Brigitte Weidlich
3 December 2008
THE Keetmanshoop municipality has severe liquidity problems and did not pay staff's tax deductions to the Ministry of Finance for 13 months, a new report reveals.
In addition, residents owed the municipality N$12 million in June 2007, says the report by Auditor General Junias Kandjeke, which was tabled in the National Assembly.
The AG qualified his opinion, which means he found that some of the submissions did not comply with generally accepted accounting principles, but the rest of the financial statements ere fairly presented.
The debts had accumulated over a few years, the report stated.
Despite this, Keetmanshoop managed to accumulate a small surplus of N$1,7 million for the 12-month review period.
The collection period for debts increased from 131 to 141 days between July 2006 and June 2007, 10 days longer than the previous review period.
"The municipality is advised to apply more pressure on its residents so that they pay on time, since the normal standard for a debt collection period should be 30 days," Kandjeke urged.
"The ability of the Keetmanshoop municipality to continue as a going concern is dependent on the profitability of its operations, a turn-around strategy and the recovery of long outstanding debts," Kandjeke cautioned.
Penalties for unpaid Pay As You Earn (Paye) deductions from municipal staff to the Receiver of Revenue came to N$308 000 for the review period plus outstanding Paye of N$545 942 - altogether an accumulated debt of N$853 942.
On the other hand, the Receiver of Revenue should refund the Keetmanshoop municipality N$1,2 million for overpaid Value Added Tax (VAT), but this has not yet been done, "because the Receiver is arguing the municipality should pay the outstanding Paye first," the Auditor General wrote.
Another matter the Office of the Auditor General finds worrisome is the high loss of water at the town.
The municipality bought 1,7 million cubic metres for N$10,4 million during the review period and sold 1,1 million cubic metres for N$10,4 million, leaving only a marginal profit of N$515 162.
However, 598 000 cubic metres, or nearly a third of the water bought, cannot be accounted for.
"The municipality should investigate the reason for these losses and come up with alternatives to minimise the loss on water distribution," Kandjeke recommended.
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