According to the latest Auditor General Report a Hawks investigation into fraud allegations initiated in previous years has not been finalised, and an investigation by the Special Investigation Unit is also still ongoing.
Madibeng Local Municipality acquired the fifth consecutive disclaimer audit opinion for 2020\2021 due to lack of sufficient appropriate audit evidence. The Auditor General’s (AG) finding on every category of the audit starts with the same sentence: “I was unable to obtain sufficient appropriate evidence due to the status of the accounting records.”
Some of the findings for which to AG could not obtain sufficient evidence include: • The AG found R317.4 million in irregular expenditure due to payments made in contravention of the supply chain management. • Material losses to the amount of R160.6 million • The municipality spent R135.1 million on contracted services • The municipality did not appropriately account for R332.1 million operational expenses. • There was not sufficient audit evidence for travel allowances and employee related costs of R591.5 million. • The municipality could not quantify the full extent of fruitless and wasteful expenditure of R87.9 million. • The municipality has identified land parcels worth R10.3 million to to be sold to pay off its PIC bonds of R325.3 million. • Employees of the municipality or other state institutions were awarded contracts in contravention of the law.
The AG said in the report his responsibility is to conduct and audit the financial statements of the municipality and issue an audit report, but was not able to obtain sufficient evidence to provide a basis for an audit opinion on the financial statements.
He said reasonable steps were not taken to prevent irregular expenditure and the majority of declared irregular expenditure was caused by non-compliance. The majority of fruitless and wasteful expenditure was caused by interest payable on long outstanding accounts. These were not investigated to determine if any person was liable.
The AG said the municipal leadership did not enforce an ethical business culture and exercise adequate oversight responsibility, and management did not implement effective monitoring controls.