Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697705779956.pdf (Zimbabwe)
REPORT of the Auditor-General for the FINANCIAL YEAR ENDED DECEMBER 31, 2020 ON STATE ENTERPRISES AND PARASTATALS _________________________________________ Presented to Parliament of Zimbabwe: 2022 _________________________________________ Office of the Auditor-General of Zimbabwe 5th Floor, Burroughs House 48 George Silundika Avenue Harare, Zimbabwe.

The Hon.

Prof. M. Ncube Minister of Finance and Economic Development Mgandane Dlodlo Building Corner S.V.
Muzenda /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 as read together with Section 10(1) of the Audit Office Act [Chapter 22:18], for the year ended December 31, 2020.

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

HARARE December 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 ........................................................................................................ iv PREAMBLE .......................................................................................................................... vi EXECUTIVE SUMMARY ................................................................................................ viii PUBLIC ENTITIES UNDER THE CATEGORY OF AUTHORITIES AND AGENCIES ............................................................................................................................. 1 AGRICULTURAL & RURAL DEVELOPMENT AUTHORITY (ARDA) 2014- 2018....... 2 CIVIL AVIATION AUTHORITY OF ZIMBABWE (CAAZ) 2019...................................... 8 ENVIRONMENTAL MANAGEMENT AGENCY (EMA) 2019 ........................................ 11 NATIONAL SOCIAL SECURITY AUTHORITY 2019 ...................................................... 16 POSTAL AND TELECOMMUNICATIONS REGULATORY AUTHORITY OF ZIMBABWE (POTRAZ) 2020.............................................................................................. 23 ZIMBABWE INVESTMENT AND DEVELOPMENT AGENCY (ZIDA) 2020 ............... 26 ZIMBABWE NATIONAL WATER AUTHORITY (ZINWA) 2020................................... 28 ZIMBABWE PARKS AND WILDLIFE MANAGEMENT AUTHORITY 2019 AND 2020 32 ZIMBABWE REVENUE AUTHORITY (ZIMRA) 2020 .................................................... 37 PUBLIC ENTITIES UNDER THE CATEGORY OF BOARDS ................................... 49 PIG INDUSTRY BOARD (PIB) 2019 .................................................................................. 50 TOBACCO INDUSTRY AND MARKETING BOARD (TIMB) 2019 AND 2020 ............ 53 TOBACCO RESEARCH BOARD 2019 & 2020 ................................................................. 56 PUBLIC ENTITIES UNDER THE CATEGORY OF COMMISSIONS ....................... 60 SPORTS AND RECREATION COMMISSION 2019 ......................................................... 61 ZIMBABWE ANTI-CORRUPTION COMMISSION (ZACC) 2012 - 2017
 ....................... 67 PUBLIC ENTITIES UNDER THE CATEGORY OF COMPANIES AND CORPORATIONS ............................................................................................................... 75 AIR ZIMBABWE (PRIVATE) LIMITED 2018 ................................................................... 76 ALLIED TIMBERS ZIMBABWE (PRIVATE) LIMITED 2019 ......................................... 81 CHEMPLEX CORPORATION LIMITED AND ITS SUBSIDIARIES 2020 ..................... 84 CMED (PRIVATE) LIMITED 2019 ..................................................................................... 87 HOTSPECK ENTERPRISES (PRIVATE) LIMITED 2019 ................................................. 91 MINERALS MARKETING CORPORATION OF ZIMBABWE (MMCZ) 2020 ............... 95 MOSI OA TUNYA DEVELOPMENT COMPANY (PRIVATE) LIMITED 2016- 2018 ... 98 NATIONAL OIL INFRASTRUCTURE COMPANY OF ZIMBABWE (NOIC) 2019..... 101 NATIONAL PHARMACEUTICAL COMPANY (NATPHARM) 2019 & 2020 .............. 103 i NATIONAL RAILWAYS OF ZIMBABWE (NRZ) 2020 ................................................. 107 NET*ONE CELLULAR (PRIVATE) LIMITED 2020 ....................................................... 118 PETROTRADE (PRIVATE) LIMITED 2019..................................................................... 121 PETROZIM LINE (PRIVATE) LIMITED 2019 ................................................................ 123 POWERTEL COMMUNICATIONS (PRIVATE) LIMITED 2020 ................................... 126 PRINTFLOW (PRIVATE) LIMITED 2019 AND 2020 ..................................................... 129 TEL●ONE (PRIVATE) LIMITED 2020 ............................................................................. 134 TRANSMEDIA CORPORATION (PRIVATE) LIMITED 2019 AND 2020 .................... 139 ZIMBABWE ELECTRICITY TRANSMISSION AND DISTRIBUTION COMPANY (ZETDC) 2020 .................................................................................... ................................. 146 ZIMBABWE MINING DEVELOPMENT
 CORPORATION (ZMDC) 2020 .................... 150 ZIMBABWE UNITED PASSENGER COMPANY (ZUPCO) 2019 ................................. 154 PUBLIC ENTITIES UNDER THE CATEGORY OF COUNCILS ............................. 160 NATIONAL ARTS COUNCIL OF ZIMBABWE (NACZ) 2019 ...................................... 163 TRAFFIC SAFETY COUNCIL OF ZIMBABWE 2020 .................................................... 166 ZIMBABWE COUNCIL FOR HIGHER EDUCATION (ZIMCHE) 2019 ........................ 169 PUBLIC ENTITIES UNDER THE CATEGORY OF FINANCIAL INSTITUTIONS172 NATIONAL BUILDING SOCIETY (NBS) 2020 .............................................................. 175 PEOPLE’S OWN SAVINGS BANK (POSB) 2020 ........................................................... 179 SMALL AND MEDIUM ENTERPRISES DEVELOPMENT CORPORATION (SMEDCO) 2019..................................................................................................... ................................. 181 ZIMBABWE WOMEN’S MICROFINANCE BANK LIMITED 2020 ............................. 184 PUBLIC ENTITIES UNDER THE CATEGORY OF FUNDS ..................................... 188 AGRICULTURAL MARKETING AUTHORITY (AMA) FUND 2020 ........................... 189 PUBLIC ENTITIES UNDER THE CATEGORY OF HOSPITALS ........................... 191 MPILO CENTRAL HOSPITAL 2019 ................................................................................ 192 PUBLIC ENTITIES UNDER THE CATEGORY OF UNIVERSITIES AND TERTIARY INSTITUTIONS........................................................................................... 197 CHINHOYI UNIVERSITY OF TECHNOLOGY (CUT) 2020 .......................................... 198 HARARE INSTITUTE OF TECHNOLOGY 2019 ............................................................ 201 MARONDERA UNIVERSITY OF AGRICULTURAL SCIENCES AND TECHNOLOGY 2017 AND 2018 ................................................................................................................... 204 MIDLANDS STATE UNIVERSITY 2020
 ......................................................................... 206 SCHOOL OF HOSPITALITY AND TOURISM 2019 ....................................................... 214 ZIMBABWE INSTITUTE OF PUBLIC ADMINISTRATION AND MANAGEMENT (ZIPAM) 2019-2020 ............................................................................................................ 217 ii ZIMBABWE OPEN UNIVERSITY (ZOU) 2020 .............................................................. 224 PUBLIC ENTITIES UNDER THE CATEGORY OF OTHER .................................... 226 NATIONAL MUSEUMS AND MONUMENTS OF ZIMBABWE (NMMZ) 2018 .......... 227 ANNEXURE “A”: STATE ENTERPRISES AND PARASTATALS AUDIT OPINIONS PER ENTITY ..................................................................................................................... 229 ANNEXURE “B”: AUDITS IN PROGRESS AND BEING FINALISED ................... 253 ANNEXURE “C”: AUDITS AT SIGNING STAGE ...................................................... 256 ANNEXURE “D”: ACCOUNTS NOT SUBMITTED FOR AUDIT ............................ 257 iii LIST OF ACRONYMS 1.
2.

3.

4.

5.

6.

7.

8.

9.

GMB- Grain Marketing Board FY-Financial Year 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 10.

OAG- Office of the Auditor General 11.

PRAZ- Procurement Regulatory Authority of Zimbabwe 12.
POTRAZ- Postal and Telecommunication Regulatory Authority of Zimbabwe 13.

RBZ- Reserve Bank of Zimbabwe 14.

RIB-Removal in Bond 15.

RIT- Removal in Transit 16.

SAP- Systems, Applications, Products in Data Processing.

17.

SMEDCO-Small and Medium Enterprises Development Corporation 18.

SPB- State Procurement Board 19.

TIMB- Tobacco Industry and Marketing Board 20.

TIP- Temporary Import Permit 21.

VAT- Value Added Tax 22.

ZCDC-Zimbabwe Consolidated Diamond Company iv 23.


ZETDC-Zimbabwe Electricity Transmission and Distribution Company 24.

ZIMRA- Zimbabwe Revenue Authority 25.

ZIMSEC-Zimbabwe School Examinations Council 26.

ZINARA- Zimbabwe National Roads Administration 27.

ZWL- Zimbabwean Dollar v PREAMBLE Introduction Following the end of the 2020 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.

vi 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, 2019 and 2020 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 some entities.

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.

vii EXECUTIVE SUMMARY The 2021 audit period was affected by effects of COVID-19 pandemic.

This presented practical challenges to both prepares and auditors to clear audit arrears and ability to meet the June 30 reporting deadline because of restrictions on travel and requirement to stay at home.
The effects made a big dent in the spectra of accountability and transparency as COVID-19 effects 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 and 2020 financial years, one hundred and three (103) audits had been completed, seventy –two (72) were in progress and thirty-five (35) entities had not yet submitted financial statements for audit while three (3) entities were in arrears of more than 3 years.
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, most entities are yet to align their practices and policies with the provisions of the Act.
As a result, governance issues were the most outstanding issues in this report.

Out of one hundred and forty-six (146) issues I am reporting; one hundred and twenty (120) relate to governance issues, while twenty-six (26) relate to revenue collection, employment costs and procurement.
I followed up on my prior year (2019) recommendations and noted a significant improvement for the entities audited, forty-six (46) out of the sixty-nine (69), that is 67% of these recommendations were implemented, twelve (12) remain outstanding, and eleven (11) were being followed up as the audits were in progress.
Governance issues reported in the current year are in respect of weak internal controls, undocumented joint venture arrangements, unsupported expenditure, absence of bank reconciliations, non-compliance with income tax provisions and other issues around risk management arrangements.
viii ISSUES RAISED IN 2020 REPORT Prior year outstanding issues 11% Employment issues 3% Procurement of goods and services 4% Revenue collection 9% Governance 73% ix Issues over the past 5 years Govenance Revenue Collection Procurement Employment issues Prior years issues not rectified 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.
x PUBLIC ENTITIES UNDER THE CATEGORY OF AUTHORITIES AND AGENCIES 1 AGRICULTURAL & RURAL DEVELOPMENT AUTHORITY (ARDA) 2014- 2018 Background information Agricultural Rural Development Authority (ARDA) is a state owned enterprise under the Ministry of Lands, Agriculture, Water, Climate and Rural Resettlement that is responsible for spearheading the advancement of agricultural production and rural development in Zimbabwe.
Its mandate is derived from the Agricultural and Rural Development Authority Act [Chapter 18:01] that seeks to promote development through implementation of vibrant schemes in the agricultural sector with a view to reducing poverty especially in rural areas.

I have audited the financial statements of Agricultural Rural Development Authority for the years ended December 31, 2014, 2015, 2016, 2017, 2018.
I issued a qualified opinion for the years ending December 31, 2014, 2015, 2015, 2016, 2017 and an adverse audit opinion in 2018.
Qualified Opinion 2014 In my opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Agricultural and Rural Development Authority as at December 31, 2014, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion 2014 Impairment of investment in associate The Authority has included in non-current assets an investment in associate with a value of USD 36 798 655 as at December 31, 2014 in the accompanying statement of financial position.

There are indications that the investment in associate is impaired as per the provisions of IAS 36 Impairment of assets.
If the investment in associate had been impaired, non-current assets and retained earnings would have been decreased as at December 31, 2014.

Additionally, net profits would be decreased for the year then ended.

Emphasis of matter I draw attention to the Authority financial statements which indicate that the Authority incurred a loss for the year of USD 5 433 514 (2013: USD 8 326 300) for the year ended December 31, 2014.
As at that date, the Authority’s current liabilities exceeded its current assets by USD 4 402 787 (2013: USD 3 237 883).

These conditions indicate a material uncertainty which may cast significant doubt on the ability of the entity to continue as a going concern.
Qualified Opinion 2015 In my opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Agricultural and Rural Development Authority as at December 31, 2015, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
2 Basis for Qualified Opinion Impairment of investment in associate The Authority has included in non-current assets an investment in associate with a value of USD 36 798 655 as at December 31,2015 in the accompanying statement of financial position.

There are indications that the investment in associate is impaired as per the provisions of IAS 36 Impairment of assets.
If the investment in associate had been impaired, non-current assets and retained earnings would have been decreased as at December 31, 2015.

Additionally, the loss for the year would be increased for the year then ended.

Emphasis of matter I draw attention to the financial statements of the Authority which indicates that the Authority incurred a loss for the year of USD 6 864 944 (2014: USD 5 433 514) for the year ended December 31, 2015.
As at that date, the Authority’s current liabilities exceeded its current assets by USD 9 249 434 (2014: USD 4 402 787).

These conditions indicate a material uncertainty which may cast significant doubt on the ability of the entity to continue as a going concern.
Qualified opinion 2016 In my opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Agricultural and Rural Development Authority as at December 31,2016, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion Impairment of investment in associate The Authority has included in non-current assets an investment in associate with a value of USD 36 798 655 as at December 31, 2016 in the accompanying statement of financial position.

There are indications that the investment in associate is impaired as per the provisions of IAS 36 Impairment of assets.
If the investment in associate had been impaired, non-current assets and retained earnings would have been decreased as at December 31, 2016.

Additionally, net profits would be decreased for the year then ended.
Material Uncertainty Related to Going Concern I draw attention to the financial statements of the Authority which indicates that for the year ended December 31, 2016, the Authority incurred a loss for the year of USD 4 324 273 (2015: USD 6 864 944) and as at that date, it had a negative working capital position of USD 10 451 657 (2015: USD 9 249 434 As stated in the financial statements, these events or conditions, along with other matters as set forth in Note 18, indicate that a material uncertainty exists that may cast significant doubt on the Board’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.

3 Qualified Opinion 2017 In my opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Agricultural and Rural Development Authority 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 Impairment of investment in associate The Authority has included in non-current assets an investment in associate with a value of USD 36 798 056 as at 31 December 2017 in the accompanying statement of financial position.

There are indications that the investment in associate is impaired as per the provisions of IAS 36 Impairment of assets.

If the investment in associate had been impaired, non-current assets and retained earnings would have been decreased as at 31 December 2017.
Additionally, net profits would be decreased for the year then ended.

Material Uncertainty Related to Going Concern I draw attention to the financial statements which indicates that for the year ended December 31, 2017, the Authority incurred a loss for the year of USD 6 931 813 (2016: USD 4 324 273) and as at that date, it had a negative working capital position of USD 14 606 046 (2016: USD 10 451 657.
These conditions indicate a material uncertainty which may cast significant doubt on the Authority’s ability to continue as a going concern.
Adverse opinion 2018 In my opinion, because of the significance of the matter discussed in the Basis of Opinion section of our report, these financial statements do not present fairly the financial position of Agricultural Rural Development Authority as at December 31, 2018, 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 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.
The Authority transacted using a combination of Nostro FCA (USD) and RTGS FCA (electronic payments), including mobile money, bond notes and coins.

In February 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 SI 33/2009 with an 4 effective date of February 22, 2019.

The SI 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 which requires that an assessment be made to the change in functional currency and that financial statements be presented at a rate that approximated the market rate.

The Authority had to be guided by SI 41/2009 which states that in 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 S1 33/ 2009, the Authority maintained its functional currency as the USD and has prepared 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.
As a result, the impact of the Authority’s ability to comply with IAS 21 has been determined as significant.

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.

The Directors performed a sensitivity analysis of how different exchange rates would have impacted the financial statements as at December 31, 2018 and disclosed this sensitivity analysis on the notes to the financial statements.
These amounts presented may not reflect the opening balances in RTGS Dollars going forward.

Emphasis of matter I draw your attention to the fact that some of the assets disclosed in the financial statements had not been registered in the name of the Authority.

Furthermore, the ARDA Modzone complex buildings in the Seke Industrial area are not fully registered in the name of the Authority.

Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1.


Authority’s houses Finding The Authority was not collecting rental income from its houses across most estates.

Most of these houses were still being occupied by former employees, who were not paying rentals, for example at Nijo, Katiyo and Kairezi.

Upon enquiry management indicated that there was a dispute between employees and the Authority, over outstanding salaries, wages and pensions.
Risk / Implication Financial loss from irrecoverable costs incurred on maintenance of these houses.

Loss of rental income.

5 Recommendation Management should ensure that they address the dispute and start collecting rental income.

Management response Audit observation noted.

Employees were alleging that the Authority still owed them their salaries and wages and pensions, hence they refused to vacate the houses until they were paid their dues.

Management is working to legally evict the former employees.
The cited cases were at Nijo, Kairezi and Katiyo Estates.

1.2.

Green Tea harvest Finding There was no evidence to support that the Authority was witnessing weighing of harvested green leaf at Katiyo Estate.

As a result, the Authority was putting reliance on the outmost good faith in the quantities declared by the lessee in determining the royalties due.

Upon enquiry, the Katiyo Estate manager indicated that reliance is placed on dispatch documents collected from the factory.
Although the agreement with the lessee (EHPL) states that a representative of ARDA must witness the weighing of harvested green leaf on which the royalty is based, this was not being done.

Risk/ Implication Financial loss due to material irregularities that may not be detected on time.

Recommendation Management should ensure that an ARDA representative is available to witness the weighing of harvested green leaf as per the dictates of the agreement.
Management response The Green Leaf from the fields to the Factory goes through the weigh bridge where the Factory Weight is recorded which is then used to calculate the royalty/tribute payable to ARDA.

Representative of the Authority has been reminded to always witness the weighing of Green Leaf at the Factory as provided for in the Contract to guard against under declaring of weight of Green Leaf Harvested.

1.3.

Remittance of pension funds.

Finding The Authority was not remitting pension contributions.
As at December 31, 2018 ARDA owed an amount of US$825 604 (2017: US$704 659) due to non-payment of pension dues.

6 Risk / Implication Employees may fail to access their pension benefit.

Recommendation The Authority may need to consider engaging the pension administrator, for payment plans in those months it anticipates cash flow challenges.

Management response Cash challenges experienced prior to 2018 resulted in the Authority not being able to meet its statutory obligations.
However, Payment Plans have been arranged with the Payroll Creditor and this is being adhered to.

The Authority is now paying the monthly obligations plus agreed instalments for arrear clearance.

1.4.

Chisumbanje Joint Venture agreement Finding The Authority, according to the records availed and reviewed, had an undocumented Joint Venture Agreement in Chisumbanje.

As a result, I was unable to assess the nature and the share structure between the Authority and the other party to the joint venture.
Although, I obtained an internal document from the business development department showing the share structure, there was no evidence to support that these were agreed by both parties.

I was therefore not able to conclude on the accounting of the arrangement.

Risk/ Implication Misstatement of financial statements due to improper accounting of the joint operation.

Financial loss in the absence of a binding joint venture agreement in place.
Recommendation Management should ensure that the position of this agreement is finalized.

Management response Audit observation noted and the recommendation will be implemented.

The Partner has been engaged in order for the Joint Venture Agreement to be in place.

7 CIVIL AVIATION AUTHORITY OF ZIMBABWE (CAAZ) 2019 Background information Civil Aviation Authority of Zimbabwe was incorporated in Zimbabwe in terms of the Civil Aviation Act [Chapter 13:16].
The Authority was established to promote the safe, regular and efficient use and development of aviation inside and outside Zimbabwe and to advise the Government on all matters relating to domestic and international civil aviation.

I have audited the financial statements of the Civil Aviation Authority 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 of my report, the accompanying financial statements do not present fairly the financial position of the Civil Aviation Authority 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).
Basis for Adverse Opinion Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” The Authority translated its comparative financial statements including transactions and balances for the period up to February 22, 2019 denominated in US$ 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 an appropriate 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 Authority applied the legal exchange rate of 1:1 as pronounced through Statutory Instrument 33 of 2019.
Subsequent to February 22, 2019 the Authority applied interbank exchange rates which came into existence, through Exchange Control Directive RU 28 of 2019 issued by the Reserve Bank of Zimbabwe (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 did not represent the price that could 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 exchange rate and to achieve fair presentation of the financial statements.

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.
8 Report on going concern Material Uncertainty Related to Going Concern I draw attention to the fact that the Authority did not service overdue long term legacy loans amounting to ZWL2 712 032 724 and domestic loans amounting to ZWL109 794 171 during the year ended December 31, 2019 and, as of that date, the Authority’s current liabilities exceeded its total assets by ZWL3 400 597 530.
These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Authority’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.

Board and key management Finding The Authority was operating without a Board of Directors from January 24, 2019 to June 2020.
Furthermore, the Authority did not have a substantive Director General since March 2019 and, as previously reported, the Finance Director position was still vacant.

Corporate governance principles require a board to be in place to ensure that there is strategic guidance and effective oversight of the entity’s operations.

Risk / Implication The Authority may operate without strategic guidance and oversight that ordinarily comes from the Board.
Recommendation A substantive Director General and Finance Director should be appointed.

The Authority should engage the parent ministry so as to regularize the Board issue.

Management response The audit observation is noted.

In the absence of the Board of Directors from February 2019, all matters requiring the Board attention were referred to the parent ministry which was the Interim Board.

A Board of Directors has since been appointed by the Shareholder effective July 4, 2020.
Then the substantive Director General was on suspension from March 2019 hence the appointment of the Acting Director General for the rest of the year.

The recruitment of the substantive Director General is currently in progress; interviews have been conducted.

Efforts were made to fill the position of the Finance Director but the recommended candidate did not take up the offer.

Recruitment for the post is in progress and the position is expected to be filled during the course of this year.

9 2.
9 2.

REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1 Concessionaires management Finding The Authority had inadequate processes in management of concessionaires.

Concessionaires were mandated by their contracts to submit relevant financial records and books of accounts for accurate billing of concession fees.

However, there was no evidence that the Authority was verifying the books of accounts of concessionaires but only invoiced based on the statements submitted by the concessionaires.
In addition, some of the concessionaires, for instance, two operators, Catercraft and Alliance Media did not submit their records for the whole period under review which is a material breach that entitles the Authority to cancel the contract.

As a result, the Authority estimated the fees payable; Catercraft, ZWL10,000 per month and Alliance Media, ZWL50,000 per month.
The contract states that, “in the event that the Company commits a material breach of many of the provisions herein and fails to remedy such breach within 14 days, CAAZ shall be entitled to cancel or suspend the contract and seek civil remedies thereto”.

Risk / Implication Loss of revenue as concessionaires may under declare revenue.

Recommendation Management should put in place measures that enforce the contract with concessionaires and ensure remittance of all fees to the Authority.
Management response The audit observation is noted.

Submission of financial records and books of accounts by concessionaires is a contractual requirement.

Failure to do so constitutes material breach of contract.

The two operators have generally reneged on this requirement in spite of numerous follow ups being made through various avenues such as written correspondence, telephonically and physical visits to their offices.

The last written communication was on 7 November 2020.
In such situations, the Authority projects the fees payable and reconciliations are then done upon receipt of the requisite financial information for billing.

The Authority will continue engaging the companies for the provision of the financial records so that reconciliations are done and may resort to litigation in line with the provisions of the contracts.

For the car parking concession an independent IT solution has since been deployed to verify the business generated by the short-term carpark.
The system will be deployed to the long term carpark during this year.

10 ENVIRONMENTAL MANAGEMENT AGENCY (EMA) 2019 Background Information The Environmental Management Agency was established in terms of the Environmental Management Act [Chapter 20:27].

Its core function is to manage and protect the environment.

I have audited the financial statements of the Environmental Management Agency for the year ended December 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 Environmental Management Agency 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 Standards (IAS) 21 - The Effects of Changes in Foreign Exchange Rates.

The Agency 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 and was initially pegged at the rate of 2.5.
The Agency used October 01, 2018 as the date of change in functional currency and translated its foreign denominated balances to ZWL using the February 22, 2019 interbank rate.

This was contrary to the requirements of IAS 21 where the translation should have been done using the rate prevailing at the date of change of the functional currency.
The Agency 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 Statutory Instrument number 33 of 2019 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 Agency applied the prevailing interbank rate in revaluing its assets and liabilities as at December 31, 2019.

In that regard, the Agency has not been able to comply with the requirements of IAS 21.
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.

Below are other material issues noted during the audit: 11 1.
GOVERNANCE ISSUES 1.1 Board composition Finding The board of directors did not have any member with Information Communication Technology (ICT) expertise as evidenced by the information in the members’ profiles.

The Public Entities Corporate Governance Act [Chapter 10:31] section 11(7) (c), requires the Board of every public entity to have an appropriate diversity of skills, experience or qualifications for managing the entity.

Risk / Implication Board oversight role over ICT governance may be compromised.
Recommendation The Agency should ensure the Board has an appropriate diversity of skills, experience and qualifications.

In the meantime, the Board may consider to outsource the services of an ICT expert.

Management response This is well noted.

The matter has been raised with the Minister of Environment, Climate Change, Tourism and Hospitality Industry who has indicated that a process is still underway to identify suitable candidates.
In addition, the recruitment of ICT Manager has since been approved by the Board and is now underway.

1.2 SAP accounting system Finding The Agency did not fully utilize the SAP accounting system for the year under review as some transactions of significant amounts were being processed outside the system.

In addition, I noted that the Agency made various payments to external consultants to attend to the challenges with the system but the challenges were not resolved.
The table below illustrates a sample of payments made outside the system; Service provider Details Date paid 10/10/2019 aging, 30/12/2019 Amount (ZWL) 72 450 24 979 10/12/2019 52 441 Chisango Chisango Chisango SAP currency conversion Customer and Vendor statements and receipts SAP reconfiguration 12 Risk/Implication Financial loss due to continued engagement of external consultant to work on the system.
Recommendation The Agency should re-engage the supplier/developer of the system to ensure the challenges are resolved.

Management response Having noted the challenges in the ERP, the Agency has taken a broad decision to invest into the re-engineering of the SAP.

The process is expected to address the current challenges through minimum system modification.
As this project will require substantial amount of money and international tendering, resource mobilization will be done to ensure that the project is implemented by end of 2021.

1.3 Bank reconciliations The Agency had thirty (30) bank accounts including imprest bank accounts for its provincial offices.

Upon enquiry, management revealed that the Agency was having challenges with the SAP system.

On average some of the bank reconciliations were being done after ten (10) months from due date.
Risk / Implication Financial loss as fraud or errors may go undetected.

Recommendation Management should ensure that bank reconciliation statements are prepared and reviewed timeously.

The Agency should re-engage the supplier/developer of the system to ensure the challenges are resolved.

Management response The observation is noted and acknowledged.

In future bank reconciliations will be done on time.
The Agency is in the process of reengineering the SAP System, this is going to address most of the current challenges once completed.

1.4 Withholding tax Finding The Agency was not deducting withholding tax on some payments made to suppliers who did not avail a valid tax clearance certificate.

This was in contravention with the Income Tax Act [Chapter: 23:06] Section 80 which requires that Withholding Tax be deducted from all amounts payable to all persons without a valid tax clearance certificate.
13 The table below provides details of such payments: Document reference 100125523 100127799 100127690 100125752 Details of payment Payment for consultancy services Payment for cellphone replacement Payment for consultancy services Payment for consultancy services Amount paid (ZWL) 52 442 30 500 72 450 24 980 Tax not withheld and remitted to ZIMRA (ZWL) 5 244 3 050 7 245 2 498 Risk / Implication Financial loss due to unnecessary penalties and interest that may be levied.
Recommendation Management should ensure that the requirements of the Income Tax Act [Chapter 23:06] are complied with.

Management response The observation is noted.

In future the Agency is going to comply with all statutory requirements.

2.

PROCUREMENT OF GOODS AND SERVICES 2.1 Procurement Management Unit Finding The Agency’s procurement management unit was not resourced in line with the approved structure.
Key posts for the Procurement Manager and Procurement Officer remained vacant during the year under review.

Risk/Implication Procurement irregularities may go undetected.

Recommendation The Agency should consider filling all the vacant posts approved on the procurement structure.

Management response The observation is noted.

However, it is common cause that the Agency is operating with a lean staff establishment strength owing to the financial resource constraints.
The Agency has an approved establishment of 480 posts but currently operating with a staff 14 complement/ strength of 335.

As much as the Agency would want to fill the vacant posts to the tune of 145, the resources are not permitting.

Funds permitting the Agency would prioritize some of the said provisional posts.
15 NATIONAL SOCIAL SECURITY AUTHORITY 2019 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, 2019 and I issued an adverse opinion.
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 accompanying consolidated financial statements do not present fairly the consolidated financial position of the National Social Security Authority 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).
Adverse Opinion on the Authority’s Financial Statements In my opinion, because of the significance of the matters discussed in the Basis for Adverse Opinion section of my report, the accompanying financial statements do not present fairly the financial position of the National Social Security 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 i. Non-compliance with International Accounting Standard (IAS) 21 “The effects of changes in foreign exchange rate” The Group and 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 Real Time Gross Settlement (RTGS) Dollar as prescribed to entities through Statutory Instrument 33 of 2019 (SI 33/2019).
In order to comply with SI33/2019, issued on February 22, 2019, the Group and 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 met the legal requirements however, did not meet the criteria for appropriate exchange rates in terms of International Accounting Standard 21 (IAS 21).

16 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.
No assessment was carried out to show the appropriateness of the interbank rate to the existing economic environment.

The interbank rate did not represent the price that could 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.
The consolidated financial statements include balances and transactions denominated in United States Dollars (USD) that were not converted to ZWL at an exchange rate that reflects the economic substance of its values as required by IAS 21.

Had the Group and Authority complied with the requirements of IAS 21, many elements in the consolidated financial statements 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 are considered material and pervasive to the consolidated financial statements as a whole.

In addition, had the Authority applied the requirements of IAS 21, many of the Group and Authority’s inflation adjusted financial statements would have been materially impacted and therefore the departure from the requirements of IAS 21 is considered to be pervasive.
The financial effects on the inflation adjusted financial statements of this departure has not been determined.

ii.

Valuation of investment property The Group conducted valuation of its investment property as at December 31, 2019 for its two subsidiaries First Mutual Holdings Limited and National Building Society in United States Dollars (USD) and was subject to certain limitation (caveats) and assumptions.
The USD property values were then converted to ZWL using the interbank exchange rate for financial reporting.

Given the limitation and assumptions made by the valuers of these entities under the group and the uncertainty over the appropriateness of the use of the interbank exchange rate used, I was unable to determine whether any adjustments would be required in respect of the recorded fair value of investment properties.
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, 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 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, 2019, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Non-compliance with International Accounting Standard (IAS) 21, “The effects of changes in foreign exchange rates” 17 The Schemes 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 Real Time Gross Settlement (RTGS) Dollar as prescribed to entities through Statutory Instrument 33 of 2019 (SI 33/2019).
In order to comply with SI33/2019, issued on February 22, 2019, the Scheme 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 met the legal requirements however, did not meet the criteria for appropriate exchange rates in terms of International Financial Reporting Standards (IFRS) as defined in International Accounting Standard (IAS) 21.

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.

No assessment was carried out to show the appropriateness of the interbank rate to the existing economic environment.

The interbank rate did not represent the price that could 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.
The financial statements of the Scheme 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 as required by IAS 21.

Had the Schemes complied 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 Scheme’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.

In addition, had the Scheme applied the requirements of IAS 21, many of the Authority’s inflation adjusted financial statements would have been materially impacted and therefore the departure from the requirements of IAS 21 is considered to be pervasive.

The financial effects on the inflation adjusted financial statements of this departure has not been determined.
Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1 Board fees and allowances Finding The Authority paid sitting fees amounting to $11 788 to a member who was not included on the schedule of NSSA board members list provided by the Authority.

The member also chaired Audit and Risk committee meeting three times and other committee meetings as well as board meetings for 1st and 2nd quarter for the year 2019.
Upon inquiry, management indicated that the member in question was appointed and then withdrawn from the board within a short space of time.

However, I was not availed with documentations to that effect.

18 Risk / Implication Expenditure which is not a proper charge to the Authority may be incurred.

Decisions made may be null and void.

Recommendation The Authority should ensure that there is sufficient documentation to support board appointments.
Payments of allowances should be supported by appropriate documentation.

Management response Noted.

The Board member in question was appointed and then withdrawn from the board within a short space of time.

Going forward Management will insist on appointment letters before any benefits are disbursed to board members.

Management will also follow up with the Ministry for withdrawal letters that would have been issued.
1.2 Investment policy Finding The Authority’s investment policy was issued in January 2015 and was due for review in 2018.

However, the policy was not reviewed despite the changes in the economic environment.

In terms of the Authority’s policy review guidelines, the investment policy should be reviewed every three (3) years or as and when need arises.

Risk / Implication Financial loss as investment decisions may lack proper guidance.
Monitoring and evaluation of investments performance may be adversely affected.

Recommendation The Authority should consider to review its investment policy as and when it’s due.

Management response Audit observation noted.

Management has already initiated a review process for the investment policy and will present to the board for approval by Q4 2021.
19 1.3 Automation of records Finding The Authority has not been able to automate the contributors (employers, employees and claimants) files over a long period of time.

Upon inquiry, management indicated that automation was behind due to constant system changes that occurred over the years.

As a result, manual retrieval of files was taking time and in some instances files could not be located in the registry.

Risk / Implication Service delivery may be compromised.
Recommendation The Authority should consider automation of its registry.

Management response In 2021 the Authority initiated the tender processes for the procurement of cloud storage and equipment that includes scanners and printers for the digitisation of paper documents to digital.

The digitisation exercise will be ongoing as it seeks to address historical and future submissions.

1.4 Processing of Claims Finding The Authority was taking over thirty (30) days to process claims from date of receipt.
This was in contravention of the Authority’s internal process timelines.

On average, the Authority was processing 30% -50% of the total claims received at any given time.

Upon inquiry, management indicated that they had staff shortages in that department.
The tables below have details of the anomaly: POBS –Long term claims Year 2018 2019 2020 Number of claims received processed within 30 Number of claims Number of claims processed outside 30 days of receipt days of receipt 14 600 12 201 8 999 4 468 4 939 4 807 10 132 7 262 4 191 20 POBS –Short term claims Year 2018 2019 2020 Number of claims received processed within 30 Number of claims Number of claims processed outside 30 days of receipt days of receipt 14 298 10 806 6 126 4 222 4 955 3 860 10 075 5 850 2 265 Risk / Implication Service delivery and reputation is compromised.
Recommendation The Authority should consider strategies that address staff shortages and service delivery.

Management response Management is in the process of filling in vacant positions within the Benefits Division.

In 2021 the Authority established a Data Management Unit which is tasked with dealing with the Authority’s data issues.
A self-service portal has been developed and rolled to employers in May 2021 and is expected to increase compliance in the submission of returns (P4 forms) by employers as well as improve in the quality of data cleanliness.

These interventions are expected to improve benefits processing turnaround time.

1.5 Properties, projects and human resources management manual and guidelines Finding The properties and projects procedures manual that was in use during the period under review was outdated.
The manual was due for review in 2018.

As a result, officers were now using the draft manual that has not been reviewed and approved.

In addition, the Authority was operating with an out dated human resources management guidelines.

The guidelines which were approved on October 05, 1995 might not be in line with current changes and practices/ trends.

Risk / Implication Material irregularity and fraud may go undetected.

The Authority may lack recourse in cases of disputes with the employees.
Recommendation The Authority should consider to review its manuals and guidelines.

21 Management response Management has initiated the processes to review the manual and expects to have it approved by Q4 2021.

The Authority is in the process of reviewing all Human Resources policies, the Human Resources Guidelines included.

Most of these policies will be submitted to the board in the first quarter of 2022.

2.
2.

PROGRESS TOWARDS IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS 2.1 Complaints register Recommendation The Authority may need to consider extracting complaints from the registers and other sources and stratify them according to their nature to aid in assessing the level of dissatisfaction.

Progress made Management has put in place various touchpoints to facilitate customer feedback, in addition to customer complaints/feedback registers.
The different regional offices send through the complaints weekly, which are then compiled, filed and followed up on.

The Authority has also resorted to targeted client meetings, starting with pensioner representatives in all regions.

With the covid-19 pandemic, management is utilising radio stations across the regions to disseminate information as well as gather feedback from clients and stakeholders.

NSSA digital platforms continue to be a vital source of client feedback.
We also intend to have trainings for all customer facing employees starting with the Customer Care Offices starting from the third quarter of 2021.

22 POSTAL AND TELECOMMUNICATIONS REGULATORY AUTHORITY OF ZIMBABWE (POTRAZ) 2020 Background information The Postal and Telecommunications Regulatory Authority of Zimbabwe was established in terms of the Postal and Telecommunications Act [Chapter 12:05].
The objective of the Authority as provided in the Act is to provide for the licensing and regulation of the cellular telecommunication and all telecommunication services.

I have audited the financial statements of Postal and Telecommunications Regulatory Authority of Zimbabwe for the year ended December 31, 2020 and I issued a qualified opinion.
Qualified Opinion In my opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph of my report, the accompanying financial statements present fairly, in all material respects the financial position of Postal and Telecommunication Regulatory Authority of Zimbabwe (POTRAZ) as at December 31, 2020, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates”.

The prior year financial statements did not comply with the requirements of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, as the Authority had been unable to use an appropriate exchange rate on change of functional currency.
The Authority 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 Authority used January 1, 2019 as the date of change in functional currency and translated its foreign denominated balances to ZWL at a rate of 1:1 per Statutory Instrument 33 of 2019 which prescribed that all assets and liabilities that were denominated in US$ before February 22, 2019 be deemed to be RTGS dollars at a rate of 1:1 and all transactions subsequent to February 22, 2019 at interbank rate.
The Authority’s inability to assess the appropriateness of using the interbank rate in achieving fair presentation was primarily due to the need to comply with SI 33 and the fact that there were no official exchange rates between October 2018 and February 2019 due to lack of an observable foreign exchange market.

In that regard the Authority’s 2020 opening balances’ misstatements had an impact on the current year financial statements.

Below are other material issues noted during the audit; 23 1.
GOVERNANCE ISSUES 1.1.

Ownership of land Finding The Authority had no title deeds for some of its land.

As a result, I could not verify the ownership of the land.

The table below shows examples of such land; Land Kotwa Bulawayo Monitoring station Acquisition Date Value as at December 31, 2020 US$2,181,000.00 Not yet capitalised 31/12/2012 31/12/2019 Risk / Implication The Authority may have no recourse in the event of disputes over the ownership of the land if it does not have title deeds.
Recommendation The Authority should make a concerted effort to obtain title deeds for all its land.

Management response Noted.

Kotwa: POTRAZ and Mudzi Rural District Council are working on the matter to process Title Deeds by changing from State Land through engagement of relevant Government Departments Bulawayo Monitoring station: Bulawayo City Council is processing Title Deeds after POTRAZ submitted all the documents requested by the City Council 1.2.
Motor vehicles Finding The Authority’s Asset policy, stipulates that a vehicle must be replaced whenever it reaches five (5) years.

However, I noted that sixteen (16) motor vehicles out of a total of sixty (60) had been in use for eight (8) to thirteen (13) years at the time of the audit.

An analysis of the motor vehicle expenses, showed an increase from ZWL10 735 749 in 2019 to ZWL24 491 361 in 2020.

The motor vehicles repairs constituted 36% of the total motor vehicles expenses.
24 Risk / Implication Operations may be adversely affected by the non-availability of a reliable mode of transport.

The costs of maintaining an aged fleet may outweigh the benefits realisable from the continued use of such vehicles.

Recommendation The Authority should comply with its asset policy.

Management response We agree with the finding.


Whilst it is proper to comply with the Asset Policy, management took a position to continue using some of the vehicles that were in sound condition because of the challenges involved in procuring new vehicles.

To this end, the Authority is in the process of replacing these operational vehicles with new ones.

If the vehicles were to be disposed of before they are replaced, the Authority’s operations would be negatively affected.
Of note is that the Authority is awaiting approval from Treasury (Ministry of Finance) for the purchase of the said new vehicles following a PRAZ directive to do so.

25 ZIMBABWE INVESTMENT AND DEVELOPMENT AGENCY (ZIDA) 2020 Background information Zimbabwe Investment and Development Agency was formed through an Act of Parliament, the Zimbabwe Investment and Development Agency Act [Chapter 14:37] on February 7, 2020.
Its mandate is to provide for the promotion, entry, protection and facilitation of investment in Zimbabwe as a One Stop Investment Services Centre.

I have audited the financial statements of Zimbabwe Investment and Development Agency for the year ended December 31, 2020 and I issued a qualified opinion.
Qualified Opinion In my opinion, except for the significant effects of the matter described in the Basis for Qualified Opinion section of my report, the financial statements present fairly, in all material respects, the financial position of the Zimbabwe Investment and Development Agency as at December 31, 2020, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards(IFRSs).
Basis for Qualified Opinion Revaluation of property, plant and equipment The Agency engaged an external valuer to value its property and equipment as at December 31, 2020 using the market value approach.

The valuations were performed in US$ and the Agency converted the US$ values to ZWL using the interbank exchange rate.
Given the uncertainty over the appropriateness of the use of interbank exchange rate, I was unable to determine whether adjustments to the carrying amounts of property and equipment, and revaluation surplus amounting to ZWL146 332 125 were appropriate in these circumstances.

