Zim’s State-owned enterprises shine
Introduction:
In a momentous stride toward transparency and accountability, Zimbabwe’s state enterprises have observed a remarkable surge in the submission of audited financial statements for the year 2023, signalling a noteworthy departure from historical norms.
This newfound dedication to robust financial disclosure not only signifies a significant governance shift, but also ushers in a promising era of enhanced fiscal responsibility across the nation’s public sector.
The substantial rise in the availability of these crucial reports not only demonstrates a steadfast commitment to upholding stringent financial regulations but also underscores a revitalised drive to boost investor confidence and cultivate sustainable economic development.
The Auditor General’s Report for 2023 has brought a beacon of optimism for Zimbabwe’s State-owned enterprises and parastatals. According to the report, there has been a notable enhancement in transparency and accountability within these entities, as evidenced by a significant uptick in the number of audited financial statements. In 2023, this figure climbed to 119, up from 104 in the preceding year.
The report indicated that out of 166 public enterprises, 119 successfully submitted financial statements for auditing, showcasing a noticeable improvement in submission rates compared to the 104 recorded in 2022.
During 2023, the Auditor General and her team undertook a substantial auditing effort covering financial statements from 2023, 2022, 2021, 2020 and earlier periods.
At the time of reporting, the Auditor General had completed auditing 191 financial statements, with 127 submissions still undergoing the audit process, reflecting an amplified rate of submissions.
Implications of a financial audit
Financial audits help ensure that the financial statements of State-owned enterprises accurately represent their financial position. It promotes transparency by revealing any discrepancies or irregularities in financial reporting. Through the audit process, the Auditor General can assess if the SOEs are following proper accounting standards and guidelines, promoting accountability in the management of public funds.
Audits can uncover inefficient or ineffective practices within State-owned enterprises, identifying areas where improvements can be made to enhance operational efficiency and effectiveness in delivering services or products.
By evaluating the performance of SOEs, the audit can highlight areas where resources are mismanaged or where operational processes can be optimised.
Audits help in the early detection of risks and potential fraudulent activities within State-owned enterprises.
This is crucial in safeguarding public funds and assets from misuse or misappropriation. Identifying weak internal controls or areas vulnerable to fraud allows for corrective actions to be taken to mitigate these risks and strengthen governance mechanisms.
Audits ensure that State-owned enterprises comply with relevant laws, regulations and governance frameworks. Non-compliance discovered during audits can lead to corrective measures being implemented to align operations with legal requirements. Through audits, the Auditor General can assess the effectiveness of governance structures within SOEs, recommending improvements to enhance oversight and accountability.
An audit by the Auditor General of a country on State-owned enterprises (SOEs) can have significant implications, shedding light on the financial health, transparency and governance practices of these entities.
Implications of the increase in the audits for Zimbabwe’s Public Sector:
The increase in the audit of financial statements signifies a move towards enhanced transparency and accountability within Zimbabwe’s State-owned enterprises and parastatals.
It reflects a commitment to upholding best practices in financial reporting and management, crucial for rebuilding trust among stakeholders and the public. This increase in submission of accounts for auditing can have a number of implications for Zimbabwe’s public sector.
Strengthening investor confidence: The improved transparency and accountability resulting from increased audits are fundamental for attracting both domestic and foreign investment. Investors are more likely to engage with entities that demonstrate sound financial practices, reducing risk perceptions and encouraging capital inflows.
Efficient resource allocation: By having a transparent financial reporting system in place, State-owned enterprises can better allocate resources, identify inefficiencies and make informed decisions. This transparency helps streamline operations, enhance performance and ultimately contribute to the sustainability of these entities.
Mitigating corruption risks: Transparent financial reporting acts as a deterrent against corruption and mismanagement of resources. By subjecting financial statements to rigorous audits, Zimbabwe’s State-owned entities can identify and address irregularities promptly, thus reducing the prevalence of fraudulent activities and enhancing overall governance.
Accountability to stakeholders: Regular audits foster a culture of accountability by ensuring that entities are answerable for their financial performance and decisions. This accountability extends to various stakeholders, including Government authorities, shareholders, employees, and the general public, fostering trust and credibility in the public sector.
Compliance with regulatory requirements: Compliance with audit and reporting standards is essential for meeting regulatory requirements and upholding legal obligations. Entities that adhere to these standards not only avoid potential legal repercussions but also demonstrate a commitment to operating within the bounds of the law.
Conclusion:
The increase in the number of audited financial statements within Zimbabwe’s State-owned enterprises and parastatals for the year 2023 signifies a positive step towards fostering transparency, accountability, and good governance practices. This trend is critical for the survival and revitalization of Zimbabwe’s public sector, as it enhances investor confidence, promotes efficient resource management, mitigates corruption risks, ensures accountability, and facilitates compliance with regulatory frameworks. Moving forward, sustained efforts to maintain this momentum will be vital in driving continued progress and rebuilding a resilient and trustworthy public sector in Zimbabwe.
Retired Major Silibaziso Zhou is a senior lecturer at Great Zimbabwe University and the following (FACCA, FCGI, MBA, MCOM ACC.B.TECH ACC,FORENSIC AUDITOR & PAAB)
-ebsuienssweekly
