PMB audit report shock

2018-01-10 13:30
Call for heads to roll after AG's damning report.

Call for heads to roll after AG's damning report. (File)

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Non-compliance with key legislation, poor financial management, awarding tenders to municipal officials and internal control deficiencies has resulted in Msunduzi Municipality regressing to a disclaimer of audit opinion.

According to the November report from the Auditor-General (AG) Kimi Makwetu, the financial statements submitted by Msunduzi for the financial year ending in June 2017 were not prepared in accordance with the requirements of the Municipal Financial Management Act.

The municipality also failed to provide information and documents needed as evidence on which to base the audit opinion. This was due to the municipality not having efficient systems for maintaining its financial records.

Last year the municipality regressed from a clean audit to a qualified audit opinion and opposition parties said the recent disclaimer came as no surprise as they predicted that the ailing municipality could soon be placed under administration for the second time since 2010.

Makwetu slammed the management for failing to provide adequate oversight to ensure that the staff and policies were able to deal with the challenges faced by the municipality.

Procurement processes were repeatedly flouted as some tenders were not advertised and others awarded to companies whose directors and principal shareholders were municipal officials. This cost Msunduzi more than R150 million of the total R381,6 million lost in irregular expenditure

“Persons in the service of the municipality who had a private or business interest in contracts awarded by the municipality failed to disclose such interest.”

A further R11 million in fruitless and wasteful expenditure was due to delayed processes in finalising suspensions of employees and interest on late payments of suppliers.

There was a slight improvement in the water losses, which were reduced from 31% in 2015/16 to 29%, but it still cost the municipality R109 million.

The municipality also wrote off bad debts in excess of R333 million without the appropriate council resolution.

The AG noted that losses resulting from irregular, unauthorised and fruitless expenditure were certified as irrecoverable without having conducted an investigation to determine their recoverability.

The municipality also underspent on the Public Transport Network Grant by R165 million and the Neighbourhood Development Partnership Grant by R29,7 million.

IFP leader Thinasonke Ntombela said the municipality’s financial statements were in shambles and even the internal audit reports pointed to non-compliance with legislations.

“The ruling party has been raising concerns about the mismanagement of finances and blatant non-compliance but the ANC always sided with the management instead of holding them accountable,” he claimed.

His sentiments were echoed by Sibongiseni Majola of the DA, who said they could not even perform their oversight role because even there were delays by the relevant managers in submitting the reports to them.

“Even the integrated report that was submitted to the AG’s office in August was never given to us as per the norm. As late as December we were still receiving reports that should have been given to us in June when their contents were already being audited by the AG,” he said.

Majola said heads were supposed to roll over the AG’s report because the municipal manager, Sizwe Hadebe, had failed to perform his duties.

“After the report came he [Hadebe] tried to pass the buck and wanted the chief financial officer [Nelly Ngcobo] to be suspended over it but if anyone must be suspended then he, as an accounting officer, needs to go because all these shenanigans happened right under his nose,” Majola said.

Spokesperson for Msunduzi Siyabonga Hlongwa declined to comment, saying he was bound by legislative provisions which prevented him from answering The Witness’s questions.

“The Msunduzi Municipality would like to state that the legislative provisions do not permit anyone to report on the outcome of the AGSA audit up until the same has been presented to a full council meeting, which is open to the public,” he said.

Read more on:    pietermaritzburg  |  msunduzi municipality

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