Report on Going Concern Material Uncertainty Related to Going Concern I draw your attention to the fact that as at December 31, 2020, the Agency’s current liabilities exceeded its current assets by ZWL16 223 018.
This condition indicates the existence of a material uncertainty that may cast significant doubt about the Agency’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 Taxation of motor vehicles disposal benefit Finding The Agency disposed motor vehicles to five (5) former employees at nil value as part of their retrenchment package.
However, the Agency did not deduct the tax on the motor vehicle 26 disposal benefit.

This was in contravention with the Income Tax Act [Chapter 23:06], Section 8(1) x which requires that the motor vehicles should be revalued to determine the deemed benefit to the employees for tax purposes.

Risk / Implication Financial loss due to penalties and interest that may be charged.

Recommendation The Agency should consider yearly assessment of compliance with laws and regulations.
Management response This was an oversight and the issue will be considered, in terms of how best to deal with it, given that the employees have been paid their packages without the taxation element being considered.

1.2 Bank accounts Finding The Agency’s management were not signatories to the bank accounts that were part of the assets transferred from a predecessor entity, the Zimbabwe Investment Authority.
As a result, the Agency did not have bank statements for the bank accounts neither could they obtain confirmation of the bank balances.

Type of account FCA Domestic Risk / Implication Balance US$ 155 000 ZWL 446 655 Financial loss due to material irregularity and fraud that may not be detected on time.

Recommendation Management should expedite the transfer of these assets.
Management response Instructions were sent to the bank, before the ZIA staff were released to transfer the funds in those accounts to ZIDA and close the respective accounts.

The instructions were not followed by the bank.

Follow ups should have been done on the issue to ensure that the accounts were indeed closed.

Management is in the process of ensuring the closure of these accounts and that there were no unauthorised transactions.
27 ZIMBABWE NATIONAL WATER AUTHORITY (ZINWA) 2020 Background information Zimbabwe National Water Authority (ZINWA) was established as a body corporate in January 2000 by an Act of Parliament, the Zimbabwe National Water Authority Act [Chapter 20:25], following a merger of the Regional Water Authority and the Department of Water.

The Authority is responsible for the planning, development, operation and management of water resources within Zimbabwe.
I have audited the financial statements for Zimbabwe National Water Authority for the year ended December 31, 2020 and I issued an unqualified opinion with an emphasis of matter on the effect of Covid-19.
Unqualified Opinion In my opinion, the Authority’s financial statements are properly drawn up in conformity with International Financial Reporting Standards (IFRSs) and, give a true and fair view of the financial position of the Authority as at December 31, 2020, and of its financial performance and its cash flows, for the year then ended.
Emphasis of matter Impact of Covid-19 Without qualifying my opinion, I draw your attention to the fact that a health hazard, COVID- 19, was declared as a world-wide pandemic by the World Health Organisation in March 2020 and has continued to affect many parts of the world, including Zimbabwe.
The Covid-19 pandemic has led to widespread economic uncertainty and volatility in financial markets 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.

However, management, does not anticipate the COVID-19 to have a significant impact on its operations, and as a result the going concern assumption adopted in the preparation of these financial statements has not been revised.
However, below are other material issues noted during the audit; 1.

REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 1.1.

Customer billings Finding The Authority had 131 370 accounts in the billing system of which 11 569, constituting 9% of the total accounts, were not billed during the year.
Upon enquiry, management indicated that there was no current agreement with clients, some clients were not consuming water, some meters were disconnected and clients resorted to borehole water whilst others were never connected.

In addition, they highlighted that, some clients’ meters were stolen and others had 28 their agreements last updated in 2012.

Below is an analysis of the 11 569 accounts per catchment.
Catchment Gwayi Manyame Mazowe Mzingwane Runde Sanyati Save Grand total Risk / Implication Financial loss due to non-billing.

Recommendation Number of Accounts 77 1 807 1 701 1 143 3 304 1 366 2 170 11 569 The Authority should consider conducting a verification of unbilled customers and take corrective action.

Management response Noted, the Authority will conduct verification through the Crack teams established to check on non-revenue water at all stations.
Corrective action where appropriate will be taken.

Accounts not billed will be signed off by the Service team leaders every month to guard against non-billing of customers.

1.2.

Configuration of the billing system Finding The Authority’s billing system was not configured to allow officers to address effectively the effects of meter malfunctioning.
As a result, when a meter malfunctions and is repaired, the system does not accept the same meter number, hence a meter character is added whilst billing continues using estimates posting them to the old meter account.

This creates multiple meter numbers for a single meter and duplicate billings.

This affected a number of customers whose accounts at times, were being used interchangeably for billing purposes.

Below is a table with details of this anomaly.


Account Number 6688011M Meter Number CLNA425 CLNA425-01 CLNA425-02 CLNA425-03 CLNA425-04 CLNA425-05 29 Account Number 66880385N 66880508V 66880510W 66880511X 66880512Y 66880513Z 66880514A 66880515B 66880516C 66880517D 66880518E 66880544E 66931934K 66933109W Meter Number CLNA425-06 20201748 20201748..-01 14105239 14105239.

14105239-01 110243 10 110243 10.

14064657 14064657.

14096448 14096448.

C-JAB 5703 C-JAB 5703.

14084787 14088577 14088577.


14105885 14105885.

LXH14047000 LXH14047000.

14104986 14104986.

15076700 15076700.

15076700.-01 15076700.-02 C-OHT196 C-OHT196.

CJHB1881 CJHB1881-01 Risk/Implication Financial loss due to material irregularity and fraud.

Data integrity may be compromised.

Recommendation The Authority should liaise with the software provider to re-configure the billing system.
Management response Observation noted, when a meter malfunctions or meter counter stops, billing continues using estimates.

The estimated volume moves the meter reading in billing system while 30 there is no movement on the actual meter.

After the meter is repaired, to continue with the same meter a character is added because the billing system does not accept same meter number.
Management will ensure that the original meter serial numbers, in such cases are made inactive in the system and no transactions will be made on previous meter serial numbers.

A thorough check will also be conducted on all such accounts to ensure that the data integrity was not compromised in any way.
31 ZIMBABWE PARKS AND WILDLIFE MANAGEMENT AUTHORITY 2019 AND 2020 Background information Zimbabwe Parks and Wildlife Management Authority is incorporated in Zimbabwe by an Act of Parliament 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 of the Zimbabwe Parks and Wildlife Management Authority for the years ended December 31, 2019 and 2020 and I issued an adverse opinion.
Adverse Opinion 2019 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 Zimbabwe Parks and Wildlife Management 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 Non-compliance with International Accounting Standard (IAS) 21 – “The Effects of Changes in Foreign Exchange Rates”.

The Authority 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.

The Authority also rebased its assets and liabilities as at January 1, 2019 using an interbank of USD 2.5: 1 ZWL.
The transactions and balances were not converted to RTGS or ZWL using an appropriate (fair) exchange rate that reflects the economic substance of its value as provided by International Accounting Standard 21, “The Effects of Changes in Foreign Exchange Rates”.

Subsequent to February 22, 2019 the Authority 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.
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.
Adverse Opinion 2020 In my opinion, except for the effects 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 the Zimbabwe Parks and Wildlife Management Authority as at December 31, 2020, and its 32 financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse opinion i. Non-compliance with International Accounting Standard (IAS) 21 – “The Effects of Changes in Foreign Exchange Rates”.

The prior year financial statements did not comply with the requirements of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, as the Authority had not assessed the appropriateness of the exchange rate applied on change of functional currency in line with the appropriate rate as provided for in IAS 21.
The Authority 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 Authority adopted January 1, 2019 as the date of change in functional currency and translated its foreign denominated balances to ZWL at a rate of 1USD: 2.5 RTGS.
Statutory Instrument 33 of 2019 prescribed that all assets and liabilities that were denominated in US$ before February 22, 2019 be deemed to be RTGS dollars at a rate of 1:1 and all transactions subsequent to February 22, 2019 at interbank rate starting at 1: 2.5.
The Authority’s inability to assess the appropriateness of using the interbank rate in achieving fair presentation was primarily due to the fact that there were no official exchange rates between October 2018 and February 2019 due to lack of an observable foreign exchange market.

In that regard the Authority’s 2020 opening balances misstatements have an impact on the current year financial statements.
Had the 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 Authority’s inability to comply with IAS 21 has been determined as significant.

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.

ii.
ii.

Revenue system configuration The Authority’s revenue system configuration could not allow the confirmation of the amount charged per room per night.

It could not differentiate between the domestic and international clients for billing purposes.

In addition, the system could not allow the allocation of the rates of conservation fees which are dependent on the different activities intended by the client.
The fee, per room, per night, per person needs to be identified to facilitate the total bill in case of group bookings.

Domestic and International clients are charged different rates therefore it is necessary for the system to indicate the type of client billed.

There is no adequate segregation of duties within the booking system, the supervisor could create, void, and complete a booking.
Furthermore, the invoices were not being captured sequentially to allow sequence test to be performed in order to confirm whether all invoices were captured in the revenue system.

This test was necessary given the fact that the Authority is partially automated.

Manual receipts were also captured in the system at the reporting stage.
I could therefore not trace receipts to the schedule or tariffs and verify whether all manual receipts were subsequently captured in the system to determine completeness, accuracy and classification of revenue.

33 Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1 Advance salary Finding The Authority had no documented policies and procedures that govern advance salaries.
As a result, salary advances processed in December 2020 totalling ZWL390 147 were not subsequently recovered although the instruction was that they should be recovered in the following month.

Risk / Implication Financial loss in the event of a dispute.

Inconsistences are inevitable if there is no policy.

Recommendation The Authority should consider to put in place policies and procedures for advance salaries.
Management response The Authority’s Advance Salary Policy will be drafted and implemented accordingly.

The Authority is in the process of reviewing all its Human Resources Policies in order to identify any existing gaps.

The process was initiated but could not be completed in time due to restrictions associated with COVID-19 pandemic.

Implementation date: 30 September 2021 2.


REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1 Revenue system Finding The Authority’s revenue system configuration could not allow the confirmation of the amount charged per room, per night.

It could not differentiate between the domestic and International clients for billing purposes.

In addition, the system could not allow the allocation of the rates of conservation fees which are dependent on the different activities intended by the client.
The fee per room, per night, per person needs to be identified to facilitate the total bill in case of group bookings.

Domestic and International clients are charged different rates therefore it is necessary for the system to indicate the type of client billed.

There was no adequate segregation of duties within the booking system, supervisor could create, void, and complete a booking.
34 Furthermore, the invoices were not being generated sequentially to allow sequence tests to be performed in order to confirm whether all invoices were captured in the revenue system.

This test was necessary given the fact that the Authority was partially automated.

Manual receipts were captured in the system at reporting stage.
Therefore, I could not trace receipts to the schedule or tariffs and verify whether all manual receipts were subsequently captured in the system to determine completeness, accuracy and classification of revenue.

Risk / Implication Misstatement of revenue.

Recommendation Management should ensure that the system provides reports with information relevant for revenue recalculations.
Management response Revenue System – Sequencing The Authority maintains a security items register for all security items such as receipt books and invoices where all books are recorded on receipt and dispatch.

All receipt books and other security items are uniquely identified by a sequential reference.

Within the security items register is a column showing the date when the book was put into use and dates completed.
At each year-end the last receipt used is endorsed and signed off by responsible officials during year-end processes so as to prevent the recording of receipts outside the cutoff dates.

During the last quarter of 2020, as a short to medium term solution the Authority changed the referencing sequence of its security items from continuous numbering to commence with Cluster prefixes.
This is meant to ensure easiness in identifying security items that are new, those in use and those that have been completed at various locations within the Authority.

However, challenges are experienced when a receipt is cancelled as it will not reflect in the system sequence and there will be a gap on the cancelled receipt.
Again in 2020, as a long term solution to address the challenges of completeness of transactions, ZIMPARKS rolled out a revenue receipting Point of Sale System (ZIMPARKS-ICE POS) starting with Victoria Falls on pilot test bases.

The idea is to ensure that all transactions should obtain a cluster based system reference for completeness purposes.
However, due to the limited revenue inflows owing to the COVID-19 impacts, the implementation process is being delayed by the significant investment costs associated with networking, back power, infrastructure and manpower restructuring that comes along with the introduction of any new revenue collection system.

Revenue System – Booking System The booking system is already being terminated in favour of ICE-Reservation System which is currently under development.
Management expects that on implementation, the 35 new system will address all the shortcomings noted from the current Booking system.

Implementation date: 30 June 2022.

3.

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 progress in respect of the following recommendations.

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

Progress made After consultation with the Parent Ministry, it was resolved to write off the outstanding amount as the costs of recovering the amount seems to be outweighing the benefits.

However, it was resolved that no such similar incidents should be allowed to take place within the Authority.

Letter from the Ministry yet to be availed to the Audit.
3.2 Lease receivables Recommendation Management should ensure that valid lease agreements are in place and efforts should be made to recover outstanding debts.

Progress made Implementation in progress.

36 ZIMBABWE REVENUE AUTHORITY (ZIMRA) 2020 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, 2020 as well as the revenue returns.
I issued an adverse opinion on the Authority’s financial statements, a modified opinion with an emphasis of matter paragraph on the Outstanding Revenue Return, unmodified opinion with an emphasis of matter paragraph on the Revenue return, Revenue Written Off, Tax Reserve Certificates Return and Receipts and Disbursements return.
Adverse 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, 2020, 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 i. Non-compliance with International Accounting Standard 21 (IAS 21) “The Effects of Changes in Foreign Exchange Rates” The prior year financial statements did not comply with the requirements of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, as the Authority had been unable to use an appropriate exchange rate on change of functional currency.
The Authority 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 Authority used January 1, 2019 as the date of change in functional currency and translated its foreign denominated balances to Zimbabwe dollar at a rate of 1:1 per Statutory Instrument 33 of 2019 which prescribed that all assets and liabilities that were denominated in United States dollar before 22 February 2019 be deemed to be RTGS dollars at a rate of 1:1 and all transactions subsequent to February 22, 2019 at interbank rate.
The Authority’s inability to assess the appropriateness of using the interbank rate in achieving fair presentation was primarily due to the need to comply with SI 33 and the fact that there were no official exchange rates between October 2018 and February 2019 due to lack of an observable foreign exchange market.

The misstatement in the Authority’s 2020 opening balances has an impact on the current year financial statements.
37 Had the 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 Authority’s inability to comply with IAS 21 has been determined as significant.

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.

ii.
ii.

Non Compliance with International Accounting Standard (IAS) 36 “Impairment of assets” The financial statements are materially misstated as the Authority did not include an impairment loss for its assets that were evidently impaired.

Sixty-six (66) accident damaged vehicles and non-runners valued at ZW$48 306 000 were included in the closing value of motor vehicles in the financial statements at the same value as running vehicles.
International Financial Reporting Standards (IFRS) prohibits the recognition of items of property, plant and equipment in excess of amounts expected to be recovered from them.

I have, based on my professional judgement and a thorough consideration of the state of these assets, concluded that the amounts disclosed do not represent the recoverable amount and are materially overstated.
Had impairment been assessed and a loss recognized, the value of property, plant and equipment would have significantly changed.

Opinion on Outstanding Revenue Return In my opinion, except for the effects of matters described in the Basis for Qualified Opinion section of my report, the accompanying Outstanding Revenue Return presents fairly, in all material respects, the outstanding revenue as at December 31, 2020.
Basis for Qualified Opinion i. SAP system contract accounts 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.

ii.
ii.

The SAP E-services platform 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.

I could not establish the extent of the misstatement.

iii.

Tax Amnesty 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, 2020 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.

38 iv.

Removal in Transit Removal in Transit (regional consignments) entries amounting to ZWL140 222 566 (2019: ZWL30 699 543) had not been acquitted as at December 31, 2020.
Some of the entries date back to the year 2015 and they exclude RITs that are in the process of cancellation once they meet the required criteria.

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.
v. Temporary Import Permits 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, 2020 there were 34 008 (2019: 49 620) electronic Temporary Importers Permits that had not been acquitted despite the fact that they had expired.

Some of the entries date back to the year 2013.

Some of the vehicles may have been localised as they are long outstanding prejudicing potential duty payable.
vi.

Unallocated deposits Included in the revenue return is ZWL707 648 618 deposited by clients but not receipted and allocated to any tax head by end of December 2020.

The Authority attributes the anomaly to insufficient details of the payee and tax heads for online banking payments.

The outstanding revenue return was not adjusted for these payments.

Some clients then continue to accumulate penalties and interest for outstanding amounts.

vii.
vii.

VAT refunds Included in VAT refunds of ZWL6.4billion stated in the receipts and disbursements, revenue return were VAT refunds that were fraudulently processed.

The process to quantify the extent of fraud is still in progress, hence this return excludes these amounts.
Emphasis of Matter Companies that are under liquidation and judicial management I draw attention to the fact that the Outstanding Revenue Return includes amounts owed to the Authority by companies under liquidation and judicial management, whose recoverability may be doubtful.

My opinion is not modified in respect of this matter.
Qualified Opinion on Receipts and Disbursements Return In my opinion, except for the effects of matters described in the Basis for Qualified Opinion section of my report, the accompanying Receipts and Disbursements Return presents fairly, in all material respects, the receipts and disbursements during the period ended December 31, 2020.

39 Basis for Qualified Opinion Included in VAT refunds of ZWL6.4 billion are refunds that were fraudulently processed.
The process to quantify the extent of fraud is still in progress.

Qualified Opinion on Revenue Return In my opinion, except for the effects of matters described in the Basis for Qualified Opinion section of my report, the accompanying Revenue Return presents fairly, in all material respects, the revenue collected as at December 31, 2020.

Basis for Qualified Opinion Included in VAT refunds of ZWL6.4 billion refunded to clients are VAT refunds that were fraudulently processed.
The process to quantify the extent of fraud is still in progress.

Included in this return is ZWL707 648 618 that had not been appropriately classified due to insufficient deposit details.

Below are other material issues noted during the audit; 1.
GOVERNANCE ISSUES 1.1 DOMESTIC TAXES 1.1.1 Duplicate Contract accounts Finding The SAP ERP system had inadequate input validation controls and as a result, the system allowed creation of duplicate contract accounts for the same revenue head under one business partner number.

In the period ended December 31, 2020, accounts totalling 4 304 were identified with anomalies varying from duplicate accounts, accounts without client’s names and without zone information.
I also noted that 7 288 accounts had duplicate names with different BP numbers.

Although management over the years indicated that duplicates were being blocked an analysis of the system revealed that 371 out of the 2 325 accounts noted in the previous years with single account with multiple BP numbers had not been blocked as of year-end.

The internal controls over the SAP were weak and ineffective to help in addressing the systems weakness as noted above.
The weaknesses limited evidence provided by the systems to help me determine management’s assertion and adequacy of controls in preventing distortion of outstanding amounts and refunds.

Risk / Implication Misstatements of outstanding revenue return as both contract accounts may be billed for outstanding returns.

40 Recommendation Appropriate input validation controls should be designed and implemented.

Management response The observation is acknowledged and agreed upon.
The system vendor was engaged on this challenge and they implemented controls that reduced the occurrence of duplicates within the system, however the challenge was not ultimately resolved.

As a mitigatory measure monitoring for these is in progress and flagged through a daily report that is circulated for blocking.

The ultimate solution for this issue is the acquisition of a new system (TaRMS) that enforces controls to prevent duplications on contract accounts.
1.1.2 SAP E-services platform and penalty charge for non-filing of returns Finding The electronic E-service platform system challenges remained unresolved since its inception in 2016.

As a result, a significant number of business partner accounts created during the year under review were manually posted rather than created automatically through the E-service CRM application.
This was in contrast to the objectives of the E-services automation project as clients would resort to manual submission of returns which were later captured into the system.

Due to the backlog, I noted 4 398 returns that had not been captured.

Furthermore, penalties ranging from 0 to 60 days were not levied according to the current policy on the change request forms.
I also noted a total of 125 857 return submission failures recorded on the E-services platform for the period ended December 31, 2020 with the most affected being monthly and quarterly returns, PAYE and VAT as shown in the table below: 2020 Tax submission Type Failed Requests As a percentage of total requests 2019 Failed Requests As a percentage of total % increase requests Capital Gains Tax (Companies & Individual) Income (Companies & Individual) Tax Presumptive Tax Pay As You Earn Value Added Tax 323 0.26% 118 0.10% 0.16% 11 974 9.51% 14 203 11.82% -2.31% 2 889 83 304 27 367 2.30% 90 0.07% 2.23% 66.19% 79 800 66.38% -0.19% 21.74% 26 000 21.63% 0.11% TOTAL 125 857 120 211 41 Risk / Implication Misstatement of outstanding revenue due to human error which is inevitable for voluminous transactions.
Recommendation Reduce submission failures, by investigating the causes and engaging the supplier to resolve the issues.

Management response It is acknowledged that the returns filed late through E-Services are still not being charged civil penalties due to interface challenges between E-Services and the SAP backend due to missing parameters.

Civil penalties for late returns captured directly into the SAP backend are calculated correctly.
This is part of the outstanding issues being handled under the E-Services enhancement project.

System congestion and log in errors have been identified and are being attended to, through the e-services enhancement project currently under way.

Clients have been advised to submit manual returns or submit through the emails created as a mitigatory measure in instances where the system is facing congestion issues.

The E-Services enhancement project is now targeted for completion by 31 December 2021.
1.1.3 Online deposits Finding There was no evidence to support that the Authority reviewed its online banking mandatory minimum details required when paying using online platforms.

As a result, the un-cleared deposits grew to ZWL1 636 814 620 by end of December 2020 due to business partners who were not supplying sufficient details of the Payee and tax heads when making online payments.

The Authority could not allocate these deposits to clients hence the business partner’s debts were not adjusted.
Some business partners continued to accumulate penalties and interest for outstanding amounts.

Risk / Implication Misstatement of the outstanding revenue return as penalty and interest would be automatically charged to the business partner’s accounts despite being up to date with the payments.

Recommendation The Authority should review its banking requirements and engage banks on how the online platforms can be enhanced to enable clients to provide the mandatory details when making tax payments.
Management response Observation Noted.

Banks have created receipting platforms that validate transactions before posting online.

The challenge is with RTGS linked payments which have to cross 42 banks or banking platforms has no validation at this point hence transactions are received by banks with insufficient details.

The banks eventually post onto the bank statements thereby creating difficulties in receipting.
The interface used by the banks was improved to include the BP number and Tax type for validation purposes.

The Authority is looking at a solution to address the RTGS challenges.

The unallocated amount is now ZWL707 648 618.

1.1.4 Tax amnesty Finding The system was not configured to waive penalties and interest, where principal amount was not paid in full.

The configuration of the program was in progress, although it was expected to be completed by June 30, 2020.
As a result, all the approved Tax Amnesty waiving of interest and penalties for late payments of tax arising prior to June 30, 2018 were not done by year ended December 31, 2020.

I could not determine the amount of waived penalties and interest included in the outstanding revenue return.

Risk / Implication Misstatement of the outstanding revenue return.

Recommendation The Authority should configure the system to accommodate such requests and the reversals should also have an audit trail.
Management response Observation noted.

A system had been developed and ready for roll out before 30 June 2020 in line with the initial requirements.

However, it was realized that the law had not been correctly interpreted and the implementation was halted.

The requirements have now been modified to include recommendations from Regions on the other amnesty returns which had not been included in the initial requirements.
The program is undergoing user acceptance testing 1.1.5 VAT Returns Finding I noted that VAT Refunds were taking long to be processed as VAT refunds amounting to ZWL1 309 335 146 remained unpaid during the year ended December 31, 2020 while a further ZWL14 455 494 related to prior years.
The delays in processing the refunds are in contravention of the Authority’s Domestic Tax Instruction (DTI) 15 which stipulates that the refunds should be processed within 30 days from the date of submission of the application or claim.

Furthermore, Section 20 of the Value Added Tax General Regulations (2003) requires interest to be payable to the registered operator on the outstanding amount at the rate prescribed in the Fifth Schedule.
From my inquiries, management indicated that the delay was caused by the risk 43 profiling issues.

As a result, I was not able to quantify the amount of interest due and payable to the registered operators for the year ended December 31, 2020 and the extent of compliance with the standing procedures relating to the processing of refunds.
Furthermore, included in receipts and disbursements as well as revenue return, are VAT refunds processed fraudulently and the prejudice is subject to a forensic investigation.

Risk / Implication Non-compliance with the Authority’s Domestic Tax Instruction (DTI) 15.

Reduction of future remittances to Exchequer due to payment of interest on amounts owing to registered operators.

Recommendation The Authority should comply with the provisions of the Value Added Tax Act and Domestic Tax Instruction.
Management response Observation noted.

The Authority will comply with the DTI15 and the VAT Act and Regulations with regard to processing refunds.

Targeted completion date for finalising processing of 2020 and prior year refunds is 30 September 2021.

1.2 CUSTOMS AND EXCISE 1.2.1 Customs debt from imported vehicles Finding The motor vehicle clearance processes had taken time to be fully automated.
As a result, it was difficult for the Authority to timely identify data capturing errors that were occurring as officers were capturing customs clearing processes (CCC documentation).

Clients took advantage of the weaknesses in the process and did not properly clear vehicles totalling 1 570 with only 645 vehicles recovered during the period under review.
The table below refers; PROJECT PHASE 1 PHASE 2 TOTAL CCC VEHICLES: Identified Recovered Recovery rate Vehicles to be recovered 485 170 35% 315 1085 475 43% 610 1570 645 41% 925 Risk / Implication Loss of revenue in the form of customs duties for the authority due to fraud and collusion amongst clients and employees of the Authority.

44 Recommendation The Authority should expedite the automation of the customs clearance processes.
This should then be augmented by random spot checks and reviews of all vehicles being imported.

Management response The Loss Control Division in collaboration with the Customs and Excise Division have agreed on a recovery plan to close the gap between the identified and the recovered vehicles.

Data capturing error rate was found to be high and a team will conduct a CCC verification exercise in May and June 2021.
Vehicle clearance process has now been fully automated as the authority Customs Clearance Certificated module is now being automatically generated after the assessment of the bill of entry.

All employees who were involved in the improper clearance of goods will be prosecuted.

More than 20 officers have already appeared before the courts to answer charges against them.

Assets acquired will all be tracked down and seized for the benefit of the Authority.
It is not possible to use the officers as they are not cooperating.

They actually destroy evidence.

1.2.2 Temporary Imports Permits of tourists’ Vehicles (TIPs).

Finding The system was not configured to flag vehicles that had expired TIPs when issuing a new TIP to the applicants.
In addition, the system did not document the applicant’s essential details like address and full name, to allow the Authority to flag applicants with outstanding vehicles on TIPs, as a result some applicants had multiple outstanding TIPs.

As at December 31, 2020 there were 34 008 (2019: 49 620) electronic Temporary Importers Permits that had not been acquitted despite the fact that they had expired.

Some of the entries date back to the year 2013.


In addition, during peak periods, the system was not coping with demand forcing the Authority to resort to the manual issuance of TIPs making it possible for an applicant to apply for multiple TIPs.

There were manually issued TIPs that had expired as detailed below: Station Beitbridge Border Post Forbes Border Post Plumtree Border Post Vic.
Falls Border Post Chirundu Border Post Kariba Border Post Nyamapanda Border Post Sango Border Post TOTAL Expired Manual TIPs 11 230 644 38 6 347 57 264 12 12 598 45 Risk / Implication Loss of revenue due to irregular use of TIPs.

Misstatement of the outstanding revenue return.

Recommendation The Authority should continue to engage other key stakeholders such as Central Vehicle Registry and ZINARA to clear vehicles that are on TIPs.
The controls surrounding the acquittal process of TIPs should be reviewed and improved.

Management response Observation noted.

The Authority will continue to check the CVR Platform and also re-engaging ZINARA on systems integration and the finalisation of the MOU with ZIMRA to enable vehicles with expired TIPs to be identified at Tolling points.

The process of acquitting re-entries has been greatly affected by COVID-19 restrictions as borders still remain closed to travellers.
Other Customs Administrations are also being engaged for assistance.

Acquitted manual TIPs are being forwarded to the issuing ports.

Communication has been made to Officers to capture full details when generating TIPs.

The system flags out vehicles with expired TIPs.

Communication has been made to Officers to capture full details instead of a dot (.)

when generating TIPs.

The fields are mandatory in the system.


During the peak periods the system can cope with volumes but it is the uptake of the mobile application by travellers which has been low forcing officers to capture TIP details which is slow.

Management will put more effort towards marketing the use of the e- TIP platform.
1.2.3 Management of Removal in Transit (RIT) Finding Some key customs clearance processes for Removal in transit were not automated, as a result, the manual interventions were allowing multiple generation of RITs.

The multiple entries were remaining outstanding RITs distorting the status of the entries.
Furthermore, the Asycuda system was not configured to timely flag out declarants with outstanding obligations for Removal in Transit (regional consignments) RITs entries to allow the Authority to call for guarantee once the acquittal period lapses.

46 I could not, ascertain the extent of outstanding duty payable to be included in the outstanding revenue return as some of the goods might have been consumed locally.
Risk / Implication Loss of revenue as outstanding RITs may not be properly acquitted and Authority may fail to recover duty payable from guarantors on time.

Recommendation The Authority should improve processes of clearing RITs and ensure guarantees are called on time once the acquittal time lapses.

Management response Observation Noted.

Processes of clearing RITs have greatly been improved to ensure guarantees are called on time.
However, in cases where a cancellation has been submitted and the verification rests with the authority neither the cancellation nor the bond call up can’t be done until the verification process is completed.

In some instances, inter-territorial verifications are required and this may take time.

2.
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 progress in respect of the following recommendations.

2.1 Tobacco levy returns Recommendation Management should continue engaging respective Legislative Authorities for the possible review.

Management should ensure that all auctioneers comply with the law.
Progress made All tobacco levy returns which had not been captured when the ICT Audit report was done have now been captured.

The legislative proposals to amend the law to remove requirement to submit returns by tobacco auctioneers every 48 hours was crafted but was not taken aboard.

A re- submission has been prepared for Ministry of Finance to consider issuing a Statutory Instrument which will allow the tobacco auctioneers to submit the tax returns monthly instead of every 48 hours.
This is expected to have been finalised by 30 September 2021.

Auditor’s comment Whilst I appreciate the response from management, the 2019 returns were captured but the underlying cause was still outstanding.

47 2.2 Report Orders Recommendation Continuous follow ups should be done on the outstanding report orders to be cleared.
Progress made Progress to date is through follow-ups and data matching as indicated below though progress was affected by COVID-19 restrictions: Beitbridge - Report Orders have been reduced from a value of ZWL12,382,551 to a value of ZWL5,285,857 Nationally the value has been reduced from ZWL95,378,7051 to ZWL57,258,142 The Authority will continue to engage Government Departments to expedite the acquittal of outstanding report orders.
48 PUBLIC ENTITIES UNDER THE CATEGORY OF BOARDS 49 PIG INDUSTRY BOARD (PIB) 2019 Background information The Pig Industry Board of Zimbabwe is a parastatal under the Ministry of Agriculture, Mechanization and Irrigation Development.

It derives its mandate to develop the pig industry from the Pig Industry Act [Chapter 18:15].

The core functions of PIB are genetic improvement, research, promotion of production and marketing of pigs.
The PIB undertakes training and extension activities to promote production of pigs.

I have audited the financial statements of the Pig Industry Board of Zimbabwe, for the year ended December 31, 2019 and I have issued an adverse opinion.
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, the financial position of Pig Industry Board 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 i. Non-Compliance with International Accounting Standard IAS 21 “The Effects of Changes in Foreign Exchange Rates” During the period January 1, 2019 to February 21, 2019 the financial statements of the Board included balances and transactions denominated in US$ that were converted to local currency (ZWL) using an exchange of 1:1 in compliance with Statutory Instrument 33 of 2019(SI 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 – The effects of changes in Foreign exchange rates.
On February 22, 2019 the Board 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 of 1:1 in compliance with (SI 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.
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 does not represent the true market exchange rate that existed in comparative year in terms of IAS 21.

Instances of non-compliance with IAS 21 noted above were primarily due to the requirements of Statutory Instrument 33 of 2019 being inconsistent with IAS 21.
To address this inconsistency, the Board was guided by Statutory Instrument 41 of 2019 (SI 41/19) which states that in the case of inconsistency between a local pronouncement and any international standard, the local pronouncement shall take precedence.

50 ii.
50 ii.

Valuation of Biological Assets The carrying amount of biological assets as at December 31, 2019 was based on a cost determined by management, this was contrary to the requirements of IAS 41 on “Agriculture” which states that a biological asset shall be measured on initial recognition and at the end of each reporting period at its fair value less costs to sell.
This constitutes a departure from International Financial Reporting Standards therefore, I could not quantify the amount of adjustments that would have been necessary to value the biological assets at fair value.

Below are other material issues noted during the audit: 1.

GOVERNANCE ISSUES 1.1.

Audit committee Finding The Chairperson of the Board and an executive director were members of the audit committee during the year under review resulting in the independence of the committee being compromised.
This was a contravention of the requirements of the Public Entities Corporate Governance Act [Chapter 10:31].

Risk / Implication The oversight role of the audit committee may be compromised.

Recommendation The Board should reconstitute the audit committee in line with the requirements of the Public Entities Corporate Governance Act [Chapter 10:31].

Management response Point noted, the audit committee will be reconstituted in line with the provisions of the Act.
1.2 Internal audit Finding The Board had an arrangement with the parent Ministry for its Internal Audit unit to carry out internal audit assignments.

However, during the year under review no internal audits were conducted.

Upon enquiry, management indicated that the parent Ministry could not carry out the internal audits due to pressure of work.

Risk / Implication Oversight over the Board’s internal controls maybe compromised.

Fraud and misappropriation of assets may go undetected.
51 Recommendation The Board should engage the parent Ministry to carry out the internal audits as planned.

Management response The PIB relies on the parent ministry for internal audits.

Due to pressure of work at the parent ministry the Ministry Internal Audit department could not do the internal audit of the PIB.

The parent ministry Internal Audit Department will be pressured to do annual audits of the PIB.
1.3 Biological Assets Finding The carrying amount of biological assets as at December 31, 2019 was based on a cost determined by management.

This was contrary to the requirements of IAS 41 which states that a biological asset shall be measured on initial recognition and at the end of each reporting period at its fair value less costs to sell.

I could not quantify the amount of adjustments that would have been necessary to value the biological assets at fair value.
Risk/implication Misstatement of financial statements.

Recommendation Management should ensure compliance with the requirements of International Financial Reporting Standards (IFRSs).

Management response The recommendation is noted.

The requirements of IAS 41 will be implemented starting with the financial statements for 2020.
52 TOBACCO INDUSTRY AND MARKETING BOARD (TIMB) 2019 AND 2020 Background information Tobacco Industry and Marketing Board was incorporated in Zimbabwe in terms of the Tobacco Industry Marketing Board Act [Chapter 18:20].

The Board was established to provide control and regulation of tobacco industry in Zimbabwe.

I have audited the financial statements of the Tobacco Industry and Marketing Board for the years ending December 31, 2019 and December 31, 2020.
I issued an adverse opinion for 2019 and a qualified opinion for 2020.
Adverse opinion 2019 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, 2019, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and the requirements of the Tobacco Industry and Marketing Act [Chapter 18:20].

.
.

Qualified opinion 2020 In my opinion, except for the effect of the matters described in the basis for qualified opinion section of my report, the financial statements present fairly the statement of financial position of Tobacco Industry and Marketing Board as at December 31, 2020, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Tobacco Industry and Marketing Act [Chapter 18:20].
Basis for adverse opinion 2019 Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” The Board’s prior year financial statements were qualified due to non-compliance with IAS 21, The Effects of Changes in Foreign Exchange Rates.

The financial statements used a rate that complied with the legislative requirements in place in the country.
As the Board chose to comply with the law, it inevitably could not comply with the requirements of IAS 21 which require foreign currency transactions and balances to be translated at a spot rate which is a rate for immediate delivery of currency.

Due to shortages of currency, it is difficult to identify and verify an appropriate spot rate that would meet the requirements of IAS 21.
To the extent that the Board transacted and has balances in foreign currency for the current year, the financial statements are misstated as a result of use of an official rate that is non-compliant with the requirements of IAS 21.
On February 22, 2019 the Reserve Bank of Zimbabwe published Statutory Instrument (SI) which brought an end to the 1:1 rate and promulgated the use of multi-currency system which was substituted in June by SI 142 declaring the Zimbabwe RTGS dollars (ZWL) as the sole legal tender, there have been further subsequent changes to the legislative framework, however identification of a rate that relates to immediate delivery of currency remains an issue for the Board.
There was no exercise done by management to restate 53 the comparatives and the transactions and balances for the periods affected by this matter.

Therefore, the opening balances and the current year financial statements were materially misstated and have been affected by the above.

These are considered to be material and pervasive to the financial statements as a whole.
Basis for qualified opinion 2020 Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” The Tobacco Industry and Marketing Board had transactions and balances that were stated in United States Dollar (US$).

IAS 21, requires the use of a spot exchange rate for immediate delivery of currency.

The interbank auction exchange rate used in the current year did not meet the definition of the spot exchange rate given in IAS 21.
The financial statements may be misstated to the extent of the net impact on the financial statement of the difference between the interbank auction exchange rate and the spot exchange rate that would meet the requirements of IAS 21.

No assessment of the spot exchange rate and the impact of the difference if was made, consequently I was unable to establish if the financial statements for the current year would be materially different if such an assessment had been carried out.
The Board’s prior year financial statements were qualified due to non-compliance with IAS 21.

The financial statements used an exchange rate that complied with the legislative requirements in place in the country.

As the Board chose to comply with the law, it inevitably could not comply with the requirements of IAS 21 which require foreign currency transactions and balances to be translated at a spot exchange rate which is a rate for immediate delivery of currency.
Therefore, the opening balances and the current year financial statements may be affected by any difference between the interbank auction exchange rate and a spot exchange rate that would meet the requirements of IAS 21.

Below is another material issue noted during the audit.

1.

GOVERNANCE ISSUE 1.1 Security over assets Finding The Board lost five (5) laptops during the years ended December 2019, one (1) laptop and December 2020 four (4) new laptops.

These laptops were never recovered.


Upon further assessment, I noted that the premises had insufficient security arrangements hence the recurrence of theft within two (2) consecutive years targeting laptops.

Risk / Implication Financial loss due to loss of assets.

Recommendation Management should reinforce security arrangements in order to safeguard assets.

54 Management response Audit recommendation noted for adoption.

The four laptops were stolen from the server room prior to allocation.
The server room has since been fitted with biometric access control features.

At TIMB HQ offices CCTV cameras have since been installed.

Police were still investigating the case.

All assets are insured on receipt.

55 TOBACCO RESEARCH BOARD 2019 & 2020 Background Information The Tobacco Research Board was established in 1950 under the Tobacco Research Act [Chapter 18:21], with a mandate of directing, controlling and carrying out tobacco research in Zimbabwe.
I have audited the financial statements of Tobacco Research Board for the years ended December 31, 2019 and 2020 and I issued an Adverse Opinion.
Adverse Opinion 2019 In my opinion, because of the significance of 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 Tobacco Research Board 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).
Basis for Adverse Opinion Non-compliance with IAS 21 “The effects of changes in Foreign Exchange Rates” The Board 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 Real Time Gross Settlement (RTGS) Dollar as prescribed to entities through Statutory Instrument 33 of 2019 (SI 33/2019).
In order to comply with SI33/2019, issued on February 22, 2019, the entity 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 met the legal requirements, but however did not meet the criteria for appropriate exchange rates in terms of International Financial Reporting Standards (IFRS) as defined in International Accounting Standard (IAS) 21.

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.

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 did not represent the price that could 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.

The financial statements of the Board 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.
Had the Board applied the requirements of IAS 21, many elements in the accompanying financial statements would have been materially affected.

As a result, the impact of the Board’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.
In 56 addition, had the Board applied the requirements of IAS 21, many of the accompanying inflation adjusted financial statements would have been materially impacted and therefore the departure from the requirements of IAS 21 is considered to be pervasive.

The financial effects on the inflation adjusted financial statements of this departure has not been determined.
Adverse Opinion 2020 In my opinion, because of the significance of matters described in the Basis for Adverse Opinion section of my report, the inflation adjusted financial statements do not present fairly, in all material respects, the inflation adjusted financial position of Tobacco Research Board as at December 31, 2020, 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” on opening balances For the financial year December 31, 2020, the Board did not comply with IAS 21 “The Effects of Changes in Foreign Exchange Rates.” Prior to 20 February 2019, the transacting and functional currency of the Zimbabwean economy was the United States dollar (“USD”).
In February 2019, Statutory Instrument (SI) 33 (SI33/19) was pronounced and it introduced a new functional currency to the economy of Zimbabwe called the RTGS Dollar.

With such a change in the functional currency and the need to present the financial statements in the new RTGS Dollar currency, IAS 21 would require the Board to carry out an independent assessment of an appropriate exchange rate to be used to translate the USD denominated balances from the prior periods to the new currency.
However, the Board was precluded from doing that as SI 33/19 fixed the exchange rate between the RTGS Dollar and the United States Dollar (“USD”) at a rate of 1:1 for the period up to this effective date.

The rate of 1:1 was based on the RBZ rate pronounced on October 01, 2018 when it issued the bond notes and coins into the basket of multi currencies.
The Board then used October 01, 2018 as the date of change in functional currency and translated its foreign denominated balances using that rate without carrying out an independent assessment of an appropriate rate to use as it elected to comply with Statutory Instrument 33 of 2019 (“SI 33/19”) only from 22 February 2019.

