Massive increase in irregular expenditure

LYDENBURG – Thaba Chweu Municipality (TCM) has, for the sixth year in a row, received a disclaimer audit from the Auditor General (AG).

In his report the AG said he was unable to obtain sufficient appropriate audit evidence for irregular expenditure, as internal controls had not been established to recognise and investigate irregular expenditure identified the previous year.

“I could not confirm whether all irregular expenditure had been recorded and investigated by alternative means. Consequently, I was unable to determine whether any adjustment was necessary to irregular expenditure of

“I could not confirm whether all irregular expenditure had been recorded and investigated by alternative means. Consequently, I was unable to determine whether any adjustment was necessary to irregular expenditure ofR171 178 575 on the financial statements.”Irregular expenditure thus increased from R150 572 270 for the 2013/14 financial year by R20 606 305.

Mr Gareth Mnisi, acting chief financial officer (CFO) told Steelburger/Lydenburg News that the problem here was that in the past there were some contracts procured outside TCM. “These contracts have since been terminated but others have unfortunately already done work reflecting on the municipality’s creditors’ book. Each time you pay that, it is recognised as irregular expenditure. That is what causes the increase from year to year.”

“These contracts have since been terminated but others have unfortunately already done work reflecting on the municipality’s creditors’ book. Each time you pay that, it is recognised as irregular expenditure. That is what causes the increase from year to year.”

The AG also ruled that TCM did not disclose distribution losses with regard to electricity and water sales as it was unable to determine the total extent of the understatement of distribution losses, as the records did not permit performance.

Mnisi said this formed part of the media briefing on the Eskom matter on Wednesday.

In addition to this the AG said he was unable to obtain sufficient appropriate audit evidence that the accounting officer had fulfilled his responsibility of preparing and fairly presenting the financial statements in accordance with SA Standards of GRAP as written representations in this respect were not provided.

Mnisi explained that this also formed part of the major historical issue. “We have received disclaimers for more than five years. The issue here is that our closing balances keep on being questioned by the AG year in and year out. Then we have to do adjustments and those need to be supported. A good example of this was the parked amount which was a huge problem for us. We have since written it off, but it is part of the question as to why preparations are not done and the financial statements are not fairly represented, plainly because some of these cannot be supported because it is all historical information. We are rolling out closing balances which have not been disclosed correctly in the past. In this year we hope to finalise all the closing balances.

We have since written it off, but it is part of the question as to why preparations are not done and the financial statements are not fairly represented, plainly because some of these cannot be supported because it is all historical information. We are rolling out closing balances which have not been disclosed correctly in the past. In this year we hope to finalise all the closing balances.

Then we have to do adjustments and those need to be supported. A good example of this was the parked amount which was a huge problem for us. We have since written it off, but it is part of the question as to why preparations are not done and the financial statements are not fairly represented, plainly because some of these cannot be supported because it is all historical information. We are rolling out closing balances which have not been disclosed correctly in the past. In this year we hope to finalise all the closing balances.

Then we have to do adjustments and those need to be supported. A good example of this was the parked amount which was a huge problem for us. We have since written it off, but it is part of the question as to why preparations are not done and the financial statements are not fairly represented, plainly because some of these cannot be supported because it is all historical information. We are rolling out closing balances which have not been disclosed correctly in the past. In this

We have since written it off, but it is part of the question as to why preparations are not done and the financial statements are not fairly represented, plainly because some of these cannot be supported because it is all historical information. We are rolling out closing balances which have not been disclosed correctly in the past. In this year we hope to finalise all the closing balances.

We are rolling out closing balances which have not been disclosed correctly in the past. In this year we hope to finalise all the closing balances.

TCM said it would meet with the AG again before April 30 to present all the mitigating actions which have been implemented.

The AG said another issue was that money being owned by the municipality was not paid within 30 days as required by the Municipal Finance Management Act. “Reasonable steps were not taken to prevent unauthorised, irregular as well as fruitless and wasteful expenditure.”

Mnisi said the catch in this matter was that there was inherited debt here. “There is debt inherited and debt procured within the financial year. All these procurements are in the limit of the financial year. If they are in the limit of the financial year, they will be paid on time. Eskom is inherited debt and thus their account will be more than 30 days.”

He said everyone knew that Rome was not built in a day. “The effects of all matters have been addressed, will only be seen in years to come. It is a slow process of getting things right. We acknowledge that there have been huge elements of underperformance in the past, but with the progress that we are making now, we are doing something right. We need to keep doing what we are doing now.”