By Correspondent
The absence of punitive measures for Councils that fail to submit financial books to the Auditor-General (AG) has been cited as a major reason for the persistent problem.
Local authorities must submit their financials within 3 months after the lapse of a financial year.
However, many continue to fail, with only one third doing so in 2024, according to the Auditor-General’s report.
Over 60 Local Authorities failed to submit their books.
Impotence of AG’s Office
The AG’s office does not have direct powers to prosecute or force submissions, and this has resulted in many flagrantly flouting the requirement.
Though several administrative and legal penalties are either currently applied or recommended by Parliament, they have failed to enforce compliance.
In a bid to bring an end to the issue, experts have proffered various measures.
Recommendations include initiating disciplinary measures against CEOs of councils that are not current with submissions.
The potential for imprisonment can be one way to enforce compliance by top officials.
Section 91 of the Public Finance Management Act allows for potential imprisonment for mismanagement of public funds.
This includes failure to adhere to financial management regulations.
Despite these measures, enforcement is considered weak, and the AG’s office lacks the power to compel submissions.
Absence of Accountability
Economic analyst Vince Musewe cited the absence of accountability.
“This is a serious problem of accountability.
“There are no consequences for non-delivery, and local authorities are the worst culprits.
“We need a more severe approach where there is non-delivery and a lack of accountability.
“Incompetence and political appointments lead to low standards,” he said.
In the financial sector, especially companies trading on the stock exchange, any overstepping on financials carries deterrent penalties.
Thus, corporates listed on the Zimbabwe Stock Exchange (ZSE) religiously adhere to the rule book.
Failure to submit financial statements (audited annual or interim reports) to the respective bourse results in significant penalties.
These range from hefty fines to trade suspension, as detailed in the ZSE Listings Requirements (Statutory Instrument 134 of 2019 and amendments).
Some specific penalties and consequences for non-compliance include
monetary fine of US$14 200 payable by every issuer that fails to publish audited accounts within 90 days of the financial year-end.
There is also an additional daily accrual of US$100 per day after the 90-day deadline, for a maximum of 30 days.
In the continued absence of punitive measures, it remains to be seen if Councils will change in the new year.