This constituted a departure from the requirements of IAS 21, and therefore the 2019 financial statements were not prepared in conformity with IFRS.
Had the Board applied the requirements of IAS 21, the December 31, 2019 comparative inflation adjusted financial statements would have been materially impacted.

The financial effects of this departure on the opening balances of the inflation adjusted financial statements have not been determined and no adjustment was made.

Below are other material issues noted during the audit; 1.
GOVERNANCE ISSUES 1.1 Customer Contracts Finding There was no evidence to suggest that remedies for breaches by customers were enforced as agreed in the memorandum of agreement between the Board and the customers who would 57 have borrowed farming inputs.

In addition, the Board was not charging interest and penalties on defaulters as stated in the contracts.
Tabulated below are some examples of cases where contract breaches were noted; Customer US195973 Amount (US$) Comments 212 645  Contract is in place.

 No debt payment plan in place.

 No 20% interest was being charged and penalty as stated in the contract.

US172796 505 154 US113807 843 803  Contract is in place.
 Debt payment plan also in place but not being followed up  The client promised to settle her debt by 31/07/2020 but debt still outstanding as at 31/12/2020  No 20% interest was being charged and penalty as stated in the contract.

 Contract is in place.

 Debt payment plan also in place but not being followed up.

 No 20% interest was being charged and penalty as stated in the contract.

Risk / Implication Financial loss due to unfulfilled terms of contracts with customers.
Recommendation Contract provisions should be adhered to as agreed on the contract.

Management response Agreed.

The TRB will ensure that systems are put in place to check on provisions in contracts.

Finance has since appointed an officer to check all contracts generated to ensure interest payments are actioned accordingly.

1.2 Expired lease agreements Finding I noted that the Board’s procedure for management of lease was not sufficient as a result there was lapse in the way the leases were being managed.
Some tenants had no valid lease agreements for the period under review.
58 The table below shows a list of leases that had expired: Lease House number 40 Kutsaga village House number 63 Kutsaga village House number 03 Kutsaga village House number 06 Oriental station House number 03 Banket station Risk / Implication Duration 01/01/2018-01/01/2020 01/01/2018-01/01/2020 01/01/2019-01/01/2020 01/11/2019-01/12/2020 01/02/2016-01/01/2020 Revenue loss due to the absence of an essential document that enables the Board to collect lease rentals.
The Board may not have legal recourse in the event of disputes.

Recommendation The Board should put in place an effective system for the management of leases.

Management response Agreed.

The Human Resources Division was in charge of the leases and agreed, there were some lapses.

This function has since been transferred to Finance and Corporate Services Division to ensure lease agreements are in place, and to make it easier to track collection of rentals.
59 PUBLIC ENTITIES UNDER THE CATEGORY OF COMMISSIONS 60 SPORTS AND RECREATION COMMISSION 2019 Background Information The Sports and Recreation Commission coordinates, controls and develops the activities of sport and recreation, to ensure proper administration of organisations undertaking the promotion of sports and recreation and to authorise national and international sporting and recreation activities.
I have audited the financial statements of Sports and Recreation Commission for the year ended December 31, 2019 and I issued an adverse opinion.
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 Sports and Recreational Commission 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”.

During the period January 01 to February 21, 2019 the financial statements of the Commission included balances and transactions denominated in US$ that were converted to local currency (ZWL) using an exchange rate of 1:1 stipulated by Statutory Instrument 33 of 2019 (S.133/19).
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: US$ exchange rate.

The use of the 1:1 exchange rate thereby constitutes a departure from the requirements of IAS 21.
On February 22, 2019, the entity changed its functional currency from US$ to local currency, all balances that were previously denominated in US$ 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.
Figures that were previously reported as US$ prior to January 01, 2019 were converted to the local reporting currency (ZWL) from the previous reporting currency (US$) at a rate of 1:1.

The exchange rate used did not represent the true market exchange rate that existed in comparative year in terms of IAS 21.

The effects of misstatements due to non-compliance with IAS 21 on current and prior year balances have not been quantified.

Below are other material issues noted during the audit.

61 1.
61 1.

GOVERNANCE ISSUES 1.1.

Declaration of Interests and Assets Finding There was no evidence of signed declaration of interests and assets for meetings held in 2019 and when appointed by the Minister in compliance with the Public Entities Corporate Governance Act [Chapter 10.31].

The act requires board members to declare interests and assets they have in the public entity by way of signing declaration forms.
Risk / Implication Lack of independence when members deliberate on issues/projects that they have personal interest.

Manipulation in decision making leading to prejudice of the Commission.

Recommendation The Commissioners should sign declaration of interests for all meetings attended.

Management Response Recommendation accepted.

Management has already instituted the process which enables the signing and capturing of declaration of assets and interests at the start of each Board or committee meeting.
1.2.

Bank Reconciliations Finding Ecocash and CABS bank reconciliations were not prepared for the whole period under review.

Upon enquiry, management cited that the Ecocash agent account was closed before preparing the account reconciliation.

Risk / Implication Errors or fraud may go undetected.

Recommendation Management should ensure bank reconciliations are done on a timely basis.

The reconciliation for the closed Ecocash agent account should also be done.
Management response Recommendation accepted.

Management has since closed the Ecocash Agent account and has requested the manager whose credentials were used to open the OK card - CABS 62 account to collect bank statements for reconciliation on a monthly basis.

1.3.

Committee Terms of Reference Finding The Public Entities Corporate Governance Act [Chapter 10.31] requires that terms of reference be signed by the committee chairperson.
I however noted that the terms of reference for all board committees were not signed by committee chairpersons.

Management highlighted that the committee adopted the reference for use in the committee minutes.

However, it could not be established if the actual document was approved in the minutes since the terms of reference were not included in the minutes.

Risk / Implication Non-compliance with the Public Entities Corporate Governance Act.
Recommendation Management should ensure the terms of reference are signed by the Committee Chairperson.

Management Response Recommendation accepted.

Management has since put draft Terms of Reference before the Board for evaluation and approval in 2020.

Conclusion of this process was, however, affected by the 2020 lockdown restrictions on business.

1.4.

Fuel Allocation to Senior Staff Finding The Commission was implementing a policy approved by the management to allocate fuel to its senior employees.
This was contrary to Section 56 (e) of the Public Entities Corporate Governance Act [Chapter 10.31] which requires the Board to approve the policies of the public entities.

Furthermore, the fuel allowances were also not included in the contract terms of the employees.

Risk / Implication Financial loss due to payment of monthly fuel allocation not authorised by the board.

Recommendation Management should ensure allowances paid to employees are based on approved policies and on contract terms.
Management Response Recommendation accepted.

Management to draft policy for Board approval regularizing conditions of service fuel allocations to senior employees.

In the case of Directors, the fuel 63 benefit has already been included in Directors’ contracts.

1.5.

Budget Approval Finding The Commission operated without an approved budget during the period under review.
Section 130 (a) of the Public Entities Corporate Governance Act requires the accounting officer to ensure that budgets are timeously developed and presented to the Board for its consideration and approval and Board decisions are effectively implemented.

Risk / Implication Planned activities may not be in line with the Commission’s policy direction.

Recommendation Management should ensure it gets approval of the Board on all budgets developed.

Management Response Recommendation accepted.


This anomaly has been addressed.

Management has presented budgets for subsequent periods to the board for approval prior to submission of funding bids from the national budget being submitted to Treasury through parent Ministry.

1.6.

Service Level Agreements Finding The Commission had no service level agreements with Belina Payroll Services and Omni Africa.
Furthermore, the contract between Sports and Recreation Commission and Hygienic Services was not signed by both parties.

Risk / Implication Financial loss in the case of disputes which may arise.

Recommendation Management should ensure that service level agreements are put in place with all its clients.

Management Response Recommendation accepted.


Services for payroll and accounting systems involve installation of software applications that create legacy commitments and switching costs such that, when satisfactory, there is no real justification to re-tender.

However, management will engage service providers for service level agreements.

64 1.7.
64 1.7.

Interim Cricket Board Finding The attendance registers and minutes for the interim Cricket Board appointed for a period of three months from June 19 to September 30, 2019 were not availed for audit.

An amount totaling ZWL26 700 for the retainer and sitting allowances was paid by the Commission to the Cricket Board members in 2019, however I could not establish the basis used in determining the amount.

Risk / Implication Financial loss.


Recommendation Payments made to the Board should be supported by the attendance registers and minutes.

Management Response Recommendation accepted.

However, it is important to note that this was an ad hoc/special Committee, with a specific mandate and as such its meetings were outside the normal calendar.

The Committee prepared reports to the board for consideration and resolution.

Payments were processed at and using Committee remuneration levels.
Management will engage the Board to consider adoption of policy on appointment, operation and remuneration of such committees in future.

1.8.

Composition of the Procurement Management Unit Finding The Procurement Management Unit (PMU) was not adequately constituted by qualified and certified procurement officers as required by section 17 of the Procurement and Disposals of Public Assets Act [Chapter 22.23].

The PMU established by the Commission had one qualified Procurement Officer.
The Commission had vacant posts in its procurement department.

Risk / Implication Procurement policies and procedures may be compromised resulting in failure to comply with the PRAZ regulations.

Recommendation Management should ensure that the Procurement Management Unit consists of qualified and certified procurement personnel.

Management response Recommendation accepted.


Management has since submitted to Treasury a request to 65 recruit additional staff for the Procurement Management Unit and is confident to complete the recruitment and selection process as soon as concurrence is received.
66 ZIMBABWE ANTI-CORRUPTION COMMISSION (ZACC) 2012 - 2017 Background information The Zimbabwe Anti-Corruption Commission is a corporate body established by an Act of Parliament known as the Anti-Corruption Commission Act [Chapter 9:22] and became operational in 2006.

The mandate of the Commission is to combat corruption, economic crimes, abuse of power and improprieties in Zimbabwe through public education, prevention and prosecution after thorough investigation.
I have audited the financial statements of Zimbabwe Anti-Corruption Commission for the years ended December 31, 2012; 2013; 2014; 2015; 2016 and 2017 and I issued a disclaimer of opinion.

I draw your attention to the period that has lapsed between the financial reporting dates and the date of issue of my report.
Although the Zimbabwean economy over the periods covered by this entity’s reports was considered to be stable, the audit report on the financial statements for these years may not be relevant to the current decision needs of users.

Disclaimer of Opinion 2012 In my opinion, because of the significance of the matters discussed in the Basis for Disclaimer opinion paragraph, I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.
Accordingly, I do not express an opinion on the financial statements of Zimbabwe Anti-Corruption Commission as at December 31, 2012; 2013; 2014; 2015; 2016 and 2017.

Basis for the disclaimer of opinion covering the period described above are as follows; Basis for Disclaimer of Opinion 2012 i Cash and cash equivalents The Commission had an incomplete cash record.

The cash record only showed the payment side of transactions.

As a result, the statement of cash flow had an imbalance of US$60 435.
I was unable to determine the extent of the adjustments necessary to correct this account area.

ii Unsupported expenditure The Commission was unable to provide sufficient and appropriate supporting documents for fuel, general expenses and payroll disclosed in the income statement amounting to US$108 215.

Due to the fact that ledgers were reconstructed from the bank statement and limited documentation in place.
I was unable to conduct alternative procedures necessary to obtain assurance regarding the reliability, validity, occurrence, completeness and accuracy of the reported expenditure.

There were no alternative audit procedures that I could perform to satisfy myself as to whether these expenses were free from material misstatements.

iii Suspense Account The statement of financial position had a suspense amount of US$432 769 which the 67 Commission could not explain and whose source could not be determined.
iv Trade payables There were no supporting documents availed in the form of invoices or supplier statements to validate the payables balance amounting to US$679 393 presented in the financial statements.

In addition, the Commission was unable to avail creditor’s reconciliations for the 2012 financial year.

I was unable to perform alternative procedures to obtain assurance as to the completeness and accuracy of this balance.
v Property, plant and equipment The Commission de-recognised houses with a carrying amount of US$2 417 374.

No proper explanations or supporting documents were provided to support this process and as a result the de-recognition did not meet the criteria set out under International Accounting Standard (IAS) 16 – Property Plant and Equipment.

Basis for Disclaimer of Opinion 2013 i Cash and cash equivalents The statement of cash flow had an imbalance of US$8 880.
I was unable to determine the extent of the adjustments necessary to correct this account area.

The Commission failed to avail a cash count certificate to support the cash balance disclosed in the financial statements.

The Commission had an incomplete cash record.

The cash record only showed the payment side of transactions.

I was not availed with payment vouchers to support fuel purchases amounting to US$48 096.

In addition, the set statement of cash flow had an imbalance (suspense) of US$8 880.
I was unable to determine the extent of the adjustments necessary to correct this account area.

ii Unsupported expenditure The Commission was unable to provide sufficient and appropriate supporting documents for fuel, general expenses and payroll disclosed in the income statement amounting to US$431 260.
Due to the fact that ledgers were reconstructed from the bank statement and limited documentation in place I was unable to conduct alternative procedures necessary to obtain assurance regarding the reliability, validity, occurrence, completeness and accuracy of the reported expenditure.

There were no alternative audit procedures that I could perform to satisfy myself as to whether these expenses were free from material misstatements.
iii Trade payables There were no supporting documents availed in the form of invoices or supplier statements to validate the payables balance amounting to US$814 841 presented in the financial statements.

In addition, the Commission was unable to avail creditor’s reconciliations for the 2013 financial period.

I was therefore unable to perform alternative procedures to obtain assurance as to the completeness and accuracy of this balance.
68 iv Suspense Account The statement of financial position had a suspense amount of US$432 769 which the Commission could not explain and whose source could not be determined.

v Property, plant and equipment The Commission de-recognised houses in 2012 with a carrying amount of US$2 417 374.

No proper explanations or supporting documents were provided to support this process and as a result the de-recognition did not meet the criteria set out under International Accounting Standard 16 (IAS 16).
Basis for Disclaimer of Opinion 2014 i Cash and cash equivalents The Commission had an incomplete cash record.

The cash record only showed the payment side of transactions.

The Commission failed to avail a cash count certificate to support the cash balance disclosed in the financial statements.

I was unable to determine the extent of the adjustments necessary to correct this account area.
ii Unsupported expenditure The Commission was unable to provide sufficient and appropriate supporting documents for fuel, general expenses and payroll disclosed in the income statement amounting to US$261 094.

Due to the fact that ledgers were reconstructed from the bank statements and due to limited documentation in place I was unable to conduct alternative procedures necessary to obtain assurance regarding the reliability, validity, occurrence, completeness and accuracy of the reported expenditure.
There were no alternative audit procedures that I could perform to satisfy myself as to whether these expenses were free from material misstatements.

iii Suspense Account The statement of financial position had a suspense amount of US$432 808 which the Commission could not explain and whose source could not be determined.
iv Trade payables There were no supporting documents availed in the form of invoices or supplier statements to validate the payables balance amounting to US$645 967 presented in the financial statements.

In addition, the Commission was unable to avail creditor’s reconciliations for the 2014 financial period.

I was therefore unable to perform alternative procedures to obtain assurance as to the completeness and accuracy of this balance.
v Property, plant and equipment The Commission de-recognised houses in 2012 with a carrying amount of US$2 417 374.

No proper explanations or supporting documents were provided to support this process and as a result the de-recognition did not meet the criteria set out under International Accounting Standard 16 (IAS 16).

69 Basis for Disclaimer of Opinion 2015 i Cash and cash equivalents The Commission had an incomplete cash record.

The cash record only showed the payment side of transactions.
The Commission failed to avail a cash count certificate to support the cash balance disclosed in the financial statements.

I was unable to determine the extent of the adjustments necessary to correct this account area.

ii Unsupported expenditure The Commission was unable to provide sufficient and appropriate supporting documents for fuel, general expenses and payroll disclosed in the income statement amounting to US$553 538.
Due to the fact that ledgers were reconstructed from the bank statement and limited documentation in place.

I was unable to conduct alternative procedures necessary to obtain assurance regarding the reliability, validity, occurrence, completeness and accuracy of the reported expenditure.

There were no alternative audit procedures that I could perform to satisfy myself as to whether these expenses were free from material misstatements.
iii Suspense Account The statement of financial position had a suspense amount of US$428 639 which the Commission could not explain and whose source could not be determined.

iv Trade payables There were no supporting documents availed in the form of invoices or supplier statements to validate the payables balance amounting to US$740 833 presented in the financial statements.

In addition, the Commission was unable to avail creditor’s reconciliations for the 2015 financial period.
I was therefore unable to perform alternative procedures to obtain assurance as to the completeness and accuracy of this balance.

v Property, plant and equipment The Commission de-recognised houses in 2012 with a carrying amount of US$2 417 374.

No proper explanations or supporting documents were provided to support this process and as a result the de-recognition did not meet the criteria set out under International Accounting Standard 16 (IAS 16).
Basis for Disclaimer of Opinion 2016 i Suspense account The prior year financial statements had an imbalance of US$428 639.

This arose as a result of incomplete records whose impact on the financial statement could not be quantified.

70 ii Expenditure and trade payables There were no supporting documents availed in the form of invoices or supplier statements to validate expenditure and payables amounting to US$1 521 988 and US$674 263 respectively presented in the financial statements.
In addition, the Commission was unable to avail creditor’s reconciliations for the 2016 financial period.

I was therefore unable to perform alternative procedures to obtain assurance as to the accuracy and completeness of these balances.

iii Property, plant and equipment The Commission de-recognised houses with a carrying amount of US$2 417 374.
No proper explanations or supporting documents were provided to support this process and as a result the de-recognition did not meet the criteria set out under International Accounting Standard 16 (IAS Basis for Disclaimer of Opinion 2017 i Opening balances The opening balances for property, plant and equipment, prepayments, cash and cash equivalents, accumulated fund and trade and other payables differed from the audited 2016 financial statements.
I have not been able to obtain sufficient appropriate audit evidence to support the movements in these opening balances.

Therefore, I could not place reliance on accuracy and validity of the opening balance.

ii Suspense account The prior year financial statements had an imbalance of US$428 639.

This arose as a result of incomplete records whose impact on the financial statements could not be quantified.
iii Expenditure and trade payables There were no supporting documents availed in the form of invoices or supplier statements to validate expenditure and payables amounting to US$2 064 864 and US$474 138 respectively presented in the financial statements.

In addition, the Commission was unable to avail creditor’s reconciliations for the 2017 financial period.

I was therefore unable to perform alternative procedures to obtain assurance as to the accuracy and completeness of these balances.
iv Property, plant and equipment The Commission de-recognised houses with a carrying amount of US$2 417 374.

No proper explanations or supporting documents were provided to support this process and as a result the de-recognition did not meet the criteria set out under International Accounting Standard (IAS) 16 Property, Plant and Equipment.

v Revenue The revenue figure presented in the financial statements of US$2 033 090 differed from the trial balance amount of US$1 042 118 by US$990 972.
No explanation was provided to explain the variance.

71 Below are other material issues noted during the audit; 1 GOVERNANCE ISSUES 1.1 Houses Finding The Commission derecognized houses amounting to US$2 417 374 in the year 2012.

On inquiry, management highlighted that the houses were part of the donations from RBZ and were being occupied by some of the Commission’s senior management thus the Commission had no control over the houses.
I was not availed with any documentation approving the de- recognition of these houses.

Risk / Implication Misstatement of financial statements Recommendation Management is encouraged to seek approval from parent Ministry before de-recognition of assets.

Management response Regularisation of the property is in progress.

1.2 Reconciliations and cash payments Finding The Commission had not prepared bank reconciliation statements on time for the periods under review as they were prepared in retrospect.
The years 2012 to 2015 bank reconciliations were prepared in 2016 and 2017 bank reconciliations were still in progress at the time of audit in 2019.

As a result, the Commission had incomplete cash records.

The cash records only showed the payment side of transactions.

The Commission’s petty cashbook was incomplete as they were only recording payments and not recording reimbursements into petty cash.
The table below provide details of the anomaly; Date Details Reference Amount 01/31/2012 Petty cash reimbursement 05/31/2012 Petty cash reimbursement 09/30/2013 Petty cash reimbursement 05/06/2015 Petty cash payments 08/10/2015 Petty cash payments 11/04/2014 Petty cash payments 05/02/2014 Petty cash payments 03/31/2015 Petty cash reimbursement TRV12/11 TRV12/90 TRV13/45 002CHWL14178007 0020STCL14036000 002CHWL14101021 002CHWL140360033 TRV12/50 US$20 000 US$31 083 US$49 472 US$7 309 US$12000 US$16 307 US$16 557 US$25 025 72 07/02/2015 Petty cash reimbursement TRV13/45 US$28 455 I was also not availed with vouchers that support the following cash payments.
Date 30/01/12 31/03/12 30/04/12 30/05/12 31/07/12 30/11/12 30/11/12 31/12/14 31/12/14 31/12/14 31/12/14 28/02/14 15/02/12 15/02/12 15/02/13 15/02/13 30/04/14 30/12/14 31/02/14 30/09/14 30/09/14 31/10/15 31/12/15 31/12/15 31/12/2015 Description Fuel purchase Fuel purchase Fuel purchase Fuel purchase Fuel purchase Fuel purchase Fuel purchase 4021005 Medical Aid and Funeral 4026030 Office accommodation 4026080 Vehicle hire and lease 4031056 Subcontracting Stationery purchase 40 KVA Generator Strategic Planning Motor vehicle service Pastel service Purchase of fuel Purchase of fuel 4031056 Sub-contracting Purchase of fuel Purchase of fuel Payment of fuel Vehicle repairs Payment of fuel Payments Amount US$20 000 US$23 360 US$24 863 US$25 039 US$24 736 US$49 472 US$26 183 US$129 485 US$108 988 US$111 217 US$43 923 US$15 858 US$21 900 US$10 660 US$1 280 US$1 277 US$129 485 US$18 211 US$43 922 US$44 850 US$10 640 US$107 599 US$1 298 US$108 988 US$13 314 Risk / Implication Financial loss due to material irregularities and fraud that may not be detected on time.
Fraudulent activities may go undetected.

Recommendation Cash payments should be adequately supported.

Management should prepare bank reconciliations timeously.

Management response Recommendation has been noted.

The Finance Department is now doing bank reconciliations.

73 The Commission has digitalized the Accounting System and eliminated use of petty cash.

Steel cabinets and box files have been procured to ensure payment vouchers are secured.
74 PUBLIC ENTITIES UNDER THE CATEGORY OF COMPANIES AND CORPORATIONS 75 AIR ZIMBABWE (PRIVATE) LIMITED 2018 Background information Air Zimbabwe (Private) Limited was incorporated in terms of the Air Zimbabwe Corporation Act [Chapter 13:02] and the Companies and Other Business Entities Act [Chapter 24:31].

The main business of the Company is to provide clients with passenger and cargo air transport, aircraft maintenance and technical commercial training courses.
I have audited the financial statements of Air Zimbabwe (Private) Limited for the year ended December 31, 2018 and issued a Disclaimer of Opinion.

Disclaimer of Opinion I do not express an opinion on the financial statements of Air Zimbabwe (Private) Limited.
Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of my report, I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

Basis for Disclaimer of Opinion i) Non-compliance with IAS 21- “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 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 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$.
In February 2019, a currency called the RTGS dollar was introduced through Statutory Instrument 33 of 2019 (S.I 33) with an effective date of February 22, 2019 and the currency commenced trading at a rate of 2.5 to the US$.

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 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.

76 (ii) Breakdown in internal controls There was a breakdown in internal controls in the previous financial years.

As a result, I was unable to obtain sufficient appropriate audit evidence that the 2018 opening balances do not contain misstatements that may materially affect the reported financial performance and cash flows for the current year.
The breakdown in internal controls continued in the current year and, accordingly, I was unable to obtain sufficient appropriate audit evidence that the financial statements are not materially misstated.

(iii) Existence, completeness and valuation of inventory An inventory count was not performed as at December 31, 2018.

As a result, I was unable to determine whether any adjustments might have been necessary in respect of recorded or unrecorded inventories.
I was thus unable to satisfy myself as to the existence, completeness and valuation of the inventories which are stated in the statement of financial position at US$ 14 596 988.

(iv) Completeness and accuracy of trade and other payables Included in trade and other payables is US$163 968 555 for which I could not obtain confirmations or supplier statements.

There were no creditors’ reconciliations in respect of these creditors.
There were no alternative procedures which I could perform to satisfy myself on the completeness and accuracy of trade and other payables.

(v) Unsupported expenditure Included in operating costs are expenses amounting to US$555 308 which had no supporting documents.

There were no alternative procedures which I could perform to verify the existence and accuracy of the expenses.
(vi) Valuation and existence of property, aircraft and equipment I was not availed with proof of ownership of property, aircraft and equipment and valuation report as at December 31, 2018.

I was therefore unable to satisfy myself with regards to the valuation, existence and completeness of property, aircraft and equipment.
(vii) Accuracy and existence of other income Included in other income is an unexplained suspense balance amounting to US$39 020 203 reclassified from current liabilities in the Statement of Financial Position.

There were no alternative procedures which I could perform to validate this amount.

I could therefore not verify accuracy and validity of reported revenue.
(viii) Existence and accuracy of trade and other receivables Included in trade and other receivables is US$4 003 981 for which I could not obtain confirmations or explanations.

There were no alternative procedures which I could perform to satisfy myself on the existence and accuracy of trade and other receivables.

77 (ix) Existence and accuracy of cash and bank balances Included in the bank and cash balances are bank balances amounting to US$173 000 which I could not verify.
The bank reconciliation statements had long outstanding uncleared amounts for deposits and payments.

Accordingly, I could not satisfy myself to the existence and accuracy of cash and bank balances.
Report on Going Concern Material Uncertainty Related to Going Concern I draw your attention to the fact that the Company incurred a loss before tax of US$84 898 659 (2017: US$8 294 104) for the year ended December 31, 2018 and as of that date its current liabilities exceeded its current assets by US$356 270 771 (2017: US$271 600 664).

The company had negative equity of US$345 051 095 (2017: US$ US$260 152 436).

Below are other material issues noted during the audit; 1.
GOVERNANCE ISSUES 1.1 Fuel allowances Finding The Company paid fuel allowances to its management in form of fuel coupons.

However, the allowances were not being taxed as required by section 8 (1) (a) of the Income Tax Act [Chapter 23:06].

Risk / Implication Financial loss due to penalties and interest that may be levied.

Recommendation The Company should ensure that non-business-related fuel allowances are taxed.
Management response Currently the coupons are not being taxed because they are not being received on time, some being 4 months behind.

This will be implemented once coupons are given together with salary and are up-to-date.

1.2 Creditors reconciliations Finding Included in trade and other payables is an amount of USD139 607 709 for which there were no creditors reconciliations.

I was not availed with suppliers’ statements and creditors confirmations.
As a result, there was a variance of USD965,506 between creditors listing and ledger balances which management could not explain.

78 Risk / Implication Misstatement of financial statements.

Financial loss due to errors and irregular payments.

Recommendation Creditor’s reconciliations should be performed for completeness and accuracy of trade and other payables.

Management response Some of the creditors did not have statements.

Effort is being made to secure statements to enable monthly reconciliations.
Most creditors did not respond to debt confirmations sent to them.

1.3 Suspense balance Finding The Company’s financial statements had an imbalance of USD28 890 941 as at December 31, 2018 which was treated as a suspense.

Management could not provide an explanation to this imbalance.

I also noted that the amount increased by USD925 365 from the 2017 balance of USD27 965 576.The suspense balance was written off during the year.

Risk/ Implication Material misstatement of financial statements.
Financial loss due to fraud and error that may go undetected.

Recommendation All transactions should be posted in the correct accounts with adequate supporting documentation and explanations for entries.

Management response Recommendation noted.

1.4 Bank reconciliations Finding There were long outstanding deposits and payments on bank reconciliation statements for various bank accounts which were not cleared.
Below are examples of such outstanding items: 79 Transaction Date Currency 30.09.2015 USD 17.11.2017 17.11.2017 30.04.2016 USD USD USD Amount 12 963 Deposits statement 887 Payments statement Description bank on on bank 32 838 Payments on cashbook 2 019 Payments statement on bank 31.01.2013 YUAN 1 332 277 Deposits on bank 31.07.2012 12.12.2014 ZAR ZAR Risk / Implication statement 722 490 Payments statement on bank 25 773 Deposits on bank 450 statement Material misstatements due to fraud or error.
Recommendation Bank reconciliation reviews should be performed regularly.

Management response Recommendation is noted, Management will ensure that postings and clearances are done on time.

80 ALLIED TIMBERS ZIMBABWE (PRIVATE) LIMITED 2019 Background information Allied Timbers Zimbabwe (Private) Limited was re-branded from the Forestry Company of Zimbabwe (Private) Limited in October 2007.
The Company is involved in plantation development and harvesting, processing, marketing and selling of pine and gum timber.

It has plantations in the Eastern Highlands and Midlands Provinces.

The Company is a limited liability Company incorporated and domiciled in Zimbabwe.

I have audited the financial statements of Allied Timbers Zimbabwe (Private) Limited for the year ended December 31, 2019 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 inflation adjusted financial statements do not present fairly, the statement of financial position of Allied Timbers 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 and Other Business Entities Act [Chapter 24:31].
Basis for Adverse Opinion i. Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” In February 2019, the Zimbabwe dollar (ZWL) was introduced through Statutory Instrument 33 of 2019 (SI 33/19) with an effective date of February 22, 2019 and the currency commenced trading at a rate of 2.5 to the US$.

In addition, SI 33/19 fixed the exchange rate between ZWL and US$ at a rate of 1:1 for periods before the effective date.
The entity took January 01, 2019 as the effective date of change in functional currency to achieve faithful representation and applied an exchange rate of 1:1 to translate opening balances from US$ to ZWL.

The basis for qualification is also due to misstatements contained in the opening balances from prior year which were reported as US$ on December 31, 2018 and translated to ZWL on the rate of 1:1 at the beginning of 2019.
Although the evidence in the market suggested that there was no longer parity between the US$ and “local currency” up to December 31,2018, the entity maintained an exchange rate of 1:1 for opening balances in compliance with SI 33/19.

This constitutes a departure from the requirements of IAS 21.
The financial effects of this departure on the inflation adjusted financial statements have not been determined and I have not been able to obtain sufficient and appropriate audit evidence to determine the impact of this departure.

81 ii.

Occurrence and Accuracy of Cost of Sales I could not obtain supporting documentation for cost of sales adjustment amounting to ZWL2 349 932 relating to a journal passed in 2019.
I was not able to determine the accuracy and occurrence of the recorded cost of sales adjustment relating to this amount.

iii.

Altim Timbers Financial Statements The financial statements of the Group’s foreign subsidiary, Altim Timbers (Proprietary) Limited have not been audited since 2014.

Altim Timbers (Proprietary) Limited has been classified as a discontinued operation after a resolution to liquidate it was made by the directors.
I was unable to obtain sufficient and appropriate audit evidence on the carrying amount of the held for sale subsidiary as at December 31, 2019 and consequently, I was unable to determine whether any adjustments to these amounts were necessary on the inflation adjusted consolidated financial statements.

Below are other material issues noted during the audit.

1.
1.

GOVERNANCE ISSUES 1.1 Withholding tax Finding The Company did not withhold and remit tax on directors’ fees paid in 2019 in violation of Section 36 (j) of the Income Tax Act [Chapter 23:06].

Risk / Implication Financial loss due to penalties and interest that may be charged.

Recommendation Management should withhold and remit tax on directors’ fees.

Management response Working to rectify this observation and liaise with ZIMRA for voluntary disclosure.

2.
2.

PROCUREMENT OF GOODS AND SERVICES 2.1 Contract management Finding The Company could not provide service level agreements for its Information Communication Technology arrangement with the service provider for the network and internet links.

82 Risk / Implication Financial loss as there will be no basis for recourse in the event that the service provider fails to deliver.

Internal controls may be compromised leading to irregularities.
Recommendation The Company should ensure that a service level agreement is in place.

Management should ensure that all contracts are put in place and signed by the relevant parties necessary to ensure that the document is legal and binding.

Management response In 2019 the ICT Department had not filed an approved and signed Service Level Agreement between Liquid & Allied Timbers Zimbabwe.
In 2020, we had already engaged Liquid Telecoms for the 2020 agreements between Allied Timbers Zimbabwe and Liquid Telecoms and is still under scrutiny with our Legal Department and will be signed-off once approved.

83 CHEMPLEX CORPORATION LIMITED AND ITS SUBSIDIARIES 2020 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 and Public Health, GD Haulage and G and W Industrial Minerals.
I have audited the financial statements of Chemplex Corporation and its subsidiaries for the year ended December 31, 2020 and I issued an adverse opinion with an Emphasis of Matter 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 Chemplex Corporation Limited as at December 31, 2020, 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 i. Non-compliance with International Accounting Standard (IAS) 21 “The Effects 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.
During the prior financial year up to February 22, 2019, the Group transacted using a combination of Nostro FCA (USD) and RTGS FCA (electronic payment), including mobile money, bond notes and coins.

In order to comply with SI 33/2019, the RTGS transactions and balances for the prior year were accounted for on the basis of a rate of 1:1 between USD and RTGS.

The Group changed the functional currency on February 22, 2019 in compliance with legislation.
This was not consistent with IAS 21, in which compliance would have resulted in the reassessment of the functional currency at a date earlier than February 22, 2019.

In addition, during the period February 22, 2019 to June 22, 2020, the foreign currency denominated transactions and balances were translated into ZWL using the official interbank exchange rate which is not considered an appropriate spot rate for translations as required by IAS 21.
The opinion on the prior year financial statements was modified in respect of this matter and the misstatements have not been corrected in the financial statements for the year ended December 31, 2020.

Had the Group applied the requirements of IAS 21, many of the elements of the financial statements would have been materially impacted and therefore the departure from the requirements of these standards is considered to be material and pervasive to the financial 84 statements, taken as a whole.

ii.
ii.

Non-compliance with International Accounting Standard (IAS) 29 "Financial Reporting in Hyperinflationary Economies” The Directors have applied the IAS 29 - Financial Reporting in Hyperinflationary Economies with effect from January 01, 2019 to December 31, 2020.

However, its application was based on prior and current year's financial information which was not in compliance with IAS 21 as described above.
Had the correct base numbers been used, most elements of the financial statements would have been materially different.

The impact of the departure from the requirements of these standards is considered material and pervasive to the financial statements.

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.

However, below are other material issues noted during the audit.

1.
1.

GOVERNANCE ISSUES 1.1 Receivables Finding The receivables ageing analysis had amounts in excess of thirty (30) days and no interest accrued against these accounts.

I also noted that supplies were made to customers despite failing to honour their debts.

A typical example is a City Council, where supplies continued despite failing to honour its debts in excess of ZWL94 million.

Upon review of the credit policy, the standard credit terms are thirty (30) days from date of invoice.
All overdue accounts should be charged interest.

Risk/Implication Financial losses due to funds that remain tied up in receivables.

Recommendation Management should ensure compliance with the credit policy.

Management response Acknowledged, we are going to investigate best ways to handle the non-compliance.

1.2 Insurance Pension Commission (IPEC) regulations Finding Allied Insurance (Private) Limited, a subsidiary of Chemplex, is governed by IPEC regulations.
I noted that, Allied Insurance (Private) Limited invested ZWL2 072 320 which constituted 1% 85 of all the funds available for investment in prescribed assets, which was below the 10% threshold set by the Commission.

Furthermore, investment property constituted 77% of the company’s investable funds when IPEC guidelines put a cap of 10%.

This represents non- compliance with IPEC regulations on investments in investment property as per IPEC guidelines.
Risk / Implication Financial loss due to penalties from the regulatory authority.

The Company may fail to honour insurance claims or obligations when they fall due.

Recommendation Management should ensure that the Company’s investments are in line with the IPEC requirements.

Management response After an increase in the value due to investment property revaluation surplus, our investment in prescribed as a percentage of investible funds dwindled to only 1%.
Disinvesting from real estate to prescribed assets is going to take us some time to achieve.

The regulator guidelines support cash and cash investments yet the inflationary environment tend to reward significantly investments in real estate.

86 CMED (PRIVATE) LIMITED 2019 Background information CMED (Private) Limited is a commercialized enterprise as provided for by the Central Mechanical Equipment Department (Commercialisation) Act, 2000.
It is wholly owned by the Government and its mandate is to provide transport and operate transport services; plant and equipment for the construction of roads, dams, bridges and other infrastructure, and to perform any other functions set out in its Memorandum of Association.

It also provides ancillary services in the form of vehicle procurement, fuel, training and testing of drivers and the administration of the Government Transport Purchase Fund (GTPF).
Its subsidiaries EasyGo Car Hire and Travel (Private) Limited and CMED Fuels (Private) Limited are incorporated in Zimbabwe in terms of the Companies and Other Business Entities Act [Chapter 24.31].

I have audited the financial statements of CMED (Private) Limited for the year ended December 31, 2019 and I issued an adverse opinion.
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 accompanying consolidated financial statements do not present fairly, the financial position of the CMED 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).
Adverse Opinion on the Company Financial Statements In my opinion, because of the significance of the matters 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 the CMED (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” The Group translated its comparative financial statements and transactions for the period up to February 22, 2019 denominated in US$ at a rate of 1:1 to Zimbabwean dollar (ZWL) as prescribed to entities through SI 33/2019.
In order to comply with Statutory Instrument 33 of 2019, issued on February 22, 2019, the Group 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 ZWL and US$ amounts.

The exchange rates applied meet the legal requirements, but did not meet the criteria for appropriate exchange rates in terms of IFRSs, as defined in IAS 21.
The financial statements of the Company include balances and transactions denominated in US$ 87 that were not converted to ZWL at an exchange rate that reflects the economic substance of its values required by International Accounting standard (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 Reserve Bank of Zimbabwe (RBZ) in February 2019 and was initially pegged at a rate of 2.5.

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

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.

As a result, the impact of the Group’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 Group applied the requirements of IAS 21, many elements of the accompanying 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.

Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1Board composition Finding I noted that the current board appointed on June 25, 2019 did not have a member with an accounting background.

This was contrary to the provisions of Section 11 (7) (c) of the Public Entity Corporate Governance Act [Chapter 10:31].
Risk / Implication Financial expertise required in the oversight role of the board may not be available.

Recommendation The board should be composed of members with requisite skills, experience and expertise.

Management response The parent Ministry is seized with the issue of the appointment of an additional non- Executive Director so that the board size increases to the maximum of 8 provided in the company’s Articles and Memorandum of Association.
It is our expectation that the additional member will be an Accountant to address the skills gap you have observed.

88 2.

PROCUREMENT OF GOODS AND SERVICES 2.1 Outsourced vehicles Finding I noted that a number of contracts for leased vehicles from private individuals had no specific lease tenures.
The Public Procurement and Disposal of Public Assets Act [Chapter 22:23] section 78 (2) (m) requires a procuring entity to ensure that every procurement contract it enters into provides for termination of the contract.
The table below depicts a sample of such contracts; Vehicle Vehicle 1 Vehicle 2 Vehicle 3 Vehicle 4 Vehicle 5 Vehicle 6 Vehicle 7 Beginning of contract 23/07/2019 16/07/2019 17/07/2019 13/07/2019 14/07/2019 01/12/2019 02/12/2019 End of contract Not provided Not provided Not provided Not provided Not provided Not provided Not provided Risk / Implication The Company may have no recourse when disputes arise.

Recommendation Management should ensure that all contracts entered into have specific time frames.
Management response We have taken note and in future we will ensure that all contracts entered into have time periods.

3.

REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 3.1 Receivables Finding The receivables age analysis showed amounts that had been outstanding for more than five (5) years, and have proved irrecoverable.

These receivables accrued during the multicurrency era and have since been redenominated to Zimbabwe Dollar (ZWL).
Below is a sample of long outstanding receivables; 89 Account 10A15 36E 36D 36D 32E 32A 10C Number Risk / Implication Financial loss.

Recommendation Balance ZWL 64 777 132 374 5 000 60 759 12 959 7 362 12 043 Management should take all necessary steps to recover debts within reasonable time.

Management response Management will continue to follow up on all Government related debts and take legal action on private debtors.
90 HOTSPECK ENTERPRISES (PRIVATE) LIMITED 2019 Background information Hotspeck Enterprises (Private) Limited is 100% owned by the Rural Electrification Fund.

It is incorporated in Zimbabwe and started its operations in September 2012.

Its main objective is to procure raw poles, treat and sell them at a profit.

I have audited the financial statements of Hotspeck Enterprises (Private) Limited for the year ended December 31, 2019 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 accompanying financial statements do not present fairly the financial position of Hotspeck Enterprises (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 i. Non-compliance with International Accounting Standard (IAS) 21 “The Effects 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 valued 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 S.I.41/2019 which states that in the case of any inconsistency between a local pronouncement issued 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 Company maintained its functional currency as the USD from January 1, 2019 to 22 February 2019 using an exchange rate of 1:1 between the RTGS FCA and Nostro FCA and changed to Zimbabwe Dollar as presented in the inflation adjusted annual financial statements.

This constitutes a departure from the requirements of IAS 21 – The Effects of Changes in Foreign Exchange Rates.
Had the inflation adjusted annual 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 inflation adjusted 91 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.

ii.
ii.

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 a 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 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 22, February 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 restated 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.

iii.

Non-compliance with International Financial Reporting Standard (IFRS) 16 – Leases IFRS 16 became effective on January 1, 2019 and it replaced IAS 17 Leases.
IFRS 16 introduces a single lease accounting model which requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is a low value asset.

The Company leases a piece of land from Rural Electrification Fund (REF) where its pole plant is situated and lease term is for a period of 10 years.
During the year ended December 31, 2019 the Company did not recognise a right of use asset representing its right to use the underlying piece of land and a lease liability representing its obligation to make lease payments.

This constitutes a departure from the requirements of IFRS 16.

