Local authorities misapply US$77.9m public funds in two years
By Staff Reporter
Zambia local authorities fraudulently misapplied and mismanaged public funds amounting to over US$77.9 million across a two-year period, according to the Auditor General’s report.
The latest Auditor General’s office has established in a 17-paragraph report covering financial years ended 31st December 2013 to 2015 that 43 of the country’s 105 local authorities failed to account for K738, 115,045 or about US$73,811,504.5 of the general grants received from the treasury.
Equally, the local authorities, it was found, imprudently managed K40,558,818 or about US$4,055,881.8 of the Constituency Development Funds (CDF) provided for the advancement of development in the country’s 150 constituencies, bringing the financial impropriate total to K778,673,863 or about US$77,867,386.3 over a 24-month period.
It was further noted that all the country’s local authorities were failing to provide quality services and deliver development to their respective communities due to the imprudent management of financial resources allocated to them within the confines of the public finance Act.
Meanwhile, the Zambia Police’s Anti-Fraud Unit has also ironically been implicated in this damning report which found all the local authorities liable of contravening public finance laws owing to failure to avail audited financial statements for the respective financial years.
Following last year’s constitutional amendment and the quest to decentralise the operations of government by placing the management of all government departments within the local authorities, greater accountability became imperative within the country’s district, municipal and city councils.
“Local Authorities are a key factor in socio-economic development because their operations are directly linked to community activities. An effective monitoring of their operations is, therefore, inevitable in ensuring sustainable economic and environmental development in the country,” the report read. “The Office conducted a survey of forty three (43) Councils in Zambia to establish the status of accounting, auditing and reporting between April and June 2016.”
The weaknesses revealed in the survey were that all the councils were facing liquidity problems in that they had challenges in meeting their financial obligations and that 21 out of the 43 councils probed, lacked a strategic framework on how to achieve their vision and goals.
“All the one hundred and five (105) local authorities had not produced audited financial statements for the financial years ended 31st December 2013, 2014 and 2015,” the 117-page audit report highlighted in part. “The non-production of audited financial statements by the above institutions is a contravention of the various enabling legislations governing the institutions and is contrary to good corporate governance.”
According to the report, Kabwe Municipal Council in Central Province, for example, failed to recover money from the Anti-Fraud Unit of the Zambia Police despite a court order directing the local authority to do so.
“On 12th September 2014, the court ordered that an amount of K13,500 which was seized by the Police from two (2) Council officers who had defrauded the Council of K51,529 be paid back to the Council. However, as of December 2016, the Police had not surrendered the seized money and the Council had not made any efforts to retrieve the funds,” the report highlighted on its page 25.
A review of the debtors’ ledgers at Chibombo District Council, also situated in the same province, found the Zambia Police wanting again.
“A review of the debtors’ ledgers revealed that receivables in amounts totalling K396, 911 remained uncollected for periods ranging from one (1) to six (6) years as of December 2016. Included in this amount was K39, 618 owed by the Zambia Police Service in respect of rentals,” the report illustrated further.
Among the key issues contained in the report include non-remittance of statutory contributions to the National Pension Scheme Authority and the Zambia Revenue Authority, irregular procurements, questionable payments, failure to settle retirees’ benefits and misapplication of funds.
