Auditor General says Govan Mbeki Municipality wastes money on consultants

SECUNDA – The Govan Mbeki Municipality have spent more than R17-million irregularly according to the Auditor General’s report for the 2012/13 financial year.

Its fruitless and wasteful expenditure was R8.1-million.

The municipality received a qualified audit.

Mr Kimi Makwetu, Auditor General, said in the report that indications are that the municipal management did not take full responsibility for the financial statements prepared by their consultants which cost the municipality R4-million.

He said financial staff were unable to prepare the financial statements themselves.

The over-reliance on consultants and a lack of appropriate skills and competencies to process and report financial and performance information, results in the poor audit outcomes.

“Although consultants were used to prepare the financial statements, financial statements submitted for auditing were not accurate.

“This indicates that basic accounting disciplines were not performed to ensure the credibility of the underlying data.”

He said the municipality continued to have non-compliance on supply chain management, as proper processes were not followed when procuring goods and services.

“There was no consistency between the planned and the reported targets, which made it difficult to confirm whether the municipality had delivered on some of its planned objectives.

Mr Makwetu said limitations on the scope of their audit continued to be a problem during the testing of compliance and financial statements.

“Our concerns relating to the continued use of consultants include their appointment without a proper needs assessment and a lack of transfer of skills.

“Management was furthermore unable to explain some of the assumptions made by the consultants in arriving at the amounts included in the financial statements, indicating that management did not take full responsibility for the financial statements prepared by the consultants.”

The financial health of the municipality remained unchanged as spending of grants continued to be under the budgeted amount.

Poor planning of capital spending resulted in project delays.

Mr Makwetu said the delayed payment of creditors continued to be the norm at the municipality.

He advised the municipality to implement processes to monitor and track the implementation of the recommendation of governance structures.

“The municipality should implement effective human resources management to ensure that adequate and sufficiently skilled officials are in place and their performance is monitored.

“Where gaps are identified, for example in the finance section, training should be provided.”

“The mayor should oversee the implementation of both the action plan to address internal and external audit findings and a proper performance management system at all levels.”

Mr Makwetu said none of the assurance providers provided full assurance.

“We met with the mayor twice during the financial year and these interactions had some impact on the audit outcome.

“The mayor implemented some of the previous commitments, but their impact was not yet visible on the audit outcome.”

Mr Henry Masango, head of Marketing and Communications of the municipality said: “There has been remarkable progress since the last audit of the municipality and the most notable being that for the first time in the history of this institution, the annual financial statements are being compiled internally.

“We are looking forward to an improved audit outcome by the Auditor General at the end of the financial year.”

Mr Masango said the amounts as reflected in the report as irregular expenditure and fruitless and wasteful expenditure, are categorised as such because of late payment of bulk purchases, such as electricity and portable water, thus incurring interest because of the cash-flow challenges.

“This can only be avoided if the financial position of the municipality can be significantly improved.”

Mr David Mabuza, Mpumalanga Premier, promised Mr Makwetu at their meeting on 10 July that there will be improvements on municipal performance following bad audit outcomes of the provincial local government and they are going to act against poor performance.

He said he fully trusted the capabilities of the new members of the executive for the Department of Cooperative Governance and Traditional Affairs and the Department of Finance respectively, in providing the necessary support to the municipalities.