Ndlambe LM – Paraphrased extracts from Auditor General’s Report for year ending 30th June 2021, signed by AG 11 February 2022. The full report can be accessed here.
- Annual Financial Statements:
The financial statements submitted for auditing were not prepared in all material aspects in accordance with the requirements of section 122(1) of the MFMA. Material misstatements of disclosure items identified by the auditors in the submitted financial statements were subsequently corrected and the supporting records 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.
- Consequence Management:
The irregular expenditure incurred by Ndlambe LM was not investigated to determine if any person is liable for the expenditure as required by section 32(2)(b) of the MFMA.
- Expenditure Management:
Persons in the service of the Ndlambe LM who had private or business interests in contracts awarded to Ndlambe LM failed to disclose such interest, in contravention of the SCK regulation 46(2)(e)
- Internal Control Deficiencies:
Leadership did not adequately discharge its responsibility of oversight over the implementation and monitoring of internal controls to ensure sound financial and compliance with legislation. Consequently the correct tone was not set to ensure that all municipal officials were held accountable for their actions through consequence management.
Management did bot effectively review and monitor financial reporting and compliance with laws and regulations. Record keeping remains a challenge. Control over daily and monthly processing and reconciling of revenue transactions with respect to free basic services were not properly implemented. Consumer households received these benefits when the municipality had not sufficiently maintained record confirming their eligibility terms of the indigent policy.
The impaired functioning of the internal audit unit greatly affected the effectiveness of the audit committee.
Investigations were conducted and finalised relating to fraudulent qualifications of employees in the financial division and outstanding monies not banked by the Traffic Department.
- Material Losses:
Water losses – amounted to R 17.4 million which amounts to 40% of total water purchased. Loses were due to physical losses, leaks, burst pipes, reservoir overflows, metering inefficiencies, meter faults and unauthorised and unmetered consumption.
Electricity losses – amounted to R 6.5 million which amounts to 13.3% of total electricity. These losses were mainly due to MV and LV losses in switchgear, overhead lines obsolete aluminium lines, underground cables and transformers. Furthermore losses are attributable to metering meter reading losses and tampering of electricity.
Impairments of R 45.6 million relating to receivables from non-exchange and R 93.0 million relating to receivables from non-exchange transactions incurred as a result of irrecoverable debtors.
- Reasonable steps were not taken to prevent irregular expenditure amounting to R 187.5 million. Unauthorised expenditure amounting to R 33.2 million was caused by overspending of the budget per department on cash and non-cash items.
- Ndlambe LM do not have proper systems in place to confirm the indigent status of the consumers who were not billed for service charges. Consequently I was unable to determine whether any adjustments were required to service charges of revenue of 6 million!
21 March 2022