Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697706032663.pdf (Zimbabwe)
REPORT of the Auditor-General for the FINANCIAL YEAR ENDED DECEMBER 31, 2019 ON STATE ENTERPRISES AND PARASTATALS _________________________________________ Presented to Parliament of Zimbabwe: 2021 _________________________________________ Office of the Auditor-General of Zimbabwe 5th Floor, Burroughs House 48 George Silundika Avenue Harare, Zimbabwe.

The Hon.
The Hon.

Prof. M. Ncube Minister of Finance and Economic Development New Government Complex Samora Machel Avenue Harare Dear Sir, I hereby submit my Report on the audit of State Enterprises and Parastatals in terms of Section 309(2) of the Constitution of Zimbabwe read together with Section 10(1) of the Audit Office Act [Chapter 22:18], for the year ended December 31, 2019.

Yours faithfully, M. CHIRI (MRS), AUDITOR-GENERAL.


HARARE April 8, 2021 OAG Vision To be the Center of Excellence in the provision of Auditing Services.

OAG Mission To examine, audit and report to Parliament on the management of public resources of Zimbabwe through committed, motivated, customer focused and well trained staff with the aim of improving accountability and good corporate governance.
TABLE OF CONTENTS LIST OF ACRONYMS ........................................................................................................ PREAMBLE ........................................................................................................................... iii v EXECUTIVE SUMMARY ................................................................................................. vii PUBLIC ENTITIES UNDER THE CATEGORY OF AUTHORITIES AND AGENCIES 1 .................................................................................................................................................. NATIONAL SOCIAL SECURITY AUTHORITY 2018 ........................................................ 2 PROCUREMENT REGULATORY AUTHORITY OF ZIMBABWE (PRAZ) 2016 - 2018 7 ZIMBABWE NATIONAL ROAD ADMINISTRATION 2018 ........................................... 10 ZIMBABWE PARKS AND WILDLIFE MANAGEMENT AUTHORITY 2018 ............... 16 ZIMBABWE REVENUE AUTHORITY (ZIMRA) 2019 .................................................... 21 PUBLIC ENTITIES UNDER THE CATEGORY OF BOARDS ................................... 30 GRAIN MARKETING BOARD (GMB) 2018/2019 ............................................................ 31 TOBACCO INDUSTRY AND MARKETING BOARD (TIMB) 2018 ............................... 35 PUBLIC ENTITIES UNDER THE CATEGORY OF COMMISSIONS ....................... 37 FORESTRY COMMISSION OF ZIMBABWE 2018 ........................................................... 38 ZIMBABWE ELECTORAL COMMISSION 2016 - 2018 ................................................... 41 PUBLIC ENTITIES UNDER THE CATEGORY OF COUNCILS ............................... 44 NATIONAL AIDS COUNCIL 2018 ..................................................................................... 45 ZIMBABWE SCHOOL EXAMINATIONS COUNCIL (ZIMSEC) 2018 ........................... 47 PUBLIC ENTITIES UNDER THE CATEGORY OF COMPANIES AND CORPORATIONS ............................................................................................................... 51 CHEMPLEX CORPORATION LIMITED AND ITS SUBSIDIARIES 2018 AND 2019 ... 52 DEPOSIT PROTECTION CORPORATION 2019 ............................................................... 55 MINING PROMOTION CORPORATION (PRIVATE) LIMITED (MPC) 2016, 2017 AND 2018......................................................................................................................... ............... 57 MINERALS MARKETING CORPORATION OF ZIMBABWE (MMCZ) 2018 AND 201959 NATIONAL RAILWAYS OF ZIMBABWE (NRZ) 2019 ................................................... 63 MOSI OA TUNYA DEVELOPMENT COMPANY (PRIVATE) LIMITED (2012- 2015) 68 NATIONAL OIL INFRASTRUCTURE COMPANY OF ZIMBABWE (NOIC) 2018....... 71 NET*ONE CELLULAR (PRIVATE) LIMITED 2019 ......................................................... 74 PETROTRADE (PRIVATE) LIMITED 2018....................................................................... 77 TEL●ONE (PRIVATE) LIMITED 2019 ............................................................................... 80 ZIMBABWE CONSOLIDATED DIAMOND COMPANY 2018 AND 2019 ..................... 84 i ZIMBABWE ELECTRICITY TRANSMISSION AND DISTRIBUTION COMPANY (ZETDC) 2019........................................................................................................................................ 93 ZESA HOLDINGS (PRIVATE) LIMITED 2019 ................................................................. 99 PUBLIC ENTITIES UNDER THE CATEGORY OF FINANCIAL INSTITUTIONS102 INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE (IDBZ) 2019 ............ 103 NATIONAL BUILDING SOCIETY 2019 .......................................................................... 106 SMALL AND MEDIUM ENTERPRISES DEVELOPMENT CORPORATION (SMEDCO) 2018......................................................................................................................... ............. 109 ZIMBABWE WOMEN’S MICROFINANCE BANK (ZWMB) 2019 ............................... 112 PUBLIC ENTITIES UNDER THE CATEGORY OF HOSPITALS ........................... 115 MPILO CENTRAL HOSPITAL 2017 AND 2018 .............................................................. 116 PARIRENYATWA GROUP OF HOSPITALS 2018 ......................................................... 120 ANNEXURE “A”: STATE ENTERPRISES AND PARASTATALS AUDIT OPINIONS PER ENTITY ..................................................................................................................... 123 ANNEXURE “B”: AUDITS IN PROGRESS AND BEING FINALISED ................... 139 ANNEXURE “C”: AUDITS AT SIGNING STAGE ...................................................... 142 ANNEXURE “D”: ACCOUNTS NOT SUBMITTED FOR AUDIT ............................ 143 ii LIST OF ACRONYMS 1.
2.

3.

4.

5.

6.

7.

8.

9.

GMB- Grain Marketing Board IFRSs- International Financial Reporting Standards ISAs- International Standards on Auditing ISSAIs- International Standards of Supreme Audit Institutions MMCZ- Minerals Marketing Corporation of Zimbabwe NOIC- National Oil Infrastructure Company of Zimbabwe NAC- National AIDS Council NSSA- National Social Security Authority OAG- Office of the Auditor General 10.

PRAZ- Procurement Regulatory Authority of Zimbabwe 11.
POTRAZ- Postal and Telecommunication Regulatory Authority of Zimbabwe 12.

RBZ- Reserve Bank of Zimbabwe 13.

RIB-Removal in Bond 14.

RIT- Removal in Transit 15.

SAP- Systems, Applications, Products in Data Processing.

16.

SMEDCO-Small and Medium Enterprises Development Corporation 17.

SPB- State Procurement Board 18.

TIMB- Tobacco Industry and Marketing Board 19.

TIP- Temporary Import Permit 20.

VAT- Value Added Tax 21.

ZCDC-Zimbabwe Consolidated Diamond Company 22.


ZETDC-Zimbabwe Electricity Transmission and Distribution Company iii 23.

ZIMRA- Zimbabwe Revenue Authority 24.

ZIMSEC-Zimbabwe School Examinations Council 25.

ZINARA- Zimbabwe National Roads Administration iv PREAMBLE Introduction Following the end of the 2019 financial year for public entities, I take the opportunity to report my audit findings.
The primary purpose of financial statements is to provide relevant and reliable information to users about a reporting entity’s financial position.

In the public sector, the users of financial statements include various stakeholders, inter alia ministers, parliament, development partners, the public at large.
The objectives of a financial statements audit in the public sector are often broader than expressing an opinion on whether the financial statements have been prepared, in all material respects, in accordance with the applicable financial reporting framework but also address service delivery issues.

Mandate My Office is mandated by the Constitution of Zimbabwe as amplified in the Audit Office Act [Chapter 22:18] to report to Parliament my findings on the examination of accounts of all public entities.
In fulfilling this mandate, I do contract from time to time, some of the audits to registered public auditors in terms of the Public Accountants and Auditors Act [Chapter 27:12] as stated in Section 9 of the Audit Office Act [Chapter 22:18].

Accordingly, I have included audit findings from such auditors in this report.

Audit approach I conducted my audits in accordance with the International Standards of Supreme Audit Institutions (ISSAIs) and the International Standards on Auditing (ISAs).
These Standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

My audit approach was designed to enable me to express an opinion on the public entities’ financial statements.

All aspects of the entities’ activities and procedures may not have been examined.

I consider maintenance of adequate internal controls to be the responsibility of management.
My work cannot therefore, be expected to identify all weaknesses in the systems and procedures, which a special investigation directed at those areas might reveal.

As to the possibility of fraud, I plan my audits to have a reasonable expectation of its disclosure if the potential effects of the fraud would be material in the financial statements.
However, there are many kinds of fraudulent activities, particularly those involving defalcation, forgery, collusion and management override of controls, which would be unreasonable to expect the normal audit to uncover.

The principal objective of my audit procedures is to enable me to express an opinion on the truth and fairness of the financial statements as a whole.

An audit opinion is based on the concept of reasonable assurance.
It is not a guarantee that the financial statements are free of misstatements.

v Financial reporting framework The Public Finance Management Act [Chapter 22:19] section 37 requires all public entities’ financial statements to be prepared in accordance with generally Accepted Accounting Practice (GAAP).

This is interpreted as comprising International Financial Reporting Standards (IFRSs) and International Public Sector Accounting Standards (IPSASs).
IFRSs and IPSASs comprise interpretations adopted by the International Accounting Standards Board (IASB) and the International Public Sector Accounting Standards Board (IPSASB), which set common rules so that financial statements can be consistent, transparent and comparable around the world.
In recent years, public entities have generally been in compliance with the requirements of the IFRSs, however for the 2018 and 2019 financial period, full compliance could not be achieved due to issues emanating from non-compliance with IAS 21.

This was due to the fact that in February 2019, the Government of Zimbabwe issued Statutory Instrument 33 of 2019 (S.I.

33), which, prescribed parity between the US dollar and local currency.

S.I.
S.I.

33 also prescribed the manner in which certain balances in the financial statements were to be treated as a consequence of the recognition of the RTGS$ as currency in Zimbabwe.

The requirements of S.I.

33 of 2019 precluded public entities from complying with International Accounting Standard 21 (IAS 21) “The effects of changes in foreign exchange rates”.

Although, the assessment of the impact of complying with S.I.
33 was done on a case by case basis, adherence to the statutory instrument resulted in a significant number of State Enterprises and Parastatals being unable to comply with IFRSs.

This therefore formed the basis for adverse opinions across entities I reported on for the financial years ended December 31, 2018 and 2019.

Report Structure The report outlines material audit findings noted during the audit of the financial statements of the State Enterprises and Parastatals.
Also included under each audited client are possible risks / implications associated with the audit findings, audit recommendations, management responses in respect of the findings, audit comments to management responses where necessary.

I also made a follow up on my prior year recommendations and reported on the progress made in addressing the prior year findings.
Although some of the issues identified are common within the audited entities, the majority of the findings are not the same due to the nature, uniqueness and varying mandates of the entities.

vi EXECUTIVE SUMMARY The 2020 audit period is a unique year because of unprecedented COVID-19 pandemic.

The COVID-19 is not only a global pandemic and public health crisis but has also severely affected national economies and financial markets.
Significant reductions in income, a rise in unemployment, and disruptions in the transportation, service delivery and manufacturing industries are among the consequences of the disease, of which Zimbabwe was not spared.

The consequences of the Covid-19 pandemic on financial reporting and audit engagements are complex and have resulted in challenges for management, those charged with governance and auditors.
There is an unprecedented level of uncertainty about the economy, future earnings and many other inputs that represent fundamental elements of financial reporting.

Both preparers and auditors were affected by restrictions on travel and requirements to stay at home, which presented practical challenges to the audit engagements and the ability to meet the June 30 reporting deadline.
Many public entities are faced with demand and operational uncertainties, as such completion of procedures necessary to issue historical financial statements may have been a low priority as observed by the number of audits performed to completion during this period.

The effects are likely to be a big dent in the spectra of accountability and transparency as COVID-19 is likely to regress the progress that had been made over the years in bringing most public entities up to date in their financial reporting.
At the time of producing this report, in relation to the 2019 financial year, fifty-two (52) audits had been completed, fifty-four (54) audits were in progress and thirty-four (34) entities had not yet submitted financial statements for audit.
Highlights of findings Whilst I appreciate the efforts made by Government in the form of statutory/structural reforms, inter alia, enactment of the Public Entities Corporate Governance Act [Chapter 10:31], establishment of the Corporate Governance Unit (CGU) in the Office of the President and Cabinet, Central Internal Audit Unit in the Ministry of Finance and Economic Development etcetera, governance issues have continued to dominate my report for State Enterprises and Parastatals.
Out of sixty-nine (69) issues I am reporting; fifty-three (53) relate to the area of governance while sixteen (16) relate to revenue collection, employment costs and procurement.

Governance issues reported in the current year are in respect of payment of board fees and allowances without approval of the responsible Minister, failure to declare interest by board members, absence / unbalanced composition of the Board of Directors and other issues on ineffective internal control systems.
Highlights of reportable issues are detailed below: ZETDC had US$ 1.2 million worth of cables undelivered since 2015. vii There was no evidence to show that ministerial approval had been sought and granted for some extra board perks such as fuel.

Additionally, some board members did not make any declarations of interest.

The Mining Promotion Corporation had no substantive Chief Executive Officer since 2016 whilst Petrotrade did not have a Board of Directors since 2015.
Some parastatals were paying board allowances that had not been approved by the minister while others grossed up board fees and also paid board members sitting allowances for attending workshops.

Conclusion The audit findings warrant the attention of management and those charged with governance.

The audit revealed that most of the weaknesses emanated from governance issues.
It is therefore imperative that State Enterprises and Parastatals embrace provisions of the new Public Entities Corporate Governance Act [Chapter 10:31] and incorporate these into their existing structures and processes.

I envisage a situation where the performance of State Enterprises and Parastatals will greatly improve if my recommendations and provisions of the said Act are implemented.
Acknowledgements My special tribute goes to the audit firms and our valued clients who made it possible for me to submit my report for the year under review.

I extend my appreciation to our development partners for their unwavering financial support and to our printers for printing the report.

Finally, I extend my sincere appreciation to my management and staff for their continued commitment and dedication to duty.
viii PUBLIC ENTITIES UNDER THE CATEGORY OF AUTHORITIES AND AGENCIES 1 NATIONAL SOCIAL SECURITY AUTHORITY 2018 Background information The National Social Security Authority is a corporate body that was established in terms of the National Social Security Authority Act, [Chapter 17:04], to establish social security schemes for the provision of benefits to contributors of the schemes.
It has the mandate to administer the pension and other benefits scheme, the accident prevention and worker’s compensation scheme and other schemes to be established in terms of the Act.

These financial statements are in respect of the authority as a whole (consolidation of the two schemes and the subsidiaries) and separate financial statements have been prepared for the individual schemes.
I have audited the financial statements of National Social Security Authority for the year ended December 31, 2018 and I issued an adverse opinion with an Other Matter paragraph.
Adverse Opinion on the Consolidated Financial Statements In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the consolidated financial statements do not present fairly the consolidated financial position of the National Social Security Authority as at December 31, 2018, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Adverse Opinion on the Authority’s Financial Statements In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the financial statements do not present fairly the financial position of the National Social Security Authority as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Adverse Opinion on the Pension and Other Benefits Scheme In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the financial statements do not present fairly the financial position of the National Social Security Authority’s Pension and Other Benefits Scheme as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Adverse Opinion on the Accident Prevention and Workers’ Compensation Scheme In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the financial statements do not present fairly the financial position of the National Social Security Authority’s Accident Prevention and Workers Compensation Scheme as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
2 Basis for Adverse Opinion The Group did not fully comply with the provisions of International Accounting Standards (IAS 21), “The Effects of Changes in Foreign Exchange Rates”.

During the year under review, the Zimbabwean economy was characterised by a multi-tiered pricing model.

Under this model, a single product had different prices depending on the mode of payment, whether United States Dollar Cash, electronic money (RTGS), mobile money or bond notes.
This resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21, The Effects of Changes in Foreign Exchange Rates, would apply.

Market wide, entities experienced premiums and discounts on the official foreign exchange rate of 1:1 between the RTGS balances and Bond Notes and the United States Dollar.
As a result of these factors the directors performed an assessment on the functional currency of the Group in accordance with IAS 21, The Effects of Changes in Foreign Exchange Rates, and acknowledge that the functional currency of the Group was no longer the United States Dollars (US$).
In February 2019, an electronic currency called the RTGS dollar was introduced through Statutory Instrument 33 of 2019 (S.I 33) with an effective date of February 22, 2019 and the currency commenced trading at a rate of 2.5 to the US$.

In addition, S.I.

33 fixed the exchange rate between the RTGS dollar and the US$ at a rate of 1:1 for periods before the effective date.
Although the directors acknowledge that there was a functional currency change and that market exchange rate between the US$ and local currency was not 1:1, they have maintained their functional currency as the US$ and have presented the consolidated financial statements in US$ using an exchange rate of 1:1, in compliance with S.I 33.

This constitutes a departure from the requirements of IAS 21.
The effect of the non-compliance with IAS 21 has not been quantified however it is considered to be material and pervasive to these consolidated financial statements.

Other matter I draw your attention to the fact that Capital Bank results have not been included in the consolidated financial statements.

The Bank’s operating license was withdrawn by the Reserve Bank of Zimbabwe after the major shareholder had opted for voluntary liquidation due to recurring and unsustainable losses.
The liquidation process is yet to be initiated as the matter is before the courts following an objection by minority shareholders.

No final determination has been given with regards to the value of assets and liabilities held by the Bank as no financial information was available.

In addition, a forensic audit had been conducted into the affairs of National Social Security Authority at the request of the Ministry of Public Service, Labour and Social Welfare.
At the time of concluding the forensic audit recommendations was still ongoing.

The outcome of investigations and hearings on the forensic audit findings could have a material impact on the audited financial statements.

The effect of this matter could not be determined at the conclusion of the audit.
the 2018 final audit, implementation of Below are other material issues noted during the audit; 3 1 GOVERNANCE ISSUES 1.1 Complaints register Finding The Authority did not keep track of the number of complaints received that range from low benefit payout, accessibility, lost information, need for self-service portal, delays in processing of claims and request for reduction in retirement ages.

A complaints register covering January to September 2018 was not availed for audit purposes.
I also noted that some pages of the complaints register covering October 2018 to December 2018 had been torn off.

As a result, the Authority could not provide the number of complaints received, resolved and outstanding as at year end.

Risk / Implication Service delivery may be compromised.

Recommendation The Authority should ensure that a robust complaints monitoring mechanism is put in place.
Management response Management will institute measures to ensure all complaints are captured and stored in an easily accessible manner.

Management to put in place a complaint handling process uniform for all departments.

A resource from the Marketing department to collect information from all regions weekly, categorize the complaints per department, flag them to the Head of the said department and acknowledge receipt of the complaint to the client via a phone call.
Acknowledgement and follow up calls will be transferred to the Contact Centre once it is functional.

Follow ups to be done until complaint is resolved.

Process to be implemented by 30 November 2019.

1.2 Board expenses Finding The Authority did not have a clear policy articulating what board members were entitled to when they attended workshops.

As a result, board members were paid sitting fees for attending other workshops.
Risk / Implication Possible financial loss as unapproved expenditure may be incurred.

4 Recommendation The Authority should consider putting in place clear policies articulating issues relating to board remuneration.

Management response The resolution to pay sitting allowances to Board members when they attend workshops or other meetings on behalf of the Authority was made by the Board.
Going forward all Board remuneration issues will have to be approved by the Minister or will be paid in terms of the Public Entities Corporate Governance Act.

1.3 Housing offtake agreements Finding There was no evidence to support that the Authority was monitoring performance of off take housing agreements it had entered into.

My examination of contract documents revealed the following: a) The Authority entered into a contract with a developer to construct one thousand (1000) houses in Harare.
The offtake agreement stipulated that the developer had performance timelines in the contract where the first batch of two hundred (200) housing units were to be delivered within 180 days from the contract commencement date and thereafter two hundred (200) housing units after every 2 months.

My enquiry with management and review of documents revealed that neither servicing of the stands nor construction of housing units had commenced as of July 2019.
In addition, there was no evidence that steps were taken by management to recover the funds from the performance bond following the breach of the contract.

b) The Authority entered into a contract with another property developer for the construction of eight hundred and nine (809) housing units in Chinhoyi.

An amount of $7.855 million was paid as part payment.

The terms of the contract stated that six hundred (600) houses were to be completed and transferred to NSSA by December 31, 2018.
I however noted that only two hundred and two (202) units had been constructed but not transferred to the Authority as of year-end.

I also noted that this contract was not backed by any performance bond.

Risk / Implication Financial loss as a result of funds locked in uncompleted projects and increased exposure to non-performance by developers.

Recommendation The Authority should ensure that performance bonds are in place for all contracts.
The Authority should improve on the effectiveness of its contract management processes.

5 Management response Management concedes that the Housing offtake agreements were not handled in a manner that best protects the interests of the Authority.

Many of the transactions are now the subject of civil court proceedings and some are also the subject of criminal investigations.

Management continues to explore ways that the Authority can recover the funds invested on these projects.
2 PROGRESS IN IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS I reviewed the progress made towards the implementation of prior year recommendations and found that the Authority made some progress and there was room for improvement in respect of the following recommendations.

2.1 Investments with Metbank Recommendation All investments should be authorized as per standing policies and if there are deviations these should be appropriately approved.
Progress made All investments are now being authorized as per the standing policies.

Matters relating to Metbank are before the Courts.

Judgment was passed in favour of the Authority to recover ZWL$20 million worth of Treasury bills which Metbank were refusing to return.

The Treasury bills have since been returned into the custody of the National Building Society.

2.2 Benefits payment Recommendation The office should comply with the stipulated turnaround times.
Progress made The Mutare Regional office cleared the backlog through overtime.

The vacant posts have not yet been filled.

However, the office currently engages the services of contract workers as a stopgap measure.

The contract workers currently take much longer time to process claims as compared to experienced personnel owing to the learning curve.

The turnaround time is currently thirty days and fifteen days for long-term and short- term benefits respectively.
The vacant posts are expected to be filled by Q4 2019.

The benefits are expected to be processed within stipulated timeframes once the vacant posts have been filled.

6 PROCUREMENT REGULATORY AUTHORITY OF ZIMBABWE (PRAZ) 2016 - 2018 Background information The Procurement Regulatory Authority of Zimbabwe was established by an Act of Parliament [Chapter 22:23].

The main function of the Authority is to regulate public procurement.
I have audited the financial statements of Procurement Regulatory Authority of Zimbabwe for the years ended December 31, 2016, 2017 and 2018.

I issued a qualified opinion for 2016 and 2017 and an adverse opinion for 2018.
Qualified opinion 2016 In my opinion, except for the possible effects of matters described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Procurement Regulatory Authority of Zimbabwe as at December 31, 2016, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and in a manner required by the Public Procurement and Disposal of Public Assets Act [Chapter 22:23] and the Public Finance Management Act [Chapter 22:19].
Qualified opinion 2017 In my opinion, except for the possible effects of matters described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Procurement Regulatory Authority of Zimbabwe as at December 31, 2017, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and in a manner required by the Public Procurement and Disposal of Public Assets Act [Chapter 22:23] and the Public Finance Management Act [Chapter 22:19].
Basis for Qualified Opinion 2016 and 2017 Administration fees from direct awards The Authority recognized administration fees from direct awards at the point of award and not at the point the recipient of the direct award would have entered into a contract with the tenderer.

The Authority had no mechanism to monitor how direct awards were being executed and could not support the administration fees with signed contracts.
The Authority could not reliably measure administration fees at the point of award as the direct awards were prone to variations and cancellations.

As a result, the Authority wrote off US$2, 39 million due to inadequate contract information which resulted in failure to adequately collect amounts owing.
I therefore could not satisfy myself on the accuracy of administration fees amounting to US$1 514 280 (2016) and US$1 329 650 (2017) and the existence and valuation of related trade receivables amounting to US$2 380 983 (2016) and US$717 200 (2017).

7 Cash and cash equivalents I could not satisfy myself on the completeness and accuracy of the reported bank balance as some transactions were not posted to the cash books.
I was unable to verify through alternative means, the accuracy and validity of the disclosed cash balances as the Authority did not maintain separate cash books for the three bank accounts that it operated and the only CBZ bank account that was maintained out of the three was incomplete with only payments made and no receipts.

Payments made from CBZ bank account amounted to two million one hundred seventy-six thousand three hundred forty-six and twenty-eight cents (US$2 176 346.28).
Adverse opinion 2018 In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the financial statements do not present fairly, the financial position of the Procurement Regulatory Authority of Zimbabwe as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and in a manner required by the Public Procurement and Disposal of Public Assets Act [Chapter 22:23] and the Public Finance Management Act [Chapter 22:19].
Basis for Adverse Opinion Non-compliance with IAS 21 – The effects of changes in foreign exchange rate The Authority did not fully comply with the provisions of International Accounting Standard 21 “The effects of Changes in Foreign Exchange rate” as Statutory Instrument 33 of 2019 precluded the Authority from applying an independent assessment of functional currency as required by the accounting standard and in terms of the guidance provided by the Public Accountants and Auditors Board (PAAB).
The need to account for these effects emanated from the ‘multi-tiered’ pricing environment that was prevailing during the year under review, where settlement of transactions was dependent on the mode of payment, whether USD cash, RTGS, bond notes and mobile money.

Shortage of foreign currency also resulted in foreign exchange rate disparities between RTGS and US$.
This in turn affected the pricing structures to incorporate foreign exchange rate movements on the RTGS and bond notes, hence the need to comply with IAS 21 to reflect effects of these changes in the preparation of financial statements.

This ‘multi-tiered pricing environment resulted transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21 would apply.
Had the Authority complied with the requirements of IAS 21, many elements in the accompanying financial statements would have been materially affected.

The effects on the financial statements of the failure to comply with the requirements of IAS 21 have not been determined.
in As a result of these factors the directors performed an assessment on the functional currency of the Authority in accordance with IAS 21, The Effects of Changes in Foreign Exchange Rates (IAS 21), and acknowledged that the functional currency of the Authority was no longer the US$.
In February 2019, an electronic currency called the RTGS dollar was introduced through 8 Statutory Instrument 33 of 2019 with an effective date of February 22, 2019 and the currency commenced trading at a rate of 2.5 to the US$.

In addition, S.I 33 fixed the exchange rate between the RTGS dollar and the US$ at a rate of 1:1 for periods before the effective date.
Cash and cash equivalents I could not satisfy myself on the completeness and accuracy of the reported bank balance as some transactions were not posted to the cash books.

I was unable to verify through alternative means, the accuracy and validity of the disclosed cash balances as the Authority did not maintain separate cash books for the three bank accounts that were in use.
The only cash book that was maintained by the Authority from CBZ Bank account was incomplete with only payments made and no receipts.

