Staff in charge of Makana's money don't know how to use the municipality's accounting system and if there were a fire, all the financial records would be lost. These are just two of the problems revealed in documents presented at last Tuesday's finance committee meeting, where Municipal Manager Ntombi Baart announced that the municipality could be used to pilot a new financial management system for local government countrywide.
Among the problems revealed in the assessments of experts from the national and provincial treasuries brought in to get to the root of the problem are that:
Staff in charge of Makana's money don't know how to use the municipality's accounting system and if there were a fire, all the financial records would be lost. These are just two of the problems revealed in documents presented at last Tuesday's finance committee meeting, where Municipal Manager Ntombi Baart announced that the municipality could be used to pilot a new financial management system for local government countrywide.
Among the problems revealed in the assessments of experts from the national and provincial treasuries brought in to get to the root of the problem are that:
* Staff have no training on the Abacus financial system used in the department. As a result, the regular financial reports required by National Treasury cannot be produced using the system and bank reconciliations are done manually.
* The general ledger does not comply with recognised accounting practice.
* The Abacus system cannot block overspending on creditors and does not cater for credit control history and payment arrangements.
* The financial back-up system is not stored off-site and so, in the case of a fire, all financial records would probably be lost.
* The structure of the finance office does not conform to that advocated by the National Treasury, making it difficult for key functions to be carried out.
* There are no employees to perform budget-related functions.
* The draft budget for 2011/12 period was not fully compliant with the municipal budget and reporting regulations.
* There is low revenue-collection resulting in a heavy reliance on government grants for operating activities.
* The municipality has a slow rate of capital spending.
* Only a few key staff members submit performance agreements.
Baart said on Tuesday that a Financial Management Improvement Plan had been drafted to turn the situation around. In addition, the National Treasury was reviewing a new system for municipalities in general.
She said it was likely Makana would be used a pilot. Baart said no more than five councils in the country were still using the Abacus financial system.
Representatives from the National Treasury at the meeting on Tuesday explained that Financial Management Improvement Plan dealt with the financial health of the municipality, including revenue, expenditure and supply chain management.
The plan drew in aspects of the entire Municipal Finance Management Act, and outlined how Makana would get from a space of chaos to being compliant. The Treasury experts would be able to provide support for 36 months.
The Financial Management Improvement Plan was first announced at a Special Council meeting in July. Executive Mayor Zamuxolo Peter said the new strategy had been informed by the conditional support National Treasury was willing to provide.
