ALTHOUGH the Auditor General of South Africa (AGSA), Tsakani Maluleke, has given OR Tambo District Municipality an unqualified audit opinion for the 2023/2024 financial year, she admonished management, stating that adequate reviews were not performed to ensure that the financial statements were valid and accurate.
The AG’s report was tabled during a special council meeting on January 30. It stated that the AG had selected a key performance area presented in the annual performance report for the year ended June 30, 2024, for auditing. “I selected a key performance area that measures the municipality’s performance on its primary mandated functions and that is of significant national, community or public interest,” the AG said.
The key performance area is basic service delivery with its goals being to promote integrated sustainable community livelihood, provide conducive, adequate, and accessible infrastructure, and provide water and sanitation to every community or village.
She reported no material findings on the performance information for basic service delivery and infrastructure. The annual report included information on reported achievements against planned targets with explanations for measures taken to improve performance. Maluleke noted that 88% of basic service delivery and infrastructure targets were achieved with 108% of the budget utilised.
The report indicated 11 planned waterborne sanitation contracts, with nine being reported as achieved. Of 450 houses scheduled for have erected two. There were material findings on compliance with legislation shown by the financial statements submitted for auditing that were not fully prepared in all material respects in accordance with the requirements of section 122(1) of the Municipal Finance Management Act (MFMA).
“Material misstatements of non-current assets, current assets, and disclosure items identified by the auditors in the submitted consolidated and separate financial statements were subsequently corrected, resulting in the consolidated and separate financial statements receiving an unqualified audit opinion.”
The municipality did not always pay debts within 30 days, as required by section 65(2)(e) of the MFMA.
“Reasonable steps were not taken to prevent unauthorised expenditure amounting to R264 million, as disclosed in note 54 to the consolidated and separate annual financial statements, in contravention of section 62(1)(d) of the MFMA. The majority of the unauthorised expenditure was due to over-expenditure on non-cash items,” Maluleke said. The majority of the disclosed fruitless and wasteful expenditure, totalling R3.69 million, was caused by interest and penalties on overdue accounts.
“Management did not perform adequate reviews of the schedules used to prepare the consolidated and separate annual financial statements to ensure that the disclosed amounts are supported by valid and accurate documents. Management, as the first level of assurance providers, has not effectively discharged their duties and responsibilities regarding the validity, accuracy, and completeness of the consolidated and separate annual financial statements. This resulted in non-compliance with legislation,” she said.
Furthermore, Maluleke noted that management did not implement appropriate internal controls to prevent non-compliance with other key legislation.
The Special Investigating Unit was investigating matters included in proclamation 172 of 2024 by President Cyril Ramaphosa, gazetted (No. 51056) on August 20, 2024.
The matters under investigation included allegations of serious maladministration and involved the following contracts:
. The appointment of Amatola Water Board in 2019, with an alleged irregular payment made to Amatola in 2020;
. The construction of the Mqanduli Bulk Water Scheme and the appointment of the contractor, with an alleged irregular payment made to the contractor in 2019;
. The supply and installation of a pump at Mhlontlo Cluster 1, with the appointment of the contractor and alleged payment made to the service providers in 2019; and
. The electrification of the Mthatha Dam and Highbury and the construction of the Thornbill Clear Water Pump Station, with alleged irregularities regarding payment to Amatola for these projects in 2018 and 2019.
