For the third year running KwaDukuza municipality (KDM) has failed to receive a clean audit, and was awarded a low performance rating of 47% by the auditor general.
Presenting the report to a virtual council meeting last Thursday, Martin Coates from the auditor general’s office made damning findings against KDM, which incurred R155.53 million in irregular spending.
The report put the blame squarely on management for not ensuring compliance with legislation.
It had not taken effective steps to prevent irregular expenditure and had developed a tolerance for transgressions.
He said the accounting officer failed to investigate irregular expenditure incurred by the municipality to determine if any person was liable for the irregular expenditure as required by the Municipal Finance Management Act (MFMA).
The previous year’s (2018/2019) R37.9 million in irregular expenditure and R3.7 million of fruitless and wasteful expenditure was also not investigated.
Of particular concern was electricity losses through theft by illegal connections up from R115 million to R152 million.
The AG criticised a weakness of IT controls, the awarding of 7 irregular contracts to the value of R11 million without inviting competitive bids and deviations from the Supply Chain Management (SCM) procedures.
“Some of the goods and services of a transaction value above R200 000 were procured without inviting competitive bids, as required by supply chain management legislation. Deviations were approved by the accounting officer even though it was not impractical to invite competitive bids. Similar non-compliance with legislation was also reported in the prior year,” he said.
Unfair procurement processes were also flagged.
It was pointed out that while awards to close family members are not prohibited, those over R2 000 must be disclosed in the financial statements and officials should declare the interest of a close family member doing business with the state.
“Close family members of one official had an interest in awards made to the value of R1.8 million. This amount was not disclosed in the financial statements.
“In the previous year, 3 instances were investigated where officials failed to disclose their own interest or that of close family members, partners or associates. In the current year there were 11 findings where the supplier submitted false declaration of interest.”
The report also noted the investigations underway by the Special Investigation Unit (SIU) on 2 bids for personal protective equipment awarded during the Covid-19 pandemic.
The report also pointed out that KDM underspent its capital budget by R82.05 million, which represents 32% of the total budget.
