Govan Mbeki Municipality writes off millions in unauthorised and irregular expenditure

The Govan Mbeki Municipality has written off millions lost to wasteful, irregular, and unauthorised expenditure.
Following an investigation into irregular and unauthorised expenditure incurred during the 2023/2024 financial year, the Municipal Public Accounts Committee (MPAC) presented its findings and recommendations to council during a meeting held on October 29.

Findings on irregular expenditure
The investigation confirmed that the expenditure incurred met the definition of irregular expenditure as defined in the Municipal Finance Management Act (MFMA).

The irregular expenditure was reported to the council in line with legal requirements.

The total irregular expenditure increased from R141.3m in the previous year to almost R158m in 2023/2024, and resulted primarily from a failure to advertise for expired contracts on time.

Internal controls were found to be inadequately enforced and monitored.

Although a policy on unauthorised, irregular, fruitless, and wasteful expenditure is in place, the municipality continues to incur such expenditure.

No material loss to the municipality was identified, as services were rendered for all expenditures.

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Findings on unauthorised expenditure
The expenditure incurred met the definition of unauthorised expenditure in terms of the MFMA. The unauthorised expenditure was reported to the council in compliance with the MFMA and the Municipal Budget and Reporting Regulations.

The total unauthorised expenditure rose sharply from R458.7m in 2023 to R911m in 2024, primarily due to budget overspending.

The overspending was primarily on bulk purchases of water and electricity, as well as finance costs, which were not adequately budgeted for.

The municipality’s unfunded budget remains a major contributor to unauthorised expenditure.

The conduct of officials was found to be neither intentional nor negligent, and therefore, the expenditure is considered irrecoverable.

Recommendations by the MPAC:
• The municipality adequately budgets for bulk purchases of water and electricity;
• That the Financial Recovery Plan and revenue enhancement measures continue to be implemented to improve financial stability;
• The municipality adopts a funded budget during preparation;
• That council write off the unauthorised expenditure amounting to R157m for the 2023/2024 financial year as irrecoverable.

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Additional considerations
In authorising the unauthorised expenditure, the council must consider the following:
• The matter has been referred to the council for determination and decision;
• The nature, extent, grounds, and value of the expenditure were submitted to the council;
• The incident was referred to MPAC for investigation and recommendations;
• The conduct of the officials involved was not deliberate or grossly negligent;
• The accounting officer reported the matter in terms of Section 32(3) of the MFMA.

The committee therefore recommended that the unauthorised expenditure be written off as irrecoverable and that financial controls and planning be strengthened to prevent recurrence.

The DA opposed the decision to write off the fruitless expenditure. The party’s councillors accused the MPAC of failing to hold politicians and officials accountable.

DA councillor Hloni Madumise said his party noted with “absolute outrage” the contents of the latest MPAC report on irregular expenditure for the 2023/2024 financial year.

“The report confirms that irregular expenditure in the Govan Mbeki Municipality has skyrocketed from R141m to R157m, yet the council and the MPAC chairperson dare to recommend writing it off as irrecoverable.

“This reckless recommendation is not only a direct violation of the Municipal Finance Management Act (MFMA) but also a deliberate attempt to cover up financial mismanagement under the watch of those who should be enforcing accountability,” said Madumise.

He added that instead, the majority of councillors in council and the MPAC have chosen to rubber-stamp wrongdoing and protect those responsible.

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Madumise said the report itself admitted that:
• internal controls remain weak and unenforced;
• irregular expenditure continues each year;
• contracts expire without re-advertisement;
• officials face no disciplinary action.

“Despite these damning admissions, MPAC has insulted residents by claiming that there is no material loss because services were rendered.

“This statement is not only misleading – it is a mockery of the law and the people of Govan Mbeki Municipality. Irregular expenditure is not about whether something was delivered – it is about the deliberate disregard for transparent, fair, and competitive procurement as required by law.

“The DA has formally rejected the report and maintains that a forensic investigation be instituted to ensure that those responsible face the might of the law. The administration of the municipality must be brought to account,” concluded Madumise.