City audit shock

2010-01-28 00:00

AFTER getting clean audits for two years in a row, the Msunduzi Municipality has dropped the ball.

According to the Auditor-General’s (AG) report, which was tabled at yesterday’s full council sitting, the municipality received a qualified audit for the 2008/2009 financial year. This means that in assessing the municipality’s financial statements and performance during this period, the AG found they were not up to standard.

Some of the problem areas outlined in the report have to do with irregular expenditure and material losses.

The financial statements disclose that “irregular expenditure to the amount of R4,078 million was incurred as the supply chain management process had not been followed”.

They also show that water and electricity losses of R60,05 million and R32,42 million respectively were incurred during the year,” states the report.

The municipality’s failure to comply with the Basic Conditions of Employment Act was another contributing factor.

The report states that working hours for employees exceeded the prescribed standards, causing the municipality to exceed the overtime budget by R32, 401 million during the year.

The municipality’s internal controls were also found to be below standard.

“The municipality has regressed from the prior year in that various internal control deficiencies were noted during the current year. These deficiencies resulted in numerous correcting adjustments during audit, and indicated that accurate financial reporting of affected transactions, balances and disclosures were not at appropriate levels,” states the report.

Although financial reports were submitted on time, the report says supervision, monitoring and leadership were not always evident.

“This is highlighted by the various control weaknesses that were noted during audit. Moreover, the financial statements and performance information submitted for auditing were not of the desired quality, thus resulting in numerous correcting adjustments,” states the report.

Also startling are the forensic investigations conducted during the 2006/07 financial year by the National Prosecu­ting Authority (NPA), as well as an investigation commissioned by the MEC for Co-operative Governance in 2007, whose outcomes are still outstanding.

Five fraud investigations led to the dismissal of those involved during the financial year.

Although the municipality was recognised as having the best provincial intergrated development plan (IDP), a few months ago the report found that the IDP had some shortcomings.

“The annual budget of the municipality did not have a clear link to the priorities, objectives and performance targets as set out in the IDP,” states the report.

The mid-year budget was not assessed, some information was found to be inaccurate and incomplete, and the performance management system was sadly lacking.

Municipal manager Rob Haswell said the audit is most disappointing. He said he is accountable for the shortcomings as the municipal manager, but it is not possible for him to correct all of them on his own.

Corrective measures have therefore been put in place to address the issues of concern, and the municipality will engage with the AG to make sure they do not get another qualified report, he said.

“Clearly we need to comply and we’ll make every effort to do so in this part of the year. Although we got a qualified report, this doesn’t indicate flaws in the entire system and this should not be exaggerated in any way,” Haswell said.

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