Audit Reveals Shocking Council Scams

Audit Reveals Shocking Council Scams
Published: 2016 June 24 05:46:54 (1773 Views)
Harare City Council has launched a full scale investigation into its accounts system after revelations emerged that two ananymous computers were being used to bill customers and create fraudulent invoices for paying customers.

According to Auditor-General Mildred Chiri’s report on local authorities for 2015 which exposed corruption in most councils, the city’s IT department failed to detect the computers that were being used to generate the bills.

The same report shows that Gweru City Council failed to account for a more than $1 million loan balance and the city’s mayor and town clerk had no fuel limit while council’s senior employees were being paid holiday and education allowances outside the payroll.

The audit showed that Mutare City Council had a bank overdraft facility with FBC Bank of $4 162 154 as at December 31, 2013 for which the city paid $1 215 349 as interest and service charges.

The audit also revealed that most councils were not up-to-date with their audited financial statements and a majority of councils maintains multiple bank accounts whose reconciliations were not up to date.

In some cases, the bank balances did not reconcile to the cash book balances resulting in unexplained variances.

“Harare City Council did not reconcile its cashbook overdrawn balance of $208 430 777 as per financial statements to the bank overdraft balances of $7 590 828 giving a significant variance of $200 839 949.

“Harare City Council had weaknesses in internal controls which resulted in significant variances between the system and financial statements. Cash and bank balances, receivables and property, plant and equipment had variances of $317 254 823, $114 237 875, and $486 701 941 respectively,” reads the report.

The Auditor-General also found out several council-owned properties which were being leased but were not recorded and accounted for.

In Kwekwe among other irregularities, the audit found out that the councils’ bank reconciliation statement had an unexplained reconciling figure of $2 569 043 which could not be traced to any underlying transactions and there was a risk that the unreconciled balances may have been used to conceal irregular activities.

In Kariba, the AG was unable to confirm the accuracy, completeness and validity of receivables written off totalling $1 103 543 as council could not provide documentation that supports the write-off of debts.

In Redcliff an analysis of residential stand files showed that most of the agreements of sale were not signed and they seemed to have been prepared post allocation and terms of agreement varied depending on the initial deposits made, some of which were as low as $5.

The audit also revealed that the councils’ CBZ Bank account was in overdraft with an amount of $400 000 and municipality was unable to service it as the loan interest continued to rise.

In Norton the audit showed that the council had total employment costs of $3 108 321 out of expenditure of $5 022 069 indicating that employment costs constituted 62 percent in violation of the ministerial directive prescribing a ratio of 30:70 in favour of service delivery.

The AG said the audit findings warrant the attention of management and those charged with governance.

“The audit revealed that most of the weaknesses emanated from governance issues, revenue collection and debt recovery, employment cost and procurement of goods and services,” Ms Chiri said.



- Herald
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