{"id":62347,"date":"2024-02-02T17:15:17","date_gmt":"2024-02-02T17:15:17","guid":{"rendered":"https:\/\/www.africa-press.net\/namibia\/all-news\/ag-lays-bare-otavis-dire-financial-state"},"modified":"2024-02-02T17:50:36","modified_gmt":"2024-02-02T17:50:36","slug":"ag-lays-bare-otavis-dire-financial-state","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/namibia\/all-news\/ag-lays-bare-otavis-dire-financial-state","title":{"rendered":"AG lays bare Otavi\u2019s dire financial state"},"content":{"rendered":"

Africa-Press – Namibia. <\/strong><\/span>Auditor-general Junias Kandjeke has slammed the Otavi town council for failing to install proper financial management systems.<\/p>\n

This resulted in an adverse audit opinion. In the auditing world, it does not get worse for an entity than receiving an adverse opinion. Auditors express adverse opinions when, having obtained sufficient appropriate audit evidence, they conclude that misstatements, individually or in the aggregate,<\/p>\n

are both material and pervasive to the financial statements. The reports covers the 2020\/2021 financial year (FY). From inconsistent accounting policies to an absent approved fixed asset policy, as well as no fixed asset acquisition dates in the register, coupled with a non-existent asset location in the fixed asset register, the council finds itself between a rock and a hard place.<\/p>\n

\u201cThe financial statements do not presentfairly, in all material respects, the financial position of the Otavi Town Council as at 30 June 2020 and [June] 2021,\u201d Kandjeke says in the damning report. The report was released late last year.<\/p>\n

Non-disclosure<\/p>\n

The local authority also failed to disclose Farm Klein Otavi No 799, which is valued at N$6 million.<\/p>\n

\u201cLand and buildings are separable assets and are accounted for separately, even when they are acquired together. With some exceptions, such as quarries and sites used<\/p>\n

for landfill, land has an unlimited useful life, and therefore is not depreciated. Buildings have a limited useful life, and therefore are depreciable assets. An increase in the value of the land on which a building stands does not affect the determination of the depreciable amount of the building,\u201d Kandjeke lectured the council. He said the depreciation was not charged on assets acquired through loan arrangements.<\/p>\n

\u201cIt is recommended that the council should ensure that the prior year\u2019s errors and misstatements as reported by the auditors should be addressed accordingly to reflect the correct and accurate opening balances for the ensuing year,\u201d Kandjeke continued.<\/p>\n

Otavi\u2019s accounting picture gets even gloomier. The auditors discovered that the council has a dumpsite and sewerage pond, but no environmental clearance certificate could be provided. Neither has the council disclosed a provision for a waste fine which amounts to N$500 000, as required by the Environmental Management Act.<\/p>\n

HR woes<\/p>\n

Back in 2016, the Ministry of Urban and Rural Development commissioned an investigation into allegations about unprocedural recruitments, promotions and appointments of staff members to act in vacant positions. The probe also investigated alleged illegal payments of acting allowances and motor- vehicle allowances.<\/p>\n

The team was specifically tasked to determine whether the correct procedures were being followed by the council in general, and especially the human resources department, in compliance with the provisions of Section 27 of the Local Authorities Act.<\/p>\n

The investigators also dug into whether Rules 32, 33 and 36 of the Personnel Rules<\/p>\n

of the Otavi Town Council as well as the Recruitment and Selection Regulations for Local Authority Councils, during the recruitment process and appointment in an acting capacity of staff members, were complied with. There were several findings reflected in the ministerial report, with recommendations on the way forward to rectify these findings. Chiefly, the council was ordered to reverse the appointments and promotions of five staff members. According to the report, the Otavi Town Council irregularly appointed and promoted at least five staff members between 2019 and 2021. It included the dubious manner in which Ernst Gaoab allegedly elevated himself to the position of acting CEO, despite only being an ordinary human resources practitioner.<\/p>\n

As acting CEO, Gaoab effective presided over more qualified and senior staff members, it was reported at the time. It was also reported that while in that position, he created the position of manager of human resources and administration, appointed himself to this position, and adjusted his own salary.<\/p>\n

This position was not on the council\u2019s staff establishment, and was never approved by the line minister. What worries Kandjeke is that \u201cthe council has not made any progress in implementing these recommendations.<\/p>\n

\u201cIt is recommended that the council should ensure the implementation of the recommendations of the internal auditors,\u201d he stated.<\/p>\n

Additionally, the auditors were not provided with the extension letters to acting appointments, as per the requirements of Section 17 of the Otavi Town Council.<\/p>\n

Money woes<\/p>\n

The council is in dire financial straits.<\/p>\n

On the front of property, plant and equipment (PP&E), an unexplained difference of N$2.46 million was noted between the recorded amount in the general ledger of N$12.87 million and the supporting documents for additions provided to the auditors, which amounted to N$15.33 million.<\/p>\n

