Polokwane Municipality receives qualified audit opinion

For a second year, Polokwane Municipality received a qualified audit opinion from the Auditor-General (AG) for the 2017/18 financial year, ending on 30 June 2018. That after regressing from an unqualified opinion during the 2015/16 financial year.
The recently released AG report for the 2017/18 financial year ending on 30 June 2018 highlights some of the aspects on which the opinion is based.
“Material misstatements of non-current assets, current assets, current liabilities, revenue, expenditure, budget statement, cash flow statement and disclosure items identified by the auditors in the submitted financial statements were subsequently corrected and the supporting records were provided subsequently, but the uncorrected material misstatements and supporting records that could not be provided resulted in the financial statements receiving a qualified audit opinion.”
According to the AG, the municipality incurred R411 050 617 in unauthorised expenditure as the expenditure was in excess of the limits of the amounts provided for in the approved budget. The figure for the 2016/17 financial year was R289 055 633. It was also detected in the audit process that some of the unauthorised expenditure was not investigated to determine whether any person is liable, as required by the Municipal Finance Management Act (MFMA).
Irregular expenditure amounted to R89 451 308, opposed to the amount of R198 754 608 for the previous financial year. The expenditure was in contravention of supply chain regulations, according to the AG.
The AG also raised a concern that the municipality has not developed and adopted appropriate systems and procedures to monitor, measure and evaluate performance of staff. “That may be one of the major reasons for poor service delivery because if you can’t measure it, you can’t manage it,” a resident remarked.
According to the AG, the municipality recorded a significant amount of service charges using estimates and that this means that the municipality is placing a high reliance on estimates opposed to actual readings. “The municipality does not have an approved methodology to account for estimates. The available draft methodology is not consistent and not monitored,” the AG found and added that the system is unable to differentiate between actual readings and estimated readings.
During the first meeting of council the report was not discussed but referred to the Municipal Public Accounts Committee (MPAC) for further attention.

Story: BARRY VILJOEN
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