department site plans and Finance department records revealed variances between the Finance and Engineering department records of billable properties. The table below shows some of these variances:

 

Location Engineering Department Finance department

 

Variance
1.Sebanga: residentia 872 783 89
2.Mambowa: residential 213 219 (6)
3.Z.B.S       
Housing Units 333 330 3
Commercial Units 10 9 1
4.C.B.D      
Commercial 124 95 29
Churches 22 1 21
5. Makusha      
Commercial 25 22 3
TOTAL 1,599 1,459 140

 

Risk / Implication

 

Financial loss from properties that are not being billed.

 

Recommendation

 

The Council should investigate and reconcile the variance.

 

Management Response

 

Noted and currently the department concerned is correcting the anomaly.

 

 

 

 

 

  • Cash and bank balances

 

Finding

 

An inspection of the cashbooks revealed that the opening cashbook balances were not rolled forward, instead the Council used the opening bank balances as the opening cashbook balances.

 

Further analysis of the bank reconciliations availed for audit revealed that the cash book balances on the bank reconciliations did not agree to the cash and bank balances disclosed in the financial statements.

 

In addition, I noted that most of the Council’s bank reconciliation statements had unexplained reconciling items and long outstanding un-cleared deposits. Subsequent tests revealed that these deposits were never cleared. The table below shows some of these reconciling items:

 

Account Long          Outstanding

Reconcilling Items

Date Amount ($)

 

       
Housing Uncleared deposit February 2013 811.30
Housing Uncleared deposit March 2013 3 490.28
Housing Uncleared deposit April 2013 4 952.44
Housing Uncleared deposit May 2013 1 822.15
Housing Uncleared deposit July 2013 3 777.68
Housing Uncleared deposit September 2013 45.89
Housing Uncleared deposit October 2013 1 204.44
Housing Uncleared deposit November 2013 4 205.93
Housing Uncleared deposit December 2013 2 869.67
Beerhall Uncleared deposit June 2013 280.02
Beerhall Uncleared deposit July 2013 1 073.60
Beerhall Uncleared deposit August 2013 486.60
Beerhall Uncleared deposit October 2013 5 378.80
Beerhall Uncleared deposit December 2013 1 206.00
Engineering Uncleared Deposit August 2013 25.12
Engineering Uncleared Deposit September 2013 58.46
Estate Uncleared deposit June 2013 1 095.00
Health Uncleared deposit July 2013 22 203.90
Health Uncleared deposit August 2013 18.00
Health Uncleared deposit September 2013 409.22
Health Uncleared deposit October 2013 516.70
Health Uncleared deposit November 2013 805.50
Health Uncleared deposit December 2013 392.59
Water Uncleared deposit May 2013 5 527.62
Water Uncleared deposit June 2013 7 433.91
Water Uncleared deposit July 2013 5 365.25
Water Uncleared deposit August 2013 1 136.59
Water Uncleared deposit September 2013 557.70
Account Long          Outstanding

Reconcilling Items

Date Amount ($)

 

Water Uncleared deposit October 2013 6 442.41
Water Uncleared deposit November 2013 3 222.89
Water Uncleared deposit December 2013 1 440.91
Water Unpresented cheque June 2013 4 606.88
Water Unpresented cheque April 2013 111.00
Treasury Non- reconciling-cash Treasury 160.00
Treasury Uncleared deposit - 3 564.26
TOTAL     96 698.71

 

Risk / implication

 

Fraud and errors may go undetected.

 

Recommendation

 

The Council should investigate the invalid and un-cleared deposits.

 

Management response

 

Work has already commenced to investigate the variances. We promise a solution before the commencement of the next audit.

 

  1. EMPLOYMENT COSTS

 

2.1.      Salaries and allowances

 

Finding

 

The Council salaries were not being paid as specified on the salary scale. Salaries for the month of January for all employees did not agree with the salary scale rates and no basis was provided as to how salaries for the month had been computed.

