Cape Town - The City has landed itself in hot water after Auditor-General Kimi Makwetu flagged it for materially underspending its operating budget to the amount of R2,4 billion and the capital budget to the amount of R1,3 billion.
The City said the underspend was due to contractual disputes. The City said in its 2018/19 Annual report there have been various contractual claims by suppliers and staff that are currently in dispute and are subject to a mediation.
The AG’s report said no reasonable steps were taken to prevent irregular expenditure of more than R950million. The report also stated that most of the irregular expenditure was due to non-compliance in supply chain management.
Some goods and services with a transaction value above R200000 were procured without inviting competitive bids, as is required by the Municipal Finance Management Act. Bid specifications for some tenders were drafted in a biased manner, and did not allow all potential suppliers to offer their goods or services, which is in contravention of the bid regulations.
Similar non-compliance was also reported last year. In the 2018/19 financial year, the City received an unqualified audit opinion with findings from the AG. This is the City’s 16th consecutive unqualified audit opinion.
Allegations of City employees having personal business interests also surfaced. The AG also flagged persons in the service of the municipality whose close family members had private or business interests in contracts awarded by the municipality, and had failed to disclose such interests.
Deputy mayor and mayco member for finance, Ian Neilson, said: “The matter is being investigated and where it has been found that an employee or supplier failed to declare an interest, consequence management action will be taken.
“A further dual verification control was implemented through a notification process to both supplier and staff member,” he said, adding that six people were involved.
Mayor Dan Plato said the matter would be referred to the municipal public accounts committee for further investigation.
“The opposition party will always have something to say, but the fact of the matter is that the AG has given the City an unqualified audit opinion, with findings. We are dealing with a R50bn budget and of course there will be issues, but it does not mean we have not done our jobs,” Plato said.
The AG also flagged the appointment of law firms representing the City. The report said the approval to procure legal services was granted to the legal department by means of a council system of delegations that was not in line with the regulations.