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REPUBLIC OF ZAMBIA REPORT OF THE COMMITTEE ON LOCAL GOVERNMENT ACCOUNTS ON THE REPORT OF THE AUDITOR GENERAL ON THE REVIEW OF OPERATIONS OF LOCAL AUTHORITES FOR FINANCIAL YEARS ENDED 31ST DECEMBER, 2014, 2015 AND 2016 FOR THE SECOND SESSION OF THE TWELFTH NATIONAL ASSEMBLY APPOINTED ON 21ST SEPTEMBER, 2017 Printed by the National Assembly of Zambia REPORT OF THE COMMITTEE ON LOCAL GOVERNMENT ACCOUNTS ON THE REPORT OF THE AUDITOR GENERAL ON THE REVIEW OF OPERATIONS OF LOCAL AUTHORITES FOR FINANCIAL YEARS ENDED 31ST DECEMBER, 2014, 2015 AND 2016 FOR THE SECOND SESSION OF THE TWELFTH NATIONAL ASSEMBLY APPOINTED ON 21ST SEPTEMBER, 2017 ii TABLE OF CONTENTS Item Paragraph Page 1.0 Composition of the Committee 1 2.0 Functions of the Committee 1 3.0 Meeting of the Committee 2 4.0 Procedure adopted by the Committee 2 5.0 Arrangement of the Report 2 PART I 6.0 Auditor General’s Preamble 2 PART II Submission by The Secretary To The Treasury 7.0 Introduction 3 8.0 Scope and Methodology 4 9.0 Budget and Funding 5 10.0 Staff Constraints 5 11.0 Internal Control 6 12.0 Background 7 13.0 Sources of Funds 7 PART III Submission by Principal Officers 14.0 Chingola Municipal Council 7 15.0 Chisali Municipal Council 19 16.0 Chipata City Council 25 17.0 Chipili District Council 29 18.0 Chisamba District Council 32 19.0 Choma Municipal Council 41 iii 20.0 Chongwe Municipal Council 44 21.0 Kabwe Municipal Council 50 22.0 Kalomo District Council 63 23.0 Kaoma District Council 66 24.0 Kapiri Mposhi District Council 79 25.0 Kasama Municipal Council 87 26.0 Kasempa District Council 94 27.0 Kazungula District Council 101 28.0 Kitwe City Council 106 29.0 Livingstone City Council 117 30.0 Luangwa District Council 120 31.0 Luanshya Municipal Council 125 32.0 Lusaka City Council 131 33.0 Luwingu District Council 137 34.0 Mansa Municipal Council 140 35.0 Mkushi District Council 144 36.0 Mongu Municipal Council 147 37.0 Mporokoso District Council 155 38.0 Mufulira Municipal Council 163 39.0 Mumbwa District Council 166 40.0 Mwense District Council 170 41.0 Nakonde District Council 172 42.0 Nchelenga District Council 180 43.0 Ndola City Council 184 44.0 Pemba District Council 201 45.0 Petauke District Council 205 46.0 Serenje District Council 211 47.0 Siavonga District Council 217 48.0 Solwezi Muncipal Council 222 iv PART IV Ovarall Recommendation 228 PART V Local Tour Report 230 Conclusion 232 Appendix 1: Report of the Committee on Local Accounts on the Report of the 233 Auditor General on the Review of Local Authorites for Financial Years Ended 31st December, 2014, 2015and 2016 Appendix 2: List of National Assembly Officials 234 v REPORT OF THE COMMITTEE ON LOCAL GOVERNMENT ACCOUNTS ON THE REPORT OF THE AUDITOR GENERAL ON THE REVIEW OF OPERATIONS OF LOCAL AUTHORITIES FOR THE FINANCIAL YEARS ENDED 31ST DECEMBER, 2014, 2015 AND 2016, FOR THE SECOND SESSION OF THE TWELFTH NATIONAL ASSEMBLY, APPOINTED ON 21ST SEPTEMBER, 2017 Consisting of: Mr E J Muchima, MP (Chairperson); Mrs P G M Jere, MP (Vice Chairperson); Mr D Chisopa, MP; Mr G G Zimba, MP; Mr K M Sampa, MP; Mr A C Mumba, MP; Mr D Mulunda, MP; Mr E Mulenga, MP; Ms P C Kucheka, MP; and Mr L K Fungulwe, MP. The Honourable Mr Speaker National Assembly Parliament Buildings LUSAKA Sir, Your Committee has the honour to present its Report on the Report of the Auditor General on the Review of Operations of Local Authorities for the Financial Years ended 31st December 2014, 2015 and 2016. 2.0 Functions of the Committee In accordance with National Assembly Standing Order No 157(2), the functions of the Committee are to: i. study, report and make appropriate recommendations to the Government through the House on the mandate, management and operations of the Government ministries, departments and/or agencies under its portfolio; ii. carry out detailed scrutiny of certain activities being undertaken by the Government ministries, departments and/or agencies under its portfolio and make appropriate recommendations to the House for ultimate consideration by the Government; iii. make, if considered necessary, recommendations to the Government on the need to review certain policies and certain existing legislation; iv. examine annual reports of Government ministries and departments under its portfolio in the context of the autonomy and efficiency of Government ministries and departments and determine whether the affairs of the said bodies are being managed according to relevant Acts of Parliament, established regulations, rules and general orders; v. consider any Bills that may be referred to it by the House; vi. consider International Agreements and Treaties in accordance with Article 63 of the Constitution; 1 vii. consider special audit reports referred to it by The Speaker or an Order of the House; viii. where appropriate, hold public hearings on a matter under its consideration; and ix. consider any matter referred to it by the Speaker on an Order of the House. In this regard, the main focus of the Committee is to: i. consider the Report of the Auditor General on the Accounts of local authorities, and; ii. consider the reports of the Auditor General on the management of constituency development fund and grants to local authorities 3.0 Meetings of the Committee During the period under review, your Committee held fourteen sittings to consider the Report of the Auditor General on the Review of Operations of Local Authorities for the Financial Years ended 31st December 2014, 2015 and 2016. 