Total payments made from CBZ bank account amounted to US$2 176 346.

Below is another material issue noted during the audit; 1 GOVERNANCE ISSUE 1.1 Cash and cash equivalents Finding The Authority operated a number of bank accounts.
The cash book maintained for one of the bank accounts was incomplete as it showed only payments made amounting to US$2 176 346 without any receipts yet the records (bank statements) showed that the Authority was collecting revenue.

In addition, the Authority did not maintain separate cash books for three other bank accounts that were in use.

I also noted that bank reconciliations were not being prepared for the accounts.

Risk / Implication Financial statements may be materially misstated.
Fraud, errors and omissions may go undetected.

Recommendation Proper cash books should be maintained and bank reconciliations prepared monthly.

Management response The observations were noted.

A new structure is being maintained which is meant to address the issue of cash books and bank reconciliations.

A process to engage a cash book clerk as well as acquiring an accounting software is underway.
9 ZIMBABWE NATIONAL ROAD ADMINISTRATION (ZINARA) 2018 Background information The Zimbabwe National Road Administration was established in 2001 by the Roads Act [Chapter 13:18] to administer the fixing, collection, management and disbursement of road administration funds.

The administration funds consist of road user charges collected.
The administration funds are disbursed to Local Authorities, Department of Roads and District Development Administration for the purpose of road maintenance, rehabilitation and construction.

I have audited the financial statements of the ZINARA for the year ended December 31, 2018.

I issued an adverse opinion with a material uncertainty related to going concern paragraph.
Adverse opinion on the Consolidated Financial Statements In my opinion, because of the significance of the matters discussed in the Basis for Adverse Opinion section of my report, the consolidated financial statements do not present fairly the consolidated financial position of the Group as at December 31, 2018 and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion on the Consolidated Financial Statements i) Non-compliance with International Accounting Standard (IAS) 21 The Group did not fully comply with the provisions of international Accounting Standard (IAS) 21, “The Effects of Changes in Foreign Exchange Rates”.

During the year the Zimbabwean economy was characterised by a multi-tiered pricing model.
Under the model, a single product had different prices depending on the mode of payment, whether United States Dollar cash, electronic money (RTGS), mobile money or bond notes.

This resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21, “The Effects of Changes in Foreign Exchange Rates” would apply.
Market wide, entities experienced premiums and discounts on the official foreign exchange rate of 1:1 between the RTGS balances and Bond Notes and the United States Dollar.

As a result of these factors the directors performed an assessment on the functional currency of the Group in accordance with IAS 21, “The Effects of Changes in Foreign Exchange Rates”, and acknowledged that the functional currency of the group was no longer the United States Dollar (US$).
In February 2019, a currency called the RTGS dollar was introduced through Statutory Instruments 33 of 2019 (S.I.

33) with an effective date of February 22, 2019 and the currency commenced trading at a rate of 2.5 to the US$.

In addition, S.I.

33 fixed the exchange rate between the RTGS dollar and the US$ at a rate of 1:1 for periods before the effective date.
Although the directors acknowledged that there was a functional currency change and that market exchange rate between the US$ and local currency was not 1:1, they have maintained their functional currency as the US$ and have presented the consolidated financial statements in US$ using an exchange rate of 1:1, in compliance with S.I.

33.

This 10 constitutes a departure from the requirements of IAS 21.
The effect of the non- compliance with IAS 21 has not been quantified, however, it is considered to be material and pervasive to these consolidated financial statements.

ii) Inappropriate revenue and receivables recognition The Group recognised revenue from vehicle licencing amounting to US$62 145 740 on a cash basis during the period under review.

As a result, vehicle licencing amounts received in advance were treated as revenue for the current period despite the fact that they relate to a future period.
The vehicle licencing system was not configured to split payments for the current period and for future periods.

Failure to recognise revenue in the appropriate accounting period and to carry out cut off procedures constitute a departure from International Financial Reporting Standards.

Management did not quantify and disclose the vehicle licensing revenue and receivables relating to future periods and management did not make any adjustments to that effect in the consolidated financial statements.
Accordingly, vehicle licensing revenue and receivables were materially misstated.

iii) Unrecorded liability related to non-compliance with tax legislation Infralink (Private) Limited received a garnishee order for understated Income Tax and Value Added Tax (VAT) of US$46 977 476 in 2015.

Management did not accrue for these amounts because they contend that the tax status of the Company is still to be established.
The effect of non-accrual of these tax obligations is an overstatement of retained earnings by US$46 977 476 and an understatement of US$46 977 476 in trade and other payables.

No tax assessments were performed for 2016, 2017 and the current financial year therefore there is potential additional exposure of 3 years.
iv) Non reconciliation of construction payables A difference of US$16 547 174 exists between the payables balance recorded in the ledger and the balances confirmed with creditors, the ledger balance being understated.

The variance is attributable to a long disputed balance owed to Group Five Construction (Proprietary) Limited.
I could not establish or corroborate the correct payable position that should be recorded by Infralink (Private) Limited and the Group as no creditors reconciliations were being maintained for the balance.
Material Uncertainty Related to Going Concern I draw attention to the fact that the Group incurred a net loss of US$70 688 881 (2017: US$74 256 939) for the year ended December 31, 2018 and, as of that date, the Group’s current liabilities exceeded its current assets by US$ 52 798 724 (2017: US$ 37 914 239).

These conditions indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern.
My opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements In my opinion, the consolidated financial statements of the Zimbabwe National Road Administration and its subsidiary have, in all material respects, been properly prepared in compliance with the disclosure requirements of the Roads Act [Chapter 13:18] and other relevant Statutory Instruments except for Section 15(d) of the Roads Act which states that the 11 Road Administration shall use the Road Fund in meeting any salaries, allowances and other expenses of the Road Administration provided that expenditure of this purpose shall not exceed two point five per centum (2.5%) of the revenue of the Road Fund in any financial year.
The Road Administration utilized 10% which is 7.5% above the percentage specified in the Roads Act.

Below are other material issues noted during the audit; 1 GOVERNANCE ISSUES 1.1 Board composition Finding The Roads Act [Chapter 13:18] requires that the Board comprises of twelve (12) board members.

However, the Administration operated with ten (10) members during the year under review.
I also noted that the Commerce and Industry sectors and Civic society were not represented in the board contrary to the Roads Act which requires the board members to be nominated in proportionate representation across sectors of the economy.

In addition, the Board composition failed to meet the gender equality requirements of the Public Entities Corporate Governance Act [Chapter 10:31] as the board had seven (7) men and two (2) women.
Risk / Implication Compromised service delivery as needs of certain sectors may not be considered.

Non-compliance with laws and regulations.

Recommendation The Administration should follow up with the parent Ministry to ensure the requirements of the governing Acts are met.

Management response Observation noted.

The appointing authority of the board is the Minister of Transport.

As ZINARA we will forward the recommendations as guided by the constitution to the appointing authorities.
1.2 Whistle blower facility Finding The Road Administration had a whistle blower policy which was approved on August 5, 2017.

However, there was no evidence that the policy was being implemented.

12 Risk / Implication Fraudulent activities may go undetected.

Recommendation The Administration should ensure that a whistle blower policy is implemented.

Management response Noted.

Whistleblowing policy is in place.


The administration now seeks to engage an independent player to manage the system where investigations can also be done after tip offs.

Currently Toll free lines are now in place for anonymous tip off and corruption reporting.

This will be in the interim managed by internal audit as the organisation makes efforts to recruit loss control and risk departments per the proposed new organisational structure.
1.3 Tollgate by-pass Finding I noted that there were instances of by-pass of the tollgate for example 22 miles, Lutumba, Chivi, Naude quarry.

Some of the by-pass roads showed that they were “passage” of by- passing tollgates.

I also noted that the barricades were being vandalized and the fence was cut, an indication that the motorists were determined not to pay the toll fees.

Risk / Implication Revenue leakages due to motorists by-passing the tollgates.
Recommendation The Administration should close the by-pass.

Management response Noted.

Toll bypass remain a challenge in tolling operations.

The efforts by ZINARA to close bypasses are evident.

The metal poles along the main roads were used to close some bypass.

In Mutare we had people creating roads to use for toll bypass.

This remains a challenge and collectively the Department of Roads and ZINARA have been closing the bypasses.
13 1.4 Automated vehicle counter system (Beitbridge border post) Finding The Administration installed an automated vehicle counting system at Beitbridge border post.

However, I noted that the system had not been functional since 2014.

As a result, vehicles that passed through the border post were being manually counted.

Risk / Implication Financial loss due to revenue leakages.
Recommendation The administration may need to consider the servicing of vehicle counter (s) or acquire a new system that is efficient.

Management response Noted.

The recommendations are welcome.

Alternatives to increase controls around the system are being considered by ICT department in the new system built to be introduced in 2020.
2 REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1 Licensing of vehicles on temporary plates Finding The Administration had no mechanisms to collect licenses for vehicles on temporary registrations.

Upon enquiry, the Administration indicated that due to non-availability of foreign currency, the vehicle central registry department has not been able to supply the registration plates.
As a result, vehicles with temporary plates were not licensed, and the Administration was not collecting revenue from those vehicles.

The temporary licenses were indefinite.

Risk / Implication Financial loss and service delivery were being compromised as the Administration will incur costs but not collecting revenue.

Recommendation Given that the temporary registrations are for an indefinite period, there is a need to find ways of licensing these vehicles.

14 Management response Noted.


The observation here as observed is not from a normal operating environment.

the country foreign currency shortages have impacted on the procurement cycle of the CVR number plates and the effects are being felt in ZINARA as well.

A temporary number plate is usually not supposed to go beyond 14 days.

We have started to consider prepayment of vehicle licensing for the new incoming vehicles.

The funds prepaid will eventually be used in the actual licensing.
System Developers are already considering this.

3 PROGRESS IN IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS I reviewed the progress made towards the implementation of prior year recommendations and found that the Administration made some progress and there was still room for improvement in the following areas; 3.1 Revenue recognition Recommendation Revenue should be measured on an accrual basis and cut off procedures should be applied to comply with IFRS.
Progress made System Developers have submitted initial report to enable compliance.

Revenue will now be matched with periods earned, the once off payments will be realized as deferred income until fully utilized over period spread.

3.2 Compliance with the Roads Act [Chapter 13:18] Recommendation The Administration should comply with the requirements of the Roads Act [Chapter13:18].
Progress made In response, ZINARA stated as follows: We acknowledge breach however going forward we are now lobbying with the Minister to consider provisions set in the ZIMCODE.

The ZIMCODE now provides for 30% for operations and 70% to service delivery.

This is the new negotiations basis now being put forward.
15 ZIMBABWE PARKS AND WILDLIFE MANAGEMENT AUTHORITY 2018 Background information Zimbabwe Parks and Wildlife Management Authority is incorporated in terms of the Parks and Wildlife Act [Chapter 20.14].

The functions of the Authority are to control, manage and maintain national parks, botanical reserves and botanical gardens, sanctuaries, safari areas and recreational parks.
I have audited the financial statements for Zimbabwe Parks and Wildlife Management Authority for the year ended December 31, 2018 and I issued an adverse opinion.
Adverse Opinion In my opinion, because of significance of the matter discussed in the Basis for Adverse Opinion section of my report, the financial statements do not present fairly, in all material respects, the financial position of Zimbabwe Parks and Wildlife Management Authority as at 31 December 2018, and its financial performance and the cash flows for the year then ended in accordance with International Financial Reporting Standards.
Basis for Adverse Opinion The Authority did not fully comply with the provisions of International Accounting Standard 21 “The effects of changes in Foreign Exchange rate as Statutory Instrument 33 of 2019 precluded the Authority from applying an independent assessment of functional currency as required by the accounting standard and in terms of the guidance provided by the Public Accountants and Auditors Board (PAAB).
The need to account for these effects emanated from the ‘multi-tiered’ pricing environment that was prevailing during the year under review, where settlement of transactions was dependent on the mode of payment, whether USD cash, electronic payment, mobile money or bond notes.

This ‘multi- tiered’ pricing environment resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21, would apply.
Had the Authority complied with the requirements of IAS 21, many elements in the financial statements would have been materially affected.

As a result, the impact of the Authority’s inability to comply with IAS 21 has been determined as significant.

The effects on the financial statements are considered material and pervasive to the financial statements as a whole.
Below are other material issues noted during the audit; 16 1 GOVERNANCE ISSUES 1.1 Board fees and allowances Finding There was no evidence to show that the monthly 300 litres of fuel per board member had been approved by the parent Ministry.

The fuel allowance was given from January to September 2018.

I also noted that the fuel allowance was not taxed.

In addition, I noted that management applied tax rates on board fees and sitting allowances which were lower than the prescribed withholding tax rate.
As a result, the tax deducted amounted to $1 252 instead of $8 655, leading to an underpayment of $7 403.

Risk / Implication Financial loss due to penalties which may be charged by ZIMRA for non-compliance.

Recommendation Management should advise the Board on compliance issues and where possible, frequent governance health checks should be carried out.

Management response Management has noted the observation.

Management had followed precedence set by the previous Board.
However, the practice has been stopped and the new Board that came in September 2018 is not getting the 300 litres of fuel per month that used to be given to the then board members.

A correction is going to be made on the type of tax that should be imposed on Board Members.

With effect from 1 May 2019, Board members will be subjected to correct withholding tax rate.
1.2 Advance payment Finding The former Chairperson of the Board was paid $3 500 board allowances in 2017 for services he was to provide in 2018.

The Board was terminated in February 2018 before the end of its tenure.

This advance payment had not been recovered by the end of 2018.

17 Risk / Implication Financial loss due to non-recovery of the outstanding amount.

Recommendation The Authority should recover the outstanding amount.
The Authority should consider paying allowances after services have been received.

Management response Audit observation has been noted.

The allowances paid in cash to the former Chairperson was supposed to be recovered when processing the Board allowances.

However, the tenure of the Board was terminated before recovering the advanced cash amount.
1.3 Custody of ammunition Finding The procurement, accounting and stores functions at Sebakwe Recreational Park were not properly segregated as the accounts clerk was performing these functions single handedly.

As a result, the accounts clerk was the custodian of ammunition at the station, a function supposed to be performed by the senior rangers.

In addition, the records between the ammunition issued and those returned from patrols were not properly maintained.
Risk / Implication Errors, omissions and illicit activities may not be detected on time.

Recommendation Duties should be properly segregated and proper ammunition records should be maintained.

Management response The observation has been noted.

Segregation of duties will be implemented by having one staff member from the Conservation Section to handle the ammunition.

This is going to be implemented with immediate effect.
18 1.4 Interest declaration Finding The Authority’s Board was composed of eight (8) members.

I noted that seven (7) of the eight (8) board members appointed in October 2018 had not declared their interests as required by the Public Entities Corporate Governance Act [Chapter 10:31].

In addition, one of those seven (7) members was also a director of a company which had entered into a lease agreement with the Authority on June 5, 2018 for a site located in Marongora Safari.
This company had outstanding fees amounting to $34 620 as at December 31, 2018.

Risk / Implication Decisions made by the Board may not be in the best interests of the Authority.

Recommendation The Authority should ensure that all board members declare their interests.

Management response Observation noted.

Board members have been availed with a declaration of interest register for filling and their signing.
Management is going to engage the concerned board member about the payment of the $34 620 by May 10, 2019.

1.5 Liquor license Finding The Chinhoyi Caves Motel was operating a bar without a liquor license or an exemption of such as required by the Liquor License Act [Chapter 14:12].

Risk / Implication The Authority may be charged penalties and fines due to non-compliance with laws and regulations.

Recommendation Management should comply with the requirements of relevant laws and regulations.
Management response Observation noted.

The Authority will apply for the Liquor license.

19 2 REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1 Lease receivables Finding The Authority had outstanding debtors amounting to $8 351 601 of which $6 860 778 (82%) was owing for over 365 days.

Some of these outstanding balances were lease rentals dating back to 2010.

However, there was no evidence that management had invoked the termination clause of the lease agreements.
Furthermore, some operators had either expired or unsigned lease agreements.

Risk / Implication Service delivery may be compromised due to financial resources tied in lease receivables.

The Authority may have no recourse should disputes arise on expired or unsigned lease agreements.

Recommendation Management should ensure that valid lease agreements are in place and efforts should be made to recover outstanding debts.
Management response Efforts have always been exerted to collect long outstanding debtors.

The current un- favourable economic conditions have resulted in some debtors finding it difficult to pay up.

Methods like service denial of services and handing over to the lawyers for collection have been employed.

Management is in the process of drafting a comprehensive debt recovery plan which shall be in place by the 30th of May 2019.
Further, management has created a Creditors Control section to deal with debtors and this should improve the rate of collection from 2019 going forward.

Management has noted the observation.

Our Business Development Division will ensure that all expired leases are renewed before they expire.

Leases expire at different times.


20 ZIMBABWE REVENUE AUTHORITY (ZIMRA) 2019 Background information The Zimbabwe Revenue Authority (ZIMRA) is constituted in terms of the Zimbabwe Revenue Authority Act [Chapter 23:11] of 1999.

Its core business is the collection of revenue for the Government of Zimbabwe, administration of trade and economic development in the region and beyond.
I have audited the financial statements of the Zimbabwe Revenue Authority for the year ended December 31, 2019 as well as the revenue returns.

I issued an adverse opinion on the Authority’s financial statements, a modified opinion with emphasis of matter paragraph on the Outstanding Revenue Return, unmodified opinion with an emphasis of matter paragraphs on the Revenue return, Revenue Written Off, Tax Reserve Certificates Return and Receipts and Disbursements return.
Opinion on the Authority’s financial statements Adverse opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph of my report, the financial statements do not present fairly the financial position of the Zimbabwe Revenue Authority as at December 31, 2019, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion The Authority translated its comparative financial statements and transactions for the period up to February 22, 2019 using an exchange rate of 1:1 for United States Dollar to RTGS Dollar as prescribed to entities through SI 33/2019.

In order to comply with Statutory Instrument 33 of 2019, issued on February 22, 2019, the Authority changed its functional currency with effect from this date.
Although the rate was legally pegged at 1:1, multiple pricing practices and other transactions observed and reported publicly indicated exchange rates other than 1:1 between RTGS and US$ amounts.

The exchange rates applied meet the legal requirements, but however did not meet the criteria for appropriate exchange rates in terms of IFRS as defined in IAS 21.
The financial statements of the Authority include balances and transactions denominated in USD that were not converted to ZWL at an exchange rate that reflects the economic substance of its values required by International Financial Reporting Standards (IFRS) IAS 21, which requires entities to use an appropriate exchange rate.
The official interbank exchange rate came into existence, through Exchange Control Directive RU 28 of 2019 issued by the RBZ in February 2019 and was initially pegged at a starting rate of 2.5.

Transactions and balances from February 22, 2019 were now translated using the interbank rates.

21 No assessment was carried out to show appropriateness of the interbank rate to the existing economic environment.
The interbank rate does not represent the price that can be received for foreign currency as many were unable to access foreign currency through the interbank market and immediate delivery of foreign currency could not be guaranteed.

As a result, the impact of the Authority’s inability to comply with IAS 21 on the financial statements had been considered material and pervasive to the financial statements as a whole.
Had the Authority applied the requirements of IAS 21, many elements of the inflation adjusted financial statements would have been materially adjusted.

The financial effects on the inflation adjusted financial statements of this departure have not been determined.
Opinion on Outstanding Revenue Return In my opinion, except for the possible effects of matters described in the Basis for Qualified Opinion paragraph, the Outstanding Revenue Return presents fairly, in all material respects, the Outstanding Revenue as at December 31, 2019.

Basis for Qualified Opinion i) ii) iii) iv) v) The SAP system allowed creation of duplicate contract accounts for the same revenue head under one business partner number.
Evidently, assessments by the Authority and payments from clients were being posted to the different contract accounts for the same business partner thereby distorting outstanding revenue for the individual business partners.

The SAP E-services platform was not charging civil penalties for some outstanding returns.

As a result, some business partners with outstanding returns were not charged civil penalties on all outstanding returns.
In addition, the SAP platform was incorrectly charging interest to some clients despite being up to date.

I could not establish the extent of the misstatement.

Tobacco levy returns were not submitted by some clients as required by the Income Tax Act [Chapter 23:06].

The clients’ account balances were in credit and this misrepresented the tax status of the clients.

Had the returns been captured, the credit balances would be cleared.

I could not establish the extent of the understatement.
The Authority introduced a Tax Amnesty waiving interest and penalties for late payments of tax arising prior to June 30, 2018.

As at December 31, 2019 all interest and penalties were yet to be reversed on the accounts of all approved clients.

I could not determine the total amount of penalties and interest to be reversed which was included in the Outstanding Revenue Return.
Removal in Transit (regional consignments) entries amounting to ZWL$30 699 543 (2018: ZWL$ 13 991 861) had not been acquitted as at December 31, 2019.

Some of the entries date back to the year 2015.

As a result, the extent of outstanding duty payable to be included in the outstanding revenue return could not be ascertained as some of the goods might have been consumed locally.
22 vi) Temporary Import Permits were issued to vehicles that were entering the country temporarily and these permits were expected to be acquitted before they expire.

As at December 31, 2019 there were 49 620 (2018: 35 210) electronic Temporary Importers Permits that had not been acquitted despite the fact that they had expired.

This figure excludes those permits that are manually issued which could not be established due to the weaknesses in the internal controls.
Some of the entries date back to the year 2013.

Some of the vehicles may have been localised as they are long outstanding compromising potential duty payable.
Emphasis of Matter I draw attention to the following: Change in functional and reporting currency On 20 February 2019, through the Monetary Policy statement, the Reserve Bank announced the introduction of the RTGS dollar effective February 22, 2019 as an official electronic currency and to be subsequently adopted as the functional and reporting currency for Zimbabwe.
Statutory Instrument 33 of 2019 prescribed that from the effective date that all RTGS balances previously expressed in United States dollars shall be deemed to be opening balances in RTGS dollars at par with the United States dollars.

The Authority thus converted prior year outstanding revenue to the RTGS dollar at a rate of 1:1.
In June 2019 the Zimbabwe dollar was reintroduced hence outstanding revenue denominated in foreign currency was converted using applicable interbank exchange rate as at December 31, 2019.

My opinion is not modified in respect of this matter.

Companies that are under liquidation and judicial management Included in the Outstanding Revenue Return is ZWL 9 315 125 which relates to amounts from companies under liquidation and judicial management.

The recoverability of the full amount is doubtful.


My opinion is not modified in respect of this matter.

Below are other material issues noted during the audit; 1 GOVERNANCE ISSUES 1.1 DOMESTIC TAXES 1.1.1 Tobacco levy returns Finding The legislation requires that Tobacco auctioneers submit returns within 48 hours from the date of sale.

However, auctioneers were not complying with this provision.
As a result, Tobacco levy returns were not being timely submitted for assessments in order for the account balances to be established.

Upon enquiry, management indicated that auctioneers were complaining of 23 huge compliance costs in relation to submission of returns within 48 hours.

Management also stated that initiatives were being taken to propose review of legislation.

Risk / Implication Misstatement of outstanding revenue.
Recommendation Management should continue engaging respective Legislative Authorities for the possible review.

Meanwhile, management should ensure that all auctioneers comply with the law.

Management response The proposed legislative changes to move returns within 48 hours to monthly was submitted to Ministry of Finance for consideration.

Management is following up with parent Ministry for promulgation.

The outstanding 35 returns are being followed for submission by 15 May 2020.
1.1.2 Tax clearance certificates Finding The tax legislation requires tax clearance certificates to be issued only to clients who are tax compliant.

The online tax clearance system was processing tax clearance certificates for all clients, including those who were not submitting returns (non-filers).

My audit revealed that this was caused by the system which was not configured to reject requests from non-filers.

Risk / Implication Loss of revenue.


Recommendation Management should ensure that the system is configured to reject tax clearance certificate requests from non-tax compliant customers.

Management response The Authority is following up all outstanding tax obligations and has introduced a number of publicity campaigns to enable wide coverage through electronic and press media.

Follow-ups are underway to regularise the outstanding compliance issues.
Management will consider system improvement to avoid similar circumstances.

24 1.1.3 Mining royalties Finding The Authority collected mining royalties through an appointed agent.

However, there were no procedures covering the agent-principal relationship.

The officers were using the generic procedure that required accounting for returns and payments.

I noted that the generic procedures did provide for timely reconciliations as a control measure.
As a result, the amounts of the submitted returns were based on reconciliations of payments and returns of royalties’ for the period January to September 2019.

Reconciliations for the returns covering the period from October to December 2019 were still being prepared as at March 16, 2020.

In addition, the reconciliations revealed differences that were being followed up by May 4, 2020.

Risk / Implication Loss of revenue due to errors and irregularities that may not be detected on time.
Recommendation Management should consider designing procedures to manage the agent-principal relationship.

Reconciliations for mining royalties should be done on time.

Management response Management will review the work process to ensure timely follow ups on royalties.

Reconciliations for 2019 are now up to date.


1.2 CUSTOMS AND EXCISE 1.2.1 Removal in Transit (RITs) Finding The Asycuda system was not configured to timely detect declarants with outstanding obligations for Removal in Transit (regional consignments) entries.

The Authority was not calling for guarantee once the acquittal period lapsed.

As a result, RIT entries amounting to US$30 699 543 (2018: US$12 005 819) had not been acquitted as at December 31, 2019.
Some of the entries dated back to the year 2015 and calling of guarantee for some was no longer possible because the sureties were no longer in business.

Ordinarily, these entries should have been acquitted within the prescribed period of 3 days with possible extension when the importer experiences a breakdown.

Risk / Implication Loss of revenue.

Outstanding revenue return may be materially misstated.
25 Recommendation The Authority should consider improving the process of clearing RITs and ensure guarantees are called on time once the acquittal time lapses.

Management response Observation noted.

Although the system cannot automatically flag expired RIT entries, reports of outstanding entries can be generated.

Generated reports for expired RIT entries were used to follow up agents and sometimes transporters to acquit the entries.
Follow up action done resulted in duplicated entries being cancelled, revenue being paid up and bonds being called up.

The system currently provides for diversion of a transit consignment into consumption whereby the clearing agent notifies ZIMRA and the necessary clearance procedures for payment of duty commence.
At the moment, the use of the electronic cargo tracking system (ECTS) has improved the control and monitoring of the movement of transit cargo whereby all sealed vehicles (transporter) use a geo-fenced route from port of entry to port of exit and are easily monitored.

For those trucks released without sealing, a list is compiled and sent to the port of exit to be on the lookout for them.

However, the large amount of outstanding entries (RITs) are mostly due to double clearances and cancelled orders.
Beitbridge has been able to reduce a huge chunk of the outstanding RIT through process of cancellations.

