Auditor-General flags Zaka RDC over 219 unrecorded stands, weak financial controls

Auditor-General flags Zaka RDC over 219 unrecorded stands, weak financial controls

For all the News from Mashonaland Central, Join One of Our Groups

The Auditor-General has flagged serious accounting and compliance weaknesses at Zaka Rural District Council (RDC) after audits of its 2023 and 2024 financial statements uncovered unrecorded residential stands, missing public assets in the books and breaches of reporting standards.

Auditor-General Vimbai Chikwenhere reported that the council failed to recognise 219 residential stands and consumables as inventory, despite the requirement under International Public Sector Accounting Standards (IPSAS) that items held for sale or distribution should be reflected in financial statements.

“The Council did not recognise two hundred and nineteen (219) stands and consumables as inventory in the financial statements,” Chikwenhere said. “This was contrary to IPSAS 12 – ‘Inventories’ paragraph 11 which requires items held for sale or distribution in the ordinary course of business to be recognised as inventory.”

The Auditor-General warned that the omission materially misstated the council’s accounts, leaving the financial statements incomplete and obscuring the full value of assets under the council’s control. The report listed “misstatement of financial statements” as the key risk arising from the failure to recognise the inventory.

Council management acknowledged the finding and said the inventory would be valued and the pegged stands recognised in future financial statements.

Beyond the stands, the Auditor-General said the council also failed, for a second consecutive year, to recognise land and key infrastructure assets in its financial statements, including road networks and water reticulation systems.

“The Council did not recognise land and infrastructure assets such as road networks and water reticulation systems in the financial statements,” Chikwenhere said. “This was contrary to IPSAS 45 – ‘Property, Plant and Equipment’ paragraph 6 which requires items that meet the definition criteria of property, plant and equipment to be recognise.”

To Advertise Inbox Us

The 2024 audit also raised concerns about asset classification after the council recognised three software programmes valued at ZWG0.32 million as intangible assets, even though auditors found the council did not meet the control requirements under IPSAS.

“These software programs did not meet the recognition criteria of IPSAS 31 – ‘Intangible Assets’ paragraph 21 which requires intangible assets to be recognised only when the Council had control over the software programs,” Chikwenhere said. Management indicated the software would be removed from the financial statements in 2025.

On revenue and debt management, the Auditor-General found that the council did not recognise an allowance for expected credit losses on receivables disclosed at ZWL8.6 billion, which auditors said overstated debtors and gave a misleading view of likely debt recovery.

“The Council did not recognise an allowance for credit losses on its receivables with a carrying amount of ZWL8.6 billion disclosed in the financial statements,” the report stated. Council management said it was finalising a debt management policy to guide future assessments and provisioning for doubtful debts.

Environmental compliance was also cited as a concern after auditors found the council did not have a landfill facility and was using an ordinary dumpsite for waste disposal, which the Auditor-General said was contrary to provisions of the Environmental Management Act.

“The Council did not have a land for disposal of waste. As a result, the Council was using a dumpsite,” Chikwenhere said, warning of possible regulatory penalties and risks of pollution and health hazards for surrounding communities.

In response, council management said the dumpsite would be decommissioned and that an Environmental Impact Assessment would be conducted before establishing a new waste disposal site.

The report noted that while the council implemented one previous recommendation by depreciating property, plant and equipment, it had not resolved the recurring matter of inventory valuation, with stores inventory still neither valued nor recognised.

Zaka RDC chief executive officer David Majaura was contacted for comment. He initially said: “I will revert to you…after I gather the facts. Now busy doing something…” Further efforts to reach him were unsuccessful by the time of publication, as calls went unanswered.

Follow Our WhatsApp Channel for all the News from Mashonaland Central – Bindura, Mbire, Guruve, Mount Darwin, Rushinga, Shamva, Mazowe & Muzarabani