North West Legislature SCOPA lambasts Naledi and Mamusa Municipalities for recurring disclaimer audit opinions
The North West Legislature’ Standing Committee on Provincial Public Accounts (SCOPA) chaired by Hon. Job Dliso has strongly lambasted Naledi and Municipalities for continuously obtaining disclaimer audit opinions which dates back to the 2016/17 financial year. This follows a virtual Municipal Finance Management Act public hearings for the 2018/19 audit reports with both municipalities where their audit reports reflected a continuous transgressions of the supply chain management policies.
According to a Senior Manager at the Office of the Auditor-General, Mr. Julio Camm, in terms of the Naledi Local Municipality, the information in the financial statements was not sufficiently reliable to enable the office to perform meaningful analyses of individual financial viability indicators. “Irregular, unauthorised and fruitless and wasteful expenditure identified in the previous year was not investigated to determine whether any person was liable for the expenditure. For example, R6 540 112 (100%) of the irregular expenditure incurred in the current financial year was as a result of the contravention of supply chain management legislation. The root causes of the lack of effective prevention and detection are a lack of adequate skills and knowledge and a lack of consequences for non-adherence to policies and procedures.
“The municipality’s leadership did not exercise adequate oversight over financial and performance reporting, compliance monitoring and related internal controls. Policies and procedures did not adequately guide financial, performance and compliance activities and consequence management measures were not fully implemented,” said Mr. Camm.
Senior Manager at the Office of the Auditor-General, Mr. Johann van Tonder also informed the Public Accounts Committee that with regards to Mamusa Local Municipality, the records management system of the municipality is of great concern together with the lack of leadership stability and the vacancies of key senior positions. “The supply chain management unit of the entity did not always function effectively as incidences of irregular and fruitless and wasteful expenditure were identified. The necessary procurement procedures were not always followed,” said Mr. van Tonder.
Hon. Dliso said it was worrying that although there is clear evidence on lack of internal controls and supply chain management transactions, both municipalities did not show any sign of implementing consequence management or improving their financial health respectively. “These municipalities are in a terrible state as they have also abandoned their projects which has affected service delivery. They continue to fail to pay their creditors within 30 days period as stipulated by law such as the Eskom accounts,” said Hon. Dliso.
He also the municipalities rely heavily on consultants for preparation and submission of annual financial statements but there is no value for money. “Their responses are disappointing as there are no plans to improve their statuses thus not providing service delivery. The financial disciplinary boards established are toothless as they do not have comprehensive plans of action with proper timeframes,” said Hon. Dliso.
The Municipal Manager of Naledi Local Municipality, Mr. Modisenyane Segapo informed the Committee that the officials lacked the accounting and technical skills to manage the accounting requirements hence the municipality has always relied on the use of consultants to assist with the compilation of a fixed asset register that meets the minimum reporting requirements. “However, the remedy to the current status is for the municipality to review the organogram which caters for manager asset with two officials. Currently the Provincial Treasury has provided support in terms of internal control by providing on site officials from CCG and Bonakude consulting with a view of improving the record keeping,” said Mr. Segapo.
He also said there was poor procurement planning resulting in invalid deviations from supply chain management processes.
Acting Municipal Manager at Mamusa Local Municipality, Ms. Mercy Phetla informed the Committee that transgressions which resulted on the unauthorised, irregular and fruitless and wasteful expenditure (UIF&W) was due to poor implementation of procurement processes. “There was a lack of capacity within the SCM unit and consequence management. We also faced lack of contract performance monitoring in place.
Hon Job Dliso also said the municipalities should submit comprehensive reports on the Section 71 which reflects expenditure and all contracts procured outside the SCM processes which also indicates monies spent and implicated officials. “Both Municipality must provide us with a report on transactions done through Regulation 32 and 36 ensuring that those projects conducted on urgency basis followed the MFMA. They need also to demonstrate value for money and service delivery for our people. We also need a report on usage of consultants for preparation and submission of annual financial statements, their terms of reference, funds spent and whether there was skills transfer. A comprehensive report on the UIF&W linked to the established financial disciplinary boards and municipal public accounts must also be provided to the Committee.
“Mamusa Local Municipality must also submit a report on the secondment of the Director Technical who was not part of any government departments. All these reports will show as whether there was any value for money in both municipalities,” said Hon. Dliso.
Source: Government of South Africa