Most previous year entries that are still outstanding are due in part to: Some entries failing to cancel due to system technical challenges that are currently being looked into by ICT.
Clearing agents that have closed business; The Asycuda Clearing Agents Registration Module has also improved compliance as the automated registration process will not process the registration of an Agent who has outstanding RIT Calling up of bonds from principals and guarantors who are still active and some Insurance companies have closed business.
Tremendous progress has been made in 2019 as evidenced by the authority having only 52 outstanding entries with a potential debt of $ 7,062,048.03 for the period under review.

26 1.2.2 Temporary Imports Permits of Tourists’ Vehicles (TIPs) Finding The Authority’s TIP system was not configured to detect vehicles that had expired TIPs when issuing new TIPs.

As a result, some applicants had multiple outstanding TIPs.
In addition, the system did not capture the applicant’s details such as addresses and full names to allow the Authority to detect applicants with outstanding TIPs.

From a total of 35 000 TIPs analysed, 50% had initials and some had no proper address.

I also noted that the system did not have capacity to process TIPs during peak periods, hence, the Authority ended up resorting to manual processing of TIPs resulting in some applicants having multiple TIPs.
This led to increased number of TIPs that were not acquitted.

As at December 31, 2019, there were 49 620 (2018: 35 210) electronic Temporary Importers Permits that had not been acquitted despite the fact that they had expired.

Some of the entries dated back to the year 2013.

These excludes the manual TIPs that were issued during peak periods.

The manual outstanding TIPs could not be ascertained as the process of matching the originals to the acquittals was ongoing.
Risk / Implication Loss of revenue due to irregular use of TIPs.

Recommendation The system should be configured to detect expired TIPs.

The system should be improved to allow for adequate customer details to be captured.

Management response Observation noted.

The Authority will continue making follow ups on the outstanding TIPs with other border posts, checking on whether vehicles exited through any of the Ports of Entry for the acquittal process.
The process also involves writing follow up letters to each client using the local and foreign address provided on the TIP.

Strategy of data matching of future entries of the same vehicle is used to acquit outstanding TIP’s.

Follow ups by the third man’s office who writes to other ports/ writes to tourist foreign address, etc.

However, those efforts are also being hampered by an inefficient postal system to send mails to foreign addresses.
Currently we are using data matching to acquit multiple prior outstanding TIP by latest outstanding TIP.

It is only effective for vehicles, which have made subsequent entry.

The Authority is also pursuing the engagement of other foreign authorities.

27 The Authority rolled out the E-TIP platform to register TIPs before arrival of tourist at the border to ease pressure on officers and minimize/eliminate the possibility of manual TIPs.
However, it is the slow take up of this facility by foreigners which is slowing down its full implementation.

An aggressive improvement in its marketing and the availability of new computers and printers will improve its efficiency.

Currently there is no MOU between ZIMRA and ZINARA on possible blocking of vehicles with outstanding TIPs by Registration number plates at tollgates.
The Station is also exploring ways of engaging other Revenue Authorities on the outstanding TIPs vehicles if they can assist, but the volumes are high such that it might not be possible to get all the information at once.

The Authority is also exploring review of legislation and the use of automatic acquittal by way of Registration number readers at point of exit as opposed to human intervention.
1.2.3 Report Orders Finding The Authority granted report orders that required importers to clear their imported goods within seven (7) days.

However, I noted that some goods were not cleared within the stipulated period.

For some of the report orders, the total value of goods imported and not yet acquitted as at December 31, 2019 were over $54 million (2018: $102 million).

Some of these report orders dated back to the year 2012.
There was no evidence to support that the importer sought and was granted an extension.

Risk / Implication Revenue leakages through potential misuse of the report order system.

Recommendation Continuous follow ups should be done on the outstanding report orders to be cleared.

Management response Observation noted.

Management has been and continues to engage Government Departments to expedite the acquittal of outstanding report orders.

This has improved on acquittals of recent Report Orders.
2 PROGRESS IN IMPLEMANTATION OF PRIOR YEAR RECOMMENDATIONS I reviewed the progress made towards the implementation of prior year recommendations and found that the Authority made some progress.

However, there was room for improvement in respect of the following recommendations 28 2.1 Board Composition Recommendation The Authority should continuously engage the Ministry of Finance and Economic Development for additional members to be appointed to the Board.
Board size, diversity and demographics should also be considered on the appointment of Board of Directors.

Progress made This was partially addressed when the Minister appointed one more member to the Board in September 2019.

There is however still a gap.

The Minister advised, at a meeting he held with the Board on 18 December 2019, that he is going to appoint two more members to the Board.

The members are still to be appointed.

Partially addressed.


The additional member appointed to the Board in September 2019 is female.

The Board requested the Minister to observe the gender balance requirement as he appoints two additional members to the Board.

The Minister was requested to consider appointing additional members with knowledge and experience in accounting and law as he appoints two more members to the Board.

It is hoped that this will be addressed when more members are appointed to the Board.
2.2 Mining Royalties Collection Recommendation The Authority should design policies and procedures to allow it to regularly visit mining entities and verify quality and quantities of minerals declared by these entities in their returns.

Progress made When audits are undertaken, DTI 20 procedures is followed which compels the authority to verify the quality and quantities of minerals against declarations.

Customs exports information is utilized as part of the verification process.
In order to enhance understanding of the mining sector and collection of royalties, ZIMRA is having direct meetings and reconciliations with large miners and MMCZ.

29 PUBLIC ENTITIES UNDER THE CATEGORY OF BOARDS 30 GRAIN MARKETING BOARD (GMB) 2018/2019 Background information The Grain Marketing Board was incorporated in terms of the Grain Marketing Board Act [Chapter 18:14].
The Board’s main activities are buying and storing of grain, manufacturing of silo products and managing of the Strategic Grain Reserve and the Input Scheme on behalf of the Government of Zimbabwe.

I have audited the financial statements of the Grain Marketing Board for the year ended March 31, 2019 and I issued an adverse opinion.
Adverse Opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph of my report, the accompanying financial statements do not present fairly the financial position of Grain Marketing Board as at March 31, 2019, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion Non-compliance with International Accounting Standard (IAS) 21 “The effects of changes in foreign exchange rates” i) Exchange rates The Board translated its comparative financial statements using the interbank rate which came into existence on February 22, 2019 through Exchange Control Directive RU 28 of 2019 issued by the Reserve Bank of Zimbabwe.
The Board used February 22, 2019 as the date of change in functional currency and translated its foreign denominated balances to ZWL using the February 22, 2019 interbank rate.

The Board has not been able to assess the appropriateness of use of the interbank rate in achieving fair presentation primarily due to the need to comply with SI 33 and also the fact that there were no official exchange rates between October 2018 and February 2019 due to lack of an observable foreign exchange market.
Additionally, the introduction of the interbank rate occurred after a period of foreign currency scarcity and constrained exchangeability of bond notes, coins and electronic money to other foreign currencies.

In substance, the immediate delivery of foreign currency could not be guaranteed which impinged on the underlying concept of closing rates and definition of spot rates.
This therefore impacts the basis for measuring transactions between October 2018 and February 2019, valuation of assets and liabilities as well as the accounting for exchange differences.

The Board applied the prevailing interbank rate in revaluing its property, plant and equipment as at March 31, 2019.
In that regard, the Board has not been able to comply with the requirements of IAS 21. ii) Date of change in functional currency Grain Marketing Board adopted February 22, 2019 as date of change in functional currency despite the existence of evidence that the chosen date may not be appropriate.
Based on 31 International Accounting Standard 21 (IAS 21) “The Effects of Changes in Foreign Exchange Rates”, the functional currency of an entity is the currency of the primary economic environment in which the entity operates and reflects the underlying transactions, events and conditions that are relevant to it.

Zimbabwe witnessed significant monetary and exchange control policy changes in 2016 and increasingly through to 2019.
The Reserve Bank of Zimbabwe (RBZ) together with the Ministry of Finance and Economic Development promulgated a series of exchange control operational guidelines and compliance frameworks during this period.

In particular, there was a requirement for banks to separate local Foreign Currency Accounts (FCAs) (RTGS$) from the FCA Nostro US$ Accounts effective October 01, 2018.
Although the rate was legally pegged at 1:1, multiple pricing practices and other transactions observed and reported publicly indicated exchange rates other than 1:1 between RTGS$ and US$.

In February 2019 there was a Monetary Policy statement which introduced RTGS$ and the interbank foreign exchange market.

These events triggered the need for the entity to assess whether there was a change in functional currency (from US$ to ZWL) and whether the 1:1 ZWL:US$ exchange rate was appropriate.
Due to the fundamental nature of the issues raised and interplay of variables within the existing economic environment, I have not been able to determine the extent of misstatements and any adjustments that would have been necessary to correct the effect of non-compliance with IAS 21 however, it is considered to be material and pervasive to these financial statements.

Below are other material issues noted during the audit; 1 GOVERNANCE ISSUES 1.1.
Grain Imports Finding The Board contracted a local company to import 10 000 metric tonnes (mt) of maize on its behalf.

An advance payment of US$3 900 000 was made for 10 000mt to facilitate the imports.

The company delivered 3 800mt of grain worth US$1,482,000 leaving a balance of 6 200mt.

However, the contract was amended for the supplier to deliver soya beans instead of maize.

The company subsequently delivered soya beans worth US$ 1 418 000.
A reconciliation of the value of maize and soya beans received to what the supplier had been paid revealed that soya beans worth US$ 1 000 000 had not been delivered.

Risk / Implication Financial loss to the Board.

Recommendation The Board should ensure that the supplier makes good their performance side of the contract.

32 Management response The supplier was paid $3,900,000.00 through Escrow account for 10,000 metric tons.
They supplied 3,800 tons of maize, value $1,482,000 and 4,836 tons of soya beans, value $1,418,000.

1.2.

Construction of hardstands Finding The Board made a request to the Ministry of Finance and Economic Development for funding to finance construction of 100 hardstands (paved surfaces).

The Ministry availed US$6.5 million at the beginning of the year 2018, which could construct 90 hardstands.

As at March 31, 2019, the Board had constructed only 39 hardstands.
Risk / Implication Service delivery may be compromised.

Recommendation The Board should conduct adequate project due diligence to ensure efficient utilization of availed funds.

Management response In 2017 GMB applied for funding to construct 36 hardstands.

However, in January 2018 Treasury availed $6 500 000 dollars which was more than the requested amount for 36 hardstands.

The contracts for the 36 hardstands were signed in January 2018 and the works commenced.
GMB was not ready to start immediately the construction of the other 64 hardstands.

The GMB had to go through the process of surveying, design, tendering and contract awarding.

The contracts for these hardstands were eventually signed in October 2018.

Due to these delays, the money had already been eroded due to the inflationary environment prevailing in the country.
2 PROGRESS IN IMPLEMENTATION OF PRIOR RECOMMENDATIONS I reviewed the progress made towards the implementation of prior year recommendations and found that the Board made some progress.

However, there was some room for improvement in respect of the following recommendations; 2.1 Outstanding purchased grains Recommendation The Board should pursue the delivery of the 2 467mt of maize.
33 Progress made Legal opinion to guide recovery of the maize was sought from Kantor and Immerman who advised that GMB engages Score Holdings.

Engagements with both Score Holdings and Aurora are in progress.

Aurora is said to be under liquidation.

Chiripula, another party involved in the transaction was wound up.

There may be need to have the debt written off as there are no prospects of recovery.
2.2 Depot to depot transfer Recommendation The board should develop a policy on normal losses for benchmarking variances.

Progress made Management is working on revised acceptable tolerable limit for reading between weighbridges.

The weighbridges are regularly assized in line with Trade Measures Regulations Act.

of 1982.

The policy document is under review.


34 TOBACCO INDUSTRY AND MARKETING BOARD (TIMB) 2018 Background information The Board was established in terms of the Tobacco Marketing and Levy Act [Chapter 18:20].

The mandate of TIMB is to control, regulate and promote the marketing of tobacco as well as to produce and collate statistics relating to, the marketing, manufacture and consumption of tobacco in Zimbabwe.
I have audited the financial statements of the Tobacco Industry and Marketing Board for the years ended December 31, 2017 and 2018 and I issued an unmodified/clean opinion and an adverse opinion respectively.
Adverse opinion 2018 In my opinion, because of the significance of the matter described in the basis for adverse opinion section of my report, the financial statements do not present fairly the financial position of Tobacco Industry and Marketing Board as at December 31, 2018, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Tobacco Industry and Marketing Act [Chapter 18:20].
Basis for adverse opinion The financial statements were presented in United States Dollars in compliance with Statutory Instrument 33 and other laws, the directors acknowledged that there was a functional currency change and the market exchange rate between the US$ and local currency was not 1:1.

This constitutes a departure from the requirements of IAS 21 The effects of changes in foreign Exchange Rates.
Given that new currency came into being after year end, the US Dollar would not have been appropriate functional currency on the basis of the exchange rate prescribed in the Statutory Instrument and would therefore not achieve fair presentation for the Board financial statements and its circumstances as described by the directors.

The financial statements consequently do not comply in full with the requirements of IAS 21.
Below is another material issue noted during the audit; 1 GOVERNANCE ISSUE 1.1 Board fees and allowances Finding The entity paid sitting fees and other allowances to board members.

However, there was no evidence to support that the allowances were approved by the parent Ministry.

On enquiry management stated that a letter was sent to the Ministry in 2013 but no response was obtained for the approval of the allowances.

35 Risk / Implication Financial loss due to payment of unauthorised allowances.
Recommendation The Board should ensure that approval is granted for all allowances paid to the board members.

Management response Ministry approval for board members’ fees was sought in April 2013, for the current rates being paid, which were effective 1/1/2013.

No response was received from the Minister.

The decision to review board fees was guided by consultants, and a Non- Executive Directors Remuneration survey done in December 2012.
Members knew they were operating in an industry with higher salaries and benefits, but they have never tried to match those levels.

Management is constantly engaging the Ministry for requisite approvals.

36 PUBLIC ENTITIES UNDER THE CATEGORY OF COMMISSIONS 37 FORESTRY COMMISSION OF ZIMBABWE 2018 Background information The Forestry Commission was incorporated under statute in Zimbabwe by the Forest Act [Chapter 19:05].
The Commission’s main activities include the management, protection and utilization of state indigenous forests, research, training, advisory and extension services, national and regional planning.

I have audited the financial statements of the Forestry Commission of Zimbabwe for the year ended December 31, 2018 and I have issued an adverse opinion with an emphasis of matter paragraph.
Adverse Opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the accompanying financial statements do not present fairly, the financial position of the Forestry Commission of Zimbabwe as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion The Commission did not fully comply with the provisions of International Accounting Standard 21 “The Effects of Changes in Foreign Exchange Rates” as Statutory Instrument 33 of 2019 precluded the Commission from applying an independent assessment of functional currency as required by the accounting standard and in terms of the guidance provided by the Public Accountants and Auditors Board (PAAB).
The need to account for these effects emanated from the multi-tier pricing environment that was prevailing during the year under review, where settlement of transactions was dependent on the mode of payment, whether US$ cash, RTGS, bond notes/coins and mobile money.

Shortage of foreign currency also resulted in foreign exchange rate disparities between RTGS and US$.
This in turn affected the pricing structures to incorporate foreign exchange movements on the RTGS and bond notes, hence the need to comply with IAS 21 to reflect the effects of these changes in the preparation of financial statements.

This ‘multi-tiered’ pricing environment resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21 would apply.
Had the Commission complied with the requirements of IAS 21, many elements of the financial statements would have been materially affected.

As a result, the impact of the Commission’s inability to comply with IAS 21 has been determined as significant hence the effects on the financial statements as a whole are considered material and pervasive.
38 Emphasis of matter The Commission incurred a deficit of $102 297 (2017: $3 167 194) for the year ended December 31, 2018 and a net liability position of $5 437 293 (2017: $5 929 282) as at December 31, 2018.

These conditions, indicate the existence of material uncertainty which may cast significant doubt on the Commission’s ability to continue as a going concern.
Below are other material issues noted during the audit; 1 EMPLOYMENT COSTS 1.1 Medical aid Scheme Finding The conditions of service for staff required the employer to provide a one hundred percent (100%) medical aid cover for all permanent employees.

However, the Commission was not honouring this obligation.

As a result, in the event of illness the employees brought quotations from medical suppliers for the Commission to settle the bills.

The amount paid for such claims was $97 712.


On enquiry, management stated that the Commission was facing financial challenges, hence could not honour its obligations as per the conditions of service.

Risk / Implication Financial loss as possible fraudulent claims may be submitted.

Recommendation The Commission should implement strategies that will assist in improving its financial situation.
The Commission should engage service providers and come up with payment plans that will ensure that employees will get the required medical services.

Management response Current arrangement adopted as a stop gap measure in the face of financial challenges rendering Forestry Commission unable to fund conventional medical insurance.

The company will return to medical aid once financial situation improves.
39 1.2 Pension Finding The Commission was not remitting pension contributions during the year under review.

Retiring employees were failing to access their pension benefits because of outstanding payments at the Pension Office.

As a result, the Commission resorted to re-engaging employees who had reached the pensionable age of sixty-five (65) years on contract basis as a stop gap measure.

Risk / Implication Failure to access pension benefits by employees upon retirement.
Recommendation Management should ensure that both current and outstanding pension contributions are paid up.

Management response Process underway to clear arrears with some substantial amounts having been paid to date.

40 ZIMBABWE ELECTORAL COMMISSION 2016 - 2018 Background information Zimbabwe Electoral Commission was established in terms of section 100B of the Constitution of Zimbabwe No.

19 as amended.
19 as amended.

The objects of the Commission are to prepare for, conduct and supervise elections to the office of the President and to Parliament; and elections to the governing bodies of local authorities; and referendums; and to ensure that those elections and referendums are conducted efficiently, freely, fairly, transparently and in accordance with the law; I have audited the financial statements of the Zimbabwe Electoral Commission, for the years ended December 31, 2016, 2017 and 2018.
I issued an unmodified/clean opinion for 2016 and 2017 and an adverse opinion for 2018.
Adverse Opinion 2018 In my opinion, because of the significance of the matter discussed in the Basis for Adverse opinion section of my report, the accompanying financial statements do not present fairly, in all material respects, the financial position of Zimbabwe Electoral Commission as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion 2018 The Commission did not fully comply with the provisions of International Accounting Standard 21 “The Effects of Changes in Foreign Exchange Rates” as Statutory Instrument 33 of 2019 precluded the Commission from applying an independent assessment of functional currency as required by the accounting standard and in terms of the guidance provided by the Public Accountants and Auditors Board (PAAB).
The need to account for these effects emanated from the multi-tier pricing environment that was prevailing during the year under review, where settlement of transactions was dependent on the mode of payment, whether US$ cash, RTGS, bond notes/coins and mobile money.

Shortage of foreign currency also resulted in foreign exchange rate disparities between RTGS and US$.
This in turn affected the pricing structures to incorporate foreign exchange movements on the RTGS and bond notes, hence the need to comply with IAS 21 to reflect the effects of these changes in the preparation of financial statements.

This ‘multi-tiered’ pricing environment resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21 would apply.
Had the Commission complied with the requirements of IAS 21, many elements of the financial statements would have been materially affected.

As a result, the impact of the Commission’s inability to comply with IAS 21 has been determined as significant hence the effects on the financial statements as a whole are considered material and pervasive.
Below are material issues noted during the audit; 41 1 REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 1.1 Contract management Finding The Commission was yet to recover $105 000 from a supplier, for computers it had acquired in 2016 as the initial delivery of the same was rejected on the grounds that they did not meet the required specifications.

Risk / implication Financial loss to the Commission as the funds may not be recovered.
Recommendation Management should make follow ups with a view of concluding the matter.

Management response The observation is noted and management will, in liaison with the Commission lawyers, institute proper handling of the matter as advised by audit.

The issue is before legal recourse hence we may still need to stand guided so that any positive outcome will put the matter to rest.
2 PROCUREMENT OF GOODS AND SERVICES 2.1 Tender for surge protectors Finding The Commission invited tenders for the supply of 3 400, 4-way surge protectors.

I noted that the tender was awarded to a company which did not meet the set specifications as it had disclosed in its quotations that it only had APC surge 5 outlets with phone protection and not the 4-way surge protectors as specified in the invitation for tender.
The Commission made an order for the company to supply 3 400 APC surge 5 surge protectors.

However, the company did not supply the surge protectors as per the order, but delivered 2 400 AE, 4-way and 1 000 APC 5 surge protectors.

Risk / Implication Violation of tender procedures that may attract penalties from the relevant authorities.

Recommendation The Commission should adhere to tender procedures and regulations 42 Management response The observation is noted.
A tender for the supply of 3400 4-way surge protectors was awarded to the said company.

The company supplied 1000 APC 5-way and 2400 AE 4- way surge protectors.

Various anomalies were observed on the tender and payment was suspended until a meeting was held with the supplier.
In the meeting held with the supplier’s representatives in the CEO’s office on 30 January 2018 where the CEO, Chief Legal Officer, Chief Internal Auditor and Director Administration represented the Zimbabwe Electoral Commission (ZEC).

The supplier explained the reason for the varied delivery due to market situation.

The meeting agreed to retain the price of the 1000 APC 5-way surge protectors at $38.00 and reduce the price of the 2 400 AE 4-way surge protectors from $38.00 to $35.00.
This reduced the amount payable by $7 200.00 from $129 200.00 (One Hundred and Twenty- Nine Thousand, Two Hundred Dollars) to $122 000.00 (One Hundred and Twenty-Two Thousand Dollars).

The supplier submitted a revised invoice on 31 January 2018 and payment was processed.

Indeed, a review of the whole procurement process was done to ensure the observed flaws were closed.

The Procurement Management Unit (PMU) is now in place.
43 PUBLIC ENTITIES UNDER THE CATEGORY OF COUNCILS 44 NATIONAL AIDS COUNCIL 2018 Background Information The National Aids Council was established in terms of the National AIDS Council Act [Chapter 15:14].

The main business of the Council is that of coordinating, stimulating, monitoring and mitigating an expanded epidemic, taking into account the comparative advantages of the different actors.
I have audited the financial statements of the National Aids Council for the year ended December 31, 2018 and I issued an adverse opinion.
Adverse Opinion In my opinion, because of the significance of the matters discussed in the Basis for Adverse opinion section of my report, the financial statements do not present fairly, in all material respects, the financial position of the National Aids Council as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion The Council did not fully comply with the provisions of International Accounting Standard 21 “The Effects of Changes in Foreign Exchange Rates” as Statutory Instrument 33 of 2019 precluded the Council from applying an independent assessment of functional currency as required by the accounting standard and in terms of the guidance provided by the Public Accountants and Auditors Board (PAAB).
The need to account for these effects emanated from the multi-tier pricing environment that was prevailing during the year under review, where settlement of transactions was dependent on the mode of payment, whether US$ cash, RTGS, bond notes/coins and mobile money.

Shortage of foreign currency also resulted in foreign exchange rate disparities between RTGS and US$.
This in turn affected the pricing structures to incorporate foreign exchange movements on the RTGS and bond notes, hence the need to comply with IAS 21 to reflect the effects of these changes in the preparation of financial statements.

This ‘multi-tiered’ pricing environment resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21 would apply.
Had the Council complied with the requirements of IAS 21, many elements of the financial statements would have been materially affected.

As a result, the impact of the Council’s inability to comply with IAS 21 has been determined as significant hence the effects on the financial statements as a whole are considered material and pervasive.
Below is another material issue noted during the audit; 45 1 GOVERNANCE ISSUE 1.1 Antiretroviral drugs payables Finding The Council had not settled $7 054 631 owing to antiretroviral drugs suppliers as at December 31, 2018.

My enquiry with management revealed that the Council was facing challenges with obtaining foreign currency.
Below is a list of such suppliers: Supplier Supplier 1 Supplier 2 Supplier 3 Supplier 4 Supplier 5 Supplier 6 Supplier 7 Supplier 8 TOTAL Risk / Implication Amount ($) 98 958 4 681 071 112 896 223 228 940 428 496 200 499 983 1 867 7 054 631 Service delivery may be compromised as credit supplies may not be offered in future.

Recommendation The Council should continuously engage the Reserve Bank of Zimbabwe through Treasury, for foreign currency allocation to procure antiretroviral medicines.
Management response Observation noted.

The Council has already engaged the Reserve Bank of Zimbabwe, Ministry of Health and Child Care and Ministry of Finance so that foreign currency can be availed.

46 ZIMBABWE SCHOOL EXAMINATIONS COUNCIL (ZIMSEC) 2018 Background information The Council was established in terms of the Zimbabwe School Examinations Council Act [Chapter 25:18].
Its core mandate is to organize and conduct examinations for primary and secondary education and award certificates and to review rules and regulations relating to examinations.

I have audited the financial statements of Zimbabwe School Examinations Council for the year ended December 31, 2018 and I issued an adverse opinion.
Adverse opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse opinion section of my report, the financial statements do no present fairly, in all material respects the financial position of Zimbabwe School Examination Council as at December 31, 2018 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion The Council did not fully comply with the provisions of International Accounting standard 21 “The effects of Changes in Foreign Exchange rate”.

The need to account for these effects emanated from the ‘multi-tiered’ pricing environment that was prevailing during the year under review, where settlement of transactions was depended on the mode of payment, whether USD cash, RTGS, bond notes and mobile money.
This ‘multi-tiered’ pricing environment resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21 would apply.

Had the Council complies with the requirements of IAS 21, many elements in the accompanying financial statements would have been materially affected.

As a result, the impact of the Council’s inability to comply with IAS 21 has been determined as significant.
The effects on the financial statements are considered material and pervasive to the financial statements as a whole.

Below are material issues noted during the audit: 1 GOVERNANCE ISSUES 1.1 Purchase of motor vehicles Finding Zimbabwe School Examinations Council (ZIMSEC) entered into a contract with a local motor vehicle supplier on June 12, 2017 for the supply and delivery of three brand new Toyota Hilux D/Cab 3.0 D4D 4X4 vehicles at a total cost of US$215 082.
My audit revealed that the Council received Toyota Hilux D/Cab 2.8 D4D 4X4 vehicles instead of the 3.0 litre trucks specified in the contract.

Enquiries with management revealed that the 3.0 litre engines were no longer available for the region.

47 No evidence was availed to support the subsequent variation of the tender specifications.

In the absence of the amended contract, I could not ascertain whether any price variations due to changes in specifications were necessary.
Risk / Implication Financial loss due to inconsistences in contract and actual specifications.

Recommendation Management should ensure that tender and contract specifications are adhered to.

Management response We were advised that upon payment technical production of the 3.0 litre had stopped and instead the 2.8 litre was now in production.

The reduction in capacity on its own appears not to be the only price determinant.
Council was satisfied that a better model from a performance and technical advancement perspective was received at the cost of the discontinued 3.0 litre model.

1.2 Acting appointments Finding I noted that in February 2018, the Board Chair approved the appointment of the Corporate Affairs Secretary to act as both Assistant Human Resources Director and Deputy Director.
The Assistant Human Resources grade structurally reports to the Deputy Director and is also in the same level as that of the Corporate Affairs Secretary.