The financial effects of the departure from IFRS have not been determined iv.
Accounts receivables The Company’s trade receivables are carried in the statement of financial position at ZWL655 874 after an allowance for credit losses of ZWL199 075.

Included in the receivables figures is a total of US$264 291 for amounts that have been outstanding for more than 5 years which are being disputed by the customers.

These amounts were neither written off nor included in the allowance for credit losses.
I was unable to agree with management regarding the adequacy of the allowance for credit losses in note 12.

Had management included the total amount of US$264 291 in the allowance for credit losses, administration expenses would have increased by US$264 291 and both profit for the year and the shareholders’ equity would have been reduced by the same amount.
92 v. 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.

Below are other material issues noted during the audit; 1.
REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 1.1.

Prepayments Finding Hotspeck had long outstanding prepayments to suppliers dating back to 2016.

Payments were made to suppliers before invoices, goods and services were received.

Long outstanding prepayments made amounted to ZWL20 177.

Risk / Implication Financial loss.

Recommendation Management should follow up on the delivery and supply of goods and services.

Management response Noted.


The trading model in operation then was that for all services, Hotspeck had to pay in advance.

In particular, the delivery of raw wood poles was not possible before the relevant suppliers have confirmed receipt of payment.

However, after making such payments veld fires were experienced and destroyed some of the wood poles that we had paid for to the extent that some of the suppliers went bankruptcy due to the loss.

Management shall continuously follow up on all prepayments.
Authority to write off those deemed bad debts shall be sought from the Board.

Defaulters shall be handed over to legal for debt collection and engaging Financial Clearing Bureau for blacklisting.

1.2 Long outstanding receivables Finding A review of the receivables age analysis revealed that there were long outstanding receivables amounting to ZWL264 291 which were over 5 years and were being disputed by customers.
Enquiries with management revealed that the customers were claiming not to have received any poles from Hotspeck.

Furthermore, there was no evidence that receivables reconciliations were being done.

The table below refers: 93 Debtor ZESA Gweru ZETDC Eastern Region Grain Marketing Board Pump Systems Africa Survival Hardware Overland Supplies Private Limited Risk / Implication Disputed Amount (ZWL) 154 464 40 000 32 755 15 616 13 604 7 852 Financial loss due to non-recovery of the outstanding receivables.
Fraud or errors may go undetected.

Recommendation Management should ensure that debtors reconciliations are prepared monthly and the outstanding balances are followed up.

Management responses Noted, debtors’ reconciliations will be done monthly.

Zesa Gweru debt is still being reconciled, the system at the time was such that customers would handle proof of deliveries through their transporters and no copies would be returned to Hotspeck.
Management shall assign a team to carry out a physical verification exercise to determine the depots where deliveries were made.

The $40 000 under ZETDC Eastern Region case shall be handed over to legal section since with all reconciliations done, ZETDC is not willing to scrutinize transactions prior to 2017 because they were audited without Hotspeck’s debt.

Management shall look into all transactions between Hotspeck and Pump Systems Africa and reconcile.
Management is awaiting the court’s verdict on issues regarding GMB and Survival Hardware.

Management is seeking authority to write off this Overland’s debt.

This is in view of all the efforts made which did not materialize.

Management shall ensure strict adherence to credit control management procedure manual.
94 MINERALS MARKETING CORPORATION OF ZIMBABWE (MMCZ) 2020 Background information 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, 2020 and I issued a qualified opinion with an emphasis of matter on going concern.
Qualified Opinion on the Consolidated Financial Statements In my opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of my report, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Minerals Marketing Corporation of Zimbabwe as at December 31, 2020, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Qualified Opinion on the Corporation’s Financial Statements In my opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of my report, the financial statements present fairly, in all material respects, the financial position of Minerals Marketing Corporation of Zimbabwe as at December 31, 2020, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion Non-compliance with International Accounting Standard (IAS) 21” The effects of changes in foreign exchange rates” The Group and Corporation 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 Corporation applied the legal exchange rate of 1:1 as pronounced through Statutory Instrument 33 of 2020.
Subsequent to February 22, 2019 the Group and Corporation 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 95 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.

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

Had the Group and Corporation complied with the requirements of IAS 21, the December 31, 2020 comparative financial statements would have been materially impacted.
Emphasis of Matter Report on going concern I draw attention to the fact that the Subsidiary, Mellofieldde Chemicals (Private), a company wholly owned by Minerals Marketing Corporation of Zimbabwe (MMCZ) prepared its annual financial statements on going concern basing 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 the existence of a material uncertainty that may cast significant doubt about the subsidiary’s ability to continue operating as a going concern.

Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1 Strategic direction of Mellofieldde Chemicals (Private) Limited Finding Mellofieldde Chemicals (Private) Limited, a subsidiary of MMCZ prepared its 2020 annual financial statements on going concern basis.
The going concern basis assumes that the Company will continue operating for the foreseeable future.

However, the subsidiary has not operated since its incorporation in April 2012.

I also noted that the subsidiary had no strategic plan to map the direction for the company and this was the case for the past eight (8) years.

Risk / Implication Service delivery and the opportunities may be compromised.
Recommendation Management should make an assessment of the Company’s ability to continue as a going concern.

Management response Noted.

It should be noted that, due to the sanctions imposed on the Corporation which affect even its subsidiaries, Mellofieldde has been kept alive mostly because it houses the 96 Corporation’s shares in BNC.
However, it is envisaged that when the sanctions imposed on the Corporation are lifted, the Company may be used to undertake the Corporation’s own trading activities hence the reason for keeping it dormant for now in anticipation to operationalize it when things normalise.
97 MOSI OA TUNYA DEVELOPMENT COMPANY (PRIVATE) LIMITED 2016- 2018 Background information Mosi Oa Tunya Development Company (Private) Limited was established in 2012 in terms of the then 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, 2016, 2017 and 2018 and I issued qualified opinions in 2016 and 2017, and an adverse opinion in 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 Mosi Oa Tunya Development Company (Private) Limited 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).
Basis for Qualified Opinion Operating expenditure I could not place reliance on the accuracy of operating expenditure amounting to US$203 756 disclosed in the financial statements.

The Company did not avail supporting documentation to support the balance disclosed.
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 Mosi Oa Tunya Development Company (Private) Limited 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).
Basis for Qualified Opinion Operating expenditure I could not place reliance on the accuracy of operating expenditure amounting to US$130 181 disclosed in the financial statements.

The Company did not avail supporting documentation to support the balance disclosed.
Adverse Opinion 2018 In my opinion, because of the significance of the matters 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 Mosi Oa Tunya Development Company (Private) 98 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 i. Non-compliance with International Accounting Standard (IAS) 21 “The effects of changes in Foreign Exchange Rates” The Company did not comply with the provisions of IAS 21 “The Effects of Changes in Foreign Exchange Rates”.
The need to account for these changes emanated from the multi- tier pricing environment that was prevailing during the year, where a product or service had different prices depending on the mode of payment, whether US$, RTGS, bond notes/coins and mobile money.

Premiums and discounts were experienced on the official exchange rate of 1:1 between the US$ and RTGS, Mobile Money, Bond Notes/Coins.
This pricing structure resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS 21 would apply.

The Company has maintained its functional currency as the US$ and has presented the financial statements in US$ using the official foreign exchange rate of 1:1.
Had the Company applied the requirements of IAS 21, many of the elements of the accompanying financial statements would have been materially impacted and therefore the departure from the requirements of IAS 21 is considered to be pervasive.

The financial effects on the financial statements of this departure have not been determined.

ii.

Operating expenditure I could not place reliance on the accuracy of operating expenditure amounting to US$175 535 disclosed in the financial statements.
The Company did not avail supporting documentation to support the balance disclosed.

Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1 Supporting documents Finding The Company could not avail supporting invoices, receipts, vouchers and ledgers in respect of income generated during the period under review (2016 to 2018).

The Company’s Finance and Administration officer prepared the financial statements on the basis of incomplete records.
Reliance was being placed on bank statements to establish the debtor’s balances.

Risk / Implication Financial statements might be materially misstated.

Errors, omissions and fraud might not be detected timeously.

99 Recommendation Management should ensure that its accounting records are maintained and financial statements are prepared based on complete records.

Management response Noted, steps have been taken to make sure that all the necessary stationery required is available.
Printing of invoices and receipts is currently under way.

1.2 Bank reconciliation Finding The Company had no accounting procedures manual to guide officers in accounting for transactions.

As a result, bank reconciliations were not being prepared for the period under review (2016, 2017 and 2018).

Risk / Implication Errors and omissions may not be detected on time.

Recommendation Management should ensure that procedures manuals are put in place and bank reconcilliations are prepared on time.
Management response The seconded staff member was not a finance person.

However, from 2019 all reconciliations will be done as the board has appointed a finance person.

100 NATIONAL OIL INFRASTRUCTURE COMPANY OF ZIMBABWE (NOIC) 2019 Background information The National Oil Infrastructure Company of Zimbabwe (Private) Limited was incorporated in Zimbabwe in terms of the Companies and Other Business Entities Act [Chapter 24:31] 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.

I have audited the financial statements of National Oil Infrastructure Company of Zimbabwe for the year ended December 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, in all material respects the financial position of National Oil Infrastructure Company 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).
Basis for Adverse Opinion Non-compliance with International Accounting Standard 21 (IAS 21) “The Effects of Changes in Foreign Exchange Rates” The Company 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 Real Time Gross Settlement (RTGS) Dollar as prescribed to entities through Statutory Instrument 33 of 2019 (SI 33/2019).
In order to comply with SI 33/2019, issued on February 22, 2019, the Company 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 met the legal requirements however, did not meet the criteria for appropriate exchange rates in terms of International Financial Reporting Standards (IFRS) as defined in International Accounting Standard 21 (IAS 21).

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 rate of 2.5.
Transactions and balances from February 22, 2019 were now translated using the interbank rates.

No assessment was carried out to show the appropriateness of the interbank rate to the existing economic environment.

The interbank rate did not represent the price that could 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.
The financial statements of the Company include balances and transactions denominated in US$ that were not converted to ZWL at an exchange rate that reflects the economic substance of its values as required by IAS 21.

Had the Company complied 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 Company’s inability to comply with IAS 21 has been determined as significant.
The 101 effects on the financial statements are considered material and pervasive to the financial statements as a whole.

In addition, had the Company applied the requirements of IAS 21, many of the accompanying inflation adjusted financial statements would have been materially impacted and therefore the departure from the requirements of IAS 21 is considered to be pervasive.

The financial effects on the inflation adjusted financial statements of this departure has not been determined.
Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUE 1.1 Budget approval Finding The Company’s 2019 principal budget statement availed for audit was not approved by the appropriate Minister in line with the PFMA Act [Chapter 22:19].

Upon enquiry, management indicated that the budget was approved by the Board of Directors.

Risk / Implication Non-compliance with the laws and regulations.

Recommendation The Company’s annual budget should be approved by the appropriate Minister.
Management response Noted.

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 and there was room for improvement in respect of the following recommendation.

2.1 Feruka depot Recommendation The Company should consider investing in other alternative sources of power for continued supply.
Progress made The upgrade of the pipeline capacity will be commencing in 2022 and the standby generator will be installed.

The Company has a dedicated ZESA line which caters for the depot’s operations.

102 NATIONAL PHARMACEUTICAL COMPANY (NATPHARM) 2019 & 2020 Background Information National Pharmaceutical Company (Nat Pharm) is a government-owned company charged with the procurement of drugs for all state-run hospitals in Zimbabwe.
The National Pharmaceutical Company is a successor to the Government Medical Stores.

The Company through an Act of Parliament, The Government Medical Stores was established (Commercialisation) Act No.

13 of 2000.

National Pharmaceutical Company’s objectives and functions are to purchase, sell, deal in and store medicines, medical equipment and other goods and articles for use in hospitals, clinics, pharmacies and other medical establishments.
I have audited the financial statements of National Pharmaceutical Company for the years ended December 31, 2019 and 2020 and I issued an adverse opinion.
Adverse opinion 2019 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, 2019 and of its financial performance and its cash flows, for the year then ended.
Basis for Adverse Opinion Non-compliance with IAS 21 Prior to February 22, 2019, the Zimbabwean economy was characterised by a multi-tier pricing system where a single product would have different prices based on the mode of payment (United States dollars, RTGS, mobile money or cash) used to settle the transactions.

Market wide, entities also experienced premiums and discounts on the official exchange rate of 1:1 between the RTGS balances and Bond notes and the United States dollar.
In February 2019, the Government of Zimbabwe (“the Government”), issued Statutory Instrument 33 of 2019 (“SI 33”) which prescribed for accounting and other purposes, contrary to the requirements of IAS 21, the conversion rate of 1:1 between the US dollar and the RTGS balances as at 22 February 2019.
As such, these financial statements, which are presented in Zimbabwean dollars, were compiled from an aggregation of local currency and foreign currency denominated transactions that have been translated to Zimbabwean dollars using the official exchange rate of 1:1 for the period up to 22 February 2019.

The comparative figures were also converted from the US$ to the Zimbabwean Dollar (“$”) at a rate of 1:1 which was the official rate prevailing as at December 31, 2018.
The Directors have determined that it is not practical to comply with the requirements of IAS 21 in the circumstances, and as such, the effect of non-compliance with IAS 21 have not been quantified but is considered material to these financial statements.
Valuation of inventories Due to a breakdown in the accounting and internal control system, foreign currency denominated inventory purchases were not being posted into the accounting system using the exchange rates prevailing on the transaction date but those prevailing on the date of recording the transaction into the accounting system.

As such, the Company’s inventories were not valued in accordance with the 103 requirements of International Accounting Standard 2: Inventories.
Consequently, inventories balances and the cost of sales figure are not fairly stated.

I could not quantify the effect of this non- compliance with IAS 2 but I believe it to be material given the significant volumes and cost of inventories handled by the Company.

I also noted that the Company does not provide for stock losses despite the Company’s inventories being highly susceptible to being obsolete, damaged, contaminated and expired, amongst other factors that may lead to loss of inventories.
The Company however, writes off expired stocks on a quarterly basis which, in itself signifies the need to maintain a provision for stock losses in the accounting system.

Emphasis of matter Comparative figures Without qualifying my opinion, I draw your attention to the fact that in the prior period, the In 2019, Company’s functional and reporting currency was the United States Dollar (“US$”).
through Statutory 142 of 2019, the Reserve Bank of Zimbabwe issued a Monetary Policy Statement which introduced the Zimbabwe Dollar which was prescribed as the new functional and reporting currency for all entities in the country.

The comparatives were converted from the US$ to the Zimbabwean Dollar (“$”) at a rate of 1:1 which was the official rate prevailing during the prior year reporting period.
Adverse opinion 2020 In my opinion, because of the significance of the matter referred to in the Basis for adverse opinion section of my report, the financial statements were 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, 2020 and of its financial performance and its cash flows, for the year then ended.
Basis for adverse opinion i. Non-compliance with International Accounting Standard (IAS 21) “The Effects of Changes in Foreign Exchange Rates” The Company complied with Statutory Instrument 33 of 2019 (SI 33) issued by the Government of Zimbabwe and consequently did not comply with IAS 21 in the preparation and presentation of the prior period financial statements.
Through SI 33, the Government prescribed an exchange rate of 1:1 between the United States dollars and the newly introduced RTGS dollars effective from February 22, 2019 for accounting and other purposes.

Had the Company performed the assessment required by IAS 21 in the prior period, the adjustments that were recognized in the comparative period’s financial statements would have been materially different.

Therefore, the departure from the requirements of IAS 21 were pervasive in the prior period.
The misstatements in the historical comparative information consequently impacted the determination of the inflation adjusted amounts as is required in the application of IAS 29 in prior years.

The financial effects on the inflation adjusted financial statements of this departure were not determined.

In addition, the effects of the matter on the restatement of prior period as well as current period equity balances cannot be readily determined.
As such, the current period’s financial statements may not be readily comparable with those of prior years.

104 The Company also had significant accounts receivable US$1 871 154, bank and cash balances US$475 620 denominated in foreign currencies as at year end.

These account balances were translated to the Zimbabwean dollar (ZWL) using the Reserve Bank of Zimbabwe auction exchange rate at year end.
IAS 21 requires such account balances to be translated using the exchange rate ruling effective as at year end (i.e., the closing exchange rate).

I was unable to obtain sufficient appropriate evidence to support the appropriateness of the application of the ZWL/US$ RBZ auction exchange rate as the closing exchange rate in accordance with IAS 21.

The effects of this matter on the financial statements cannot be readily determined.

ii.
ii.

Unrecorded Liability The Company did not provide for an amount of US$2 733 480 arising from an arbitration award made in favour of a supplier.

This unfavourable award arose after National Pharmaceutical Company had terminated a US$20 million supply contract with the supplier for illegality.

The matter was subsequently sent for arbitration and the claimant abandoned the larger portion of its claim but was awarded a sum of US$2 733 480 in respect of medicines and sundries already supplied.
Management insists on not providing for the arbitration award on the basis that it was the Ministry of Health and Child Care (MoHCC) that entered into the contract with the supplier in question in the first place and as such, it is the MoHCC who should honour the arbitration award.

Below are other material issues noted during the audit: 1.

GOVERNANCE ISSUES 1.1 Email phishing Finding The Company lost funds amounting to US$104 760.
Upon inquiry, management indicated that their information technology system was hacked and the hackers diverted funds which were meant to pay a certain supplier.

Management further advised that the email server at National Pharmaceutical Company was down at the time and a clerk had used his personal Gmail account to communicate with the supplier.

They suspect that this action resulted in the hackers accessing key information and subsequently succeeding in diverting the funds.
Risk / Implication Financial loss due to the theft of crucial business data and information.

Recommendation Management should ensure that all business communication is done via the Company’s email servers and minimise use of personal email accounts.

Management response The email server activity and performance is now being assessed every day and encryption has been enforced on all accounts.

Furthermore, the use of private e-mail domains has been discouraged.

105 2.
105 2.

PROCUREMENT OF GOODS AND SERVICES 2.1 Management override of controls Finding The Company was not following its internal control procedures.

As a result, the procurement of face masks at a cost of ZWL$54 600 on May 19, 2020 from Sacred Heart Pharmaceuticals was done without raising a purchase requisition.

Thereafter, the delivery notes and confirmation of receipt of goods was done by the same person.

There was no segregation of duties and minimum procurement controls were not applied.
In addition, these goods were not delivered at the warehouse as is the normal practice at National Pharmaceutical Company.

These face masks were instead sold and delivered to Zimbabwe Medical Association for ZWL$68 600 and no quotation or invoice was raised by the Strategic Business Unit which is responsible for the Company’s retail functions.

All these are incompatible duties which should have been segregated.

Risk/Implication Financial loss due to management override of internal controls.
Recommendation Those charged with governance should discourage management from overriding internal controls.

Compensatory controls will need to be put in place where management find it necessary to divert from normal procedures.

Management response Management noted the audit observation and will ensure that policies and procedures are adhered to.
106 NATIONAL RAILWAYS OF ZIMBABWE (NRZ) 2020 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, 2020 and I issued an adverse opinion with a material uncertainty related to going concern and an emphasis of matter.
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, the statement of financial position of National Railways of Zimbabwe as at December 31, 2020, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Zimbabwe Companies and Other Business Entities Act [Chapter 24:31].
Basis for Adverse Opinion i. Non-compliance with International Accounting Standards 21 – “The Effects of Changes in Foreign Exchange Rates” and International Accounting Standards 29 – “Financial Reporting in Hyperinflationary Economies” The Government of Zimbabwe promulgated Statutory instrument (“SI”) 33 on February 22, 2019, giving legal effect to the reintroduction of the Zimbabwe dollar “ZWL” as legal tender and prescribed that for accounting and other purposes, certain assets and liabilities on the effective date would be deemed to be Zimbabwe dollars at a rate which was at par with the United States Dollar (“USD”).
The requirements of SI 33 are contrary to the provisions of IAS 21.

In October 2018, banks were instructed by the Reserve Bank of Zimbabwe to separate and create distinct banks accounts for deposits names, RTGS (Real Time Gross Settlement) FCA and Nostro FCA accounts.

This resulted in separation of transactions on the local RTGS payment platform from those relating to foreign payments.
This separation resulted in 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 legal 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 decision by the directors of National Railways of Zimbabwe to change the functional currency only on February 22, 2019 in accordance with SI 33/19 resulted in misstatement of the financial performance and cash flows of the Company, as transactions denominated in USD were not properly translated during that period.

Had the Company applied the requirements of IAS 21, many of the elements of the inflation adjusted financial statements 107 of the comparative period would have been materially impacted.
The financial effects on the inflation adjusted financial statements of this departure were not quantified.

An adverse opinion was issued on the inflation adjusted financial statements for the year ended December 31, 2019.

Furthermore, my opinion on the current period’s inflation adjusted financial results is modified because of the possible effects of the matter on the comparability of the current year’s financial results with that of the prior year.

ii.
ii.

Loans and borrowings - ZWL$ 1 131 578 213 (2019: ZWL$ 1 318 514 855) I was unable to obtain sufficient appropriate audit evidence that management had properly accounted for loans due to the poor status of the accounting records and non-submission of information in support of these balances.

I received representation from directors stating that third party loan documents were not available.

I was unable to confirm the loan balances by alternative means.

iii.
iii.

Exchange gains on translation of foreign loans - ZWL$ 185 326 469 (2019: ZWL$ 997 097 714) I was unable to obtain sufficient appropriate audit evidence that management had properly accounted for exchange movements of foreign loans due to the poor status of the accounting records and non-submission of information in support of these balances.

I received representation from directors stating that third party loan documents were not available.
I was unable to establish the reasonableness the exchange movements on loan balances by alternative means.

iv.

Accrued interest on loans Included in trade and other payables is accrued interest of 108020: ZWL$679 644 150 (2019: ZWL$138 372 010).

I was unable to obtain sufficient appropriate audit evidence that management had properly accounted accrued interest on foreign loans due to the poor status of the accounting records and non-submission of information in support of these balances.
I received representation from directors stating that third party loan documents were not available.

I was unable to establish the reasonableness of the accrued interest on foreign loan balances by alternative means.
v. Conversion losses ZWL$ 1 480 639 313 (2019: ZWL$ 987 814 139) I was unable to obtain sufficient appropriate audit evidence that management had properly accounted for conversion losses, due to the poor status of the accounting records and non- submission of information in support of these conversion losses.

I was unable to confirm these conversion losses by alternative means.

vi.
vi.

Valuation of property and equipment National Railways of Zimbabwe maintained its policy of valuing property, plant and equipment using the cost valuation model and then restating balances into the current 108 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.

Furthermore, I noted that the Company’s locomotives are antiquated and some have been decommissioned.

Management did not adequately perform the impairment assessment of equipment at the reporting date.
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.

vii.

Valuation of investment property National Railways of Zimbabwe maintained its policy of valuing investment property using the cost valuation model and then restating balances into the current purchasing power at the end of the reporting period.
This is in line with IAS 40 –Investment property and IAS 29 - Financial Reporting in Hyperinflationary Economies.

However, 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 properties, occupancy rates, market rentals and risk yields, I was unable to independently verify if the carrying amounts of property, plant and equipment were fairly stated.

viii.

Valuation of inventories Included in the inventories balance are spares for rail infrastructure and locomotives totalling ZWL$ 698 537 547 (2019: ZWL$ 664 634 384).
These spares are for antiquated decommissioned equipment and rail infrastructure.

Management did not adequately perform the impairment assessment of inventories at the reporting date.

I was unable to independently verify the carrying amounts of inventories.

ix.

Account’s receivables I could not establish the reasonableness of the carrying amounts of accounts receivable despite relatively high levels of provisions for credit losses.
National Railways of Zimbabwe invoices a number of customers in foreign currency.

The Company does not maintain a separate foreign currency denominated debtor’s ledger.

I, therefore, was unable to obtain sufficient appropriate audit evidence that management had properly accounted for accounts receivable due to the poor status of the accounting records and non-submission of information in support of these receivables.

I was unable to confirm these receivables by alternative means.
x. Non-compliance 19th IAS 19 - Employment benefits National Railways of Zimbabwe operates a Defined benefit plan post-employment fund.
IAS 19 (2011) sets the following disclosure objectives in relation to defined benefit plans [IAS 109 19 (2011).135]: an explanation of the characteristics of an entity's defined benefit plans, and the associated risks identification and explanation of the amounts arising in the financial statements from defined benefit plans a description of how defined benefit plans may affect the amount, timing and uncertainty of the entity's future cash flows.
I was unable to obtain sufficient appropriate audit evidence that management had properly accounted for post-employment benefits in accordance with IAS 19 due to the poor status of the accounting records and non-submission of information in support of the post- employment benefits.

xi.
xi.

Material uncertainty regarding tax liabilities National Railways of Zimbabwe has not been remitting Value Added Tax (VAT) and Pay As You Earn (PAYE) to the tax authority (Zimbabwe Revenue Authority) in accordance with the VAT Act (Chapter 23:12) and Income Tax Act (Chapter 23:06) respectively.

The balances accrued for VAT and PAYE as at year end are ZWL$4 887 052 and ZWL $134 321 611 respectively.
Management acknowledges that penalties on the outstanding balances have not been ascertained but are likely to be material.

I was unable to obtain sufficient appropriate audit evidence that management had properly accounted for the outstanding tax liabilities.

I was also unable to quantify penalties on late payment of taxes.

Report on going concern Emphasis of matter Without further qualifying my opinion, I draw attention to the following: 1.
Material uncertainty relating to solvency and going concern 1.1 Solvency The company is solvent by ZWL$ 3 741 712 997 (2019: ZWL$ 5 440 629 281).

I was unable to gather sufficient audit evidence to establish that management had properly accounted for the items described in the Basis for adverse opinion section.

Consequently, I was unable to independently verify the reasonableness of the calculations of the company’s solvency position.
1.2 Going concern The Company has a negative working capital position (current liabilities exceed current assets) of ZWL$ 3 203 635 752 (2019 negative working capital: ZWL$ 3 648 661 522).

The following additional information casts additional significant doubt on National Railways of Zimbabwe’s ability to continue as a going concern: i.

Included in working capital is inventory of ZWL$ 805 885 161 (2019: ZWL$ 678 295 467).

Please refer to note 12 of the financial statements.
Included in the inventories balance are spares for rail infrastructure and locomotives totalling ZWL$ 698 537 547 (2019: ZWL$ 664 634 384).

These spares are for antiquated, decommissioned equipment 110 and rail infrastructure.

Management did not adequately perform the impairment assessment of inventories at the reporting date.

ii.

The company has been incurring substantial losses for over 10 years.
Inflation adjusted losses before monetary gains and deferred tax charges / (credit) are as follows: 2018 loss 2019 loss 2020 loss (2 498 091 431) (4 452 543 240) (4 332 377 441) Factors causing the above losses include: sub economic operating capacity; operating with antiquated equipment and high operating overheads relative to turnover; High provisions for doubtful debtors and high exchange losses and interest charges.
There is no tangible evidence of the above issues being resolved in the foreseeable future.

iii.

The Company has antiquated operating equipment and has been forced to rely on locomotives leased from third parties.

All the lease contracts for the locomotives are denominated in United Stated dollars.

This exposes NRZ to significant foreign currency losses.
Lease liabilities as at December 31, 2020 totalled ZWL$1 462 700 684 (ZWL$1 657 955 358) of which ZWL$558 393 528 falls due in the following financial year.

NRZ is unable to meet its financial obligations on the leases threatening the current business model of relying on leased locomotives.

iv.

Loans and interest accrued at December 31, 2020 were ZWL$ 1 131 578 213 (2019 ZWL$ 1 318 514 856) and ZWL$679 644 150 (2019: ZWL$138 372 010) respectively.
Loans totalling ZWL$1 065 261 426 (2019: ZWL$1 179 211 868 were overdue.

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

v. Post-employment benefit - Defined benefit fund NRZ operates a Defined benefit plan post-employment fund.

This plan creates an obligation on the NRZ to provide agreed benefits to current and past employees and effectively places actuarial and investment risk on NRZ.

The Company bears the risk that the returns on the investment.
The National Railways of Zimbabwe Pension Fund had a deficit of ZWL$383 million according to the 2020 draft actuarial valuation report done by independent consultants.

The company fully provided for this deficit in the accounts.

However, the Company has no financial resources to pay the Pension Fund ZWL$526 542 152 that was due at the end of the financial year comprising of: outstanding company and employee pension contributions ZWL$ 143 452 013 and accrual for pension deficit ZWL$383 090 139.
Furthermore, the Company is not currently in a financial position underwrite current and future pension fund deficits.

The company is not in a position to provide eligible employees guaranteed income for life when they retire guarantee.

vi.

Subsequent to year end, the ZWL$ has further depreciated against the major currencies.

At the time of approval of the accounts the ZWL$ had depreciated by 29% to 1 USD 111 =ZWL$ 105.6 (31 December 2020: 1 USD = ZWL$ 81.8).
This will result in the company incurring significant exchange losses.

vii.

Negative impact of the COVID 19 pandemic.

NRZ volumes have been materially affect by the pandemic.

I refer to management comments in notes to the financial statements.

viii.

Previous capital raising initiatives and restructuring plans have not resulted in the financial position and financial performance of the company improving.
At the time of approval of the financial statements, none of the initiatives listed by directors in notes 25 and 26 of the financial statements had been successfully concluded.

I note that the directors of National Railways of Zimbabwe are satisfied that the Company has access to adequate resources to continue in operational existence for the foreseeable future.

Their assertion is based on government recapitalising the Company and taking over the loans.
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.

Furthermore, there were no approved formal commitments from the central government to recapitalise the Company and take over loans at the time of approval of the accounts.

However, below are other material issues noted during the audit.

1.
1.

GOVERNANCE ISSUES 1.1 Board composition Finding The Company’s board of directors’ committees were not appropriately constituted.

There was no member that had relevant qualifications and experience in the audit and risk compliance committee.

This was in contravention with the Public Entities Corporate Governance Act [Chapter 10:31].

Risk / Implication Oversight and accountability is compromised.
Recommendation The Company should liaise with the appointing authority to ensure that the composition of the committee is properly constituted.

Management response The Audit Committee now being chaired by the Major Gen Dube.

112 1.2 Bank reconciliations Finding There was no evidence to support that NRZ was preparing bank reconciliation statements for all of its bank accounts.

Risk / Implication Material errors and irregularities may go undetected.
Recommendation The Company should prepare bank reconciliations for all its bank accounts.

Management response Interviews have been conducted for the Post of the Chief Finance Officer.

We are awaiting the outcome of the vetting process which is now being conducted by the Government of Zimbabwe.

The appointment of the substantive Chief Finance Officer will see the strengthening of the quality control in the Finance Department.
1.3 Fraud and theft Finding A review of the records and the reports for the period under review revealed a high incidence of theft and fraud in various stations and departments.

Reports showed cases of theft of company inventories, assets and revenue thereby prejudicing NRZ.

This is an indication of a weak and porous internal control environment.

There was no evidence to support that the Company made effort to recover misappropriated goods as well as appropriate action taken against offenders.
Risk / Implication Financial loss due to fraud that may not be detected on time compromises financial recovery.

Recommendation The Company should assess the strength of its internal control environment and ensure that corrective measures are taken.

Management response Management has taken the following steps: 1.

Has expanded the scope of the Security department to encampus the Control aspect.

Furthermore, the NRZ has also recruited Security guards to beef up the Security department.
113  Subsequent to the lockdown limitations, the outstanding disciplinary cases have been held which has seen the NRZ dismissing employees on cases related to theft and fraud. 1.4 Real estate management Finding There was no evidence to support that the company was regularly reviewing residential and commercial leasing arrangements.
As a result, most leases both residential and commercial were in dire need of updating in terms of respective applicable running rates being charged, since the rates appear to be sub economic.

Risks/Implication Financial loss due to non-recovery of costs incurred in maintaining these properties.

Recommendation The company should consider to review its rates at least to break even.

Management response Recommendation noted.


Management will carry out portfolio Real Estates Portfolio Audit which will address the issues of leases, rental as well as mitigate any potential leakages on the portfolio.

1.5 Accounting records Finding The Company’s accounting records were not being maintained properly, as foreign currency transactions were not being properly accounted for.

The Company had significant foreign receivables, creditors and revenue streams which were not separately accounted for.
As a result, I was unable to obtain sufficient appropriate audit evidence that management had properly accounted for exchange movements of foreign loans due to the poor status of the accounting records and non-submission of information in support of these balances.

Upon enquiry, management indicated that third party loan documents were not available.

I was therefore unable to establish the reasonableness the exchange movements on loan balances by alternative means.
Risk/Implication Material errors and irregularities may go undetected.

Recommendation The Company should ensure that all transactions are appropriately accounted for and efforts should be made to secure third party loan documents.

114 Management response The NRZ has embarked on the Currency Change project on its SAP system.

This will have the ZWL as the Base Currency, thus enabling the NRZ to create foreign currency accounts/ledgers in the Sap System.
1.6 Loan documentation Finding The Company could not avail third-party documentation to enable me to verify the existence and valuation of loans save for Natexis Banque.

Upon enquiry, management confirmed that these documents were not available.

As a result, I was not able to obtain sufficient evidence to verify the balances stated in the financial statements (December 31, 2020 totalling ZWL1 131 578 213).

Risk / Implication Material misstatement of financial statements.
Recommendation NRZ, through the Ministry of Finance and Economic Development should approach the lenders to establish the extend of indebtedness, who guaranteed the loans.

Management response Management has written to the Ministry of Finance to take over the loans since the Government is the guarantor of the loans.

It is management’s view that the takeover of the loans will be rigorously pursued with the shareholder in the 2021 Financial Year.
1.7 Valuation and impairment of inventories Finding There was no evidence to support that the Company regularly assess the state of its inventory.
In addition, there was no evidence to support that the following duties were segregated:      Daily stock takes as a counter and signs off the stock check sheet as the officer in charge. Receiving goods on the delivery bay. Dispatching goods on the dispatch bay. System processing of inventory. Risk/Implication Overstatement of inventories that may lead to material misstatement of financial statements.

Fraud and error may go undetected.


115 Recommendation The company should regularly assess the state of its inventory in order to identify obsolete stock on time.

Daily stock receiving of goods must be segregated.

Management response Recommendation noted.

Management will institute a regular review mechanism of its inventories.

Management will ensure that the internal controls in the ticketing office and inventory stores areas are strengthened through the segregation of duties.
1.8 Weighing of goods Finding The Company does not weigh all the goods that are set to be transported but rather relies on weights declared by customers unless there is a suspicion that the customers have under declared their goods.

Risk and implication Financial loss due to under declaration of weights by customers.

Reliance on human judgement and third parties to identify overweight may not be reliable.

Recommendation The Company should ensure that all goods are weighed by NRZ employees.
Management response Recommendation noted.

Management is investing in the weighbridges to be installed in the rail network.

The project will commence in the 2022 financial period.

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 Loan valuation Recommendation The Company should investigate and establish the location of the documentation and 116 establish the extent of its indebtedness.

Progress made Recommendation noted, Management will continue with its efforts to resolve the anomaly by engaging with the IDBZ as well as the Government.
2.2 Valuation of property, plant and equipment Recommendation While the standards allow for directors’ valuations, independent valuers will give greater credibility to NRZ financials.

Progress made NRZ has since awarded the tender to Bard Real Estates and the independent revaluation process is expected to be 31 December 2021.

2.3 Investment policy Recommendation NRZ should formulate an Investment policy.

Progress made The draft investment policy is awaiting approval from the Board.
2.4 Insurance on assets Recommendation All assets should be insured.

Progress made Wagons, coaches and sensitive customer goods were insured with WFDR.

Management will continue with its efforts to mitigate the risk of loss of its assets i.e.

locomotives and building by insuring them as well.


117 NET*ONE CELLULAR (PRIVATE) LIMITED 2020 Background information Net*One Cellular is a limited liability Company incorporated under the Companies and Other Businesses Entities Act [Chapter 24:31] 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, 2020 and I issued an adverse opinion.
Adverse Opinion In my opinion, because of the significance of the matters described in the Basis for Adverse Opinion section of my report, the inflation adjusted annual financial statements do not present fairly, in all material respects, the inflation adjusted financial position of Net One Cellular (Private) Limited as at December 31, 2020, 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 i. Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates”.

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.
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.
In order to comply with SI 33/2019, the RTGS transactions and balances for the prior year were accounted for on the basis of a rate of 1:1 between USD and RTGS.

The Company changed the functional currency on February 22, 2019 in compliance with SI 33/2019.

This was not consistent with IAS 21, in which compliance would have resulted in the reassessment of the functional currency at a date earlier than February 22, 2019.
In addition, foreign currency denominated transactions and balances for the year were translated into the functional and presentation currency using exchange rates which were not considered appropriate spot rates for translations as required by IAS 21.

The opinion on the prior year financial statements was modified in respect of this matter and the misstatements have not been corrected in these financial statements.
Had the Company applied the requirements of IAS 21, many of the elements of the financial statements would have been materially impacted and therefore the departure from the requirements of IAS 21 is considered to be material and pervasive to the financial statements, taken as a whole.

118 ii.
118 ii.

Non-compliance with International Accounting Standard (IAS) 29 – Financial Reporting in Hyperinflationary Economies The Directors have applied the IAS 29 – Financial Reporting in Hyperinflationary Economies with effect from January1, 2019 to December 31, 2020.

However, its application was based on prior and current year’s financial information which was not in compliance with IAS 21 as described above.
Had the correct base numbers been used, most elements of the consolidated financial statements would have been materially different.

The impact of the departure from the requirements of these standards is considered material and pervasive to the consolidated financial statements.

Below is another material issue noted during the audit, 1 GOVERNANCE ISSUES 1.1 Chirundu Base station Finding The Chirundu Net One base station had no adequate security.
This resulted in the damage to the fuel tank lock and the palisade fence.

In addition, approximately 138 litres of fuel were stolen due to lack of security on site.

Upon enquiry, management indicated that the base station was vandalised.

Risk / Implication Loss of property due to theft and vandalism.

Recommendation Security at the base station should be improved to safeguard key assets.

Management response Duly noted, this is an isolated event of vandalism at the sites.
The security issues will be looked at on a case by case as the type of security to be put on a site is determined.

2 PROGRESS IN IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS I reviewed the progress made towards the implementation of prior year recommendations and found that the following issue was still outstanding.

2.1 Residential property Recommendation Management should regularize the position regarding the former CEO’s occupancy.
119 Progress made Net One cellular (Private) Limited has instituted legal proceedings against the former CEO for his eviction from the said property.

The matter has been set down for hearing on the 12th and 13th of July 2021 in the High Court of Zimbabwe.

120 PETROTRADE (PRIVATE) LIMITED 2019 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, 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 section of my report, the financial statements do not present fairly the financial position of Petrotrade (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”.

The Company 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 Real Time Gross Settlement (RTGS) Dollar as prescribed to entities through Statutory Instrument 33 of 2019 (SI 33/2019).
In order to comply with SI33/2019, issued on February 22, 2019, the entity 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 met the legal requirements however, did not meet the criteria for appropriate exchange rates in terms of International Financial Reporting Standards (IFRSs) as defined in International Accounting Standard (IAS) 21.

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.

No assessment was carried out to show the appropriateness of the interbank rate to the existing economic environment.

The interbank rate did not represent the price that could 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.
The financial statements of the Company 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 as required by IAS 21.

Had the Company complied 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 Company’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.

121 Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1 Directors Finding The Company had been operating without a board of directors since 2015.

This was in contravention with Section 195 of the Companies and Other Business Entities Act [Chapter 24:31].
As a result, the Chief Executive Officer’s post and all key management posts were filled in acting capacity since 2015.

Risk / Implication Weak corporate governance may result in financial losses as there will be no oversight.

Recommendation The Company should continue to engage the Ministry of Energy and Power Development for the appointment of the Board.
Management response The CGU and the Ministry of Energy and Power Development were engaged lately and promised that the appointment of a Board of Directors is imminent.

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 progress in respect of the following recommendations.
2.1 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.

122 PETROZIM LINE (PRIVATE) LIMITED 2019 Background Information The Company was incorporated and domiciled in Zimbabwe.

It owns and operates the 208 kilometre multi-product fuel pipeline between Feruka and Harare.
The parent company is the National Oil Infrastructure Company of Zimbabwe (NOIC) Private Limited which owns 100% of the ordinary share capital of the Company.

I have audited the financial statements of Petrozim Line (Private) Limited for the year ended December 31, 2019 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 accompanying financial statements do not present fairly, in all material respects, the financial position of Petrozim Line (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” The Company 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 (US$) to Real Time Gross Settlement (RTGS) Dollar as prescribed to entities through Statutory Instrument 33 of 2019 (SI 33/2019).
In order to comply with SI33/2019, issued on February 22, 2019, the entity 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 met the legal requirements but however, did not meet the criteria for appropriate exchange rates in terms of International Financial Reporting Standards (IFRS) as defined in International Accounting Standard (IAS) 21.

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.

No assessment was carried out to show the appropriateness of the interbank rate to the existing economic environment.

The interbank rate did not represent the price that could 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.
The financial statements of the Company include balances and transactions denominated in US$ that were not converted to ZWL at an exchange rate that reflects the economic substance of its values as required by IAS 21.

Had the Company complied 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 Company’s inability to comply with IAS 21 has been determined as significant.
The 123 effects on the financial statements are considered material and pervasive to the financial statements as a whole.

In addition, had the Company applied the requirements of IAS 21, many of the accompanying inflation adjusted financial statements would have been materially impacted and therefore the departure from the requirements of IAS 21 is considered to be pervasive.

The financial effects on the inflation adjusted financial statements of this departure has not been determined.
Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1 Board allowances Finding The board members were receiving monthly fuel coupons from the Company.

