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OpenOver US$4.8 Million At Air Zimbabwe Unaccounted For - Auditor-General
Air Zimbabwe (Private) Limited’s financial statements have come under scrutiny after the Auditor-General (AG) issued an adverse opinion for 2020 and an unmodified opinion for 2021.
The Acting Auditor-General Rheah Kujinga, in the Auditor-General’s report for the Financial Year ended December 31, 2023, note several key issues, including discrepancies in opening balances, inventory valuation, and ongoing concern uncertainties at the national airline.
According to the report, in 2020, the Auditor-General found that opening balances did not agree with the prior year’s financial statements, with variances amounting to USD$4.89 million. Said Kujinga:
As at the beginning of the year ended December 31, 2020, Air Zimbabwe’s opening balances were not agreeing to the prior year financial statement balances.
Management could not provide a justification or correction for the variances in the opening balances amounting to USD$4.89 million.
As such, I could not satisfy myself on the accuracy of the opening balances and determine if any adjustments were necessary to the statement of financial position.
Therefore, for all balance sheet balances, valuation and accuracy of them could not be determined. The prior year financial statements were modified in respect of this matter.
The AG also said an inventory count was not performed, casting doubt on the existence, completeness, and valuation of inventories. She said:
During the year ended December 31, 2020, inventory amounting to USD$14.4 million was recognised in the financial statements. An inventory count was not performed as at December 31, 2020.
As a result, I was unable to determine whether any adjustments might be necessary in respect of the recorded or unrecorded inventories. I was thus unable to satisfy myself as to the existence, completeness and valuation of the inventories.
The prior year financial statements were modified in respect of this matter.
The Auditor-General also noted that the company’s current liabilities exceeded its total assets by US$358.2 million, raising concerns about its ability to continue as a going concern. Reads the report:
I draw your attention to the fact that Air Zimbabwe incurred a net loss of USD11.1 million (2019: USD15.3 million).
The accumulated losses of USD417.4 million have been recognised to date and that the Company’s current liabilities exceeded its total assets by USD358.2 million.
In addition, there is a contingent liability amounting to approximately USD39 million arising from claims being done over the ownership of ZWPN Airbus A320.
These conditions indicated uncertainties which cast significant doubt on the Company’s ability to continue as a going
concern. My opinion was not modified in respect of this matter.
In response to the concerns raised, the Air Zimbabwe management team acknowledged the issues and committed to implementing corrective measures.
This included finalizing the relevant policy documents and aligning the organization’s accounting processes with the established reporting framework.
While the auditor noted that the organisation had made progress in addressing some of the previous audit findings, one finding from the 2021 report remained outstanding and unresolved. Said the AG:
The Commission made progress in addressing audit findings raised in my 2021 and 2022 annual reports.
I raised three (3) findings in my 2022 annual report and followed up on one (1) finding which was outstanding from my 2021 annual report.
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