This arrangement effectively resulted in one individual having overall responsibility for three executive positions.
On inquiry as to why the acting appointment included both a lateral and vertical positioning, management indicated that this was caused by lack of individuals with institutional memory and the employee appointed had the capacity to carry forward the business of the organization.

However, I noted that in April 2018 another employee was appointed to act as Assistant Human Resources Director.
Furthermore, the Corporate Secretary was paid an Honorarium amount of US$750 for Acting as Assistant Human Resources Director.

There was no evidence to show that this Honorarium arrangement was provided for in the Council’s policies.

Risk / Implication Override of controls due to one person occupying most critical roles in the Council.

Recommendation Management should ensure adequate segregation of duties especially in key positions.
48 Management response The Board Chairman signed a letter communicating a Board decision appointing the Corporate Affairs Secretary in the capacities mentioned.

The appointments and rearrangements were considered to be in the best interests of the organization.

Sensitivities around the period militated against different/alternative appointment models.

The USD750 honorarium was determined by the Board and established as the policy position in response to the unique situation at hand.
1.3 Security compensation I noted that the Corporate Secretary was paid $10 709 as security allowance in 2018 whilst acting as Deputy Director of the Council.

A review of policies availed to the audit revealed that no such allowance was catered for in the Council’s policies.

Security personnel were still deployed at the former Acting Deputy Director’s premises after the post had been subsequently filled.

Risk / Implication Financial loss.


Recommendation The Council should pay benefits in line with policies of the organisation.

Management response A Board decision was made to avail security to the incumbent’s premises.

This decision is in tandem with benefits applicable to the Deputy Director role in which incumbent was acting.

Following this approval, deployment of security was delayed.

Council subsequently reimbursed expenses incurred by incumbent after authorization but before deployment.
After appointment of a substantive Deputy Director, the Board approved continued deployment of security for the incumbent until March 2020.

49 2 PROCUREMENT OF GOODS AND SERVICES 2.1 Procurement process Finding I noted that ZIMSEC signed contracts with suppliers before the procurement process was finalized.

Some contracts were signed with suppliers before the certification of the tender evaluation and technical committee’s recommendations by the Director.
The table below refers: Date report the Director evaluation signed by Date of signing Contract Value ($) the contract 17/09/2018 10/09/2018 498 760 28/11/2018 24/09/2018 442 330 941 090 Tender number Description ZIMSEC A3 003/2018 Paper Bond ZIMSEC 004/2018 Tamper evident security Total Risk / Implication Non-compliance with procurement regulations.

Recommendation Management should ensure that all contracts are signed after all stages of tendering process have been cleared by the accounting officer.
Management response Observed shortcomings are acknowledged.

Process flows that resulted in these issues will be corrected immediately.

50 PUBLIC ENTITIES UNDER THE CATEGORY OF COMPANIES AND CORPORATIONS 51 CHEMPLEX CORPORATION LIMITED AND ITS SUBSIDIARIES 2018 AND 2019 Background information Chemplex Corporation Limited is the largest fertilizer and chemical manufacturing company in Zimbabwe.
The company mines and beneficiates phosphate rock which is used in the manufacture of fertilizers and also manufactures sulphuric acid which is then converted to other industrial chemicals.

The Corporation has six companies namely ZimPhos, Dorowa, Chemplex Marketing, Chemplex Animal & Public Health, GD Haulage and G&W Industrial Minerals.
I have audited the financial statements of Chemplex Corporation and its subsidiaries for the year ended December 31, 2018 and 2019 and I issued an adverse opinion with an Emphasis of Matter paragraph.
Adverse opinion 2018 In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the consolidated and separate financial statements do not present fairly the financial position of Chemplex Corporation Limited (the Company) and its subsidiaries (together the Group) as at December 31, 2018, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and in the manner required by the Zimbabwe Companies Act [Chapter 24:03].
Basis for Adverse Opinion On October 1, 2018, the Reserve Bank of Zimbabwe issued a monetary policy statement that directed a separation of Foreign Currency Bank Accounts (FCAs) into two categories, Nostro FCAs and the RTGS FCA.

The Nostro FCAs were to hold individual foreign currencies permissible in Zimbabwe’s multi-currency economy.

The RTGS FCA would be held at the same value as the US dollar.

Mobile money and bond notes and coins would be treated in the same way as the RTGs FCA.
During the year ended December 31, 2018, the Group and the Company transacted using a combination of the Nostro FCAs and RTGS FCA, mobile money and bond notes and coins.
In terms of International Accounting Standard 21 The Effects of Changes in Foreign Exchange Change Rates (IAS 21), these payment methods would have been considered to be separate currencies to be translated for financial reporting purposes to the functional and presentation currency of the Group and the company at an appropriate exchange rate.

However, due to the monetary policy statement, the consolidated and separate financial statements reflect these transactions and balances at parity.
Had the consolidated and separate financial statements been prepared in accordance with the requirements of IAS 21, many elements in the consolidated and separate financial statements would have been materially restated.

The effects on the consolidated and separate financial statements of the failure to prepare in accordance with the requirements of IAS 21 have not been determined.
Adverse Opinion 2019 In my opinion, because of the significance of the matters discussed in the Basis for Adverse Opinion section of my report, the inflation adjusted consolidated financial statements do not 52 present fairly, in all material respects, the inflation adjusted financial position of Chemplex Corporation Limited as at December 31, 2019, and its inflation adjusted financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for adverse opinion Non-compliance with International Accounting Standard (IAS) 21 – The effects of changes in Foreign Exchange Rates and International Accounting Standard (IAS) 29 – Financial Reporting in Hyperinflationary Economies On October 1, 2018 the Reserve Bank of Zimbabwe (RBZ) issued a Monetary Policy Statement which directed banks to separate bank accounts into Real Time Gross Settlement Foreign Currency Accounts (RTGS FCAs) and Nostro FCAs.
The economic environment during the year ended December 31, 2019 was characterized by “multi-tiered” pricing, and the Group transacted predominantly in RTGS FCA (electronic payments), including mobile money, bond notes and coins.

On February 20, 2019, a Monetary Policy Statement was issued, denominating the existing RTGS balances, bond notes and coins in circulation as RTGS dollars in order to establish an exchange rate between the existing monetary balances and foreign currency.
The RTGS dollars became part of the multi-currency system in Zimbabwe through the issuance of statutory instrument (SI) 33/2019., with an effective date of February 22, 2019.

The statutory instrument provided that for accounting and other purposes, all assets and liabilities that were immediately before the effective date, valued and expressed in United States dollars shall on and after the effective date be deemed to be values in RTGS dollars at a rate of 1:1 to the United States dollar.
This was not consistent with IAS 21- The effects of changes in Foreign Exchange Rates which requires that an assessment be made of the change in functional currency and that financial statements be presented at a rate that approximates the market rate.

The group had to be guided by S.I.


41/2019 which states that in the case of any inconsistency between a local pronouncement issued by the Board through a notice in the Government Gazette and any international standard, the local pronouncement shall take precedence to the extent of the inconsistency.

In compliance with SI 33/2019, the Group maintained its functional currency as the USD from January 1, 2019 to February 22, 2019 using an exchange rate of 1:1 between the RTGS FCA and Nostro FCA.
This constitutes a departure from the requirements of IAS 21 - The effects of changes in Foreign Exchange Rates.

Had the consolidated financial statements been prepared in accordance with the requirements of IAS 21, many elements would have been materially affected.

As a result, the impact of the company’s inability to comply with IAS 21 has been determined as significant.
The effects on the consolidated financial statements of the non-compliance with IAS 21 are considered material and pervasive to the consolidated financial statements taken as a whole.

On October 11, 2019, the Public Accountants and Auditors Board (PAAB) issued a pronouncement relating to the application of IAS 29 – Financial Reporting in Hyperinflationary Economies.
The PAAB advised that there is broad market consensus within the accounting and auditing professions that the factors and characteristics to apply the Financial Reporting in Hyperinflationary Economies Standard (IAS 29), in Zimbabwe had been met.

The Directors have applied the IAS 29 – Financial Reporting in Hyperinflationary Economies with effect 53 from January 1, 2019.
However, as a result of the need to comply with the requirements of S.I 33 of 2019, the changes in the general pricing power of the functional currency were applied on amounts that were not translated in terms of IAS 21 – The Effects of Changes in Foreign Exchange Rates for the period January 1 to February 22, 2019.

This constitutes a departure from the requirements of IAS 29 – Financial Reporting in Hyperinflationary Economies.
Had the Group applied the requirements of IAS 21 and IAS 29, many of the elements of the consolidated financial statements would have been materially impacted and therefore the departure from the requirements of these standards is considered to be pervasive.

The financial effects of on the inflation adjusted consolidated financial statements of this departure have not been determined.
Fair value determination for assets, transactions and liabilities The determination of fair values for assets presented in the financial statements is affected by the prevailing economic environment and may therefore be distorted.

This may result in significant variations in fair values, depending on factors and assumptions used in the determination of the fair values.
Emphasis of matter Without modifying my opinion, I draw attention to the uncertainties related to the possible effects of the Covid 19 outbreak on the Group.

Below is another material issue noted during the audit; 1 GOVERNANCE ISSUE 1.1 Staff loans Finding There was no listing for staff loans amounting to $17 965 at G&W Industrial Minerals.

I could therefore not ascertain the members that benefited.

In addition, the entity wrote off these amounts as at December 31, 2018.
Risk / Implication Non-recovery of loans due to inability to track those still owing the Company.

Recommendation The Company should maintain a listing of all loans issued to staff members.

Management response Proper listings shall be maintained and reconciled regularly going forward.

54 DEPOSIT PROTECTION CORPORATION 2019 Background information The Deposit Protection Corporation is governed by the Deposit Protection Act, [Chapter 24:29].
The Deposit Protection Corporation aims at meeting a number of objectives that include:  Protecting small, less-financially sophisticated depositors by providing an orderly means of compensation in the event of a deposit-taking institution becoming insolvent;   Enhancing public confidence and systemic stability by providing a framework for the resolution of failed banks;   Enhancing competition in the financial sector by mitigating some of the competitive barriers in the deposit taking industry and helping in defining the boundaries of the Government exposure and support in protecting depositors when a bank or the Corporation of banks fails in normal times. I have audited the financial statements for Deposit Protection Corporation for the year ended December 31, 2019 and I have issued an adverse opinion based on non-compliance with IAS 21 “The effects of changes in foreign exchange rates”.
Adverse Opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the financial statements do not present fairly the financial position of Deposit Protection Corporation as at December 31, 2019, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs), and in the manner required by the Deposit Protection Corporation Act [Chapter 24:29].
Basis for adverse opinion During the period 1 January to 21 February 2019 the financial statements of the Corporation included balances and transactions denominated in US$ that were converted to local currency (ZWL) using an exchange of 1:1 stipulated by Statutory Instrument 33 of 2019 (S.I 33/19).

I believe that the economic substance of transactions in the market indicated a different rate between the two currencies throughout this period despite the legal 1:1 ZWL: USD exchange rate.
The use of the 1:1 exchange rate thereby constitutes a departure from the requirements of IAS 21.

On 22 February 2019, the Corporation changed its functional currency from USD to local currency, all balances that were previously denominated in USD were translated into local currency using an exchange rate of 1:1 stipulated by S.I 33/19.
This constitutes a material departure from the requirements of IAS 21 which requires the use of market exchange rates when translating figures from one currency to another.

55 The comparative figures were converted to the local reporting currency (ZWL) from the previous reporting currency (USD) at a rate of 1:1.

The exchange rate used do not represent the true market exchange rate that existed in comparative year in terms of IAS 21.
The Public Accountants and Auditors Board (PAAB) issued a guidance on application of IAS 29 Financial Reporting in Hyper-Inflationary Economies for entities reporting in Zimbabwe with effect from 1 July 2019.

Notwithstanding that IAS 29 has been applied from 1 January 2019 to 31 December correctly.

It is noted that this is inconsistent with the management ‘s assertion that change in functional currency date is 22 February 2019.
Below are other material issues noted during the audit; 1 GOVERNANCE ISSUE 1.1 Withholding tax certificates Finding The Corporation did not issue withholding tax certificates for tax withheld from payments made to suppliers.

In terms of Section 80 (3) of the Income Tax Act, the paying officer should issue to the payee a withholding tax certificate whenever tax is withheld.

Risk / Implication Financial loss due to interest and penalties that may be charged by the tax authority.
Recommendation Management should issue withholding tax certificates for all amounts withheld.

Management response Agreed.

A VAT letter in lieu of a certificate will be issued.
56 MINING PROMOTION CORPORATION (PRIVATE) LIMITED (MPC) 2016, 2017 AND 2018 Background information The main business of the Mining Promotion Corporation (Private) Limited as set out in its Memorandum and Articles of Association is to assist in the development of the mineral resources of the country by undertaking prospecting, exploration and development work.
I have audited the financial statements of the Mining Promotion Corporation (Private) Limited for the years ended December 31, 2016, 2017 and 2018 and I issued unmodified opinions for 2016 and 2017 and adverse opinion for 2018.
Adverse Opinion 2018 In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph of my report, the financial statements do not present fairly the financial position of Mining Promotion Corporation (Private) Limited as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion 2018 The Corporation did not fully comply with the provision of International Accounting Standard 21 (IAS 21), “The Effects of Changes in Foreign Exchange Rates”.

During the year the Zimbabwean economy was characterized by a multi-tiered pricing model.

Under the model, a single product had different prices depending on the mode of payment, whether United States Dollar Cash, electronic money (RTGS), mobile money or bond notes.
This resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which International Accounting Standard (IAS 21), “The Effects of Changes in Foreign Exchange Rates”, would apply.

Market wide, entities experienced premiums and discounts on the official foreign exchange rate of 1:1 between the RTGS balances and Bond Notes and the United States Dollar.
As a result of these factors the directors performed an assessment on the functional currency of the Corporation in accordance with IAS 21, The Effects of Changes in Foreign Exchange Rates (IAS 21), and acknowledge that the functional currency of the Corporation was no longer the US$.

In February 2019, an electronic currency called the RTGS dollar was introduced through Statutory Instrument 33 (S.I.
33) of 2019 with an effective date of February 22, 2019 and the currency commenced trading at a rate of 2.5 to the US$.

In addition, S.I.

33 of 2019 fixed the exchange rate between the RTGS dollar and the US$ at a rate of 1:1 for periods before the effective date.
Although the directors acknowledge that there was a functional currency change and that market exchange rate between the US$ and local currency was not 1:1, they have maintained their functional currency as the US$ and have presented the financial statements in US$ using an exchange rate of 1:1, in compliance with S.I.

33 of 2019.

This constitutes a departure from the requirements of IAS 21.
The effect of the non-compliance with IAS 21 has not been quantified, however, it is considered to be material and pervasive to these financial statements.

57 Below is another material issue noted during the audit; 1 EMPLOYMENT COSTS 1.1 Key vacant posts Finding The Corporation had been operating without a substantive Chief Executive Officer since 2016.

In addition, the positions of Human Resources and Administration Manager, Internal Auditor, and Chief Accountant were also vacant.
Risk / Implication The Corporation’s strategic thrust may be compromised as decision making by those in acting positions may be limited to short term periods.

Recommendation The Corporation should ensure that all key vacant posts are filled.

Management response The Corporation is still going through its formative stage and most managerial positions are not yet filled.

The reason for this current status is because the Corporation relies on donation funding from the Ministry for its operations.
Thus the previous Board was not keen on having a top heavy operating structure, but rather have more field operatives in the exploration projects.

58 MINERALS MARKETING CORPORATION OF ZIMBABWE (MMCZ) 2018 AND 2019 Background information The Minerals Marketing Corporation of Zimbabwe (MMCZ) was established by statute in 1982 to act as the sole marketing and selling agent for all minerals, except gold and silver and to provide for the control and regulation of stock piling of minerals.
The Minerals Marketing Corporation of Zimbabwe (MMCZ) owns 100% of Mellofieldde Chemical (Private) Limited which was incorporated on April 17, 2012.

The main objectives of the Company are to pursue mining and mining related investment opportunities and projects and to provide specialist management services to the Corporation.
I have audited the consolidated financial statements for Minerals Marketing Corporation of Zimbabwe for the year ended December 31, 2018 and 2019 and I have issued an adverse opinion with a material uncertainty on going concern paragraph on subsidiary, Mellofieldde Chemical (Private) Limited.
Adverse Opinion on the Corporation’s financial statements 2018 and 2019 In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph of my report, the financial statements do not present fairly the financial position of the Minerals Marketing Corporation of Zimbabwe as at December 31, 2019, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Adverse Opinion on the consolidated financial statements 2018 and 2019 In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph of my report, the consolidated financial statements do not present fairly the consolidated financial position of the Group as at December 31, 2019, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion Non-compliance with International Accounting Standard (IAS) 21 “The effects of changes in foreign exchange rates” The Group translated its comparative financial statements including transactions and balances for the period up to February 22, 2019 denominated in USD at a rate of 1:1 to the Zimbabwean Dollar (RTGS or ZWL).
The transactions during this period were not converted to RTGS or ZWL using appropriate (fair) exchange rate that reflects the economic substance of its value as provided for by International Accounting Standard 21, “The Effects of Changes in Foreign Exchange Rates”.

The Group applied the legal exchange rate of 1:1 as pronounced through Statutory Instrument 33 of 2019.
59 Subsequent to February 22, 2019 the Group applied interbank exchange rates which came into existence, through Exchange Control Directive RU 28 of 2019 issued by the RBZ and was initially pegged at a rate of 2.5.

This was after a period of foreign currency scarcity and constrained exchangeability of bond notes, coins and electronic money to other foreign currencies.

No assessment was carried out to show appropriateness of the interbank rate to the existing economic environment.
The interbank rate and the exchange rate of 1:1 applied on comparative amounts does not represent the price that could be received for foreign currency as many organisations were unable to access foreign currency through the interbank market.

Therefore, use of the interbank exchange rate alone fails to meet the criteria for appropriate (fair) exchange rate and to achieve fair presentation of the financial statements.
As a result, the impact of the Group’s inability to comply with IAS 21 has been determined as significant.

The effects on the consolidated financial statements are considered material and pervasive to the consolidated financial statements as a whole.
Material uncertainty related to going concern Mellofieldde Chemicals (Private), a company wholly owned by Minerals Marketing Corporation of Zimbabwe (MMCZ) prepared its annual financial statements on going concern basis on the assurance it obtained from parent company (MMCZ) of its intention to maintain the Company in order to facilitate transactions as its investment unit.

However, the subsidiary has not operated since incorporation in April 2012.
These conditions indicate existence of a material uncertainty that may cast significant doubt about the subsidiary’s ability to continue operating as a going concern.

My opinion is not modified in respect of this matter.

Below are other material issues noted during the audit; 1 GOVERNANCE ISSUES 1.1 Board Fees Finding The Corporation paid board fees and allowances that were above the approved rates during the year under review.
Board Fees and Allowances Maximum Approved rates ($) Rates paid ($) Board sitting from 25/10/18 to 31/12/18 Board Member Quarterly Retainer Allowance Chairman Board Fees per sitting Board Member allowance per sitting Chairman of committee sitting allowance Committee Member sitting allowance Risk / Implication Financial loss due to non-compliance.
60 1 000 300 250 250 200 1950 345 316 345 285 Recommendation The Corporation should ensure that fees and allowances paid to board members are based on approved rates.

Management response Noted.

The Corporation will recover the overpaid board fees in the current financial year.

1.2 Monitoring manuals Finding The Corporation had monitoring manuals used to monitor mining activities.
However, the manual did not cover issues to do with quality analysis of the value addition processes in the production of High Carbon Ferro Chrome and Ferro Silicone which were being exported by producers.

My audit revealed that there was no mechanism to assist the Corporation to review its monitoring manual whenever it was necessary.

Review of manuals was necessary as producers were now carrying out value addition processes (smelting of ore).
Risk / Implication Loss of revenue (mining royalties) due to under declaration.

Recommendation The Corporation should put in place a mechanism that will continuously flag new processes.

Management response The process of quality analysis is ongoing and is done on a random basis.

However, the Corporation will incorporate the processes in the Monitoring Manual and will be reviewed when need arises.
1.3 Internal Controls Finding The Corporation could not account for five (5) carat diamonds worth USD2 075 belonging to a producer which went missing during a weight verification exercise.

In addition, the CCTV video footages could not be retrieved as there was an internal control system failure.

Risk / Implication Financial loss due to internal control failures.

Recommendation The Corporation should continuously monitor the operating effectiveness of internal controls.
61 Management response Noted, the Corporation will continuously monitor the operating effectiveness of internal controls to prevent, detect and correct any lapses within systems.

However, the Corporation has upgraded its storage capacity for CCTV recordings up to a maximum period of 6 months before the information is deleted.

1.4 Mining royalties Finding The Corporation collected mining royalties on behalf of the Zimbabwe Revenue Authority.
However, there were no procedures covering the agent principal relationship.

As a result, reconciliations for mining royalties were not being done on time as some were still being prepared as at July 17, 2020.

In addition, the amounts for mining royalties remitted to ZIMRA were not reconciled to the payments and returns for the period January to December 2019.

Risk / Implication Errors and omissions may go undetected.
Recommendation The Corporation should have procedures for the administration of royalties.

Reconciliations of mining royalties should be done on time.

Management response The Corporation’s relation with ZIMRA regarding the royalties’ collection and remittances is guided by the Finance Act.

The Corporation also maintains separate bank accounts for royalties which are linked to ZIMRA accounts.

Continuously there have been engagements with ZIMRA.
The Corporation will review its accounting procedure manual to incorporate the administration of royalties by 31 December 2020.

62 NATIONAL RAILWAYS OF ZIMBABWE (NRZ) 2019 Background Information The National Railways of Zimbabwe (Railways) was incorporated in terms of the Railways Act [Chapter 13:09].

It is wholly owned by the Government of Zimbabwe.

It was established to provide, operate and maintain an efficient system of public transportation of goods and passengers by rail.
I have audited the financial statements of the National Railways of Zimbabwe for the year ended December 31, 2019 and I issued an adverse opinion with a material uncertainty related to going concern paragraph.
Adverse Opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse opinion section of my report, the financial statements do not present fairly, in all material respects, the financial position of National Railways of Zimbabwe as at December 31, 2019, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and in the manner required by the Companies Act [Chapter 24:03].
Basis for Adverse Opinion Non-compliance with International Accounting Standard (IAS) 21- “The effects of changes in foreign exchange rates” and International Accounting Standard (IAS) 29-“Financial Reporting in Hyperinflationary Economies” National Railways of Zimbabwe financial statements have been presented in Zimbabwe dollars (“ZWL”), being the functional and presentation currency.
The company had been using United States dollars (“USD”) as its functional and presentation currency since 2009 until February 22, 2019, when Statutory Instrument 33 of 2019 was issued as an amendment to the Reserve Bank of Zimbabwe Act which introduced a local currency.

In October 2018, banks were instructed by the Reserve Bank of Zimbabwe to separate and create distinct bank accounts for depositors, namely, RTGS FCA and Nostro FCA accounts.
Prior to this date, RTGS FCA and Nostro FCA transactions and balances were co-mingled.

As a result of this separation, there was an increased proliferation of multi-tier pricing practices by suppliers of goods and services, indicating a significant difference in purchasing power between the RTGS FCA and Nostro FCA balances, against a legislative framework mandating parity.
These events were indicative of economic fundamentals that would require a reassessment of the functional currency as required by IAS 21: “The Effects of Changes in Foreign Exchange Rates”.

As National Railways of Zimbabwe predominantly traded in RTGS dollars, 1 October 2018 would have been deemed the date of change in the functional currency in line with IFRS.
Given the context of the environment, National Railways of Zimbabwe directors assessed in terms of IAS 21, if there had been a change in functional currency used by the company.

Although the Directors concluded that the currency had changed from October 1, 2018 per IAS 21, the company chose to observe the legal instruments and changed its functional currency 63 from USD to ZWL on February 22, 2019.

The interbank exchange rates were adopted for translation thereafter.
During the year, the factors and characteristics to apply International Accounting Standard (IAS) 29- “Financial Reporting in Hyperinflationary Economies” were met in Zimbabwe.

As a result, the Public Accountants and Auditors Board (PAAB) pronounced that entities reporting in Zimbabwe were required to apply the requirements of IAS 29 with effect from July 1, 2019.

IAS 21 requires balances and transactions to be translated from the date of initial recognition.
There are estimation complexities with respect to the determination of restated amounts for balances and transactions recognized before the change in functional currency.

National Railways of Zimbabwe directors have, therefore, applied the requirements of IAS 29 from January 1, 2019.

However, in accordance with IAS 21 the date of change in functional currency should be October 1, 2018.

Consequently, the changes in the general pricing power of the functional currency should apply from October 1, 2018.
National Railways of Zimbabwe transacted using a combination of the USDs, Bonds and RTGS during the period from October 1, 2018 to February 22, 2019, the decision to change the functional currency on February 22, 2019 in line with SI 33/19 and commence application of IAS 29 on this date resulted in material misstatements to the financial performance and cash flows of National Railways of Zimbabwe as transactions were not appropriately translated in line with IAS 21 and IAS 29.
Had the company applied the requirements of IAS 21 and IAS 29, many of the elements of the statement of profit or loss and other comprehensive income and statement of cash flows would have been materially impacted and therefore the departure from the requirements of these standards is considered to be pervasive.
Valuation of loans and borrowings; interest payable; unrealized exchange losses and finance charges National Railways of Zimbabwe reported loan liabilities of ZWL 293 927 172, exchange losses on foreign loans of ZWL210 270 650 and accrued interest on loans of ZWL 138 372 010.

I was unable to obtain sufficient audit evidence to substantiate the above balances.

I received representation from directors stating that third party loan documents were not available.
I also failed to obtain direct confirmations from the lenders.

The amounts highlighted above are material and have a pervasive impact on the financial statements.

Because management failed to provide sufficient audit evidence, I was unable to determine if borrowings, other payables, finance charges and unrealized losses are fairly stated.
Valuation of property, plant and equipment National Railways of Zimbabwe maintained its policy of valuing property, plant and equipment using the cost model and then restating into current purchasing power at the end of the reporting period.

This is in line with IAS 16 – Property, Plant and Equipment and IAS 29 -Financial Reporting in Hyperinflationary Economies.
I note the historical cost values which were used to calculate inflation adjusted values were translated from USD to ZWL in February 2019 at an exchange rate of 1:1.
In the absence of a professional valuation exercise which will take into account the condition of assets, I was unable to independently verify if the carrying amounts of property, plant and equipment were fairly stated 64 Conversion losses and unrealized exchange gains Included in the statement of profit or loss account are conversion losses amounting to ZWL 220 206 405.