The monthly fuel should have been subjected to Income Tax as prescribed by the Income Tax Act [Chapter 23:06] Section 73 as read with 13th Schedule part b and c. A total of ZWL94 237 worth of fuel was paid to the board members.

Risk / Implication Financial loss due to penalties and fines which may be levied by the tax authority.
Recommendation The Company should comply with the requirements of the Income Tax Act.

Management response The observation is noted.

Management will comply with the Income Tax Act regarding taxation of fuel allocated.

1.2 Board fees and allowances Finding I noted that the Company was grossing up Board fees and allowances for tax purposes.

An amount totalling ZWL21 485 was paid by the Company as withholding tax on behalf of non- executive directors during the year 2019.
Audit was not availed with written approval from the shareholder, National Oil Company of Zimbabwe (NOIC), authorizing the company to gross up the withholding tax.

Risk / Implication Financial loss as a result of paying taxes for its board members.

Recommendation The company should seek approval from its shareholder NOIC before grossing up board fees.

124 Management response The observation is noted.

Management will comply with the Income Tax Act regarding taxation of fuel allocated.
125 POWERTEL COMMUNICATIONS (PRIVATE) LIMITED 2020 Background information Powertel Communications (Private) Limited is a wholly owned subsidiary of ZESA Holdings.

The core business of the Company is to provide Information and Communication Technology (ICT) connectivity services in Zimbabwe and globally.

I have audited the financial statements of Powertel Communications (Private) Limited for the year ended December 31, 2020 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 accompanying financial statements do not present fairly, in all material respects, the financial position, of Powertel Communications (Private) Limited as at December 31, 2020, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion i. Non-compliance with International Accounting Standard 21 (IAS 21) “The Effects of Changes in Foreign Exchange Rates”.

Prior to February 22, 2019, 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 (US Dollar), Real Time Gross Settlement (RTGS), mobile money or bond notes.
The multi-tiered pricing model was evidence of the emergence of a new currency, the Zimbabwe Dollar (ZWL), which was being used alongside the USD.

The new currency was formally acknowledged through the issue of Statutory Instrument 33 of 2019 (S.I 33).

The statutory instrument prescribed parity between the US Dollar and the new local currency (the ZWL) up to the effective date of February 22, 2019.
The new functional currency (ZWL) was effective from February 22, 2019, instead of the fourth quarter of 2018 as evidenced by the separation of the bank accounts into Foreign Currency Accounts and non-Foreign Currency Accounts.

The statutory instrument also prescribed how US Dollar balances were to be translated to the ZWL.
The delay in recognizing the ZWL as a currency and the translation method of balances from US Dollar to ZWL resulted in misstatement of comparative financial statements and current year accumulated loss opening balance of ZWL1 111 834 029. .

ii.

Valuation of Property, Plant and Equipment The Directors valued the Company’s property, plant, and equipment as at December 31, 2020 using the market approach.
The valuations were performed in US$ using the December 31, 2019 valuation results carried out by an independent valuer as a basis.

The Company converted the US$ values to ZWL using the interbank exchange rates which the Directors believed to be the appropriate indicators of the market values.
Given the uncertainty over the appropriateness of the use of interbank exchange rate, we were unable to determine whether adjustments of 126 ZWL2 244 729 456 to the carrying amounts of property, plant and equipment, and revaluation surplus amounting to ZWL2 244 729 456 were appropriate in these circumstances.
Report on Going Concern Material Uncertainty Related to Going Concern I draw attention to the fact that the Company incurred a loss before tax for the year ended December 31, 2020 of ZWL408 847 888 (2019: ZWL96 701 647) and as of that date its current liabilities exceeded its current assets by ZWL423 288 992 (2019: ZWL108 636 873).

These conditions indicate the existence of a material uncertainty that may cast significant doubt on the company’s ability to continue operating as a going concern.
My opinion is not qualified in respect of this matter.

Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1.

Taxation of allowances Finding The Company was not taxing vehicle and transport allowances for its employees.

Risk / Implication There is a risk that penalties and fines may be levied by tax authorities.

Recommendation Management should ensure that all allowances are taxed.

Management response Management did not respond.

2.
2.

REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1.

Billing of decommission links Finding The Company was providing Virtual Private Network (VPN) services to decommissioned customers and these were not billed for services rendered.

In addition, the Company was not reconciling the bills to the underlying records.

Risk / Implication Financial loss due to revenue leakages.

127 Recommendation Management should ensure that every customer is billed for services rendered.
The Company should prepare monthly reconciliations of bills to underlying records.

Management response This has been noted.

Going forward, Management shall fully resource a revenue assurance team that will be responsible for carrying out the necessary Monthly reconciliations that shall be responsible for ensuring that such loopholes shall be plugged and addressed appropriately.
128 PRINTFLOW (PRIVATE) LIMITED 2019 AND 2020 Background information The Company is a successor organization to the former Department of Printing and Stationery in the Ministry of Finance.

The Company was established in terms of the Companies and Other Business Entities Act [Chapter 24.31].
The main function of the Company is the printing, publishing, buying and selling of all forms of office supplies and any other business in printing and stationery supplies giving priority to serving the needs of the Government in the discharge of its business.

I have audited the financial statements of Printflow (Private) Limited for the years ended December 31, 2019 and 2020 and I issued an adverse opinion for 2019 and a qualified opinion for 2020.
Adverse Opinion 2019 In my opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph, the financial statements do not present fairly, in all material respects, the financial position of Printflow (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” Comparative financial statements The Company 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 Company used October 01, 2018 as the date of change in functional currency and translated its foreign denominated balances to ZWL using the February 22, 2019 interbank rate.

The Company 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 Company applied the prevailing interbank rate in revaluing its property, plant and equipment as at December 31, 2019.

In that regard, the Company has not been able to comply with the requirements of IAS 21.
129 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.
Qualified Opinion 2020 In my opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of my report, the accompanying inflation adjusted financial statements present fairly, in all material respects, the financial position of Printflow (Private) Limited as at December 31, 2020 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” The prior year financial statements did not comply with the requirements of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, as the Company was unable to use an appropriate exchange rate on change of functional currency to translate the opening USD denominated balances and transactions from January 1, to February 22, 2019.
The balances and transactions were translated 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 Company used October 1, 2018 as the date of change in functional currency and translated its foreign denominated balances to ZWL at a rate of 1:1 which was prescribed by Statutory Instrument 33 of 2019 which required that all assets and liabilities that were denominated in US$ before 22 February 2019 be deemed to be RTGS dollars at a rate of 1:1 and all transactions subsequent to February 22, 2019 be translated at the prevailing interbank rate.
The Company’s inability to assess the appropriateness of using the prescribed rates in achieving fair presentation was primarily due to the need to comply with SI 33 and the fact that there were no official exchange rates between October 2018 and February 2019 due to lack of an observable foreign exchange market.

In that regard the Company’s 2020 opening balances misstatements have an impact on the current year financial statements.

Below are other material issues noted during the audit.

1.
1.

GOVERNANCE ISSUES 1.1 Fuel issue Finding The Company issued 380 litres of diesel fuel coupons that were meant for the generator during the 2020 financial year.

However, I noted that the fuel was not accounted for as required by the Company`s fuel management policy.

There was no evidence provided to support that the fuel was used for the intended purposes.

On enquiry, management stated that it was an oversight.

130 Risk / Implication Misappropriation of fuel.

Financial loss.
Financial loss.

Recommendation Management should properly account for drawdowns of fuel for use in the generator according to the Company`s fuel management policy Management response The issue of diesel coupons meant for the generator is under investigation, by internal audit, to prove its usage.

To ensure traceability of the use of fuel in Engineering drawn for the generator, the process of maintaining the record for fuel usage was transferred to Warehouse with effect from 5 July 2021.

2.
2.

REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1 Branch sales inventory Finding The Company has branches in Bulawayo, Mutare, Masvingo and Gweru that receive inventory for sale from the Head Office.

These branches had obsolete inventory which mainly consisted of calendars and diaries.

Inquiries with branch management revealed that the branches received the inventories late during the year when most of the targeted customers had already bought the required goods elsewhere.
In addition, the branches had not yet received stocks of 2021 calendars and diaries as at January 07, 2021.

The following table details some of the obsolete inventories; Inventory details A4 Executive Diary A5 Executive Diary Desk Calendar Wall Calendar Risk / Implication Quantity 478 65 17 774 Financial Statements may be materially misstated.

Financial loss as the cost incurred in production of the inventory may not be recovered.
131 Recommendation Management should consider stocking the branches with inventories of this nature timeously.

Management response Production of the seasonal products such as diaries and calendars were affected by staff shortages in the designing studio which was manned by 4 members during the period under review instead of six; breakdowns on key machinery and delays in the supply of key raw materials required in the production of these products.
The staff complement levels in the Origination section mismatched the influx of jobs and efforts to recruit designers were futile during the year 2020.

Targeted designers ended up turning down our employment offers.

Late publication of school calendar for the year 2021 was another reason for delay on calendars.

Breakdowns on key machines such as SX74 and SM102 have had a contributing effect as well especially on 2021 calendars.

3.
3.

EMPLOYMENT COSTS 3.1 Contracts of employment Finding The Company employed its senior management on contract basis.

I noted that no new contracts were signed after the expiry of the existing contracts.

On enquiry, management stated that the Company had no board to renew the contracts.

The table below shows details of the expired contracts.
Position Date reappointment of Contract Duration Chief Executive Officer 01/08/2009 Corporate Services Director 01/10/2013 01/08/2012 Technical Director 5 years 10 months Two years Date contract expired 31/07/2014 31/07/2014 31/07/2014 Risk / Implication The Company and the employees may not have legal recourse in the event of any disputes.

Recommendation The Company should make arrangements to have contracts renewed.
Management response Renewal of contracts for executives was affected by the non-availability of the Board.

Once the Board is in place this will be rectified.

132 4.

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 some improvements in respect of the following recommendations: 4.1 Budget Recommendation The Company should ensure that its annual budget is approved every year.

Progress made Management made unsuccessful intense regular follow ups during the first half of the year 2019 with the Ministry representative for a signed copy of the budget.

Statutory and other obligations Recommendation Management should ensure that statutory and other obligations are remitted in time.
Progress made The company is in the process of honouring the payment plans it entered into with most of the statutory bodies.

Some of the outstanding balances have started to come down such as Fidelity pension fund whilst others have been cleared such as NSSA and NEC contributions.

4.2 Safety Health and Environment (SHE) Recommendations A budget for safety and health should be put in place in order to provide safety clothing and safe environment to the factory employees.
The Company should consider appointing a Health and Safety Officer or give the responsibility to another person within its structures.

The Company should come up with a fire procedure manual.

Fire markings and fire assembly should be put in place.

Fire trainings should be done.

Progress made Management purchased most of the protective clothing for employees except for safety shoes.

Management will procure the outstanding safety shoes during the year 2020.
As for the appointment of the health and safety officer, management is in the process of seeking authority from the Ministry of Finance.

In the meantime, management will appoint another employee to act in that position.

133 TEL●ONE (PRIVATE) LIMITED 2020 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, 2020 and I issued a qualified opinion with a material uncertainty related to going concern.
Qualified Opinion In my opinion, because of the significance of the matter discussed in the Basis for Qualified Opinion paragraph, the accompanying financial statements do not present fairly, the financial position of Tel●One (Private) Ltd as at December 31, 2020, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Currency Rates” The prior year financial statements did not comply with the requirements of IAS 21 “The Effects of Changes in Foreign Currency Rates”, as the Company had been unable to use an appropriate exchange rate on change of functional currency.
The Company 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 Company used October 01, 2018 as the date of change in functional currency and translated its foreign denominated balances to ZWL using the February 22, 2019 interbank rate.
The Company’s inability to assess the appropriateness of using the interbank rate in achieving fair presentation was primarily due to the need to comply with SI 33 and the fact that there were no official exchange rates between October 2018 and February 2019 due to lack of an observable foreign exchange market.

In that regard the Company’s 2020 opening balances misstatements have an impact on the current year financial statements.
Material uncertainty related to going concern I draw attention to the fact that the Company had an inflation adjusted net liability position of ZWL8 807 641 986 (2019: ZWL27 658 279 731) as at December 31, 2020.

Additionally, the entity incurred recurring inflation adjusted before tax losses amounting to ZWL12 093 844 844 (2019: ZWL35 034 438 393) in the 2020 financial year.
The entity has significant legacy loans and borrowings amounting to ZWL46 066 757 523 (2019: ZWL41 604 029 684) principal plus interest accruals.

The fixed-term borrowings approached maturity without realistic prospects of renewal or repayment.

These conditions indicate that a material uncertainty exists that may cast significant doubt about the Company’s ability to continue as a going concern.

My opinion is not modified in respect of this matter.
134 Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1 Investment in Joint arrangement Finding I noted that Tel●One (Private) Ltd had 30% shareholding in a joint operation, Zimbabwe Information Technology Company (ZITCO) valued at ZWL69 346 481 as at December 31, 2020.

However, I was not availed with the signed copy of the shareholders’ agreement and the authority from the parent Ministry and Treasury.
Risk / Implication Financial loss due to lack of enforceability of terms of the joint operation.

Recommendation The Company should obtain authority from the parent Ministry and Treasury before making substantial investments.

The Company should ensure that an express shareholders’ agreement is in place.

Management response We acknowledge that the shareholding agreement which stipulates the shareholding of the parties, is still to be signed.
However, there is a letter (dated 20 December, 2018), from Office of the President and Cabinet, regarding the envisaged shareholding for the joint operations of Tel●One (through Telecommunications Infrastructure and Gadgets (Private) Limited), Flushcord Enterprises (Private) Limited, (representing Government interest as advised) and Inspur Zimbabwe (Private) Limited.
We also have communication to the OPC expressing the need to finalise the Shareholders’ agreement but there has not been much traction from that office.

We will endeavour compliance by continued engagement of OPC on behalf of Government to finalise the shareholding structure.

1.2 Motor vehicles fleet Finding I noted that most of the motor vehicles have outlived their useful lives.

The Company’s Motor Vehicle policy states that, motor vehicles shall be replaced after 5 years.
However, the Company had some vehicles that had been in service for more than twenty years.

An analysis of the performance of the vehicles revealed that it was no longer economic for the Company to keep on using these vehicles as repairs and maintenance costs were high.
The table below shows a sample of the motor vehicles: 135 Make NISSAN CPB12 NISSAN CPB12 NISSAN UD NISSAN UD CPB12 NISSAN UD CPB12 NISSAN UD CPB12 Risk / Implication Registration Number ACX-3347 ACX-3658 ACJ-3448 AAI-9040 AAK-3005 AAK-3006 Year of purchase 1992 1992 1992 1992 1992 1992 Total maintenance cost (2020) ZWL 306 145 190 670 589 236 666 817 118 005 233 236 Financial loss as a result of high maintenance costs.

Recommendation The Company should comply with the Motor Vehicle policy.
Management response Tel●One has annual fleet replacement plans in place earmarked to address the observation.

A total of 8 vehicles have been acquired and delivered in 2021 to date whilst a further 2 have been paid for.

A budget to replace part of the fleet is in place for 2021.

Fleet replacement has however lagged behind as a result of cash flow challenges affecting the company.

Management is sourcing funding for the vehicle replacements.
1.3 Foreign creditors The Company had long outstanding foreign creditors which amounted to US$18 586 005 as at December 31, 2020 and 75% of these creditors were overdue with more than 120 days.

On enquiry with management it was highlighted that the ability to settle international creditors had been hampered by lack of access to foreign currency.

Risk / Implication Service delivery may be compromised due to failure to acquire critical components for operations.
Recommendation The Company should continue to engage the Government for foreign currency allocation.

Management response We agree that more than 75% of foreign creditors were overdue with more than 120 days.

This is due to foreign currency scarcity in the country and exclusion of state owned entities through Reserve Bank of Zimbabwe Circular 8 of 2019 from registration of blocked funds (legacy debts).
However, the following efforts were done both to maintain good relationships with the partners and to settle outstanding balances: 136     Negotiating flexible payment plans  Regular engagement with creditors  Weekly participation on the foreign currency exchange market to obtain required foreign currency.  Regular participation on interbank market  Engaging RBZ through our parent Ministry, POTRAZ, Ministry of Finance and Economic Development and Parliament of Zimbabwe to register the bulk (US$31 812 874) of these blocked funds (legacy debts) to ensure payment at 1ZWL:1US$.  As a result of these efforts we have managed to settle US$12,285,132 of these legacy debts which has seen the balance declining year on year.  2.
EMPLOYMENT COSTS 2.1 Motor Car loans Finding I noted that the Company issued motor car loans from 2009 to 2017 to its employees.

From an analysis of a loans schedule submitted for audit, the loans had not been recovered for more than ten (10) years.

Furthermore, the schedule indicated that some of the employees had left the organization.

The Company did not avail evidence on efforts to recover the long outstanding loans.
The table below refers: Date of Issue 03.12.09 10.06.10 14.05.10 06.04.10 27.05.10 13.04.10 08.06.10 27.05.10 27.05.10 22.04.10 15.10.10 24.05.10 07.05.10 07.05.10 01.06.10 02.02.11 30.06.15 19.10.17 Amount US$ Employee No.
708235 708084 708158 708223 708585 708863 709097 709405 709477 709596 709804 709947 710014 710193 710205 707808 708404 719662 137 Risk / Implication Financial loss as staff loans may be irrecoverable.

Recommendation All staff loans should be followed up and the amounts due should be recovered as per the Company policy.

Management response All the files were handed over to Tel●One Legal Counsel, Dondo and Partners through the Company Secretary.

Prosecution of the same is undergoing.

3.


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; 3.1 Asymmetric Digital Subscriber Line (ADSL) copper cables Recommendation Management may consider replacing copper cables with fibre optic cables.
Progress made Network Vandalism: Incidents of network vandalism have been on the decrease as noted by 261 incidents recorded in 2020 against 305 in 2019 representing a 14% decrease.
This is attributable to the anti-vandalism strategies adopted that includes the deployment of physical guards in areas under attack; use of technologies such as cable alarms to provide alerts the moment a cable has been vandalised; awareness campaigns in the print, electronic and social media; community engagements; joint operations with the Police; offer of rewards to informers and working with Prosecution to ensure that suspects are charged under the appropriate Act.
In addition, our request for review of the mandatory jail term from 10 to 30 years for offenders is now before Parliament of Zimbabwe for enactment into law.

The efforts resulted in the arrest of 96 criminals for vandalising our network in 2020 and out of this 13 were handed down the mandatory 10-year jail term with the rest receiving various sentences.

Funding is being sourced to replace copper with optic fibre and wireless solutions that are less vulnerable to vandalism as a long-term solution.
Midlands Investigations- Interviews for the position of Security Officer Midlands were done and the new Officer is expected to commence duties on 1st June 2021.

The Officer will coordinate operations in the Region complemented by commercial security guards who are engaged on a temporary basis as and when the need arises.
138 TRANSMEDIA CORPORATION (PRIVATE) LIMITED 2019 AND 2020 Background information Transmedia Corporation (Private) Limited is a state-owned entity established in terms of the Zimbabwe Broadcasting Corporation (Commercialization) Act of 2001 under the Ministry of Information, Publicity and Broadcasting Services.
The Corporation’s mandate is to distribute radio and television broadcast signal and the digitalisation of the television network with added interest and involvement in content creation and consumer awareness campaign.

I have audited the financial statements of Transmedia Corporation (Private) Limited for the financial years ending December 31, 2019 and 2020.

I issued an adverse opinion for the two (2) financial years.
Adverse Opinion 2019 In my opinion because of the significance of the matters described in the Basis for Adverse Opinion, the financial statements do not present fairly the financial position of Transmedia Corporation (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 i. Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” The non- compliance with IAS 21 resulted in the Financial Statements being misstated in the prior year and those balances being carried forward to the current year as opening balances in the determination of cash flows and performance.

ii.
ii.

Non-compliance with International Accounting Standard (IAS) 28 “Investment in Associates and Joint Ventures” The non-compliance with IAS 28 and the consequential impact of the above matters on International Accounting Standard (IAS) 29 “Financial reporting in hyperinflationary economies”.
Adverse Opinion 2020 In my opinion because of the significance of the matter described in the Basis of Adverse Opinion, the financial statements do not present fairly the financial position of Transmedia Corporation (Private) Limited as at December 31, 2020 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
139 Basis for Adverse Opinion 2020 i. Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” The Corporation applied the United States Dollar (US$) or Zimbabwe Dollar (ZWL) for the period February 22, 2019 to December 31, 2020 to comply with Statutory Instruments 33 of 2019 (SI33/2019) issued on February 22, 2019.

In addition, to comply with SI33/2019, the Corporation changed its functional and reporting currency with effect from February 23, 2019.
I however, believe that the change in functional and reporting currency occurred from October 1, 2018.

Zimbabwe witnessed significant monetary and exchange control policy changes in 2016 that continued 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 out local Foreign Currency Accounts (FCAs) (RTGS$) from the FCA Nostro US$ Accounts effective October 1, 2018.

Although the exchange rate between US$ and RTGS$ was legally pegged at 1:1, multiple pricing practices and other transactions observed and reported publicly indicated exchange rates other than 1:1 between two currencies.
In February 2019, a monetary policy statement was issued introducing the RTGS$ and the interbank foreign exchange market.

This monetary policy statement was followed by Statutory Instrument 142 of 2019 which specified that for all domestic transactions, ZWL (which comprises RTGS$, Bond Notes and Bond Coins), was the sole legal tender effective June 24, 2019.
The events in the preceding paragraphs, triggered a requirement for the Corporation to assess whether there was a change in functional and reporting currency from US$ to RTGS$.
I believe that events in the market and subsequent promulgation of the RTGS$ as a formal currency supported a change in functional currency from US$ to RTGS$ prior to February 22, 2019 and that transactions in the market indicated different exchange rates between the two currencies despite the legal 1:1 RTGS$:US$ exchange rate and this applied from 1 October 2018.The Corporation chose to comply with the requirements of the law by adopting the date of change in functional and reporting currency as of February 22, 2019.This therefore impacted the basis for measuring transactions that occurred between October1, 2018 and February 22, 2019.Consequently, my audit report for the year ended December 31, 2019 was modified as the effects were considered material and pervasive.
There has been no restatement of the opening balances to resolve this matter which resulted in the adverse audit opinion in the prior year in accordance with IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors as the issues to do with IFRS compliance and consistent market exchange rates have continued in the current period.
Consequently, all corresponding numbers remain misstated on the statement of profit or loss and other comprehensive income, statement of financial position, statement of changes in equity, and statement of cash flows.

This also impacts comparability of the current year’s figures with prior years.

As opening balances enter into determination of cash flows and 140 performance, our current year opinion is modified in respect of the impact of this matter on the financial statements.

ii.
ii.

Non-compliance with International Accounting Standard (IAS) 28 “Investment in Associates and Joint Ventures” The Corporation had a 20% shareholding in Skynet Holdings (Private) Limited carried at a cost of ZWL12 000 as at December 31, 2020.

Management have not been able to obtain the financial statements of the associate to properly equity account for the investment in its financial statements.
Consequently, I have not been able to determine the amounts at which the Corporation’s financial statements are misstated.

My opinion has been modified considering this matter.

iii.

Valuation of transmission and broadband equipment The Corporation had transmission and broadband equipment carried at ZWL722 139 995 as at December 31, 2020.These assets were valued by the Directors using historical US$ denominated inputs and converted to ZWL at the interbank rate in the prior year.
The US$ inputs used may not be a true reflection of market dynamics as risks associated with currency trading do not reflect the risks associated with property trading.

Owing to the nature of the matter, I am unable to quantify the possible impact.

My conclusion on the current year’s financial information is also modified because of the possible effect of this matter on the comparability of the current year’s figures and corresponding prior year figures.

iv.
iv.

International Accounting Standard (IAS) 29 “Financial Reporting in Hyper- Inflationary Economies” Furthermore, notwithstanding that IAS 29 - Financial Reporting in Hyper-Inflationary Economies has been applied from February 23, 2019 to December 31, 2020 it is noted that its application was based on prior and current year’s financial information which has been misstated because of matters described above.
Had the correct base numbers and start date been used, many elements of the financial statements would have been materially different.

The effects of the above departures from IFRS are material and pervasive to the Corporation’s financial statements.

Below is another material issue noted during the audit; 1.

GOVERNANCE ISSUE 1.1 Investment in Associate Finding The Corporation holds 20% interest in Skynet Holdings (Private) Limited.
However, the Corporation did not account for the Associate in its financial statements.

Risk / Implication Financial statements may be misstated.

141 Recommendation The Corporation should account for its Associate.

Management response Noted.

The Corporation is working on resolving the matter.
1.2 Service level agreements Finding The Corporation had no service level agreements with most of its clients which are listed below;       AB Communications; Zimbabwe Broadcasting Holdings; Star FM; Capital FM; Nyaminyami FM; and Diamond FM.  Risk / Implication Financial loss in the case of a disagreement.

Recommendation Management should ensure that service level agreements are put in place with all its clients.

Management response Noted.


Discussions are underway with broadcasters to regularise the matter.

142 ZIMBABWE CONSOLIDATED DIAMOND COMPANY 2020 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 for the Zimbabwe Consolidated Diamond Company for the year ended December 31, 2020 and I issued unqualified/clean opinion with an emphasis of matter.
Opinion In my opinion, the Company’s financial statements are properly drawn up in conformity with International Financial Reporting Standards (IFRSs) and give a true and fair view of the financial position of the Company as at December 31, 2020, and of its financial performance and its cash flows, for the year then ended.
Emphasis of matter Without modifying my opinion, I draw attention to the health hazard, COVID-19, that was declared as a worldwide pandemic by the World Health Organization in March 2020 has continued to affect many parts of the world, including Zimbabwe.

The COVID-19 pandemic has led to widespread economic uncertainty and volatility in financial markets as the measures taken across the globe to try and slow down the spread of the pandemic is impacting both the supply and demand of many goods and services.
However, management, do not anticipate the COVID-19 to have significant impact on its operations, and as a result the going concern assumption adopted in the preparation of these financial statements has not been revised.

Below are material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1 Mining areas Finding One of the Company’s mining areas, Portal B, was reallocated to another diamond miner, Anjin by the Government in 2020.
Before the reallocation, the Company was working on the Portal and had incurred stripping costs amounting to US$2.8 million.

However, after the reallocation, the Company was not reimbursed of the stripping costs incurred.

There was also no acknowledgement of debt from Anjin.

Risk / Implication Financial loss as the Company may fail to recover the stripping costs incurred.
143 Recommendation The Company should engage Government and Anjin in order to recover the costs incurred by the Company before reallocation.

Management response Management is engaging with the government to ensure that any decisions should consider the production and /or financial impact of such policies on the Company’s operations.

1.2 Debt management Finding The Company was not preparing creditors’ reconciliations on time.

As a result, there were disputes with creditors which were not resolved.
Risk / Implication Financial loss due to disputes that may not be resolved on time for supplier to resume the supply of key supplies.

Fraudulent or erroneous payments may be made to suppliers due to inaccurate or incomplete creditors’ balances.

Recommendation Management should ensure that all creditors’ reconciliations are prepared on time.

Management response Long outstanding disputes with most suppliers, especially those which had legacy issues, were resolved in 2021.
Management is engaging with the remaining suppliers to bring closure to dispute matters.

Management has also commenced the process of strengthening the capacity of monitoring and oversight of its suppliers accounts, so as to ensure disputed transactions are rectified timeously, and maintain good relationship with supplies.

1.3 Related party debts Finding The Company had not yet recovered amounts it is owed by Marange Resources, Diamond Mining Corporation and ZMDC for debts amounting to ZW$1.755 billion.
144 Risk / Implication Possible financial strain on the Company’s cash flows which may have an impact on the Company’s operations.

Recommendation The Company should continue to engage the respective companies’ shareholders for the recovery of those amounts.

Management response Management is engaging Related Parties, Ministry of Mines and Mining Development and Treasury for accelerated resolution of all legacy debt related issues.

2.
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 Composition of the Board 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.

Progress made Board yet to be reconstituted.

2.2 Prepayments Recommendation All outstanding goods procured should be followed up for delivery.
Progress made The issue has partially been resolved.

The whole amount of USD352,068 was reimbursed in ZWL as a result of Statutory Instrument 33 which converted USD balances on a 1:1 basis to ZWL balances.

145 ZIMBABWE ELECTRICITY TRANSMISSION AND DISTRIBUTION COMPANY (ZETDC) 2020 Background information The Zimbabwe Electricity Transmission and Distribution Company is incorporated in terms of the Companies and Other Business Entities Act [Chapter 24:31].

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 an emphasis of matter on going concern.
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, 2020, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion i. Non-compliance with International Accounting Standard (IAS) 21 – “The Effects 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.
During the prior financial year up to February 22, 2019, the Company transacted using a combination of Nostro FCA (USD) and RTGS FCA (electronic payments), including mobile money, bond notes and coins.

In terms of IAS 21, these would be considered separate currencies requiring translation to the functional and presentation currency at appropriate exchange rates.
In order to comply with SI 33/2019, the RTGS transactions for period January 01, 2019 to February 22, 2019 were accounted for on the basis of a rate of 1:1 between USD and RTGS.

The Company changed the functional currency on February 22, 2019 in compliance with legislation.

This was not consistent with IAS 21, in which compliance would have resulted in the reassessment of the functional currency at a date earlier than February 22, 2019.
In addition, during the period February 22, 2019 to June 22, 2020, the value of property, plant and equipment, and foreign currency denominated transactions and balances were translated into ZWL using the official interbank exchange rate which is not considered an appropriate spot rate for translations as required by IAS 21.
The opinion on the prior year financial statements was modified in respect of this matter and the misstatements have not been corrected in the financial statements for the year ended 31 December 2020.

Had the 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.
146 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.

ii.

Non-compliance with International Accounting Standard (IAS) 29 – “Financial Reporting in Hyperinflationary Economies” The Directors have applied the IAS 29 – Financial Reporting in Hyperinflationary Economies with effect from January 01, 2019 to December 31, 2020.
However, its application was based on prior and current year’s financial information which was not in compliance with IAS 21 as described above.

Had the correct base numbers been used, most elements of the financial statements would have been materially different.

The impact of the departure from the requirements of these standards is considered material and pervasive to the financial statements.
Report on Going Concern Emphasis of matter I draw attention to the fact that the Company incurred an operating loss before tax for the year ended December 31, 2020 of ZWL 16 108 107 329 (2019: ZWL39 084 603 414).

The Company’s current liabilities exceeded its current assets by ZWL 29 564 902 479 as at December 31, 2020 (2019: ZWL 23 593 439 892).

The Company defaulted on repayments of its foreign loans which have not been rescheduled.
These conditions indicate the existence of a material uncertainty that cast significant doubt about the ability of the company to continue operating as a going concern.

Below are other material issues noted during the audit.

1.

GOVERNANCE ISSUES 1.1 Statutory and other obligations Finding The Company was not settling its payables to the extent that, payments for insurance premium, tax, pensions contributions and supply of prepaid meters were lagging behind.
The insurance premiums that were not settled for the period under review amounted to ZWL 41 001 895.

As a result, after the loss of assets to fire, the Company’s claim was not honoured by the Insurers due to lapse of cover.

In addition, the Company had outstanding medical aid contributions amounting to ZWL 234 386 951.

The Company also incurred interest and penalties due to late payment of some of its trade and other payables.
The interest/ penalties amounting to ZWL 75 026 851 was paid for the late payments.

The table below has details of interest/penalties: 147 Service provided Supply of prepaid meters Penalty on late payment of PAYE Pension fund contributions Late payment of PAYE Other Total Risk / Implication Loss of assets without recourse.

Amount ZWL 28 579 582 16 261 320 11 892 097 10 357 798 7 936 055 75 026 851 Financial loss due to unnecessary interest and penalties.
Recommendation Management should consider assessment of cash flow patterns and ensure they prioritise key payments to prevent interest and penalties.

Management response The observation is noted.

The insurance payments have been lagging behind due to cash flow constraints.

The failure to settle the subscriptions on time is due to cash flow constraints.

Management will reduce the outstanding payments to current as the cash flows improve.
1.2 Electricity fringe benefits Finding A total of 8 620 employees redeemed the electricity fringe benefit for the year ended December 31, 2020.

I however, noted that 55% (4 773) of the beneficiaries’ details were not documented.

The missing data such as EC number, depot and suburb details limited my verification of bona fide beneficiaries.

Risk / Implication Fraud and errors may not be detected on time.

Recommendation Management should ensure that data is complete before uploading on the payroll.
Management response The observation noted.

The accounts with missing data will be corrected by the third quarter of 2021.

148 2.

EMPLOYMENT ISSUES 2.1 Attendance register Finding The Company’s onsite wayleave clearance attendance register did not include a signature column to allow contract workers to individually sign the register.

As a result, the attendance registers were being completed and signed by one person on behalf of all employees.
These employees were being paid according to the number of days worked.

Risk / Implication Financial loss due to payment to ghost employees.

Recommendation Management should ensure that the attendance register is completed and signed by each individual wayleave employee.

Management response This is an isolated case at Tokwe substation, an on-site hand written register to account for all employees on a particular contract during the contract period was being kept.
On completion of the contract, the information on the on-site hand written registers was then transferred onto the printed presentable form and signed by the foreperson.

Management will ensure that going forward, all registers for wayleave clearance are standardized to include a signature column and will be signed by all casual contract staff on site.
149 ZIMBABWE MINING DEVELOPMENT CORPORATION (ZMDC) 2020 Background information Zimbabwe Mining Development Corporation is wholly owned by the Government of Zimbabwe.

The main business of the Corporation and its subsidiaries, which are incorporated in Zimbabwe, is that of minerals extraction and sales.
I have audited the financial statements of the Zimbabwe Mining Development Corporation for the year ended December 31, 2020 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 Mining Development Corporation as at December 31, 2020, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion i. Non-compliance with International Accounting Standards (IAS) 21 “The Effects of Changes in Foreign Exchange Rates”.

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.
During the prior financial year up to February 22, 2019, the Corporation transacted using combination of Nostro FCA (USD) and RTGS FCA (electronic payment), including mobile money, bond notes and coins.

In order to comply with SI 33/2019, the RTGS transactions and balances for the prior year were accounted for on the basis of a rate of 1:1 between USD and RTGS.

The Corporation changed the functional currency on February 22, 2019 in compliance with legislation.
This was not consistent with IAS 21, in which compliance would have resulted in the reassessment of the functional currency at a date earlier than February 22, 2019.

In addition, during the period February 22, 2019 to June 22, 2020, the foreign currency denominated transactions and balances were translated into ZWL using the official interbank exchange rate which is not considered an appropriate spot rate for translations as required by IAS 21.
The opinion on the prior year financial statements was modified in respect of this matter and the misstatements have not been corrected in the financial statements for the year ended December 31, 2020.

Had the Corporation applied the requirements of IAS 21, many of the elements of the financial statements would have been materially impacted and therefore the departure from the requirements of these standards is considered to be material and pervasive to the financial statements, taken as a whole.

150 ii.
150 ii.

Non-compliance with International Accounting Standard (IAS) 29 “Financial Reporting in Hyperinflationary Economies” The Directors have applied the IAS 29 - Financial Reporting in Hyperinflationary Economies with effect from January 1, 2019 to December 31, 2020.

However, its application was based on prior and current year's financial information which was not in compliance with IAS 21 as described above.
Had the correct base numbers been used, most elements of the financial statements would have been materially different.

The impact of the departure from the requirements of these standards is considered material and pervasive to the financial statements.

iii.
iii.

Fair value determination for assets, transactions and liabilities The determination of fair value for assets, transactions and liabilities presented in the inflation adjusted annual financial statements is affected by the prevailing economic environment and may be distorted.

This may result in significant variations in fair values, depending on factors and assumptions used in the determination of the fair values.

iv.
iv.

Non-compliance with International Accounting Standard (IAS) 28, Investments in Associates and Joint Ventures and International Financial Reporting Standard 11 (IFRS) 11, Joint Arrangements IAS 28 and IFRS 11 require a parent to recognize its interests in joint ventures and associates in its separate financial statements at cost or at fair value.
Zimbabwe Mining Development Corporation did not recognize its shareholding in Todal Mining (Private) Limited, Golden Kopje (Private) Limited, Global Platinum Resources (Private) Limited and Northridge Platinum.

Accordingly, I was unable to determine the extent of the financial impact of non- compliance on the financial statements.
Report on Going Concern Material Uncertainty Related to Going Concern Without modifying my opinion, I draw attention to the financial statements which indicate that the Company’s total liabilities exceeded its total assets by ZWL8 689 071 as at December 31, 2020.

This indicated the existence of a material uncertainty related to 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.


Going concern Finding The Corporation’s total liabilities exceeded its total assets by ZWL8 689 071 as at December 31, 2020.

This indicated the existence of a material uncertainty related to going concern.

151 Risk/Implication The entity may fail to continue as a going concern.

Recommendation Management should ensure that there are adequate measures in place to improve the company’s ability to continue as a going concern.
Management Response ZMDC adopted a partial privatisation strategy and identified investors for most of its non-operating mines, this will result in generation of revenue and be able to clear its liabilities by end of 2022.

1.2 Motoring benefits Finding Motoring benefit is a deemed benefit in terms of Income Tax Act [Chapter 23:06] Section 8(i) (f) (ii) (a) (iii).

From my review of employee benefits, I noted that some ZMDC beneficiaries of company vehicles were not being taxed motoring benefits.
The Corporation has not been taxing motoring benefits since the acquisition of management vehicles.

Risk / Implication Financial loss due to unnecessary penalties and fines for non-compliance.

Recommendation Management should ensure that all employee benefits are taxed accordingly as per the Income Tax Act.

Management response Employees allocated vehicles are now being taxed according to the Income Tax Act.

2.
2.

REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1 Performance of subsidiaries and joint ventures.

Finding From my review of investments in subsidiaries and joint ventures I noted that some of the subsidiaries and joint ventures were non-operational and some were making losses from their operations.
The table overleaf shows some of the subsidiaries and joint ventures not performing; 152 Company Name Relationship Status Golden Kopje (Private) Limited, Subsidiary Not operational Global Platinum Resources (Private) Limited Joint venture Northridge Platinum Lynx Mine Risk / Implication Joint venture Subsidiary Not operational Not operational Loss of ZWL8 840 073 Financial Loss as the parent may end up absorbing costs incurred by these joint ventures and subsidiaries.
Recommendation Management should ensure that there are adequate measures in place to improve the performance of these non-performing entities.

Management response i.

Golden Kopje (Private) Limited The Mine was partially privatised in 2020 in line with Transitional Stabilisation Programme (TSP) and National Development Strategy 1(NDS1) ii.

Global Platinum Resources (Private) Limited Under exploration iii.

Northridge Platinum Under exploration iv.


Lynx Mine Resuscitation of the mine is under way and is expected to resume operations in 2022.

153 ZIMBABWE UNITED PASSENGER COMPANY (ZUPCO) 2019 Background information Zimbabwe United Passenger Company is a road transport company incorporated and registered in Zimbabwe with the mandate to provide rural, urban and regional passenger travel services.

It has its Head Office at 109 Belvedere Road in Harare.
The company runs its activities through two main divisions, namely the Northern Region based in Harare and the Southern Region based in Bulawayo.

I have audited the financial statements of the Zimbabwe United Passenger Company for the year ended December 31, 2019 and I issued an adverse opinion with an emphasis of matter paragraph.
Adverse Opinion Non-compliance with International Accounting Standards (IAS) 21 “The effects of changes in foreign exchange rates.” The Zimbabwe United Passenger Company financial statements have been presented in Zimbabwe dollars being the functional and presentation currency.
The Company has been using United States dollars as the 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 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 with multi-tier pricing practices.

These events were indicative of economic fundamentals that would require reassessment of the functional currency as required by IAS 21: The effects of changes in foreign exchange rates.

As Zimbabwe United Passenger Company predominantly traded in RTGS dollars, October 1, 2018 would have been deemed the date of change in functional currency in line with IFRS.
Non-compliance with International Accounting Standard (IAS) 29 “Financial Reporting in Hyperinflationary economies.” During the year, the factors and characteristics to apply International Accounting Standard Financial Reporting in Hyper-Inflationary economics (IAS29) were met in Zimbabwe.

As a result, the Public Accountants and Auditors Board pronounced that entities reporting in Zimbabwe were required to apply the requirements of IAS with effect from 1 July 2019.
The Zimbabwe United Passenger Company 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 purchasing power the functional currency should apply from 1 October 2018.
Because Zimbabwe United Passenger Company transacted using a combination of the USDs, Bonds and RTGS during the period from October 1, 2018 to February 22,2019 in line with SI 33/19 and commenced application of IAS 29 on this date resulted in material misstatements to the financial performance and cash flows as transactions were not appropriately translated in line with IAS21 and IAS 29 and the departure is considered pervasive.
154 Report on going concern Material uncertainty related to going concern The following information casts significant doubt on Zimbabwe United Passenger Company’s ability to continue as a going concern: As at 31 December 2019 the Company’s current liabilities exceeded current assets by ZWL $81 972 013 (2018: ZWL$92 749 521).

Furthermore, the Company incurred a significant gross loss of ZWL $ 372 507 428(2018 loss: ZWL $ 1 572 805).
The operating loss before government subsidies of ZWL $ 529 578 042(2018: Nil) was ZWL $ 439 985 816 (2018: ZWL $ 19 975 026).

This loss is mainly due to the fact that the Company is charging sub-economic passenger fares.

This indicates that the Company is currently dependent on government subsidy for its operational viability.

The Company also relies on leased buses from bus operators and on 31 December 2019 the Company’s lease liability was ZWL $ 328 269 566 (2018: Nil).
The Company faces a potential liquidity risk with regard to its lease liabilities.

