The Permanent Secretary conceded that the system that was initially in place did not meet the Audit expectations. The Ministry had changed the system, the new system involved both internal and external auditors in the stock. The Committee was satisfied with the measures that were taken in addressing the observation. The Committee also questioned the basis of the price of number plates, considering that the Ministry had relied on one sole supplier over a period of more than 19 years. The Fund was also in a position to lend surplus funds to other entities and the Committee was wondering whether it was now a profit making venture or whether the percentage being retained should be reviewed. The Permanent Secretary indicated that the Ministry was seized with the matter within the context of ease of doing business. He confirmed that there was scope for reducing the price of number plates.
4.5.3 Suspense Account, 2013
There was a balance of $3 560 631 (2014:$3 560 631) disclosed in the financial statements and it had been outstanding since 2011. No evidence was shown to the auditors that the Fund had taken measures to either investigate or clear the suspense account. Existence of a suspense account implies that the financial statements are not reliable.
The Permanent Secretary informed the Committee that the balance relates to stocks that were procured prior to the introduction of the multicurrency regime and there was no guidance from Treasury regarding the conversion rate. Thus the balance in the suspense account therefore relate to the value that was placed on closing stock for raw materials and finished products. He however indicated that his Ministry got some guidance and recommendations from the Auditor General on how to recast the figure. There was therefore scope to recast the figures going back to 2009, based on the value which has been placed on those number plates.
4.5.3.1 The Committee recommends that the Fund should clear the suspense account by 30thSeptember 2017 based on the formula given by the Auditor General.
4.5.4 Long Term Advances to Air Zimbabwe, 2013
Audit observed that for the second year running, the Fund made some payments to Air Zimbabwe service providers without obtaining prior Treasury authority. Payments were then treated as long term loans, although no interest is being charged, contrary to the provisions of the Fund’s Constitution. The accumulated payments as at December 31, 2013 amounted to $22 909 504 (2012:19 875 976). The loan agreements had not been signed by Air Zimbabwe and no repayments had been received. During 2014 the Fund further advanced to Air Zimbabwe $7 578 660 as a loan to repay its operation expenses. The Audit further noted that there were no explanatory notes submitted with accounts on the long outstanding loans to Air Zimbabwe, which is required by best practice.
There is a risk that the Fund may fail to achieve its objectives if its revenue is diverted to other entities which is in violation of the Constitution of the Fund. The Committee further queried whether retention funds are justified if the Fund had such excess funds to loan out to other entities. In the absence of explanatory notes on items, the integrity of the financial statements may be compromised.
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