Durban - The Msunduzi Municipality is in danger of being placed under administration by the Department of Co-operative Governance and Traditional Affairs (Cogta).
This is the view of the opposition in the council following reports that the auditor-general, Kimi Makwetu, had issued the municipality with a disclaimer where the AG cannot form an audit opinion owing to insufficient documentation provided.
The Mercury has seen a copy of the 11-page AG report for the 2016/17 financial year.
In it the AG expressed negative sentiments about the municipality’s financial compliance and management.
DA caucus leader Sibongiseni Majola said: “We have not seen the report. We were expecting it to be negative, but not that it would be the worst opinion the AG can express.
“In December 2016 the AG had raised concerns about wasteful expenditure related to people who were on suspension.
“I told the council that the issue should be dealt with or we will be inviting Cogta intervention. The manner (in which) the city has been running in this financial year, I am sure that the AG will express another negative opinion in December next year.
“It will be something worse than a disclaimer and could result in an intervention (being placed under administration).”
IFP leader Thinasonke Ntombela said: “We are headed for administration. You cannot run such a big institution like this. That place is run worse than a spaza shop. Most of the issues raised by the AG are issues we were warned about last financial year.”
The AG found that the municipality incurred irregular expenditure of about R150 million and about R11m in fruitless and wasteful expenditure.
He also found that the municipality had not properly accounted for its assets – by failing to provide documentation.
It had written off more than R300m in consumer debts without a council resolution.
There were material water losses to the amount of R109.2m, which represented 29% to 31% of the total water purchased.
In his report on compliance, the AG found that transactions below R200 000 were made without obtaining the required three quotations and invitations for competitive bidding were not advertised for a required minimum period.
(Tender) awards were made to providers who were in the service of the municipality and whose directors and principal shareholders were in the service of the municipality. He stated that individuals who benefited from such contracts had failed to declare their interests.
The AG found that the council had certified certain losses as irrevocable without conducting an investigation to determine the recoverability of the expenditure.
Cogta spokesperson Lennox Mabaso said they would not comment on the audit outcomes until the findings had been presented to them and analysed. He declined to speak on the possibility of the municipality being placed under administration, saying a disclaimer was not the final nail in the coffin.
“You can get a disclaimer by failing to register a fleet of cars.”
He said all councillors should take responsibility for the municipality and not sit on the side waiting for it to collapse.
Acting municipal spokesperson Siyabonga Hlongwa said they would issue a statement on the report once they had dealt with it.
Msunduzi Municipality Mayor Themba Njilo said he could not comment now on the issue of the audit report. "It has not been tabled and those who claim they have it, I am not sure where they got it. Once it is tabled we will call a media briefing."