Karibib Council N$4,3m in the red

THE Karibib Municipality ended the last financial year N$4,3 million in the red – more than double the amount of the previous year.

According to the Auditor General’s report for the year ended June 2003, investment policies valued at N$201 500 were cashed in at a loss of N$141 781. “Council should indicate who should be liable for this loss,” notes the report.The audit did not find any irregularities within the municipal accounts, but rather attributed the dire financial position to “insufficient” accounting and internal controls.From the audit it emerged that more than N$1,6 million was advanced from the Council’s housing, capital reserves and fixed property funds to the Revenue Account to finance operating costs.”As said in previous reports this situation underlines the cash flow problems of the municipality and should be remedied,” said the Auditor General, Junias Kandjeke.At least N$260 000 from an amount of N$1,3 million from the Ministry of Regional and Local Government and Housing, granted in 2002 for the Build Together Project and the Single Quarters, were used for other purposes.The books show that just more than N$850 000 of this money was spent over the two financial years on these projects, but that more than N$70 000 had been used for other purposes.A further N$190 000 was used to finance the council’s operating expenses.An audit of investments made by the Council found that an amount of N$50 000 was invested with a local insurance company for which no permission was obtained from the Minister of Regional and Local Government and Housing as required by law.At year end, the Council had investments totalling N$370 000.However, it was in arrears to Government by N$1,8 million for a loan from the Ministry of Regional and Local Government and Housing.”Taking into account the cash flow position, the Municipality will not be able to repay these loans when they become due,” the report said.On June 30 2003, the municipality had a bank balance of just over N$250 000.Its savings amounted to N$11 556.According to the Auditor General, the Municipality’s ability to continue as a going concern was dependent on the continuation of profitable operations, negotiations with Government to extend postponement on the payment of loans in arrears, the extension of existing levels of finance by major creditors, banks and the recovery of outstanding debt.Auditors estimate that the Municipality was owed as much as N$1,1 million at year end and that the amount of N$500 000, which appears in the books, had been grossly understated.Kandjeke has recommended a thorough investigation by the Municipality to establish the full amount.”Council should indicate who should be liable for this loss,” notes the report.The audit did not find any irregularities within the municipal accounts, but rather attributed the dire financial position to “insufficient” accounting and internal controls.From the audit it emerged that more than N$1,6 million was advanced from the Council’s housing, capital reserves and fixed property funds to the Revenue Account to finance operating costs.”As said in previous reports this situation underlines the cash flow problems of the municipality and should be remedied,” said the Auditor General, Junias Kandjeke.At least N$260 000 from an amount of N$1,3 million from the Ministry of Regional and Local Government and Housing, granted in 2002 for the Build Together Project and the Single Quarters, were used for other purposes.The books show that just more than N$850 000 of this money was spent over the two financial years on these projects, but that more than N$70 000 had been used for other purposes.A further N$190 000 was used to finance the council’s operating expenses.An audit of investments made by the Council found that an amount of N$50 000 was invested with a local insurance company for which no permission was obtained from the Minister of Regional and Local Government and Housing as required by law.At year end, the Council had investments totalling N$370 000.However, it was in arrears to Government by N$1,8 million for a loan from the Ministry of Regional and Local Government and Housing.”Taking into account the cash flow position, the Municipality will not be able to repay these loans when they become due,” the report said.On June 30 2003, the municipality had a bank balance of just over N$250 000.Its savings amounted to N$11 556.According to the Auditor General, the Municipality’s ability to continue as a going concern was dependent on the continuation of profitable operations, negotiations with Government to extend postponement on the payment of loans in arrears, the extension of existing levels of finance by major creditors, banks and the recovery of outstanding debt.Auditors estimate that the Municipality was owed as much as N$1,1 million at year end and that the amount of N$500 000, which appears in the books, had been grossly understated.Kandjeke has recommended a thorough investigation by the Municipality to establish the full amount.