I could not independently verify this balance which has a material impact on the financial statements.
Material Uncertainty Related to Going Concern Without further qualifying my opinion, I draw your attention to the following information which casts significant doubt on National railways of Zimbabwe’s ability to continue as a going concern: i.

Total current liabilities exceeded current assets by ZWL 874 711 565. ii.

Included in current assets is inventory of ZWL 151 207 601 which is generally slow moving.

The company has been incurring substantial losses for over 10 years.
Operating loss (loss before finance, monetary gains and taxation) for the year under review was ZWL 1 079 492 346.

Loans and interest accrued at December 31, 2019 was ZWL 293 927 172 and ZWL 138 372 010 respectively.

All loans were overdue.

The company is not in a position to pay its loan and interest commitments.

Subsequent to year end, the ZWL significantly depreciated against the major currencies.
At the time of approval of financial statements on November 24, 2020, the loans had increased by ZWL 867 673 863 to ZWL 1 161 601 035.

Previous capital raising initiative and restructuring plans have not resulted in financial position and financial performance of the company improving.

iii.

iv.

v. vi.

I reviewed National Railways of Zimbabwe current strategic plans and various capital raising initiatives.
National Railways of Zimbabwe obtained a letter of support from the Ministry of Transport and infrastructural Development.

However, the letter of support from the parent Ministry is not a financial guarantee.

The directors of NRZ are, however, satisfied that the company has access to adequate resources to continue in operational existence for the foreseeable future.
Below are other material issues noted during the audit; 1 GOVERNANCE ISSUES 1.1 Loan valuation Finding Management did not avail third-party documentation to enable verification of the existence and valuation of loans.

I received a letter of representation from the NRZ board confirming that the company did not have the required documentation.
Because of lack of supporting documentation I was unable to obtain any meaningful audit evidence to verify the following balances which were materially impacted by valuation of loans: 65  Loans outstanding as at 31 December 2019 totalling ZWL293 927 172  Interest payable on borrowings as at 31 December 2019 totalling ZWL138 372 010 All foreign loans were long overdue.

I could not establish the penalties NRZ may be liable to pay lenders for defaulting.
Risk / Implication Material misstatement of financial statements.

Worsening going concern situation.

Recommendation The Company should investigate and establish the location of the documentation and establish the extent of its indebtedness.

Management response The Ministry of Finance and Economic Development has been engaged and written to through the parent Ministry to take off the debt from NRZ balance sheet and has agreed in principle.
1.2 Valuation of property, plant and equipment Finding The historical cost values which were used to calculate inflation adjusted values were translated from USD to ZWL in February 2019 at an exchange rate of 1:1.

However, in the absence of a professional valuation exercise which will take into account the condition of assets, I was unable to independently verify if the carrying amounts of property, plant and equipment were fairly stated.
Risk / Implication Misstatement of financial statements Recommendation While the standards allow for directors’ valuations, independent valuers will give greater credibility to NRZ financials.

Management response The NRZ will tender for the independent valuation of PPE.

In the meantime, the organisation will have a Directors’ valuation of PPE for the current year.

66 2.
66 2.

PROGRESS TOWARDS IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS I reviewed the progress made towards the implementation of prior year recommendations and found that the Railways made some progress.

However, there was some room for improvement in respect of the following recommendations; 2.1 Illegal tenants on real estate land Recommendation Management should regularise this issue.

Progress made Woolendale Farm illegal settlers’ case is before the Court of Law for legal eviction by the NRZ.
An inquiry on the illegal use of NRZ land and Buildings is ongoing in Eastern Region starting from August 2020.

2.2 Investment Policy Recommendation NRZ should formulate an Investment policy.

Progress made Draft investment policy currently being reviewed internally.

2.3 Insurance on assets Recommendation All assets should be insured.
Progress made With regards to locomotives, a tender was awarded to WFDR Risk Services Pvt Ltd but NRZ has not been able to finalise the contract to insure the locomotives owing to financial challenges.

To this end, the insurance policy covering locomotives will be concluded once the financial standing of the organisation is able to absorb such necessary expense.
67 MOSI OA TUNYA DEVELOPMENT COMPANY (PRIVATE) LIMITED (2012- 2015) Background information Mosi Oa Tunya Development Company (Private) Limited was established in 2012 in terms of the Companies Act [Chapter 24:03] as a Special Purpose Vehicle of the Ministry of Environment, Tourism and Hospitality Industry.

The mandate of the company is to develop Tourism Infrastructure in the country.
I have audited the financial statements of Mosi Oa Tunya Development Company (Private) Limited for the years ended December 31, 2012, 2013, 2014 and 2015 and I issued qualified opinions.
Qualified opinion (2012) In my opinion, except for the matters described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Mosi Oa Tunya Development Company as at December 31, 2012 and of the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
Basis for Qualified Opinion Operating expenditure I could not place reliance on the accuracy of operating expenditure amounting to USD 245 755 disclosed in the financial statements.

The Company did not avail supporting documentation to support the balance disclosed.

In the absence of the evidence and supporting documentation on balances disclosed in the financial statements, I was unable to carry out reasonable alternative procedures to draw assurance on the balance disclosed in the financial statements.
Qualified opinion (2013) In my opinion, except for the matters described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Mosi Oa Tunya Development Company as at December 31, 2013 and of the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
Basis for Qualified Opinion Operating expenditure I could not place reliance on the accuracy of operating expenditure amounting to USD 110 653 disclosed in the financial statements.

The Company did not avail supporting documentation to support the balance disclosed.
In the absence of the evidence and supporting documentation on 68 balances disclosed in the financial statements, I was unable to carry out reasonable alternative procedures to draw assurance on the balance disclosed in the financial statements.
Qualified opinion (2014) In my opinion, except for the matters described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Mosi Oa Tunya Development Company as at December 31, 2014 and of the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
Basis for Qualified Opinion Operating expenditure I could not place reliance on the accuracy of operating expenditure amounting to USD109 745 disclosed in the financial statements.

The Company did not avail supporting documentation to support the balance disclosed.

In the absence of the evidence and supporting documentation on balances disclosed in the financial statements, I was unable to carry out reasonable alternative procedures to draw assurance on the balance disclosed in the financial statements.
Qualified opinion (2015) In my opinion, except for the matters described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Mosi Oa Tunya Development Company as at December 31, 2015 and of the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
Basis for Qualified Opinion Operating expenditure I could not place reliance on the accuracy of operating expenditure amounting to USD 107 105 disclosed in the financial statements.

The Company did not avail supporting documentation to support the balance disclosed.

In the absence of the evidence and supporting documentation on balances disclosed in the financial statements, I was unable to carry out reasonable alternative procedures to draw assurance on the balance disclosed in the financial statements.
Below are material issues noted during the audit; 69 1 GOVERNANCE ISSUE 1.1 Expenditure Finding I was not availed with supporting documents such as invoices, receipts and payment vouchers for some of the expenses disclosed in the financial statements.

The related expenditure for the four (4) years was as follows: 2012 2013 2014 2015 $245 755 $110 653 $109 745 $107 105 Risk / Implication Misappropriation of funds.
Recommendation Management should ensure that all payments are supported with proper documentation.

Management response The mentioned expenses were paid by the Bank (IDBZ) direct to suppliers as part of the loan disbursement.

The only documentation available is the authorization for the release of funds by the Permanent Secretary in the Ministry of Environment, Tourism and Hospitality Industry.
The services/ products were received by the Ministry of Local Government, Public Works and National Housing who were the lead contractors of the project.

Mosi Oa Tunya cannot vouch for the actual usage.

70 NATIONAL OIL INFRASTRUCTURE COMPANY OF ZIMBABWE (NOIC) 2018 Background information The National Oil Infrastructure Company of Zimbabwe (Private) Limited was incorporated in Zimbabwe in terms of the Companies Act [Chapter 24.03] and it is wholly owned by the Government of Zimbabwe.
The Company is responsible for the transportation, storage and handling of petroleum products for oil companies.

It operates fuel depots in Harare, Mutare, Beitbridge and Bulawayo.

I have audited the consolidated financial statements of National Oil Infrastructure Company of Zimbabwe for the year ended December 31, 2018, and I issued an adverse opinion.
Adverse Opinion on the Consolidated Financial Statements In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the consolidated financial statements do not present fairly the consolidated financial position of the National Oil Infrastructure Company of Zimbabwe (Private) Limited as at December 31, 2018, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Adverse Opinion on the Company’s Financial Statements In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the financial statements do not present fairly the financial position of the National Oil Infrastructure Company of Zimbabwe (Private) Limited as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion The Group and the Company did not fully comply with the provisions of International Accounting Standard 21 (IAS 21) “The Effects of Changes in Foreign Exchange Rates”.

During the year the Zimbabwean economy was characterised by a multi-tiered pricing model.

Under the model, a single product had different prices depending on the mode of payment, whether United States Dollar Cash, electronic money (RTGS), mobile money or bond notes.
This resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21, The Effects of Changes in Foreign Exchange Rates, would apply.

Market wide, entities experienced premiums and discounts on the official foreign exchange rate of 1:1 between the RTGS balances and Bond Notes and the United States Dollar.
As a result of these factors the directors performed an assessment on the functional currency of the Group and Company in accordance with IAS 21 “The Effects of Changes in Foreign Exchange Rates” (IAS 21), and acknowledge that the functional currency of the Group and Company was no longer the US$.
In February 2019, an electronic currency called the RTGS 71 dollar was introduced through Statutory Instrument 33 (S.I 33) of 2019 with an effective date of February 22, 2019 and the currency commenced trading at a rate of 2.5 to the US$.

In addition, S.I.

33 fixed the exchange rate between the RTGS dollar and the US$ at a rate of 1:1 for periods before the effective date.
Although the directors acknowledge that there was a functional currency change and that market exchange rate between the US$ and local currency was not 1:1, they have maintained their functional currency as the US$ and have presented the financial statements in US$ using an exchange rate of 1:1, in compliance with S.I 33.

This constitutes a departure from the requirements of IAS 21.
The effect of the non-compliance with IAS 21 has not been quantified however it is considered to be material and pervasive to these financial statements.

Below are other material issues noted during the audit; 1 GOVERNANCE ISSUES 1.1 Feruka depot Finding The Company did not have adequate alternative sources of power to generate enough power to run the pipeline pumping station at the depot.

As a result, pumping of fuel from the depot to Msasa was delayed during power outages.
Enquiries with management revealed that the standby generator at the depot did not have capacity to supply enough power to run the pipeline pumping station.

Risk / Implication Service delivery may be compromised.

Recommendation The Company should consider investing in other alternatives sources of power for continued supply.

Management response The Company engaged ZESA for uninterrupted power supplies for pipeline services.
A standby generator will be installed by Petrozim Line during the upgrade of the capacity of the pipeline.

During the first phase of upgrading of the Feruka-Harare pipeline to 7.5 million litres per day, the generators will be installed as per plan.

1.2 Board fees and allowances Finding Board fees and allowances paid to Board members were being grossed up to cover the twenty percent (20%) withholding tax on directors’ fees and allowances.
In addition, the board 72 members were also getting fuel and airtime allowances.

However, there was no evidence to support that the allowances and the grossing up were approved by the responsible Minister.

Risk / Implication Financial loss as the expenditure was unauthorised.

Recommendation The Company should ensure that allowances and benefits for board members are approved by the responsible Minister before being paid.
Management response We have engaged the Ministry of Energy and Power Development concerning the above and now awaiting the response.

73 NET*ONE CELLULAR (PRIVATE) LIMITED 2019 Background information Net*One Cellular is a limited liability Company incorporated under the Companies Act [Chapter 24:03] and domiciled in Zimbabwe.

It is involved in the provision of connection to the network for airtime services.
I have audited the financial statements of Net*One for the year ended December 31, 2019 and I issued an adverse opinion with an other matter paragraph.
Adverse opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the financial statements do not present fairly, in all material respects, the financial position of Net*One Cellular (Private) Limited as at December 31, 2019, and its financial performance and cash flows for the year then ended in accordance with the International Financial Reporting Standards.
Basis for Adverse Opinion Non-compliance with International Accounting Standard (IAS) 21 - The Effect of Changes in Foreign Exchange Rates On February 20, 2019, a Monetary Policy Statement was issued, denominating the existing RTGS balances, bond notes and coins in circulation as RTGS dollars in order to establish an exchange rate between the existing monetary balances and foreign currency.
The RTGS dollars became part of the multi-currency system in Zimbabwe through the issuance of statutory instrument (S.I.)

33/2019, with an effective date of February 22, 2019.

The statutory instrument provided that for accounting and other purposes, all assets and liabilities that were immediately before the effective date, valued and expressed in United States dollars shall on and after the effective date be deemed to be values in RTGS dollars at a rate of 1:1 to the United States dollar.
This was not consistent with IAS 21 – The Effects of Changes in Foreign Exchange Rates which requires that an assessment be made of the change in functional currency and that financial statements be presented at a rate that approximates the market rate.

The Company had to be guided by Statutory Instrument (S.I.)
41/2019 which states that in the case of any inconsistency between a local pronouncement issued by the Board through a notice in the Government Gazette and any international standard, the local pronouncement shall take precedence to the extent of the inconsistency.

In compliance with statutory instrument (S.I.)


33/2019, the Company maintained its functional currency as the USD from January 01 2019 to February 22, 2019 using an exchange rate of 1:1 between the RTGS FCA and Nostro FCA and changed to Zimbabwe Dollar as presented in the consolidated financial statements.

This constitutes a departure from the requirements of IAS 21 – The Effects of Changes in Foreign Exchange Rates.
Had the consolidated financial statements been prepared in accordance with the requirements of IAS 21, many elements would have been materially affected.

As a result, the impact of the Company’s inability to comply 74 with IAS 21 has been determined as significant.

The effects on the inflation adjusted annual financial statements of the non-compliance with IAS 21 are considered material and pervasive to the inflation adjusted annual financial statements, taken as a whole.
On October 11, 2019, the Public Accountants and Auditors Board (PAAB) issued a pronouncement relating to the application of IAS 29 – Financial Reporting in Hyperinflationary Economies.

The PAAB advised that there is broad market consensus within the accounting and auditing professions that the factors and characteristics to apply the Financial Reporting in Hyperinflationary Economies Standard (IAS 29), in Zimbabwe had been met.
The Directors have applied the IAS 29 – Financial Reporting in Hyperinflationary Economies with effect from 1 January 2019.

However, as a result of the need to comply with the requirements of S.I.

33 of 2019, the changes in the general pricing power of the functional currency were applied on amounts that were not translated in terms of IAS 21 – The Effects of Changes in Foreign Exchange Rates for the period January 01 to February 22, 2019.
This constitutes a departure from the requirements of IAS 29 – Financial Reporting in Hyperinflationary Economies.

Had the Company fully applied the requirements of IAS 29 on restatement base numbers, many of the elements of the inflation adjusted annual financial statements would have been materially impacted and therefore the departure from the requirements of these standards is considered to be pervasive.
The financial effects on the inflation adjusted annual financial statements of this departure have not been determined.

Fair value determination for assets, transactions and liabilities The determination of fair values for assets, transactions and liabilities presented in the inflation adjusted annual financial statements is affected by the prevailing economic environment and may therefore be distorted.
This may result in significant variations in fair values, depending on factors and assumptions used in the determination of the fair values.

Other matter There is no automated integration between the Company’s revenue billing sub-systems and the accounting and financial reporting system to allow for real time processing of revenue transactions from the sub-systems to the financial reporting system.
The Company uses journal entries to transfer data from revenue billing sub-subsystems to the accounting and financial reporting system.

Below is another material issue noted during the audit; 75 1 GOVERNANCE ISSUE 1.1 Residential property Finding The Company owned a residential property in Greystone Park, Harare.

I noted that the property was still being occupied by a former CEO of the Company and no benefits were accruing to the Company from the former CEO’s continued stay in the house.
Risk / Implication Financial loss as no benefits are accruing to the entity.

Recommendation Management should regularize the position regarding the former CEO’s occupancy.

Management response The former CEO was in dispute with Net*One regarding the expiration of his employment contract in 2017 and compensation he believes is due to him.

He has refused to vacate the company house.

The Company engaged its lawyers to resolve the matters and the issues are currently before the courts.
76 PETROTRADE (PRIVATE) LIMITED 2018 Background Information The Company is incorporated in Zimbabwe and engages in the importation, distribution and retail of petroleum products in Zimbabwe.

I have audited the financial statements of Petrotrade (Private) Limited for the year ended December 31, 2018 and I issued an adverse opinion.
Adverse Opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph of my report, the financial statements do not present fairly the financial position of Petrotrade (Private) Limited as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and the Company’s Act [Chapter 23:04].
Basis for Adverse Opinion The Company did not fully comply with the provisions of International Accounting Standard 21, “The Effects of Changes in Foreign Exchange Rates”.

During the year the Zimbabwean economy was characterised by a multi-tiered pricing model.

Under the model, a single product had different prices depending on the mode of payment, whether United States Dollar Cash, electronic money (RTGS), mobile money or bond notes.
This resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21, The Effects of Changes in Foreign Exchange Rates, would apply.

Market wide, entities experienced premiums and discounts on the official foreign exchange rate of 1:1 between the RTGS balances and Bond Notes and the United States Dollar.
As a result of these factors the Management performed an assessment on the functional currency of the Company in accordance with IAS 21, The Effects of Changes in Foreign Exchange Rates, and acknowledge that the functional currency of the Company was no longer the US$.

In February 2019, an electronic currency called the RTGS dollar was introduced through Statutory Instrument 33 of 2019 (S.I.

33) with an effective date of February 22, 2019 and the currency commenced trading at a rate of 2.5 to the US$.
In addition, S.I.

33 fixed the exchange rate between the RTGS dollar and the US$ at a rate of 1:1 for periods before the effective date.

Although Management acknowledge that there was a functional currency change and that market exchange rate between the US$ and local currency was not 1:1, they have maintained their functional currency as the US$ and have presented the financial statements in US$ using an exchange rate of 1:1, in compliance with S.I 33.
This constitutes a departure from the 77 requirements of IAS 21.

The effect of the non-compliance with IAS 21 has not been quantified however it is considered to be material and pervasive to these financial statements.

Below are other material issues noted during the audit.

1 GOVERNANCE ISSUE 1.1 Board of directors Finding The Company did not have a Board since August 2015.

As a result, some matters that should have been handled by the Board were still outstanding.
For instance, the Company was yet to recover two vehicles from managers discharged in 2014.

Risk / Implication In the absence of a board, strategic direction and oversight is compromised.

Financial loss due to failure to recover assets.

Recommendation Management may need to consider seeking the help of the Ministry to recover these assets.

Management response The two vehicles in question were used by two dismissed managers and there is a dispute.
The matter is yet to be resolved through the Ministry in the absence of the board.

2 PROGRESS IN IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS I reviewed the progress made towards the implementation of prior year recommendations and found that the Company made some progress.

However, there was room for improvement in respect of the following recommendations.

2.1 Donations Recommendation Donations should be authorized at the appropriate level as per the policy.
Budgetary requirements should be adhered to and expenditure in excess of the budget should be approved by the Parent Ministry.

78 Progress made We separated ministry budget support from donations in the year 2018 as promised.

A separate line item for ministry support was created in the budget for 2019.

2.2 Ownership of properties Recommendation The ownership of the land should be regularized through obtaining the title deeds.

Progress made This is still work in progress.


79 TEL●ONE (PRIVATE) LIMITED 2019 Background Information Tel●One (Private) Ltd was incorporated in Zimbabwe in 2000 in terms of the Postal and Telecommunications Act [Chapter 12:05].

The Company is a fixed mobile convergence company whose main business is that of provision of telecommunication services and products.
I have audited the financial statements of Tel●One (Private) Limited for the year ended December 31, 2019 and I issued an adverse opinion with a material uncertainty related to going concern paragraph.
Adverse Opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse opinion section of my report, the financial statements do not present fairly, in all material respects, the financial position of Tel●One (Private) Limited as at December 31, 2019, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion Non-compliance with International Accounting Standard (IAS) 21” The effects of changes in foreign exchange rates” i) Exchange rates The entity translated its comparative financial statements using the interbank rate which came into existence on February 22, 2019 through Exchange Control Directive RU 28 of 2019 issued by the Reserve Bank of Zimbabwe.
The entity used January 01, 2019 as the date of change in functional currency and translated its foreign denominated balances to ZWL using the February 22, 2019 interbank rate.

The entity has not been able to assess the appropriateness of use of the interbank rate in achieving fair presentation primarily due to the need to comply with SI 33 and also the fact that there were no official exchange rates between October 2018 and February 2019 due to lack of an observable foreign exchange market.
Additionally, the introduction of the interbank rate occurred after a period of foreign currency scarcity and constrained exchangeability of bond notes, coins and electronic money to other foreign currencies.

In substance, the immediate delivery of foreign currency could not be guaranteed which impinged on the underlying concept of closing rates and definition of spot rates.
This therefore impacts the basis for measuring transactions between October 2018 and February 2019, valuation of assets and liabilities as well as the accounting for exchange differences.

In that regard, the entity has not been able to comply with the requirements of IAS 21. ii) Date of change in functional currency Tel●One adopted January 01, 2019 as date of change in functional currency despite the existence of evidence that the chosen date may not be appropriate.
Based on International Accounting Standard 21 (IAS 21) “The Effects of Changes in Foreign Exchange Rates”, the functional currency of an entity is the currency of the primary economic environment in which 80 the entity operates and reflects the underlying transactions, events and conditions that are relevant to it.

Zimbabwe witnessed significant monetary and exchange control policy changes in 2016 and increasingly through to 2019.
The Reserve Bank of Zimbabwe (RBZ) together with the Ministry of Finance and Economic Development promulgated a series of exchange control operational guidelines and compliance frameworks during this period.

Specifically, there was a requirement for banks to separate local Foreign Currency Accounts (FCAs) (RTGS$) from the FCA Nostro US$ Accounts effective October 01, 2018.
Although the rate was legally pegged at 1:1, multiple pricing practices and other transactions observed and reported publicly indicated exchange rates other than 1:1 between RTGS$ and US$.

In February 2019 there was a Monetary Policy statement which introduced RTGS$ and the interbank foreign exchange market.

Furthermore, Statutory Instrument 142 of 2019 specified that for all domestic transactions, ZWL (which comprises RTGS$, Bond Notes and Bond Coins) was the sole legal tender effective June 24, 2019.
These events triggered the need for the entity to assess whether there was a change in functional currency (from US$ to ZWL) and whether the 1ZWL: 1US$ exchange rate was appropriate.

Due to the fundamental nature of the issues raised and interplay of variables within the existing economic environment, I have not been able to determine the extent of misstatements and any adjustments that would have been necessary to correct the historical cost financial statements.
The effects on the historical financial statements have an impact on the IAS 29 inflation adjusted financial statements.

These effects are considered material and pervasive.

Material Uncertainty Related to Going Concern Without qualifying my opinion, I draw attention to the fact that the Company had an inflation adjusted net liability position of ZWL 4 831 951 713 (2018: ZWL 1 179 920 350) as at December 31, 2019.
Additionally, the entity incurred recurring inflation adjusted before tax losses amounting to ZWL 5 169 485 518 (2018: $121 922 409) in the 2019 financial year.

The entity has significant legacy loans and borrowings amounting to ZWL 8 602 961 843 (2018: ZWL 3 129 037 055) principal plus interest accruals.

The fixed-term borrowings approached maturity without realistic prospects of renewal or repayment.
These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

Below are other material issues noted during the audit; 1 GOVERNANCE ISSUE 1.1 Asymmetric Digital Subscriber Line (ADSL) copper cables Finding The Company’s ADSL infrastructure was being vandalised in various provinces.
I noted that some of the cables were continuously being replaced with copper despite the high increase in 81 vandalism and availability of fibre as an alternative.

I also noted that although a notable number of these cases were reported, only a few arrests were made.
The table below shows the statistics per region; Region Number of cases Value Affected customers Revenue loss Arrests Harare Southern Northern TOTALS 93 89 75 257 $ 54 349 $ 251 093 70 233 $ $ 375 675 6 405 6 517 933 13 855 $ 224 175 $ 228 095 $ 32 655 $ 484 925 24 20 22 66 Vandalism cases and estimated revenue loss per region extracts from Telone internal reports Risk / Implication Financial loss due to continued expenditure on copper cables that are being stolen.

Service delivery may be compromised.


Recommendation Management may consider replacing copper cables with fibre optic cables.

Management response The copper network susceptibility to vandalism is a risk that has been noted by management to be high and a deliberate strategy to invest in alternative less vulnerable technologies such as Optical Fibre and Wireless-To-The-x(WTTx) is already in place.

The optic fibre and WTTx projects have however stalled owing to non-availability of foreign currency.
The following interim measures are being implemented with a view of fortifying the copper network and mitigating the risk of vandalism:  Network hardening through fortification of manholes, cabinets and underground  cables  Day and night security patrols  Installation of alarms on primary routes and vandalism-prone areas  Relocation of last mile network elements to secure sites closer to client’s premises 2 PROGRESS IN IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS I reviewed the progress made towards the implementation of prior year recommendation and found that the Company made some progress.
However, there was some room for improvement in respect of the following recommendation; 82 2.1 Statutory and other obligations Recommendation The entity must comply with statutes and also continue engaging with relevant authorities to avoid fines and penalties.

Progress made Payment plans were in place for taxes.

NSSA, RBZ no penalties for non-compliance were charged in 2019.
83 ZIMBABWE CONSOLIDATED DIAMOND COMPANY 2018 AND 2019 Background information Zimbabwe Consolidated Diamond Company (Private) Limited (ZCDC) was incorporated on July 2, 2015 and commenced operations in 2016, in line with the Government of Zimbabwe’s policy to have one state owned company in the country that mine diamonds.

The Company is involved in the mining of diamonds and alluvial gold.

The Company is wholly owned by the Government through the Ministry of Mines and Mining Development.
I have audited the financial statements of Zimbabwe Consolidated Diamond Company for the year ended December 31, 2018 and 2019 and I issued an adverse opinion.
Adverse Opinion 2018 In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the financial statements are not properly drawn up in conformity with International Financial Reporting Standards (“IFRSs”) and, do not give a true and fair view of the financial position of the Company as at December 31, 2018, and of its financial performance and its cash flows, for the year then ended.
Basis for Adverse Opinion 2018 Functional and presentation currencies There was no official/legal local currency in Zimbabwe during the 2018 financial year.

The United States dollar was deemed by the Directors to be the functional and presentation currencies of the Company.

During the year under review, there was evidence of a three tier pricing system in Zimbabwe, namely for the US$ dollar, for the funds in the electronic transfer system (“RTGS”) and the bond notes.
Furthermore, there was a differential between the pricing of goods and services depending on the mode of settlement, albeit through the RTGS system, with bond notes or US dollars.

