The Auditor General’s 2022 Report has raised serious concerns over the City of Harare’s financial management after identifying significant discrepancies in the council’s accounting records casting doubt on 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 report further revealed that the council 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.
As a result of these discrepancies, the Auditor General stated that it was not possible to confirm 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 identified weaknesses in the council’s Value Added Tax (VAT) accounting procedures.
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 noted that the council failed to provide supporting documentation to verify the accuracy and completeness of the VAT provision.
“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 point to weaknesses in financial controls and record-keeping within the City of Harare highlighting the need for improved accounting systems and stronger financial governance to ensure accurate financial reporting and accountability in the management of public funds.
