Africa-Press – Namibia. Auditor general Junias Kandjeke has given Outapi Town Council a disclaimer audit after finding its bad debt provision understated by N$3.4 million for 2022.
These are debts that the council is not expected to collect in full. Meanwhile, net assets stood at over N$74.4 million for the same year.
This is contained in the audit report for the year ended 30 June 2022.
In 2016, the council debt stood at N$24 million.
The report states that the N$3.4 million bad debt recorded in the financial statement is less than the debt impairment and as such, the council received a disclaimer audit.
Outapi Town Council chief executive Ananias Nashilongo yesterday explained that they have never written off debts.
“The provision for bad debts is understated by N$3.4 million. It was based on the age category of 150 days and above, while the general practice in Namibia is to provide for all debts in the age category of 90 days and above,” he said.
Kandjeke says he has not been able to obtain sufficient appropriate audit evidence to support the reported figures.
He had previously recommended for the council to get a debt collector.
“The prior year’s audit report had a disclaimer of audit opinion, consequently, auditors could not obtain sufficient evidence to satisfy themselves that the opening retained earnings and comparative figures in the current year statement of financial position, financial performance, statement of changes in net equity, and cash flow statement are fairly presented,” says Kandjeke.
“The auditors could, therefore, not satisfy themselves with the valuation of trade receivables,” he says.
In the absence of an International Public Sector Account Standards (IPSAS) that specifically applies to a transaction, other event, or condition, management may apply an accounting policy from the most recent pronouncements of other standard-setting bodies, Kandjeke says.
The report notes that the provision for severance pay of over N$2.2 million (a post-employment) benefit was determined in a manner not consistent with IPSAS 39, paragraph 68 which requires the use of actuarial assumptions in measuring the obligation and the expense.
Kandjeke says there is a possibility of actuarial gains and losses.
The obligations, he adds, should be measured on a discounted basis, because they may be settled many years after the employees render the related service.
The severance pay obligation is overstated since it was not discounted, he says.
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