However, the existence of the three tier pricing system and the difference in the pricing of similar goods and services suggests that in substance the values were not equal.
According to the Reserve Bank of Zimbabwe (“RBZ”) Act, the balances between the Bond note, RTGS System and the US$ notes were legally exchangeable at 1:1 during the year ended 31 December 2018.

However, there was constrained exchangeability (i.e., the Company was not readily able to exchange currencies through a legal exchange mechanism within a relatively short period of time) of the RTGS balances with foreign currencies in Zimbabwe as there was no legal foreign exchange mechanism.
On 1 October 2018, the RBZ issued a monetary policy statement which directed banks to separate bank accounts into Real Time Gross Settlement Foreign Currency Accounts (“RTGS FCAs”) and Nostro FCAs.

During the year ended 31 December 2018, the Company predominantly transacted using RTGS FCA (i.e.

electronic payments, mobile money, bond notes and coins).
84 Following the announcement of the Country’s Monetary Policy Statement (“MPS”) on 20 February 2019 by the RBZ, bond notes and coins were immediately denominated as “RTGS dollars” which came in as a new currency in the multi-currency system of the economy.
To support pronouncements made in the MPS, the Government of Zimbabwe issued Statutory Instrument No 33 of 2019 (“SI 33/2019”) which states that, “for accounting and other purposes, all assets and liabilities that were, immediately before the effective date, valued and expressed in United States dollars shall, on and after the effective date, be deemed to be values in RTGS dollar at a rate of one to one to the United States dollar”.
This was not consistent with IAS 21 which requires that an assessment be made of the change in functional currency and that financial statements be presented at a rate that approximates the market rate.

In compliance with SI 33/2019, the Company maintained its functional currency as the USD and has presented the financial statements in USD using an exchange rate of 1:1 between the RTGS FCA and Nostro FCA.
This constitutes a departure from the requirements of IAS 21, The Effects of Changes in Foreign Exchange Rates.

Had the financial statements been prepared in accordance with the requirements of IAS 21, many elements would have been materially affected.

The effects on the financial statements of the non-compliance with IAS 21 are considered material and pervasive to the financial statements, taken as a whole.
According to the conceptual framework for financial reporting, financial reports represent economic phenomena in words and numbers.

To be useful, financial information must not only represent relevant phenomena, but it must also faithfully represent the substance of the phenomena that it purports to represent.

In many circumstances, the substance of an economic phenomenon and its legal form are the same.
If they are not the same, providing information only about the legal form would not faithfully represent the economic phenomenon.

[March 2018 Conceptual Framework paragraph 2.12].

The valuation (recoverability) of amounts owed by related parties I was not able to verify the valuation (recoverability) of amounts owed by related parties with a balance of $24 347 454 on the Company’s statement of financial position.

The amounts are owed by companies that have since closed down.
Management have failed to provide us with persuasive audit evidence on how and when these amounts would be recovered.

The valuation of the investment in a subsidiary I was not able to verify the valuation of the investment in a subsidiary company stated at an amount of $20 295 856 on the Company’s statement of financial position.
The Company could not provide the audited financial statements for the subsidiary company, DTZ OZGEO (Private) Limited, to enable us to assess the fair valuation of the Company’s investment in the subsidiary.

In addition, management could not provide us with an impairment assessment for the investment in the subsidiary.

Consequently, I was unable to determine whether any adjustments to the above stated amounts were necessary.
Adverse Opinion 2019 In my opinion, because of the significance of the matters discussed in the Basis for Adverse Opinion section of my report, the financial statements are not properly drawn up in conformity with International Financial Reporting Standards (“IFRSs”) and, do not give a true and fair 85 view of the financial position of the Company as at December 31, 2019, and of its financial performance and its cash flows, for the year then ended.
Basis for Adverse Opinion 2019 Functional and presentation currencies of comparative information During the financial year ended 31 December 2018, and for the period from 1 January 2019 to 20 February 2019, there was no official/legal local currency in Zimbabwe.

The United States dollar was deemed by the directors to be the functional and presentation currency of the Company.
According to the Reserve Bank of Zimbabwe (“RBZ”) Act, the balances between the Bond note, RTGS System and the US$ notes were legally exchangeable at 1:1 during this period.

However, there was constrained exchangeability (the Company was not readily able to exchange currencies through a legal exchange mechanism within a relatively short period of time) of the RTGS balances with foreign currencies in Zimbabwe as there was no legal foreign exchange mechanism.
Furthermore, there was a differential between the value of pricing of goods and services depending on the mode of settlement, albeit through the RTGS system, with the bond notes and US dollars.

The Company transacts a significant amount of business in foreign currencies (especially in the procurement of raw materials and goods for resale), and had significant foreign currency denominated assets and liabilities in its statement of financial position as at 31 December 2018 and 20 February 2019.
During this period, the Company was unable to comply with the requirements of IAS 21 “The Effects of Changes in Foreign Exchange Rates” in the recognition and measurement of foreign currency denominated transactions and balances in its accounting records, as well as, the presentation and disclosure of same in its financial statements.
During this period, there was evidence of a three tier pricing system in Zimbabwe, namely for the US dollar, for the funds in the electronic transfer system (“RTGS”) and the bond notes.

According to the conceptual framework for financial reporting, financial reports represent economic phenomena in words and numbers.

To be useful, financial information must not only represent relevant phenomena, but it must also faithfully represent the substance of the phenomena that it purports to represent.
In many circumstances, the substance of an economic phenomenon and its legal form are the same.

If they are not the same, providing information only about the legal form would not faithfully represent the economic phenomenon.

[March 2019 Conceptual Framework paragraph 2.12].

On 20 February 2019, the Reserve Bank of Zimbabwe issued a Monetary Policy Statement in which the bond notes and coins were redenominated as RTGS Dollars.
At the same time, the RBZ established an interbank foreign exchange market in Zimbabwe to formalize the exchange of RTGS Dollars with United States Dollars.

The opening exchange rate for the United States Dollar to the RTGS Dollar as at 23 February 2019 was 1:2.5.

The Directors had to apply judgement in determining the rates at which the historical comparative information for the year ended 31 December 2018 would be restated.
The currency conversion challenge emanates from the existence of a 3-tier pricing structure during the comparative period depending on mode of settlement and the challenge was compounded by the fact that the official exchange rate between US$ and the bond note/electronic balances was pegged at 1:1 and there was neither an orderly, nor functional market where foreign currency transactions were being conducted in order to establish credible foreign currency conversion 86 rates.
On that basis, the Directors have restated the historical comparative information at the official rate of USD/ZW$1:2.5 as the cost and effort of restating the comparative information using any other rate outweighs the benefits that may arise from the exercise and would contravene the country’s laws and regulations.
However, even subsequent to the introduction of the RTGS Dollar on 20 February 2019, there was evidence of a three tier pricing system in Zimbabwe, namely for the US dollar, for the funds in the electronic transfer system (“RTGS Dollars”) and the bond notes cash, which again presented challenges in terms of complying with the requirements of IAS 21 and provisions of the conceptual framework for financial reporting as explained above.
As a result of the issues discussed above and the significance thereof, I was unable to determine the adjustments that might have been necessary in respect of comparative information to the financial statements, and to transactions entered into during the beginning of the current financial year to satisfy myself concerning the fair presentation of these financial statements.
Recoverability of Related Party Balances I was not able to verify the valuation (recoverability) of amounts owed by related parties with a balance of $304 258 953 on the Company’s statement of financial position.

Some of the amounts are owed by companies that have since closed down whilst ZMDC have not acknowledged the amount due.

Management failed to provide persuasive audit evidence on how and when these amounts would be recovered.
Consequently, I was unable to determine whether any adjustments to the above stated amounts were necessary.

Valuation of Investment in Subsidiary I was not able to verify the valuation of the investment in a subsidiary company stated at an amount of $178 799 841 on the Company’s statement of financial position.
The Company could not provide the audited financial statements for the subsidiary company, DTZ OZGEO (Private) Limited, to enable me to assess the fair valuation of the Company’s investment in the subsidiary.

In addition, management could not provide me with an impairment assessment for the investment in the subsidiary.

Consequently, I was unable to determine whether any adjustments to the above stated amounts were necessary.
Accruals and Trade Payables I was not able to verify the valuation of accruals with a balance of $51 613 628 and trade creditors with a debit balance of $82 686 279, and the rights and obligations of the Company thereon.

Delays in recording of invoices into individual supplier accounts meant that as at the time of our report, management had not provided me with sufficient and appropriate evidence to support these amounts.
Consequently, I was unable to determine whether any adjustments to the above stated amounts were necessary.

87 Emphasis of Matter Subsequent events-Covid-19 I draw attention to the fact that towards the end of the year, a health hazard, COVID-19, that was later declared as a world-wide pandemic by the World Health Organisation in March 2020 affected many parts of the world, including Zimbabwe.
The Covid 19 pandemic has led to widespread economic uncertainty and volatility in financial market as the measures taken across the globe to try and slow down the spread of the pandemic is impacting both the supply and demand for many goods and services.

Although fiscal and monetary policy measures are also being implemented to prop up the economy, many still believe there is a possibility of a global recession.
As at the date of the approval of the financial statements, management was in the process of assessing the full impact of COVID-19 on its operations.

However, management, do not anticipate the COVID-19 to have a significant impact on its operations, and as result the going concern assumption adopted in the preparation of the financial statements has not been revised.

Material Uncertainty Related to Going Concern I draw attention to the notes to the financial statements relating to going concern.
The matters as set forth in the notes indicate that a material uncertainty exists that may cast doubt on the Company’s ability to continue operating as a going concern.

My opinion is not further modified in respect of this matter.

Below are other material issues noted during the audit; 1 GOVERNANCE ISSUES 1.1 Composition of Board Finding The Company’s board does not have independent directors as all board members on the interim board have interests in other related parties.
For instance, three (3) of the five (5) board members are also directors of Zimbabwe Mining Development Corporation (ZMDC) (a former shareholder in ZCDC with related party balances with ZCDC), the other director is Chairman of the Minerals Marketing Corporation (MMCZ), whilst the fifth board member is an official at the Ministry of Mines and Mining Development (MMMD).

Risk / Implication Objectivity of the Board may be compromised and members may not act in the best interests of ZCDC.
88 Recommendation The appointing authority should consider reconstituting the Company’s Board to ensure that the majority of the board members are independent in line with good corporate governance principles.

Management response The term of office of the current Board which was six (6) months expired on 23 October 2020.

A request to appoint a substantive Board was submitted to the appointing authority in line with the relevant laws and corporate governance best practices.
The appointing authority will be advised of the audit finding raised.

1.2 Acting Allowances Finding The Company policy for Executive Management Positions states that “acting allowances shall be the higher of 40% of the acting person’s current salary (current salary + 40%) or the salary of the substantive position in which they are acting”.
I noted that after applying the Company policy, for almost all positions, the Acting Persons in executive positions ended up getting salaries which were higher than salary levels for the substantive positions.

Risk / Implication The acting employee may end up earning significantly more than what a substantive person in that position would.

Should the acting person be confirmed for that position, his/her salary would come down and this may lead to disgruntlements and or labour issues.
Recommendation The Company should consider revising the policy on acting allowances in order to ensure that the total earnings of the acting staff do not exceed the earning which a substantive person in that position would be receiving.

Management response The 40% acting allowance applies to the Executive Management level in line with the Acting Appointment Policy where a substantive Executive acts in a higher role.
In this category, Management notes the anomaly identified in the executive acting allowance.

The Acting appointment policy will be reviewed.

89 2 REVENUE COLLECTION 2.1 Sales of diamond to local customers in local currency Finding During the year under review, the Company was instructed by the Ministry of Mines and Mining Development (MMMD) to sell diamonds to local customers in local currency (Zimbabwe Dollars) instead of United States Dollars (US$).
This directive was said to be in compliance with SI 33 of 2019.

However, management represented that this position was later reversed by the authorities in 2020.

Risk / Implication Failure by the Company to generate foreign currency to fund its expenditures e.g.

importation of equipment and spares, and payment of staff salaries (foreign currency component).

Possible arbitrage opportunities by local buyers who would then benefit by exporting Diamonds purchased in local currency.
Recommendation In future, for major policy changes that are promulgated by the government, the Company is encouraged to be proactive in seeking exemptions that benefit the Company.

Management response The observation is noted.

Management will continue to seek approvals and exemptions from relevant stakeholders so as to realise value from diamond sales.

2.2 Stock Count Reconciliations Finding The Company does not prepare a variance report after the diamonds stock count has been held at Sort House.
There was no evidence of a documented formal process of reconciling physical stock counted to theoretical stock.

For instance, the following anomalies were noted in respect of diamond stocks which then necessitated post year-end adjustments to the financial statements which had been presented for audit: • In 2019, 297 660.41 carats of diamond stock held at MMCZ was not counted at the time of the stock count.

These parcels were packed for customers and held at MMCZ.
However, at year end, during the stock count, these stocks were not included in closing inventories; and • In 2018, 41 699.85 carats of diamond stocks held at MMCZ were excluded from the stock count.

It was assumed at the time that these stocks had been sold to customers.

• An additional 13 222.85 carats were excluded from the final stock sheet in error.

90 Risk / Implication Material variances between physical stock and theoretical stock may go undetected.
Possible pilferage of inventories may occur and go undetected.

Recommendation The Company should consider utilising the sales and distribution module in SAP in order to run a variance report between physical diamonds stock counted and theoretical closing stock.

Any variances noted therefrom should be investigated and cleared timeously.

Management response Noted and agreed.

The SAP sales and distribution module will be up and running before end of 2020.
In addition, a Diamond Stock Controller will be engaged to manage diamond stocks and, Management will ensure stock diamond reconciliations are done on a monthly basis.

2.3 Uncollected Customer Parcel Finding At the time of the audit in April 2020, I learnt that a sale was made to a local customer in September 2019.

The tender rules stated that a customer should pay for their parcels within 3 days of winning a tender.
However, 8 months from the date of sale, the customer had not yet paid for the parcels or collected same.

Risk / Implication Failure to comply with tender rules.

Recommendation The Company should enforce tender rules and consider cancelling a sale and retendering the products in the event that a customer does not pay for a parcel within the required 3 days.

Management response The observation is noted.

Tender rules and sales cut-off procedures will be enforced by Management in liaison with MMCZ.
91 3 PROCUREMENT OF GOODS AND SERVICES 3.1 Prepayments Finding The Company had some goods which were long paid for but not yet received, indicating possible deficiencies in the Company’s supplier selection or capacity of selected suppliers to fulfil contractual obligations.
Prepayment date Description 2017 2017 2018 2018 Boardroom table - hunting furniture 20 Boardroom chairs for Cosham offices Spares and equipment Fuel Total Amount US$ 8 271 9 999 278 579 55 219 US$352 068 Risk / Implication Financial loss as the goods may not be delivered.

Recommendation All outstanding goods procured should be followed up for delivery.

Management response All the above transactions were handed over to the ZCDC Legal team for legal proceedings to commence.
The ZCDC Legal team has lined up meetings with these suppliers to discuss the outstanding payments and map the way forward.

Management will look at current procurement practices to identify and address any weaknesses.

92 ZIMBABWE ELECTRICITY TRANSMISSION AND DISTRIBUTION COMPANY (ZETDC) 2019 Background information The Zimbabwe Electricity Transmission and Distribution Company is incorporated in terms of the Companies Act [Chapter 24:03].

It is a subsidiary of ZESA Holdings.


Its business is the distribution and retail of electricity to final users.

The business operations cover the following aspects, distribution asset management, which includes network planning, development, operation and maintenance.
I have audited the financial statements of the Zimbabwe Electricity Transmission and Distribution Company (Private) Limited for the year ended December 31, 2019 and I issued an Adverse opinion with a material uncertainty related to going concern paragraph.
Adverse Opinion In my opinion, because of the significance of the matters described in the Basis for Adverse Opinion section of my report, the financial statements do not present fairly, in all material respects, the financial position of Zimbabwe Electricity Transmission and Distribution Company (Private) Limited as at December 31, 2019, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and in the manner required by the Companies Act [Chapter 24:03].
Basis for Adverse Opinion Non-compliance with International Accounting Standard (IAS) 21 - The Effect of Changes in Foreign Exchange Rates On October 01, 2018, the Reserve Bank of Zimbabwe (RBZ) issued a Monetary Policy Statement which directed banks to separate bank accounts into Real Time Gross Settlement Foreign Currency Accounts (RTGS FCAs) and Nostro FCAs.
As described in the notes to the consolidated financial statements, the economic environment during the year ended December 31, 2019 was characterised by ‘multi-tiered’ pricing, and the Group transacted predominantly in RTGS FCA (electronic payments), including mobile money, bond notes and coins.
On February 20, 2019, a Monetary Policy Statement was issued, denominating the existing RTGS balances, bond notes and coins in circulation as RTGS dollars in order to establish an exchange rate between the existing monetary balances and foreign currency.

The RTGS dollars became part of the multi-currency system in Zimbabwe through the issuance of statutory instrument (S.I.)

33/2019, with an effective date of February 22, 2019.
The statutory instrument provided that for accounting and other purposes, all assets and liabilities that were immediately before the effective date, valued and expressed in United States dollars shall on and after the effective date be deemed to be values in RTGS dollars at a rate of 1:1 to the United States dollar.
This was not consistent with IAS 21 – The Effects of Changes in Foreign Exchange Rates which requires that an assessment be made of the change in functional currency and that financial statements be presented at a rate that approximates the market rate.

The Group had to 93 be guided by Statutory Instrument (S.I.)
41/2019 which states that in the case of any inconsistency between a local pronouncement issued by the Board through a notice in the Government Gazette and any international standard, the local pronouncement shall take precedence to the extent of the inconsistency.

In compliance with statutory instrument (S.I.)


33/2019, the Group maintained its functional currency as the USD from January 01 2019 to February 22, 2019 using an exchange rate of 1:1 between the RTGS FCA and Nostro FCA and changed to Zimbabwe Dollar as presented in the consolidated financial statements.

This constitutes a departure from the requirements of IAS 21 – The Effects of Changes in Foreign Exchange Rates.
Had the consolidated financial statements been prepared in accordance with the requirements of IAS 21, many elements would have been materially affected.

As a result, the impact of the Group’s inability to comply with IAS 21 has been determined as significant.

The effects on the consolidated financial statements of the non-compliance with IAS 21 are considered material and pervasive to the financial statements, taken as a whole.
Non-compliance with International Accounting Standard (IAS) 29 – Financial Reporting in Hyperinflationary Economies to the application of IAS 29 – Financial Reporting On October 11, 2019, the Public Accountants and Auditors Board (PAAB) issued a in pronouncement relating Hyperinflationary Economies.
The PAAB advised that there is broad market consensus within the accounting and auditing professions that the factors and characteristics to apply the Financial Reporting in Hyperinflationary Economies Standard (IAS 29), in Zimbabwe had been met.

The Directors have applied the IAS 29 – Financial Reporting in Hyperinflationary Economies with effect from 1 January 2019.

However, as a result of the need to comply with the requirements of S.I.
33 of 2019, the changes in the general pricing power of the functional currency were applied on amounts that were not translated in terms of IAS 21 – The Effects of Changes in Foreign Exchange Rates for the period January 01 to February 22, 2019.

This constitutes a departure from the requirements of IAS 29 – Financial Reporting in Hyperinflationary Economies.
Had the Company applied the requirements of IAS 21 and IAS 29, many of the elements of the consolidated financial statements would have been materially impacted and therefore the departure from the requirements of these standards is considered to be pervasive.
Fair value determination for assets, transactions and liabilities The determination of fair values for assets, transactions and liabilities presented in the financial statements is affected by the prevailing economic environment and may therefore be distorted.

This may result in significant variations in fair values, depending on factors and assumptions used in the determination of the fair values.
94 Material Uncertainty Related to Going Concern I draw attention to fact that the Company recorded an operating loss before tax of ZWL 924 576 859 (2018: 2 348 661 135) for the year ended December 31, 2019.

As at December 31, 2019, the Company’s current liabilities exceeded its current assets by ZWL 5 168 114 975 (2018: ZWL 4 794 391 397), this indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern.
My opinion is not modified in respect of this matter.

Below are other material issues noted during the audit; 1 GOVERNANCE ISSUES 1.1 Rural electrification levy Finding The Company was not remitting the rural electrification levy to the Rural Electrification Agency (REA).

REA levy outstanding as at 31 December 2019 amounted to ZWL 224 392 693 (2018: ZWL 108 465 723).

Risk / Implication Non-compliance with the Rural Electrification Fund Act (Chapter 13:20).
Possible litigation by the Rural Electrification Agency (REA).

Recommendation Management should ensure that the outstanding levies are settled.

Management response REA levy owing is still high due to cash flow challenges.

The REA levy is now being remitted based on collections.

When cash flows improve the outstanding balance will be reduced to bring it to current.

1.2 Connections to customers Finding The Company had some customers who made advance payments for connection of electricity.
However, the Company was not connecting electricity for these customers.

As a result, the total amount paid for connections which remained outstanding increased from ZWL 3 212 964 in 2018 to ZWL 4 137 715 in 2019.

95 Risk / Implication Possible litigation from customers who have paid connection fees and remain unconnected.

Loss of potential revenue from customers who have paid connection fees and remain unconnected.
Recommendation Management should ensure that all customers who have paid connection fees have been connected.

Management response Although customers are now buying their own meters which are refunded through tokens of electricity, the Company is experiencing delays in connecting customers who have paid their connection fees due to shortage of connection materials such as cables, weather dac and other accessories.
The connection fees being charged to customers are inadequate to procure the required materials.

The company has gone to tender for connection materials.

It is anticipated that once the materials are received, the waiting period will be reduced from current 51 days to the promised 21 days by the third quarter in 2020.

2 REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1 Meter readings Finding The Company’s policy required meter readings to be done every three (3) months.
However, I noted that the Company had some clients whose meter readings had not been taken for more than 12 months.

These clients were being billed using estimates.

Risk / Implication Possible misstatement of financial statements.

Recommendation Management should ensure that meter readings are done in every three (3) months in accordance with the Company’s policy.

Management response The Company is still failing to take meter readings as per Company policy due to shortage of operational vehicles.
Installation of approximately one hundred thousand outstanding prepaid meters by end of 2020 and forty thousand smart meters currently on-going by 2021 will eliminate the need to take meter readings 96 2.2 Receivables Finding The Company had debtors amounting to ZWL 2.2 billion as at December 31, 2019 (2018: ZWL 1.1 billion).

The debtors age analysis revealed that 45% of the Company debtors were aged 90 days or more.
Risk / Implication Compromised service delivery as financial resources are tied up in debtors.

Recommendation Management should ensure receivables are collected within 60 days in accordance with the Company’s policy.

Management response The following strategies are being implemented to reduce the debt: - i. taking legal action to recover the debt, ii.

iii.

iv.
iii.

iv.

v. installing prepaid meters for the remaining domestic and low capacity commercial clients, Installing smart meters for large clients, Debt-set off for state owned enterprises through Treasury Bills, So far a total of 2 479 smart meters and accessories have been delivered under the pilot project and 726 have been installed with a target to install 16 000 meters by 2020 and 40 000 by end of 2021, vi.

increase the debt ratchet on prepayment sales to 50% of token purchases, and vii.
tight enforcement of payment plans followed by disconnections upon default.

viii.

Local Authorities debt has been referred to the parent Ministry to assist in recovering the debt.

ix.

The Company is also submitting defaulting customers to the Financial Credit Bureau for black listing.

97 3 PROCUREMENT OF GOODS AND SERVICES 3.1 Prepayments Finding The Company had outstanding prepayments with some dating as far back as 2015.

The prepayments relate to goods and services that had not been delivered.
In one instance the Company paid a supplier USD 1 293 654 for cables in 2015.

The supplier delivered wrong cables which were then returned.

However, the Company had neither received the correct cables nor a refund at the time audit was concluded in 2020.

Risk / Implication Non delivery of goods or services paid for.

Recommendation Management should ensure that goods or services prepaid for are delivered.
Management response The supplier delivered a wrong cable which was put in a Bonded warehouse for eight weeks pending payment of duty.

When the duty was eventually paid that's when it was discovered that the cable was wrong and was returned to the supplier for replacement.

However, the supplier is working with his financier to deliver the outstanding cable valued at $1 293 654 to close the case.
98 ZESA HOLDINGS (PRIVATE) LIMITED 2019 Background information ZESA Holdings (Private) Limited was incorporated in terms of the Companies Act [Chapter 24:03].

The Company manages its 100% owned subsidiaries, which are, Zimbabwe Power Company (Private) Limited, Zimbabwe Electricity Transmission and Distribution Company (Private) Limited, Powertel Communications (Private) Limited and ZESA Enterprises (Private) Limited.

The Company is governed by the Electricity Act [Chapter 13:19].
I have audited the financial statements of ZESA Holdings (Private) Limited for the year ended December 31, 2019 and I issued an adverse opinion with a material uncertainty related to going concern paragraph.
Adverse Opinion In my opinion, because of the significance of the matters described in the Basis for Adverse Opinion section of my report, the consolidated financial statements do not present fairly, in all material respects, the financial position of ZESA Holdings (Private) Limited and its subsidiaries as at December 31, 2019, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and in the manner required by the Companies Act (Chapter 24:03).
Basis for Adverse Opinion Non-compliance with International Accounting Standard (IAS) 21 - The Effect of Changes in Foreign Exchange Rates On October 01, 2018, the Reserve Bank of Zimbabwe (RBZ) issued a Monetary Policy Statement which directed banks to separate bank accounts into Real Time Gross Settlement Foreign Currency Accounts (RTGS FCAs) and Nostro FCAs.
As described in the notes to the consolidated financial statements, the economic environment during the year ended December 31, 2019 was characterised by ‘multi-tiered’ pricing, and the Group transacted predominantly in RTGS FCA (electronic payments), including mobile money, bond notes and coins.
On February 20, 2019, a Monetary Policy Statement was issued, denominating the existing RTGS balances, bond notes and coins in circulation as RTGS dollars in order to establish an exchange rate between the existing monetary balances and foreign currency.

The RTGS dollars became part of the multi-currency system in Zimbabwe through the issuance of statutory instrument (S.I.)

33/2019, with an effective date of February 22, 2019.
The statutory instrument provided that for accounting and other purposes, all assets and liabilities that were immediately before the effective date, valued and expressed in United States dollars shall on and after the effective date be deemed to be values in RTGS dollars at a rate of 1:1 to the United States dollar.
This was not consistent with IAS 21 – The Effects of Changes in Foreign Exchange Rates which requires that an assessment be made of the change in functional currency and that financial statements be presented at a rate that approximates the market rate.

The Group had to be guided by Statutory Instrument (S.I.)
41/2019 which states that in the case of any inconsistency between a local pronouncement issued by the Board through a notice in the 99 Government Gazette and any international standard, the local pronouncement shall take precedence to the extent of the inconsistency.

In compliance with statutory instrument (S.I.)


