9 January 2013

Namibia: Oshakati's Debt On the Increase

THE Oshakati Town Council has made a nett profit of N$6,9 million for the book year ending on June 30 2011, but the annual outstanding debt increase is a cause of serious concern for the Auditor General, Junias Kandjeke.

This, he said in his report of the Oshakati Town Council, is a clear sign that the debt collection strategies and policies implemented are not effective.

The total income for the Council for the year under review was N$50,7 million, while N$45,4 million was spent and the Council also received an additional N$1,6 million on investment interest earned. The largest income was generated from the sale of water to the residents. Bulk water to the amount of N$13,3 million was purchased, while it was sold for N$31,5 million resulted in a profit of N$18,1 million.

However, the outstanding debt increased from N$11,6 million in 2009 to N$15,3 million in 2011.

"Furthermore the portion of debtors at 120 days to total debts outstanding has shown a constant increase over the past years, raising concerns of possible future cash flow difficulties. Although it was evident that credit control policies are in place, the effectiveness of these measures should be reviewed constantly by the management committee and Town Treasurer department," said Kandjeke.

The Council also did not provide for creditors amounting to N$200 095 as at 30 June 2011 and N$507 309 as at 2010. According to him such practice leads to inadequate accounting control over accruals and provisions made by the Council.

With regard to the Build Together advances the auditors' reconciliation of the annual financial statements balance to the Council's computerised loan debtors trial balance, revealed an unexplained difference of N$133 429. "In addition, a substantial number of beneficiaries debts exceeded their original approved loan amount. This is mainly due to arrears and interest charges levied," said Kandjeke.

Another concern for the Auditor General is the poor attendance of Council meetings by Councillors which could result in a lack of quorums and creates unnecessary delays in decisions taken.

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