R1.2bn ir­reg­u­lar ex­pen­di­ture probe


IR­REG­U­LAR ex­pen­di­ture amount­ing to R1.2-bil­lion which had been in­curred by the Chris Hani Dis­trict Mu­nic­i­pal­ity (CHDM) since 2012, is re­ceiv­ing the at­ten­tion of the lo­cal au­thor­ity.

In a spe­cial coun­cil meet­ing last week, it was in­di­cated that an in­ves­ti­ga­tion into ir­reg­u­lar ex­pen­di­ture, com­mis­sioned by the pre­vi­ous coun­cil, had not been con­cluded.

Ac­cord­ing to the meet­ing’s agenda, the au­dit com­mit­tee ad­dressed the in­ves­ti­ga­tion on ex­pen­di­ture in­curred and on Oc­to­ber 14 last year the project was as­signed to the in­ter­nal au­dit com­mit­tee to con­sider the ir­reg­u­lar ex­pen­di­ture dat­ing from 2012 to 2016.

CHDM ex­ec­u­tive mayor Kholiswa Vim­bayo said it had since been re­vealed that ir­reg­u­lar ex­pen­di­ture for 2010-11 and 2011-12 had been dealt with by coun­cil in Au­gust 2013, when coun­cil had con­doned ir­reg­u­lar ex­pen­di­ture amount­ing to R509 966 370.

“This ex­pen­di­ture was writ­ten off in the an­nual fi­nan­cial state­ments (AFS) of 2012-13 and the bal­ance for ir­reg­u­lar ex­pen­di­ture was R42959 770.”

Dur­ing 2013, the Au­di­tor Gen­eral (AG), how­ever, found that no suf­fi­cient sup­port­ing ev­i­dence could be sub­mit­ted to sup­port the write-off and the ir­reg­u­lar ex­pen­di­ture that had been writ­ten off, was re­in­stated.

Vim­bayo said en­gage­ments were held with the AG to pro­vide sup­port­ing ev­i­dence for ir­reg­u­lar ex­pen­di­ture writ­ten off by coun­cil, to en­sure that the con­don­ing of the R509-mil­lion was ap­proved.

Vim­bayo said amounts un­der the ir­reg­u­lar ex­pen­di­ture cat­e­gories, were: risk appointment (R37641 539.74); EPWP (R62760 318.01); ir­reg­u­lar ten­ders (R20 231 656.79).

In the cat­e­gory of risk-based appointment were en­gi­neers who had been con­sulted by the mu­nic­i­pal­ity prior to the im­ple­men­ta­tion of the Mu­nic­i­pal Fi­nance Man­age­ment Act (MFMA) to as­sist with the sub­mis­sion of busi­ness plans, de­vel­op­ment and fi­nal­is­ing of de­signs and man­age­ment of civil con­tracts in or­der to source fund­ing. The ap­point­ments were done with­out fol­low­ing the sup­ply chain man­age­ment (SCM) pro­cesses as these were not ap­pli­ca­ble at the time.

In the cat­e­gory for ir­reg­u­lar ten­ders, some ten­ders were clas­si­fied as ir­reg­u­lar ex­pen­di­ture be­cause the mu­nic­i­pal­ity could not pro­vide in­for­ma­tion to sup­port com­pli­ance with SCM reg­u­la­tions.

The miss­ing in­for­ma­tion con­sisted of an­nual fi­nan­cial state­ments, min­utes, mu­nic­i­pal rates clear­ance cer­tifi­cates and ten­der ad­verts that could not be found on con­tract files. Some of the in­for­ma­tion had since been found, while the mu­nic­i­pal­ity was so­lic­it­ing ex­tra in­for­ma­tion from ser­vice providers and in­ter­nal stake­hold­ers.

Vim­bayo rec­om­mended that an amount of R430 725 319 be re­moved from the cat­e­gory of ir­reg­u­lar ex­pen­di­ture as it did not meet the def­i­ni­tion.

She said the in­sti­tute had cen­tralised the man­age­ment of con­tracts/doc­u­ments to en­sure proper man­age­ment and easy re­trieval. The in­sti­tu­tion had iden­ti­fied chal­lenges with the SCM unit re­lat­ing to non-com­pli­ance with laws and reg­u­la­tions.

Var­i­ous strate­gies had been put in place to ad­dress the mat­ter. CHDM was seek­ing le­gal ad­vice to deal with the is­sue of in­her­ited and risk appointment con­tracts that did not com­ply with the MFMA.

“The in­sti­tu­tion has also re­viewed the waste­ful/fruit­less and ir­reg­u­lar ex­pen­di­ture pol­icy and de­vel­oped a pro­ce­dure man­ual to as­sist with iden­ti­fi­ca­tion and man­age­ment of such ex­pen­di­ture.”

Monthly re­ports would be made to the CHDM ex­ec­u­tive man­age­ment to al­low for in­ves­ti­ga­tion and con­se­quence man­age­ment.

The coun­cil ap­proved the rec­om­men­da­tions.

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