 

The salary scale used from February was provided, however, variances were noted on allowances as shown in the table below:

 

Employment Number Allowance Amount

Paid ($)

Amount On Salary

Scale ($)

Variance ($)
1001 Entertainment 173,42 167,85 5,57
  Cell phone 123,42 118,48 4,94
1004 Entertainment 138,77 121,95 16,82
2015 Entertainment 138.77 121,95 16,82
3007 Cell phone 50,00 Not entitled to cell phone allowance

according to grade

 
Employment Number Allowance Amount

Paid ($)

Amount On Salary

Scale ($)

Variance ($)
3009 Entertainment 110,50 Not entitled to this allowance according to grade  
  Mileage 50,00 Not entitled to this allowance according to grade  
3011 Entertainment 110,50 Not entitled to this allowance according to grade  
  Mileage 50,00 Not entitled to this allowance according to grade  

 

Risk / Implication

 

Financial loss.

 

Recommendations

 

The Council should investigate and regularise the anomaly.

 

Management response

 

The Council has noted the above and of late the same has been submitted to the Internal Audit for rectifications.

 

2.2.      Bank transfer schedules

 

Finding

 

The Council was not maintaining monthly net pay reconciliations to ensure accuracy of transfers. The Council also failed to avail bank transfer schedules for junior employees for the year under review. In addition, the executive payroll for some months were not availed.

 

Risk / Implication

 

Financial loss due to fraud and errors.

 

Recommendation

 

Monthly net pay reconciliations and bank transfer schedules should be maintained and filed accordingly.

 

 

 

 

Management response

 

We are currently looking into the matter and all information will be made available to the auditors once the reconciliation has been done.

 

 

 

 

 

 

 

RURAL DISTRICT COUNCILS

            

BIKITA RURAL DISTRICT COUNCIL 2016

 

I have audited the financial statements of Bikita Rural District Council for the year ended December 31, 2016. The following are material issues that were noted during the audit.

 

  1. GOVERNANCE ISSUES

 

1.1.     Bank reconciliations

 

Finding

 

There were several outstanding items that had not been cleared for several months.

The following are examples of bank accounts with long outstanding reconciling items:

 

Account Name  Bank Balance ($) Cash book balance ($) Reconciling items ($)
Conservation 97 312 215
Estates 3 930 11 825 7 895

 

Risk / Implication

 

Fraud and errors may not be detected in time.

 

Recommendation

 

Long outstanding reconciling items should be investigated and cleared.

 

Management response

 

The introduction of plastic money and the use of swiping machines have resulted in more outstanding items as cash is usually swiped into another account and will have to wait for its transfer to be acknowledged in the other account.

 

1.2.      Journals

 

Finding

 

The Council passed several journals during the year under review. I was not availed with these journals and supporting documentation for my audit. In addition, the Council did not maintain a journal register.

 

Risk / Implication

 

Unauthorized and fraudulent journals may be posted into the system.

 

Errors may go undetected.

 

 

Recommendation

 

All journals entries must be documented and approved before being posted into the system.

 

Management response

 

A journal register is going to be in place and entries will be approved first before they are posted by the senior person as per audit observation effective June 2017.

 

 

 

 

BINGA RURAL DISTRICT COUNCIL 2016

 

I have audited the financial statements of Binga Rural District Council for the year ended   December 31, 2016. The following material issue was noted during audit.

 

EMPLOYMENT COSTS

 

1.1.     Employment cost ratios

 

Finding

 

The payroll costs totalled $792 404, consuming 79% of the Council’s income of $1 006 729 for the year. Payroll costs also constituted 68% of total expenditure of $1 163 790. The Council was not adhering to the government policy of 30:70 costs to service delivery ratio.

 

Risk / Implication

 

Service delivery is compromised as most of the resources are channelled towards employment costs.

 

Recommendation

 

The Council should put in place measures to ensure that it achieves the required ratio.  

 

Management response

 

The Council will put in place measures to ensure that revenue collection is realized in full. By laws to enforce revenue collection has been crafted and are awaiting approval by the Minister. The Council is considering reducing the number of employees to cut employment costs and measures on this has since started.

 

CHIKOMBA RURAL DISTRICT COUNCIL 2016

 

I have audited the financial statements of Chikomba Rural District Council for the year ended December 31, 2016. The following material issue was noted during audit.

