Irregular expenditure high at Gauteng municipalities

OFFICIALS in most Gauteng municipalities failed to properly do their jobs ahead of the 2016 local government elections, which led to spiralling irregular expenditure, including in the three metros.

This was revealed by Dorothy Khunou, deputy business executive in the Auditor-General’s Gauteng office, when she appeared before the standing committee on public accounts (Scopa) in the provincial legislature yesterday. Councillors, particularly members of Municipal Public Accounts Committee (MPAC), also attended.

Khunou was giving the two public accounts committee members a presentation on the state of financial management of the local municipalities from 2013 until 2016.

Over this period, the A-G found it was only the DA-run Midvaal Local Municipality in the Vaal which consistently managed to obtain clean audits.

Khunou said municipalities were failing to comply with supply chain management procedures, which led to failure to curb unauthorised expenditure, irregular and fruitless and wasteful expenditure, and the quality of submitted financial statements.

“This was due to the slow response, diverted leadership attention, due to the elections, and lack of urgency by the administrative leadership to address compliance findings relating to uncompetitive or unfair procurement processes.”

She also said that irregular expenditure remained high at R1.5 billion, the same amount as 2015. She said municipalities only managed to detect 18% of the irregular expenditure.

“The three metros were the highest contributors to irregular expenditure, accounting for R976 million (65%). The administrative leadership should be held accountable for strengthening the controls necessary to adhere to supply chain management (SCM) prescripts and to prevent irregular expenditure.

“SCM officials should also be further trained on the application of SCM regulation 36, which is often incorrectly applied across the local government sphere.

“Where irregular expenditure is incurred, it should be properly investigated and appropriate consequence management should be instituted against the transgressors.” A similar regression was also found in municipal entities.

In Gauteng, Pikitup and the Joburg Road Agency (JRA) regressed.

Khunou said the regression of the two entities was due to “material non-compliance with legislation, particularly in respect of material misstatements in the financial statements and inadequate contract management”.