THE debt of the Opuwo Town Council grew by 49,9% in the financial year ending June 30 2011 compared to the previous year.
This is contained in the Auditor General’s report for 2011.
Auditor General Junias Kandjeke observed in the report that the accounting and internal controls at the Opuwo Town Council were inadequate.
In the report tabled in the National Assembly last week, Kandjeke said proper segregation of duties was not possible due to the small number of staff employed.
“While increased management involvement reduces risks, the risk arises that management and council override existing controls, a potentially dangerous practice which the council should vigilantly guard against.”
The total outstanding debt is N$6,49 million and according to Kandjeke it does not appear as if the council is improving its debt collection.
The council owes N$2,9 million to NamWater alone.
Debt collection, Kandjeke said, “is a matter of grave concern as the recovery of long outstanding debtors threatens the future cash flows of the town council”.
He proposed that the council develop and implement a strict policy of debt collection and if the amounts outstanding appear to be uncollectible, consider writing off such debts to maintain the integrity of the council’s accounts.
The cost of bulk water purchases amounted to N$3,5 million but the council’s water account only reflected sales of N$380 375, which represents a 89,2% loss. In addition, the distribution losses for water show a loss of N$391 675 due to inadequate record keeping.
“No sufficient evidence was provided to indicate which consumers paid their water accounts.”
Significant weaknesses were also identified in the Build Together Fund, administered by the council on behalf of the Ministry of Regional and Local Government, Housing and Rural Development.
The Finstel system was not properly updated to reflect the loan balances of beneficiaries as funds were disbursed over the year, but were only recorded on Excel.
“Differences of 2011 amount to N$3,1 million and for 2010 N$1,1 million which were observed between the annual financial statements and the manual Excel working documents provided by council.”
Other problems with the Build Together Fund were poor repayments by beneficiaries and the fact that numerous supporting documents relating to the fund could not be found at the time of the audit.
“For the past consecutive years, numerous important source documents of expenditure incurred by the town council could not be found at the time of the audit. This was mainly attributable to an unorganised filling system and poor record-keeping by the council,” Kandjeke said.
The council received a N$2 million subsidy from the central government for operational activities and capital projects, but entire amount was used for operations and nothing went towards capital projects.
The Town Council ended the year with a loss of N$2,6 million despite the fact that its income had increased by 66,8% compared to the previous year.