 

EMPLOYMENT COSTS

 

1.1.    Taxable benefits

 

Finding

 

I noted that school fees benefit for the Council’s employees in grade eight (8) and above, as well as overtime allowances for all employees were not being taxed as per the requirements of the Income Tax Act [Chapter 23:06].

 

Risk / Implication

 

The Council may be penalised by the revenue authorities.

 

Recommendation

 

Management should ensure that all taxable benefits are subjected to income tax per requirements of the Income Tax Act [Chapter 23:06].

 

Management response

 

Noted. PAYE will be deducted from the respective employees’ allowances.

 

GOKWE NORTH RURAL DISTRICT COUNCIL 2016

 

I have audited the financial statements of Gokwe North Rural District Council for the year ended   December 31, 2016. The following are material issues noted during the audit.

CORPORATE GOVERNANCE

 

1.1      Vacant posts

 

Finding

 

The following key posts were vacant during the year under review:

  • Engineer,
  • Executive Officer Agriculture,
  • Executive Officer Administration (this has been handled by the EO Social Services) and
  • Internal Audit.

 

 

Risk / implication 

 

Service delivery may be compromised.

 

Recommendation

 

The Council should ensure that these key positions are filled.

 

Management response

 

Due to financial constraints, the Council will start with Internal Auditor. To   minimize costs the Council has merged the EO Social department with the administration department and the two are to be headed by the EO Social Services.  The other vacancies will be considered when cash flows improve.

 

  1. EMPLOYMENT COSTS

 

2.1      Payroll costs to service delivery ratio 

 

Finding

 

The total payroll costs of $514 739 constitute 59.9% of the total expenses of $858 656, exceeding the 30:70 payroll to service delivery recommended ratio.

 

Risk / Implication

 

Service delivery may be compromised.

 

 

Recommendation

 

The Council should endeavour to achieve the 30:70 ratio as per ministerial directive.

 

Management response

 

The Finance Department cannot influence the conditions of services for the employees. However, we can indirectly recommend that the Council stop replacing employees who may have left employment except for critical posts.

 

2.2      Remittance of statutory deductions

 

Finding

 

Statutory deductions were not remitted in a timely manner which led to an accumulation of outstanding balances. The situation resulted in ZIMRA garnishing the Council to the tune of $113 000. For NSSA only two payments were made, in August ($2 000) and September ($2 000). The following were the outstanding balances as at December 31, 2016:

 

Creditor Amount ($)
PAYE 27 000
NSSA 29 000

 

Risk / implication

 

Financial loss due to penalties and interests that may be levied by the respective authorities.

 

Recommendation

 

Statutory deductions should be remitted in a timely manner.

 

Management response

 

We are working towards improving our revenue collection so that we may have enough funds to pay statutory deductions timeously.

 

GOROMONZI RURAL DISTRICT COUNCIL 2017

 

I have audited the financial statements of Goromonzi Rural District Council for the year ended December 31, 2017 and I issued an unmodified / clean opinion.

 

Opinion

 

In my opinion, the financial statements present fairly, in all material respects, the financial position of Goromonzi Rural District Council for the year ended December 31, 2017, and its financial performance and its cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSASs).

 

However, below are material issues noted during the audit.

 

  • REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY

 

  • Revenue from A1, A2 and 0-10 Hectares

 

Finding

 

The Council had not received revenue collected by the then Ministry of Lands and Rural Resettlement for the years 2016 and 2017 in relation to A1, A2 and 0-10 hectare plots.

 

Risk / Implication

 

Loss of revenue which may compromise service delivery.

 

Recommendation

 

Council should engage the Ministry of Lands with regards to remittance of the outstanding amounts.

 

Management response 

 

Council shall engage the Ministry of Lands with regards to 2017 land levies by May 31, 2018.

 

  • PROCUREMENT OF GOODS AND SERVICES

 

  • Vehicles repair costs

 

Finding

 

The Council paid a total of $2 002 for the repair of the District Administrator’s (DA) vehicle. I was not availed with satisfactory explanations or reasons for the DA’s office cost to be borne by the Rural District Council.

 

 

 

Risk / Implication

 

The expenditure may not be a proper charge to the Council.

 

Recommendation

 

The Council should engage the DA’s Office to recover the expenses incurred.

