Auditor-General flags Harare City Council over missing financial records
Harare City Council continues to be dogged by misgovernance of its business entities after the Auditor-General Vimbai Chikwenhere flagged shortcomings in the local authority’s financial reporting.
The City of Harare oversees several business units, including Sunshine Holdings, Rufaro Marketing, Harare Quarry and City Parking.
In her latest audit report covering the 2022 and 2023 financial years, Chikwenhere criticised the council for failing to consolidate the financial statements of its subsidiaries, warning that the omission could result in misstatements in the local authority’s financial reports.
“The Council did not consolidate its subsidiaries, contrary to IPSAS 35 – ‘Consolidated Financial Statements’, paragraph 5, which requires the consolidation of subsidiaries in financial statements.
“In addition, the carrying amount of investments in subsidiaries such as Harare Sunshine Holdings (Private) Limited, Rufaro Marketing (Private) Limited and Harare Quarry (Private) Limited were not disclosed in the financial statements.
“This was contrary to IPSAS 38 – ‘Disclosure of Interests in Other Entities’, which requires disclosure of interests in other entities,” reads the report.
The council’s subsidiaries have long been the subject of public concern amid allegations of weak governance and limited financial transparency, with critics fearing the entities have become conduits for misuse of public resources.
During the Commission of Inquiry established to investigate the operations of Harare City Council last year, evidence emerged suggesting that the finances of several council- owned companies were in disarray.
In its response to the Auditor-General’s findings, Harare City Council said it has since established a Business Development Unit to strengthen oversight of its commercial entities and improve financial reporting.
“During the period under review, the City’s financial reporting framework did not fully support the generation of segment-based financial information required under IPSAS 18.
“As a result, financial information was reported on an aggregated basis rather than by individual service delivery segments. Council has established a Business Development Unit responsible for coordinating strategic business units, monitoring performance and ensuring the submission of financial statements and other financial information required for reporting purposes.
“The establishment of the Business Development Unit has further strengthened oversight of investee entities and will facilitate the collection of information required for related-party reporting and disclosure purposes.
“Management is reviewing all investments and investee entities to ensure appropriate classification, disclosure and reporting in accordance with IPSAS 35 and IPSAS 38 requirements.
“Processes are also being strengthened to facilitate the preparation of consolidated financial information and the maintenance of complete records of the City’s investments,” the report states. *_-NewZimbabwe_*
