Concerns despite improved audit report

This poses as good news for the municipality since the AG gave the municipality the worst opinion in its history for the 2020-2021 financial year — an adverse opinion.

The AG’s findings were released in the municipal annual report for 2021-2022, which the public can find on the municipal website and comment on. The report was first issued to the municipal council in November 2022.

Despite a better audit opinion, the AG’s representative did include concerning commentary:

• The municipality received little value for properties that were invested in and the expected return did not materialize.
• Ratepayers’ accounts who had passed away were never closed.
• Traffic fines amounting to over R8 million were incorrectly written off under the municipal bad debt policy and thus remained as outstanding.
• No audit evidence existed of payments made in advance to the municipality nor unknown deposits.
• Municipal revenue overextended the budget by R12 million at one point
• No internal control was exercised for service charges, and cash flow management. In some instances, the AG found no record of the residents that were not charged for service delivery. Cash flow from operating activities couldn’t be justified.
• Categorical mistakes were made under expenditure, where contracted services were categorized under plant and equipment or under general expenses.
• The amount due to water losses could not be substantiated.
• Material electricity losses of over R30 million, due to technical losses, illegal connections, faulty meters, and theft were found.
• The municipality incurred an irregular expenditure of over R138 million.
• Presentation of financial statements, which includes policies, remuneration of councilors, deviations, commitments, and material losses through criminal conduct was omitted to report by the municipality.
• The municipality’s current liabilities exceed the total value of all municipal assets by over R104 million. A material uncertainty exists that may cast significant doubt on the municipality’s ability to continue as a going concern.
• An unauthorized expenditure of over R52 million was noted. The chief financial officer and the department of social and community services exceeded their appropriated budget allocations.
• Fruitless and waste expenditure was R2,1 million, due to interest and penalties for late settlement of outstanding accounts. No investigation was done to prove that any person is liable for these irregular expenditures.
• Some tenders were awarded to bidders that did not score the highest during the evaluation process. No minimum threshold for local contractors was specified.
• The municipal accounting officer, management, and leadership did not exercise adequate oversight or monitoring regarding financial and performance reporting.
• Consequence management, accounting principles and systems to monitor compliance, as well as municipal mechanisms are not in place.

Peter Moloto, the municipal spokesperson, said that more effort must be made to get things back on track.

“Water and electricity issues persist. The knock-on effect from the Covid-19 pandemic when residents were unable to pay for services rendered, still has a negative impact on the financial situation. Residents want value for money,” said Moloto.

“The municipality did at least receive a better opinion, which means things are steering in the right direction again. We have faith in our legal and disciplinary systems to root out the negative causes.”