 

Management response

 

Council shall engage the District Administrator’ office and map a way forward before 31 May 2018.

 

  • PROGRESS IN IMPLEMENTATION OF PRIOR YEAR ISSUES

 

I reviewed the progress made towards the implementation of prior year recommendations and found that Goromonzi Rural district Council has made some progress. However, there was room for improvement in respect of the following recommendations:

 

3.1.     Refuse dumpsite

 

Recommendation

 

Council should regularise the Juru dump site issue and comply with the requirements of the Environmental Management Agency guidelines.

 

Progress made

 

There was still no dumpsite at Juru business centre. However, the Council had paid for the environmental impact assessment to Environmental Management Agency (EMA).

 

 

 

HWEDZA RURAL DISTRICT COUNCIL 2016

 

I have audited the financial statements of Hwedza Rural District Council for the year ended   December 31, 2016.   The following is a material issue noted during the audit.

  • SERVICE DELIVERY ISSUE

 

1.1.     Health staff

 

Finding 

 

Hwedza district had a relatively high patient to doctor ratio, as evidenced by two (2) doctors serving an estimated population of 75 000.

 

Risk / Implication

 

Service delivery is compromised as health practitioners may be overwhelmed by the workload.

 

Recommendation

             

The Council should approach Ministry of Health and Child Care for additional staff (doctors and nurses).

 

Management response

 

The Council has an arrangement with Ministry of Health to allocate them monthly fuel so that doctors service Council clinics hence improving access to doctors by patients in the district.

 

 

 

 

 

MATOBO RURAL DISTRICT COUNCIL 2016

 

I have audited the financial statements of Matobo Rural District Council for the year ended December 31, 2016. The following are material issues noted during the audit.

 

  1. GOVERNANCE ISSUES

 

1.1.     Statutory obligations Finding

The Council was not remitting statutory obligations on time. As of December 31, 2016, the Council had outstanding statutory obligations amounting to $516 769 as detailed below;

AUTHORITY AMOUNT ($)
NSSA 13 223
ZIMRA VAT 79 268
ZIMRA PAYE 108 907
ZIMDEF 3 612
NEC 17 220
PENSION 277 248
ZRDCWU 11 621
STANDARD DEVELOPMENT 6 480
TOTAL 516 769

 

Risk / Implication

Financial loss due to penalties and interest levied.

Recommendation

The Council should come up with payment plans with respective authorities.

Management response

The revenue section collection strategy document is currently being used to try and make the clients realise the importance of paying Council dues.

Other strategies that are being implemented include door to door revenue collections, litigation and payment plans. For instance, payment plans have been entered into by and between Council and creditors such as ZIMRA, NSSA, ZIMDEF, ZRDCWU, ARDC etc.

There is also a resolution that requires management to streamline expenditure and concentrate on clearance of statutory obligations.

 

 

MAZOWE RURAL DISTRICT COUNCIL 2016

 

I have audited the financial statements of Mazowe Rural District Council for the year ended December 31, 2016. The following is a material issue noted during the audit.

 

  1. REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY

 

Engagement of debt collector

 

Finding

 

The Council engaged a debt collector to assist it in the collection of outstanding amounts from ratepayers without proper due diligence. After more than a year of engagement, the debt collector failed to remit to the Council amounts collected from ratepayers. It was later discovered that the debt collector was of no fixed abode and could not be prosecuted.

 

Risk / Implication

 

Financial loss due to non-recovery of cash received from ratepayers by debt collectors.

 

Recommendation

 

Concerted effort should be made to locate the debt collector in order to recover the amounts collected.

 

The Council should exercise due diligence when engaging debt collectors.

 

Management response

 

Noted.

 

 

 

 

 

 

 

 

 

 

 

MUTARE RURAL DISTRICT COUNCIL 2015

 

I have audited the financial statements of Mutare Rural District Council for the year ended December 31, 2015. The following are material issues noted during the audit.

