AG report: Polokwane a top contributor to irregular expenditure in Limpopo

Business Executive in the office of the AG in Limpopo, Nthanyi Dhumazi.

LIMPOPO – Not one municipality in the province obtained a clean audit and no municipality had findings on compliance with legislation. Irregular expenditure, described as unacceptably high, amounted to R1,3 billion.

Two municipalities remained in the disclaimed/adverse categories for the past five years.

Dhumazi emphasised that commitments made by the premier to deal with poor-performing municipalities have not been acted upon.

“Accountability continues to fail in local government,” she said, adding that in most municipalities, basic controls have not been implemented.

The quality of annual financial statements, annual performance reports and compliance with legislation remained consistently poor.

Nine municipalities managed to obtain unqualified audit opinions, but none managed to submit statements without material misstatements that had to be adjusted upon auditing. Twenty-one municipalities spent R96 million on consultants, with R71 million spent where municipalities still obtained a qualified, disclaimer or adverse audit report. Only three of 27 municipalities could deliver performance reports that were both useful and reliable and only one of these did not require adjustments to the reports.

Dhumazi said the AG remain extremely concerned about the status of compliance with legislation by municipalities in the province: All municipalities had material findings due to non-compliance with legislation.

All municipalities had findings for the poor quality of statement submitted and in 96% of cases unauthorised, irregular and fruitless and wasteful expenditure was not prevented.

Polokwane Municipality (R199 million), Vhembe District Municipality (R226 million) and Sekhukhune Municipality are the three top contributors to irregular expenditure.

“Despite our efforts in proactively engaging municipal managers and mayors during our regular interaction in the process to deal with irregular expenditure, they have been slow in investigation such expenditure,” Dhumazi said.

Of most concern to Dhumazi is the failure to implement a culture of accountability by the first and third level assurance providers, and consequences through investing transgressions, especially relating to procurement of goods and services.

The inability of municipalities to collect money owed for services rendered is an ongoing challenge, with eight municipalities having creditors balances greater than the actual cash on hand.

Fruitless expenditure amounted to R243 million, up from R75 million in 2015/16.

Project planning, better budget management and progress monitoring to ensure timeous delivery of quality services to municipalities and residents are much needed in the province.

Polokwane was cited as an example, where water losses amounting to R48 million due to aging water infrastructure was reported, with the municipality’s maintenance plan not having specific time frames and targets to address the problem.

Dhumazi said setting the right tone for solid ethical behaviour that will support a responsible, accountable, effective and efficient local government system needs to be set from the top. Senior managers, municipal managers and mayors, must deal decisively with accountability failures and implement consequence management. Adherence to basic financial disciplines, the design and implementation of credible and comprehensive action plans to address root causes of matters raised, close monitoring of work done and gaining an understanding of the processes followed in getting the actual outcomes is imperative.

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Nelie Erasmus
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