Third successive qualified audit opinion for CHDM

THE Chris Hani District Municipality (CHDM) has received a qualified audit from the Auditor-General (AG).

AG’s office senior manager Caryn Boettger released the municipal audit results for the 2015/16 financial year to executive mayor Kholiswa Vimbayo on Wednesday.

Boettger said improvements were needed as CHDM had received qualified audit reports for the past three consecutive years.

Boettger said the municipality had not billed all customers in the past financial year.

As a result, receivables from exchange transactions to the consolidated and separate financial statements were understated by R40.98-million, and revenue from exchange transactions by the same amount.

“In 2014 you received a qualified opinion, in 2015 you still received a qualified opinion, but you addressed the other disclosure issues. You received a new qualification in 2014/15 on receivables and revenues on exchange transactions and that was predominately with regard to the water takeover from all the local municipalities in the district.”

There was “no sufficient appropriate audit evidence available to support receivables” from exchange transactions as a result of the status of the municipalities’ accounting records and the municipality did not have adequate systems to identify and disclose all irregular expenditure incurred during the year.

“The only thing we can suggest to clear your irregular expenditure qualification is to actually go back and look at all your procurement contract management transactions and make sure that you have supporting documentation for all of them.

“We cannot determine whether all irregular expenditure was identified and disclosed. Your responsibility is to go back to the entire population and make sure that everything that is irregular is disclosed.

“Then you have to follow the necessary processes in trying to address that irregular expenditure – why it was incurred and who was responsible and what action should the council take in terms of writing it off or investigating to make sure that whoever was responsible is charged with those transgressions.”

The municipality incurred unauthorised expenditure of R183.44-million as a result of overspending the amount appropriated for the budget and treasury office, technical services and roadworks votes in the municipality’s budget.

CHDM incurred fruitless and wasteful expenditure of R887224 during the year due to interest on late payments of R736542 and payments in respect of advertisements and costs incurred in respect of cancelled tenders of R150 682.

Boettger said CHDM needed to look at the cause of overspending.

“Irregular expenditure is not a good picture and the causes are lack of commitment, poor management and poor performance.”

She said employees needed to take responsibility for their work, with consistent monitoring necessary.

Engcobo municipality was the only one to receive a clean audit in the Chris Hani region.