Below are other material issues noted during the audit; 1 GOVERNANCE ISSUES 1.1 Tap card Finding There was no evidence to support that the Company carried out a feasibility study before the implementation and use of the tap card system.
As a result, the system, during the period under review had deficiencies that include the following:     tap machines failing to upload, tap card website failing to download backdated transactions, tap card activation machine failing to activate cards general lack of understanding of 2 computer platforms (Tap Merchant & Jaspersoft) These could have been noted and addressed during the feasibility study and corrected before the system roll out.
The challenges were compounded by the fact that the Company’s manuals were not updated to include the tap card procedures for ease of reference by staff.

Risk / Implication Financial loss resulting from the continued use of tap card system.

Recommendation The whole tap card system should be suspended while all the deficiencies noted are investigated and resolved.

Management comment The service providers upgraded their server, uploading challenges are no longer being experienced.
Big POS gadgets which have a bigger memory is replacing the smaller 155 gadgets which were used initially.

The tap merchant platform is the only one which is now being used.

ZUPCO is now in the process of replacing the smaller gadgets which the service provider had supplied, so the physical gadgets will be owned by ZUPCO.

Analysis and accounts were trained how to use the platform.

Reconciliations are being performed on a weekly basis.

ICT personnel were trained on the use of tap card merchant system.
1.2 ZUPCO Board Finding The Company was operating without a board of directors for the period under review.

As a result, the oversight role was being performed by a management committee.

This constituted a departure from good corporate governance and violates the provisions of Public Entities Corporate Governance Act [Chapter 10:31].

Risk / Implication Accountability and transparency may be compromised.
Recommendation The Company should liaise with parent Ministry to ensure the appointment of the board complies with the Public Entities Corporate Governance Act [Chapter 10:31].

Management response The Company is currently under the direction of a management committee which was appointed by the parent Ministry when it dissolved the board of directors.

The management committee is comprised of seven members.

Five of the committee members are external with the other two being executive members.
1.3 Transactions with related parties Finding ZUPCO had a management committee that was set up during the year in the absence of the board.

During the year under review ZUPCO entered into business with HIT / Matsimba Technologies with regards to tap card technology.

ZUPCO was to remit a certain percentage of revenues to HIT/ Matsimba Technologies.
I however noted that Matsimba was directed mainly by a member of the ZUPCO management committee who was a Director of the Technology Transfer and Licensing Centre (TTLC).

This constitutes conflict of interest and no declaration of interest was presented for audit.

Risk / Implication Oversight, accountability and transparency may be compromised.

156 Recommendation The Company should consider to review its processes with related parties to enhance transparency and accountability.
Management response Noted.

1.4 Information Technology (IT) Governance Framework Finding The Company automated its passenger ticketing system.

I however noted that they had no IT governance framework to provide a formal structure for its operations to ensure that IT investments support business objectives of the Company.

Risk / Implication Financial loss due to high failure rate of IT-enabled business projects.
Recommendation The Company should consider developing and adopting an IT Governance Framework that is reflective of global acceptable practices.

Management response Noted, we will adopt Information Technology Infrastructure Library (ITIL).

1.5 Asset register Finding The Company’s asset register was not being updated regularly.
As a result, records were still reflecting details of buses with old registration plates which had been phased out several years ago (for example 800-765W) were still in the asset register.

I also noted that the register did not show asset location (exact depot) and tag numbers/serial numbers/labels.

Risk / Implication Misappropriation of assets.

Old registration numbers may be abused.


Recommendation The Company should update its register regularly and document all the necessary information in the asset register.

157 Management response The Company is in the process of migrating to a new accounting package which will incorporate the recommendations.

1.6 FAW buses parts Finding The Company made a decision to strip Mutare depot non-running FAW buses and store the stripped parts in a storeroom.
However, there was no record of receipts, storage and issue of the parts.

In addition, the defunct broken down FAW buses which were being stripped for repair parts or bus rebuilds were not properly secured at Khami depot.

Risk / Implication Misappropriation of the stripped parts.

Recommendation The Company should strengthen the controls of its inventory management.
Management response Mutare depot An exercise to record all the parts removed from non-running buses and light vehicles will be carried out shortly.

Proper inventory documentation will be put in place so that all old spares in stock can be accounted for at any given time.

Khami depot Stripped parts will be stored in a secure facility and a proper inventory list will be done to account for all items.
An asset and liabilities committee will be formed so that all shells will be disposed in accordance with PRAZ regulations.

1.7 Immovable Properties Finding The Company had title deeds for a property in Harare registered in its name.

However, management was not aware of this property nor the identity of people currently occupying it.

158 Risk / Implication Financial loss as income may be collected irregularly.
Recommendation The Company should carry out an asset verification exercise and regularise ownership of properties in its books.

Management response The Company has already started an exercise of verifying the names and occupancy of various properties with some local authorities with a view of approaching the Deeds Office to ascertain ownership of the property.
2 REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1 Control of waybills Finding The Company contracted private operators to complement their efforts in providing public transport.

These private operators provided the Company with summaries of trip activities which were key documents utilised for ticketing income verification.

However, I noted that these documents were not being checked by supervisors.
In addition, the waybills at various depots visited were not being properly maintained as evidenced by numerous cancellations and alterations and tear rendering them obscure hence casting doubt on their integrity.

As a result, between January 2019 and August 2019 there was an overpayment to private operators of ZWL 459 180.

I also noted that there was no evidence of reconciliations between waybills issued and those submitted for operator payments.
The lapse in in supervisory controls might have contributed to these overpayments.

Risk / Implication Financial loss due to lapse in internal controls.

Recommendation The Company should consider strengthening of its supervisory controls.

The Company should recover the overpayments.

Management response Noted.

Management will start signing the Waybills at the end of day or operation.

All over payments were recovered and the schedules are available.
159 PUBLIC ENTITIES UNDER THE CATEGORY OF COUNCILS 160 CONSUMER COUNCIL OF ZIMBABWE (CCZ) 2020 Background information Consumer Council of Zimbabwe was established in 1975 to oversee and defend consumer interest, initiate pro-consumer legislation, empower consumers and monitor product quality.

It is a registered welfare entity in accordance with Zimbabwean laws.

I have audited the financial statements of the Consumer Council of Zimbabwe for the year ended December 31, 2020 and I issued a qualified opinion.
Qualified Opinion In my opinion, because of the significance of the matters discussed in the Basis for Qualified Opinion section of my report, the Council's financial statements do not present fairly the financial position of the Council as at December 31, 2020, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion Impact of incorrect date of application of International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” on comparative financial information.

For the financial year ended December 31, 2020.

The Council did not comply with IAS 21 “The Effects of Changes in Foreign Exchange Rates” as it elected to comply with Statutory Instrument 33 of 2019 (“SI 33/19”) only from February 22, 2019.
Prior to February 20, 2019, the transacting and functional currency of the Zimbabwean economy was the United States dollar (“USD”).

On February 20, 2019, a currency called the RTGS Dollar was legislated through Statutory Instrument 33 of 2019 (“SI 33/19”) with an effective date of February 20, 2019.

SI 33/19 fixed the exchange rate between the RTGS Dollar and the United States Dollar (“USD”) at a rate of 1:1 for the period up to this effective date.
The rate of 1:1 was consistent with the rate mandated by the RBZ at the time it issued the bond notes and coins into the basket of multi currencies.

The below 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”.

The Council transacted using a combination of USD, electronic cash, bond notes and bond coins.
Acute shortage of USD cash and other foreign currencies in the country resulted in an increase in the use of different modes of payment for goods and services, such as settlement through the Real Time Gross Settlement (“RTGS”) system and mobile money platforms.

During the year there was a significant divergence in market perception of the relative values between the bond note, bond coin, mobile money platforms, and RTGS FCA in comparison to the USD.
Although RTGS was not legally recognised as currency up until February 22, 2019, the substance of the economic phenomenon, from an accounting perspective, suggested that it was currency.

161 In October 2018, banks were instructed by the Reserve Bank of Zimbabwe (“RBZ”) to separate and create distinct bank accounts for depositors, namely, RTGS FCA and Nostro FCA accounts.

This resulted in a separation of transactions on the local RTGS payment platform from those relating to foreign currency.
Below are other material issues noted during the audit.

1 GOVERNANCE ISSUES 1.1 Risk management policy Finding The Council was operating without a risk management policy in place since 2009.

As a result, when the Council’s computer equipment was stolen they could not retrieve lost data since there was no back up.

Backup as risk management practice could have assisted the Council to recover lost data.
Risk / Implication Business continuity maybe compromised as the Council may fail to identify and mitigate new and emerging risks.

Recommendation The Council should put in place the risk management policy.

Management response The Council will hire an external consultant and assist the organisation.

The Council will set up back-ups.


162 NATIONAL ARTS COUNCIL OF ZIMBABWE (NACZ) 2019 Background information The National Arts Council of Zimbabwe (NACZ) was established in terms of the National Arts Council of Zimbabwe Act [Chapter 25:07].

The main function of the Council is to foster, develop and improve the knowledge, understanding and practice of the arts and their presentation, performance, execution and the exhibition of the same to the public.
I have audited the financial statements of National Arts Council of Zimbabwe for the year ended December 31, 2019 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 in my report, the financial statements do not present fairly, in all material respects, the financial position of the National Arts Council 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).
Basis for Adverse Opinion Non-compliance with International Accounting Standards (IAS) 21 “The Effects of Changes in Foreign Exchange Rates”.

The Council translated its comparative financial statements using the interbank rate, which came into existence on February 22, 2019 through the Exchange Control Directive RU 28 of 2019 issued by the Reserve Bank of Zimbabwe.
The Council used October 01, 2018 as the date of change in functional currency and translated its foreign denominated balances to ZWL using the February 22, 2019 interbank rate.

This was contrary to the requirements of IAS 21, which requires the translation to be done using the rate prevailing at the date of change of functional currency.
The Council 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 affects 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 Council applied the prevailing interbank rate in revaluing its property, plant and equipment as at December 31, 2019.

In that regard, the Council has not been able to comply with the requirements of IAS 21.
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.
163 Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1 Grant Aid to registered arts organizations Finding The Council was allocated a grant of ZWL600 000 to aid registered arts organizations, however, only ZWL40 000 was released and transferred to the Council during the year under review.

As a result, the Council could not fully provide assistance to art organizations as per the strategic plan (2019-2020).
Although one of the Council’s wider mandate is to grant aid or to provide any other form of financial assistance to registered arts organizations engaged in or concerned with the practice or teaching of any particular art, or its presentation, performance, execution or exhibition to the public from the Art development Fund (ADF), they could not perform this responsibility.

Risk / Implication Service delivery may be compromised.

Failure by Council to meet its mandate.


Recommendation The Council should engage the Treasury for release of funds to provide financial assistance to registered art organizations as part of fulfilling its mandate.

Management response Observation is noted.


The National Arts Council of Zimbabwe could not provide the grant in aid to registered arts associations and unions as required by the Act in 2019 because the vehicle, Arts Development Fund (ADF) which was designed to support this mandate was allocated $600 000 and only $40 000 was released and transferred to the Council during the year.
During the year under review the amount released was used to fund Amagugu Heritage Centre - $25 000 and funerals for the late Stephen Chipfunyise - $5 000 and Abel Sithole - $10 000.

1.2 Office Accommodation Finding The Council leased office accommodation in various provinces.
However, I noted that there were no lease agreements for office space at the following places; Education Service Centre (Harare), DA offices (Mutare), Chinese Complex (Chinhoyi), Mhlahlandlela office complex (Bulawayo), Mashonaland East Government complex (Marondera), Murehwa Culture Centre (Heartfelt International Ministries, Harvest International Church and Almega Trust).

Risk / Implication 164 There may be no legal recourse in the event of disputes.
Recommendation The Council should ensure that lease agreements are put in place.

Management response Observation is noted.

Ministry of Local Government, Public Works and National Housing could not renew the lease agreements while the Council was in arrears for rentals, which the Council is paying in advance as required by the expired lease agreements.
The responsibility to pay rentals was with Treasury as was agreed upon during a budget meeting held at Ministry of Finance and Economic Development in 2017.

From 2017 to date the Council received only $4 000.00 on 12 February 2018 and the second disbursement of $282 000 was received on 28 May 2020 which amount was not sufficient to pay for Head Office and Provinces.
165 TRAFFIC SAFETY COUNCIL OF ZIMBABWE 2020 Background Information The main business of the Traffic Safety Council of Zimbabwe is to administer the funds of the Council in the terms of the Traffic Safety Council Act [Chapter 13:17], promote safety on roads, disseminate information on road safety, publish the Highway Code, establish standards of practice to be observed by driving schools.

The Council also controls and regulates driving schools and persons who provide instruction in the driving of vehicles.
I have audited the financial statements of Traffic Safety Council of Zimbabwe for the year ended December 31, 2020 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 Council's financial statements do not present fairly the financial position of the Council as at December 31, 2020 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 i.
Use of incorrect Exchange rate – Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” on comparative financial information For the period ended December 31, 2020 the financial statements of the Council included balances and transactions denominated in US$ that were not converted to ZWL at a ZWL: US$ exchange rate that reflects the economic substance of its value as required by International Financial Reporting Standards ("IFRS").
This is because management applied the legal exchange rates as prescribed by the foreign exchange auction system which replaced the interbank market on June 23, 2020.

I believe that the transactions in the market indicated a different rate between the two currencies throughout this period.

From June 23, 2020, being the date the foreign exchange auction system was adopted, management translated all balances using weekly foreign exchange auction rates.
Prior to the adoption of the auction system the Council had been using the then stipulated 1:25 fixed interbank exchange rate system.
Both of the foreign exchange systems did not meet the criteria for appropriate exchange rates in terms of IFRS as defined below: According to IAS 21, at the end of each reporting period; (a) foreign currency monetary items shall be translated using the closing rate; (b) non-monetary items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date of the transaction; and (c) non-monetary items that are measured at fair value in a foreign currency shall be translated using exchange rates at the date when the fair value was measured.
Foreign currency transactions shall be recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.

According to paragraph 8 of IAS 21, 166 the closing rate is defined as a) spot exchange rate at the end of the reporting period, and b) Spot exchange rate is the exchange rate for immediate delivery.
In light of the definitions above, the IFRS interpretations Committee concluded in their September 2018 paper that closing rate is the rate to which an entity would have access at the end of the reporting period through a legal exchange mechanism.

I therefore believe that the exchange rates for transactions and balances between the US$ and the RTGS$/ZWL used by the council did not meet the criteria for appropriate exchange rates in terms of IFRS as defined above.
Had the correct rate been used, most balances would have been materially different.

ii.

Impact of incorrect date of application of International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” on comparative financial information For the financial year December 31, 2020 the Council did not comply with IAS 21 “The Effects of Changes in Foreign Exchange Rates” as it elected to comply with Statutory Instrument 33 of 2019 (“SI 33/19”) only from February 22, 2019.
Prior to February 20, 2019, the transacting and functional currency of the Zimbabwean economy was the United States dollar (“USD”).

On February 20, 2019, a currency called the RTGS Dollar was legislated through Statutory Instrument 33 of 2019 (“SI 33/19”) with an effective date of February 23, 2019.

SI 33/19 fixed the exchange rate between the RTGS Dollar and the United States Dollar (“USD”) at a rate of 1:1 for the period up to this effective date.
The rate of 1:1 was consistent with the rate mandated by the RBZ at the time it issued the bond notes and coins into the basket of multi currencies.

The below 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”.

The council transacted using a combination of USD, electronic cash, bond notes and bond coins.
Acute shortage of USD cash and other foreign currencies in the country resulted in an increase in the use of different modes of payment for goods and services, such as settlement through the Real Time Gross Settlement (“RTGS”) system and mobile money platforms.

During the year there was a significant divergence in market perception of the relative values between the bond note, bond coin, mobile money platforms, and RTGS, FCA in comparison to the USD.
Although RTGS was not legally recognised as currency up until February 22, 2019, the substance of the economic phenomenon, from an accounting perspective, suggested that it was currency.

In October 2018, banks were instructed by the Reserve Bank of Zimbabwe (“RBZ”) to separate and create distinct bank accounts for depositors, namely, RTGS FCA and Nostro FCA accounts.

This resulted in a separation of transactions on the local RTGS payment platform from those relating to foreign currency (e.g.
United States Dollar, British Pound, and South African Rand).

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.
167 For the period up to February 22, 2019, the Council maintained its functional currency as the USD, with transactions and balances reflected using an exchange rate of 1:1 in compliance with SI 33/19.

From February22, 2019, balances and transactions were retranslated at the legislated inaugural exchange rate of 1:2.5 between the USD and the RTGS$ in compliance with the requirements of SI 33/19.
Whilst the timing of this conversion was in line with the dictates of SI 33/19, it constituted a departure from the requirements of IAS 21, and therefore the 2019 financial statements were not prepared in conformity with IFRS.

Had the council applied the requirements of IAS 21, the December 31, 2019 comparative inflation adjusted financial statements would have been materially impacted.

The financial effects of this departure on the inflation adjusted financial statements have not been determined.
Below is a material issue noted during the audit; 1.

EMPLOYMENT COSTS 1.1 Key vacant posts Finding The Council`s Managing Director and Operations Director positions were still being held in an acting capacity after the former office bearers left the Council.

The former Managing Director left the Council upon retirement in November 2019 and the Operations Director had left earlier.

Risk / Implication Service delivery may be compromised.
Recommendation The Council should ensure that the key vacant posts are filled.
Management response The matter is expected to be resolved by end of 2021 168 ZIMBABWE COUNCIL FOR HIGHER EDUCATION (ZIMCHE) 2019 Background information The Zimbabwe Council for Higher Education was established in terms of the Zimbabwe Council for Higher Education Act [Chapter 25:27] to promote and co-ordinate education provided by institutions of higher education and to act as a regulator in the determination and maintenance of standards of teaching, examinations, academic qualifications and research in institutions of higher education.
I have audited the financial statements of Zimbabwe Council for Higher Education for the year ended December 31, 2019 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 accompanying financial statements do not present fairly, in all material respects, the financial position of Zimbabwe Council for Higher Education 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 Council 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 Council used October 01, 2018 as the date of change in functional currency and translated its foreign denominated balances to ZWL using the February 22, 2019 interbank rate.
The Council 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 Statutory Instrument number 33 of 2019 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 Council applied the prevailing interbank rate in revaluing its assets and liabilities as at December 31, 2019.

In that regard, the Council has not been able to comply with the requirements of IAS 21.
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.
Below are other material issues noted during the audit; 169 1.

GOVERNANCE ISSUES 1.1 Council files Finding The Council did not avail for audit the Council and Committee Minutes, Council members’ attendance registers, declarations of interest and personal files of members for the year under review.

Inquiries with management indicated that all the Council files were locked up in the office of an employee who resigned and handover procedures were not performed for the office keys.
As a result, I could not assess and review transactions from source documents to Council deliberations and resolutions passed with material effect on my audit.

Risk / Implication Internal controls may be compromised.

Recommendation Management should ensure that hand over take over procedures are performed.

Management response The observation is noted.


ZIMCHE had an un-amicable separation with a senior member of staff responsible for Council minutes and meeting registers thus the normal hand-over/take-over process was not possible.

The issues around the separation are currently in the courts and efforts to retrieve the office keys through the Prosecutor at the courts did not yield positive results at the time of the audit.
Advice obtained from the Law Enforcement agents and the Prosecutor’s office was to the effect that, we should wait until the employee concerned appear in court before Council can take alternative steps to retrieve the keys and/or have access to the locked office.

If Council takes any other action before the court appearance that would work against the Council when the matters at the courts are finalized.

The indicative court appearance date is provisionally set for 22nd April 2021.
1.2 Internal audit Finding The Council’s internal audit structure does not facilitate the independent oversight role of internal auditors as the position of internal auditor for the Council was designed and introduced as two in one, to the extent that the duties included chairing the human resources policy processes and participating in Higher Education Institutions (HEI) quality assurance processes.
Whilst I appreciate the size of the entity, the Internal audit should not review the work that it would have performed.

As a result of the dual role, internal audit did not accomplish some of its planned tasks.

On enquiry, management highlighted that the design of the Internal Audit Unit structure allowed it to have both oversight and operational roles.

170 Risk / Implication The oversight role of the Internal Audit function may be compromised.
Recommendation Those charged with Governance should ensure that the duties of the internal audit function do not compromise its oversight role.

Management response The observation is noted.

The position was designed and introduced as two in one, the size of the organization was sighted as the reason for that design.

It was Internal Audit and Quality Assurance which was operations for Higher Education Institutions.
The irregularity was addressed in 2020 from Internal and Quality Audit Assurance to Audit and Risk Management in 2020.

Council has also now hived off the Risk Management function and created a Risk Management Unit.

Therefore, the workload of the Internal Audit unit has been reduced to manageable levels.
171 PUBLIC ENTITIES UNDER THE CATEGORY OF FINANCIAL INSTITUTIONS 172 INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE (IDBZ) 2020 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] and is primarily involved in mobilizing and providing finance for infrastructure development activities and management of infrastructure development projects.
I have audited the financial statements of Infrastructure Development Bank of Zimbabwe for the year ended December 31, 2020 and I 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 accompanying inflation adjusted consolidated financial statements give a true and fair view of the statement of financial position of IDBZ as at December 31, 2020, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” IDBZ used United States Dollars (USD) as its functional currency from the January 1, 2019 to the February 22, 2019.

It is further noted that 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 1:2.5 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 1:1 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.
The basis for qualification is due to misstatements contained in the opening balances from prior year where all monetary assets and liabilities were translated at an exchange rate of 1:1 which was not compliant with IAS 21 “The Effects of Changes in Foreign Currency Rates”, this resulted in the recognition of a material Foreign Currency Translation Reserve in equity amounting to ZWL363 612 060.

Below are other material issues noted during the audit: 173 1.
GOVERNANCE ISSUE 1.1 Board Composition Finding I noted that there is no gender balance on the current Governing Board.

There is only one female board member out of the appointed nine.

Section 11(7) (a) of the Public Entities Corporate Governance Act provides that “as far as practicable, the Board must have an equal number of men and women on the Board”.

Risk / Implication Non-compliance with relevant statutes.
Recommendation Appointments should be made in line with relevant statutory requirements to ensure that the Board is properly balanced.

Management response The issue is currently being attended to by the Minister of Finance.

2.

PROGRESS IN IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS 2.1 Employment benefits Recommendation All employee benefits should be processed through payroll and taxed appropriately.

Progress made Fuel benefits are still not being processed through the payroll.
However, fuel is being prorated according to days one reports for duty.

174 NATIONAL BUILDING SOCIETY (NBS) 2020 Background information National Building Society (NBS) was incorporated in 2014 in terms of the Companies and Other Business Entities Act [Chapter 24.31].

The institution was registered as a Building Society in September 2015 and was authorized to commence operations on 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 with a material uncertainty on 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 Building Society as at December 31, 2020, 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 i. Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates”.

The functional currency of the Building Society changed in October 2018 from US$ to ZWL in line with International Accounting Standard (IAS) 21, Effects of Exchange Rates, as evidenced by the exchange control regulations which were enacted by the authorities then and the trading conditions which were already prevailing in the economy in the period 2016 to 2018.
The functional currency change was more evident in the fourth quarter of 2018 and should have been effected from that period.

However, the Building Society prospectively changed its functional currency from US$ to ZWL on February 22, 2019 in accordance with the requirements of Statutory Instrument 33 of 2019.
In line with this statutory instrument, some elements of the statement of financial position were translated at 1:1 and some at a rate of 1:2.5 to the United States dollar, which rates did not comply with paragraph 37 of IAS 21.

In addition, the delay by the Building Society in effecting the change in functional currency resulted in the material misstatement of comparative financial statements and opening balances for the year ended December 31, 2020.
The non-compliance affected valuation and accuracy of property and equipment balance of ZWL167 269 418, revaluation surplus of ZWL73 535 982, right of use asset of ZWL1 338 796, intangible assets of ZWL93 397 795, work in progress of ZWL300 260 680 and accumulated loss balance of ZWL61 207 281 as at January 1, 2020. ii.

Valuation of property and equipment The Building Society engaged an external valuer to value its property and equipment as at December 31, 2020 using the market approach.
The valuations were performed in US$ and were subjected to certain caveats as disclosed in the valuer’s report.

The Building Society 175 converted the US$ values to ZWL using the interbank exchange rate.

Given the caveats made by the valuer and the uncertainty over the appropriateness of the use of interbank exchange rate, I was unable to determine whether adjustments to the carrying amounts of property and equipment, and revaluation surplus were appropriate in these circumstances.
Report on Going Concern Material Uncertainty Related to Going Concern I draw your attention to the fact that the financial statements indicate a material variation between the Building Society’s capitalization levels as at December 31, 2020 (US$2.3 million) and the Reserve Bank of Zimbabwe’s minimum capital requirement of ZWL equivalent of US$20 million effective December 31, 2021.
This condition indicates the existence of a material uncertainty that may cast significant doubt about the Society’s ability to continue operating as a going concern.
Given the significant gap that existed at year end between the Building Society’s core capital and the new minimum capital requirements as communicated by the Central Bank, the Building Society has been engaging its shareholder, NSSA, with the view of obtaining the necessary assurances that it will be adequately capitalized by the regulatory deadline.

This is necessitated by the fact that the Society concluded that it cannot attain the new minimum capital threshold on its own.
The shareholder demonstrated its willingness to ensure the Society is adequately capitalized in line with the new minimum capital requirements through a letter of support, conditional upon certain assurances being attained and subject to Board approval.

Below are other material issues noted during the audit; 1.
GOVERNANCE ISSUES 1.1 Minimum capital requirements Finding The Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee Statement that was issued on January 22, 2020, revised the minimum capital requirements for Building Societies to ZWL equivalent of US$20 million effective December 31, 2020.

Based on the financial statements for the year ended December 31,2020, the Society’s capital level was at US$2.3 million converted at the closing interbank rate giving a variance of US$17.7 million.
Risk / Implication Going concern from possible non-compliance with the RBZ regulatory requirements.

Recommendation Management should establish plans that will ensure compliance with the minimum capital requirements by December, 31 2021.

176 Management response Based on the capitalization plan supplied by management, the Society will be capitalized through retained earnings and a capital injection from NSSA.

NSSA has issued a letter of support confirming its ability and willingness to capitalize NBS.
1.2 Board Committees Finding The Audit, Credit and Loans review committees were not properly constituted as they each had two members.

This was in contravention of good Corporate Governance.

Risk / Implication Decision making process may be compromised.

Recommendation The Board should elect an additional member for each committee to ensure compliance with statutory requirements and enable quality decision making.
Management response The Board, at a special board meeting that was held on 13 May 2021, approved reconstituted committees which addressed the composition of both the Board Audit, Board Loans Review and Board Credit Committees.

The Board Chairman is attending to these issues.

1.3 State of Newmara houses Finding My review of the valuation report of the Newmara housing units revealed that they were in a bad state.
The houses were constructed to a poor standard and did not meet the requirements of residential building stage inspection tests.

Risk / Implication Possible financial loss as the Building Society may fail to recover project funds.

Recommendation The Building Society should closely monitor the contractors to ensure quality houses are constructed.

Management response All contractors are selected in line with the Society`s policies and procedures and PRAZ regulations.
The Society will address the structural defects noted on Newmara Houses.

177 All key projects are reviewed and approved by the Board Housing Committee and the Main 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 Society made progress in respect of the following recommendation.
2.1 Service contracts Recommendation The Society should ensure that service level agreements are in place whenever suppliers are engaged.

Progress made 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.
178 PEOPLE’S OWN SAVINGS BANK (POSB) 2020 Background information The People’s Own Savings Bank (POSB) is a corporate body established in terms of section 3 of the People’s Own Savings Bank of Zimbabwe Act [Chapter 24:22] of 1999, to provide savings, banking and financial services in Zimbabwe.

The Bank accepts deposits that will accumulate interest for the benefit of the depositors and all deposits are Government guaranteed.
I have audited the financial statements of People’s Own Savings Bank for the year ended December 31, 2020 and I 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 accompanying inflation adjusted financial statements presents fairly in all material respects, the statement of financial position of the People’s Own Savings Bank as at December 31, 2020, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Currency Rates” The prior year financial statements did not comply with the requirements of IAS 21 “The Effects of Changes in Foreign Currency Rates”, as the Bank had been unable to use an appropriate exchange rate on change of functional currency.
The Bank 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 Bank used October 01, 2018 as the date of change in functional currency and translated its foreign denominated balances to ZWL using the February 22, 2019 interbank rate.
The Bank’s inability to assess the appropriateness of using the interbank rate in achieving fair presentation was primarily due to the need to comply with SI 33 and the fact that there were no official exchange rates between October 2018 and February 2019 due to lack of an observable foreign exchange market.

In that regard the Bank’s 2020 opening balances misstatements have an impact on the current year financial statements.

Below are other material issues noted during the audit; 1.
GOVERNANCE ISSUE 1.1 Performance Contract Finding I noted that there was no evidence of performance contracts for individual board members.

This was contrary to the requirements of the Public Entities Corporate Governance Act [Chapter 179 10:31], section 25 which requires the line Minister to enter into a written performance contract with each board member within two (2) months of appointment.

Risk / Implication Board effectiveness may be compromised in the absence of performance contracts.
Recommendation The appointing authority should ensure that Board members’ performance contracts are in place.

Management response This is an area where the Bank continues to be guided by approved Consultants on the precedents that have to be used in drafting such contracts.

This is also an area that is still being operationalized and the guidance that has been available so far relates to one Board Performance Contract.
We have taken note of the statutory requirement for the Minister to enter into Performance Contracts with each member of the POSB Board.

Management will take this as a gap to be regularized in 2021 and will engage the shareholder on the matter.

1.2 Board members’ tenure Finding The tenure of two (2) of the six (6) board members expired in 2019.

At the time of the audit, these members were still serving on the board of the Bank.
On enquiry with management, it was revealed that the Bank had since written to the parent Ministry notifying them of the expiry of the tenure of these two board members.

Two letters were received from the Minister extending the tenure of the board members.

The Minister advised the Bank that the Government was still in the process of identifying two board members with the requisite skills in human resources and accounting to replace the aforementioned.
The last letter was silent on the expiry of the extension and thus could not ascertain whether their tenure was still valid.

Risk / Implication Oversight role of the Board may be compromised.

Recommendation Management should continue to liaise with the responsible Minister to regularize the Board appointments.

Management response The shareholder is aware of the issue and Management has continued to raise the issue with the shareholder.
The shareholder position as communicated is that the two members will remain in office until the appointment of their replacements.

Up and until their replacements, our understanding is that their tenure remains valid.

180 SMALL AND MEDIUM ENTERPRISES DEVELOPMENT CORPORATION (SMEDCO) 2019 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.

I have audited the financial statements of Small and Medium Enterprises Development Corporation for the year ended December 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 section of my report, the accompanying financial statements do not present fairly the financial position of the Small and Medium Enterprises Development Corporation 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 Corporation 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 an appropriate 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 Corporation applied the legal exchange rate of 1:1 as pronounced through Statutory Instrument 33 of 2019.
Subsequent to February 22, 2019 the Corporation applied interbank exchange rates which came into existence, through Exchange Control Directive RU 28 of 2019 issued by the Reserve Bank of Zimbabwe (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 exchange rate and to achieve fair presentation of the financial statements.

As a result, the impact of the Corporation’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; 181 1.

GOVERNANCE ISSUES 1.1.


Withholding tax on board fees Finding The Corporation paid sitting allowances to its board members.

However, there was no evidence to support that withholding tax was remitted for these taxable amounts.

This was contrary to the requirements of the Income Tax Act [Chapter 23:06].

Risk / Implication Financial loss due to penalties and fines that may be levied.

Recommendation The Corporation should ensure that all withholding taxes are remitted.
Management response Observation noted.

The Corporation will effect the 20% withholding tax on sitting allowances as well from the second quarter of 2021.

1.2.

Mkoba Artisan Hives Finding The Corporation did not have an asset maintenance plan for its properties.

As a result, the Gweru Mkoba Artisan Hives’s condition was deteriorating to the extent that the floors were peeling off, doors and gutters broken.
Upon enquiry, management indicated financial constraints and plans were underway to ring-fence rentals.

I appreciate that the Corporation was availing business spaces to small and medium enterprises but my concern was these tenants were resorting to funding the repairs to the building from their own resources.

Risk / Implication Service delivery may be compromised.

Financial loss as the property may require more financial resources to refurbish when it is not being regularly maintained.
Recommendation The Corporation should come up with an asset maintenance plan to ensure regular repairs and maintenance of its assets.

182 Management response Observation noted.

The rentals collected from the artisan hives tenants will be ring- fenced by the Corporation and re-appropriated to the refurbishment and maintenance of the roof.

1.3.

Tax on accommodation benefit Finding The Corporation was charging accommodation rentals to its employees.
I however, noted that the tax benefit was not being charged as the rates were lower than the market rates.

In terms of Income Tax Act [Chapter 23:06] section 8(f), a taxable benefit arises where the rate charged is lower than the market rates and the tax should be deducted and remitted to ZIMRA.

The Corporation therefore did not comply with the provisions of this Act.

Risk / Implication Financial loss due to penalties and interest for non-compliance to the Income Tax Act [Chapter 23:06].
Recommendation Management should ensure that tax on all taxable benefits is charged and remitted to ZIMRA.

Management response Observation noted.

The issue will be rectified by reviewing rentals and ensuring the benefit is taxed according to the Law.

The matter is being worked on so as to benchmark with other government departments.
183 ZIMBABWE WOMEN’S MICROFINANCE BANK LIMITED 2020 Background information Zimbabwe Women’s Microfinance Bank Limited is a corporate body established 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.

I have audited the financial statements of Zimbabwe Women’s Microfinance Bank for the year ended December 31, 2020 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 the financial position of the Zimbabwe Women’s Microfinance Bank Limited as at December 31, 2020 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 prior year financial statements did not comply with the requirements of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, as the Bank had been unable to use an appropriate exchange rate on change of functional currency.
The Bank 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 Bank translated its foreign denominated balances to ZWL at a rate of US$1: ZW$1 per Statutory Instrument 33 of 2019 which prescribed that all assets and liabilities that were denominated in United States Dollars (US$) before February 22, 2019 be deemed to be ZW$ dollars at a rate of US$1: ZW$1 and all transactions subsequent to February 22, 2019 at interbank rate.
The Bank’s inability to assess the appropriateness of using the interbank rate in achieving fair presentation was primarily due to the need to comply with SI 33 of 2019 and the fact that there were no official exchange rates between October 2018 and February 2019 due to lack of an observable foreign exchange market.

In that regard, the Bank’s opening balances misstatements have an impact on the current year financial statements.
Had the 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 Bank’s inability to comply with IAS 21 has been determined as significant.

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.

Below are other material issues noted during the audit.

184 1.
184 1.

GOVERNANCE ISSUES 1.1 Capitalisation of the Bank Finding I noted that the Bank was operating below the minimum capital requirement in terms of Regulations from the Reserve Bank of Zimbabwe (RBZ).

RBZ regulations empowered by the Microfinance Act [Chapter 24:29] require that, every Deposit Taking Micro-Finance Institution shall have and maintain on an ongoing basis, a minimum paid-up share capital of ZWL$ equivalent to US$5 000 000 or as may be prescribed effective December 31, 2020.
The Bank had a total of ZWL111 436 359 (US$1 326 623) as at December 31, 2020, as total paid up share capital which was just 26.53% of the required minimum share capital.

Risk / Implication Inadequate funding may negatively affect the operations of the Bank.

Loss of investor confidence.

Failure to raise the minimum capital requirements may lead to cancellation of the operating license of the bank by the regulator.
Recommendation The Bank should continue to engage the shareholder for additional funding to meet the prescribed minimum capital requirements.

Management response The Shareholder, the Board and Management are ceased with the issue of ensuring that ZWMB meets the regulatory capital that is equivalent to US$5 million by the 31st of December 2021.

The Shareholder injected ZWL250 million in March 2021 and is poised to inject an additional ZWL200 million towards meeting the set targets.
Management, led by the Board, has put in place two key strategies that are expected to augment the capital injection drive by the Shareholders.

The first strategy entails engaging developmental partners to collaborate with ZWMB on matters of mutual interest thereby providing direct or indirect financial support to ZWMB.

The second strategy entails preserving the Balance Sheet through provision of indexed financial products that can withstand the economic volatilities.

2.
2.

REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1 Castor bean loans Finding The Bank in 2018 entered into an agreement with Life Brand Agric Services (The Value Chain Partner) to offer funding aimed at empowering farmers interested in growing Castor Beans for 185 export.

The funding was used to pay Value Chain Partner who was also the supplier of all the castor bean inputs.
All the significant activities leading to the harvest of the crop and the off taking of the crop were part of the partner’s responsibilities with the Bank only monitoring the projects.

The loan amounts were set to be recovered after the first harvest of the funded crop.
However, the majority of the loans remained unserviced at year end as illustrated below; Period of loan Dec 2018-Nov 2019 July 2019-April 2020 Jan 2020- Oct 2020 Feb 2020- Nov 2020 Mar 2020-Dec 2020 Number of loans paid off 48 48 107 183 123 Value disbursed Outstanding amount as at 31/12/2020 ZWL ZWL 48 000 90 000 158 438 174 375 466 875 46 260 90 000 158 438 174 375 466 875 Upon inquiry, it was indicated that the crop was new in the market and farmers had limited experience in growing it and that farmers had logistics problems in transporting the crop to Harare and some were still holding on to the produce.
This is indicative of the fact that the Bank did not obtain sufficient evidence on the abilities of The Value Chain Partner before venturing into arrangement as evidenced by value chain partner not performing their end of the contract i.e.

to train the farmers and to assure a market for the harvested produce.

Risk / Implication Financial loss due to late repayment of loans.

Reputational risk with the farmers who worked hard on the crop but are not realizing the promised value.
Recommendation The Bank should improve its selection criteria for value chain partners.

The Bank should closely monitor projects to ensure the partners play their part of the contract.

Management response There is still room to recover the Caster bean debts.

The crop was new in the market and farmers had limited experience in growing it.

The impression was that it did not require a lot of attention and limited water which turned out to be incorrect.
For farmers who have looked after the crop they have managed to harvest.

The yield gradually increases with time.

Farmers had logistics problems in transporting the crop to Harare some are still holding on to the produce.

Most farmers who have delivered their crop have been paid and the bank is in the process of following up on the loans.

The value chain has a lot of potential and pays very well.
There is need for monitoring at all stages since it is a new crop with most farmers and practice good farming standards like with all other crops.

186 3.

PROGRESS IN IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS I reviewed the progress made towards the implementation of prior year recommendations and found that the Bank made some progress and there was room for improvement in respect of the following recommendation.
3.1 Value chain loans Recommendation The Bank should consider automating the recording and processing of value chain loans.

Progress made Implementation is in progress.


187 PUBLIC ENTITIES UNDER THE CATEGORY OF FUNDS 188 AGRICULTURAL MARKETING AUTHORITY (AMA) FUND 2020 Background information The Agricultural Marketing Authority (AMA) is a statutory body established in terms of an act of Parliament, Agricultural Marketing Authority Act [Chapter 18:24] with a broad mandate to regulate the participation in production, buying and processing of agricultural products in Zimbabwe.
I have audited the financial statements of Agricultural Marketing Fund, for the year ended December 31, 2020 and I issued a qualified opinion.
Basis for Qualified Opinion Impact of non-compliance with International Accounting Standard (IAS) 21 “The effects of changes in foreign exchange rates” on opening balances The prior year financial statements did not comply with the requirements of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, as the Fund was unable to use an appropriate exchange rate on change of functional currency to translate the opening USD denominated balances and transactions from January 1 to February 22, 2019.
The balances and transactions were translated 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 Fund used October 1, 2018 as the date of change in functional currency and translated its foreign denominated balances to ZWL at a rate of 1:1 which was prescribed by Statutory Instrument 33 of 2019 which required that all assets and liabilities that were denominated in US$ before 22 February 2019 be deemed to be RTGS dollars at a rate of 1:1 and all transactions subsequent to February 22, 2019 be translated at the prevailing interbank rate.
The Fund’s inability to assess the appropriateness of using the prescribed rates in achieving fair presentation was primarily due to the need to comply with SI 33 and the fact that there were no official exchange rates between October 2018 and February 2019 due to lack of an observable foreign exchange market.

In that regard the Fund’s 2020 opening balances misstatements have an impact on the current year financial statements.

Below are material issues noted during the audit; 1.
GOVERNANCE ISSUES 1.1 Bank reconciliations Finding The Fund was operating without a procedures manual.

As a result, it was taking an average of three (3) to six (6) months to prepare bank reconciliations, contrary to best practice.

Risk / Implication Material errors may go undetected.

Financial loss due to inconsistences in processing of transactions.

189 Recommendation The Fund should ensure policies and procedures are in place.
The Fund should ensure bank reconciliations are performed and reviewed timeously.

Management response A draft manual is available for approval by the Audit and Risk committee.

Bank reconciliations will be performed and reviewed timeously.

2.
2.

REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1 Merchants monthly returns Finding The Fund’s monitoring of farming activities includes the use of monthly returns which it uses for planning, advisory services, technical consultancy and other regulatory activities.

However, I noted that monitoring was compromised by lack of monthly returns collection as merchants were not filing the returns.
This was contrary to the provisions of the Agricultural Marketing Authority Act [Chapter 18:24] and related statutory instruments.

Risk / Implication Service delivery may be compromised by lack of adequate information which is ordinarily obtained from the returns.

Recommendation The Fund should educate and encourage all merchants to submit monthly returns in order to have sufficient information that feeds into the decision planning process.
Management response Merchants are continuously engaged to ensure compliance.