 

  1. GOVERNANCE ISSUES

 

1.2      Councillors allowances

 

Finding 

 

I noted that the Council was paying transport allowances that were above the Ministerial circular approved rates. No approval from the parent Ministry to pay allowances above the stipulated rates was availed. The table below compares the allowances paid and the allowances as per circular:

 

Councillor Distance to/from Council (KMs) Circular approved

rate ($)

Allowance paid

($)

1 52 30 35
2 80 30 40
3 121 30 40
4 68 30 35
5 103 30 40
6 45 25 30

 

Risk / Implication

 

Financial loss due to unauthorised expenditure.

 

Recommendation

 

The Council should seek Ministerial approval to pay allowances above those stipulated.

 

Management Response

 

The variances observed by Audit are noted. The adjustments were made to compensate Councillors who come from areas where transport costs are high due to their inaccessibility.  We are taking steps to apply for Ministerial approval for these adjustments.

 

 

 

 

 

 

 

  1. REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY

 

2.1      Stand sales

 

Finding

 

During the year under review some stands were sold to Councillors at a rate of $1 per square meter which was below the resolved price of $6 per square meter. This was in violation of Circular No. 1 of 2011(Ref CX/6/1) which stated that stands can only be sold to Councillors at a concessionary rate of 35-40% of the resolved value depending on the number of years a Councillor would have served.

 

Furthermore, I noted that the Council sold commercial stands at Chitakatira area at below the resolved prices. There was no other supporting documentation as to the basis for this allocation at the said price. The following table shows a sample of such:

 

Stand

Number

 

Stand Size (m2) Offer Price

($)

 

Resolved Price ($) Variance

($)

Value of prejudice to

Council ($)

288 180 2 6 4 720
289 180 2 6 4 720
325 360 2 6 4 1 440
328 360 2 6 4 1 440

 

Risk / Implication

 

Financial loss due to low charges on stand sales.

 

The Council is in violation of directives from the parent Ministry.

 

Recommendation

 

The Council should follow guidelines provided by the parent ministry in the administration of stands.

Management response

The Councillor was originally allocated a stand and he built his house when the ruling price was a dollar per square meter, however Physical Planning Department realigned lay out plans resulting in the constructed house intruding in the next stand. The Council was left with two options one (1) to demolish the Councillor’s house (built with Council approval) and compensate him then request him to rebuild at the right spot in the realigned stand, or (2) offer him the next stand at the price at which he had acquired the original stand, thus the house will therefore be at the centre of the double stand and would not necessitate demolition and compensation. The Councillor was therefore offered the adjacent stand under option (1) above.

Regarding commercial stands sold below the $6-00 price referred to above, this happened at the changeover period from the old price to the new price in respect of people who were holding offer letters at the old price but had not paid anything to the Council. We have engaged these people and informed them that owing to their delay in payment, prices had changed to $6. We are pleased to report that all the people concerned have accepted to pay for the land at the new price of $6 per square metre and signed acknowledgement of debts.

2.2      Land Levy

 

Finding

 

The Council continued to bill land levy after the Ministerial Circular No. 3 of 2014 from Ministry of Local Government, Public Works and National Housing. The circular stated that both the unit tax and land rentals would be collected by the Ministry of Lands and Rural Resettlement at no cost to the Council and that two separate invoice books and receipt books were to be maintained for easy accountability of land rental and unit tax by the Ministry of Lands and Rural Resettlement.

 

For the period January to June 2015, the Council billed and collected land levy, and from July to December 2015 the Council billed but did not collect the levy as the Council left the collection to the Ministry of Lands and Rural Resettlement which was then supposed to remit the unit tax to the Council. However, on checking whether the Ministry remitted to the Council the unit tax collected, I noted that the Council did not receive anything in the period ending December 2015. The Council had accrued debtors which it had no control over.

 

Risk / Implication

 

The Council is recognising income that it may not collect hence revenue may be overstated.

 

Recommendation

 

The Council should engage the Ministry of Lands and Rural Resettlement to ensure that all unit tax collected on its behalf is remitted to the Council.

 

Management response

 

Audit observation is noted.  We have made efforts to engage Ministry of Lands through ARDC and also through Ministry of Rural Development. To date we have received $2 320 through these efforts.

 

 

MUTOKO RURAL DISTRICT COUNCIL 2016

 

I have audited the financial statements of Mutoko Rural District Council for the year ended December 31, 2016. The following material issue was noted during the audit.