It was recommended that the council should ensure that amounts are recorded<\/p>\n

accurately as per the supporting documentation, and that all transactions are classified in the appropriate FY.<\/p>\n

Additionally, Kandjeke\u2019s team noted an invoice amounting to N$980 441 for the 2019\/2020 FY and invoices amounting to N$565 533 for the 2020\/2021 FY pertaining to the construction of bitumen, were classified as expenses rather than work in progress.<\/p>\n

\u201cIt is recommended that the council should ensure that all transactions are properly classified,\u201d he said. Still on Otavi\u2019s list of financial troubles is a difference of N$15.84 million between the cash and cash equivalent, with an unfavourable amount in the general ledger of N$4.25 million and the N$11.59 million disclosed in the financial statement.<\/p>\n

Kandjeke then recommended that the council ensures that the financial statement and the general ledger are correctly reconciled.<\/p>\n

Furthermore, the report noted that the figure disclosed in the statement of the financial position for trade and other receivables amounting to N$8.57 million does not agree with the figures in the general ledger, as only balances amounting to N$5.37 million could be traced.<\/p>\n

This resulted in an unexplained difference of N$3.19 million.<\/p>\n

\u201cIt is recommended that the council<\/p>\n

should implement strong internal controls, regularly review and reconcile financial data, and ensure that all disclosures are complete, consistent and accurate,\u201d the country\u2019s longest-serving AG said. As if this was not enough, the council\u2019s credit and debt management policy does not provide guidance on how<\/p>\n

the bad debts\u2019 allowance should be accounted for.<\/p>\n

This has made it impossible for the<\/p>\n

auditors to verify the bad debts amounting to N$35.43 million for both the 2020 and 2021 financial periods. As such, \u201cIt is recommended that the council ensures that mechanisms are put in place to guide the council with the treatment of outstanding debts.\u201d<\/p>\n

The council also disclosed subsidies for capital projects amounting to N$16.1 million.<\/p>\n

However, the auditors were only able to confirm N$11.91 million received as capital grant through the capital project bank statement, resulting in an unexplained difference of N$4.14 million.<\/p>\n

\u201cIt is recommended that the council<\/p>\n

should implement strong internal controls, regularly review and reconcile financial data, and ensure that all disclosures are complete, consistent and accurate,\u201d stressed Kandjeke.<\/p>\n

For More News And Analysis About Namibia<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Namibia. Auditor-general Junias Kandjeke has slammed the Otavi town council for failing to install proper financial management systems. This resulted in an adverse audit opinion. In the auditing world, it does not get worse for an entity than receiving an adverse opinion. Auditors express adverse opinions when, having obtained sufficient appropriate audit evidence, […]<\/p>\n","protected":false},"author":84,"featured_media":62345,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[234,236,233],"class_list":["post-62347","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-namibia","tag-namibia"],"yoast_head":"\nAG lays bare Otavi\u2019s dire financial state - Namibia<\/title>\n<meta name=\"description\" content=\"Auditor-general Junias Kandjeke has slammed the Otavi town council for failing to install proper financial management sy ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/namibia\/all-news\/ag-lays-bare-otavis-dire-financial-state\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"AG lays bare Otavi\u2019s dire financial state\" \/>\n<meta property=\"og:description\" content=\"Auditor-general Junias Kandjeke has slammed the Otavi town council for failing to install proper financial management sy ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/namibia\/all-news\/ag-lays-bare-otavis-dire-financial-state\" \/>\n<meta property=\"og:site_name\" content=\"Namibia\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2024-02-02T17:15:17+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-02-02T17:50:36+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/nambia\/sites\/29\/2024\/02\/sm_1706883504.731775.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"720\" \/>\n\t<meta property=\"og:image:height\" content=\"479\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/ag-lays-bare-otavis-dire-financial-state#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/ag-lays-bare-otavis-dire-financial-state\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/namibia\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"AG lays bare Otavi\u2019s dire financial state\",\"datePublished\":\"2024-02-02T17:15:17+00:00\",\"dateModified\":\"2024-02-02T17:50:36+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/ag-lays-bare-otavis-dire-financial-state\"},\"wordCount\":1129,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/ag-lays-bare-otavis-dire-financial-state#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/nambia\/sites\/29\/2024\/02\/sm_1706883504.731775.jpg\",\"keywords\":[\"africa press\",\"Africa Press-Namibia\",\"namibia\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/namibia\/all-news\/ag-lays-bare-otavis-dire-financial-state#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/ag-lays-bare-otavis-dire-financial-state\",\"url\":\"https:\/\/www.africa-press.net\/namibia\/all-news\/ag-lays-bare-otavis-dire-financial-state\",\"name\":\"AG lays bare Otavi\u2019s dire financial state - 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