‘Ugu’s financial statements are flawed’, says Auditor-General

The latest report from the Auditor-General (AG) on Ugu District Municipality has painted a grim picture of the state of the municipality’s financial reports.

AG Indhren Perumaul told a full sitting of the Ugu District Municipality council today (Thursday) that the municipality had received an Adverse Audit Opinion.

This means Ugu’s financial statements are ‘misrepresented’ and ‘do not accurately reflect its financial performance and health’.

The AG found that the municipality had regressed, going ‘from bad to worse’, he said,  in terms of audit outcomes.

According to the AG, this was due to lack of credibility and accountability in the municipality’s financials.

The AG stressed that Ugu’s financial statements were flawed and therefore he could not determine if what was presented to him was correct or not,  truthful or false.

Also Read: Ugu’s qualified audit ‘an embarrassment’, says DD Naidoo

The AG’s basis for giving Ugu an Adverse Opinion is as follows:

• The AG said Ugu had failed to account for and provide evidence on how it spends money and its income.
• On irregular expenditure: The AG said Ugu did not have adequate systems and controls to ensure irregular expenditure incurred was recorded correctly. “This resulted in irregular expenditure being misstated by an unknown amount. I was unable to obtain evidence for the amounts disclosed.”
• Some of the unauthorised expenditure incurred by Ugu was not investigated to determine if any people were liable.
• Capital assets were disposed of without Ugu having a meeting open to the public.
• Internal control for debtors and revenue was not in place.
• Expenditure was incurred in excess of the approved budget, in contravention of section 87 (8) of the Municipal Finance Management Act.
• The AG stressed that steps were not taken to prevent unauthorised expenditure amounting to R243,82 million.
• Money owed by the municipality was not always paid within 30 days.
• Ugu had also failed to provide audit evidence for water losses,  value added tax payable, commitments, and percentage compliance to water tankering services.
• Some of the goods and services with a transaction below R200 000 were procured without obtaining the required price quotations.
• Some of the goods and services above R200 000 were procured without inviting competitive bids.
• The performance of some of the contractors was not monitored on a monthly basis as required.
• Some of the contracts were extended without approval of a properly designated official.

DA Councillor George Henderson said the municipality was in this situation because there was no accountability and consequences faced by those who are failing the municipality.

IFP Councillor Simphiwe Mthethwa stressed that nothing was done to change things at Ugu, hence the IFP’s call for a forensic investigation on how money is spent and for the wrong-doers to be punished.

ANC Councillor Lindo Mzimela said that this was a difficult time for the municipality and that they were bitterly disappointed at how things had turned out under the current council’s watch.

“Let us go back to the drawing board, we can’t do things the same way and expect a different outcome,” he said.

Mayor Mondli Chiliza told councillors that it was ‘not too late’ for them to get things right the next time.

Comment from municipal manager DD Naidoo is awaited.

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