The Opuwo Town Council could face the wrath of the Receiver of Revenue after the council failed to submit income tax deductions from employees to treasury between 2013 and 2014, thus contravening the Income Tax Act.
According to the Auditor General, Junias Kandjeke, the council may face penalties and interest charges levied for non-compliance to submit the pay-as-you-earn (PAYE) receipts of employees.
The Receiver of Revenue printout shows N$ 5 295 370 as the amount owed by Council to treasury for non-payment of PAYE deductions whereas the general ledger reflects a payable balance of N$6 954 741, the councils audit for the financial year ended June 2014 shows.
An amount of N$213 898 was transferred from the VAT account to the PAYE account to clear the balance, although the balance was not reflected in the council’s records. However, after the transfer from the VAT account by the Receiver of Revenue, the balance was zero at year-end.
Kandjeke further indicates that, the water network and sewerage upgrades effected in 2013 were not depreciated correctly, and the property, plant and equipment of the prior year was not corrected in the year. Accumulated depreciation is therefore understated with N$700 875.
The auditors also noted that the property, plant and equipment is over insured by N$866 778.
“It is critical that the council reviews and updates the list of assets that are insured as they are acquired and disposed. This will ensure that the council does not suffer unnecessary costs,” the auditor suggested.
Overall, the council received a disclaimed audit opinion due to the fact that the inventory value at year-end was not accounted for in the financial statements, consumer deposits were insufficient and outstanding balances of debtors were incorrect with credit balances being unallocated to their respective accounts. The council was also no able to give reconciliations for the Build Together and Fixed Housing Funds, which are under their administrations. The auditors could also not establish the amount that the beneficiaries owe the Fund and consequently the debtor’s completeness was not satisfied.
“No supporting documents could be provided for the following expenditure line items; consulting fees amounting to N$1 104 197, repairs and maintenance amounting to N$167 827 and bank charges amounting to N$241 488,” the auditor stated.
The council also had no proper documents and valuation reports for inspection relating to land and buildings compensation payments done for the year. The auditor could also not establish if the debtors from the sale of erven (which amounted to N$1 270 416) were included in the total debtors balances reflected on the balances reflected on the balance sheet. The council stands to lose money if records are destroyed.
According to comments by the AG, the council was not able to provide documentation for Water Consumption at the amount of N$6 574 680, basic sewerage (N$251 374), additional sewerage (N$471 993), Sundry income (N$452 791).
“No confirmation could be obtained for a contribution from Central Government’s TIPEEG to the amount of N$11 459 375. The budget however included an approved amount of N$14 700 000. The completeness of contributions received could thus not be asserted. An amount of N$2.5 million from Central Government was received in 2013 but was accounted for in the financial year under review,”’ the auditor noted.
Due to the significance of these matters, the AG could not express an opinion on the financial income accounts on water, sewerage, and sundry income. The council is exposed to financial losses if the Build Together Housing Fund are destroyed. An attempt to reconcile the total balance owed by beneficiaries could not be performed successfully. However, the council’s bank account during the year under review amounted to N$5 570 882. Cheques not presented for payment amounted to N$473 017, resulting in a favourable cashbook balance.