4.0 Procedure Adopted by the Committee With technical guidance from the Auditor General, your Committee considered both oral and written submissions from local authorities that were cited in the Report of the Auditor General on the Review of Operations of Local authorities for the Financial Years ended 31st December, 2014, 2015 and 2016. 5.0 Arrangement of the Report The Report is in three parts, as follows: Part I of the Report is the Auditor General’s preamble and a summary of all the queries; Part II deals with the response from the Secretary to the Treasury; Part III captures the responses from Controlling Officers on the individual audit queries; Part IV highlights overall recommendations from the Auditor General’s Report and Part V contains the findings from the Committee’s local tour. PART I Auditor General’s Preamble This Report presented the audit findings on the review of operations of councils for the financial years ended 31st December, 2014, 2015 and 2016. Local authorities were a key factor in socio- economic development because their operations were directly linked to community activities. An effective monitoring mechanism of their operations was therefore critical in ensuring prudent financial management for sustainable economic and social development in the country. The Constitution of Zambia (Amendment) Act, No. 2 of 2016 devolved powers to the local authorities in a quest to decentralise the operations of Government as well as all the Government departments so that institutions were now managed at the local level. This, therefore, entailed greater accountability on the part of the local authorities as they would now be responsible for a lot of government resources for onward service delivery to the general citizenry. The Report contained paragraphs on thirty-five councils. The audit of selected councils showed that twelve councils did not prepare Financial Statements for the period under review, contrary to 2 section 52 of the Local Government Act, Chapter 281 of the Laws of Zambia. Further, the Report showed that seven councils did not have strategic plans. It was also observed that councils owned various assets but twenty-two councils did not have title deeds for their properties. Other issues contained in the report included non-remittance of statutory contributions to the National Pension Scheme Authority (NAPSA), Local Authorities Superannuation Fund (LASF) and Pay As You Earn (PAYE) to the Zambia Revenue Authority (ZRA), unsupported payments, unaccounted for stores, irregular procurements, questionable payments and failure to settle retirees’ benefits, among others. A summary of the findings is contained in the table below. AMOUNT ISSUE K Failure to Collect Revenue 4,098,455 Failure to Follow Procurement Procedures 548,916 Failure to Insure Assets 199,474,423 Failure to Remit Statutory Contributions and PAYE 411,597,888 Failure to Pay Staff Obligations 225,811,615 Irregular Payment of Allowances 1,512,320 Misapplication of Funds 8,995,732 Misapplication of Equalisation Funds 14,913,913 Missing Payment Vouchers 3,839,319 Non-Recovery of Salary Advances 93,395 Overpayments 748,934 Questionable Payments 1,670,673 Unaccounted for Revenue 1,367,019 Unaccounted for Stores 18,467,255 Unapproved Payments 254,668 Undelivered Stores 147,378 The audit findings on the local authorities, which included governance, operational and financial matters, required to be addressed in order for the Councils to provide quality service delivery and development in their respective communities. The Secretary to the Treasury responded as set out below. PART II Submission by the Secretary to the Treasury The Secretary to the Treasury informed your Committee that the comments of the Auditor General on the accounts for the Local Authorities for the financial years ended December, 2014, 2015 and 2016 were appreciated. The process of interacting and communicating with the Controlling Officer whose accounts were audited was acknowledged as it provided an opportunity for the Controlling Officer to clarify and take corrective action on the audit findings so that matters were resolved during the process of the audit. 3 Introduction The responsibilities of the Minister of Finance, Secretary to the Treasury, Controlling Officers and the Auditor General as regards the management of public resources, reporting and accountability were as contained in the Constitution, the Public Finance Act, No.
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