FAILED CITY

2019-03-01 15:02

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The City has failed yet another audit, which warns it is on the brink of collapse due to a failure to comply with key laws, internal control deficiencies and poor accounting practices.

on Thursday a disappointed council was presented with an adverse audit opinion for the 2017/18 financial year.

While this is a level higher than last year’s damning disclaimer, the senior manager in the KwaZulu-Natal office of the auditor-general (AG), Hlanganani Makhanyela, said reports submitted by Msunduzi “had so many material misstatements in their financial statement that we disagreed with all the amounts and disclosures in the financial statements”.

He blamed both council and management for the adverse audit opinion.

“Leadership did not ensure that effective measures were taken to address previous findings to support the achievement of credible reporting and compliance with legislative requirements,” read his report.

He said Msunduzi failed to correctly disclose some of the required financial information, including cash flow statements.

The AG’s team also could not verify some of the service delivery information provided in terms of the status of some projects. This included the number of households with access to refuse removal at least once a week.

Procurement processes were repeatedly flouted as some tenders were not advertised and the accounting officer, Sizwe Hadebe, approved deviations instead of inviting competitive bids.

“The municipality made payments in contravention of the supply chain management regulations, resulting in irregular expenditure of R11,68 million,” said Makhanyela.

Reasonable steps were not taken to prevent fruitless and wasteful expenditure of R10,9 million. Similar to last year, the AG highlighted that most of this disclosed expenditure was caused by investigations into employees on suspension that were not finalised on time.

During the 2017/18 financial year the municipality’s internal audit unit concluded 29 of 36 investigations regarding allegations received from the whistle-blower hotline. These related to allegations of fraud, corruption, theft, recruitment, mismanagement and tender irregularities.

Makhanyela also pointed at a lack of consequence management, saying unauthorised, fruitless and wasteful expenditure was not investigated to determine whether any person was liable.

The City once again lost 29% of its water — which amounted to R138,7 million — as a result of ageing infrastructure.

There was a slight improvement in electricity losses, which were reduced by one percent from R279 million in 2016/17 to R256,9 million.

Msunduzi also failed to pay some service providers within 30 days as required by the Municipal Finance Management Act.

The areas of concern raised by Makhanyela were also highlighted by the City’s own consultant, Thabani Zulu, who was brought in by internal audit to help address the AG’s findings.

Zulu said his preliminary observations were that Msunduzi was plagued with ineffective consequence management, poor administrative discipline and lack of due diligence in implementing council resolutions.

He said the high vacancy rate, especially non-filling of critical positions, was crippling the municipality.

“Condonation of fruitless, wasteful and unauthorised expenditure without due process” was also found to be a problem area.

Zulu said water and electricity losses as well as underspending of conditional grants were not only compromising service delivery but also the financial stability of the municipality.

He tabled a strategy on how he could help the municipality turn the situation around — starting with dealing with a collapse in performance management — but said it would not work if there was no sense of accountability by both the leadership and management.

The DA and ACDP were visibly upset when the speaker Jabu Ngubo ruled that the AG’s findings would not be debated until a councillors’ workshop on the report next week.

Speaking to The Witness after the meeting, both parties said Msunduzi was on the brink of collapse and only going into administration would help turn things around.

“The adverse opinion is a disclaimer decorated with a few flowers. The issues that were raised by the AG last year have come back again in this report and chances are, we will be back with a disclaimer come June,” said DA caucus leader Sibongiseni Majola.

He said the City was on its knees and could not fall any further in terms of both its poor management and financial status.

His sentiments were echoed by the ACDP’s Rienus Niemand, who said lack of accountability and political interference were to blame for Msunduzi’s woes.

“The sad part is that it is the ratepayers who are suffering because of the poor decisions made by the leadership and management.”


Read more on:    pietermaritzburg  |  msunduzi municipality
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