By Victor Fanuel
GWERU — Auditor-General Vimbai Chikwenhere has refused to express an opinion on Gweru City Council’s (GCC), 2024 financial statements after uncovering widespread accounting failures, missing records and unexplained financial variances, including an unresolved ZWG1.29 billion suspense balance.
The disclaimer of opinion — the most severe audit finding — means auditors could not obtain sufficient and appropriate evidence to determine whether the municipality’s accounts fairly represented its financial position.
In her latest audit report, Chikwenhere issued a disclaimer of opinion, saying she was unable to obtain sufficient and appropriate audit evidence to determine whether the city’s financial statements fairly represented its financial position.
“I do not express an opinion on the financial statements of Gweru City Council,” the Auditor-General said, adding that the significance of the issues identified meant there was no reliable basis on which to audit the council’s books.
The report paints a picture of a municipality whose financial management systems failed to comply with multiple International Public Sector Accounting Standards (IPSAS), while basic accounting controls such as bank reconciliations, asset registers and double-entry bookkeeping were either absent or severely deficient.
One of the most serious findings concerns a ZWG1.29 billion suspense account that remained unresolved because the council failed to maintain adequate accounting records and was not properly applying the principle of double-entry bookkeeping.
The Auditor-General warned that the unexplained balance made it impossible to determine whether other figures in the financial statements were also misstated.
Council also failed to adjust its financial statements for inflation despite Zimbabwe operating in a hyperinflationary economy, contrary to IPSAS 10.
Chikwenhere said inflation-adjusted reporting would have materially altered the financial statements.
Auditors also found that GCC completely excluded the finances of its four schools from its consolidated financial statements.
As a result, revenue, expenditure, liabilities and assets relating to the schools were omitted, undermining transparency over the council’s education services.
The Auditor-General warned that the omission created weak financial oversight, increased the risk of misuse of funds and undetected fraud, and resulted in material misstatements.
GCC has since undertaken to incorporate the schools into its consolidated financial statements by June 30, 2026.
Property records were equally problematic.
The audit found that the local authority had no asset register to support property, plant and equipment worth ZWG5 million reflected in its accounts.
Critical infrastructure including roads, sewer reticulation systems and bridges had also not been valued or recognised as council assets.
Without supporting records, the Auditor-General said she could not verify the completeness or valuation of the municipality’s fixed assets.
Cash management controls also collapsed during the year under review.
GCC failed to carry out bank reconciliations, resulting in an unexplained ZWG89 million difference between cashbook balances of ZWG93.5 million and an overdraft of ZWG4.5 million reflected in bank statements.
Auditors also discovered another unexplained discrepancy of ZWG167.69 million between the trial balance and the general ledger.
The report concludes that these inconsistencies prevented verification of the council’s reported cash and bank balances.
Receivables were similarly affected by poor record keeping.
GCC’s receivables listing reflected ZWG632.25 million, while trade receivables in the financial statements stood at ZWG588.27 million, leaving an unreconciled difference of ZWG43.98 million.
In addition, council failed to recognise expected credit losses on outstanding debts as required under IPSAS 41, potentially overstating the value of amounts owed to the municipality.
Inventory records also attracted adverse findings.
Auditors said repossessed commercial stands that should have been recorded as inventory were omitted from the accounts.
The inventory valuation report showed a negative balance of ZWG2.62 billion, while the financial statements reflected a positive inventory balance of ZWG23.81 million, creating an unexplained variance of approximately ZWG2.64 billion.
The Auditor-General said she could not verify the completeness, existence or valuation of the inventory.
Further weaknesses were identified in payroll accounting after auditors found a ZWG54.23 million variance between cash paid in lieu of leave and the leave provision recorded in the statement of financial position.
GCC also failed to produce supporting documentation for journal entries amounting to ZWG99.4 million, raising concerns over the validity of transactions processed during the year.
Beyond the financial statements, the audit highlighted governance weaknesses that expose the council to fraud, poor accountability and weak financial oversight.
The report notes that many of the deficiencies identified in previous audits remain unresolved.
Of the 15 findings raised in the previous audit, only three had been addressed, while 12 remained outstanding.
Recurring issues included failure to maintain an asset register, continued non-compliance with hyperinflation accounting requirements, failure to account for joint ventures, and failure to consolidate subsidiary companies.
Auditors also flagged unresolved bank reconciliations, unsupported journal entries, poor receivables reconciliations and persistent weaknesses in cash management.
Management acknowledged most of the shortcomings during the audit and committed to implementing corrective measures throughout 2026.
These include introducing inflation accounting by September 2026, acquiring a new IPSAS-compliant enterprise resource planning system by December 2026, clearing the ZWG1.29 billion suspense account by August 2026, recognising repossessed stands as inventory, improving bank reconciliations, accounting for joint ventures and strengthening documentation supporting journal entries.
However, the Auditor-General’s findings indicate that, for the 2024 financial year, the extent of accounting failures was so significant that the audit office could not determine whether Gweru City Council’s financial statements fairly presented the municipality’s financial affairs.
