Andries van der Heyde l Views: 216
Things are not looking good for Bela-Bela after Kimi Makwetu, the auditor general (AG) of South Africa, released an audit report on the municipality’s finances, stating that the municipality has regressed from an unqualified audit opinion to a qualified opinion for the 2016/2017 financial year.
This means the municipality will have difficulty securing government funds for capital projects in the future, according to the DA. The manner in which the municipality spends its money, is also raising questions.
The audit report was made public during the first council meeting of the year on Wednesday 24 January.
The AG said in the report that evidence was missing regarding infrastructure assets and that previous years’ misstatements was not rectified. In the cash flow statements there were an unexplained difference of R24 665 373 generated from operations, which was also misstated. Additional errors in the financial statements also came up, according to the AG.
The municipality did not disclose irregular expenditure amounting to R24 201 749, resulting from the unspent conditional grant and the AG could not determine the purpose the amount was used for.
Material losses to the amount of R32 309 464 were also incurred as a result of traffic fines and trade debtors which was written off and considered to be irrecoverable according to the report.
Other losses totalled R19 269 226 for electricity, R3 490 584 for water, an amount of R2 203 436 for fruitless expenditure and an amount of R40 046 173 for unauthorised expenditure as a result of overspending.
The AG found that money owed by the municipality was also not paid within 30 days as required by the municipal finance act. No adequate management, accounting and information system was in place, which should have recognised expenditure when it was incurred and no steps were taken to curb fruitless and wasteful expenditure, according to the report.
The municipal infrastructure grant and integrated national electrical programme were also not spent in accordance with the division of revenue act. Basic service delivery, as well as local economic development, were also looked at, but the reporting was taken into question.
The AG found that municipal contracts were awarded to bidders that did not score the highest points during the evaluation process as was required. This non-compliance was identified in the procurement processes, according to the report.
Furthermore, the reported achievement for the target of 10 425 households with access to a basic level of solid waste removal, was misstated. The AG found that from the evidence provided, there were only 9 012 households. Job creation was also reported on, but the AG was unable to confirm the exact figures.
The AG reiterated that no effective system of internal control was in place for asset management, but the disposal of capital assets were done correctly.
The AG also spoke of uncertainties relating to the future outcomes of exceptional litigations.
“The municipality is the defendant in various lawsuits. The municipality is opposing these claims, as it believes there is reasonable ground for success. The ultimate outcome of the matter cannot presently be determined and no provision for any liability that may result, has been made in the financial statements.”
The AG concluded that the accounting officer did not adequately exercise its oversight responsibility regarding financial and performance reporting and compliance with certain laws and regulations. The misstatements were mainly due to inadequate review by management and compliance issues would have been successful if it was properly reviewed.
DA councillor Kobus van der Merwe said the DA is worried that the report, once again, proves that the municipality cannot be trusted to handle public funds.
“Morris Maluleka, the previous municipal manager, left us with a ton of problems, notwithstanding the fact that the town’s maintenance will take a huge knock because of this. It is even worse to know that the municipality had only spent 0,6% of the budget on maintenance, where the prescribed norm is 8%,” said Van der Merwe. “Council have asked that representatives of the AG come and address council on the report but still, the facts speak for themselves.”
There was no response from David Raborolo, the municipal spokesperson, to emailed queries at the time going to press.
2 months ago 08 February 2018