The Municipality of Tsumeb is in a mess as its financial status could not be properly ascertained by the Auditor General because of a lack of documentation and unconvincing explanations of some of the irregular matters raised for the year 2020.
“The auditors were unable to establish the accuracy, validity, physical existence, and condition of the Property, Plant, and Equipment, which had a net book value of N$79 379 051 (2020). This was due to the Municipality of Tsumeb failing to provide the auditors with a fixed asset register. The Municipality did not disclose its open lands in the fixed asset register,” noted AG Junias Kandjeke.
Meanwhile, there was no differentiation between the Fixed Property Fund and Housing Funds of the N$50 109 704 disclosed in the financial statements.
In addition, the AG said the auditors could not verify the cash flow statements because they could not identify the sources of cash inflows and the items on which cash was expanded during the reported period. With this information, the municipality earned itself an adverse opinion as financial statements were not presented fairly.
Furthermore, Kandjeke noted that there were some bad debts as well as some irreconcilable trade receivables. “There is no provision for impairment of trade receivables stated in the financial statements. The age analysis for trade receivables reflects an amount of N$143 486 705, and the financial statements reflect an amount of N$17 403 463. There is a difference of N$126 083 242 which could not be explained by the Municipality,” he stressed.
The AG found that there was no long-term loan summary, for an amount of N$6 789 529 nor were any documentation made available for audit purposes. Also no documentation for the provision of arrear Government loans were included in current liabilities, N$2 9967 107, thus no audit could be carried out. “The auditors noted that the opening balances or comparative figures for the prior year were changed without any proper explanations; therefore, no reliance can be placed on the current year figures reported,” he said. This is after council changed both assets to a total of N$181 780 655 same figure as that of liabilities.
It was further established that the municipality did not comply with the correct financial reporting standards.