Africa-Press – Namibia. Non-adherence to accounting protocols, misrepresented financial statements, misallocated funds and unauthorised claims worth millions were some of the key shortcomings flagged by Auditor General Junias Kandjeke in the Land Acquisition and Development Fund’s audit report of 2022/23.
Kandjeke gave the Fund an adverse audit opinion due to its failure to submit a complete set of compulsory financial statements for the year ended 2022, as per International Public Sector Accounting Standards’ (IPSAS) principles. An adverse audit opinion states that the financial statements do not fairly present the financial position, results of operations or cash flows of the entity, in conformity with generally-accepted accounting principles. Kandjeke noted that the adverse audit opinion was informed by the fact that the Fund did not prepare an opening statement of financial position as per IPSAS requirements, and that revenue disclosed in the financial statements for the two years under review is not distinguished whether it is revenue from exchange or non-exchange transactions.
The auditors likewise raised concerns about the N$30 million that was disclosed by the fund as an investment under the Post-Settlement Support Fund programme during the two years under review, with Kandjeke stating that the Agricultural Bank of Namibia (Agribank) should have been the one to report on and account for the Post- Settlement Support Fund programme funds, and not the Fund itself. “The Memorandum of Understanding (MoU) between the Fund and Agribank states that the bank shall account for all the funds allocated under the Post-Settlement Support Fund programme, including interest accrued and the repayment of loans done by beneficiaries.
It is recommended that the Fund reconcile the N$30 million, and liaise with Agribank on the accounting and disclosure of the said amount,” stressed Kandjeke.
Another flaw flagged in the report is revenue from land tax that the AG felt was grossly misstated, as a difference amounting to N$29.5 million for 2023 and N$15.4 million for 2022 was noted between the financial statements and the tax payable in the valuation roll, since the Fund recognises land tax income on the cash-basis approach of accounting, instead of the accrual basis of accounting.
“The land tax, which the farmers have paid at the Namibia Revenue Agency (NamRa), was N$6.1 million for 2023 and N$5.1 million in 2022. The fund, however, only records the amounts received from NamRa, which do not constitute the receivables due for the financial years.
As a result, the audit concluded that trade receivables as disclosed in the financial statements should not have been recognised and disclosed. Again, the Fund is recommended to ensure that transactions are recorded on the accrual basis of accounting,” Kandjeke said.
The Land Acquisition and Development Fund was established in terms of Section 13A (1) of the Agricultural (Commercial) Land Reform Amendment Act to administer funds appropriated by Parliament for the government to acquire and rehabilitate farms for resettlement. As of 31 March 2023, the Fund had over N$85 million in its account.
Misdirected funds
The auditor general then raised a concern with funds which were misdirected by the Fund through the payment of salaries amounting to N$4.2 million in 2022 from their account,
saying these payments should have been paid from the ministry’s vote, and not from the Fund’s account. Kandjeke advised that the Fund should in future ensure that all payroll-related expenses are paid from the ministry’s budget instead.
He also worryingly noted that unauthorised overtime in the aggregate of 54 hours was claimed from the Fund, which was not approved by the Ministry of Labour, Industrial Relations and Employment-Creation as per the submission letter. The AG warned that the Fund should always ensure that employees only claim for the approved overtime hours, as per Labour Act (11) of 2007.
The Fund furthermore incurred expenses related to overtime and tuition fees for staff members employed by the ministry of agriculture. Again, Kandjeke cautioned that the Fund is a legal entity as established in terms of the Agricultural (Commercial) Land Reform Amendment Act of 2000, with its own mandate, and should not have incurred those
expenses. Their trade receivables were also not in conformity with acceptable and expected accounting protocols, as the auditors were unable to confirm the accuracy and completeness of lease rental fees amounting to N$3.8 million for the 2022 and 2023 financial years.
The reconciliation for lease rental receivables was not performed, and the Fund was advised to perform the reconciliation of rental fees in compliance with the lease agreements, going forward. The auditor general’s report has since been submitted to Parliament, and now awaits strategic and policy interventions from the august House.
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