No clean audit for Msunduzi

2017-02-01 06:02

A TRAGIC overview of Msunduzi Municipality’s last financial year was reported by the Auditor-General South Africa at a full council meeting held last week at City Hall as AGSA announced that the municipality did not receive a clean audit status, which it received in 2015.

Senior manager of AGSA, Sinenhlanhla Sibiya, delivered the 2015/16 report stating that a lack of oversight, inadequate accounting management, mistakes in the financial statements and an overall lack on the basic implementation of internal controls resulted in the qualified audit.

Sibiya said leaders did not “act swiftly enough” to ensure that financial processes were followed.

“The leadership and management did not create a sound and sustainable environment by institutionalising an appropriate risk management strategy. Internal controls were not implemented to support reliable records.”

The report stated that reasonable steps were not taken to prevent irregular expenditure and that adequate management, accounting and information expenditure was not in place.

She also pointed out irregularities in tender awards. “Persons in service of the municipality, whose close family members had a private or business interest in contracts awarded by the municipality, failed to disclose such interest.

“Awards were made to providers who were in the service of the municipality or whose directors are in the service of the municipality. Providers failed to disclose that they were in service of the municipality.

“Also bids that were invited were not always advertised for the required minimum period.”

She stated many financial and accounting practices were not followed and the consolidated financial statements submitted for auditing were not prepared in accordance with the Municipal Financial Management Act.

“Oversight of key internal controls was not adequate,” she said.

Reporting on material losses and impairments, Sibiya revealed that the municipality had recorded a loss of R181,96 million as a result of illegal electricity connections. Further to this a R119,72 million water loss was recorded.

Sibiya also revealed that the municipality underspent on the public transportation infrastructure grant by R37,90 million and R25,34 million on the integrated national electrification grant.

She said both grants were underspent due to delays in implementing the projects related to each grant.

Councillors sat in silence as Sibiya delivered one piece of bad news after the next gasping at some of the findings she made.

While some councillors conceded that the opinion of AGSA was expected, DA caucus leader Sibongiseni Majola expressed his disappointment with the findings. “This is a warning to us. What are we doing? Are we addressing the problems or are we doing worse?

“I want to warn the council that we are one step away from a disclaimer [with the AG] if we don’t take a drastic step.”

Msunduzi Speaker Jabu Ngubo said the report still had to go through the structures and be processed.

“No one is expected to divorce themselves from the problem. We need to look at what can be done to correct it. Plans are in place to move towards stability,” she said.

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