Cow explains accumulated liabilities

16 Nov 2017 17:40pm
WINDHOEK, 16 NOV (NAMPA) – The City of Windhoek (CoW) on Thursday appeared before a National Council Standing Committee on Public Accounts and Economy to explain accumulated liabilities which exceeded its assets during the 2015/16 financial year.
CoW received a disclaimer audit opinion in the audit report by the Office of the Auditor General (AG) in 2015, with commercial insolvency listed as a “going concern”.
A disclaimer opinion is issued in cases when the auditor is not independent or when there is a conflict of interest. When the limitation on scope is imposed by the client, the auditor is unable to obtain sufficient appropriate audit evidence.
The AG also highlighted in the report that current liabilities in 2015 exceeded the City’s current assets during the same period.
“These conditions indicate the existence of material uncertainties which may cast doubt on the City’s abilities to continue as a going concern,” Kandjeke said.
A going concern is regarded as a business being operational and making a profit.
The condition is collaborated by the accumulated deficit of over N.dollars 2 billion in 2015 compared to over N.dollars 1.5 billion in 2014, indicating that the losses are accumulating over a period, the AG indicated.
The report further explains that CoW was not commercially viable and if allowed to continue unabated; operating deficits would eventually erode the City’s equity base which would result in it being insolvent.
Member of the Standing Committee, John Likando said CoW’s commercial viability puts the country in an awkward position as residents and investors will lose trust in the City.
In his response, CoW’s Acting Chief Executive Officer (CEO), Fillemon Hambunda said the City was in the process of addressing government debts in order to strengthen its balance sheet.
He added that the City had to divert some of its funds from projects to address the water shortage during the same year, which as a result put the city in financial difficulties.
Chairperson of the Standing Committee, Peter Kazongominja said there were concerns of financial mismanagement, fraud and irregularities in awarding tenders and the sale of properties.
“A disclaimer audit opinion is one of the worst audits you can get,” he said.
The AG recommended that the municipality should implement measures to reduce its accumulated deficit in liabilities, which the Standing Committee supported.
(NAMPA)
ANS/HP/PS