Moving forward the Authority is establishing a compliance department.

190 PUBLIC ENTITIES UNDER THE CATEGORY OF HOSPITALS 191 MPILO CENTRAL HOSPITAL 2019 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 year ended December 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, in all material respects the financial position of Mpilo Central Hospital 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 i. Valuation of Property and Equipment The Hospital carries its property and equipment on a revaluation model.

Furthermore, the Hospital's property and equipment was last revalued on February 9, 2017, whilst motor vehicles were last revalued on April 1, 2016.
According to IAS 16, revaluations shall be made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period.
Given the currency reforms that took place in 2019, as well as the hyperinflationary economic environment, it is likely that the property and equipment carrying value amounting to ZWL203 053 458 at year end was materially and fundamentally different from that which could have been determined through a revaluation exercise.

I was unable to quantify the carrying value of property and equipment through alternative audit procedures ii.
Expected credit loss allowances The Hospital adopted IFRS 9: Financial Instruments effective July 1, 2018.

The Hospital elected to apply the simplified approach and used the provision matrix in determining the expected credit loss allowances as at year end which amounted to ZWL31 574 522.

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 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 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 192 impracticable for me to quantify the financial effects on the financial statements of this non- compliance with IFRS 9. iii.
Non-compliance with International Accounting Standard (IAS) 21 “The Effects of changes in Foreign Exchange Rates” On October 1, 2018, the Reserve Bank of Zimbabwe issued a Monetary Policy Statement (MPS) that directed a separation of the Foreign Currency Bank Accounts (FCAs) into two categories, that is, Nostro FCAs and the Real Time Gross Settlement (RTGS FCA).
The Nostro FCAs were to hold Individual foreign currency balances permissible in Zimbabwe's multi-currency economy at the time The RTGS FCAs, mobile money.

and bond notes and corns (which later on became the RTGS Dollar/Z1mbabwe Dollar) were to be held at the same value as the United States Dollar (US$).

During the prior year and for the period January 1, 2019 to February 22, 2019 the Hospital transacted using a combination of Nostro FCAs and RTGS Dollar.
However, in terms of IAS 21: The Effects of Changes in Exchange Rates, these methods of payment would have been regarded as separate currencies to be translated for financial reporting purposes at appropriate exchange rates.

In order to comply with Statutory Instrument 33 of 2019 (SI 33/2019) issued on February 22, 2019, the Hospital changed its functional currency to the RTGS Dollar ("RTGS Dollar") with effect from February 23, 2019.
SI 33/2019 precluded the use of any other currency other than US$ as the functional currency prior to February 22, 2019.

Based on their Interpretation of IAS 21, The Board acknowledged that there was a functional currency change in the prior year from the US$ to RTGS Dollar, with effect from October 1, 2018, and that the market exchange rate between the US$ and RTGS Dollar was not at after October 1, 2018.
However, the Hospital only accounted for the change in functional currency prospectively from February 23, 2019, in compliance with SI 33/20) 9, with transactions for the prior year through to February 22, 2019 being account on a 1:1 party basis with the US$.

This constitutes a pervasive and fundamental departure from the requirements of IAS 21 due to the need to comply with local regulations as provided for under SI 33/2019 .
The Hospital has not restated the opening balances and comparative amounts as at December 31, 2018, as required by IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8), to resolve the matters which resulted in non-compliance with IAS 21 and therefore the non-compliance continued in the current year financial statements.

An adverse audit opinion was issued on the prior year financial statements due to this non- compliance with IAS 21.
Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1 Board of Management Finding The Hospital was operating without a Board from March 2019 to December 2020 following the expiry of the previous Board Members’ term of office in March 2019.

Section 6 of the Second Schedule of the Health Services Act [Chapter 15:16] provides that any Board vacancies should be 193 filled within three months.

Risk / Implication There may be no oversight over the operations of the hospital.
Compromised service delivery at the Hospital.

Recommendation Management should timeously engage the responsible authorities and ensure that the Board is appointed within three months from the date when the sitting Board’s term expires.

Management response Recommendation is noted, the Health Services Board (“HSB”) is working on setting up a full complement of the Board of Management by 2022.
1.2 Shortage of manpower Finding In terms of Section 20 of the Health Services Act, the Board should hire staff in order to provide for the care and treatment of patients.

However, during the audit I noted that the Hospital had a shortage of manpower, particularly specialists such as Radiologists, Dermatologists and the Ear, Nose and Throat Specialists.

Risk / Implication Compromised service delivery.


Recommendation Management should ensure that open vacancies are filled in as soon as possible to ensure effective service delivery for the Hospital.

Management response The staff shortages have been communicated to HSB and they advised us that Specialists’ shortage is a national issue.

1.3 Non-compliance with IFRS 9 “Financial Instruments” Finding The Hospital adopted IFRS 9: Financial Instruments effective July 1, 2018.
The Hospital elected to apply the simplified approach and used the provision matrix in determining the expected credit loss allowances as at year end which amounted to ZWL31 574 522.

194 In terms of IFRS 9, expected credit losses should be computed on the gross carrying amount based on historical loss ratios which incorporate forward looking information.
However, during the audit l noted that the Hospital did not comply with the requirements of IFRS 9: Financial Instruments when determining the expected credit losses.

The Hospital did not apply different loss rates for accounts receivables 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 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.
This was caused by limitations of the manual accounting system in use which could not ensure the segregation, ageing and profiling of accounts receivables.

Risk / Implication Misstatement of financial statements.

Recommendation Management should address the limitations in the manual accounting system to enable them to compute accurate, reliable and supportable expected credit losses in line with IFRS 9.
Management response Recommendation was noted, management is to re-implement Pastel evolution when finances are available.

1.4 Non-compliance with IAS 16 “Property, plant and equipment” Finding In terms of IAS 16 “Property, plant and equipment”, when an entity carries its assets on a revaluation basis, revaluations shall be made with sufficient regularity to ensure that the carrying values do not differ materially from those which would be determined using fair value at the end of the reporting period.
However, during the audit I noted that the Hospital did not comply with the requirements of IAS 16 as the assets were last revalued over four years ago.

Risk / Implication Misstatement of financial statements.

Recommendation Management should ensure that fixed assets are revalued through the Department of Public Works on a regular basis in line with guidance from IAS 16, depending on changes in the economic environment.
195 Management response Recommendations were noted, management is to engage the Department of Public Works so that all the assets are revalued.

2.

PROGRESS IN IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS I reviewed the progress made towards the implementation of prior year recommendations and found that the Hospital made progress in respect of the following recommendation.
2.1 Practicing certificates Recommendation Management should formulate a monitoring mechanism and ensure that all practitioners at the Hospital have practicing certificates at all times.

Progress made Recommendations were noted, management has strengthened the monitoring of practicing certificates of the practitioners.
196 PUBLIC ENTITIES UNDER THE CATEGORY OF UNIVERSITIES AND TERTIARY INSTITUTIONS 197 CHINHOYI UNIVERSITY OF TECHNOLOGY (CUT) 2020 Background information The University was established by an Act of Parliament, The Chinhoyi University of Technology Act (Chapter 25:23), on 10 August 2001.

The University’s operations are overseen by the Ministry of Higher and Tertiary Education, Science and Technology Development.
The University’s principal activities include the advancement of knowledge, the development and practice of design and technology, the teaching and application of sciences, art and design, the creation of opportunities for income generation through consultancy work, training and other similar activities, with the ultimate aim of making the University a self- sustaining entity, the preservation, dissemination and enhancement of knowledge that is relevant for the development of the people of Zimbabwe through teaching and research and, so far as is consistent with those objectives, the nurturing of the intellectual, aesthetic, social and moral growth of the students at the University.
I have audited the financial statements of Chinhoyi University of Technology for the year ended December 31, 2019 and I issued an adverse opinion.
Adverse opinion In my opinion, because of the significance of the matters discussed under the Basis for adverse opinion section of my report, the consolidated financial statements have not been 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 University as at December 31, 2020, and its financial performance and its cash flows, for the year then ended.
Basis for adverse opinion Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” The University complied with Statutory Instrument 33 of 2019 (SI 33/19) issued by the Government of Zimbabwe and consequently did not comply with IAS 21 in the preparation and presentation of the prior period financial statements.
Through SI 33/19, the Government prescribed an exchange rate of 1:1 between the United States dollars and the newly introduced RTGS dollars effective from February 22, 2019 for accounting and other purposes.

Had the University performed the assessment required by IAS 21 in the prior period, the adjustments that were recognized in the comparative period’s financial statements would have been materially different.

Therefore, the departure from the requirements of IAS 21 were pervasive in the prior period.
The misstatements in the historical comparative information consequently impacted the determination of the inflation adjusted amounts as is required in the application of IAS 29 in prior years.

The financial effects on the inflation adjusted financial statements of this departure were not determined.

In addition, the effects of the matter on the restatement of prior period as well as current period equity balances cannot be readily determined.
As such, the current period’s financial statements may not be readily comparable with those of prior years.

198 The University also transacted in foreign currencies and had significant foreign currency denominated bank and cash balances (US$269 704) and accounts receivable (US$68 655) as at year end.
The foreign currency denominated transactions and account balances were translated to the Zimbabwean dollar (“ZWL”) using the Reserve Bank of Zimbabwe auction exchange rate prevailing on the date of the respective transactions and at year end, respectively.

IAS 21 requires such account balances to be translated using the exchange rate ruling effective as at year end (i.e., the closing exchange rate).
I was unable to obtain sufficient appropriate evidence to support the appropriateness of the application of the ZWL/US$ RBZ auction exchange rate as the closing exchange rate in accordance with IAS 21.

The effects of this matter on the financial statements cannot be readily determined.

Below are other material issues noted during my audit 1.

GOVERNANCE ISSUES 1.1 Kariba Lodge Finding The University lodge in Kariba was operating without a licence from the Zimbabwe Tourism Authority (ZTA) during the year.
In addition, the lodge did not have an operating licence from the Kariba Municipality.

Risk/Implication Financial loss due to fines and penalties that may be levied by the authorities.

Recommendation Management should ensure that Kariba CUT lodge is licenced by the local authority and Zimbabwe Tourism Authority.

Management response This is still work in progress.

The building plans that are required by Kariba Municipality before they may give the Lodge a licence are being drawn up.
The artisan for the project is now registered on the list of Kariba Municipality Artisans and will spearhead the application for the change of use.

The municipal operating licence is required by the ZTA as a prerequisite to processing the ZTA licence.

1.2 Cutec Microfinance Finding Cutec Microfinance (Private) Limited, a subsidiary of the University, was not complying with some key provisions of the Microfinance Act [Chapter 24:29].
The Company had not been submitting audited financial statements to the Registrar of Micro financiers as required by Sections 23 (2) and 42(2) of the Act.

199 The Company was also, operating without a valid registration certificate contravening Section 10 (2) of the Act.

The last registration certificate expired in October 2020.

Furthermore, the Company was not in compliance with the stipulated minimum capital requirement of US$25 000 as at December 31, 2020.
This was in contravention with Section 33 of the Act.

Risk/Implication The Company may face censure from RBZ which may result in the withdrawal of the registration licence.

Recommendation Management should ensure that the Company complies with the requirements of the Act.

Management response The observation is noted and the Board will sit and look at the anomalies with a view to comply with all the statutory provisions.
200 HARARE INSTITUTE OF TECHNOLOGY 2019 Background Information Harare Institute of Technology (HIT) was established in terms of the Harare Institute of Technology Act [Chapter 25:26) in December 2005.

The objectives of Harare Institute of Technology are the advancement of knowledge and technology through the preservation, dissemination and enhancement of academic and practical knowledge as well as skills relevant to the development of the people of Zimbabwe.
I have audited the financial statements of Harare Institute of Technology for the year ended December 31, 2019 and issued an Adverse Opinion.
Adverse Opinion In my opinion, because of the significance of matters discussed in the basis for adverse opinion below, the inflation adjusted financial statements as at December 31, 2019 do not fairly present the inflation adjusted financial position of the Institute, its inflation adjusted financial performance and related cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Adverse Opinion i. Non-compliance with International Accounting Standard (IAS) 21 “The effects of changes in foreign exchange rates” and International Accounting Standards (IAS) 8 “Accounting policies, changes in accounting estimates and errors” In order to comply with regulatory and the country’s laws the Institute changed its functional and reporting currency from United States Dollars to Zimbabwe Dollars (sometimes referred as RTGS) as from 22 February 2019.
This was in order to comply with government issued directive through Statutory Instrument 33 of 2019 (SI 33).

The result of complying with SI 33 meant that all prior year balances had to be converted to Zimbabwe dollars from United States Dollars at the prescribed rate of one US$ is equal to one ZWL and your Boards agreed that this was at variance with reality on the ground.

This meant the prior year (2018) Financial statements were accordingly qualified on this basis.
The prior year Financial statements were converted at this 1 to 1 exchange rate as opening balances to current financial year, thus having incorrect opening balance which had a material effect into current year inflation adjusted financial statements.

We were not able to perform any other procedures to establish the actual effect coming from these opening balances into the inflation adjusted current financial statements ii.
Hyperinflation reporting in accordance with IAS 29 In accordance with International Accounting Standard (IAS 29), Zimbabwe was classified as one of the countries experiencing hyperinflation from July 22, 2019 and as a result IAS 29 had to be applied for current year and prior year.

This meant the incorrect opening balances were then used to inflate not only the comparatives but also balances coming into current year.
I was also not able to establish the amounts affecting the inflation adjusted financial statements as a result of using incorrect opening balances.

201 Below are other material issues noted during the audit; 1.
GOVERNANCE ISSUES 1.1 Related party transactions Finding The Institute had a Memorandum of Understanding (MOU), between Matsimba Technologies (Private) Limited (MT) and Harare Institute of technology (HIT) in which Matsimba Technologies (Private) Limited was to develop and manage the ZUPCO tap card system.

However, I noted that Matsimba was directed mainly by a member of the ZUPCO management committee who was a Director of the Technology Transfer and Licensing Centre (TTLC).
The MOU stipulated that HIT and Matsimba were to share 50/50 of profit until all the start-up expenses were covered.

During the audit I noted that on October 6, 2019 a request was made to HIT from the Director of the TTLC, to pay Matsimba their share of profit.

On November 7, 2019 a payment voucher was raised with an amount of $115 591.

I could not establish how the $115 591 paid to Matsimba was calculated in terms of profit sharing.
Upon inquiry, there was indication that it was paid from revenue, a practice that deviates from the concept of profit sharing.

Risk / Implication Financial loss due to conflict of interest arising from related party transactions that are not at arm’s length.

Recommendation Management is advised to share the profit according to the stipulated guidelines in the MOU.

Management should ensure that transactions with related parties are at arm’s length.
Management response The observation is noted, however the amount paid to Matsimba was an advance payment to cover part of their operational costs.

Management would obtain the actual expenses as at that date for all projects and recover all the costs.

2.

REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY 2.1ZUPCO revenue Finding The Institute had an arrangement with ZUPCO for the operation of the tap card system.

However, the Institute and the Company had no invoicing modalities.
As a result, invoicing of ZUPCO was not being done at the end of each month as it should have been done.

In addition, the service level agreement was not clear and specific enough on the source of invoicing of ZUPCO.

I was therefore unable to trace and ensure that all revenue was invoiced.

202 Risk / Implication Financial loss as revenue may not be fully accounted for.

Recommendation The Institute should consider improving its service level agreement with ZUPCO.
Management response The observation is noted.

Harare Institute of Technology management need to meet ZUPCO management to discuss the invoicing modalities, which allows Harare Institute of Technology to get raw data from ZUPCO every month for invoicing.
203 MARONDERA UNIVERSITY OF AGRICULTURAL SCIENCES AND TECHNOLOGY 2017 AND 2018 Background information Marondera University of Agricultural Sciences and Technology was established through an Act of Parliament, the Marondera University of Agricultural Sciences and Technology [Chapter 25:29] with a vision to be the leading global University of excellence in the provision of technology driven sustainable green agricultural solutions.
I have audited the financial statements of Marondera University of Agricultural Sciences and Technology for the years ended December 31, 2017 and 2018 and I have issued an unqualified opinion for 2017 and an adverse opinion for 2018.
Unqualified Opinion 2017 In my opinion, the financial statements present fairly, in all material respects, the financial position of Marondera University of Agricultural Sciences and Technology as at December 31, 2017 and the results of its operations and its cash flows for the period then ended in accordance of International Financial Reporting Standards (IFRSs) Report on going concern 2017 The financial statements of the University have been prepared using the going concern basis of accounting.
The use of this basis of accounting is appropriate unless Parliament either intends to repeal the University Act, dissolve the University or to cease operations, or has no realistic alternative but to do so.

As part of my audit of the financial statements, I have concluded that management’s use of the going concern basis of accounting in the preparation of the University's financial statements is appropriate.
Management has not identified a material uncertainty that may cast significant doubt on its ability to continue as a going concern, and accordingly none is disclosed in the financial statements of the University.

Based on my audit of the financial statements of the University, I also have not identified such a material uncertainty.

However, neither management nor the auditor can guarantee the University’s ability to continue as a going concern.
Adverse Opinion 2018 In my opinion, because of the significance of the matter described in the Basis for Adverse Opinion paragraph, the financial statements do not present fairly, in all material respects, the financial position of Marondera University of Agricultural Sciences and Technology 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 Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” The University has not applied the requirements of IAS 21, Effects of Changes in Foreign Exchange Rates in the financial statements for the year ended December 31, 2018 because of the unavailability of exchange rates as at that date.
Transactions in Zimbabwe during the year had a three (3) tier pricing structure where a single product had different prices depending on the mode of payment, namely the United States Dollar Cash, Bond Notes, Electronic Money or 204 Mobile Money.

This resulted in transactions bearing similarities to what one would expect with transactions that are undertaken in different currencies to which IAS21, The Effects of Changes in Foreign Exchange Rates would apply.
Statutory Instrument 133 of 2016, Statutory Instrument 33 of 2019 and Monetary Policy statements of February 22, 2018, October 1, 2018 and February 20, 2019 all confirmed the parity of 1:1 between the United States Dollar Cash, Bond Notes, Mobile Money and Electronic Money.

This presented difficulties in ascertaining the fair value of the University's material assets and liabilities as the reporting date.
IAS21, "The Effect of Changes in Foreign Exchange Rates", requires the use of spot rate in accounting for transactions.

During the year, premiums and discounts were offered on the official exchange rate of 1:1 between the RTGS balances, Bond Notes and United States Dollar Cash.

Under International Financial Reporting Standards, the University should have converted all transactions at spot rate.

The effects on the financial statements have not been determined.
Below are is another material issue noted during the audit; 1.

GOVERNANCE ISSUE 1.1 Scholarships Finding The University provided scholarships to some students without approval from the parent Ministry and the University Council amounting to US$37 200.

Risk / Implication Financial loss due to abuse of the scholarship facility.
Recommendation The University management should ensure that all scholarships are appropriately approved by the Ministry of Higher and Tertiary Education, Innovation, Science and Technology Development and the University Council.

Management response Noted.

The University management will ensure that all scholarships are appropriately approved by the Ministry of Higher and Tertiary Education, Innovation, Science and Technology Development and the University Council.
205 MIDLANDS STATE UNIVERSITY 2020 Background Information The University’s principal activities include the advancement of knowledge, the diffusion and extension of arts, science and learning, the preservation, dissemination and enhancement of knowledge that is relevant for the development of the people of Zimbabwe through teaching and research and, so far as is consistent with those objectives, the nurturing of the intellectual, aesthetic, social and moral growth of the students at the University.
I have audited the financial statements of Midlands State University for the year ended December 31, 2020 and I issued an adverse opinion.

Adverse Opinion .
Adverse Opinion .

In my opinion, because of the significance of matters described in the Basis for Adverse Opinion section of my report, the financial statements do not present fairly, in all material respects, the inflation adjusted financial position of Midlands State University as at December 31, 2020, 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 i. Non-compliance with International Accounting Standard (IAS) 21 “The Effects of Changes in Foreign Exchange Rates” 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.
During the prior financial year up to February 22, 2019, the University transacted using a combination of Nostro FCA (USD) and RTGS FCA (electronic payment), including mobile money, bond notes and coins.

In order to comply with SI 33/2019, the RTGS transactions and balances for the prior year were accounted for on the basis of a rate of 1:1 between USD and RTGS.

The University changed the functional currency on February 22, 2019 in compliance with legislation.
This was not consistent with IAS 21, in which compliance would have resulted in the reassessment of the functional as at a date earlier than February 22, 2019.

In addition, during the period February 22, 2019 to December 31, 2020, the foreign currency denominated transactions and balances were translated into ZWL using the official interbank exchange rate which is not considered an appropriate spot rate for translations as required by IAS 21.
The opinion on the prior year financial statements was modified in respect of this matter and the misstatements have not been corrected in the financial statements for the year ended December 31, 2020.

Had the University applied the requirements of IAS 21, many of the elements of the financial statements would have been materially impacted and therefore the departure from the requirements of these standards is considered to be material and pervasive to the financial statements, taken as a whole.
The financial effects on the financial statements of this departure have not been determined.

206 ii.

Non-compliance with International Accounting Standard (IAS) 29 “Financial Reporting in Hyperinflation Economies” The Directors have applied the IAS 29 - Financial Reporting in Hyperinflation Economies with effect from January 1, 2019 to December 31, 2020.

However, its application was based on prior and current year’s financial information which was not in compliance with IAS 21as described above.
Had the correct base numbers been used, most elements of the financial statements would have been materially different.

The impact of the departure from the requirements of these standards is considered material and pervasive to the financial statements.

iii.
iii.

Fair value determination for assets, transactions and liabilities The determination of fair value for assets, transactions and liabilities presented in the annual financial statements is affected by the prevailing economic environment and may therefore be distorted.

This may result in significant variations in fair value, depending on factors and assumptions used in the determination of the fair values.

iv.
iv.

Transfer of operations from Sodew Investments to Midlands State University Sodew Investments (Private) Limited, the former subsidiary operations (including all assets and liabilities), were transferred to the parent Midlands State University with effect from April 1, 2020.

The process of verifying take-on balances from the subsidiary had not been completed and Sodew accounting records were not updated on the cut-off date except for non–current assets which were valued by an external valuer.
Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1 Motor vehicles Finding The University acquired four (4) used vehicles from various suppliers between March and June 2020.

These vehicles were not yet registered in the name of the University a year after purchase.

This was in contravention with the Vehicle Registration and Licensing Act [Chapter 13:14] that requires new vehicle owners to apply for a change of ownership within fourteen (14) days.
The table below shows details of these vehicles; Description Toyota Ace Toyota Allion Toyota D4D Single Cab Toyota D4D Single Cab Risk / Implication Financial loss in case of disputes.

Date of acquisition 31/03/2020 03/06/2020 03/06/2020 03/06/2020 207 Recommendation The University should expedite the process of changing ownership of vehicles registered in the names of third parties.

Management response The change of ownership of vehicles will be finalised by 2021.
208 NATIONAL UNIVERSITY OF SCIENCE AND TECHNOLOGY (NUST) 2019 Background information National University of Science and Technology (NUST) is a higher education institution governed by the National University of Science and Technology Act [Chapter 25:13].

The university’s mandate is to provide higher learning in science, technology, innovation, entrepreneurship and business development and spearheading industrialisation locally and beyond.
I have audited the financial statements of National University of Science and Technology for the year ended December 31, 2019 and I issued a disclaimer of opinion.

Basis for Disclaimer of Opinion i.

Contingent liabilities arising from claims on construction contracts Management requested the University's old contractors to submit final claims for construction works done up to the end of 2013 on the University's Library and Service Centre.
An amount of ZWL2 163 872 was accrued in the current year financial statements in respect of some of the claims which had been submitted to date.

However, I noted that a significant number of the contractors had not submitted any claims by the date of the audit report and management did not know whether or not they would indeed submit any claims.

As such, management was not able to estimate the potential liabilities that the University may face as a result of the contractors submitting their claims.

ii.
ii.

Recognition, valuation and classification of E-books The University has a collection of electronic books and Journals ("E-books") which were valued and recognised as part of plant and equipment in the financial statements.

This accounting treatment was not in accordance with IFRS as E-books should have been recognized in accordance with IAS 38 Intangible Assets.
In any case, management could not provide information on the licensing arrangements nor the basis for the valuation of the E-books which were used on recognising the E-books as assets m the University's financial statements.

iii.

Valuation of Library books The University revalued its entire collection of Library books as at December 31, 2019.
I was not satisfied with the methods, assumptions and inputs that were used by management in arriving at the revalued amount of ZWL31 957 320 as at December 31, 2019. iv.
Contact leave liability Contact leave obligations amounting to US$9 885 728 as at December 31, 2018 as well as an accrual amounting to UD$221 615 in respect of the period up to February 22, 2019, were converted from US$ to ZWL at a rate of basis when accruing for the contact leave liability with management considering the currency to be the US dollar whilst all other forms of remuneration are being accrued for and paid in Zimbabwean Dollars.
209 In addition, IAS 21 requires that exchange gains and losses arising from the restatement of foreign denominated liabilities such as contact leave should be disclosed separately on the statement of profit or loss.

However, my audit indicated that the effects of exchange losses on contact leave have not been separately disclosed and have been included as part of the contract leave expense on the statement of profit or loss.
The effects of this non-compliance with SI 33/2019 as well as International Financial Reporting Standards are likely to be material on the financial statements as at December 31, 2019. v. Contingent liabilities arising from non-compliance with statutory requirements The University may face significant penalties and interest charges from statutory authorities for failure to submit returns for some PAYE and Standard Development Levies (SDL) amounting ZWL6 246 563 as well as, failure to remit statutory dues in respect of submitted returns amounting to ZWL4 647 169 in accordance with statutory requirements.
A provision of ZWLI 163 793 in respect of the potential penalties and interest charges has been made in these financial statements.

vi.

Expected credit loss allowance The University applied the simplified approach and used a provision matrix in determining the expected credit loss allowances at year end.
In line with International Financial Reporting Standard 9: Financial Instruments (IFRS 9) However, the University did not use relevant, reasonable and supportable forward looking Information in establishing loss rates in accordance with IFRS 9.

In addition, the University did not appropriately age its accounts receivables and as a result I could not rely on the different loss rates used for accounts receivables in different cycles or buckets of default based on historical payments profiles.
Management did not make use of probability weighted expected credit losses on the different scenarios and it also did not appropriately segment the accounts receivables according to the differing credit risk profiles.

Furthermore, the University did not define defaults consistently with the definition used for internal credit risk management purposes, and it also did not appropriately define curing rules for the staging of the accounts receivables.
It was impracticable to quantify the financial effects of these instances of non-compliance with IFRS 9 on the financial statements.

Material uncertainty related to going concern I draw attention to the fact that the University’s current liabilities exceeded its current assets by ZWL51 314 555 (2018: ZWL171 797 609) as at December 31, 2019.

These factors indicate a material uncertainty that may cast significant doubt on the University’s ability to continue as a going concern.
Below are other material issues noted during the audit; 210 1.

GOVERNANCE ISSUES 1.1.


Contact leave Finding Contact leave obligations amounting to US$9 885 728 as at December 31, 2018 as well as an accrual amounting to US$221 615 in respect of the period up to February 22, 2019, were converted from US$ to ZWL at a rate of basis when accruing for the contact leave liability with management considering the currency to be the US dollar whilst all other forms of remuneration are being accrued for and paid in Zimbabwean Dollars.
In addition, IAS 21 requires that exchange gains and losses arising from the restatement of foreign denominated liabilities such as contact leave should be disclosed separately on the statement of profit or loss.

However, my audit indicated that the effects of exchange losses on contact leave have not been separately disclosed and have been included as part of the contract leave expense on the statement of profit or loss.
My review of the contact leave policies revealed that contact leave is provided for the University’s management to go and attach with other institutions for a certain time period in order to learn and understand their systems.

In addition, any significant changes to contact leave benefits would require approval at Council level as part of good governance practices per the Public Entities and Corporate Governance Act [Chapter 10:34].

Risk / Implication A weak control environment which may be abused.
Misstatement of contact leave obligations in the financial statements.

Recommendation Management should ensure that the terms and conditions of contact leave are approved by Council before implementation.

Management response At preparation of the accounts the rates prevailing was as per 2019 budget which was in USD.
At the review of the 2020 and 2021 budget provisions and contact costs will be presented to Council for review in line with economic challenges faced by the University; and these are cases where employee’s contact leave had been approved, but the university had been unable to pay at the time.

This amount must then be paid on termination or on settlement of amounts owed to the University by employees.

The issue will be addressed when contact is reviewed going forward.

1.2.
1.2.

Demolition of prefabricated structures Finding Section 44 (1) (b) (ii) of the Public Finance Management Act [Chapter 22:19] requires the 211 accounting authority of a public entity to prevent irregular, fruitless and wasteful expenditure.

In addition, financial resources should be utilised economically and effectively.

I however noted that prefabricated structures with a total cost of ZWL513 000 were demolished after being condemned for not meeting certain quality standards by the Engineers.
The demolition resulted in a financial loss amounting to ZWL443 000.

Risk / Implication Financial loss due to inadequate planning.

Compromised service delivery arising from delayed completion of projects.

Recommendation Management should come up with a proposed plan on how the structures can be completed in an efficient manner and they should submit the proposal to Council for approval before implementation.
Management response The prefabricated structures were only dismantled and the residual materials taken to storage for safety against wind gusts before complete construction.

All the building materials which could be salvaged from the demolition process are still in place.

The project will resume as soon as the new Director of PPWE is appointed and will follow the recommended guidelines.

1.3.
1.3.

Non-compliance with International Financial Reporting Standard (IFRS) 9 -“: Financial Instruments” Finding In terms of IFRS 9, expected credit losses should be computed on the gross carrying amount based on historical loss ratios which incorporate forward looking information.

I however noted that the University did not comply with University of Science and Technology Act and requirements of IFRS 9: Financial Instruments when determining the expected credit losses.
This was caused by limitations within Navision system in relation to the segregation, ageing and profiling of accounts receivables.

Risk /Implication Misstatement of financial statements.

Recommendation Management should upgrade the Navision system to incorporate an accounts receivable module which would process and produce the required information to enable them to compute accurate, reliable and supportable expected credit losses in line with IFRS 9.

212 Management response Noted 1.4.


Tax obligations Finding The University was not submitting Pay-as-you-earn (PAYE) returns to the Zimbabwe Revenue Authority (ZIMRA) for two of its payrolls being the Special Run and Outsourced Run throughout the year ended 31 December 2019.

The total undeclared PAYE for these payrolls amounted to ZWL6 000 000.

As a result, the University was levied interest amounting to ZWL260 834.
According to Section 73 of the Income Tax Act [Chapter 23:06], employees’ tax shall be paid in respect of remuneration payable to an individual who is defined as an employee in terms of the said Act.

Risk / Implication Financial loss due to penalties and interests that may be levied by Zimbabwe Revenue Authority for non-compliance with tax statutes.

Recommendation Management should comply with the relevant statutes.

Management response Recommendations noted for adoption and implementation.
In particular management advise that: Zimbabwe Revenue Authority delays were due to the departures of registered public officers in rapid succession.

Now an application for the registration of a new public officer is underway.

We are working out a payment plan for all arrears and statements from Zimbabwe Revenue Authority will be requested regularly in future to identify arrears and penalties charged.
213 SCHOOL OF HOSPITALITY AND TOURISM 2019 Background information The School is operating on commercial basis as per recommendation of the Public Service Commission reference number B/202/135 dated November 27, 1998.

The School's principal activity is provision of training in Tourism and Hospitality.

I have audited the financial statements of School of Hospitality and Tourism for the year ended December 31, 2019 and I issued an adverse opinion.
Basis for Adverse Opinion Non-compliance with International Accounting Standards (IAS) 21 “The effects of changes in foreign exchange rates” The School 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 School used October 01, 2018 as the date of change in functional currency and translated its foreign denominated balances to ZWL using the February 22, 2019 interbank rate.
The School 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 Statutory Instrument number 33 of 2019 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 School applied the prevailing interbank rate in revaluing its assets and liabilities as at December 31, 2019.

In that regard, the School has not been able to comply with the requirements of IAS 21.
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.
Below are other material issues noted during the audit; 1.

GOVERNANCE ISSUES 1.1.

Organisation structure Finding The School was operating without an approved organogram.

Enquiries with management revealed that they were waiting for direction from the parent ministry on the legal status of the 214 School.

Risk / Implication Reporting structure and responsibilities may not be clear.

Employee accountability may be compromised.

Recommendation The School should ensure that there is an approved organogram.
Management response Agreed, the School will submit an organizational structure to the parent ministry for approval.

However, management has been waiting for direction from the parent ministry as it was dependent on the legal status.

1.2.

Value Added Tax Finding The School was liable for Value Added Tax (VAT) registration since its taxable supplies exceeded the minimum threshold of $60 000 during the year under review.
However, I noted that the School did not register for VAT in contravention of VAT Act [Chapter 23.12].

Risk / Implication Financial loss due to penalties and interest which may be levied by the Tax Authorities.

Recommendation The School should comply with the provisions of the VAT Act.

Management response Agreed.

The School will engage ZIMRA in order to comply with all provisions of VAT Act and other statutory requirements.

2.

REVENUE COLLECTION, MANAGEMENT AND DEBT RECOVERY ISSUES 2.1.
Complimentary accommodation Finding The School did not have a standard or documented policy on giving complimentary accommodation to customers.

As a result, there were instances where complimentary accommodation was offered without senior management approval and some were approved in retrospect.

The table below shows complimentary accommodation offered.
215 Period Occupant Hotel Date approved Remarks 28-29/8/2019 28-29/08/2019 11-12/11/2019 11-12/11/2019 21-24/08/2019 28-29/08/2019 Risk / Implication Hotel St Patricks No approval Not approved Hotel St Patricks No approval 03/01/2020 Hotel St Patricks Hotel St Patricks 03/01/2020 Hotel St Patricks No approval Hotel St Patricks No approval in in Not approved Approved retrospect.

Approved retrospect.

Not approved.

Not approved.

Financial loss through abuse of the facility.


Recommendation The School should put in place a policy on complementary accommodation.

Management response Agreed a policy for complimentary accommodation will be put in place where all complimentary accommodation will be approved.
216 ZIMBABWE INSTITUTE OF PUBLIC ADMINISTRATION AND MANAGEMENT (ZIPAM) 2019-2020 Background information The Institute is incorporated in Zimbabwe through the Zimbabwe Institute of Public Administration and Management Act of Parliament 1990, [Chapter 25:17].
The Institute is responsible for the dissemination of information relating to, and the promotion, teaching, direction, supervision, study and coordination of matters of administration and management with particular reference to the interest of the Public Service, Local Authorities, Parastatals and also the private sector.

I have audited the financial statements of Zimbabwe Institute of Public Administration and Management for the years ended December 31, 2019 and 2020.
I issued an adverse opinion for 2019 and a qualified opinion for 2020.
Adverse opinion 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 Zimbabwe Institute of Public Administration and Management 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 Standards (IAS) 21 “The effects of changes in foreign exchange rates” The Institute translated its comparative financial statements using the interbank rate which came into existence on February 22, 2019 through the Exchange Control Directive RU 28 of 2019 issued by the Reserve Bank of Zimbabwe.
The Institute used October 01, 2018 as the date of change in functional currency and translated its foreign denominated balances to ZWL using the February 22, 2019 interbank rate.
The Institute 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 Statutory Instrument number 33 of 2019 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 Institute applied the prevailing interbank rate in revaluing its assets and liabilities as at December 31, 2019.

In that regard, the Institute has not been able to comply with the requirements of IAS 21.
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.

217 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.
Qualified Opinion 2020 In my opinion, except for the effects of the matters described in the Basis for Qualified Opinion section of my report, the accompanying inflation adjusted financial statements present fairly, in all material respects, the financial position of the Zimbabwe Institute of Public Administration and Management as at December 31, 2020 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified Opinion Non-compliance with International Accounting Standard (IAS) 21 “The effects of changes in foreign exchange rates” The prior year financial statements did not comply with the requirements of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, as the Institute was unable to use an appropriate exchange rate on change of functional currency to translate the opening USD denominated balances and transactions from January 1 to February 22, 2019.
The balances and transactions were translated 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 Institute used October 1, 2018 as the date of change in functional currency and translated its foreign denominated balances to ZWL at a rate of 1:1 which was prescribed by Statutory Instrument 33 of 2019 which required that all assets and liabilities that were denominated in US$ before February 22, 2019 be deemed to be RTGS dollars at a rate of 1:1 and all transactions subsequent to February 22, 2019 be translated at the prevailing interbank rate.
The Institute’s inability to assess the appropriateness of using the prescribed rates in achieving fair presentation was primarily due to the need to comply with SI 33 and the fact that there were no official exchange rates between October 2018 and February 2019 due to lack of an observable foreign exchange market.

In that regard the Institute’s 2020 opening balances misstatements have an impact on the current year financial statements.

Below are other material issues noted during the audit; 1.
GOVERNANCE ISSUES 1.1Non-current assets Finding The Institute had some assets that were not recorded in the asset register.

In addition, a number of these assets were not tagged for ease of reference and identification.

This was contrary to the ZIPAM Accounting and Procedures Manual, [Chapter 15.2] which outlines how the Institute should manage its assets.
The table below highlights some of these assets which were not tagged and not referenced to the asset register; 218 Asset Quantity Comment Padded blue chairs 6 drawer office desk Brush cutters HP Pro 400G4FF Tea urn Chest freezer desktop PC 3 plate industrial stove Water dispenser 48kg lpg cylinders Convection oven Gas stove – 6 burner with oven 487 No asset numbers in the asset register and assets not tagged 4 4 2 3 2 1 8 3 1 1 No asset numbers in the asset register and assets not tagged No asset numbers in the asset register and assets not tagged No asset numbers in the asset register and assets not tagged Asset not recorded in the asset register Asset not recorded in the asset register Asset not recorded in the asset register Asset not recorded in the asset register Asset not recorded in the asset register Asset not recorded in the asset register Asset not recorded in the asset register Risk / Implication Financial loss as these movable assets may easily be misappropriated.
Recommendation All assets should be tagged and the tag numbers should be recorded in the asset register.

Management response The recommendation has been noted and the asset register will be updated quarterly going forward.

The exercise could have commenced earlier; we however had limited access to hotel rooms due to COVID 19 restrictions as the Institute was designated as a quarantine center in April 2020.
1.2 Inventory records Finding There was no evidence to support that proper handover and takeover procedures were being followed.

As a result, there were variances between the physical count quantity and the stock records for the year ended December 31, 2019.

There were instances where items were being received and not recorded in the stock records leading to excess inventory.

Upon enquiry management highlighted that high staff turnover contributed to the anomaly.
219 The table below shows a sample of anomalies noted.
Description System Quantity Count quantity Variance Remarks Beef meat (kg) 23kg 109kg (86 kg) Inventory shortfall not explained Chicken gizzards (kg) 402kg 0kg (402kg) Inventory shortfall not explained Mineral water 772 1 216 (444) Inventory shortfall not Soft drinks cans Pet soft drink 500ml Soft drink bottle 300ml Zambezi beer pint Pilsner beer pint Castle lager beer pint Hunters gold/dry Cider- Savana 550 772 75 168 72 0 0 0 0 9 0 0 0 32 14 24 explained (550) Inventory shortfall not explained (763) Inventory shortfall not explained (75) Inventory shortfall not explained (168) Inventory explained (72) Inventory explained.
shortfall shortfall not not 32 Inventory receipts not recorded in the system.

14 Inventory receipts not recorded in the system.

24 Inventory receipts not recorded in the system.

Risk / Implication Financial loss due to misappropriation of inventory.

Recommendation Management should investigate all inventory variances shown on the inventory report.

Proper handover and takeover procedures should be followed.

Management response The recommendation has been noted.
Some of the variances are emanating from previous years and this was a result of high staff turnover in the stores department and no proper handover procedures were being followed during the transitions.

In future proper handover procedures will be followed to ensure accountability of stock variances.

Non-compliance was a result of high staff turnover in the relevant department.

The Institute is now conducting quarterly audits with effect from 1 January 2020.
220 1.3 Board of Governors Finding The tenure of office for Institute’s Board of Governors expired on July 31, 2019.

The Board continued to serve but, I was not availed with correspondence for extension of term of office for the Board of Governors from the Parent Ministry.

Risk / Implication The Institute might not have board oversight.

Recommendation Management should lobby the Parent Ministry on the issue of the expired board’s tenure of office.

Management response The recommendation has been noted.
Management will continue to lobby the Parent Ministry on the issue of the expired board’s tenue of office.

1.4 Bank reconciliation statements Finding My inspection of the Institute’s bank reconciliation statements revealed that the bank reconciliation statements were not being prepared timely.

On enquiry, management indicated that this was due to national lockdown to curb Covid-19 pandemic.
The table below shows a sample of such bank reconciliations and the date they were prepared; Bank ZB Training Fund Month January Date prepared July 14, 2020 ZB Training Fund June September 10, 2020 ZB NUST ZB NUST ZB POS Card ZB POS Card Risk / Implication January July January June May 26, 2020 September 10, 2020 September 9, 2020 September 9, 2020 Financial loss as fraud and errors may not be detected on time.

221 Recommendation The Institute should ensure that bank reconciliations are prepared timely.
Management response Data Capturing and system updates were slowed down by the lockdowns as employees didn’t have access of the system at home.

1.5 Expenditure supporting documents Finding The Institute made payments to various suppliers however, I was not availed with valid supporting documentation.

