Auditor-General calls for intervention at three Western Cape municipalities
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BEAUFORT WEST, which owes creditors R70 million, is among three municipalities in the Western Cape flagged by the auditor-general.
Auditor-General Tsakane Maluleke released the 2019/2020 audit report this week.
Of the 23 municipalities audited on time in the province, nine were able to sustain their clean audit outcomes, while five improved to a clean audit status.
The province’s municipalities also managed to decrease their unauthorized expenditure from R434 million in 2018/2019 to R195 million in 2019/2020.
Irregular expenditures also decreased from R2 billion to R1.4 billion in the 2019/2020 financial year. The top contributors to irregular expenditure were:
*The City of Cape Town at R669 million
*Bitou with R119 million
*And Matzikama at R100 million
“Although irregular expenditure decreased, we remain concerned about the findings raised on contract and supply chain management, and the resultant irregular expenditure at the majority of municipalities,” read the report.
“While none of the audited municipalities were in a financially vulnerable position, we have concerns with regard to the financial sustainability of municipalities. On average 51% of the revenue due to municipalities for services rendered was deemed irrecoverable.”
On average, 63% of the debt owed municipalities is irrecoverable, which saw R39.3 billion written off in a year.
Currently, five municipalities are said to owe R74 million in arrears to Eskom and water boards.
The Western Cape was also among the top three provinces contributing to incidents where contracts were awarded to close family members of councillors or senior managers without disclosure. As many as 16 municipalities nationally accounted for R527 million of such contracts of which the province’s stood at R59 million.
However, Beaufort West was flagged among 22 municipalities in the country, which received disclaimers on their audit report and were unable to provide evidence for financial statements worth R5.5 billion.
Mayor Quinton Louw told Weekend Argus plans are in place to ensure there is a turnaround strategy to improve.
“At the core of the problem was that the municipality was without a chief financial officer for four years and that brought a lot of instability. Political oversight was also an issue which was cited by the previous mayor when he resigned that it was the first step in implementing consequence management,” he said.
Chief Financial Officer Nomfundo Fetsha said an action plan had been drafted and tabled to council in June to address the issues raised by the AG’s report.
“The issue has been a lack of stability with posts not filled and people coming and going with nobody held accountable.Since my appointment in May, we already have three staff members that have been suspended and have investigations that are ongoing,” she said.
“Work needs to be done around the municipality’s credit control, not only for our clients, but also those who we owe money to. There is no use disconnecting services for residents for none payment, while we as a municipality are also not paying our creditors either.
“Priority for the coming year is to clear our outstanding credit which is R70 million, of which R45 million is owed to Eskom, but we have gotten in contact to set up a payment plan starting at the end of July.
“This week we also met with Western Cape government to work on strengthening financial management,” Fetsha said.
Chairperson of the Provincial Legislature’s Standing Committee on Local Government, Derrick America said the municipalities cited by the AG as needing intervention, face a number of challenges.
“Among those would be financial, they all have low revenue bases and are very reliant on transfers from the national and provincial government. Therefore, given the lack of funds, prudent financial management needs to be exercised. Council needs to approve funded budgets. In all of those municipalities this is not the case,” he said.
“In part, the staff complement must reflect the organogram as agreed to be council. This often is not the case. Unnecessary political appointments not reflected on the organogram need to be avoided at all cost. Most of all, stable leadership is required. All those municipalities are reliant on coalitions, which does not contribute to stability in leadership.
“The Provincial Department of Local Government initiated a number of initiatives to assist all municipalities to improve their governance, but often find resistance in Beaufort West and recently in Kannaland, which undermine and refuse to cooperate with the Provincially Appointed Administrator,” America said.