THE Auditor General’s Report has revealed that the Zambia Forestry and Forest Industries Corporation Limited (ZAFFICO) did not submit expenditure returns to the Office of the Accountant General in amounts totalling US$1,200,000 from the sale of Mukula logs.

And the Report disclosed that the corporation paid K 4,560,947 towards electricity bills for former institutional houses.

According to the Auditor General’s Report on the Accounts of Parastatal Bodies and other statutory institutions for the financial year ended December 31, 2018, US$5,474,914 was realized from the sale of Mukula logs.

“On 17th August 2015, ZAFFICO Limited was granted authority by Ministry of Lands, Natural Resources and Environmental Protection to export the already harvested Mukula logs. On 30th May 2017, ZAFFICO Limited received further directives to collect all the logs countrywide and export them. The proceeds from the exports were to be invested in ZAFFICO Limited and ZAFFICO Tea Company. Further, on 13th December 2017, ZAFFICO Limited was granted authority to retain US$1,200,000 realized from the disposal of the confiscated Mukula logs with the following conditions among others: utilise funds on programmes for which funds have been requested, and submit expenditure returns to the Office of the Accountant General – Ministry of Finance on utilisation of the above stated funds in accordance with regulation no. 8 of Financial Regulations of 2006,” The Report read.

“During the period from 8th September 2016 to 7th December 2018, amounts totaling US$5,474,914 were realized from the sale of Mukula logs. However, the following were observed; contrary to the outlined conditions, as at 31st December 2019, ZAFFICO Limited had not submitted expenditure returns to the Office of the Accountant General, in amounts totalling US$1,200,000. In the absence of expenditure returns there is a possibility of funds being applied on other unrelated
activities. A scrutiny of the bank statement as at 31st December 2018 revealed that the Mukula bank account had a balance of US$4,361,882.71 (fixed deposit account US$4,207,982.34 and bank balance US$153,900.37) However, the investment plan and budget on the utilisation of the funds was not availed for audit as at 31st December 2019.”

The Report revealed that the corporation did not have a receivable management policy.

“During the period under review, the Corporation did not have a receivable management policy. In this regard, it was not clear as to what guided the Corporation in the management of receivables. Consequently, it was observed that during the period under review the trade receivables increased from K2,601,483 in 2016 to K15,333,197 in 2018. The debtors’ age ranged from 60 to above 180 days. The failure to collect debts on time may lead to cash flow constraints,” the report read.

And according to the report, the Corporation continued paying electricity bills for former institutional houses.

“A review of ZAFFICO‘s electricity bills for the period under review revealed that, included in the bills were bills for former institutional houses. However, the Corporation continued paying electricity bills for the institutional houses as they were not delinked from the office lines. In this regard, the Corporation paid K1,036,406 in 2016; K2,431,276 in 2017; and K1,093,265 in 2018 towards electricity bills. In a meeting held on 29th September 2016, the Board directed management to constitute a Committee to follow up on the de-linkage and subsequent recoveries from the occupants of the houses. As at 31st December 2019, management had not implemented the Board’s directive,” the Report disclosed.

Meanwhile, the Report revealed that the corporation did not have a long term strategic guidance on the management of the forest plantations.

“A review of the Forest Inventory Report of 2016 revealed that the Corporation had planned to develop a five (5) year Forest Plantations Management Plan for the period 2018 to 2023 as a deliverable which was supposed to be approved by the Board by 20th March 2017. However, as at 31st December 2019, the Forest Plantation Management Plan had not been developed.In the absence of a plan, the Corporation did not have long term strategic guidance on the management of the forest plantations,” read the Report.