ECONOMIC GOVERNANCE WATCH 2/2024

[25th March 2024]

The Zimbabwe Anti-Corruption Commission : Who Will Guard the Guards?

In October last year, in the National Assembly, the Deputy Minister of Finance tabled the Auditor-General’s report on State-owned enterprises and parastatals for the 2022 financial year.  The report can be accessed on the Veritas website [link].  Although the report was for 2022, it covered audits on financial statements prepared by State-owned enterprises and parastatals for previous financial years.

Among the bodies which the Auditor-General reported on is the Zimbabwe Anti-Corruption Commission [ZACC], a constitutional commission whose functions include:

·        combating corruption, theft, misappropriation, abuse of power and other improper conduct in the public and private sectors, and

·        promoting honesty, financial discipline and transparency in the public and private sectors.

One would have expected ZACC, of all government entities, to have kept its financial affairs in impeccable order and to have passed the audit with flying colours.  It didn’t.

The Auditor-General’s Findings

The Auditor-General’s report deals with ZACC’s financial statements for 2019 and 2020, which implies that ZACC was late in submitting its financial statements for 2021 and 2022 [though in fairness to ZACC the Auditor-General records that the statements for those later years are currently being audited].  In neither of the two years reported on  – 2019 and 2020 – did ZACC get a clean bill of health.

2019 financial year

For the 2019 financial year the Auditor-General issued an adverse opinion, meaning that she considered the financial statements did not present fairly ZACC’s financial position, financial performance or cash flows in accordance with International Financial Reporting Standards.

Specifically, the Auditor-General’s findings were as follows:

·        Non-compliance with International Accounting Standards.  ZACC’s financial statements converted US dollar amounts to Zimbabwe (RTGS) dollars at the rate of 1:1 up to February 2019 and then at the official inter-bank exchange rate.  This complied with SI 33 of 2019 and a Reserve Bank directive, but it did not comply with International Accounting Standards and did not properly reflect transactions which ZACC carried out at different exchange rates.  Had ZACC complied with the international standards, many elements in its financial statements would have been materially affected.

·        Absence of documentary evidence for expenditure.  ZACC did not produce documents to validate expenditure amounting to US$21 078 at the inter-bank rate.

2020 financial year

The Auditor-General issued a qualified opinion for the 2020 financial year, meaning that apart from the issues listed below she considered ZACC’s financial statements fairly represented the Commission’s financial performance.  The issues that qualified her opinion were:

·        Non-compliance with International Accounting Standards.  ZACC’s continued use of the inter-bank rate to convert US dollar amounts to RTGS dollars, contrary to International Accounting Standards, meant that its opening balances were different from those they would have been had ZACC complied with the international standards.

·        Absence of documentary evidence for expenditure. Again the Auditor-General found no documents to support expenditure of US$21 078 – the same amount as in 2019.  [This must be a mistake:  either the Auditor-General erroneously repeated the entry from 2019 or she found the same problem of non-documentation but for a different amount.]

·        Fuel expenditure. Receipts for a total of 43 420 litres of fuel were not recorded in a fuel register, and there was no evidence that fuel registers were regularly reviewed by a senior officer during the year.

·        Procurement of goods and services. ZACC had paid US$345 918 for ten vehicles but only five had been delivered by time the Auditor-General conducted her audit – two years after the payment was made.

·        Houses:  In 2010 ZACC received a donation of three houses from the Reserve Bank but because of delays in transferring title ZACC “derecognised” them in 2012, i.e. it removed them from its balance sheet, which was contrary to proper accounting practice.  The Auditor-General had pointed out the error in an earlier audit but ZACC had only partially rectified it:  ZACC had obtained ownership of two out of the three houses, leaving one outstanding.  Several questions arise here.  Why did the Reserve Bank donate houses to ZACC, rather than sell them or transfer them for value?  Under what law were they donated?  Did ZACC satisfy itself that the transaction was lawful?  And why has it taken so long for ZACC to get ownership of them?]

Conclusion

ZACC’s audit record was by no means the worst in the Auditor-General’s report.  NSSA for example did not receipt deposits worth Z$233,4 million – about US$726 000 at the then rate of exchange – and several entities have been very late in submitting their financial statements for audit.  Even so, ZACC is tasked by the Constitution with combating corruption and crime and promoting financial discipline.  Of all State institutions one would expect it to be the most assiduous in keeping financial records and to prepare the most perfect financial statements.  It failed to attain the lofty standards expected of it.   This is not the only problem besetting ZACC.  There are vacancies on the Commission which have remained unfilled for many months, and the appointment of its new chairperson is controversial.  These problems are not the fault of ZACC, of course, nor can they be resolved by ZACC, but they add to the picture of a Commission which is not as orderly, well-managed and competent as it should be.