THE Ba-Phalaborwa Municipality has received a disclaimer of opinion from the Auditor-General (AG) for the seventh financial year in a row.
The recently-released audit report for the 2012/13 financial year showed there was no improvement in the audit outcome despite the Ba-Phalaborwa Municipality spending R7,9 million on external consultants to prepare their financial statements.
A disclaimer is issued when the AG could not form an opinion and consequently refuses to present an opinion on the financial statements.
This type of report is issued when the AG tried to audit an entity but could not complete the work due to various reasons and as a result does not issue an opinion.
According to the AG’s report, the municipality couldn’t provide any proof of how their money was spent.
The report also revealed that the municipality spent over R29 million in unauthorised, irregular, fruitless and wasteful expenditure. Fruitless and wasteful expenditure amounted to R970 462, unauthorised expenditure amounted to R12,6 million and irregular expenditure amounted to R15,5 million.
According to the report, unauthorised, irregular, fruitless and wasteful expenditure resulted from the municipality’s failure to follow the normal processes of procurement.
“The status of supply chain management remains unsatisfactory, primarily as a result of the municipality not always complying with the legislative requirement to obtain three quotations or to procure goods and services through a competitive bidding process,” read part of the report.
The report further showed that lack of improvement in the key controls resulted from the ineffective leadership of the mayor, Anna Sono, as well as the accounting officer, Dr Stimela Sebashe’s failure to exercise oversight of financial and performance reporting. The AG expressed concern over the ineffective management of consultants, lack of proper project closeout procedures, and the lack of transfer of skills resulting in the continued dependence on outside financial service providers.
He recommended that the following control measures be strengthened to create a control environment that supported reliable financial and performance reporting and compliance with legislation: implement effective human resource management to ensure adequate and sufficiently skilled officials; take disciplinary action against those responsible for the municipality not complying with laws and regulations; and implement proper record keeping mechanisms to ensure that complete, relevant and accurate information is available.
Role players should address the root causes of poor audit outcomes and inadequate controls as a matter of urgency. The report also described how to go about doing so.
Several attempts to get comment from the Ba-Phalaborwa Municipality were unsuccessful. Both Sono and municipal spokesperson, Jonas Mahesu referred CV to Sebashe, whose cellphone was constantly on voicemail. He failed to respond to several voicemail messages.
Meanwhile, the rest of the audit outcomes for the municipalities in the Mopani district are as follows:
The Greater Letaba Municipality regressed from a qualified opinion (issued when the AG encountered one of two types of situations which did not comply with generally accepted accounting principles, but the rest of the financial statements were fairly presented) in the 2011/2012 financial year to a disclaimer of opinion in the year under review. The report shows that the resignation of the chief financial officer three months before the end of the financial year contributed to the regression.
Maruleng Municipality attained a qualified opinion for the second year in a row.
The report revealed that the municipality continued to rely on the services of consultants to assist with the preparation of financial statements. The position of the chief financial officer was also vacant during the financial year.
The Greater Tzaneen Municipality received a qualified audit opinion, which is a slight improvement from the disclaimer of opinion they received the previous financial year.
The Greater Giyani Municipality received a disclaimer of opinion for the third year in a row. The report showed that supporting documents for some of the services procured by the municipality were not provided to the auditors and so the audits could not confirm whether the goods or services were received.
It further shows that in some instances, approved supply chain management processes were not been followed, meaning municipality may have paid more than they should have.
The audit for the Mopani District Municipality was not finalised on July 31 when the AG released the audit outcomes.
