Lolo Madonsela
AbaQulusi Local Municipality (ALM) received an unqualified audit outcome with findings, while Zululand District Municipality and eDumbe Local Municipality received qualified audit outcomes with findings.
Other local municipalities in the Zululand District that received an unqualified audit outcome with findings were Pongola, Nongoma and Ulundi.
Auditor-General (AG) Kimi Makwetu said in his report that, “The audit outcome of AbaQulusi improved from a qualified opinion to an unqualified opinion with findings. This was due to the commitment of the finance team, support from the provincial Department of Co-operative Governance & Traditional Affairs and the National Treasury, and the use of consultants to assist in preparing the financial statements. However, the municipality’s leadership was unstable due to the suspension of the municipal manager and the resignation of the mayor.
“Stability has been a challenge for this municipality for a number of years. One of the reasons for this was the closely contested elections where the ruling party usually had a majority of only one seat. In prior years, the municipality had no municipal manager for the entire five-year term of Council. The municipality placed undue reliance on the chief financial officer, which was not a good practice, as it could hamper operations should this official leave.
“In 2018, the internal audit unit completed many audits throughout the year, but recommendations were not implemented in a timely manner by management, resulting in repeated deficiencies. The municipal public accounts committee held meetings and reviewed information, but not comprehensively enough to provide assurance on the credibility and reliability of financial and performance information. The committee was unable to fulfil its duties effectively due to political instability within the Council, which resulted in the appointment of an administrator in March 2019,” said Makwetu.
The AG said the financial statement showed that ALM entered into an agreement with Zululand District in 2003, according to which the provision of water services in the Vryheid and Paulpietersburg areas was delegated to the municipality.
“The lack of funding for water infrastructure was felt in all communities across the municipality, with the aging assets no longer coping with demand and constant breakages occurring. This was evidenced by the high asset maintenance costs, the non-achievement of the targets set for the replacement of infrastructure assets, as well as the high disclosed water losses of R15.9 million (60%). In 2018/19, the municipality was involved in a legal dispute with a landowner over the compensation for property that was expropriated for a low-cost municipal housing development on June 12, 2006. After a protracted legal process, the court settlement agreement ruled that the municipality had to pay R25.1 million plus interest to the landowner from 2006. The repayment of this debt, the low levels of debt collection, as well as reported deficits meant that the municipality had insufficient cash reserves to discharge its responsibilities,” said Makwetu.
He added that the pressure on the municipality’s finances was further worsened by significant water losses of R15.9 million (60%) due to an aging infrastructure network, as well as illegal electricity connections that resulted in electricity losses of R30.7 million (19%), placing a further strain on finances.
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