The Tsholotsho Rural District Council in Matabeleland North province has come under scrutiny for failing to comply with International Accounting Standards (IAS) in its 2021–2023 financial reporting, according to the latest Auditor General’s (AG) report tabled in Parliament.
According to the report, the council did not review the useful lives or residual values of its assets as of December 31, 2021, breaching IAS 16 (Property, Plant, and Equipment) ll .
The council also failed to depreciate property, plant, and equipment (except land), contrary to IAS 16, paragraph 43.
The AG warned this omission materially distorted the financial statements.
“This was contrary to IAS 16 — “property, plant and equipment” paragraph 51 which requires the review of the residual values and useful lives of assets at each reporting date and paragraph 43, which requires property, plant and equipment to be depreciated except for land,” the report read.
“Had council reviewed the useful lives and residual values of assets and depreciated assets, the financial statements would have been materially different and there was non-compliance with IAS 40 — investment property.
“The council incorrectly classified investment property as property, plant and equipment.”
The AG said this was contrary to IAS 40 — “investment property” paragraph 5, which requires properties held to earn rentals or for capital appreciation or both to be classified as investment property.
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The AG also noted misclassification of investment properties held for rentals or capital appreciation were incorrectly categorised as property, plant and equipment, violating IAS 40 (investment property).
The RDC had no policy to assess receivables’ recoverability and did not recognize allowances for expected credit losses, flouting IFRS 9 (Financial Instruments).
The council recorded ZWL$34,2 million from property rentals and land levies on a cash basis, contravening IFRS 15 (revenue from contracts with customers), which mandates revenue recognition upon fulfilling performance obligations.
