JON HOUZET
IRREGULAR expenditure and failure to monitor water and electricity losses were among the Auditor General's reasons for giving Ndlambe municipality another qualified audit report this year.
The AG's report was tabled at a special council meeting on Wednesday.
In his report the AG repeatedly stated the municipality had not provided "sufficient appropriate audit evidence” on a range of issues, from the value of property, plant and equipment (put at R127.9-million) to bulk purchases of R3.2-million.
There was possible irregular expenditure of R3.1-million in contracts awarded, the AG said.
Due to inadequate record keeping and the decentralisation of the supply chain management (SCM) function at the municipality, he was unable to obtain sufficient evidence to confirm that contracts awarded were in accordance with the requirements of SCM legislation.
The AG completed an investigation into an allegation of fraud involving a "confirmed SCM contravention” last year and noted that irregular expenditure of R1.1-million was included in the current year, due to spending against the related contract.
The AG also cited once instance where irregular expenditure was not recovered from the liable person, as required by the Municipal Finance Management Act (MFMA), and was not reported to the police, as required by the Municipal SCM Regulations.
In response to this and other issues raised, municipal manager Rolly Dumezweni said an action plan had been raised to "correct the issue”.
Failures by Ndlambe's independent audit committee to review the annual financial statements and advise the municipality on the adequacy, reliability and accuracy of its financial reporting, were also cited as contraventions of the MFMA.
Ndlambe's audit committee was also slated for not reviewing the performance management system and the quarterly internal audit reports.
However, the AG pointed out the internal audit unit had failed to provide relevant information to the audit committee.
Another major issue was material losses of water and electricity, which has been raised in previous years.
Water distribution losses are not monitored by the municipality, as there are no bulk water meters at the purification works to monitor the amount of water supplied to the municipality.
Given the lack of systems in place, it was impractical to determine the full extent of electricity distribution losses, the AG said.
Ndlambe also failed to maintain an adequate fixed assets register.
The value of land and buildings (R8.5-million) in the financial statements "were not in agreement with the underlying fixed asset register as well as the valuation roll,” the AG said.
The municipality did not disclose whether it made provision for landfill sites.
The AG listed a litany of other problems, though he said they did not modify his opinion.
Ndlambe under-spent its capital budget by R9.4-million, "which translates into incomplete infrastructure projects and consequently impacts on service delivery”.
It also could not complete capital projects as it under-spent conditional grants and receipts by R14.9-million.
Ndlambe also scored poorly on its performance objectives.
"Adequate and reliable corroborating evidence could not be provided for 91% of measures taken to improve performance as disclosed in the annual performance report,” the AG stated.
He found more than half of the indicators relevant to basic services, institutional transformation and development, local economic development, municipal financial viability and management and good governance were "not verifiable, in that valid processes and systems the produce the information on actual performance did not exist”.
Performance targets were not specific, not measurable and not time bound, the AG said, and this was all attributed to a lack of oversight by management.
The municipality did not establish mechanisms to monitor and review its performance management system, as required by the Municipal Systems Act.