District under-estimates money needed to operate

2008-03-16 00:00

Unreliable accounting systems at the uMgungundlovu District municipality have led to an under-estimation of the amount needed to cover its operations.

The projected monthly figure of R3,7 million for operational necessities has since been reviewed by the new acting chief financial officer, Walter Muwandi, to an average of R4,2 million a month.

The reduction of the municipality’s monthly expenditure from R20 million to R3,7 million was recommended in December by the provincial treasury.

Muwandi said that the "must haves" funding has been increased as the original figure was based on incorrect statistics.

"Challenges within the operations of the finance department increased the error on the figures as the financial reporting system available was not reliable," he said.

"The figure of R3,7 million was based on the historic payment trend and excluded the R15 million creditors that had not been paid at the time, resulting in understating of the figure," said Muwandi.

In order to tighten financial control, expenditure has been frozen and restricted to "must haves" identified in the mid-term budget review. Major "must haves" are the repayment of a R2,5-million SA Development Bank loan; motor vehicle running costs (reduced to R1 500 per month); bulk water purchases (R2 million per month); water and sanitation (R990 000); and bursaries (R430 000).

Muwandi said that it is crucial that the municipality adhere to the amounts stipulated.

The must haves for the year amount to R25 million, which means that the municipality will reach a projected R27 million deficit at the end of the year if the adjustment budget is adhered to.

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