North West SCOPA lambasts Mahikeng Local municipality’s lack of compliance on supply chain management laws and regulations that resulted in irregular expenditure of R133 Million
The North West Provincial Legislature’s Standing Committee on Provincial Public Accounts (SCOPA) has lambasted Mahikeng Local Municipality’s continuous failure to comply with supply chain management laws and regulations that resulted in irregular expenditure as well as their inability to implement control measures to ensure compliance and recurring matters on the audit report. This came after the Committee held public hearings on the Municipal Finance Management Act (MFMA) audit outcomes for the financial year 2015/16 with Mahikeng; Madibeng and Moretele Local Municipalities.
In the 2015/16 financial year, Mahikeng and Madibeng Local Municipality received a disclaimer audit opinion and Moretele Local Municipality received a qualified audit opinion respectively. Mahikeng Local Municipalities incurred unauthorised expenditure of R133, 4 million; irregular expenditure of R133,5 million and fruitless and wasteful expenditure of R370 769 due to overspending of budget, payments made in contravention of supply chain management regulations and due to interest and penalties charged by suppliers due to non/late payments.
SCOPA Chairperson, Hon. Mahlakeng Mahlakeng said Mahikeng as a seat of provincial government cannot continue to receive disclaimer audit opinions due to lack of adequate control measures; non-functionality and implementation of the supply chain management policies and increased vacancy rate from 6 percent in the previous financial year to 15 percent in the current year.
“It cannot be correct that there were no consequences for irregular expenditure transgressors and other supply chain management transgressions. There is lack of sufficiently skilled and competent staff in the supply chain unit. The auditor general has also indicated that the municipality operates from an unfavourable financial position.
“The audit report has also highlighted that there is inability of the municipality to effectively bill users and collect money from debtors and has impacted on the ability to settle and pay its creditors , which exposes the municipality to cash flow risk,” said Hon. Mahlakeng.
He said the municipalities continue to ignore SCOPA Resolutions hence there are recurring matters in the current year’s audit report.
On water, sanitation and infrastructure, the Acting Business Executive at the Provincial Auditor General’s Office, Mr. Schalla van Schalkwyk said the municipality does not have approved policies in place to address routine maintenance of water infrastructure and planning, management and reporting of roads infrastructure. “There was also an investigation prompted by the previous municipal manager, undertaken by the hawks on the irregular sale of property to an external party without following the correct disposal processes and it is on-going,” said Mr. van Schalkwyk.
The Municipal Manager of Mahikeng Local Municipality, Mr. Thabo Mokwena said the Municipal Public Accounts Committee has been assigned to investigate the unauthorised; irregular and, fruitless and wasteful expenditure. “In order to ensure that there are control environment around record keeping. The municipality has centralized the supply chain management unit to ensure that there is document filling. Other control measures include compliance checklists, implemented and review for correctness by independent officials including the Internal Audit Unit,” said Mr. Mokwena.
“All incorrectly allocated debtor payments were identified and allocated to the correct debtor accounts during the August and September 2016. The water losses are mainly as a result of incomplete billing for water services that has been primarily caused by faulty and non-installed water meters. The municipality purchased the required water meters for replacement and process is ongoing. The management is also addressing the issue of duplicate positions and abuse of overtime by officials,” said Mr. Mokwena.
He said President Jacob Zuma has signed a proclamation for an investigation on the entire land of Mahikeng by the Special Investigations Unit and the Hawks. “There is no development on the land due to illegal sale of most empty spaces in the town hence the current investigation on land,” said Mr. Mokwena.
The Head of Department Finance, Economy and Enterprise Development, Mr. Ndlela Kunene said SCOPA and MPAC oversight processes can assist the municipality in improving audit findings. “The department continues to assist all municipalities with revenue and debt management,” said Mr. Kunene.
The Committee has also welcomed Madibeng and Moretele Local Municipalities’ audit action plans to address matters raised on the 2015/16 audit reports. Madibeng Local Municipality regressed from a qualified audit opinion in 2014/15 to disclaimer audit opinion in the 2015/16 financial year whilst Moretele Local Municipality remained on qualified audit opinion in the financial year under review.
Hon. Mahlakeng said the Committee is impressed with steps taken by management of both municipalities to turn-around their financial statuses. “Although our municipalities are the worst performing in the country, we aim to work hard towards clean audits. Investigations on the supply chain management transgressions should go ahead as planned,” said Hon. Mahlakeng.
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