The Nelson Mandela Bay Municipality has been issued with a qualified audit report for the 2013/14 financial year by the Office of the Auditor General.
The AG’s Report together with the Annual Report will be formally tabled in Council at the end of this week.
Spelling out the reasons for issuing a qualified audit opinion, the AG says the municipality “did not have adequate systems in place to identify and disclose all irregular expenditure incurred during the year as required by the Municipal Finance Management Act (MFMA).
The AG states that irregular expenditure disclosed at R768.5 million was understated, although “due to a lack of systems and non-availability of sufficient appropriate audit evidence…it was impracticable to determine the full extent of the understatement”.
The AG says the municipality also did not have “an adequate system in place to ensure that all vacation leave is properly administered”.
With regard to procurement and contract management, the AG says that sufficient appropriate audit evidence could not be obtained that “measures to combat the abuse of the Supply Chain Management (SCM) system were implemented” as per the requirements of the SCM regulations.
The AG points out that people in the service of the municipality whose close family members had a private or business interest in contracts awarded by the metro “failed to disclose such interest” as required by the SCM regulations.
Further, awards were made to providers in the service of the municipality and/or whose directors/principal shareholders were in the service of the municipality in contravention of the MFMA and SCM regulations.
“Similar non-compliance was reported in the prior year and the municipality did not take disciplinary action against the suppliers/officials involved.”
The AG also notes that unauthorised, irregular and fruitless and wasteful expenditure incurred by the municipality was “not investigated to determine if any person is liable for the expenditure as required by the MFMA”.
Further, he points out, the accounting officer and council “did not always report to the South African Police Service alleged irregular expenditure that constituted a criminal offence as required by the MFMA, and this was also the case where allegations of financial misconduct against officials constituted a crime.
“Article published from Metro Minutes by Patrick Cull”.