Kouga technically bankrupt

Piet Liebenberg
THE top management of the Kouga Local Municipality (KM) is blamed for technically bankrupting the institution in a damning report by the Auditor General (AG).
Tabled at the last council meeting the report said the KM was bankrupt since its current liabilities exceeded assets by R45.8-million.
This shocking disclosure was made by the AG in his damning report for the 2010/2011 financial year. He also questioned the KM’s ability to meet its current liabilities. The report, dated December 14 2011, was tabled at the last council meeting in January.
It states: “The municipality is however experiencing significant financial difficulty where the current liabilities are exceeding the current assets by R45.8-million and expenditure is exceeding income by R11.3-million resulting in significant cash-flow constraints and it is uncertain if the municipality can settle its current liabilities in the normal course of business.”
Top management is blamed, as apparently they did not “demonstrate effective leadership based on a culture of honesty, ethical business practices and good governance”.
They also demonstrated a lack of protecting the best interest of the municipality.
The AG lists nearly 20 reasons why he was unable to obtain “sufficient and appropriate audit evidence” which made it impossible to provide an audit opinion.
In the report, the AG highlights multiple occurrences of poor record keeping, inconsistencies and mismanagement including:
The KM could not provide a fixed-asset register and he was thus unable to verify the existence of tangible capital assets totaling R17.8-million.
Payments of R44.8-million were made in contravention of the supply chain management regulations.
Performance bonuses of R389675 were paid without the approval of council.
The KM could not provide approved leave forms for annual leave taken by employees to the value of R3.1-million.
The mayor did not submit financial reports to council as required by law.
No internal audit unit was in place and the audit committee who was supposed to promote accountability and service delivery was dysfunctional.
The municipal manager did not take reasonable steps to prevent irregular, fruitless and wasteful expenditure.
There is an absence of proper record keeping, record management and no effective financial control.
A total lack of oversight responsibility and no risk management activities exposed the KM to increased fraudulent activities.
Some of the top management team at the time – the previous mayor, Robbie Dennis, municipal manager Eddie Rankwana and the chief financial officer, Ridwaan Abdullah – have since left. Some of the mayoral executive committee including Vernon Stuurman and Magdalene Dlomo are still on the committee.

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