HARARE – The Sports and Recreation Commission (SRC) is under scrutiny following the release of its financial audits for 2022 and 2023, revealing significant governance issues and questionable financial practices.
According to the audit report, the SRC paid its director ZWL$1.2 billion in benefits, including housing, school fees, and entertainment allowances. These payments were processed outside the payroll system, which meant they were not subjected to Pay As You Earn (PAYE) tax, as required by Section 8 (1) f of the Income Tax Act [Chapter 23:06].
“The Commission processed director’s benefits amounting to ZWL$1.2 billion, which were not subjected to PAYE tax,” the report stated. “This could lead to financial loss due to penalties and fines.”
In response, the SRC acknowledged the issue but cited financial constraints as a reason for non-compliance. “We acknowledge that the benefits accrued and/or paid are taxable. However, the Commission does not currently have the capacity to do so. As revenue streams are diversified and increased, this will be reviewed on an ongoing basis,” the SRC management said.
It could immediately be ascertained who was the SRC director at the time who benefited from the said payout. Eltah Nengomasha is currently the SRC director-general, appointed with effect from 1st April, 2023.
The audit also highlighted other significant governance issues, such as the absence of key policies. “The Commission operated without key policies during the year 2023, such as the donations, Information Technology, and Investment policy,” the report noted. This non-compliance was contrary to Section 44 (1) (a) of the Public Finance Management Act [Chapter 22:19].
In 2022, the SRC received a qualified opinion from the auditors due to non-compliance with International Accounting Standard (IAS) 21, relating to the effect of changes in foreign exchange rates. The report indicated that the SRC maintained an exchange rate of 1:1 between the USD and ZWL$, despite market evidence to the contrary.
Despite these issues, the SRC’s 2023 financial statements received an unmodified, or clean, opinion from the auditors. “In my opinion, the financial statements present fairly, in all material respects, the financial position of the Sports and Recreation Commission as at December 31, 2023, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs),” the auditor stated.
The SRC has committed to addressing the audit findings, with plans to develop and implement necessary policies by the third quarter of 2024.
