MBOMBELA – The money wasted by municipalities in Mpumalanga increases every year. According to the Auditor-General’s (AG) report on the finances of local and district municipalities in the province, at the end of the 2013/14 financial year it totalled R3,2 billion.
“The Municipal Finance Management Act (MFMA) requires a council to investigate unauthorised, irregular as well as fruitless and wasteful expenditure, and take action against perpetrators. As councils completely disregard this requirement, this kind of expenditure increases every year,” stated the report.
According to the report, this kind of expenditure from previous years which had still not been dealt with, totalled R1,9 billion at the end of 2014. In the 2013/14 financial year, unauthorised and irregular expenditure totalling R1,3 billion was incurred.
Unauthorised expenditure is spending which deviates from the approved budget. In 2013/14 unauthorised expenditure increased by 37 per cent to R740 million, compared to 2012/13, in Mpumalanga’s municipalities. Irregular expenditure is incurred outside of prescribed legislation. This does not necessarily mean that fraud was committed, but must be investigated by the municipal council.
In 2013/14 this increased by 25 per cent to R557 million. Of this, only 23 per cent was identified by municipalities’ internal controls.
“It is common practice in the province for councils to accept deviations month after month without properly understanding the reasons for these deviations and identifying the type of recurring expenses so that these can be included in the procurement plan,” the AG notes.
Fruitless and wasteful expenditure is made in vain and can be avoided if care is taken. A total of 89 per cent of municipalities incurred this kind of spending in 2013/14. The 1 210 instances was “alarming” in comparison with the 313 instances in 2012/13, according to the AG.
As much as 95 per cent thereof related to interest charged on late payments, resulting mainly from cash-flow challenges.
The report also notes that little progress has been made in managing procurement and the awarding of contracts as well as managing the consequences thereof, and that the prevention and follow-up has regressed from the previous year.
Mr Bosman Grobler, the DA’s spokesman on cooperative governance in the provincial legislature, says the findings point to a lack of adequate political and administrative leadership in municipalities.
He pointed out that of particular concern was R136,9 million in awards made to employees, councillors and other state employees, R55 million spent on consultants and 87 per cent of the municipal infrastructure grants being spent with only 44 per cent of targets achieved in municipalities.
“(We have) municipalities where freedom is afforded to those who are politically connected, where fairness is compromised, and opportunities are given to those who follow specific political lines and that see the AG’s concerns as just mere recommendations.”
Previously the AG pointed out some concerns in Mbombela Local Municipality’s (MLM) finances including an increased deficit, a low real-collection rate, and significant risks to cash flow. MLM was criticised for continuing to ignore supply-chain regulations but commended for compiling its financial statements in-house.
The report commended Ehlanzeni District Municipality for obtaining clean audit opinions since 2007/08.
