Harare books under fire

The Auditor General's 2022 Report has exposed serious weaknesses in the City of Harare's financial management after uncovering major discrepancies in the council's accounting records, raising concerns over the reliability of its financial statements.

According to the report, the City of Harare had an unresolved variance of ZWL242.11 billion between its creditors control account, which reflected ZWL298.69 billion, and the ZWL56.58 billion disclosed in the financial statements.

The Auditor General also found that the council had included a ZWL13.40 billion suspense account balance under trade and other payables. Suspense accounts are typically used as temporary holding accounts for transactions that cannot immediately be classified, and prolonged balances may indicate unresolved accounting issues.

Because of these discrepancies, the Auditor General said it was not possible to verify the completeness and validity of the trade and other payables reported in the council's financial statements.

"The Council had an unresolved variance of ZWL242.11 billion between the creditors control and the balance disclosed in the financial statements. In addition, the Council had a suspense account balance of ZWL13.40 billion included in payables. As a result, I was unable to satisfy myself as to the completeness and validity of trade and other payables disclosed in the financial statements," the Auditor General said.

The audit also highlighted shortcomings in the council's Value Added Tax (VAT) accounting processes.

The report found that the City of Harare was not recognising VAT at the transaction processing stage, resulting in the recognition of a ZWL4.12 billion VAT provision on outstanding gross receivables at year-end.

However, the Auditor General said the council failed to provide supporting documentation to substantiate the accuracy and completeness of the VAT provision recorded in the financial statements.

"The Council was not recognising VAT at the transaction processing stage. As a result, the Council recognised a VAT provision of ZWL4.12 billion on outstanding gross receivables at year end. I was not availed with supporting documentation to verify the accuracy and completeness of the provision recognised in the financial statements," the report states.

The findings underscore persistent weaknesses in the City of Harare's financial controls, accounting systems and record-keeping practices. They also highlight the need for stronger financial governance, improved internal controls and enhanced accountability to ensure public funds are accurately accounted for and managed transparently.