By Luvuyo Mjekula
The Makana Municipality is set to end 2024 at a low ebb, having received another disclaimer audit opinion from the Auditor-General (AG), the DA asking national and provincial government leadership to intervene again in a seemingly unending water crisis and ratepayers dialing the Presidential Hotline to vent their water frustrations.
Makana Citizens’ Front (MCF) PR councillor Lungile Mxube even labelled the beleaguered institution “a scrapyard municipality”.
The AG announced the disclaimer audit outcome for the 2023/24 financial year at a virtual Makana Municipality special council meeting on Wednesday this week.
He said he was unable to obtain sufficient and appropriate audit evidence in about 90 items.
The AG reported that annual financial statements and reports submitted for auditing were not prepared in all material respects in accordance with the Municipal Finance Management Act (MFMA). “Material misstatements identified by the auditors in the submitted financial statements were not adequately corrected and the supporting records could not be provided subsequently, which resulted in the financial statements receiving a disclaimer of opinion.”
The AG further reported on his challenges obtaining audit evidence on procurement and contract management, an area of serious interest to the Special Investigating Unit (SIU) investigators who raided the municipality’s offices last month, following President Cyril Ramaphosa’s proclamation authorising the SIU to investigate allegations of serious maladministration into Makana’s procurement processes pertaining to certain tenders.
He stated that sufficient appropriate audit evidence could not be obtained that all contracts and quotations were awarded in accordance with the legislative requirements as some of the competitive bids were not submitted.
Some of the AGs findings:
- Some of the goods and services within the prescribed transaction value for competitive bids were procured without inviting competitive bids, as required by supply chain management regulations, the AG said.
- Some of the contracts were made to bidders other than those recommended by the bid evaluation committee without ratification by the accounting officer as required by supply chain management regulations.
- Some of the contracts were awarded to providers whose tax matters had not been declared by Sars to be in order. This is in contravention of supply chain management regulation 43.
- The preference point system was not applied to some of the procurement goods and services as required by section 2(1)(a) of the Preferential Procurement Policy Framework Act.
- Some of the contracts were awarded to bidders based on preference points that were not allocated or calculated in accordance with the requirements of the PPPF Act and its regulations.
- Some of the contracts and quotations were awarded to bidders that did not score the highest points in the evaluation process, as per the PPPF Act.
- The performance of some of the contractors or providers was not monitored monthly as required.
- The contract performance and monitoring measures were not in place to ensure effective contract management.
On consequence management, the AG reported that some of the unauthorised, irregular and fruitless and wasteful expenditure incurred by the municipality was not investigated to determine if any person is liable for the expenditure.
The AG also delved into the municipality’s expenditure management, noting that the institution did not always pay money it owed within 30 days of the agreed period. An adequate management, accounting and information system was not in place which accounted for creditors and payments made.
The AG found that reasonable steps were not taken to prevent irregular expenditure, but the full extent of the irregular expenditure could not be quantified as indicated in the basis for the disclaimer audit opinion.
However, the majority of the disclosed irregular expenditure was caused by non-compliance with supply chain management regulations.
Reasonable steps were also not taken to prevent fruitless and wasteful expenditure, and although the AG could not quantify the full extent of the problem, the major cause was interest incurred on long overdue accounts.
On revenue management, the AG was unable to obtain enough audit evidence that revenue due to the municipality was calculated monthly, or that accounts for municipal tax and changes for municipal services or service charges were prepared on a monthly basis as required by supply chain management legislation. This was partly because an effective system of internal control for debtors and revenue was not in place.
Because the AGs report had not been circulated to councillors in time, it was decided its contents would be discussed in the next council meeting.
However, some councillors expressed shock at the report, MCF’s councillor Paul Notyawa saying it was “painful and horrendous”.
Said Philip Machanick: “I can’t remember when we last had a report that didn’t have 90 or more items in the disclaimer.”
DA councillor, Brian Jackson, said he noted what the AG reported on the redevelopment of Lavender Valley, which he said 98% of of the budget had been spent, but not a single target had been met. “We need an explanation and I hope the SIU will be investigating that as well.”
Mxube said the accounting officer must prepare a comprehensive response to the AGs report, giving full accountability as well as a remedial action plan, including the consequence management.
Council Speaker Mtutuzeli Matyumza called Mxube out for calling the municipality a scrapyard. “You are part of the municipality too. Do not refer to it as a scrapyard again.”
Other matters discussed in the meeting included the acceptance of the reviewed financial recovery plan, delivered by mayor Yandiswa Vara.
Meanwhile, as there appears to be no end in sight to Makana’s water crisis, the DA has confirmed it has written letters to Water and Sanitation minister Pemmy Majodina and Eastern Cape Cooperative Governance and Traditional Affairs (Cogta) MEC Zolile Williams to intervene into the crisis still plaguing the residents of Makhanda.
In the letter dated 11 December 2024, to Majodina, the DA’s local government spokesperson and member of parliament, Retief Odendaal, informed the minister about Williams’ earlier intervention and how the situation has remained dire.
Odendaal asked Majodina to urgently intervene by also availing some technical personnel to Makhanda to support both the local as well as the provincial team. “These extended outages are not just a massive inconvenience to the residents, they are decimating local businesses that just simply can’t continue to trade without a sustainable supply of water.”
The DA has also informed Williams that the water crisis in Makana has grown progressively worse, with some of the communities having experienced extended water outages for weeks.
Residents from the western parts of Makhanda have been reporting their prolonged water outages and lack of communication from the municipality through the Presidential Hotline.
