North West SCOPA blames failure to deal with increasing irregular expenditure for poor performance in Dr. Kenneth Kaunda, Matlosana and Ratlou Municipalities
On Wednesday, 04 September 2019, the North West Provincial Legislature’s Standing Committee on Provincial Public Accounts (SCOPA) lambasted Dr. Kenneth Kaunda District; Matlosana and Ratlou Local Municipalities' failure to deal with increasing unauthorised, irregular and fruitless and wasteful expenditure for poor performance. The municipalities were also blamed for inadequate controls implemented for supply chain management compliance and inadequate consequences management resulting on supply chain management transgressions.
This follows the Standing Committee's public hearings with the municipalities on Municipal Finance Management Act for the 2017/18 audit report in the legislature.
According to the audit report in the 2017/18 financial year, Dr Kenneth Kaunda District Municipality incurred irregular expenditure of R106,6 million and R101,8 million in the previous financial year, unauthorised expenditure of R17,4 million and R50,4 million in the previous financial year; Matlosana Local Municipality incurred irregular expenditure of R319,4 million (2017/18) and R2,4 billion in the previous financial years thus totalling R2,7 billion, and Ratlou Local Municipality incurred irregular expenditure of R31,7 million (2017/18) and R77,3 million in the previous financial years; unauthorised expenditure of R32 million in the previous financial years.
Key root causes for poor audit findings include high vacancy rate in key positions; over reliance on consultants for preparation of the financial statements; slow implementation of adequate basic systems of internal controls over financial management and compliance with applicable laws and regulations, and prior years unauthorised, irregular and fruitless and wasteful expenditure not investigated to determine if any person is liable for the expenditure.
The Standing Committee Chairperson, Hon. Job Dliso said the Committee is worried that there is trend of deliberately ensuring citing missing documents when the municipal officials should be accounting on irregular expenditure. "Billions of Rands are unaccounted for due to poor record keeping. Bid Adjudicating Committees are also constituted illegally in these municipalities yet the accounting officers are shifting the function of investigating transgressions to MPAC and financial disciplinary boards," said Hon. Dliso.
"Even with the assistance of consultants, the audit performances of these municipalities have remained stagnant in the last three (3) financial years. The audit reports suggest that there is no value for money with the use of these consultants," said Hon. Dliso. He said the Standing Committee needs to explore means through which it can easily refer suspicious cases of fraud, theft, dishonesty and non-compliance with legal policies to law enforcement agencies including Special Investigating Unit and National Prosecution Authority's new Special Investigating division.
The Municipal Manager of Dr. Kenneth Kaunda District Municipality, Ms. Shirley Lesupi said a Financial Disciplinary Board was established in accordance with Chapter 15 of the Municipal Finance Management Act, Act 56 of 2003, to assist the Council on investigating unauthorised, irregular and fruitless and wasteful expenditure cases.
The Municipal Manager of Matlosana Local Municipality, Mr. Theetsi Nkhemise confirmed that over R716 million incurred on the irregular expenditure was for confirmed projects and services rendered but there are missing documents and fraud cases worth R1,4 million. "For many years, supply chain was decentralised in the municipality hence the high irregular expenditure. As part of decreasing over reliance on consultants, we have brought in two directors to assist with preparation of annual financial statements and sent officials for training," said Mr Nkhemise.
Municipal Manager of Ratlou local municipal, Mr. Tebogo Chanda said the municipality will appoint senior managers in the current financial year. "All cases have been referred to MPAC for further investigations and recommendations. Non-compliance is as a result of administrative challenges in the budget and treasury office and supply chain management unit," said Mr. Chanda.
Hon. Dliso said the municipalities should submit detailed report on how to deal with unauthorised, irregular and fruitless and wasteful expenditure including steps for consequence management on affected officials in terms of MFMA; report on all projects, their actual expenditure and value for money; list of all consultants, time of appointment and terms of reference; post audit action plans with clear time lines; cases referred to law enforcement agencies for processing and a report on how to deal with debtors such as Eskom.
Hon. Dliso said that Municipal Councils must play their oversight in holding accounting officers accountable for enhancement and strengthening service delivery.
Enquiries:
Namhla Luhabe
Tel: 018 392 7000
Cell: 079 527 0628
Fax: 086 695 3784
E-mail : namhla@nwpl.org.za<mailto:namhla@nwpl.org.za
