POLOKWANE – Losses that amounted to R97,5 million were suffered by the Polokwane Municipality as a result of water and electricity losses in 2013/14.
This was according to Ulde Shumba from the office of the Auditor-General (AG), who presented the report on the audited annual financial statements of the municipality for 2013/14 before council last Thursday.
The municipality received a qualified audit opinion, which is 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.
The AG, despite the qualified audit opinion given, was satisfied with the financial statements and said there were major improvements in them.
The municipality previously received a disclaimer audit opinion from the AG for its 2012/13 financial statements. A disclaimer audit opinion is given when the AG could not form an opinion, and consequently refuses to present an opinion on the financial statements.
This latest qualified audit opinion was as a result of issues that were not new to the municipality. These included not adhering to regulations and legal prescripts, asset management, and irregular and unauthorised expenditure.
The AG could not give an audit opinion on the values of assets, after a re-evaluation of assets and infrastructure. Some assets were also not recorded in the financial statements and accounting records.
Financial statements were incorrect. A number of figures for 2013 were restated as a result of errors discovered in 2014.
The municipality underspent its budget by R251 million. This was due to grant money not being completely spent, as in the case of the public transport infrastructure grant. This underspending also contributed to the municipality not reaching 23% of it predetermined objectives.
Unauthorised expenditure amounted to R371 million and irregular expenditure amounted to just over R96 million.
The AG suggested that personnel in the asset and infrastructure unit be upskilled and the municipality ensured personnel were trained. “This would address some of the root causes of the outcomes. The municipality has the capability to receive an unqualified (clean) audit opinion,” Shumba said.
He further reported that the Polokwane Housing Agency (PHA) had received an unqualified outcome with findings, which was a major milestone, but care should be taken that sustainability did not regress. The presence of findings in an audit report indicate significant errors or risks in the entity’s financial information.
Polokwane mayor, Thembi Nkadimeng, said the appointment of a supply chain manager was imminent and the municipality would advertise and acquire special asset management skills.
She said the issues raised by the AG would be dealt with. She was happy with the improvement so far, but said adequate controls had to be put in place as R96 million was too much for irregular expenditure in the supply chain unit.
She said the municipality wanted an unqualified (clean) audit opinion, and promised that the PHA would receive an unqualified (clean) audit opinion without findings next year. “Ninety percent of issues will be addressed by March,” she said.
The AG warned the municipality that while service delivery performance was not included in the report in 2013/14, it would be included in the 2014/15 audit report.
