City not out of the red yet

2020-02-07 14:30
Police rushed to the City Hall on Monday following an explosion outside the council chamber.

Police rushed to the City Hall on Monday following an explosion outside the council chamber. (MOEKETSI MAMANE)

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Msunduzi is still not out of the red as non-compliance with local government regulations continues to grip the municipality.

The City received yet another negative audit opinion for 2018/19 — this time a qualification. This is a small improvement from the 2017/18’s adverse and the disclaimer before then.

This was revealed by Ntombifuthi Mhlongo, the auditor-general’s (AG’s) business executive in KwaZulu-Natal, when she presented her report before council on Thursday.

She highlighted five areas as the basis for the qualified opinion and those included property, plant and equipment where plots of land were recorded at incorrect amounts.

On the consumer debts she said she could not obtain sufficient evidence that they had been properly accounted for as the municipality was found not to have adequate internal controls to maintain records.

“The financial system does not support the billing to consumers, as a result the information that is produced in the system is not reliable and cannot support, specifically, the revenue section of the municipality,” she said.

Mhlongo said the management did not see to it that the system was correctly configured to ensure credible billing of consumers. There were also problems with the inadequacy of reports submitted for the auditing of property rates and service charges.

There were seven findings on consequence management. They include failure to investigate unauthorised as well as fruitless and wasteful expenditure incurred by the municipality in order to determine if any official was liable.

The City incurred R170 million in unauthorised expenditure, R93 million in irregular expenditure and R3,5 million in fruitless and wasteful expenditure. “The majority of the disclosed fruitless and wasteful expenditure was caused by salaries paid to suspended employees with cases that were not finalised on time,” said Mhlongo.

While internal audit was able to conduct 61 probes related to recruitment, corruption, misconduct and theft during the 2019/19 financial year, Mhlongo said some of allegations of financial misconduct against officials, including senior managers, were not investigated. “Cases of financial misconduct which constituted a crime committed by senior managers and officials were not always reported to the SAPS, as required by municipal disciplinary regulations for senior managers.”

She said even allegations of fraud and forged documents, which exceeded R100 000, were not always reported to the police.

On the material losses, she found that the City lost electricity worth R248,2 million — a minor improvement compared R256,9 million from 2017/18. “Losses were incurred as a result of illegal connections, infrastructure vandalism, ageing infrastructure, overloading and poor standard of equipment installed.”

With regards to water, Msunduzi lost 20,1 kl amounting to R157,2 million — a significant monetary increase from R138,7 million of the previous financial year. This was a result of illegal connections and ageing infrastructure.

On expenditure management, Mhlongo found that Msunduzi did not always pay its creditors within 30 days as required by the law. She was concerned about the high vacancy rate in both the finance department and internal audit, which she said were critical in order for Msunduzi to be able to comprehensively address her findings.

Management was blamed for failing to implement proper record keeping, which would have ensured that accurate and reliable reports were available for auditing.

Mhlongo also laid the blame for the qualification on the council saying it did not implement effective control to ensure accurate financial reporting nor did it exercise adequate oversight of compliance with applicable legislation.

However, it was not all doom and gloom as Msunduzi’s Safe City entity received its third consecutive unqualified audit opinion.R170 million unauthorised


R93 million irregular expenditure

R3,5 million fruitless

and wasteful expenditure

R248,2 million electricity

R157,2 million water

Read more on:    pietermaritzburg  |  msunduzi

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