Government books in total shambles: Auditor-General

Source: Government books in total shambles: Auditor-General | Daily News

HARARE – State-owned enterprises and parastatals continue to incur shocking financial losses, with high chances of ceasing operations, Auditor-General Mildred Chiri has warned.

State-owned enterprises and parastatals are losing millions of dollars, according to Chiri’s latest 2017 report, with fears that some might be declared insolvent due to the losses.

Among the companies experiencing dreadful losses are Zimbabwe Consolidated Diamond Company (ZCDC), Zesa Enterprises (Private) Limited (Zent), Zimbabwe Electricity Transmission and Distribution Company (ZETDC) and Small to Medium Enterprises and Development Corporation (Smedco).

“I draw your attention to the fact that the company (ZCDC) incurred a total comprehensive loss of $7 445 606 during the period ended December 31, 2016, and as at that date there was a net current liabilities position of $7 981 756 and negative equity of $7 445 576. These matters cast doubt on the company’s ability to continue operating as a going concern for the foreseeable future,” the audit reads.

Chiri said many State-owned enterprises and parastatals failed to comply with statutory requirements.

She also said some entities like Zent were facing viability challenges owing to these losses.

“I draw your attention to the fact that the company (Zent) had a loss before tax of $12 451 369 (2015: $9 046 855) for the year ended December 31, 2016 and, as of that date, the company’s liabilities exceeded its current assets by $26 461 480 (2015: $11 736 440). This indicates that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern,” she said.

Chiri further said that the company had also experienced a loss of $8 375 921 last year. She said revenues for the company continue to decline, which has resulted in the erosion of the company’s equity.

“Continuation of this trend will result in the company having negative equity. The working capital also continues to decline with statutory obligations amounting to $8 750 931 as at the balance sheet date,” she said, adding that the company may be declared insolvent and should come up with turnaround strategies to avert this reality.
Chiri also cited Zesa Holdings (Private) Limited, claiming the company was also failing to service its foreign loans amounting to $29 878 401.

ZETDC, was also said to be suffering losses, as its current liabilities also exceeded its assets by $687 327 440, as at December 31, last year.

“The company incurred an operating loss before tax of $74 472 490 for the year ended December 31, 2017 (2016: $69 275 164). The company also had an accumulated loss of $524 898 859 as at December 31, 3017 (2016: $444 330 258) for the year ended December 31, 2017, the company had a negative working capital position of $687 327 440 (2016: $648 557 731). The company defaulted on repayment of its foreign loans,” Chiri said.

According to the report, Smedco also incurred a loss of $1 106 164 at the end of 2016, while State Lotteries experienced a loss of $180 055 by end of last year, as well as the Grain Marketing Board, which made a loss of $208 968 178, as at March 31, 2017.