33/2019, the Group maintained its functional currency as the USD from January 01, 2019 to February 22, 2019 using an exchange rate of 1:1 between the RTGS FCA and Nostro FCA and changed to Zimbabwe Dollar as presented in the consolidated financial statements.

This constitutes a departure from the requirements of IAS 21 – The Effects of Changes in Foreign Exchange Rates.
Had the consolidated financial statements been prepared in accordance with the requirements of IAS 21, many elements would have been materially affected.

As a result, the impact of the Group’s inability to comply with IAS 21 has been determined as significant.

The effects on the consolidated financial statements of the non-compliance with IAS 21 are considered material and pervasive to the financial statements, taken as a whole.
Non-compliance with International Accounting Standard (IAS) 29 – Financial Reporting in Hyperinflationary Economies to the application of IAS 29 – Financial Reporting On October 11, 2019, the Public Accountants and Auditors Board (PAAB) issued a in pronouncement relating Hyperinflationary Economies.
The PAAB advised that there is broad market consensus within the accounting and auditing professions that the factors and characteristics to apply the Financial Reporting in Hyperinflationary Economies Standard (IAS 29), in Zimbabwe had been met.

The Directors have applied the IAS 29 – Financial Reporting in Hyperinflationary Economies with effect from 1 January 2019.

However, as a result of the need to comply with the requirements of S.I.
33 of 2019, the changes in the general pricing power of the functional currency were applied on amounts that were not translated in terms of IAS 21 – The Effects of Changes in Foreign Exchange Rates for the period January 01 to February 22, 2019.

This constitutes a departure from the requirements of IAS 29 – Financial Reporting in Hyperinflationary Economies.
Had the Group applied the requirements of IAS 21 and IAS 29, many of the elements of the consolidated financial statements would have been materially impacted and therefore the departure from the requirements of these standards is considered to be pervasive.
Fair value determination for assets, transactions and liabilities The determination of fair values for assets, transactions and liabilities presented in the consolidated financial statements is affected by the prevailing economic environment and may therefore be distorted.

This may result in significant variations in fair values, depending on factors and assumptions used in the determination of the fair values.
Material Uncertainty Related to Going Concern I draw attention to the fact that the Group’s current liabilities exceeded its current assets by ZWL 3 219 512 232 (2018: 1 506 889 459), the Group also posted an operating loss before tax of ZWL 2 305 108 569 for the year ended December 31, 2019 this indicates that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern.

My opinion is not modified in respect of this matter.
Below is another material issue raised during the audit; 100 1.

GOVERNANCE ISSUE 1.1 Loans Finding The Company received loan amounts from Ministry of Finance and Economic Development.

However, there was no agreement for the loan amounts.

As a result, there were no stipulated terms of repayments and interest.

As at December 31, 2019, the amount outstanding was ZWL 1 179 454.

Risk / Implication Possible misstatement of financial statements.
Recommendation Management should ensure that a signed loan agreement is put in place.

Management response The National Public Debt Office has been engaged with regards to the loan agreement.

Management will continue to make follow ups with the Government on the matter.
101 PUBLIC ENTITIES UNDER THE CATEGORY OF FINANCIAL INSTITUTIONS 102 INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE (IDBZ) 2019 Background information The Infrastructure Development Bank of Zimbabwe (IDBZ) is a development financial institution which is incorporated and domiciled in Zimbabwe under the IDBZ Act [Chapter 24:14].
IDBZ and its subsidiaries, (together the “Group”) are primarily involved in mobilizing and providing finance for infrastructure development activities and management of infrastructure development projects.

I have audited the financial statements for Infrastructure Development Bank of Zimbabwe for the year ended December 31, 2019 and I have issued a qualified opinion.
Qualified Opinion In my opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of my report, the inflation adjusted consolidated financial statements give a true and fair view of the statement of financial position of IDBZ as at 31 December 2019, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”).
Basis for Qualified Opinion IDBZ used United States Dollars (USD) as its functional currency from the 1st of January 2019 to the 22nd of February 2019.

IDBZ changed its functional currency and presentation currency to Zimbabwean dollar (“ZWL”) on 22 February 2019 following the promulgation of Statutory Instrument 33 of 2019 (“SI 33/19”).
All foreign denominated balances including Nostro bank accounts and non-monetary items except prepayments, were translated to ZWL on 22 February 2019, using an exchange rate of 1USD:2.5ZWL which was the exchange rate on the date of change in functional currency.

All monetary assets and liabilities were translated at an exchange rate of 1USD:1ZWL in order to achieve faithful representation.
The translation treatment of local monetary items and prepayments is not compliant with IAS 21 “The Effects of Changes in Foreign Currency Rates”, which requires all balances to be translated at exchange rate available on the date of change of functional currency which in this case was 2.5.
Recognition of Foreign Currency Translation Reserve (“FCTR”) The directors translated prepayments, local monetary assets and liabilities excluding Nostro denominated bank balances and foreign currency held, on the date of change in functional currency, from USD to ZWL using the exchange rate of 1USD:1ZWL contrary to the requirements of IAS 21 that prescribe that one rate, on the date of change in functional currency, be applied to all items.
Directors applied this rate to achieve faithful representation and to ensure prepayments, monetary assets and liabilities are not overstated.

This resulted in the recognition of a material “FCTR” in equity amounting to ZWL 363,612,060, contrary to requirements of IAS 21.

The inapplicability of IAS 21 on the translation of local monetary items and prepayments was a result of the promulgation of SI 33/19 which prescribed a rate of 1USD:1ZWL.
103 Hyperinflation Reporting Although restatement was correctly done in terms of IAS 29 “Reporting in Hyperinflationary Economies”, from 1 January 2019 to 31 December 2019, the effective date of application of IAS 29 is not consistent with the effective date of change in functional currency of 22 February adopted by IDBZ.
Below are other material issues noted during the audit; 1 GOVERNANCE ISSUE 1.1 Employment benefits Finding The bank paid fuel benefits to some of its employees during the year under review.

However, I noted that these benefits were not being processed through payroll and were not subject to tax.

Risk / Implication Financial loss due to interest and penalties that may be charged by the tax authority.

Recommendation All employee benefits should be processed through payroll and taxed appropriately.
Management response As advised, the Bank abolished the company car benefit in September 2012 and moved to a car purchase scheme effective October 2012, whereby staff members were given loans to purchase vehicles for both business and personal use.

This change of policy meant that the Bank would not provide any allowances for fuel, maintenance and insurance of the vehicle among others.

Part of the conditions under the new policy required staff members to use their vehicles for business purposes.
In an endeavor to ensure that Bank business is not compromised, the Bank offered Professional Level and Management Level Staff fuel which would be used to meet all the local business travels.

Since the fuel is used for both personal and business use, it cannot be easily split to allocate what is used for business and personal so that the personal component is liable for tax.
It should also be noted that staff members are not compensated for maintenance costs and insurance despite using their personal vehicles for business purposes.

Furthermore, using the AA rates as a measure of compensation for employees using their personal vehicles for business purposes would far outweigh the costs that are currently paid by the Bank in the form of fuel costs.
Evaluation of Management Response I acknowledge the management response and the fact that the cost of using personal vehicles for business purposes far outweigh the cost of fuel paid by the bank, however, this position 104 needs to be confirmed by ZIMRA in writing concurring about the inability to split this fuel allowance or benefit and exempting Bank employees from being taxed on this allowance.
105 NATIONAL BUILDING SOCIETY 2019 Background information National Building Society (NBS) was incorporated in 2014 in terms of the Companies Act [Chapter 24.03].

The institution was registered as a Building Society in September 2015 and was authorized to commence operations on 27 April 2016.

The Society was set up with the sole mandate of contributing to the National Housing Stock.
NBS is a wholly owned subsidiary of the National Social Security Authority (NSSA), a statutory corporate body tasked by the Government to provide social security.

I have audited the financial statements of the National Building Society and I issued an adverse opinion.
Adverse Opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of my report, the inflation adjusted financial statements do not present fairly the inflation adjusted financial position of National Building Society as at December 31, 2019, and its inflation adjusted financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS), and the requirements of the Companies Act [Chapter 24:03] and the Building Societies Act [Chapter 24:02].
Basis of adverse opinion Noncompliance with International Financial Reporting Standards IAS 21 – The Effects of Changes in Foreign Exchange Rates (IAS 21) in the prior and current financial years and inappropriate application of IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8) In the inflation adjusted financial statements, for the period 1 October 2018 to 22 February 2019, the Society applied the United States Dollar (USD) as its functional currency, in order to comply with Statutory instrument 33 (S.I.
33), issued on 22 February 2019.

S.I.

33 precluded any reference to any local currency as the functional currency prior to the formal introduction of a local currency on 22 February 2019 and this impacted on the financial statements as at 31 December 2018.

For the 2019 financial year, the Society changed its functional currency to the RTGS dollar (RTGS$) with effect from 22 February 2019.
The inflation adjusted financial statements are presented in ZWL, also referred to as the RTGS dollar (RTGS$) in SI33.

The National Building Society, based on its interpretation of IAS 21, acknowledged that there was a functional currency change in the prior year from the USD to a local currency unit, with effect from 1 October 2018, and that the exchange rate between the USD and the local currency unit was no longer 1:1 after 1 October 2018.
An adverse opinion was issued in the prior year for the departure from IAS 21.

The directors have not restated the comparative information to resolve the matters which resulted in the adverse opinion in the prior year relating to non-compliance with IAS 21, as required by IAS 8 Accounting Policies, Changes in Accounting 106 Estimates and Errors.

This was primarily due to comply with S.I.

33 in the prior year and the difficulty in determining an appropriate exchange rate.
Due to the matters discussed above, I was unable to obtain sufficient appropriate audit evidence that the closing balance as at December 31 2018 were free of material misstatement and have been brought forward correctly.

I was unable to satisfy myself by alternative means concerning the opening balances.
Since opening balances have a bearing into the determination of the financial performance and cash flows, I was unable to determine whether adjustments might have been necessary in respect of the movements in the inflation adjusted statement of profit or loss and other comprehensive income, the inflation adjusted statement of cash flows and the inflation adjusted statement of changes in equity.
Furthermore, when the Society accounted for the change in functional currency prospectively from 22 February 2019, the Society translated its foreign denominated assets and liabilities at an exchange rate of USD 1: ZWL1, which was the official exchange rate prior to the introduction of the interbank foreign exchange market which was introduced on a later date.

This further constitutes a departure from IAS 21.


Noncompliance with international financial reporting standards IAS 29 – Financial reporting in hyperinflationary economies Zimbabwe became a hyperinflationary economy with effect from 1 July 2019.

IAS 29 Financial Reporting in Hyperinflationary economies has only been applied to the 2019 numbers with effect from 1 January 2019, whilst comparative information has been restated, without applying full IAS 29 principles.
IAS 29 has also been applied to the incorrect opening balances due to non-compliance with IAS21 and IAS 8.

The effects of the above departures from IFRS are material and pervasive to the inflation adjusted financial statements.

Valuation of investment property The Society engaged an independent professional valuer to value the investment property during the current year using the market approach.

The valuation was performed in USD and was subject to certain caveats as disclosed in the valuer’s report.
The Society converted the USD property values using the interbank exchange rate to calculate the ZWL property values.

Given the caveats made by the valuer and the uncertainty over the appropriateness of the use of the interbank exchange rate used, I was unable to determine whether any adjustments to the fair value of the investment property were necessary in these circumstances.
Capitalization of the Society I draw attention to the significant gap between the Society’s own capitalization levels as at December 31, 2019 of USD 3.8 million and the new minimum capital requirements announced on January 22, 2020, of USD 20 million effective December 31, 2020.

The Society obtained conditional support, in the form of a letter of support from its shareholder of its willingness to ensure that the Society is adequately capitalized in line with the new minimum capital 107 requirements.
The letter of support is, however, subject to requisite assurances and relevant Board Approvals.

Below is another material issue noted during the audit; 1 GOVERNANCE ISSUE 1.1 Service contracts Finding The Society engaged two property valuers for the valuation of their properties for the year ended December 31, 2019.

However, I noted that there were no service contracts or engagement letters that were signed between the Society and the valuers.
The only supporting documents for the engagement of one of the valuers was a purchase order, while for the other one was through a letter of appointment.

These two documents were not sufficient for the administration of the arrangement in that the contractual rights and obligations were not then put in writing.

Risk / Implication The Society may not have legal recourse in the event of disputes.
Recommendation The Society should ensure that service level agreements are in place when ever suppliers are engaged.

Management response These are routine, short term assignments as per direct mandate and are supported by letter of appointment spelling out the nature of the assignment and as such, we saw little value in drawing up contracts.

However, comments have been noted for implementation in future.
108 SMALL AND MEDIUM ENTERPRISES DEVELOPMENT CORPORATION (SMEDCO) 2018 Background information Small and Medium Enterprises Development Corporation was incorporated in Zimbabwe in terms of the Small and Medium Enterprises Development Corporation Act [Chapter 24:12] as amended.

The nature of business of the Corporation is that of providing loan finance to upcoming and existing small to medium scale enterprises and that of property letting and investment activities.
Its subsidiary Litefold Engineering (Private) Limited is incorporated in Zimbabwe in terms of the Companies Act [Chapter 23.04].

The nature of business of the Company is that of providing metal engineering and carpentry services.

I have audited the financial statements of Small and Medium Enterprises Development Corporation for the year ended December 31, 2018 and I issued an adverse opinion.
Adverse Opinion on the Consolidated Financial Statements In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph of my report, the consolidated financial statements do not present fairly the financial position of the Group as at December 31, 2018, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion on the Consolidated Financial Statements Non-compliance with IAS 21, “The effects of Changes in Foreign Exchange rates” The Group did not fully comply with the provisions of International Accounting Standard 21 “The effects of Changes in Foreign Exchange rates” as Statutory Instrument 33 of 2019 precluded the Group from applying an independent assessment of functional currency as required by the accounting standard and in terms of the guidance provided by the Public Accountants and Auditors Board (PAAB).
The need to account for these effects emanated from the ‘multi-tiered’ pricing environment that was prevailing during the year under review, where settlement of transactions was dependent on the mode of payment, whether USD cash, RTGS, bond notes and mobile money.

Shortage of foreign currency also resulted in foreign exchange rate disparities between RTGS and US$.
This in turn affected the pricing structures to incorporate foreign exchange rate movements on the RTGS and bond notes, hence the need to comply with IAS 21 to reflect effects of these changes in the preparation of financial statements.

This ‘multi-tiered’ pricing environment resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21 would apply.
Had the Group complied with the requirements of IAS 21, many elements in the financial statements would have been materially affected.

As a result, the impact of the Group’s 109 inability to comply with IAS 21 has been determined as significant hence the effects on the financial statements as a whole are considered material and pervasive.

Limitation of scope Litefold Engineering (Private) Limited had no internal control system over receipting of revenue from equipment hire.
There were no job cards, timesheets, registers of services provided and invoices raised for engineering services and equipment hire.

Therefore, I was unable to gather evidence on the completeness and accuracy of revenue.
Adverse Opinion on the Corporation’s Financial Statements In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph of my report, the financial statements do not present fairly the financial position of the Small and Medium Enterprises Development Corporation as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion on the Corporation’s Financial Statements The Corporation did not fully comply with the provisions of International Accounting Standard 21 “The effects of Changes in Foreign Exchange rate” as Statutory Instrument 33 of 2019 precluded the Corporation from applying an independent assessment of functional currency as required by the accounting standard and in terms of the guidance provided by the Public Accountants and Auditors Board (PAAB).
The need to account for these effects emanated from the ‘multi-tiered’ pricing environment that was prevailing during the year under review, where settlement of transactions was dependent on the mode of payment, whether USD cash, RTGS, bond notes and mobile money.

Shortage of foreign currency also resulted in foreign exchange rate disparities between RTGS and US$.
This in turn affected the pricing structures to incorporate foreign exchange rate movements on the RTGS and bond notes, hence the need to comply with IAS 21 to reflect effects of these changes in the preparation of financial statements.

This ‘multi-tiered’ pricing environment resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21 would apply.
Had the Corporation complied with the requirements of IAS 21, many elements in the financial statements would have been materially affected.

As a result, the impact of the Corporation’s inability to comply with IAS 21 has been determined as significant hence the effects on the financial statements as a whole are considered material and pervasive.
Below is another material issue noted during the audit; 110 1 GOVERNANCE ISSUE 1.1 Board Committees Finding The Corporation did not have a full complement of the Board.

The Board had five (5) members instead of seven (7).

As a result, the numbers could not facilitate the formation of various board committees which are critical for financial institutions.

Risk / Implication The Board’s oversight role may be compromised as it is overwhelmed by issues that should be deliberated by committees.
Recommendation The Corporation should engage the parent Ministry for appointment of Board members or consider co-opting other members as this is provided for in the establishing Act.

Management response Observation noted.

The Corporation is anticipating appointment of additional board members to make up the full complement of the Board to enable establishment of the committees.

The Board met to deliberate on matters in the year under review.
However, an option to co-opt alternate members to the Board in terms of Small and Medium Enterprises Development Corporation Act [Chapter 24:12] section 12(4) b will be put forward for consideration by the relevant Ministry.

111 ZIMBABWE WOMEN’S MICROFINANCE BANK (ZWMB) 2019 Background information Zimbabwe Women’s Microfinance Bank is a corporate body establishment and duly incorporated in Zimbabwe as a private company in 2017.
The Bank was established by the Government of Zimbabwe to be the vehicle for the empowerment of women and to address financial inclusion challenges.

The Bank accepts deposits that will accumulate interest for the benefit of the depositors and lends to a targeted market in line with its developmental mandate.

The Bank is also a member of the Deposit Protection Board.
I have audited the financial statements of Zimbabwe Women’s Microfinance Bank for the year ended December 31, 2019 and I issued an adverse opinion based on non-compliance with IAS 21 “The effects of changes in foreign exchange rate”.
Adverse Opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph of my report, the financial statements do not present fairly the financial position of the Zimbabwe Women’s Microfinance Bank as at December 31, 2019, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion Non-compliance with International Accounting Standard (IAS) 21” The effects of changes in foreign exchange rates” The Bank translated its comparative financial statements including transactions and balances for the period up to February 22, 2019 denominated in USD at rate of 1:1 to the Zimbabwean Dollar (RTGS or ZWL).
The transactions during this period were not converted to RTGS or ZWL using appropriate (fair) exchange rate that reflects the economic substance of its value as provided for by International Accounting Standard 21, “The Effects of Changes in Foreign Exchange Rates”.

The Bank applied the legal exchange rate of 1:1 as pronounced through Statutory Instrument 33 of 2019.
Subsequent to February 22, 2019 the Bank applied interbank exchange rates which came into existence, through Exchange Control Directive RU 28 of 2019 issued by the RBZ and was initially pegged at a rate of 2.5.

This was after a period of foreign currency scarcity and constrained exchangeability of bond notes, coins and electronic money to other foreign currencies.

No assessment was carried out to show appropriateness of the interbank rate to the existing economic environment.
The interbank rate and the exchange rate of 1:1 applied on comparative amounts does not represent the price that can be received for foreign currency as many were unable to access foreign currency through the interbank market and immediate delivery of foreign currency could not be guaranteed.

Therefore, use of the interbank exchange rate alone fails to meet the criteria for appropriate (fair) exchange rate and to achieve fair presentation of the financial statements.
As a result, the impact of the Bank’s inability to comply with IAS 21 has been determined as significant.

The effects on the financial statements are considered material and pervasive to the financial statements as a whole.

112 Below are other material issues noted during the audit.

1 GOVERNANCE ISSUES 1.1 Board of directors Finding The Bank operated without a Board of directors during the year under review.
I noted that a new board was not appointed following the expiry of the term of the previous board in February 2019.

The Board provides strategic direction for the Bank and exercises oversight over management and operations.

Risk / Implication Oversight over management and operations may be compromised.

Recommendation The Bank should engage the parent Ministry for the appointment of the Board in time.
Management response The notice was provided in time as per the corporate governance requirement to the parent ministry.

The selection process of Board Members took long hence the delay in appointing the Board.

We are confident that the oversight role was executed in line with the best practice as the responsible Minister superintended over the affairs of the Bank including approvals for key and material decisions beyond the scope of Management.
1.2 Value chain loans Finding Value chain loans advanced to farmers during the year were being processed outside the Bank’s automated system (BR.net).

The loans were kept on an excel document which was not automated and password protected.

In addition, the calculation of interest on the loans was being done manually.

Risk / Implication Accountability and recovery of the loans may be compromised.

Recommendation The Bank should consider automating the recording and processing of value chain loans.
113 Management response Noted.

The Bank is already working with the systems provider to enable the system to accommodate such products in BR.Net.

The project should be completed by the 30th of September 2020.

114 PUBLIC ENTITIES UNDER THE CATEGORY OF HOSPITALS 115 MPILO CENTRAL HOSPITAL 2017 AND 2018 Background information Mpilo Central Hospital is a body corporate as defined in section 18 read together with the first schedule of the Health Service Act [Chapter15:16].
It was incorporated in August 1958 in Zimbabwe, and is involved in the provision of hospitalization and medical services to the Southern region of Zimbabwe.

I have audited the financial statements of Mpilo Central Hospital for the years ended December 31, 2017 and 2018 and I issued a qualified opinion with a material uncertainty on going concern and an adverse opinion respectively.
Qualified Opinion 2017 In my opinion, except for the matters described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of the Hospital as at December 31, 2017 and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRSs”).
Basis for Qualified Opinion I was not able to extend my examination of grants and donations income from other sources beyond the receipts actually recorded and confirmations from known parties recorded as having provided funds to the Hospital.

Accordingly, I could not ascertain the completeness of grants and donations income beyond what was recorded in the financial statements.

In addition, non-monetary donations received by the Hospital were not quantified and recognised in the financial statements.
Accordingly, inventories and equipment recognised in the financial statements at year end may not be fairly stated.

Material Uncertainty related to going concern The Hospital reported an operating deficit amounting to $976 404 (2016: $2 624 210) for the year ended 31 December 2017.

In addition, the Hospital’s current liabilities exceeded its current assets by $1 315 151 (2016: 2 767 211) as at 31 December 2017.
These factors indicate that a material uncertainty exists that may cast doubt on the Hospital’s ability to continue operating as a going concern.
Adverse Opinion 2018 In my opinion, because of the significance of the matters described in the basis for adverse of opinion paragraph below, the financial statements do not present fairly the financial position of the Hospital as at 31 December 2018 and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”).
116 Basis for Adverse Opinion Non-Compliance with IAS 21-Effects of Changes in Foreign Exchange Rates During the year the Zimbabwean economy was characterised by a multi-tiered pricing model.

Under this model a single product or service had different prices depending on the mode of payment, such as the United States Dollar (US$), electronic money (RTGS Dollar), mobile money and bond notes.
This resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21, The Effects of Changes in Foreign Exchange Rates, would apply.

In the market in general entities experienced premiums and discounts on the official foreign exchange rate of 1:1 between the RTGs Dollar balances, bond notes and the US$.
As a result of these factors the Board of Management (“Board”) performed an assessment of the Hospital’s functional currency in accordance with IAS 21, the Effects of Changes in Foreign Exchange Rates (“IAS 21”) and acknowledged that the functional currency of the Hospital was no longer the US$.

In addition, in February 2019, an electronic currency called the RTGS Dollar was introduced through Statutory Instrument 33 of 2019 (“S.I.
33/2019”) with an effective date of 22 February 2019 and the currency commenced trading at a rate of 2.5 to the US$.

Furthermore, SI 33/2019 fixed the exchange rate between the RTS Dollar and the US$ at a rate of 1:1 for periods before the effective date.

While the Board of Management acknowledged the change in functional currency from the US$ to the RTGS Dollar as per developments subsequent to year end, the Hospital maintained its functional currency in US$.
Furthermore, while the timing of conversion of functional currency from US$ to RTGS Dollar is in line with the requirements of S.I.

33/2019 subsequent to year end, it constitutes a material departure from the requirements of IAS 21 and therefore the financial statements have not been prepared in conformity with IFRS.
Had management applied the requirements of IAS 21, many elements of the accompanying financial statements would have been materially affected and therefore this departure from IAS 21 is considered to be pervasive and fundamental.

The financial effects on the financial statements arising from this departure have not been determined.
However, as further disclosed in note 13 of the financial statements, management have performed a sensitivity analysis of the potential effects of the changes in foreign exchange rates on the Hospital’s statement of financial position as at 31 December 2018.

This analysis has not been performed on the financial performance and cash flow due to the lack of appropriate exchange rates during the year ended 31 December 2018.
Expected credit loss allowance (“ECL”) The Hospital adopted IFRS 9: Financial Instruments (IFRS 9) effective 1 July 2018.

The Hospital elected to apply the simplified approach and used the provision matrix in determining the expected credit loss (“ECL”) allowances as at year end.

The Hospital did not use relevant, reasonable and supportable forward looking information in establishing loss rates in accordance with IFRS 9.
In addition, the Hospital did not apply different loss rates for accounts receivables in different cycles or buckets of default based on historical payments profiles.

Furthermore, Mpilo did not make use of probability weighted expected credit loss on the 117 different scenarios and appropriately segment the accounts receivables according to the differing credit risk profiles.
The Hospital did not also make retrospective appropriate adjustment to the retained earnings and it did not define defaults consistently with the definition used for internal credit risk management purposes.

Mpilo did not appropriately define curing rules for staging of the accounts receivables.

It was impracticable to quantify the financial effects on the financial statements of this non-compliance with IFRS 9.
Below are other material issues noted during the audit; 1 GOVERNANCE ISSUE 1.1 Practicing certificates Finding The Hospital did not have a monitoring mechanism to ensure that all practitioners had valid practicing certificates.

As a result, some medical practitioners at the Hospital were practicing without valid practicing certificates during the year under audit.

Risk / Implication Censure of the Hospital and practitioners by the authorities.
Exposure of clients to staff who have not been authorized to do procedures.

Recommendation Management should formulate a monitoring mechanism and ensure that all practitioners at the Hospital have practicing certificates at all times.

Management response The Human Resource Department has opened registers for all practicing health practitioners as a tool to monitor their registration with their relevant councils.
We are also working closely with the professional councils to regulate the practice of the said professionals.

Commencing 3rd quarter 2020 memos shall be issued to all departments requesting members to present their practising certificates.

These memos shall be issued quarterly for compliance purposes.
118 2 PROGRESS IN IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS 2.1 Service delivery in Maternity unit Recommendation Management should engage the key stakeholders and formulate plans to resolve all the issues noted in relation to limited capacity and shortage of drugs and equipment without any further delay.

Progress made The referral system as it relates to maternity is being enforced, which has resulted in maternity being decongested.

Medicines and equipment availability is work in progress.
119 PARIRENYATWA GROUP OF HOSPITALS 2018 Background information Parirenyatwa Group of Hospitals as a central Hospital is a body corporate established in terms section 18 (1) of the Health Service Act, [Chapter 15:16] of 2004.

