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.