An Auditor General’s report has revealed that senior managers at the Epworth Local Board allegedly diverted close to US$100,000 that had been set aside for community development projects, and instead used the funds to purchase luxury vehicles for themselves.
According to the Auditor General’s report, the significance of the issues outlined in the Basis for Adverse Opinion section, the financial statements of the Epworth Local Board do not present a fair view of its financial position.
The Auditor General stated that the financial position of the Board as at 31 December 2022, together with its financial performance and cash flows for that year were not prepared in accordance with International Financial Reporting Standards (IFRSs).
One of the key issues raised was the improper valuation of property, plant, and equipment. The Council determined the values in United States dollars (USD) and then translated them into Zimbabwe dollars (ZWL) using the interbank rate as at 31 December 2022.
This approach, according to the Auditor General, failed to meet the requirements of IFRS 13 on Fair Value Measurement because the translated values did not reflect assumptions that market participants would use in valuing similar assets in Zimbabwean dollars.
When contacted for a comment, Epworth Board Director, Dr. Wilton Mhanda, dismissed the allegations as false. “This is false and not true. We did not do such a thing at the Local Board,” Dr. Mhanda stated.
However, some of the implicated officials admitted to receiving the funds, arguing that they had received “approval.” Their explanation has been met with skepticism since the law explicitly prohibits the use of the Estate Fund for such purposes.
The officials also pledged to reimburse the money, but this promise has not yet been fulfilled, further fuelling concerns about a culture of impunity within local authorities.
The Auditor General’s report also noted additional irregularities in the handling of foreign currency transactions. The Council failed to translate these transactions at the date of occurrence.
Instead, the balances were maintained in foreign currency until year-end, when they were translated using the closing rate as at 31 December 2022.
This practice was contrary to the requirements of IAS 21 – The Effects of Changes in Foreign Exchange Rates, which specifies that transactions must be translated using the spot exchange rate on the date of the transaction.
