Auditor-General Mildred Chiri has painted a grim picture of the collapse of governance systems at Chitungwiza Town Council where millions of dollars are unaccounted for amid massive corruption within the municipality.
In her Local Authorities Report for the Financial Year ending December 31 2012, Chiri said Chitungwiza’s financial statements for the year ended December 31 2011 were submitted for audit after the statutory deadline of 180 days in contravention of the Urban Council’s Act.
“The absence of financial and other reports on a timely basis may compromise the decision making and accountability by those charged with governance,” she said in the report released recently.
She also raised concern that many of the council’s financial practices compromised the internal audit system as there were no internal audit reports on expenditure irregularities.
Chiri also highlighted that the local authority’s management received salary increments, which were effected in September 2011, without council approval.
She bemoaned the use of manual billing and receipting system which she said led to incomplete financial records as the local authority handled a large volume of transactions.
“There were reconciling items on the bank reconciliation statement that did not have supporting documentation.
“The Treasurer’s department failed to justify the validity or occurrence of such transactions and they were not traceable to the cash book,” she said.
She added that cash withdrawals without supporting documents from January 2011 to December 2011 amounted to $32 615.
She said her audit also established that some cash transfers amounting to $944 021 could not be verified as there were no supporting documents.
“The nature of the reconciling items may be an indication of possible abuse and misappropriation of council funds,” she said.
The majority of reconciling items on the bank reconciliation statements had been outstanding for a very long period of time, Chiri noted.
She said some of the amounts, which included deposits and withdrawals, amounted to $448 381, but this was not reflected such that the possibility of misappropriation to cover up shortfalls, theft or fraud could not be ruled out.
The auditor said council management also enjoyed tax-free fringe benefits, in contravention of the Income Tax Act which obliged employers to disclose all the fringe benefits accruing to employees.
“An examination revealed that the motor vehicle benefit, and other general benefits which included school fees, cash in lieu of leave, housing and holiday allowances awarded to management were tax free,” she said.
Chiri also said council management were granted car loans totaling $284 000 at 5% interest per annum repayable over three years, but the loans were not supported by loan application forms and loan agreements.