Severe financial chaos at district

2008-03-16 00:00

The uMgungundlovu District Municipality has received yet another disclaimer of opinion from the KZN auditor-general (A-G) for their 2006/07 financial statements.

On Friday, representatives from the office of the A-G gave council a sobering report on the disorder in the municipality’s finances, believed by many to be the legacy of former municipal manager Monica Mngadi and her chief financial officer, Bongani Ndlovu. Mayor Bongi Sithole was not present as she was reportedly "unwell".

Because the A-G could not obtain sufficient appropriate audit evidence, he could not express an opinion on the financial statements.

The issues raised by the A-G highlighted negligence of proper accounting systems and a dismal failure to keep or produce supporting documents for most financial transactions made by the district.

No valid documentation relating to the water services transactions — income of R35 million and expenditure of R36 million for the Impendle, uMshwathi, uMngeni and Mpofana municipalities on behalf of the district — could be found.

Acting chief financial officer Walter Muwandi, who was sent by the provincial treasury to try to bring order, said the municipality is being supported by treasury to reconcile income and expenditure relating to water and sanitation and that a meeting with local mayors was held in February to formalise the service level agreements.

The A-G also could not deduce the recoverability of unconfirmed water debts amounting to R85 million, as no supporting schedules were provided.

Muwandi said that local municipalities keep records of water debtors. "In future, direct confirmation on the municipality letterhead will be sought from the municipalities," he said.

The district also has long-outstanding debts relating to staff loans, dating back to 1996.

No action has been taken by the district to recover R1,7 million as the matter is under dispute — the retrenchment payments due to staff had to be set off against amounts owed by them. The matter has been referred to the high court.

Councillors expressed concern that a loan of R8,6 million has not been repaid by the Sisonke District Municipality. Sisonke borrowed the money for a demarcation process and the matter is still under dispute. Should the matter not be resolved by the end of June, Muwandi said the municipality will either provide the full amount or seek authority to write it off.

Wasteful expenditure on cellphone allowances is also a point of concern. Councillors were paid cellphone allowances in addition to having their two-year cellphone contract accounts settled by the municipality.

The A-G was unable to determine the overpayments made as the amounts were not disclosed in the financial statements as wasteful expenditure. Muwandi said councillors are now paid the gazetted cellphone allowance.

No records were kept of the district’s fixed assets for the year. However, fixed assets were recorded as valued at R130 million. The existence of fixed sewerage and water works assets totalling R144 million could not be verified as no supporting documents were provided.

Muwandi said supporting documentation for all assets owned by the municipality should be completed by the end of June.

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