Bulawayo City Council risks facing borrowing challenges due to delayed IPSAS financial statement submission

Annahstacia Ndlovu

The Ministry of Local Government and Public Works has disclosed that Bulawayo City Council (BCC) has failed to submit its lnternational Public Sector Accounting Standards (IPSAS) 2023 financial statement, and this is likely going to affect its borrowing powers.

The Chief Director of Finance and Administration in the Ministry of Local Government and Public Works, Emmanuel Ngwarati, during the Urban Development Corporation 2024 IPSAS and Tax Matters three-day meeting, disclosed that Bulawayo City Council has failed to submit their 2023 financial statement.
“Bulawayo City Council has been reminded to submit its financial statement by the end of this month and failure to do so will result in a number of financial implications like having a challenge in getting clearance to borrowing powers,” said Ngwarati, adding that BCC has been granted an extension to submit their financial statement to the end of July 2024.

The government has been working on migrating to the IPSAS for several years, with a projection to complete the transition in 2025. Since the government and local government’s migration to IPSAS, draft transitional IPSAS compliant accounts were supposed to have been submitted by June 30, 2024. These drafts were expected to be the basis of what the external auditors would use to audit accounts.

BCC Finance and Development Committee Chairperson, Mpumelelo Moyo shared that the Council will submit the draft accounts on Monday next week.

“It was not the 2023 financial statement, but the transitional financial statement that the Ministry wanted. As far as the audited accounts, the majority of local authorities are way behind as was again highlighted by the Director of Finance, we did not want to submit garbage to the Ministry,” said Moyo.

He explained that they are finalising the draft and that during the meeting it became apparent that those who submitted their Financial Statements were chasing the deadline and not quality.
“During the UDCORP workshop, numerous errors were highlighted on a number of accounts that beat the deadline. Local authorities raced to beat the deadline by submitting financials that were incomplete. It was even mentioned that some just did a copy and paste of the template as it was, together with some figures and wording,” added Moyo.

Bulawayo residents have expressed their concern over the Council’s failure to adhere to government financial regulations. A Bulawayo resident, Ben Moyo has expressed his disappointment over the failure by Council to submit its Financial Statement on time.

“As residents its saddening to hear that our BCC finance department is failing to meet their deadline to submit financial statement. It means some people are incompetent, heads must roll,” Moyo said.

Dr Felix Chari, an economist, highlighted that IPSAS promote transparency and accountability by providing consistent and reliable financial information. Failure to report or comply with IPSAS leads to a lack of transparency, making it difficult for stakeholders, including citizens, investors, and creditors, to assess the financial position and performance of the Bulawayo City Council.

“Delay in reporting IPSAS also erodes the credibility of the City of Bulawayo. Stakeholders, including investors, donors, and the public, may now question the reliability of financial position, which can impact the council’s reputation and ability to attract funding or investment, ” Dr Chari said.

Precious Mugumbate, the Principal Accountant in the Ministry of Finance Economic Development and Infrastructure Promotion, secretary to IPSAS project implementation team explained that the government of Zimbabwe started implementing IPSAS in 2019 and the project will be completed on 31 December 2025, when all Councils are IPSAS compliant.

“We introduced Zig on the 5th of April 2024, we are now supposed to produce our Financial Statements in the new currency, and this must be disclosed in the notes though it’s not affecting the financial statement report,” Mugumbate said.

The 2023 executive summary of the Auditor General’s Report on Zimbabwe local authorities state that although there has been efforts to submitting the financial statements for audit by local authorities at the time of producing the report, in relation to the 2020, 2021, 2022 and 2023 financial years, 98 financial statements that were submitted for the audit had been completed while 69 financial statements that were submitted for the audit were in progress and some being finalised . However, only 19, local authorities have submitted financial statements up to financial year ended December 31, 2023, while 73 local authorities were yet to submit final statements for the year ended December 31, 2023.