…Auditor General shocked by “depth of financial mismanagement”
Mohloai Mpesi/Mathatisi Sebusi
THE Maseru City Council (MCC) has failed to account for more than M200 million over a six-year period, a staggering financial black hole exposed this week through a series of damning audit reports tabled before parliament.
According to the Auditor General, ‘Mathabo Makenete, the Council’s financial statements for 2017 to 2022 are so riddled with inconsistencies, omissions and missing documentation that she could not express an opinion on any of them, resulting in six consecutive disclaimer opinions, a rarity of alarming proportions in public finance.
A disclaimer is the worst form of opinion any entity can obtain from a professional audit. It essentially means its accounts are so bad that they are unauditable. The entity cannot provide sufficient evidence for an auditor to form an opinion on its financial statements.
The reports, which were tabled by the Minister of Local Government, Chieftainship, Home Affairs and Police, Lebona Lephema, show a local authority whose bookkeeping and financial accountability has been in shambles for years.
MCC went for an extended period without being audited until the Town Clerk, ‘Moea Makhakhe, submitted all the financial statements for the outstanding six years on 11 August 2025. This submission prompted Ms Makenete to commission CGT and Associates Chartered Accountants to conduct the long-overdue audits.
In his cover submission for the six statements, Mr Makhakhe wrote: “I attest that the financial statements are based on properly maintained financial records and are in accordance with procedures laid down under the Public Financial Management and Accountability Act 2011 and Treasury Regulations 2014 issued under that law.”
But the audit findings paint a drastically different picture – one defined by missing revenue, unexplained variances, missing supporting documents, and discrepancies between ledgers and statements.
Presenting her findings, Ms Makenete said she could not obtain sufficient and appropriate evidence to form an opinion.
“I do not express an opinion on the financial statements of the MCC because of the significance of the matters described in the Basis for Disclaimer of Opinion section of my report.
“I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.” She noted that her audits followed the International Standards of Supreme Audit Institutions (ISSAI) and adhered to the IESBA Code of Ethics for Professional Accountants.
“Nevertheless, the depth of financial mismanagement made it impossible to reach any reliable conclusions, and no key audit matters could be identified due to the overwhelming deficiencies,” she said.
Ms Makenete affirmed that MCC management bears the responsibility for preparing accurate financial statements, ensuring proper disclosure, assessing the council’s ability to continue as a going concern, and maintaining sound internal controls.
She explained that auditors must assess the risks of material misstatements, understand internal controls, evaluate accounting estimates and policies, and review the overall structure of the financial statements.
Those charged with governance must oversee the reporting process and address internal control deficiencies that audits may identify, she stressed.
But across all the six years, the audit teams repeatedly encountered the same red flags: revenue that appeared nowhere in the financial statements, expenditure omitted without explanation, discrepancies between the books and bank confirmations, and age-analysis listings that did not match account disclosures.
2017
Ms Makenete reported that the year’s books were riddled with “unexplained discrepancies of figures between the financial statements and general ledger”.
She said the statement of cash receipts and payments reflected operating expenses of M151 383 562 and revenues of M147 761 955, but these did not tally with the M149 652 896 and M221 176 100 reported in the Statement of Comparison of Budget and Actual.
“These amounts were inconsistent… The difference resulted in unexplained variances of M1 730 666 and M73 414 145 for total operating expenses and revenues respectively,” Ms Makenete stated, leaving M75 144 811 unaccounted for.
She added that revenues from the sale of land (M70 000) and project grants of M19 078 672.94 did not appear in the financial statements. “There were no supporting documents for sampled operating expenses of M2 186 341. Expenditure accounts amounting to M6 157 519.42 were omitted in the financial statements. There were inconsistencies between the financial statement disclosures and the age analysis listing balances.”
2018
For 2018, Ms Makenete again cited major anomalies, saying: “A discrepancy of M469 597 exists between the bank balance per financial statements and bank confirmations from the bank. The cause of the difference could not be confirmed due to lack of bank reconciliations.”
That M469 597 is effectively missing.
She further revealed that revenue from the sale of land (M166 110) and project grants (M48 671 271) were not captured in the financial statements.
“There were no supporting documents for sampled revenue and operating expenses amounting to M256 568 and M2 432 107 respectively. Expenditure accounts amounting to M2 217 040 were omitted in the statement’s disclosure and age analysis listing balances. There were unexplained inconsistencies between the financial statement’s disclosure and age analysis listing balances.”
2019
In 2019, the statement of cash receipts and payments reflected operating expenses of M166 464 436, an amount that did not match the M167 206 733 reported in the Statement of Budget and Actual — producing an unexplained variance of M742 297.
“A discrepancy of M5 620 721 exists between the bank balance per the financial statements and bank confirmations from the banks; the cause could not be explained due to lack of bank reconciliations,” she said.
She further noted that there were no supporting documents for sampled operating expenses of M1 794 887, while revenues from sale of land (M188 700) and project grants (M12 444 414) were not reflected in the financial statements. There were also inconsistencies between disclosures and the age analysis listing.
2020
For 2020, the statement of cash receipts and payments recorded operating expenses of M129 647 288 and revenues of M122 850 029, figures that differed sharply from the M127 529 281 and M66 345 933 shown in the budget and actual statement.
“The difference resulted in unexplained variance of M2 118 007 and M56 504 096 for total operating expenses and revenues respectively,” the report noted — a combined M58 622 103 unaccounted for.
A further M6 771 517 discrepancy existed between bank balances, again due to lack of reconciliation.
There were no supporting documents for sampled revenues (M668 889) and operating expenses (M1 237 747). Expenditure accounts totalling M30 025 628 were omitted from the statements, compounded by unexplained inconsistencies with the age analysis listing.
2021
The 2021 audit showed operating expenses of M83 607 020 and revenues of M72 213 987, which are at variance with the M54 004 400 and M42 208 842 recorded in the budget and actual statement.
“The differences resulted in unexplained variances of M29 602 620 and M30 005 144 for operating expenses and revenues, respectively,” the report read — leaving a total of M59 607 764 unaccounted for.
Ms Makenete added that revenues from property rates of M4 650 634 were not recorded, while expenditure accounts of M19 162 724 were omitted.
A Caterpillar TLB originally purchased for M2 081 168 had been disposed of, but that disposal was never reflected in the financial statements. Disclosures again conflicted with the age analysis listing.
2022
In 2022, the audit found operating expenses of M60 440 809 and revenues of M66 684 529 in the cash receipts and payments statement. These diverged from the M62 143 511 and M61 200 594, respectively, reported in the Statement of Comparison of Budget and Actual, showing unexplained variances of M1 702 701 and M5 483 935 — a combined M7 186 636 missing.
The report added that revenues from land sales (M128 240) and project grants (M11 771 720) were not accounted for.
“There were no supporting documents for sampled revenues and operating expenses amounting to M497 818 and M1 143 178 respectively. There were unexplained inconsistencies between the financial statement’s disclosures and the age analysis listing,” it stated.
Across the six years, the total amount unaccounted for stands at an astonishing M201,773,208 — a figure that highlights a prolonged and deeply entrenched failure in financial accountability at MCC.
