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Parastatals evade audit

by Staff reporter
18 Aug 2021 at 05:47hrs | Views
BOARD members of public entities are rewarding themselves with hefty unsanctioned allowances and most of the abuse will likely go unnoticed as parastatals hide behind COVID-19 to withhold financial statements for auditing.

A latest report by Auditor-General Mildred Chiri, shows that board members of public entities were milking public coffers through hefty allowances not sanctioned by ministers.

In her report for the financial year ended December 31, 2019, that touched on parastatals and commissions, Chiri said there were governance problems in respect of payment of board fees and allowances for parastatal bosses.

Chiri said the looting was a result of an unprecedented level of uncertainty about the economy and future earnings.

the current year are in respect of payment of board fees and allowances without approval of the responsible minister, failure to declare interest by board members, absence or unbalanced composition of the board of directors and other issues on ineffective internal control systems,"Chiri said.

Because of the ravaging COVID-19 pandemic, some financial statements were not submitted for auditing and, therefore, some of the looting will likely go unnoticed, spelling disaster for the country, Chiri said.

"The consequences of the COVID-19 pandemic on financial reporting and audit engagements are complex and have resulted in challenges for management, those charged with governance and auditors," Chiri said.

"Both preparers and auditors were affected by restrictions on travel and requirements to stay at home, which presented practical likely to regress the progress that had been made over the years in bringing most public entities up-to-date in their financial reporting."

On the power utility, the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), Chiri said the company was failing to account for over US$1,2 million worth of cables that have not yet been delivered since 2015.

"Highlights of reportable issues are detailed below: ZETDC had US$1,2 million worth of cables undelivered since 2015. There was no evidence to show that ministerial approval had been sought and granted for some extra board perks such as fuel."

"Additionally, some board members did not make any declaration of interest. The Mining Promotion Corporation had no substantive chief executive since 2016 while PetroTrade did not have a board of directors since 2015.

"Some parastatals were paying board allowances that had not been approved by the minister while others grossed up board fees and also paid board members sitting allowances for attending workshops."

She said the Grain Marketing Board contracted a local company to import over 10 000 metric tonnes of maize on its behalf but it failed to deliver.

"An advance payment of US$3 900 000 was made for 10 000mt (metric tonnes) to facilitate the imports. The company delivered 3 800mt of grain worth US$1 482 000, leaving a balance of 6 200mt.

"However, the contract was amended for the supplier to deliver soyabeans instead of maize. The company subsequently delivered soyabeans worth US$ 1 418 000. A reconciliation of the value of maize and soyabeans received to what the supplier had been paid revealed that soyabeans worth US$1 000 000 had not been delivered.

"The risk or implication is financial loss to the board," she said.

She revealed that the Tobacco Industry and Marketing Board paid out unsanctioned board fees and allowances to members contrary to expectation and in violation of the law.

The Zimbabwe Electoral Commission awarded a tender for surge protectors to a company which did not meet the set specifications.

"The commission made an order for the company to supply 3 400APC 5 surge protectors. However, the company did not supply the surge protectors as per the order, but delivered 2 400AE, 4-way and 1 000APC 5 surge protectors," Chiri said.

She said this was a violation of tender procedures that may attract penalties from the relevant authorities.

Source - newsday