SRC A SINKING SHIP

Petros Kausiyo Deputy Sports Editor
THE Sport and Recreation Commission’s future as a going concern has been put into question amid stunning revelations by an audit report that the regulatory body is being weighed down by rising debts that have reached nearly $1,5 million.

In the audit produced by Nolands Harare Chartered Accountants, it has emerged that the Sports Commission’s debt has ballooned from $500 000 two years ago with a red flag now been raised over the capacity of the institution led by Edward Siwela and directed by Joseph Muchechetere and finance chief Patience Kabanda, to rescue itself from the slide.

Both board chairman Siwela and acting director-general Muchechetere signed an acknowledgement of the audit report, a copy of which The Herald has obtained, which leaves a number of questions on the state of the body that is tasked with superintending the country’s sporting associations.

Muchechetere has been acting director-general for over two years and is one of the applicants whose name is being considered by Siwela’s board for the substantive director-general’s post that fell vacant following Charles Nhemachena’s departure in April 2016.

But it is the observations contained in the audit report, which paint a grim picture of the situation at the Sports Commission and its future and whose management appear to have targeted collection of levies from associations as their best bet for sustainability.

“We have audited the accompanying financial statements of the Sport and Recreation Commission which comprise the Statements of Financial Position as at 31 December 2017 and the Statement of Comprehensive income, Statement of Changes in Reserves and Statement of Cash Flows for the year then ended as a summary of significant accounting and polices and the explanatory notes as set out on pages 8-20.

In our opinion the accompanying financial statements presented fairly in all material respects the financial position of the Sports and Recreation Commission as at 31 December 2017 and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.

“We concluded our audit in accordance with International Standards of Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report.

“We are independent of the Commission in accordance with the ethical requirements that are relevant to our audit of financial statements in Zimbabwe and we have fulfilled our ethical responsibilities in accordance with these requirements. We believe that audit evidence we have obtained is sufficient and appropriate to prove basis of our opinion,’’ read part of the report.

It is the auditors’ remarks on the state of the Commission as a going concern that must also worry both the Ministry of Youth, Sport, Arts and Recreation and the associations that have been playing their part to ensure the institution continues to survive through payment of levies in terms of the SRC Act.

The auditors noted that the Commission had accumulated losses of $1,387, 415 with their total liabilities exceeding current assets by $1, 026 317.

“We draw attention to Note 23 in the financial statements which indicates that the Commission had accumulated losses of $1 387 415 and total current liabilities exceed total current assets by $1 026 317.

“The Commission mainly relied on government grants and did not fully exploit its other sources of income. These conditions along with other matters set out in the financial statements indicate the existence of a material uncertainty that may cast significant doubt about the Commission’s ability to continue as a going concern.

“Our opinion is not modified in respect of this matter,’’ the auditors said.

Nolands Harare Chartered Accountants, who carried out the audit, also outlined the Auditors’ responsibilities for the audit of the financial statements from which one of their main objectives included to “obtain reasonable assurance about whether the financial statements as a whole a free from material misstatement, whether due to fraud or error and issue an auditor’s report that includes our opinion’’.

“As part of an audit in accordance with ISAs we exercise professional judgment and maintain professional scepticism throughout the audit’’.

These included to:

Conclude on the appropriateness of management’s use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Commission’s ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to date of our auditor’s report. However, future events or conditions may cause the Commission to cease to continue as a going concern.’’

On Note 23 which the auditors earlier made reference to, they noted that the Sports Commission management had outlined some initiatives they believe could increase the revenue base.

“We draw you to the fact that as at December 31, 2017 the Commission had accumulated losses of $1 387 415 and total current liabilities exceed total current assets by $1 026 317. The financial statements have been prepared on the basis of accounting policies applicable to going concern.

“This basis presumes that funds will be available to finance future obligations and that the realisation of assets and the settlement of liabilities, contingent obligations and commitments will occur in the ordinary course for business. The ability of the institution to continue as a going concern is dependent on a number of factors, the most important of these is that the Board must continue to procure funding for the on-going operations of the Commission.

“In the 2018 outlook, the Sports and Recreation Commission board has approved a number of initiatives meant to address the on-going threat facing the Commission. These initiatives include – a) registering all sports organisations, b) registering all Sport and Recreation facilities, c) Collection of annual levy from Sport and Recreation bodies are backed by the Sport and Recreation Commission Act Chapter 25:15 and the respective regulations.

“The Commission believes the initiatives outlined are sustainable and financially sound and will be able to address the current ‘going concern’ threat’’.

Although the Sports Commission management have outlined the initiatives, it can also be noted from the audit that levy collection and fundraising efforts have already increased from $154 629 to $214 148.

Curiously though, fund raising expenses rose from $3, 967 to $49 065 with the Commission citing the Zimbabwe Legends against Barcelona Legends match at the National Sports Stadium last year, as the biggest cost driver at $39,342 and it raised $38,477.

Source :

The Herald

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