Makana municipality has received its fourth negative audit report from the Auditor-General (AG) in a row, after the AG found it had no proper plans for service delivery, and no system to punish the municipal officials who committed unauthorised, irregular, fruitless and wasteful expenditure.
Presented at a special meeting of the council at City Hall on 28 February, the report by AG Tsakani Maluleke listed over 80 areas where the municipality had failed to provide proper financial information to her.
She gave Makana municipality a negative “disclaimer” opinion for the 2021/22 financial year, as had happened in the 2020/21 financial year. The municipality declared R577.4 million of unauthorised expenditure last year and R7.8 million of fruitless and wasteful expenditure but the AG had no idea if these figures were accurate as she was not provided with enough financial evidence to confirm the amounts.
Maluleke also found that the municipality had bought goods and services for less than R200 000 without getting quotes first. Some quotes were accepted from bidders who did not disclose whether they were also working for the government, the AG found. (State employees are not allowed to tender for government contracts).
The AG could also not find enough evidence that tenders were awarded by a genuine bidding process managed by a bid adjudication committee.
The municipality had claimed it met 100% of its water conservation targets but the evidence provided showed it had only achieved a 63,9% success rate, Maluleke found.
“Reasonable steps were not taken to prevent fruitless and wasteful expenditure” – Maluleke
Makana municipality had deviated from approved procurement procedures to the tune of R11.7 million but had not properly recorded this information, the AG found.
Makana municipality’s financial statements did not agree with its fixed asset register or payroll information or billing reports. The AG was unable to find accurate financial records for many types of revenue earned by the municipality which had failed to prepare a proper cash flow statement, and had provided no information on water and electricity losses.
“I was unable to obtain sufficient appropriate audit evidence that VAT payable had been properly accounted for”, Maluleke said. The municipality also “does not have a working system for records management”.
No proper accounts for money coming in or going out
Makana municipality did not “recognise and account for revenue from exchange transactions” and had failed to record income when it sold off assets.
The AG also said the municipality had not correctly recorded how much it spent on suppliers, and there was a discrepancy between invoices from suppliers and the municipal financial statements.
Overtime payments and employee allowances were overstated by R3.9 million, she found.
Makana Citizen’s Front wants municipality dissolved – again
The Makana Citizen’s Front (MCF) said they were consulting their attorneys about returning to court to have the municipality dissolved again.
“We might go back to court because the audit report clearly shows that Financial Recovery Plan is in the dust bin. Four consecutive disclaimers is a story of a failed municipality. The matter requires intervention from the Special Investigations Unit. All internal oversight bodies have equally failed” said MCF secretary Ayanda Kota.
Democratic Alliance demands paperwork for water treatment pumps
The DA also condemned the municipality, and said it was especially “damning” that the AG was “unable to find the paperwork for the procurement of two pump sets for James Kleynhans water treatment works”.
DA councillor Geoff Embling added that the municipality intended to auction off a ‘graveyard’ of unused vehicles. He insisted that the money raised from this be ring-fenced for service delivery, so that it could be accounted for, rather than wasted.
The AG has ordered that Makana municipality develop an action plan to address his concerns. He said the municipality will be monitored every three months to compel it to comply with public finance laws.
Grocott’s Mail will unpack the AG’s report in detail in the coming editions of the newspaper.
(Alyssa Harrison, Tokologo Lekoma, Elaine Wabwire and Anna Majavu contributed to this article).