REPORT of the Auditor-General for the FINANCIAL YEAR ENDED DECEMBER 31, 2019 ON STATE ENTERPRISES AND PARASTATALS _________________________________________ Presented to Parliament of Zimbabwe: 2021 _________________________________________ DISTRIBUTED BY VERITAS e-mail: [email protected]; website: www.veritaszim.net Veritas makes every effort to ensure the provision of reliable information, but cannot take legal responsibility for information supplied. 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 New Government Complex Samora Machel Avenue Harare Dear Sir, I hereby submit my Report on the audit of State Enterprises and Parastatals in terms of Section 309(2) of the Constitution of Zimbabwe read together with Section 10(1) of the Audit Office Act [Chapter 22:18], for the year ended December 31, 2019. Yours faithfully, M. CHIRI (MRS), AUDITOR-GENERAL. HARARE April 8, 2021 OAG Vision To be the Center of Excellence in the provision of Auditing Services. OAG Mission To examine, audit and report to Parliament on the management of public resources of Zimbabwe through committed, motivated, customer focused and well trained staff with the aim of improving accountability and good corporate governance. TABLE OF CONTENTS LIST OF ACRONYMS ........................................................................................................ iii PREAMBLE ........................................................................................................................... v EXECUTIVE SUMMARY ................................................................................................. vii PUBLIC ENTITIES UNDER THE CATEGORY OF AUTHORITIES AND AGENCIES .................................................................................................................................................. 1 NATIONAL SOCIAL SECURITY AUTHORITY 2018 ........................................................ 2 PROCUREMENT REGULATORY AUTHORITY OF ZIMBABWE (PRAZ) 2016 - 2018 7 ZIMBABWE NATIONAL ROAD ADMINISTRATION 2018 ........................................... 10 ZIMBABWE PARKS AND WILDLIFE MANAGEMENT AUTHORITY 2018 ............... 16 ZIMBABWE REVENUE AUTHORITY (ZIMRA) 2019 .................................................... 21 PUBLIC ENTITIES UNDER THE CATEGORY OF BOARDS ................................... 30 GRAIN MARKETING BOARD (GMB) 2018/2019 ............................................................ 31 TOBACCO INDUSTRY AND MARKETING BOARD (TIMB) 2018 ............................... 35 PUBLIC ENTITIES UNDER THE CATEGORY OF COMMISSIONS ....................... 37 FORESTRY COMMISSION OF ZIMBABWE 2018 ........................................................... 38 ZIMBABWE ELECTORAL COMMISSION 2016 - 2018 ................................................... 41 PUBLIC ENTITIES UNDER THE CATEGORY OF COUNCILS ............................... 44 NATIONAL AIDS COUNCIL 2018 ..................................................................................... 45 ZIMBABWE SCHOOL EXAMINATIONS COUNCIL (ZIMSEC) 2018 ........................... 47 PUBLIC ENTITIES UNDER THE CATEGORY OF COMPANIES AND CORPORATIONS ............................................................................................................... 51 CHEMPLEX CORPORATION LIMITED AND ITS SUBSIDIARIES 2018 AND 2019 ... 52 DEPOSIT PROTECTION CORPORATION 2019 ............................................................... 55 MINING PROMOTION CORPORATION (PRIVATE) LIMITED (MPC) 2016, 2017 AND 2018......................................................................................................................... ............... 57 MINERALS MARKETING CORPORATION OF ZIMBABWE (MMCZ) 2018 AND 201959 NATIONAL RAILWAYS OF ZIMBABWE (NRZ) 2019 ................................................... 63 MOSI OA TUNYA DEVELOPMENT COMPANY (PRIVATE) LIMITED (2012- 2015) 68 NATIONAL OIL INFRASTRUCTURE COMPANY OF ZIMBABWE (NOIC) 2018....... 71 NET*ONE CELLULAR (PRIVATE) LIMITED 2019 ......................................................... 74 PETROTRADE (PRIVATE) LIMITED 2018....................................................................... 77 ............................................................................... 80 ZIMBABWE CONSOLIDATED DIAMOND COMPANY 2018 AND 2019 ..................... 84 i ZIMBABWE ELECTRICITY TRANSMISSION AND DISTRIBUTION COMPANY (ZETDC) 2019........................................................................................................................................ 93 ZESA HOLDINGS (PRIVATE) LIMITED 2019 ................................................................. 99 PUBLIC ENTITIES UNDER THE CATEGORY OF FINANCIAL INSTITUTIONS102 INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE (IDBZ) 2019 ............ 103 NATIONAL BUILDING SOCIETY 2019 .......................................................................... 106 SMALL AND MEDIUM ENTERPRISES DEVELOPMENT CORPORATION (SMEDCO) 2018......................................................................................................................... ............. 109 ZIMBABWE WOMEN ............................... 112 PUBLIC ENTITIES UNDER THE CATEGORY OF HOSPITALS ........................... 115 MPILO CENTRAL HOSPITAL 2017 AND 2018 .............................................................. 116 PARIRENYATWA GROUP OF HOSPITALS 2018 ......................................................... 120 ANNEXURE STATE ENTERPRISES AND PARASTATALS AUDIT OPINIONS PER ENTITY ..................................................................................................................... 123 ANNEXURE ................... 139 ANNEXURE ...................................................... 142 ANNEXURE ACCOUNTS NOT SUBMITTED FOR AUDIT ............................ 143 ii LIST OF ACRONYMS 1. GMB- Grain Marketing Board 2. IFRSs- International Financial Reporting Standards 3. ISAs- International Standards on Auditing 4. ISSAIs- International Standards of Supreme Audit Institutions 5. MMCZ- Minerals Marketing Corporation of Zimbabwe 6. NOIC- National Oil Infrastructure Company of Zimbabwe 7. NAC- National AIDS Council 8. NSSA- National Social Security Authority 9. OAG- Office of the Auditor General 10. PRAZ- Procurement Regulatory Authority of Zimbabwe 11. POTRAZ- Postal and Telecommunication Regulatory Authority of Zimbabwe 12. RBZ- Reserve Bank of Zimbabwe 13. RIB-Removal in Bond 14. RIT- Removal in Transit 15. SAP- Systems, Applications, Products in Data Processing. 16. SMEDCO-Small and Medium Enterprises Development Corporation 17. SPB- State Procurement Board 18. TIMB- Tobacco Industry and Marketing Board 19. TIP- Temporary Import Permit 20. VAT- Value Added Tax 21. ZCDC-Zimbabwe Consolidated Diamond Company 22. ZETDC-Zimbabwe Electricity Transmission and Distribution Company iii 23. ZIMRA- Zimbabwe Revenue Authority 24. ZIMSEC-Zimbabwe School Examinations Council 25. ZINARA- Zimbabwe National Roads Administration iv PREAMBLE Introduction Following the end of the 2019 financial year for public entities, I take the opportunity to report my audit findings. The primary purpose of financial statements is to provide relevant and reliable information to users about a reporting entity 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 All aspects of the entities 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