File picture: Pexels
File picture: Pexels

Msunduzi audit results paint bleak picture

By Thami Magubane Time of article published Apr 29, 2021

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DURBAN - THE latest audit outcomes of the Msunduzi Municipality paint a damning picture of a municipality that is struggling to move forward, failing to follow regulations and whose financial viability is a pressing concern.

Members of the Office of the Auditor-General tabled the municipality’s audit outcomes for the 2019/20 financial year during a full council meeting yesterday.

The audit outcomes, said the A-G’s office, showed stagnation as the municipality received a qualified audit with findings, similar to what it received in the previous audit.

Opposition parties said the AG’s reports only served to confirm what they had already stated – that putting the municipality under administration had not worked.

In his presentation, Hlanganani Makhanyela, a senior manager in the A-G’s office, stated that the financial health of the municipality was still a concern. The report stated that among the root causes of the negative audit opinion was that financial statements and annual performance reports were not adequately reviewed before submission for auditing.

Also, management had failed to ensure that documents supporting the financial statements and performance reports were readily available when they were requested for audit.

Among the issues raised as concerns was the city spending R78 million on security that related to the hiring of bodyguards for councillors.

Makhanyela said that on the security issue, due to the lack of internal controls and evidence, he could not confirm whether the municipality had received the services it had paid for.

He said there was concern about how Covid-19 had affected the municipality regarding its inability to collect money due from consumer debtors, its inability to pay creditors on time, decreasing reserves and other adverse financial ratios.

“These conditions indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern,” he said.

He said the municipality’s officials had also failed to take basic steps to ensure that they complied with legislative requirements.

“Reasonable steps were not taken to prevent unauthorised expenditure amounting to R564.66m, up from R170m in the previous audit. The majority of the unauthorised expenditure was caused by the overspending of the approved budget,” he said.

He added that reasonable steps were not taken to prevent irregular expenditure amounting to R40.9m, although this figure was down from R93m in the previous audit.

The majority of the irregular expenditure was caused by non-compliance with local government municipal supply chain management regulations.

In addition, “reasonable steps were not taken to prevent fruitless and wasteful expenditure amounting to R5.38m, up from R3.5m in the previous audit”.

“The majority of the disclosed fruitless and wasteful expenditure was caused by salaries paid to suspended employees with cases that were not finalised on time.”

In addition the A-G found:

◆ Unauthorised expenditure was not investigated to determine if any person was liable for the expenditure, as required.

◆ Appropriate action was not taken against officials of the municipality where investigations proved financial misconduct, as required.

◆ Leadership did not implement effective preventive controls and diligent oversight over the review and validation of documents to ensure that recorded amounts were supported by credible information.

◆ Policies and procedures were also not fully adhered to regarding compliance with legislation.

◆ Management did not implement adequate records management over vital source documentation to support recorded amounts.

DA councillor Sibongiseni Majola said the audit report was a clear indication that the municipality had not learned anything from the past or benefited from being under administration.

For the municipality to turn its fortunes, the A-G recommended that internal controls be institutionalised and that vacancies in the internal audit departments be filled, and that the municipality must reduce reliance on consultants and that controls for verifying receipts of goods and services be monitored regularly.


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