13 Nov 2018 07:20am
WINDHOEK, 12 NOV (NAMPA) The Auditor-General (AG) has issued a disclaimer of opinion for the Grootfontein Municipalitys financial statements for the 2015/16 financial year for its failure to furnish sufficient evidence of how over N.dollars 73 million was spent.
This information is contained in the report of the AG on the accounts of the municipality for the financial year ended 30 June 2016 submitted to the National Assembly by Finance Minister, Calle Schlettwein recently.
A disclaimer opinion is given to institutions where the auditors were not able to obtain sufficient appropriate evidence for the audit.
In the report, Auditor-General Junias Kandjeke singled out 18 items in the financial statements of the municipality which informed his opinion, one of which was the municipalitys chief executive officer not submitting to the AG statements as stipulated.
Kandjeke recommended that the chief executive officer submit all annual reports as stipulated in Circular D3/2015.
In response, the municipalitys management indicated that its finance personnel do not posses adequate bookkeeping and financial reporting skills.
To this, Kandjeke said: The municipality must ensure that the finance department is exposed to professional training and education on bookkeeping and corporate reporting.
The municipalitys financial department is headed by the strategic executive of finance and information technology, the chief accountant and an accountant.
Further, the auditors observed that the municipalitys accounting records and financial statements do not conform to international accounting standards for public entities.
The auditors also observed that the municipality presented an unconventional statement of financial position and draft departmental income statements.
The statements did not include a statement of cash flows, a statement of changes in equity and summary of significant accounting policies and other explanatory notes, Kandjeke said.
In addition, the auditors found that the municipality did not charge depreciation on assets through government and internal loans.
The municipality must develop, adopt, document and implement a sound depreciation and amortisation policy for its non-current assets, the AG proposed.
Additionally, the auditors discovered that depreciation amounting to N.dollars 3 175 350 was debited to capital outlay, which conceals the municipalitys losses.
This means the net deficit fort for the period under review and the prior period was therefore understated.
To address the dilemma, it was recommended that the municipality restate its financial statements to reflect the correct treatment of depreciation and usage of funds.
Other issues the auditors noted was the understatement of leave pay by N.dollars 1.3 million; unrecorded liabilities amounting to N.dollars 3 million and failure to provide provision for severance pay of N.dollars 4.7 million.
Bad debts were understated by N.dollars 2 million.
Meanwhile, the auditors observed that the municipality had funds, reserves and internal loans amounting to N.dollars 58.2 million, which were not supported by assets.
The auditors recommend that the above funds and reserves and related assets be written off against each other, reads a recommendation.
Kandjeke in his closing remarks said I have not been able to obtain sufficient appropriate audit evidence to provide a basis of an audit opinion.