 

  1. EMPLOYMENT COSTS

 

1.1.     Employment costs ratio

 

Finding

 

Payroll costs totalled $687 662, consuming 58% of the Council’s income of $1 187 654, for the year. Payroll costs also constituted 53% of total expenditure of $1 294 538.

 

Risk / implication

 

Service delivery is compromised.

 

Recommendation

 

The Council should aim to achieve the employment to service delivery 30:70 ratio as directed by the Ministry.

 

Management’s response

 

The figure above includes contract workers who should fall under a separate project.

 

 

 

 

 

 

SANYATI RURAL DISTRICT COUNCIL 2016

 

I have audited the financial statements of Sanyati Rural District Council for the year ended December31, 2016. The following are material issues noted during the audit.

 

  1. GOVERNANCE ISSUES

 

1.1.     Vacant Positions

 

Finding

 

A review of the Council’s organogram showed that a number of key posts within the Council were vacant. Amongst the vacant posts were the positions of Civil Engineer, Social and Community Services Officer and Building inspector.

 

Risk / Implications

 

Service delivery may be compromised.

 

Recommendations

 

The Council should consider filling in such crucial posts.

 

Management Response

 

Due to the prevailing economic challenges, employment of additional staff may result in the Council moving away from any realistic chances of meeting the employment to service delivery (30:70) ratio. As a Council however, we are considering carrying out a job evaluation exercise paving way for a restructuring exercise. The job evaluation exercise will assist greatly in determining the key positions that the Council should fill in light of the financial situation.   

 

1.2.     Sale of Stands to Staff

 

Finding

 

The Council sold stands to staff at 40% of the cost price in line with Council resolution CR/19/2010. For taxation purposes a taxable benefit arises as a result of such a transaction with the benefit being the difference between the market price of the stand and the discounted price. However, during the year under review no taxable benefits were accrued to all staff who were allocated stands in the period.

 

Risk / Implication

 

Non-taxation of such benefits is a violation of the Income Tax Act [Chapter 23:06] and the Council will be subject to penalties from tax authorities.

 

Recommendation

 

The above-mentioned benefit must be taxed accordingly and the taxes remitted to ZIMRA.

 

Management Response

 

The resolution allowing Councillors to acquire residential stands was done on the basis of a Ministerial circular which at the time granted authority to the Councils to allow sitting Councillors’ access to stands at concessionary rates.

 

The Council as the employer, made a resolution to offer favourable conditions to employees where they acquire stands at a concessionary rate. This is a retention strategy by the Council and is in line with industry practice. 

 

The aspect of taxation of benefits is noted and will be implemented for new allocations. 

 

  1. PROCUREMENT OF GOODS AND SERVICES

 

2.1.     Procurement procedures

 

Finding

 

 

The Council purchased several non-locally assembled vehicles without seeking Cabinet approval. This is in violation of Cabinet Circular No. 16 of 2011 which states that “with effect from 1 November 2011 all vehicles purchased by Government and by other public institutions shall be procured from the local vehicle assembly plants” unless a clearance by the Office of the President and Cabinet has been obtained. The table below shows the vehicles bought during the year under review without complying with the regulations;

 

Vehicle Supplier Cost ($)
Isuzu 4*2 double cab Paza Buster 55 750
Nissan NP300 AMC Nissan 32 500
Nissan NP300 Croco Motors 34 460

 

Furthermore, the Council charged tender fees of $50 for tenders mv1/2016, mv2/2016 and mv3/2016 which is $40 above the stipulated $10.

 

Risk / Implication

 

The Council is in violation of laid down guidelines from the Cabinet.

 

 

Recommendation

 

The Council should follow the guidelines prescribed by the government in relation to procurement of vehicles.

 

Management Response

 

The Council charged $50 as tender fees so as to recoup the expenses incurred in the procurement process. For procurement of vehicles that are not locally assembled but suitable for our rough terrain, Cabinet approval will be sought.

 

2.2.     PAYE on terminal benefits

 

Finding

 

Inoted that terminal benefits worth $16 095 were processed outside the payroll. PAYE amounting to $2 727 was not deducted from terminal benefits. Table 1 below gives the breakdown of the PAYE.

