Council discussed the Auditor-General’s (AG) report on the municipality’s financial state last Friday. This was the first time in Merafong’s existence that it had received a qualified audit. The senior manager of the Auditor-General’s Gauteng business unit, Mr Velaphi Madzena, stated in the report, “In my opinion, because of the significance of the matter described in the basis for the adverse opinion section of the auditor’s report, the financial statements do not represent fairly, in all material respects, the financial position of the Merafong City Local Municipality as at 30 June 2021…” Among the problems the AG’s office picked up is that the municipality overstated its work in process and understated its com-pleted assets by R209,034,079. The municipality also failed to give appropriate audit evidence that consumer debtors for the current year had been properly accounted for. The municipality also failed to give proper audit evidence that money received from exchange transactions were properly accounted for. Neither did it recognise all outstanding amounts that are considered a liability. There was insufficient evidence to show that provisions for the current financial year had been properly accounted for. Among other things, the municipality did not correctly disclose its nett cash flows from operating activities. The AG further pointed out that, as a result of its books not being in order, the municipality is facing material uncertainty and impairments. It also lost 23.97 per cent of the water and 33 per cent that it purchased. The municipality also did not take what the AG termed as reasonable steps to prevent irregular expenditure. The municipality disclosed R33,893,638 in irregular expen-diture in the past financial year. The AG stated that all the irregular expenditure was caused by contravening the Municipal Financial Management Act. The municipality did not have competitive bidding processes for goods and services procured and did not comply with various regu- lations. It also did not take reasonable steps to prevent irregular expenditure. Among others, the AG also noted that the municipality’s accounting officer did not ade-quately perform his duties in compliance with legislation. The municipality’s senior management also failed to implement sufficient monitoring controls.