Furthermore, I could not verify the validity and accuracy of some expenditures recorded in the financial statements due to incomplete documentation in files.
The table below shows some of the payments made without supporting documents: Voucher Number Details Amount (ZWL) CBN13.11 Website updating training CBN09 CBN021 CBN101 CBN0108 CBN0113 CBN122 CBN126 ZCT029 ZCT034 ZCT022 ZB004 ZBA031 ZBA023 Payment for beef Payment for accommodation Vehicle servicing and repairs Service of band saw Air conditioners service JMC Service Payment for annual leave book Payment for fish (03/09/2019) JMC Truck servicing First aid training Payment for antivirus Reimbursement for accommodation payment Payment for accommodation Payment for hire of PA system Risk/Implication Payments may be made for services not rendered to the Institute.
Recommendation The Institute should ensure that all transactions are adequately supported by relevant documentation.

Management response The recommendation has been noted.

Management will put in place an efficient filing and retrieval system going forward.

2.
2.

PROCUREMENT OF GOODS AND SERVICES 2.1 Perimeter fencing for the vegetable garden Finding There was no evidence to support that the institute’s evaluation of construction work was effective to ensure contracts are awarded to suppliers with technical expertise.

As a result, the Institute awarded a contract for the sum of USD6 600 for the construction of perimeter fencing and its canopy (to prevent wild life from accessing vegetables) for the vegetable garden on October 20, 2020.
However, the contractor did not perform to specification hence, the garden was not put to use as its condition did not meet the intended design.

A review of the documentation in respect of this project revealed that the selected supplier did not have the technical skills required to undertake the project.
According to the records, although management brought their concern to the supplier and obtain assurance to address the anomalies noted during the construction, the end product did not meet the required product.

Risk/Implication Financial loss due to rework.

Recommendation.

The Institute should review how they evaluate tender proposals before awarding tenders.
Management response The recommendations have been noted and management would like to highlight that a projects committee was set up in December 2020 to address the evaluation issues before projects commencement, during and upon completion of the contract.

We would also want to highlight that management evaluated the gardens from the beginning of the contract and highlighted their concerns to the contractor through PMU and directly to the Contractor’s team on the ground.
Management was assured that their concerns to do with poor workmanship were being addressed.

The Contractor even changed the team on the ground to try and address management complaints.

However, the projects team still condemned the gardens upon completion of the project.

It was then agreed by both parties through an addendum that the Contractor be paid for the materials only.

The Institute will then engage another Contractor to rectify the poor workmanship.
223 ZIMBABWE OPEN UNIVERSITY (ZOU) 2020 Background information Zimbabwe Open University is an education institution with the mandate to provide higher and tertiary education through open and distance learning.

I have audited the financial statements of the Zimbabwe Open University for the year ended December 31, 2020 and I issued a Qualified opinion with an emphasis of matter on going concern.
Qualified Opinion In my opinion, except for the effects of the matters described in the basis of qualified opinion paragraphs, the financial statements present fairly, in all material respects, the financial position of the University as at December 31, 2020, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).
Basis for Qualified opinion Non-compliance with International Accounting Standard (IAS) 21 – “The Effects of Changes in Foreign Exchange Rates” The University’s functional and reporting currency was the United States Dollar (“US$”) in 2018.

In 2019, through Statutory Instrument 142 of 2019, the Reserve Bank of Zimbabwe issued a Monetary Policy Statement which introduced the Zimbabwe Dollar which was prescribed as the new functional and reporting currency for all entities in the country.
The 2018 balances were converted from the US$ to ZWL$ at a rate of 1:1 which was the official rate prevailing during the prior year reporting period.

Any effects on the non-compliance with International Accounting Standard (IAS) 21 on these comparative figures on the current year financial statements has not been determined.
Emphasis of matter Subsequent events - Covid 19 I draw your attention to the fact that the Covid 19 pandemic continues to induce widespread economic uncertainty and volatility in financial markets 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.

The responses to the pandemic include intermittent lockdowns, which were called for in the country from January 2021 to February 2021.
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.

The process of assessing the full impact of the Pandemic on the operations of the University is ongoing.

However, Council do not anticipate that the Pandemic will have a significant impact on the University’s operations, and as result the going concern assumption adopted in the preparation of these financial statements has not been revised.
Below is another material issue noted during the audit; 224 1.

GOVERNANCE ISSUE 1.1 Farms accounting procedures Finding The University farms did not have proper books of accounts to record their transactions.

As a result, transactions that include handover readings, sales and inventory issuing transactions were being recorded in the exercise books.

In addition, Senga Farm located in Gweru was not issuing receipts for customer purchases through bank transfers or eco-cash.
Risk / Implication Material errors and irregularities may go undetected.

Limitation of scope due to incomplete records (absence of proper books of accounts).

Recommendation The University should ensure its farm operations are properly accounted for through use of proper books of accounts.

Management response Approved accounting books (Ledgers and Journals) will be bought for the farms.

Noted.

Recommendation will be implemented.


225 PUBLIC ENTITIES UNDER THE CATEGORY OF OTHER 226 NATIONAL MUSEUMS AND MONUMENTS OF ZIMBABWE (NMMZ) 2018 Background information The National Museums and Monuments of Zimbabwe is a statutory body established in Zimbabwe in terms of the National Museums and Monuments Act [Chapter 25:11] responsible for conducting scientific investigations and maintenance of museums and monuments within and outside Zimbabwe.
I have audited the financial statements of the National Museums and Monuments of Zimbabwe for the year ended December 31, 2018 and I issued an adverse opinion with material uncertainty related to going concern and emphasis of matter paragraphs.
Adverse opinion 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 National Museums and Monuments of Zimbabwe as at 31 December 2018, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.
Basis for Adverse Opinion The entity incurred expenditure in which the suppliers applied multi-tiered pricing structure during the period October 2018 to 31 December 2018 where a single product had different prices depending on the mode of payment, whether USD cash, electronic payment, 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 Effect of Changes in Foreign Exchange Rates would apply.

IAS 21 requires the use of a spot rate in accounting for these transactions.
During the 2018 financial year, the entity experienced premiums on the official foreign exchange rate of 1:1 between the RTGS balances and Bond Notes and the US Dollar prescribed by Statutory Instrument 133 of 2016.

The exchange rate of 1:1 was further confirmed by Statutory Instrument 33 of 2019 and the Monetary Policy Statements of the 22nd of February 2018, 1st of October 2018 and 20th of February 2019.
This constitutes a material and pervasive departure from the requirements of International Financial Reporting Standards.

Report on going concern Material Uncertainty Related to Going Concern I draw attention to the fact that the entity had accumulated deficit of ($4,648,069) and incurred deficit of ($108,662).

The entity mainly relied on government grants and had did not fully exploit its other sources of income.
These conditions along with other matters set out in the financial statements; indicated the existence of a material uncertainty that may cast significant doubt about the Organization’s ability to continue as a going concern.

My opinion was not modified in respect of this matter.

227 Emphasis of Matter I draw attention to the fact that the change in functional currency from US Dollar to RTGS Dollar effective February 22, 2019 in terms of International Accounting Standard 21.
This event is a non-adjusting event in terms of International Accounting Standard 10 since, the change in functional currency was triggered by the monetary policy statement of the 20th of February 2019, the Exchange Control Directive RU 28 of 2019 which introduced an interbank market for the RTGS Dollar and the US Dollar issued on the 22nd of February 2019 and the statutory Instrument 33 of 2019 issued on the 22nd of February 2019 which, 5 for accounting and other purposes, deemed all assets and liabilities that were valued in US Dollar immediately before the 22nd of February 2019 to be valued in RTGS Dollar at a rate of 1:1.
These events indicate conditions that arose after the reporting period.

The current year financial statements are therefore still presented in US Dollar, however, the amounts presented on the statement of financial position may not reflect the opening balances in RTGS Dollar for future periods.

My opinion is not modified in respect of this matter.

Below are other material issues noted during the audit.

1.
1.

GOVERNANCE ISSUES 1.1 Board of Trustees Finding The entity was operating without a Board of Trustees.

The Board has been vacant for over six (6) years contrary to the provisions of both best practice and the Public Entities Corporate Governance Act [Chapter 10:31].

Upon subsequent enquiry, since this entity had been at signing stage since my report of 2019, management indicated the Board was not yet in place and the accounts are with the Parent Ministry for signing.
Risk/Implication Strategic direction, accountability and oversight may be compromised.

Recommendation The entity should continue to liaise with the Parent Ministry for both signing of the accounts and appointment of the Board.

Management response The Parent Ministry is still to appoint the Board of Trustees.
228 ANNEXURE “A”: STATE ENTERPRISES AND PARASTATALS AUDIT OPINIONS PER ENTITY Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued AUTHORITIES AND AGENCIES 1.

Agricultural 2020 Adverse due to 2019 Adverse due to 2018 Adverse due 2017 Unqualified 2016 Unqualified 2020 AG report 2019 AG report 2018 AG report 2017 AG report 2016 AG report - - 2011 Adverse 2012 Adverse 2013 Adverse Marketing Authority (AMA) non -compliance with IAS 21 2.
Agricultural and 2014 Qualified due to - Rural Development Authority (ARDA) impairment of investments non - compliance with IAS 21 - - to non - compliance with IAS 21 - 2015 Qualified due to impairment of investments 2016 Qualified due to impairment of investments 2017 Qualified due to impairment of investments 2018 Adverse due to non -compliance with IAS 21, 229 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2019 Adverse due to 2019 AG report - - 2018 AG report 2018 Adverse due 2017 Unqualified 2016 Unqualified 2017 AG report 2016 AG report to non - compliance with IAS 21 2018 Adverse due to 2017 Unqualified with an emphasis of matter with an emphasis of matter 2016 Unqualified 2015 Unqualified non - compliance with IAS 21 2018 Adverse due to non - compliance with IAS 21 - - 2016 Unqualified - - & 2017 Unqualified 3.
Civil Aviation Authority of Zimbabwe non -compliance with IAS 21, 4.

Environmental Management Agency (EMA) 2019 Adverse due to non -compliance with IAS 21 5.

Health Professions Authority (HPA) 2019 Adverse due to & non -compliance with IAS 21 2020 Qualified Due to non - compliance with IAS 21 on opening balances 6.
Medicines Control Authority of Zimbabwe (MCAZ) 2020 Qualified 2019 Adverse due to 2017 Unqualified 2016 Unqualified - - Due to non - compliance with IAS 21 on opening balances non - compliance with IAS 21 & 2018 Adverse due to non – compliance IAS 21 7.
National Social 2019 Adverse due to 2018 Adverse due to 2017 Unqualified - - 2016 Unqualified Security Authority (NSSA) non -compliance with IAS 21 non - compliance with IAS 21 230 with an Emphasis of Matter Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 8.
Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) 2020 AG report 2020 Qualified 2019 AG report 2018 Adverse due to 2017 Unqualified 2018 AG report 2017 AG report 2016 Unqualified 2015 Qualified due 2016 AG report Due to non - compliance with & IAS 21 on opening balances non - compliance 2019 with IAS 21 to under - statement of revenue and receivables 9.
Procurement 2019 Adverse due to Regulatory Authority of Zimbabwe (PRAZ) non -compliance & with IAS 21 2017 2016 Qualified due to recognition of administration fees and completeness of cash - - - - 2012- Qualified 2015 10.
Radiation Protection 2020 Qualified Authority of Zimbabwe Due to non - compliance with IAS 21 on opening balances 2018 Adverse due to non - compliance with IAS 21 2018 Adverse due to non - & compliance 2019 with IAS 21 - - 2017 Unqualified 2016 Unqualified with an Emphasis of matter with an Emphasis of matter 11.
Zimbabwe Energy 2020 Qualified 2019 Adverse due to 2016 Unqualified - - 2015 Unqualified Regulatory Authority Due to non - compliance with 2017 Unqualified non - compliance with IAS 21 231 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2019 AG report 2018 AG report 2017 AG report 2016 AG report IAS 21 on opening balances 2018 Adverse due to non - compliance with IAS 21 12.
Zimbabwe 2020 Qualified 2019 Adverse due to 2018 Adverse due 2016- Unqualified - - Investment and Development Agency ( Former ZIA & ZIMSEZA) ) 13.
Zimbabwe National Water Authority (ZINWA) Due to lack of revaluation of property plant and equipment non - compliance with IAS 21 to non - compliance with IAS 21 2017 with an Emphasis of matter 2020 Unqualified 2019 Unqualified 2017 Unqualified 2016 Unqualified 2015 Unqualified with an Emphasis of matter 2018 Adverse due to non - compliance with IAS 21 with an Emphasis of matter 14.
Zimbabwe Parks and 2019 Adverse due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified 2015 Unqualified Wildlife Management Authority & non -compliance with IAS 21 2020 Adverse due to non -compliance with IAS 21 on opening balance & non - compliance with IAS 21 232 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2019 AG report 2018 AG report 2017 AG report 2016 AG report 15.

Zimbabwe Revenue Authority (ZIMRA) 16.
Zimbabwe Tourism Authority (ZTA) Completeness of revenue 2020 Adverse due to non -compliance with IAS 21 on opening balances & Non- compliance with IAS 36 Impairment of assets 2019 Adverse due to non -compliance with IAS 21 2019 Adverse due to 2018 Adverse due 2017 Unqualified 2016 Unqualified non - compliance with IAS 21 to non - compliance with IAS 21 2017 Unqualified 2018 Adverse due to non - compliance with IAS 21 2016 Unqualified - - - - with an emphasis of matter paragraph BOARDS 17.
Health Services 2020 Qualified 2018 Adverse due to - - Board Due to non - compliance with IAS 21 on opening balances 2019 non - compliance with IAS 21 2016 Unqualified 2017 Unqualified - - Adverse due to non - compliance with IAS 21 233 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 18.
Pig Industry Board 2020 AG report 2019 Adverse due to 2019 AG report - - 2018 AG report 2017 Unqualified 2017 AG report 2016 Unqualified 2015 Unqualified 2016 AG report non -compliance with IAS 21 19.

Tobacco Research 2019 Adverse due to Board non -compliance with IAS 21 2020 Adverse due to non -compliance with IAS 21 on opening balances 2018 Adverse due to non - compliance with IAS 21 2018 Adverse due to 2017 Unqualified non - compliance with IAS 21 2016 Unqualified - - 20.
Tobacco Industry and Marketing Board 2019 Adverse due to 2017 Unqualified 2016 Qualified - - 2015 Unqualified non -compliance with IAS 21 2020 Qualified due to non- compliance with IAS 21 and carrying amounts on investment properties.

2018 Adverse due to non - compliance with IAS 21 234 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2019 AG report 2018 AG report 2017 AG report 2016 AG report COMMISSIONS 21.
Competition and Tariff Commission 2020 Qualified due to non- compliance with IAS 21 22.

Insurance and Pensions Commission 2020 Adverse due to non -compliance with IAS 21 2019 Adverse due to 2018 Adverse due 2016 Unqualified 2015 Unqualified non - compliance with IAS 21 to non - compliance with IAS 21 2019 Adverse due to 2017 Unqualified 2017 Unqualified 2016 Unqualified 2015 Unqualified non - compliance with IAS 21 2018 Adverse due to non - compliance with IAS 21 - - - - - - 23.
National 2018 Adverse due to - - - Competitiveness Commission non -compliance with IAS 21 24.

Securities and Exchange Commission of Zimbabwe 25.
Sports and Recreation Commission 2019 Adverse due to non -compliance with IAS 21 2020 Qualified due to non-compliance with IAS 21 2019 Adverse due to non -compliance with IAS 21 2019 Adverse due to 2018 Adverse due 2017 Unqualified 2016 Unqualified non - compliance with IAS 21 to non - compliance with IAS 21 2018 Adverse due to 2017 Unqualified non - compliance with IAS 21 235 2016 Unqualified 2015 Unqualified with an emphasis of matter with an emphasis of matter Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 26.
Zimbabwe Anti- Corruption Commission 2020 AG report 2012 Disclaimer due to various limitation - of scope 2017 (Incomplete records) 2019 AG report - - 2018 AG report - - 2017 AG report - - 2016 AG report 2011 Adverse due to various issues COMPANIES AND CORPORATIONS 27.

Air Zimbabwe 2018 Disclaimer due to 2015- Disclaimer (Private) Limited various issues 2017 2011- Disclaimer 2014 28.
Allied Timbers 2019 Adverse due to 2018 Adverse due to 2017 Qualified (Private) Limited non -compliance with IAS 21 non - compliance with IAS 21 with an Emphasis of matter 29.

Chemplex 2020 Adverse due to 2018 Adverse due to 2017 Unqualified - 2009 Disclaimer & 2010 2016 Qualified - - - - with an Emphasis of matter - 2016 Unqualified Corporation Limited 30.
CMED (Private) Limited non -compliance & with IAS 21 and IAS 29 2019 Adverse due to 2019 non - compliance with IAS 21 2018 Adverse due to 2017 Unqualified 2016 Unqualified 2015 Unqualified non -compliance with IAS 21 non - compliance with IAS 21 31.
CMED Fuels 2019 Adverse due to 2018 Adverse due to 2017 Unqualified - - - - (Private) Limited non -compliance with IAS 21 non - compliance with IAS 21 236 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 32.

Deposit Protection Corporation 2020 AG report 2020 Adverse due to non -compliance with IAS 21 33.
Deven Engineering 2019 Adverse due to - (Private ) Limited non -compliance with IAS 21 2020 Adverse due to non -compliance with IAS 21 on opening balances 2018 AG report 2019 AG report 2019 Adverse due to 2018 Adverse due 2016 Unqualified 2017 Unqualified 2017 AG report 2016 AG report non - compliance with IAS 21 - to non - compliance with IAS 21 2018 Adverse due - - - - to non - compliance with IAS 21 with an emphasis of matter 34.
EasyGo Car Hire 2019 Adverse due to 2018 Adverse due to 2017 Unqualified - and Travel (Private) Limited non -compliance with IAS 21 non - compliance with IAS 21 35.

Genesis Energy (Private) Limited 36.


Hotspec Enterprises (Private) Limited 2019 Adverse due to 2018 Adverse due to 2017 Unqualified - non -compliance with IAS 21 2019 Adverse due to non -compliance with IAS 21, 29 and IFRS 16 non – compliance with IAS 21 2016 Unqualified 2017 Unqualified 2018 Adverse due to non - - - - - - - - - - - - - 237 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 37.

Hwange Electricity Supply Company 38.
Industrial Development Corporation 2020 AG report 2019 AG report 2018 AG report 2017 AG report 2016 AG report 2020 Adverse due to 2019 Adverse due to 2018 Adverse due - - - compliance with IAS 21 non -compliance with IAS 21 on opening balances 2020 Qualified due to non-compliance with IAS 21, 29 and IAS 8 non – compliance with IAS 21 to non – compliance with IAS 21 2019 Adverse due to 2017 Qualified 2016 Qualified - non – compliance with IAS 21 2018 Adverse due to non – compliance with IAS 21 with an emphasis of matter - - 39.
Kariba Hydro Power 2020 Adverse due to 2019 Adverse due to 2018 Adverse due 2016 Unqualified - - Company non –compliance with IAS 21 on opening balances non – compliance with IAS 21 to non – compliance with IAS 21 2017 Unqualified with an Emphasis of matter 40.
Mellofieldde 2020 Qualified due non 2018 Adverse due to 2017 Unqualified 2016 Unqualified 2015 Unqualified Chemicals (Private) Limited –compliance with & IAS 21 and with an emphasis of matter 2019 non – compliance with IAS 21 with an Emphasis of matter with an Emphasis of matter with an Emphasis of matter 238 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2020 Qualified due to 2019 AG report 2018 Adverse due to 2017 Unqualified 2018 AG report 2017 AG report 2016 Unqualified 2015 Unqualified 2016 AG report 2019 non – compliance with IAS 21 with an Emphasis of matter with an Emphasis of matter 2012 Qualified due to 2015 to completeness of expenditure - - - - - - 41.
Minerals Marketing Corporation of Zimbabwe 42.

Mosi- Oa Tunya Development Company non –compliance & with IAS 21 on opening balances and with an Emphasis of matter 2016 Qualified due to completeness of to expenditure 2017 2018 Adverse due to non –compliance with IAS 21 43.
National Handling 2018 Adverse due to Services non –compliance with IAS 21 Unqualified 2014 Unqualified 2015 & 2016 & 2017 2018 Adverse due to 2017 Unqualified with an Emphasis of matter Unqualified Unqualified - - - - 2016 Unqualified 2015 Unqualified non – compliance with IAS 21 2019 Adverse due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified - - 44.

National Oil Infrastructure Company of Zimbabwe 45.
National 2019 Adverse due to non –compliance with IAS 21 Pharmaceutical Company & non –compliance with IAS 21 non – compliance with IAS 21 239 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2020 Adverse due to non –compliance with IAS 21 on opening balances 46.
National Railways of Zimbabwe (NRZ) 2020 Adverse due to various issues 2019 AG report 2018 AG report 2017 AG report 2016 AG report - - 2017 Unqualified 2016 Unqualified with an emphasis of matter 2018 Adverse due to non – compliance with IAS 21 2019 Adverse due to non – compliance with IAS 21 47.
Net*One Cellular (Private) Limited 2020 Adverse due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified 2015 Unqualified non –compliance with IAS 21 and IAS 29 non – compliance with IAS 21 2019 Adverse due to non – compliance with IAS 21 with an Emphasis of matter with an Emphasis of matter 48.
Petrotrade (Private) 2019 Adverse due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified 2015 Unqualified Limited non –compliance with IAS 21 non – compliance with IAS 21 240 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 49.
Petrozim line (Private) Limited 2020 AG report 2019 Adverse due to 2019 AG report 2018 Adverse due to 2017 Unqualified 2018 AG report 2017 AG report - - 2016 AG report - - non –compliance with IAS 21 non – compliance with IAS 21 50.

Powertel 2020 Adverse due to 2019 Adverse due to 2018 Adverse due 2016 Unqualified 2015 Unqualified Communications (Private) Limited non –compliance with IAS 21 51.
Printflow (Private) 2019 Adverse due to - non – compliance with IAS 21 - to non – compliance with IAS 21 2017 Unqualified & 2017 with an Emphasis of matter 2016 Unqualified - with an Emphasis of matter - Limited 52.

Sunway City (Private) Limited 53.
TelOne ( Private) Limited non –compliance with IAS 21 2020 Qualified due to non- compliance with IAS 21 on opening balances 2018 Adverse due to non – compliance with IAS 21 2020 Adverse due to 2019 Adverse due to 2018 Adverse due 2017 Unqualified 2016 Unqualified non –compliance with IAS 21, IAS 29 and with an emphasis of matter 2020 Qualified due to non-compliance with IAS 21 on opening balances and with material non – compliance with IAS 21 to non – compliance with IAS 21 2019 Adverse with material uncertainty relating to going concern 2017 Unqualified with a material of uncertainty to going - - 2016 Unqualified with a material of uncertainty to 241 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2019 AG report uncertainty relating to going concern 2018 AG report concern paragraph 2018 Adverse due 2017 AG report 2016 AG report going concern paragraph 54.
Transmedia Corporation 55.

UDCORP 56.
Zimbabwe Consolidated Diamond Company 2019 Adverse due to & non –compliance with IAS 21 and IAS 28 2020 Adverse due to non –compliance with IAS 21, 28 and 29 2018 Qualified due to non –compliance with IAS 21 2019 Adverse due to non –compliance with IAS 21 and valuation of investment properties 2020 Unqualified with an emphasis of matter to non – compliance with IAS 21 2018 Adverse due to 2016 Unqualified non – compliance with IAS 21 & 2017 Unqualified 2015 Unqualified - - - - 2017 Unqualified 2016 Unqualified - - 2018 Adverse due to 2017 Qualified 2016 Qualified - - non - compliance with IAS 21 242 with an Emphasis of matter Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2019 AG report 2018 AG report 2017 AG report 2016 AG report (Private) Limited (ZCDC) 57.
ZESA Enterprises (Private) Limited (ZENT) 58.

ZESA Holdings (Private) Limited 59.

Zimbabwe Electricity Transmission and Distribution Company (ZETDC) 60.
Zimbabwe Mining Development Corporation 2019 Adverse due to non - compliance with IAS 21 2020 Adverse due to 2019 Adverse due to 2018 Adverse due 2016 Unqualified 2015 Unqualified non -compliance with IAS 21 on opening balances non - compliance with IAS 21 to non - compliance with IAS 21 & 2017 with an Emphasis of matter with an Emphasis of matter 2020 Adverse due to 2019 Adverse due to 2018 Adverse due 2016 Unqualified 2015 Unqualified non -compliance with IAS 21 on opening balances non - compliance with IAS 21 to non - compliance with IAS 21 with an Emphasis of matter with an Emphasis of matter 2020 Adverse due to 2019 Adverse due to 2018 Adverse due 2016 Unqualified 2015 Unqualified 2017 Unqualified with an Emphasis of matter non -compliance with IAS 21 on opening balances non - compliance with IAS 21 to non - compliance & with IAS 21 2017 matter with an Emphasis of with an Emphasis of matter 2020 Adverse due to 2018 Adverse due to 2015 Qualified - - - - non -compliance with IAS 21, 28 and 29 non - compliance with IAS 21 with an & 2016 Emphasis of matter 243 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2019 AG report 2018 AG report 2017 AG report 2016 AG report (ZMDC)- Company excluding group 2019 Adverse due to 2017 Qualified non - compliance with IAS 21 with an Emphasis of matter 61.
Zimbabwe Power Company (ZPC) 2020 Adverse due to 2019 Adverse due to 2018 Adverse due 2016- Unqualified 2015 Unqualified non -compliance with IAS 21 on opening balances non - compliance with IAS 21 to non - compliance with IAS 21 2017 with an Emphasis of matter with an Emphasis of matter 62.
Zimbabwe United 2019 Adverse due to 2018 Adverse due to 2017 Qualified 2016 Qualified 2015 Qualified Passengers Company Limited (ZUPCO) COUNCILS non -compliance with IAS 21 and 29 non - compliance with IAS 21 with an Emphasis of matter with an Emphasis of matter with an Emphasis of matter 63.

Agricultural 2018 Adverse due to 2017 Unqualified - - 2016 Unqualified - - Research Council non -compliance with IAS 21 64.
Allied Health 2018 Adverse due to - - 2017 Unqualified 2016 Unqualified 2015 Unqualified Practioners Council 65.

Consumer Council of Zimbabwe non -compliance with IAS 21 2020 Qualified due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified 2015 Unqualified non -compliance & with IAS 21 2019 non - compliance with IAS 21 with an Emphasis of matter 244 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 66.

Medical and Dental Practitioners Council 67.


National AIDS Council of Zimbabwe 68.
National Arts Council of Zimbabwe 2020 AG report 2019 Adverse due to 2019 AG report 2018 Adverse due to 2017 Unqualified 2018 AG report 2017 AG report 2016 Unqualified 2016 AG report - - non -compliance with IAS 21 non - compliance with IAS 21 2019 Adverse due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified 2015 Unqualified non -compliance with IAS 21 2019 Adverse due to - non -compliance with IAS 21 non - compliance with IAS 21 - 2017 Unqualified 2016 Unqualified 2015 Unqualified 2018 Adverse due 69.
Pharmacists Council 2019 Adverse due to of Zimbabwe non -compliance with IAS 21 70.
Research Council of 2019 Adverse due to Zimbabwe non -compliance with IAS 21 & 2020 Qualified due to non- compliance with IAS 21 on opening balances to non - compliance with IAS 21 2018 Adverse due to 2017 Unqualified 2016 Unqualified 2015 Unqualified - - 2016 Unqualified 2015 Unqualified & 2017 non - compliance with IAS 21 2018 Adverse due to non - compliance with IAS 21 245 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2020 Adverse due to 2018 AG report 2019 AG report 2019 Adverse due to 2018 Adverse due 2016 Unqualified 2017 AG report 2016 AG report - - 71.
Traffic Safety Council non -compliance with IAS 21 72.

Zimbabwe Council 2019 Adverse due to for Higher Education (ZIMCHE) non -compliance with IAS 21 non - compliance with IAS 21 2018 Adverse due to non - compliance with IAS 21 - to non - compliance with IAS 21 - 2017 Unqualified 2016 Unqualified 2015 Unqualified & 2017 73.
Zimbabwe National Family Planning Council 2019 Adverse due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified - - non -compliance with IAS 21 non - compliance with IAS 21 FINANCIAL INSTITUTIONS 74.

AFC(Former Agricultural Bank of Zimbabwe (Agribank) 2020 Qualified due to non -compliance with IAS 21 and valuation of investment properties 2019 Adverse due to 2018 Adverse due 2017 Unqualified 2016 Unqualified non - compliance with IAS 21 to non - compliance with IAS 21 75.
Empower Bank 2020 Adverse due to 2019 Adverse due to 2018 Adverse due - - - - Limited non -compliance with IAS 21 and 29, Valuation of assets and liabilities non - compliance with IAS 21 to non - compliance with IAS 21 246 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 76.

Infrastructure Development Bank of Zimbabwe 2020 AG report 2020 Qualified due to non -compliance with IAS 21 77.

National Building Society 78.


People’s Own Savings Bank (POSB) 79.

Small Medium Enterprise Development Corporation (SMEDCO) 80.
Zimbabwe Women’s Microfinance Bank limited FUNDS 2019 AG report 2019 Qualified due to non- compliance with IAS 21 and IAS 29 2018 AG report 2018 Unqualified with Emphasis of Matter 2017 AG report 2017 Unqualified 2016 Unqualified 2016 AG report with Emphasis of Matter with Emphasis of Matter 2019 Adverse due to 2018 Adverse due 2016 Unqualified non - compliance with IAS 21 to non - compliance with IAS 21 2017 Unqualified 2019 Adverse due to 2018 Adverse due 2017 Unqualified 2016 Unqualified non - compliance with IAS 21 to non - compliance with IAS 21 2020 Adverse due to non -compliance with IAS 21 and valuation of property and equipment 2020 Qualified due to non -compliance with IAS 21 on opening balances 2019 Adverse due to 2018 Adverse due to 2017 Qualified 2016 Qualified 2015 Qualified non -compliance with IAS 21 non - compliance with IAS 21 with Emphasis of Matter with Emphasis of Matter with Emphasis of Matter 2020 Adverse due to 2019 Adverse due to 2018 Adverse due - - - - non -compliance with IAS 21 non - compliance with IAS 21 to non - compliance with IAS 21 247 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 81.
Agricultural Marketing Authority Fund 2020 AG report 2020 Qualified due to non-compliance with IAS 21 on opening balances 82.
Investor Protection 2020 Adverse due to Fund non -compliance with IAS 21 2019 AG report 2017 Unqualified 2018 AG report - - 2017 AG report - - 2016 AG report 2016 Unqualified 2018 Adverse due to non - compliance with IAS 21 2019 Adverse due to non - compliance with IAS 21 2018 Adverse due to non - compliance 2019 with IAS 21 Adverse due to non - compliance with IAS 21 - - - - - - 83.
Lotteries and Gaming Fund 2019 Adverse due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified - non -compliance with IAS 21 non - compliance with IAS 21 84.
Rural Electrification 2019 Adverse due to 2017 Qualified 2016 Qualified 2014 Qualified - - - Fund (Former REA) non -compliance with IAS 21, 29 and IFRS 16 2018 Adverse due to 2015 Qualified non - 248 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2019 AG report 2018 AG report 2017 AG report 2016 AG report compliance with IAS 21 85.
Universal Service Fund 2020 Qualified due to non-compliance with IAS 21 on opening balances 2018 Adverse due to 2017 Unqualified & 2019 non - compliance with IAS 21 2016 Unqualified 2015 Unqualified STATE HOSPITALS 86.

Mpilo Central Hospital 2019 Adverse due to 2017 Qualified 2016 Qualified 2015 Qualified 2013 Disclaimer & with an Emphasis of 2014 matter non -compliance & with IAS 21 and IAS 16 2018 Adverse due to non - compliance with IAS 21 TERTIARY INSTITUTIONS 87.
Bindura University 2019 Adverse due to of Science Education non -compliance with IAS 21 - - 2018 Adverse due 2016 Unqualified - - to non - compliance with IAS 21 2017 Unqualified 2020 Qualified due to Non-compliance with IAS 21 on opening balances 249 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 88.
Chinhoyi University of Technology 2020 AG report 2020 Adverse due to non -compliance with IAS 21 2019 AG report 2019 Adverse due to 2018 Adverse due 2016 Unqualified 2015 Unqualified 2018 AG report 2017 AG report 2016 AG report non - compliance with IAS 21 to non - compliance with IAS 21 2017 Unqualified with an emphasis matter 89.

Great Zimbabwe University 90.

Gwanda State University 91.

Harare Institute of Technology 92.

Lupane State University 93.


Marondera University of Agricultural Sciences and Technology 94.
Midlands State University (MSU) 2020 Unqualified with 2019 Adverse due to 2018 Adverse due 2016 Unqualified 2015 Unqualified an emphasis matter on IAS 21 non - compliance with IAS 21 2018 Adverse due to non -compliance with IAS 21 2017 Qualified due to valuation of land and buildings - to non - compliance with IAS 21 - 2017 Unqualified - - - 2019 Adverse due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified - non -compliance with IAS 21 non - compliance with IAS 21 2020 Adverse due to 2019 Adverse due to 2018 Adverse due 2016 Unqualified - non -compliance with IAS 21 on opening balances 2017 Unqualified & 2018 Adverse due to - non - compliance with IAS 21 - - to non - compliance with IAS 21 - 2017 Unqualified - - - - - - - non -compliance with IAS 21 2020 Adverse due to non -compliance & 2018 Adverse due to non - - - 2016 Unqualified 2015 Unqualified 2017 Unqualified 250 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2019 AG report compliance 2019 with IAS 21 2018 AG report 2017 AG report 2016 AG report 2020 AG report with IAS 21 and 29 on opening balances 2019 Disclaimer due to various issues 95.
National University of Science and Technology - - 2018 Disclaimer due to various 2016 Unqualified 2017 Unqualified - - - 96.

School of 2019 Adverse due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified - Hospitality and Tourism non -compliance with IAS 21 non - compliance with IAS 21 2019 Adverse due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified 2015 Unqualified 97.

University of Zimbabwe 98.


Zimbabwe Institute 2019 Adverse due to - of Public Administration and & Management (ZIPAM) non -compliance with IAS 21 non -compliance with IAS 21 2020 Qualified due to non -compliance with IAS 21 on opening balances non - compliance with IAS 21 - with an Emphasis of matter 2017 Unqualified 2015 Unqualified - 2018 Adverse due 2016 Unqualified & with an Emphasis of matter - to non - compliance with IAS 21 99.
Zimbabwe Open University (ZOU) 2020 Adverse due to 2018 Adverse due to 2017 Unqualified 2016 Unqualified - - non -compliance with IAS 21 on opening balances non - compliance with IAS 21 251 Public Entity FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued FY Opinion Issued 2020 AG report 2019 AG report 2019 Adverse due to non - compliance with IAS 21 2018 AG report 2017 AG report 2016 AG report OTHER 100.
Scientific Industrial Research and Development Centre (SIRDC) 2020 Qualified due to non -compliance with IAS 21 on opening balances non - compliance with IAS 21 2019 Adverse due to 2018 Adverse due 2016 Unqualified with Going Concern Uncertainty 2017 Unqualified with Going Concern Uncertainty to non - compliance & with IAS 21 101.
National Museums and Monuments of Zimbabwe 2018 Adverse due to 2016 Unqualified - - non -compliance with IAS 21 with an Emphasis of matter & 2017 Unqualified with an Emphasis of matter 252 - - 2015 Unqualified with an Emphasis of matter ANNEXURE “B”: AUDITS IN PROGRESS AND BEING FINALISED PUBLIC ENTITY YEAR 1.

2.

3.

4.

5.

6.

7.

8.

9.


Agricultural and Rural Development Authority (ARDA) Air Zimbabwe Allied Health Practitioners Council Allied Timbers (Private) Limited Broadcasting Authority of Zimbabwe (BAZ) Chitungwiza Central Hospital CMED (Private) Limited CMED fuels Cold Storage Company (CSC) 10.

Courier Connect (Private) Limited 11.

DTZ-OZGEO 12.

Easy Go and Car Hire (Private) Limited 13.

Environmental Health Practioners Council 14.

Forestry Commission 15.

Genesis Energy (Private) Limited 16.


Grain Marketing Board 17.

Gwanda University 18.

Harare Institute of Technology 19.

Hotspec (Private) limited 20.

Infralink (Private) Limited 21.

Ingutsheni Central Hospital 22.

Lake Kariba Fisheries Research Institute 23.

Lotteries and Gaming Fund 24.

Manicaland University of Applied Sciences 25.


Marondera University 253 2019 2019 2019 &2020 2020 2019 & 2020 2019 2020 2020 2013-2017 2017& 2018 2016 & 2017 2020 2019 & 2020 2019 & 2020 2020 2019/2020 2020/2021 2019 2020 2020 2019 & 2020 2019 2020 2020 2020 2019 PUBLIC ENTITY 26.

Medical and Dental Practitioners Council YEAR 2020 27.

Medical Laboratory and Clinical Scientists Council of Zimbabwe 2019 & 2020 28.

Medical Rehabilitation Practitioners Council 29.

Mosia Tunya Development Company 30.


National AIDS Council 31.

National Arts Council of Zimbabwe 2019 & 2020 2019 & 2020 2020 2020 32.

National Biotechnology Authority of Zimbabwe 2019 & 2020 33.

National Competitiveness Commission 34.

National Handling Services 35.

National Museums and Monuments of Zimbabwe 36.

National Oil Infrastructure Company (NOIC) 37.

New Ziana 38.

Parirenyatwa Group of Hospitals 39.

Petrotrade (Private) Limited 40.

Petrozim line (Private) Limited 41.


Pharmacists Council of Zimbabwe 42.

Pig Industry Board 43.

Procurement Regulatory Authority of Zimbabwe 44.

Rhodes Matopos Estate Fund 45.

Rhodes Nyanga Estate Fund 46.

RMS (Private) Limited 47.

Rural Electrification Fund (formerly REA) 48.

Sally Mugabe Central Hospital (Harare Central Hospital) 49.

Sabi Gold Mine (Kimberworth Investments) 50.

Silo Food Industries (Private) Limited 51.


Sports and Recreation Commission 254 2020 2019 2019 2020 2019 2019 & 2020 2020 2020 2020 2020 2020 2020 2020 2019 & 2020 2020 2019 2019 & 2020 2019/2020 & 2020/2021 2020 PUBLIC ENTITY 52.

State Lotteries Fund 53.

United Bulawayo Hospitals 54.

University of Zimbabwe 55.

UDCORP 56.

Zimbabwe Academic Research Network 57.

Zimbabwe Anti-Corruption Commission 58.

Zimbabwe Broadcasting Corporation 59.

Zimbabwe Council for Higher Education 60.


Zimbabwe Electoral Commission 61.

Zimbabwe Media Commission (ZMC) 62.

Zimbabwe Mining Development Corporation-Group status 63.

Zimbabwe National Family Planning Council 64.

Zimbabwe National Road Administration 65.

Zimbabwe National Statistics Agency 66.

Zimbabwe Open University 67.

Zimbabwe Posts Properties (Private) Limited 68.

Zimbabwe Posts (Private) Limited 69.

Zimbabwe Schools Examinations Council 70.

Zimbabwe Tourism Authority 71.


Zimbabwe United Passengers Company Limited (ZUPCO) 72.

Zimbabwe Youth Council YEAR 2019 2019 2020 2020 2018 & 2019 2018-2020 2018 & 2019 2020 2019 & 2020 2019 & 2020 2015-2020 2020 2019 & 2020 2019 & 2020 2020 2017 & 2018 2017 & 2018 2019 & 2020 2020 2020 2018 & 2019 255 ANNEXURE “C”: AUDITS AT SIGNING STAGE PUBLIC ENTITY 1.

Agriculture Research Council 2.

National Museum and Monuments of Zimbabwe(NMMZ) 3.


National Social Security Authority (NSSA) YEAR 2018 2018 2019 256 ANNEXURE “D”: ACCOUNTS NOT SUBMITTED FOR AUDIT PUBLIC ENTITY Agriculture Research Council Agricultural and Rural Development Authority (ARDA) Air Zimbabwe (Private) Limited Applebridge (Private) Limited Chitungwiza Central Hospital Civil Aviation Authority of Zimbabwe Cold Storage Company (CSC) Consumer Council of Zimbabwe Courier Connect (Private) Limited.
DTZ-OZGEO Environmental Management Agency (EMA) Gwanda State University Ingutsheni Central Hospital Marondera University of Agricultural Science and Technology Mining Promotion Corporation Mpilo Central Hospital National Handicrafts Centre National Handling Services National Libraries and Documentation Centre National Museums and Monuments of Zimbabwe National Social Security Authority New Ziana Nurses Council of Zimbabwe Sally Mugabe Central Hospital (Harare Central Hospital) School of Hospitality and Tourism Small and Medium Enterprises Corporation(SMEDCO) State Lotteries Fund 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.

27.

257 YEAR 2019 & 2020 2020 2020 2015-2020 2020 2020 2018-2020 2020 2019 &2020 2018-2020 2020 2020 2020 2020 2019 &2020 2020 2009-2020 2020 2009-2020 2020 2020 2020 2020 2020 2020 2020 2020 PUBLIC ENTITY 28.

United Bulawayo Hospital 29.

ZARNET (Private) Limited 30.

Zimbabwe Broadcasting Corporation 31.

Zimbabwe Posts Properties (Private) Limited 32.


Zimbabwe Posts (Private) Limited (ZIMPOST) 33.

Zimbabwe Schools Examinations Council 34.

Zimbabwe School of Mines 35.

Zimbabwe Youth Council YEAR 2020 2020 2020 2019 & 2020 2019 & 2020 2019 & 2020 2020 2020 258