 

PAYE on terminal benefits

Beneficiary Terminal Benefits ($) PAYE ($)
1 2 530 491
2 2 697 387
3 5 312 754
4 3 910 929
5 1 646 166
Total 16 095 2 727

 

Risk / Implication

 

Financial loss due to penalties and fines.

 

Recommendation

 

The Council should comply with income tax laws.

 

Management response

 

The Council has taken note of the recommendation and will commence taxation of terminal benefits forthwith. Applications for tax directives on terminal benefits will be made to ZIMRA as and when necessary. 

 

 

 

 

2.3.     Water meters

 

Findings

 

Enquiries with the Township Superintendent indicated that 199 properties out of a total of 557 did not have functional water meters at the date of the audit. (November 2017)

 

Risk / Implication

 

Loss of revenue from unmetered water.

Recommendation

 

The Council should ensure that all non-functional meters are replaced.

 

Management response

 

The Council procured 70 domestic water meters in April 2017, to date 38 meters have been installed in Sanyati Growth Point. The program is continuing until all the procured meters are installed. In the medium - long term, the Council is considering prepaid meters.

 

TSHOLOTSHO RURAL DISTRICT COUNCIL 2016

 

I have audited the financial statements of Tsholotsho Rural District Council for the year ended December 31, 2016. The following are material issues noted during the audit.

 

  1. GOVERNANCE ISSUES

 

  • Disaster recovery plan

 

Finding

 

The Council did not have a disaster recovery plan. The Council was not maintaining back up for its accounting and administrative information.

 

Risk / Implication

 

Loss of the Council’s information in the event of a disaster.

 

Recommendation

             

Management should develop a disaster recovery plan and communicate it to all employees.

 

Management response

 

Noted.

 

  1. REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY

 

  • Council properties and communal land leases

 

Finding

 

I noted that most of the Council properties and communal land leases had expired

 

Risk / Implication 

 

The Council may have no recourse in the event of dispute.

 

Recommendation

 

Lease agreements should be up to date.

 

Management response

 

The process of renewing the leases was started. Leases will be renewed as operators come to renew their licenses.

APPENDIX “A”

AUDITS IN PROGRESS OR BEING FINALISED AS AT MAY 31, 2018

Name of Local Authority Year
CITY COUNCILS   
1. Bulawayo City Council 2013-2015
2. Gweru City Council 2014
3. Harare City Council 2017
4. Kwekwe City Council 2016
5. Masvingo City Council 2015
6. Mutare City Council 2014
MUNICIPAL COUNCILS  
7. Bindura Municipal Council 2017
8. Chegutu Municipal Council 2015
9. Chinhoyi Municipal Council 2016
10. Chitungwiza Municipal Council 2015
11. Redcliff Municipal Council 2014
12. Victoria Falls Municipal Council 2016
TOWN COUNCILS  
13. Beitbridge Town Council 2017
14. Chipinge Town Council 2016
15. Chiredzi Town Council 2015
16. Gokwe Town Council 2016
17. Karoi Town Council 2016
18. Norton Town Council 2017
19. Rusape Town Council 2017
20. Zvishavane Town Council 2015-2016
LOCAL BOARDS  
21. Chirundu Local Board 2016-2017
22. Epworth Local Board 2017
23. Hwange Local Board 2015
24. Lupane Local Board 2016
25. Ruwa Local Board 2012-2013
RURAL DISTRICT COUNCILS  
26. Beitbridge Rural District Council 2017
27. Bikita Rural District Council 2016
28. Bindura Rural District Council 2017
29. Binga Rural District Council 2017
30. Chegutu Rural District Council 2017
31. Chipinge Rural District Council 2017
32. Chirumanzu Rural District Council 2016
33. Chivi Rural District Council 2017
34. Gokwe North Rural District Council 2017
35. Guruve Rural District Council 2016
36. Gutu Rural District Council 2017
37. Hurungwe Rural District Council 2017
Name of Local Authority Year
38. Hwedza Rural District Council 2017
39. Makonde Rural District Council 2017
40. Mangwe Rural District Council 2017
41. Manyame Rural District Council 2017
42. Mhondoro-Ngezi Rural District Council 2015
43. Mudzi Rural District Council 2016
44. Murewa Rural District Council 2017
45. Mutare Rural District Council 2016
46. Mutasa Rural District Council 2017
47. Mutoko Rural District Council 2017
48. Nkayi Rural District Council 2017
49. Nyanga Rural District Council 2017
50. Runde Rural District Council 2016
51. Tongogara Rural District Council 2017
52. Tsholotsho Rural District Council 2017
53. UMP Zvataida Rural District Council 2017

