The Madibeng municipality is still paying certain individuals’ accounts even though the matter was reported for police investigation, the Auditor-General (AG) said in her 2019-2020 report on local government audit outcomes.
“Unauthorised debit orders to pay accounts of private individuals, detected in 2018-19, continued in 2019-20 despite the matter having been reported for police investigation. The persistent disregard of our recommendations and lack of consequences against officials responsible for areas with repeat material findings are concerning,” said AG Tsakani Maluleke.
The AG said they could not assess the full extent of irregularities as they were not provided with all relevant information.” We also could not determine if goods and services had been procured at reasonable prices through an unbiased and fair process. This situation persists because there appears to be no fear of consequences, as most previously identified irregular and fruitless and wasteful expenditure was not investigated.”
She said the current administration inherited a dysfunctional municipality and has done little to improve its status, as reflected in the four consecutive disclaimed opinions received since 2016-17. “Current leadership has failed to implement basic controls, including key reconciliations, on a regular and timely basis. Transactions were processed without valid supporting documents and the lack of proper review and supervision allowed such instances to go undetected. Despite the interventions of both the provincial treasury and the National Treasury, the culture of complacency persists.”
Madibeng’s increased reliance on consultants to prepare financial statements raise questions as a substantial investment in personnel within the finance unit was made. “ Additionally, the consultants’ task of compiling credible statements and upskilling finance staff was made impossible by the poor status of the municipality’s underlying records.”
The same consultants were used to prepare the financial statements for the current and prior years for which Madibeng received a disclaimed audit opinion. This is the worst audit opinion a municipality can get.
The municipality has operated with less than half of its required senior managers for the past four years. “The impact of this is evident in its inability to perform and report against key delivery targets. Due to the complete lack of processes to collect the required financial and performance information, we were unable to determine whether allocated funds had been used for their intended purposes.”
The municipality relies heavily on the equitable share to provide services to the community. However, the municipality is unable to obtain regular meter readings due to broken meters and resistance from community members, who sometimes prevent municipal officers from accessing the meters.
As a result, the municipality has, in some instances, relied on estimates as old as five years for billing water, electricity and sewerage. The inaccuracies in billing also contributed to the municipality’s inability to collect the money it is owed for these services, and as at 30 June 2020, the municipality did not expect to collect R2,3 billion (89%) of its R2,6 billion in debt.
“By not issuing demand letters, handing over accounts and disconnecting services, the municipality failed to effectively implement its credit policy.”
In November 2020, the National Treasury warned the municipality about its late payments to bulk suppliers. Reported payables amounted to R1,4 billion at year-end, with cash reserves amounting to only R260 million.
She said another serious concern is the poor or nonexistent maintenance of wastewater infrastructure, treatment and disposal, with some plants and pump stations completely non-functional. “Wastewater overflows and spillage pollute the environment and pose serious health risks to the receiving communities.
“For audit outcomes to improve, there needs to be stability in key leadership positions to bring about a much-needed cultural change. A tone of zero tolerance for poor performance and transgressions has to be set at the top by the administrative team, mayor, municipal manager and senior managers,” she said.