ZNBS books of accounts not reconciled - Auditor General's report

ZNBS books of accounts not reconciled - Auditor General's report
By Henry Sinyangwe
Mon 18 June 2012, 13:24 CAT

ZAMBIA National Building Society's books of accounts have not been reconciled for the past five years in which it wrote off K948 million mortgage debts which were not secured, says the Auditor General's report. And reports reveals that ZNBS in 2006 wrote off K2.1 billion unreconciled balances in mortgage loans although no documentation was availed for verification.

"A scrutiny of financial statements revealed that the society's accounts for the year ended 31st March 2007 had unreconciled balance of K86 million which was stated as relating to inter branch receivables," stated the Auditor General.

"There was no documented evidence produced for audit to indicate that the accounts have been reconciled as of December 2011."

The report stated that ZNBS wrote off mortgage debts amounting to K948 million which were not secured.

"Although in response, management stated that all mortgages were secured by property and that had been the case on all traditional mortgages except for home improvement loans which were of a shorter duration were secured by simple deposit of title and memoranda of understanding or deed of guarantee with various organisations which form the basis of security as repayments were recovered at source by the employer and that most of the poorly performing loans were on account of job losses following the global credit crunch from 2008 to mid 2010 which resulted in Sun Hotel laying off a substantial numbers of employees who had borrowed thus necessitating write-offs, no documentations were availed for verification," according to the report.

The report stated that as of March 31, 2010, 3636 accounts with a total of K5,278,505,928 were overdrawn in all the 19 branches of the society compared to K1,277,971,110 overdrawn in 2009.

"Therefore, the overdrawn accounts increased by K4,000,534,818 representing an increase of 313 per cent," stated the report. "Amongst the branches which had the largest amounts overdrawn were Chililabombwe, Chingola, Kitwe, Livingstone and Solwezi with Kitwe being the highest with a value of K922,969,796."

ZNBS is expected to appear before the Parliamentary Public Accounts Committee (PAC) this Friday to respond to the queries raised by the Auditor General.