 

 

APPENDIX “B”

ACCOUNTS NOT YET SUBMITTED FOR AUDIT AS AT MAY 31, 2018

Name of Local Authority Year
CITY COUNCILS   
1. Bulawayo City Council 2016-2017
2. Gweru City Council 2015-2017
3. Kadoma City Council 2015-2017
4. Kwekwe City Council 2017
5. Masvingo City Council 2016-2017
6. Mutare City Council 2015-2017
MUNICIPAL COUNCILS  
7. Chegutu Municipal Council 2016-2017
8. Chinhoyi Municipal Council 2016-2017
9. Chitungwiza Municipal Council 2016-2017
10. Gwanda Municipal Council 2017
11. Kariba Municipal Council 2017
12. Marondera Municipal Council 2016-2017
13. Redcliff Municipal Council 2015-2017
14. Victoria Falls Municipal Council 2017
TOWN COUNCILS  
15. Beitbridge Town Council 2017
16. Chipinge Town Council 2017
17. Chiredzi Town Council 2016-2017
18. Gokwe Town Council 2016-2017
19. Karoi Town Council 2017
20. Mvurwi Town Council 2017
21. Plumtree Town Council 2017
22. Shurugwi Town Council 2015-2017
23. Zvishavane Town Council 2017
LOCAL BOARDS  
24. Chirundu Local Board 2017
25. Epworth Local Board 2017
26. Hwange Local Board 2016-2017
27. Lupane Local Board 2017
28. Ruwa Local Board 2014-2017
RURAL DISTRICT COUNCILS  
29. Beitbridge Rural District Council 2017
30. Bikita Rural District Council 2017
31. Bindura Rural District Council 2017
32. Bubi Rural District Council 2016-2017
33. Buhera Rural District Council 2017
34. Bulilima Rural District Council 2017
35. Chaminuka Rural District Council 2017
36. Chegutu Rural District Council 2017
37. Chikomba Rural District Council 2017
Name of Local Authority Year
38. Chimanimani Rural District Council 2017
39. Chipinge Rural District Council 2017
40. Chiredzi Rural District Council 2017
41. Chirumanzu Rural District Council 2017
42. Chivi Rural District Council 2017
43. Gokwe South Rural District Council 2017
44. Guruve Rural District Council 2017
45. Gutu Rural District Council 2017
46. Gwanda Rural District Council 2017
47. Hwange Rural District Council 2016-2017
48. Insiza Rural District Council 2017
49. Kusile Rural District Council 2014-2017
50. Makoni Rural District Council 2017
51. Mangwe Rural District Council 2017
52. Marondera Rural District Council 2017
53. Masvingo Rural District Council 2017
54. Matobo Rural District Council 2017
55. Mazowe Rural District Council 2017
56. Mberengwa Rural District Council 2017
57. Mbire Rural District Council 2016-2017
58. Mhondoro-Ngezi Rural District Council 2016-2017
59. Mudzi Rural District Council 2017
60. Mutare Rural District Council 2017
61. Muzarabani Rural District Council 2017
62. Mwenezi Rural District Council 2017
63. Nyaminyami Rural District Council 2015-2017
64. Pfura Rural District Council 2017
65. Runde Rural District Council 2017
66. Rushinga Rural District Council 2017
67. Sanyati Rural District Council 2017
68. Umguza Rural District Council 2017
69. Umzingwane Rural District Council 2017
70. Vungu Rural District Council 2017
71. Zaka Rural District Council 2017
72. Zvimba Rural District Council 2017
73. Zibagwe Rural District Council 2017

 

 

 

 

 

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