Outapi Town Council fails debt recovery test

17 Oct 2018 14:00pm
WINDHOEK, 17 OCT (NAMPA) – The Outapi Town Council was only able to recoup N.dollars 860 433 from nearly N.dollars 6.3 million owed to it during the 2015/16 financial year, Auditor General (AG), Junias Kandjeke, has said.
Kandjeke made these findings in the 2015/16 audit report of the council, which was submitted to the National Assembly by Deputy Finance Minister, Natangwe Ithete on Tuesday.
“Only N.dollars 860 433 (14 per cent) of the selected sample was confirmed as debt collecting. This is an extreme indication of poor recoverability,” the AG states in the report.
To address this situation, Kandjeke recommended that the council implement strict measures to collect its outstanding debts.
He cautioned that the council will soon be facing a cash-flow problem if such measures are not introduced.
“Legal action may be necessary,” he added.
In their comment in the report, the council’s management said they took note of the concern and legal action has been taken and that an amount of N.dollars 3 000 000 of its debts had been handed over to a debt collector.
Moreover, the auditor found no indication that senior management of the council approved the writing off of debtors during the period under review, noting that the entity does not do proper analysis of debtors' accounts, but instead made a provision for all accounts that are in arrears by more than 90 days.
To remedy the shortcoming, Kandjeke recommended: “A senior official of the Council should approve debtors’ write-offs after obtaining necessary resolutions from the Council.”
Another finding into the accounts was that the Build Together Housing Scheme was disclosed in totality as part of the council’s current assets, which the AG noted as incorrect.
Likewise, the First Capital long-term loan was disclosed in totality as part of non-current liabilities, which is also incorrect according to the AG.