SWAKOPMUND – The Municipality of Swakopmund says its adverse audit opinion for the 2024/25 financial year relates to a period when it was still implementing International Public Sector Accounting Standards (IPSAS). Auditor General Junias Etuna Kandjeke issued an adverse audit opinion on the Swakopmund municipality’s 2024/2025 financial report that was released on Monday.
An adverse audit opinion means that the auditor found discrepancies of errors in an organisation’s financial statements, meaning the figures in the financial report cannot be fully trusted to give an accurate picture of the organisation’s finances.
According to Kandjeke, some financial records did not accurately reflect the municipality’s cash movements, investment property and housing inventory in the report that was submitted in July this year.
He says the municipality recorded revenue of N$547.2 million against expenditure of N$733.5 million, resulting in an operating deficit of N$186.3 million. “After accounting for other gains and losses, the deficit stood at N$173.6 million, compared with N$196.6 million in the previous financial year,” the report states.
He also raised concern over cash and cash equivalents, which were overstated by N$3.46 million compared with the bank’s reconciliation and cash book balance in the general ledger.
The auditors also found shortcomings in the municipality’s cash flow statement, which did not fully comply with the applicable reporting requirements.
“An amount of N$15.66 million relating to value-added tax (VAT) was incorrectly recorded as a cash outflow, although it did not represent an actual cash movement,” it states.
A further N$293 296 was recorded as an adjustment for non-cash gains under non-cash expenditure.
In addition, receipts from property rates and service charges did not reconcile with the municipality’s records, resulting in a discrepancy of N$26.82 million.
Municipality responds
Responding to the auditor’s report, the municipality said the 2024/25 financial year fell within its three-year transition period for implementing IPSAS. According to the municipality’s spokesperson, Linda Mupupa, the implementation process required extensive institutional preparation, technical expertise, staff training and adjustments to existing accounting and reporting systems.
She said the process started in 2017 but was not successfully completed, partly due to the complexity and cost of the process and restarted it in 2020 after authorisation by the management committee.
“ It took us approximately two years before the necessary expertise was appointed due to the procurement process, she said.
Mupupa explained that during the transition period, financial information that was not recorded or presented in accordance with IPSAS requirements might have been reflected in the audit process as missing, unallocated, or incorrect.
She added that the municipality is yet to formally receive the auditor general’s report, which was still to be tabled in Parliament, and would provide a more detailed response to specific findings once the report had been formally made available.
The town authority also rejected allegations that it was misrepresenting financial information or misusing public funds.
“The municipality remains committed to transparent financial reporting, sound financial management and the responsible administration of public resources,” she said.
edeklerk@nepc.com.na
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