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CMED fails to account for vehicles

CMED (Pvt) Ltd, a company set up by government to provide transport hire services and procure vehicles on its behalf, is debt-ridden and failing to account for 19 vehicles that have vanished without a trace in Harare, an audit report has said.

A  Value for Money Report compiled by the Comptroller and Auditor-General Mildred Chiri says CMED’s poor record-keeping practices has seen the company losing track of 19 vehicles in Harare alone.
She says more vehicles could vanish because of poor record-keeping in the company.

In her report, Chiri says: “As a result of poor-record keeping, I was not able to trace the movement of 19 vehicles transferred from head office to Harare province. The 19 vehicles were also not recorded at the provincial office.”

“I observed with concern that, of the 68 Mahindra vehicles bought, 15 of them were issued without proper procedures having been followed as one could hardly trace them to the user ministry and in addition these vehicles have not been billed since their date of purchase in March 2008.

“The vehicles were entered in the fleet list in March 2008. This, in my opinion, is open to abuse and could even result in the CMED (Pvt) Ltd losing vehicles, as the vehicles cannot be traced to the user ministry due to inadequate recording,” her report said.

Chiri said the CMED’s Chinhoyi provincial office also faces the same problem – poor record keeping – that resulted in the failure to provide vehicle files for 63 light vehicles and 27 heavy vehicles. 
The report says further evidence of poor record-keeping was also reflected by the absence of job cards in the vehicles that were presented for inspection.

The fleet list in Mutare is also not complete. Out of 165 vehicles, 76 had no engine numbers, 44 had no chassis number while 34 had dates when they were bought and their expected year of disposal.
CMED also does not have an asset register, according to the report.

This resulted in the auditor failing to ascertain whether the company really owns 1 200 vehicles as claimed by management.
“I established that vehicle registers were not properly recorded and that there was no master asset register,” Chiri said in the report.

Apart from poor records, the company is operating with an aged fleet, fails to honour government tender bids, cannibalises vehicles, does not replace an aged fleet that is costly to maintain and does not service vehicles.

Cannibalism entails taking parts from a vehicle with major problems and transferring them to another vehicle of the same make to get a vehicle back on the road.

The report says the company takes a long while to repair vehicles. For instance,according to the report, in a review of provincial and district workshops from 2004 to 2008 from a sample of 3 490 vehicles 42% exceeded the company’s own service schedule of two days.
Also the company’s assets are “tied up” in debtors.

“My analysis of the organisation’s financial statements for the financial years 2004 to 2008 revealed that more than 50% of the organisation’s current assets were tied up in debtors. In 2004, 78% current assets were tied up in debtors, 64% in 2005, 56% in 2006, 78% in 2007 and 88% in 2008,” the report said.

According to the report, line managers were not seeking authority to cannibalise vehicles as required by the management. The report says CMED blames government departments for some of the problems at the company. For instance, the report says the Ministry of Information never made a single payment in 2008 while the Mines Ministry only paid in July 2008.  The Local Government and Justice ministries were also fingered as culprits for non- payment to CMED.

But Chiri says the company is not aggressive in its debt management and collection approach.
“Even though CMED (Pvt) Ltd was attributing its failure to purchase vehicles to ministries not paying their bills on time, I however, noted with concern that 24 vehicles were not billed since the date of purchase in question,” Chiri said.

In her recommendations, the comptroller said CMED needs to be recapitalised for the company to be self-sustaining, maintain minimum stock levels for spares, ensure adequate supervision at all levels and design and implement “good internal control systems which ensure that all vehicles purchased are properly recorded”.

The report reads: “CMED (Pvt) Ltd should ensure that there is adequate supervision at all levels. Management should design and implement a good internal control system which ensures that assets of the organisation are properly recorded.

“CMED (Pvt) Ltd management should ensure that all vehicles purchased are recorded and information that should be contained in the asset register is captured. There should be a monitoring mechanism to ensure that all activities and information are recorded. Good record-keeping would help in
identifying areas needing more attention and resources and hence help management in decision- making.”

The report urged management of the state company to effect an aggressive management of debtors.
CMED was a parastatal prior to commercialsation in 2000.

Chris Muronzi

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