Harare City Council Fails IPSAS 35 Compliance Audit by Auditor-General Vimbai Chikwenhere

• Auditor-General Vimbai Chikwenhere flagged Harare City Council for failing to consolidate its subsidiaries' financial statements, a requirement under IPSAS 35.
• The council failed to disclose the carrying amount of investments in its subsidiaries, contravening IPSAS 38 requirements.
• Harare City Council has established a Business Development Unit to strengthen oversight and improve financial reporting.
• Lawyers advising the council should review and strengthen their procedures to ensure compliance with IPSAS 35 and IPSAS 38 requirements.

The council's failure to consolidate its subsidiaries' financial statements and disclose investments in these entities could lead to misstatements in its financial reports, undermining public trust and accountability.

The Auditor-General Vimbai Chikwenhere has flagged Harare City Council for failing to consolidate the financial statements of its subsidiaries, a requirement under IPSAS 35. The council oversees several business units, including Sunshine Holdings, Rufaro Marketing, and Harare Quarry, which have been plagued by allegations of weak governance and limited financial transparency. According to Chikwenhere's latest audit report, the council failed to disclose the carrying amount of investments in its subsidiaries, contravening IPSAS 38 requirements. This omission could lead to misstatements in the local authority's financial reports. The council has since established a Business Development Unit to strengthen oversight and improve financial reporting.

IPSAS 35 requires the consolidation of subsidiaries in financial statements, while IPSAS 38 demands disclosure of interests in other entities. Harare City Council's failure to comply with these standards raises concerns about the accuracy and transparency of its financial reporting. The council's response to the Auditor-General's findings highlights the need for strengthened processes in preparing consolidated financial information and maintaining complete records of investments. Lawyers advising the council should review and strengthen their procedures to ensure compliance with IPSAS 35 and IPSAS 38 requirements.

The misgovernance of Harare City Council's business entities has far-reaching implications for the local authority's financial reporting. The council's failure to consolidate its subsidiaries' financial statements and disclose investments in these entities could lead to misstatements in its financial reports, undermining public trust and accountability. Strengthening oversight and improving financial reporting are essential steps towards ensuring transparency and good governance in Harare City Council's operations.

Lawyers advising Harare City Council should review and strengthen their processes for preparing consolidated financial information and maintaining complete records of investments, to ensure compliance with IPSAS 35 and IPSAS 38 requirements.

Source: Original reporting via New Zimbabwe