Tsumeb Municipality continues to shoulder a high balance of unsettled debts for municipal services, which have accumulated to more than N$36 million.
The Auditor-General’s report on Tsumeb Municipality for the 2014 financial year, tabled in the National Assembly last week, described the high level of debt as a financial crisis that has a negative impact on the municipality’s cash-flow position.
Some residents have apparently not been paying for water, sewerage, cleaning and electricity services for a number of years.
Auditor General Junias Kandjeke found that even though the town council provided for bad debts of N$36.8 million and that the provision for bad debts was reduced from N$44.3 million by writing-off N$7.5 million against debtors, the auditors’ calculations still show that the provision made was understated by N$42.5 million. The total provision of bad debt should have been N$79.3 million.
At the time when Tsumeb announced that it would write off bad debt, residents had taken to the streets to protest against what they said are “unrealistic” and high water bills.
A crowd of more than 50 pensioners and other residents had marched to the municipal offices to hand over a petition demanding that their high water debts be cancelled and that the water meters be removed from their homes, as they can no longer afford to pay skyhigh water bills.
Some pensioners have lived in the municipal houses at Tsumeb for over 30 years.
Kandjeke revealed that the municipality faces a cash-flow problem, as indicated by the temporary advances to revenue from various funds and accounts, amounting to N$36.5 million, compared to N$46.6 million during the 2013 financial year.
At the time, external recoveries and interest amounting to N$20.6 million were in arrears, compared to N$19 million in 2013.
The Auditor General’s report also shows that council was in arrears by N$2.2 million in 2014, while in 2013 its debts stood at N$1.7 million, including the regional council fees.
Moreover, the Auditor General’s report discloses that the VAT (value-added tax) with the Receiver of Revenue had been written off and paid, where applicable and the correct amount is now reflected in the financial statements.
An audit typically involves conducting forensic procedures to obtain audit evidence about the amounts and disclosures in financial statements.