Msunduzi’s audit shame

2018-05-24 16:50
City ranks sixth on list of delinquent spenders.

City ranks sixth on list of delinquent spenders. (File)

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Msunduzi ranked sixth amongst the country’s top contributors to municipal unauthorised expenditure amounting to R336 million during the 2016/2017 financial year.

This was revealed by Auditor-General Kimi Makwetu on Wednesday when he briefed the media on the overall deterioration in the audit results of South Africa’s municipalities for the previous audit period. He said KZN municipalities will continue regressing to negative audit opinions if issues such as lack of accountability and non-compliance with key regulations are not dealt with.

The audit outcomes for the province’s 53 municipalities for 2016/2017 saw 13 municipalities regressing, with Msunduzi settling for a disclaimer.

Makwetu said KZN, which only managed to secure seven clean audits, has been on the downward path since the 2015/2016 financial year when it regressed from 22 to 11 clean audits.

The regression has, however, been recorded across the country as only 16 of the 257 audited municipalities improved while 45 regressed. Only 33 municipalities received clean audits.

“Not only did the unqualified opinions on the financial statements decrease from 68% to only 61%, but the financial statements provided to us for auditing were even worse than in the previous year. Only 22% of the municipalities could give us financial statements without material misstatements,” said Makwetu.

He explained that complacency and a lack of follow-through on the previous administration’s commitments had a negative effect in KZN municipalities. “Leadership did not decisively deal with the weaknesses we reported and warned them about.

“If these lapses in accountability are not dealt with, the regressions will continue,” warned Makwetu.

The province’s municipalities also contributed R2,4 billion towards a R12,2 billion national irregular expenditure bill, which was mainly due to non-compliance with supply chain management regulations.

“It is difficult to say how much money is lost through irregular processes, as this needs to be determined through an investigation, but the non-compliance we reported at 78% of the municipalities can potentially lead to a financial loss,” Makwetu explained.

Auditors also picked up that the inability to collect debt from municipal consumers was widespread. Last month The Witness reported Msunduzi’s debt book was sitting at R2,1 billion.

The KZN Department of Co-operative Governance and Traditional Affairs recently revealed that R13,1 billion is owed to municipalities by defaulting consumers.

“In these circumstances, it is inevitable that municipalities will struggle to balance their books,” said Makwetu.

He highlighted that despite his office’s constant and insistent advice and caution to those charged with governance and oversight about administrative lapses since 2013, their counsel has largely not been heeded.

“We reported material non-compliance with legislation dealing with consequences at 55% of the municipalities. This lack of consequences is also evident in municipalities again not paying sufficient attention to the findings on supply chain management and the indicators of possible fraud or improper conduct that we reported and recommended for investigation,” he said.

Makwetu’s pronouncement on the continuing lack of accountability and consequence management came a day after the decision of the Parliament standing committee on the auditor-general to amend the Public Audit Act, the legislation that governs the operations of the office of the auditor-general. The amendment will give the auditor-general power to refer irregularities and misconduct, picked up during the audit process, to authorities such as the law enforcement agencies and the public protector to investigate instead of just making recommendations to the municipalities and entities to investigate the matters themselves.

Cogta reveals turnaround plan after damning report on KZN municipalities

KZN Department of Co-operative Governance and Traditional Affairs (Cogta) will be cracking the whip on the province’s poor performing municipalities to reverse the latest audit regression.

Only seven of the province’s 54 municipalities achieved clean audits for the 2016/17 financial year.

Reacting to Wednesday’s warning by Auditor-General Kimi Makwetu that KZN will continue on a downward path if something is not done urgently, Cogta spokesperson Lennox Mabaso said the department has a turn-around plan.

Known as Operation Bounce Back, he said the strategy places a premium on consequence management by penalising poor performance.

“Our message to poorly performing municipalities is clear: clean up your act or face dire consequences. Not only are we putting a stop to all manner of bonuses and salary increases for councillors and staff at poorly performing municipalities, but we are also holding them individually accountable for poor performance,” said KZN MEC for Cogta Nomusa Dube-Ncube.

The main audit challenges during the 2016/17 financial year included flawed procurement processes and general non-compliance with various aspects of financial governance.

Dube-Ncube said one of their priorities is eliminating wasteful expenditure by municipalities by urging councils to adopt various cost-cutting measures. These measures, which are now being gazetted to become compulsory for all municipalities, include limits on bodyguards, mayoral homes and vehicles, use of consultants, cell phones and credit cards as well as restrictions on events, catering and travel.

“The level of poor performance seen in the 2016/2017 municipal audit outcomes is unprecedented and requires radical solutions,” she said.

Cogta Minister Zweli Mkhize said Makwetu’s report corroborates the department’s own recent assessment, which indicates that 31% of SA’s municipalities are dysfunctional and another 31% are almost dysfunctional.

“I am currently embarking on provincial visits as part of Cogta consultative process to refine the nature and extent of the problems faced by the municipalities to inform concrete long-term interventions that are effective,” said Mkhize.

Read more on:    pietermaritzburg  |  msunduzi municipality

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