The Hospital consists of Mbuya Nehanda Maternity Hospital, Sekuru Kaguvi Eye Unit, Annex Hospital for the Mentally Disabled and the Main Hospital.
I have audited the financial statements of Parirenyatwa Group of Hospitals for the year ended December 31, 2018 and I issued an adverse opinion.
Adverse Opinion In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph of my report, the accompanying financial statements do not present fairly the financial position of the Parirenyatwa Group of Hospitals as at December 31, 2018, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion The Hospital did not fully comply with the provisions of International Accounting Standard 21 “The effects of Changes in Foreign Exchange rates” as Statutory Instrument 33 of 2019 precluded the Hospital from applying an independent assessment of functional currency as required by the accounting standard and in terms of the guidance provided by the Public Accountants and Auditors Board (PAAB).
The need to account for these effects emanated from the ‘multi-tiered’ pricing environment that was prevailing during the year under review, where settlement of transactions was dependent on the mode of payment, whether USD cash, electronic payment, bond notes and mobile money.

Shortage of foreign currency also resulted in foreign exchange rate disparities between RTGS and US$.
This in turn affected the pricing structures to incorporate foreign exchange rate movements on the RTGS and bond notes, hence the need to comply with IAS 21 to reflect effects of these changes in the preparation of financial statements.

This ‘multi-tiered pricing environment resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21 would apply.
Had the Hospital complied with the requirements of IAS 21, many elements in the financial statements would have been materially affected.

As a result, the impact of the Hospital’s inability to comply with IAS 21 has been determined as significant hence the effects on the financial statements as a whole are considered material and pervasive.
Below are other material issues noted during the audit: 120 1 GOVERNANCE ISSUES 1.1 Theatre cancellations Finding The Hospital cancelled a total of 1688 theatre operations.

Upon enquiry, management stated that the major cause of the cancellations was non-availability of equipment to carry out theatre operations.

Risk / Implication Service delivery may be compromised.

Recommendation Management should ensure that the hospital is equipped with equipment for efficient service delivery.
Management response The observation is noted.

Due to financial constraints to re-tool the theatres over the years, most of the equipment broke down and the hospital was unable to provide adequate theatre coverage hence cancellations of theatre cases.

However, during the third quarter of the year, procurement of spare parts which was used to repair the equipment was done which reduced the number of theatre cancellations.
The year 2018 witnessed two industrial actions by medical personnel in February and December 2018 which contributed to theatre cancellations.

Furthermore, availability of Anesthetists was also a challenge and this resulted in theatre cancellations.
The other reasons for theatre cancellations were:      Overbooking of elective cases by surgeons Shortage of material resources Poor preparation of patients Shortage of ICU beds Shortage of equipment such as multi-parameter monitors. 1.2 Capacitation of the Hospital Finding The Hospital was operating with inadequate key equipment and resources during the year under review.
The Hospital did not have adequate monitors in anaesthetic rooms and recovery areas and only eight (8) out of eighteen (18) stations were in use.

In addition, Intensive Care Unit (ICU) and Higher Dependence Unit (HDU) did not have adequate beds to accommodate patients.

121 Risk / Implication Service delivery may be compromised.

Recommendation The Hospital should acquire more equipment and service existing ones.

Management response The observation is noted.


(a) Critical equipment such as monitors and anaesthetic machines were inadequate due to shortage of foreign currency.

Orders for replacement and or procurement of new equipment was hampered by lack of foreign currency.

(b) The minimum allocation of ICU and HDU beds should have been 10% of the hospital capacity which translates to 120 beds.

This was far-fetched as the hospital itself was not designed to comply with that provision.
Furthermore, assuming space would be provided, that space would not have been utilised because of shortage of specialist nurses who are even not adequate to cover the ICU and HDU beds that are available at the moment.
122 ANNEXURE “A”: STATE ENTERPRISES AND PARASTATALS AUDIT OPINIONS PER ENTITY PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR ISSUED ISSUED ISSUED OPINION ISSUED Agricultural Marketing Authority Broadcasting Authority of Zimbabwe Environmental Management Agency Health Professions Authority 2018 2017 2018 AUTHORITIES AND AGENCIES Adverse due to 2019 non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2018 2018 2017 Adverse due to non -compliance with IAS 21 Unqualified 2017 Unqualified 2016 Unqualified 2016 Unqualified 2015 Unqualified Unqualified 2016 Unqualified 2015 Unqualified 2017 Unqualified 2016 Unqualified Medicines Control Authority of Zimbabwe 2019 Adverse due to non -compliance with IAS 21 2017 Unqualified 2016 Unqualified 2015 Unqualified National Biotechnology Authority 2018 Adverse due to non -compliance with IAS 21 2018 2017 Adverse due to non -compliance with IAS 21 Unqualified 123 2016 Unqualified 2015 Unqualified PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR National Social Security Authority 2018 Postal and 2018- Telecommunications 2019 Regulatory Authority of Zimbabwe (POTRAZ) Procurement Regulatory Authority of Zimbabwe (PRAZ) Rural Electrification 2017 Agency 2018 2018 Radiation Protection 2019 Authority of Zimbabwe Zimbabwe Energy Regulatory Authority 2019 ISSUED Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2017 ISSUED Unqualified 2016 2017 Unqualified 2016 ISSUED Unqualified with an Emphasis of Matter Unqualified 2015 2015 2017 Qualified 2016 Qualified OPINION ISSUED Unqualified with an Emphasis of Matter Qualified Qualified 2016 Qualified 2015 Qualified 2014 - - Qualified Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2018 2016- Unqualified Adverse due to non -compliance 2017 with IAS 21 with an
 Emphasis of matter Unqualified 2015 2015 Unqualified with an Emphasis of matter Unqualified 2017 Unqualified 2016 2018 Adverse due to non -compliance with IAS 21Unqualified 124 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR Zimbabwe Investment Authority 2019 Zimbabwe National 2018 Road Administration (ZINARA) Zimbabwe National 2018 Statistics Agency Zimbabwe National 2019 Water Authority (ZINWA) 2018 Zimbabwe Parks and Wildlife Management Authority Zimbabwe Revenue 2019 Authority (ZIMRA) Zimbabwe Tourism Authority 2018 ISSUED Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2017 Adverse due to non -compliance with IAS 21 Unqualified with 2018 an Emphasis of matter Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2018 ISSUED Adverse due to non -compliance 2017 with IAS 21 ISSUED 2016- Unqualified 2017 Qualified 2016 2015 2015 with an Emphasis of matter Qualified with an Emphasis of matter Unqualified Adverse due to non -compliance with IAS 21 2016 Unqualified 2015 2017 Unqualified 2016 Unqualified 2015 OPINION ISSUED Unqualified with an Emphasis of matter Qualified with an Emphasis of matter Unqualified with an Emphasis of matter Unqualified Unqualified 2016 2015 Qualified 2018 2017 Adverse due to non -compliance with IAS 21 Unqualified 2017 Unqualified 2016 Unqualified 2016 2015 Unqualified with an emphasis of matter paragraph Unqualified with an emphasis of matter paragraph 125 PUBLIC ENTITY YEAR OPINION ISSUED YEAR OPINION YEAR OPINION YEAR ISSUED ISSUED OPINION ISSUED BOARDS 2019 Adverse due to non -compliance with IAS 21 2019 2018 2017 2018 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Unqualified Adverse due to non -compliance with IAS 21 COMMISSIONS 2019 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2018 2019 Grain Marketing Board Health Services Board
 Tobacco Research Board Tobacco Industry and Marketing Board Competition and Tariff Commission Forestry Commission Insurance and Pensions Commission 2018 Unqualified 2017 2018 2017 Adverse due to non -compliance with IAS 21 Unqualified 2017 Unqualified with emphasis of matter Unqualified 2016 Qualified with emphasis of matter 2016 Unqualified 2016 Unqualified 2015 Unqualified 2016 Qualified 2015 Unqualified 2014 Unqualified 2018 2017 Adverse due to non -compliance with IAS 21 Unqualified 2017 Unqualified 2016 Unqualified 2016 2016 Unqualified with an emphasis of matter Unqualified 2015 Unqualified 2015 Unqualified Adverse due to non -compliance with IAS 21 2017 2018 Unqualified Adverse due to non -compliance with IAS 21 126 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR Securities and Exchange Commission of Zimbabwe Sports and Recreation Commission 2019 2018 ISSUED Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2018 ISSUED Adverse due to non -compliance with IAS 21 2017 ISSUED Unqualified 2016 2017 Unqualified 2016 OPINION ISSUED Unqualified Unqualified with an emphasis of matter Unqualified 2015 2014 Unqualified with an emphasis of matter Unqualified Zimbabwe Electoral 2017 Commission Unqualified 2016 Unqualified 2015 2018 2018 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2017 Unqualified 2016 Unqualified 2015 Unqualified COMPANIES AND CORPORATIONS 2015- 2017 2018 2011- 2014 2017 Disclaimer Adverse due to non -compliance with IAS 21 Disclaimer Qualified with an Emphasis of matter 2010 Disclaimer 2009 Disclaimer 2016 Qualified 2015 with an Emphasis of matter 2017 Unqualified Unqualified with an Emphasis of matter Zimbabwe Media Commission Air Zimbabwe (Private) Limited Allied Timbers (Private) Limited Chemplex (Private) Limited 2018- 2019 CMED (Private) Limited 2018 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2017 Unqualified 2016
 Unqualified 2015 Unqualified 127 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR ISSUED Unqualified - ISSUED - - - - - OPINION ISSUED CMED Fuels (Private) Limited Courier Connect Deposit Protection Corporation EasyGo Car Hire and Travel (Private) Limited Genesis Energy (Private) Limited 2018 2016 2019 2018 2018 Hwange Electricity Supply Company 2019 Industrial Development Corporation Infralink (Private) Limited Jena Mine 2019 2018 2018 Kariba Hydro Power 2019 Company ISSUED Adverse due to non -compliance with IAS 21 Unqualified Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non –compliance with IAS 21 Adverse due to non –compliance with IAS 21 Adverse due to non –compliance with IAS 21 Disclaimer 2017 2015 2018 2017 2018 2018 2017 Adverse due to 2015- non –compliance 2017 with IAS 21 Adverse due to non –compliance with IAS 21 2018 2014 2017 Unqualified Unqualified 2016 Unqualified Unqualified Adverse due to non -compliance with IAS 21 Unqualified 2017 Unqualified - - - - - - Adverse due to non –compliance with IAS 21 Adverse due to non –compliance with IAS 21 Qualified Qualified Adverse due to non –compliance with IAS 21 128 2017 Qualified 2016 Qualified 2016 Qualified 2015 Unqualified 2017 Unqualified 2016 Unqualified with an Emphasis of matter PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR Mellofieldde Chemicals 2018- 2019 ISSUED Adverse due to non –compliance with IAS 21 2017 ISSUED Unqualified with 2016 an Emphasis of matter Minerals Marketing 2018- 2019 Corporation of Zimbabwe Adverse due to non –compliance with IAS 21 Mining Promotion Corporation 2018 Adverse due to non –compliance with IAS 21 2017 Unqualified 2016 2017 Unqualified 2016 2015 2015 ISSUED Unqualified with an Emphasis of matter Unqualified with an Emphasis of matter Unqualified OPINION ISSUED Unqualified with an Emphasis of matter Unqualified with an Emphasis of matter 2015 Qualified 2014 Qualified 2013 Qualified 2012
 Qualified 2017 Unqualified 2016 Unqualified 2015 Unqualified 2014 Mosi Oa Tunya Development Company National Handling Services National Pharmaceutical Company National Oil Infrastructure Company National Railways of Zimbabwe 2018 2018 2019 Adverse due to non –compliance with IAS 21 Adverse due to non –compliance with IAS 21 Adverse due to non –compliance with IAS 21 with Unqualified with an Emphasis of matter Unqualified with an Emphasis of matter Unqualified 2017 Unqualified 2016 Unqualified 2015 2017 Unqualified 2016 Unqualified 2015 2018 Adverse due to non –compliance with IAS 21 2017 2016 Unqualified with an Emphasis of matter Unqualified with an Emphasis of matter 129 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR ISSUED ISSUED OPINION ISSUED ISSUED an emphasis of matter 2017 Adverse due to non –compliance 2018 with IAS 21 Adverse due to 2015 non –compliance 2016 2017 with IAS 21 2017 Adverse due to non –compliance with IAS 21 Adverse due to non –compliance with IAS 21 Adverse due to non –compliance with IAS 21 2018 2017 Net*One Cellular (Private) Limited 2019 New Ziana (Private) 2018 Limited Petrotrade (Private) Limited 2018 Petrozim line (Private) Limited Powertel Communications (Private) Limited Sunway City (Private) Limited TelOne ( Private) Limited 2018 2019 2019 2019 Unqualified Adverse due to non –compliance with IAS 21 Unqualified Unqualified Unqualified Unqualified 2016 2015 Unqualified with an Emphasis of matter Unqualified with an Emphasis of matter 2016 Unqualified 2015 Unqualified Unqualified - - - - - - Adverse due to non –compliance 2017 with IAS 21 2016- Unqualified 2015 2016 2016 Unqualified with an Emphasis of matter Unqualified Unqualified with a material of uncertainty to going concern paragraph with an Emphasis of matter Unqualified Unqualified with a material of uncertainty to going concern paragraph 2018 2018 Adverse due to non –compliance with IAS 21 Adverse with material uncertainty relating to going concern Adverse due to
 non –compliance with IAS 21 Adverse due to non –compliance with IAS 21 2017 2017 130 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR Transmedia Corporation 2018 ISSUED Adverse due to non –compliance 2017 with IAS 21 2016 - ISSUED Unqualified 2015 ISSUED Unqualified 2014 OPINION ISSUED Unqualified Zimbabwe Academic Research Network Zimbabwe Broadcasting Corporation Zimbabwe Consolidated Diamond Company (Private) Limited (ZCDC) ZESA Enterprises (Private) Limited (ZENT) 2017 2019 2019 ZESA Holdings (Private) Limited 2019 2017 Unqualified 2016 Unqualified 2015 Unqualified with an Emphasis of matter Unqualified with an Emphasis of matter Qualified with an Emphasis of matter Unqualified with an Emphasis of matter 2014 Unqualified 2014 2016 2015 2016 Unqualified with an Emphasis of matter Qualified with an Emphasis of matter Unqualified with an Emphasis of matter Unqualified with an Emphasis of matter Unqualified with 2016 an Emphasis of matter Unqualified 2015 Adverse due to non -compliance with IAS 21 2018 Adverse due to non -compliance with IAS 21 2017 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2018 2018 Adverse due to non -compliance 2017 with IAS 21 2016- Unqualified Adverse due to non -compliance with IAS 21 2017 131 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR Zimbabwe Electricity Transmission and Distribution Company (ZETDC) Zimbabwe Mining Development Corporation 2019 2019 Zimbabwe Power Company (ZPC) 2019 ISSUED Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2018 2018 2018 2016 2016 2018 Unqualified with 2015 an Emphasis of matter Unqualified with an Emphasis of matter Adverse due to non -compliance with IAS 21 2017 - Zimbabwe Post (Private) limited Zimbabwe Post Properties Zimbabwe United Passengers Company Limited (ZUPCO) COUNCILS Agricultural Research Council ISSUED Adverse due to non -compliance 2017 with IAS 21 ISSUED
 2016- Unqualified with an Emphasis of matter Qualified with an Emphasis of matter with an Emphasis of matter Qualified 2015 2016 2015 2013 Adverse due to non -compliance with IAS 21 2017 Adverse due to non -compliance 2017 with IAS 21 2016- Unqualified Qualified 2014 OPINION ISSUED Unqualified with an Emphasis of matter Qualified with an Emphasis of matter Unqualified with an Emphasis of matter Qualified - - - - - Qualified with an Emphasis of matter 2016 2015 Qualified with an Emphasis of matter Qualified with an Emphasis of matter 2017 Unqualified 2016 Unqualified 2015 Unqualified 2018 Adverse due to non -compliance with IAS 21 132 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR 2017 ISSUED Unqualified 2016 ISSUED Unqualified 2015 2017 Unqualified 2016 Unqualified 2015 OPINION ISSUED Unqualified with an Emphasis of matter Unqualified Consumer Council of Zimbabwe 2018- 2019 2018 2018 Environmental Health Practitioners Council of Zimbabwe Medical and Dental Practitioners Council Medical Laboratory 2018 and Clinical Scientists Council of Zimbabwe Medical Rehabilitation Practitioners Council National AIDS Council of Zimbabwe Nurses Council of Zimbabwe 2018 2018 2018 Pharmacists Council 2018 of Zimbabwe ISSUED Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2017 Unqualified 2016 Unqualified 2015 Unqualified 2017 Unqualified 2016 Unqualified 2015 Unqualified 2017 Unqualified 2015- Unqualified 2016 2014 Unqualified 2017 Unqualified 2016 Unqualified 2015 Unqualified 2017 Unqualified 2016 Unqualified 2015 Unqualified 2017 Unqualified 2016 Unqualified 2015 Unqualified 133 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR Research Council of 2018 Zimbabwe Traffic
 Safety Council 2019 2018 Zimbabwe Council for Higher Education (ZIMCHE) Zimbabwe National 2018 Family Planning Council Zimbabwe Schools Examinations Council Zimbabwe Youth Council FINANCIAL INSTITUTIONS 2016- 2017 2018 ISSUED Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Unqualified ISSUED ISSUED 2016- Unqualified 2017 2015 OPINION ISSUED Unqualified 2018 2017 Adverse due to non -compliance with IAS 21 Unqualified 2017 Unqualified 2016 Unqualified 2016 Unqualified 2015 Unqualified 2017 Unqualified 2016 Unqualified 2015 Unqualified 2016 - 2017 2012- 2015 Unqualified 2015 Unqualified 2014 Unqualified Unqualified Agricultural Bank of 2019 Zimbabwe (Agribank) Empower bank 2019 Infrastructure Development Bank of Zimbabwe 2019 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Qualified 2018 2018 2018 2017 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Unqualified with 2017 Emphasis of Matter - Unqualified 2016 Unqualified - - - - - 2015 Unqualified with Emphasis of Matter Unqualified with Emphasis of Matter 134 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR 2018 2018 2017 2018 2018 2018 2017 National Building Society People’s Own Savings Bank (POSB) Small Enterprise Development Corporation (SMEDCO) Zimbabwe Women Bank FUNDS Agricultural Marketing Authority Fund Investor Protection Fund Lotteries and Gaming Fund 2019 2019 2018 2019 2019 2019 2018 Lake Kariba Fisheries Research Institute Universal Service Fund 2018 - 2019 2018- 2019 ISSUED Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance
 with IAS 21 ISSUED Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Qualified with Emphasis of Matter Adverse due to non -compliance with IAS 21 - 2017 ISSUED Unqualified 2016 OPINION ISSUED Unqualified 2017 Unqualified 2016 Unqualified 2016 Qualified with Emphasis of Matter - 2015 Qualified with Emphasis of Matter - - - - .
Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Unqualified 2017 Unqualified 2016 Unqualified 2016 Unqualified 2015 Unqualified 2017 Unqualified 2016 Unqualified 2015 Unqualified 135 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR ISSUED ISSUED ISSUED OPINION ISSUED Rhodes Matopo Estate Fund Rhodes Nyanga Estate Fund 2019 2019 STATE HOSPITALS Chitungwiza Central 2018 Hospital Harare Central Hospital Mpilo Central Hospital 2017- 2018 2018 Parirenyatwa Group of Hospitals 2018 United Bulawayo Hospitals 2018 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2018 2018 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse 2015 2016 2017 2016 Qualified Adverse Adverse Adverse 2017 Unqualified 2014 Qualified 2013 Qualified 2017 Qualified 2015 2016 Adverse Opinion Qualified 2014 2015 2017 Unqualified 2016 Unqualified 2015 2017 Qualified 2016 Qualified 2015 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Disclaimer of Opinion Qualified with an Emphasis of matter Unqualified Qualified with an Emphasis of matter TERTIARY INSTITUTIONS Bulawayo School of 2018 Hospitality and Tourism Adverse due to non -compliance with IAS 21 2017 Unqualified 2016 Unqualified 2015 Unqualified 136 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR 2017 ISSUED Unqualified 2016 OPINION ISSUED Unqualified 2017 Unqualified 2016 Unqualified 2016 Unqualified 2016 Unqualified 2017 Unqualified 2016 Unqualified 2018 2018 2017 2018 2018 ISSUED Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Unqualified Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 2017 Unqualified 2016 Unqualified 2017 Unqualified 2016 2017 Unqualified 2016 Unqualified with an Emphasis of matter Unqualified 2015 2015 Unqualified with an Emphasis of matter
 Unqualified ISSUED Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Adverse due to non -compliance with IAS 21 Chinhoyi University 2019 of Technology Great Zimbabwe University Harare Institute of Technology Lupane State University Manicaland University of Applied Sciences Midlands State University University of Zimbabwe 2019 2018 2019 2019 2018- 2019 2018 Zimbabwe Open University 2018- 2019 OTHER Scientific Industrial Research and Development Centre (SIRDC) 2019 Adverse due to non -compliance with IAS 21 2018 Adverse due to non -compliance with IAS 21 2017 2016 Unqualified with Going Concern Uncertainty Unqualified with Going Concern Uncertainty 137 PUBLIC ENTITY YEAR OPINION YEAR OPINION YEAR OPINION YEAR National Museums and Monuments of Zimbabwe 2017 ISSUED Unqualified with an Emphasis of matter ISSUED 2016 2015 ISSUED Unqualified with an Emphasis of matter OPINION ISSUED Unqualified with an Emphasis of matter 138 ANNEXURE “B”: AUDITS IN PROGRESS AND BEING FINALISED PUBLIC ENTITY Agricultural and Rural Development Authority YEAR 2014-2018 1.
2.

3.

4.

5.

6.

7.

8.

9.

Air Zimbabwe Allied Health Practitioners Council Allied Timbers (Private) Limited Bindura University Bulawayo School of Hospitality and Tourism Chitungwiza Central Hospital Civil Aviation Authority of Zimbabwe Cold Storage Company (CSC) 10.

Courier Connect 11.

CMED (Private) Limited 12.

CMED Fuels (Private) Limited 13.

DTZ-OZGEO 14.

EasyGo Travel and Car Hire (Private) Limited 15.

Environmental Management Agency 16.

Forestry Commission 17.


Genesis Energy (Private) Limited 18.

Gwanda University 19.

Harare Institute of Technology 20.

Health Professions Authority 21.

Infralink (Private) Limited 22.

Ingutsheni Central Hospital 23.

Marondera University 24.

Medical and Dental Practitioners Council 25.

Medical Rehabilitation Practitioners Council 26.


National AIDS Council 139 2018 2018 2019 2019 2019 2019 2019 2013-2017 2017-2018 2019 2019 2016-17 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 PUBLIC ENTITY 27.

National Arts Council of Zimbabwe 28.

National Biotechnology Authority 29.

National Competiteveness Commission 30.

National Handling Services 31.

National Oil Infrastructure Company (NOIC) 32.

National Social Security Authority (NSSA) 33.


Parirenyatwa Group of Hospitals 34.

Petrotrade (Private) Limited 35.

Petrozim line 36.

Pharmacists Council of Zimbabwe 37.

Pig Industry Board 38.

Procurement Regulatory Authority of Zimbabwe 39.

Research Council of Zimbabwe 40.

RMS (Private) Limited YEAR 2019 2019 2018- 2019 2018/2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 41.

Sabi Gold Mine (Kimberworth Investments) 2017-2018 42.
Small and Medium Enterprises Development Corporation (SMEDCO) 43.

Sports and Recreation Commission 44.

State Lotteries 45.

Tobacco Industry and Marketing Board 46.

Tobacco Research Board 47.

Transmedia Corporation 48.

United Bulawayo Hospitals 49.

University of Zimbabwe 50.

UDCORP 51.

Zimbabwe Council for Higher Education 52.

Zimbabwe Institute of Public Administration 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 2019 53.

Zimbabwe Mining Development Corporation-Group 54.


Zimbabwe National Family Planning Council 2015-2019 2019 140 PUBLIC ENTITY YEAR 55.

Zimbabwe National Road Administration 56.

Zimbabwe Parks and Wildlife Management Authority 57.

Zimbabwe Posts Properties (Private) Limited 58.

Zimbabwe Posts (Private) Limited 59.

Zimbabwe School of Mines 60.

Zimbabwe United Passengers Company Limited (ZUPCO) 2019 2019 2017-2018 2017-2018 2019 2019 141 ANNEXURE “C”: AUDITS AT SIGNING STAGE PUBLIC ENTITY 1.
Lotteries and Gaming Fund 2.

Marondera University of Agricultural Science and Technology YEAR 2019 2018 3.

Mosia Oa Tunya Development Company 2016 - 2018 4.

National Museum and Monuments of Zimbabwe 5.

National University of Science and Technology Printflow (Private) Limited 6.

7.

UDCORP 8.

Zimbabwe Anti- Corruption Commission 2018 2019 2019 2018 2012- 2017 142 ANNEXURE “D”: ACCOUNTS NOT SUBMITTED FOR AUDIT 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.


22.

23.

24.

25.

26.

PUBLIC ENTITY Agriculture Research Council Allied Health Practitioners Council Air Zimbabwe (Private) Limited Anti-Corruption Commission Broadcasting Authority of Zimbabwe Courier Connect (Private) Limited.
DTZ-OZGEO Environmental Health Practitioners Council Grain Marketing Board Harare Central Hospital Marondera University of Agricultural Science and Technology Medical Laboratory and Clinical Scientists Council of Zimbabwe YEAR 2019 2019 2019 2018-2019 2019 2019 2018-2019 2019 2019/2020 2019 2019 2019 Minerals Development (Private) Limited (Elvington Mine) 2018-2019 Mining Promotion Corporation Mpilo Central Hospital Mosia Oa Tunya Development Company National Handicrafts Centre National Libraries and Documentation Centre National Museums and Monuments of Zimbabwe New Ziana Nurses Council of Zimbabwe Rural Electrification Agency Sandawana Mine ZARNET (Private) Limited Zimbabwe Anti-Corruption Commission Zimbabwe Broadcasting Corporation 143 2019 2019 2019 2009-2019 2009-2019 2019 2019 2019 2019 2015-2019 2018-2019 2018-2019 2018-2019 PUBLIC ENTITY YEAR 27.
Zimbabwe Electrical Commission (ZEC) 28.

Zimbabwe Media Commission 29.

Zimbabwe National Statistics Agency 30.

Zimbabwe Posts Properties (Private) limited 31.

Zimbabwe Posts (Private) Limited (ZIMPOST) 32.

Zimbabwe Schools Examinations Council 33.

Zimbabwe Tourism Authority 34.

Zimbabwe Youth Council 2019 2019 2019 2019 2019 2019 2019 2018-2019 144