MBOMBELA – The Auditor General (AG) says the local municipality’s financial statements are a fair representation of its financial position, but drew attention to some troubling matters.
The AG’s report on Mbombela Local Municipality (MLM) for the year ending June 2014 was tabled during a special council meeting on Friday, along with the audited financial statements and mid-year report for 2014/15.
The financial statements show that the municipality’s deficit increased in 2014 byR19,7 million to R139,3 million from 2013. This is attributed to, among other factors, a R14,2-million increase in repairs and maintenance and a R18,2-million increase in the cost of bulk services.
The report notes that MLM achieved a collection rate or level of payments of 95 per cent. However, to determine the real collection rate, bad debts that were written off are taken into consideration. This ratio shows that only 42 per cent were written off as a provision for bad debt, while the norm is 100 per cent.
The report also shows there is a significant risk to cash flow to settle short-term debt. “The main contributing factor is the unspent conditional grants amounting to R295 million,” the report read.
The AG pointed out that R3,9 million was lost as a result of water distribution losses, 35 per cent of the total water purchased. Money owed by Mbombela was also not always paid within 30 days as required by the Municipal Financial Management Act.
Reasonable steps were not taken to prevent unauthorised, irregular, fruitless, and wasteful expenditure. Contracts and quotations were awarded to providers listed as prohibited from doing business with the public sector in contravention of supply-chain management regulations.
He noted that the CFO position had been vacant for more than a year. “Non-compliance with laws and regulations could have been prevented had compliance been properly monitored.”
Read what the AG had to say about provincial departments here.
