News / Local
Auditor-General redflags Bulawayo, Gweru councils
10 Apr 2022 at 03:14hrs | Views
THE Auditor-General has red-flagged the Bulawayo and Gweru city councils for a host of misconduct, among them evading paying taxes, failure to account for millions of donations and selling stands to minors.
According to the 2020 Auditor-General's report, it was noted that Bulawayo council was not deducting taxes from its top management as provided by Section 8(1) (f) of the Income Tax Act (Chapter 23:06). The local authority has also not been declaring deemed benefits on handsets and airtime paid to its managers.
"The Council was not complying with Section 17(3) of the Value Added Tax (Chapter 23:12) in that, a number of its senior Council management who were allocated personal use motor vehicles were not charged value added tax (VAT).
"The Council was not also declaring deemed benefits on handsets and airtime paid to managers. According to the provisions of this Act, employers who provide employees with taxable benefits should account for value added tax on them. In addition, the Council was not deducting tax as provided by Section 8(1) (f) of the Income Tax Act [Chapter 23:06] as the benefits were not being processed through payroll," said the auditor general, Mrs Mildred Chiri in her report.
The auditor general noted that failure to account for tax on taxable benefits may attract penalties and interest.
It was further revealed that according to the Council records, donations made to clinics amounting to US$1,7 million were received but these were not recorded in the system nor reported in the financial statements.
"Upon enquiry, management indicated that this was because the donations were delivered straight to the clinics by benefactors, however, the auditor general noted that this had the risk of misappropriation of donated items going undetected and misstatement of revenue and inventories.
"There was no evidence to support that all bank reconciliations were being prepared on monthly basis. For instance, Barclays bank account had no bank reconciliations from August to December 2016, CBZ bank account had no bank reconciliations from January to November. It was not clear why these bank reconciliations were not being done. This was in contravention with the Council's policy and procedure manual."
The report said council had no documented policies and procedures to detail out its business processes. The policies and procedures that were being followed were verbally communicated to employees and there was no document for point of reference.
Meanwhile, the Gweru City Council has also be caught with a number of irregularities chief of which being the sale of housing stands to two minor twins on the same day that their father also purchased a stand from the local authority. In their defence Gweru council, while confirming the sale of the stands to the minors, claimed that the agreement of sale were signed by their parents on their behalf.
"Council allocated two stands to two minors aged 16-years from the same family on the same date their father was also allocated a stand under the Mkoba 21 Housing Scheme. The minors had no contractual capacity according to the General Law Amendment Act (Chapter 8:07), hence this was in contravention to this Act.
"There was thus high risk of fraud and corruption depriving residents who may have been on the waiting list for a long time. The Director of Housing and Community services acceded to the fact that the two stands were sold to twins. However, the agreements of sale were signed for by the parents on their behalf who are seniors and have contractual capacity according to the provisions of the Guardianship of Minors Act (Chapter 5.08) section 3," reads the report.
The local authority further revealed that management has however, instructed its junior staff to desist from entering into contractual agreements with minors and familiarise themselves with the provisions of the Legal Age of Majority Act (Chapter 8.07) on signing of contracts or agreements.
Further the Gweru City Council reportedly failed to avail evidence of ownership of five vehicles as no registration books were provided, in addition, a Mazda T3500 vehicle was registered in the name of Mr Tee Thirty-Five (Private) Limited and not in the name of the council.
"Council was operating without approved policies for the past years. The operational functions of the Council were executed without approved guidelines or set standards, and as such, there was great reliance on Council resolutions.
The City Council was utilizing estate funds for recurrent expenditure contrary to section 300 of the Urban Councils Act which requires estate funds to be utilized for capital related expenditure (purchase and servicing of land). An analysis of the Estates account revealed funds amounting to US$6 870 815 which could not be justified as to how it was utilized. The same amount represents stands which were sold," reads the report.
According to the 2020 Auditor-General's report, it was noted that Bulawayo council was not deducting taxes from its top management as provided by Section 8(1) (f) of the Income Tax Act (Chapter 23:06). The local authority has also not been declaring deemed benefits on handsets and airtime paid to its managers.
"The Council was not complying with Section 17(3) of the Value Added Tax (Chapter 23:12) in that, a number of its senior Council management who were allocated personal use motor vehicles were not charged value added tax (VAT).
"The Council was not also declaring deemed benefits on handsets and airtime paid to managers. According to the provisions of this Act, employers who provide employees with taxable benefits should account for value added tax on them. In addition, the Council was not deducting tax as provided by Section 8(1) (f) of the Income Tax Act [Chapter 23:06] as the benefits were not being processed through payroll," said the auditor general, Mrs Mildred Chiri in her report.
The auditor general noted that failure to account for tax on taxable benefits may attract penalties and interest.
It was further revealed that according to the Council records, donations made to clinics amounting to US$1,7 million were received but these were not recorded in the system nor reported in the financial statements.
"Upon enquiry, management indicated that this was because the donations were delivered straight to the clinics by benefactors, however, the auditor general noted that this had the risk of misappropriation of donated items going undetected and misstatement of revenue and inventories.
"There was no evidence to support that all bank reconciliations were being prepared on monthly basis. For instance, Barclays bank account had no bank reconciliations from August to December 2016, CBZ bank account had no bank reconciliations from January to November. It was not clear why these bank reconciliations were not being done. This was in contravention with the Council's policy and procedure manual."
Meanwhile, the Gweru City Council has also be caught with a number of irregularities chief of which being the sale of housing stands to two minor twins on the same day that their father also purchased a stand from the local authority. In their defence Gweru council, while confirming the sale of the stands to the minors, claimed that the agreement of sale were signed by their parents on their behalf.
"Council allocated two stands to two minors aged 16-years from the same family on the same date their father was also allocated a stand under the Mkoba 21 Housing Scheme. The minors had no contractual capacity according to the General Law Amendment Act (Chapter 8:07), hence this was in contravention to this Act.
"There was thus high risk of fraud and corruption depriving residents who may have been on the waiting list for a long time. The Director of Housing and Community services acceded to the fact that the two stands were sold to twins. However, the agreements of sale were signed for by the parents on their behalf who are seniors and have contractual capacity according to the provisions of the Guardianship of Minors Act (Chapter 5.08) section 3," reads the report.
The local authority further revealed that management has however, instructed its junior staff to desist from entering into contractual agreements with minors and familiarise themselves with the provisions of the Legal Age of Majority Act (Chapter 8.07) on signing of contracts or agreements.
Further the Gweru City Council reportedly failed to avail evidence of ownership of five vehicles as no registration books were provided, in addition, a Mazda T3500 vehicle was registered in the name of Mr Tee Thirty-Five (Private) Limited and not in the name of the council.
"Council was operating without approved policies for the past years. The operational functions of the Council were executed without approved guidelines or set standards, and as such, there was great reliance on Council resolutions.
The City Council was utilizing estate funds for recurrent expenditure contrary to section 300 of the Urban Councils Act which requires estate funds to be utilized for capital related expenditure (purchase and servicing of land). An analysis of the Estates account revealed funds amounting to US$6 870 815 which could not be justified as to how it was utilized. The same amount represents stands which were sold," reads the report.
Source - The Sunday News
