The Tses Village Council in the //Kharas Regional Council has been operating without a financial reporting framework for the financial years ended 30 June 2018 and 30 June 2019, auditor general Junias Kandjeke noted in his audit report.
Kandjeke said due to the non-existence of a financial reporting framework and related accounting policies, the auditors were unable to satisfy themselves concerning the correct treatment of accounting transactions and balances disclosed in the financial statements.
Kandjeke has, therefore, provided a disclaimer opinion on audited financial results of the Tses Village Council for the financial years ended 30 June 2018 and 2019.
“A transaction value of N$505 217 related to the purchase of a motor vehicle during the 2018 financial year was recorded as an expense related to a welcome notice board for the council. The mentioned finding resulted in the understatement of property, plant and equipment and overstatement of expenses,” said Kandjeke.
He said the auditors were not provided with accounting or debtors policies on the treatment of debtors and, therefore, could not satisfy themselves with regard to the accuracy and completeness of the bad debt allowances amounting to N$7 243 742 for 2019 and N$7 905 227 for 2018.
Included in accounts receivable is unearned income amounting to N$122 846 for 2019 and N$140 672 for 2018, resulting in an understatement of accounts receivable and accounts payable, while differences amounting to N$418 997 for 2019 and N$128 650 for 2018 were noted between the financial statements and VAT reconciliation performed by the auditors.
The council did not raise accruals resulting from employee costs amounting to N$147 184 for 2019 and N$146 779 for 2018 and Paye As You Earn, noted the report, resulting in an understatement of current liabilities.
“The village council also recognised the release of funds for capital projects and operating expenses from one of its bank accounts as revenue earned. This has an effect of double accounting and overstatement of revenue, while we were not provided with source documentation amounting to N$302 299 related to receipts from the Road Fund Authority in 2018,” noted the report.
All phone calls, text and WhatsApp messages to the chief executive Fritz Christians and chairperson of the village council Julian Christians went unanswered.
Last week, acting chief regional officer for the //Kharas Regional Council Bennie Diergaardt attributed the disclaimer opinion to a lack of training on the part of the accountants and finance managers.
“We received instructions from the ministry of urban and rural development for us to migrate to the International Standards for Supreme Audit Institutions (ISSAI). Before this year, we were not using an accounting standard and, therefore, all regional councils were instructed to migrate countrywide.
“This was our first attempt to compile our financial standards as per the ISSAI standards and there were a lot of mistakes made with the compilation of the financial statements. That is why they gave us the disclaimer on expressing an opinion.”
Diergaardt said the finance executives have, however, rectified those mistakes in the 2020/2021 financial statements, which were submitted and are waiting to be audited.
“We did not have training on the system, and as we speak we are sending people again next week for the ISSAI training but at that time we did not have any training and we basically learned by practising it,” said Diergaardt.
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