ADM irregular spend balloons from R17m to R77m

Failure to take effective steps for expenditure management has seen Amathole district municipality incur a R130m irregular, unauthorised, fruitless and wasteful expenditure in the last financial year.

This has resulted in the auditor general giving the municipality a qualified audit opinion once again. The report was tabled in council by Mazithi Pieters from the AG’s office.

“As disclosed to the consolidated and separated financial statements, unauthorised expenditure amounting to R50.7m was incurred due to overspending on the bad debts and the staff leave provisions. Fruitless and wasteful expenditure amounting to R2m was incurred due to interest and penalties charged on late payments. Irregular expenditure amounting to R77.3m was incurred due to supply chain management transgressions in the current and prior financial years. The cumulative balance as at June 30 2018 amounted to R99m,” the report read.

In addition to the failure to take effective steps to prevent the expenditures, the municipality also failed to find out who was responsible, auditor general Kimi Makwetu said.

While unauthorised spending decreased from R59.9m and fruitless and wasteful spending to R2.3m from 2016-2017, the irregular spend has ballooned from R16.8m to R77.3m, raising red flags for the AG.

The municipality was also found to be failing at paying its debts within 30 days, as required by the Municipal Finance Management Act.

Pieters said the audit outcome was a consolidated report for the entity which is Aspire and the district municipality.

“We have a qualified audit outcome with findings on performance information as well as compliance with laws and regulations. Overall we have a stagnation in terms of the key elements that we audit, which is the financial statements, the performance report, as well as compliance with laws and regulations. Therefore there has been no movement [from last year],” she said.

ADM mayor Winnie Nxawe said she was still hopeful that the situation could improve by the end of the current financial year in June. “[A] clean audit is possible. We have already been dealing with some of the issues raised by the AG,” she said.

Municipal manager Thandekile Mnyimba said they needed to prepare an audit action plan to attend to the problems.

“There are three major issues: property plant and equipment, commitments, and fruitless, irregular and unauthorised expenditure,” he said blaming a “systems challenge” for the bad results.