ABOUT eight out of Zimbabwe’s 55 local authorities have submitted their 2024 financial statements for compliance checks with the Finance ministry, the Zimbabwe Independent has established.
The crucial reviews are meant to assess whether the financial statements comply with International Public Sector Accounting Standards (IPSAS), officials said.
This translates to just 15% of local authorities responding to directives to submit their accounts, leaving a staggering 85% yet to comply, according to statistics provided by Brice Musendo, president of the Institute of Chartered Accountants of Zimbabwe (Icaz).
The low submission rate emerged after Icaz requested Treasury to evaluate local authorities’ compliance with IPSAS, raising concerns about their readiness to adopt the new accounting standards.
Speaking on the sidelines of last week’s Local Authorities Convention in Nyanga, Musendo acknowledged the importance of IPSAS implementation, but noted that municipalities were grappling with serious resource constraints.
“The biggest thing that was a concern to me was the number of local authorities that were submitting accounts for review by the Ministry of Finance in order to get feedback on how they are doing,” the Icaz boss said.
“We heard that there were eight out of 55 that had submitted, which is very low. The review that is being done by the ministry is quite key in terms of preparedness of the entities.
“And I think the ministry also needs to do some work in terms of going back to the local authorities and getting their accounts.”
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Previously, there had been widespread concern over state-owned enterprises failing to submit financial statements to the government.
However, since the Public Finance Management Act came into force about a decade ago, these concerns have been raised less frequently.
Musendo attributed the slow uptake of the Public Sector Professional Accountant of Zimbabwe qualification to inadequate resources.
The qualification, offered by Icaz in collaboration with the government, is designed to enhance accounting expertise in the public sector.
“When we did the public sector convention back in September last year, one of the issues that we advocated for was that there needs to be adequate budget allocation for implementation of IPSAS,” Musendo said.
“The ministry did quite make it clear that they were not providing a budget, and that the budget would come out of the entities.
“One of the things that we had encouraged was that they need to lobby for that budget to make sure that they are prepared.”
He further noted that even where budgets were allocated, funds were often diverted to other uses, hampering IPSAS implementation.
“What we have also noticed, which is a big challenge to the local authorities, is even though some were successful in getting that budget, funds are not always used for their purpose. They have been diverted, and so on,” Musendo said.
He said local authorities were struggling to allocate adequate funding, resulting in them diverting funds to support the implementation process.
“The Treasury actually clarified that they do not have funding capacity for that, and it is something that has to be created,” he said.
“Whether from a local authority or from any other public sector entity that is supposed to be IPSAS compliant they have to create it from their own budget.
“I think if we look at the numbers we received from the Ministry of Finance, some of them were a bit concerning.”
However, he believes 68% of local authorities were now fully adopting IPSAS.
Musendo urged the government to follow up with non-compliant local authorities to ensure they align with those that have already implemented the standards.
“One challenge that they (the Ministry) need to be proactive in terms of going back to local authorities where accounts have not been submitted and then challenge the progress,” he said.
He emphasised that this was necessary to gain a clear understanding of where each local authority stands and what support is required to ensure full compliance.
“What we need to look at critically is the government’s appetite to professionalise finance professionals.
“What we need to see is action in terms of funding that project. It is something that will benefit us down the line in terms of what we get from the reporting.”
He said public sector entities were stewards of public funds.
“We are always looking forward to making sure that they are properly qualified and that they have proper accountability for the funds they get from the public,” he said.
