‘Minor details’ cost Garden Route its clean audit
Three municipalities in the Western Cape lost their clean audit status in the previous financial year - the Garden Route District Municipality (previously known as Eden), Bitou and the Cape Town Metro. Although this was announced a few months ago, the reason for the regression in the 2016/2017 financial year when compared to the 2015/16 financial year, has recently been detailed in a report by Sharonne Adams, the Auditor General of South Africa's
(Agsa) business executive responsible for the Western Cape.
Material non-compliance with SCM (supply chain management) regulations at all three municipalities, failure to prevent irregular expenditure at Bitou, and weaknesses in consequence management and revenue management at the City of
Cape Town Metro, are listed as the three main reasons why these municipalities have slipped. The Garden Route District Municipality (GRDM) managed to keep its unqualified audit status during the 2016/2017 financial year, but slightly regressed from its clean audit status. This regression was mainly due to irregular expenditure of R32-million which was identified by the office of the Auditor General.
In a press conference on Tuesday afternoon, GRDM Municipal Manager Monde Stratu said "minor details" were the cause of the irregular expenditure. "This is purely about compliance to a certain requirement. Actually there is no rand value loss to the municipality," said Stratu. "We are dealing with these minor details that might affect the outcomes of the audits and we are confident that with the interventions we have made there will be improvement."
According to Adams's report, the total irregular expenditure incurred in the Western Cape was R173-million (2015-16: R174-million), R163-million of which related to non-compliance with SCM regulations. The main contributors to irregular expenditure were the City of
Cape Town (R47-million), Beaufort West (R36-million) and Garden Route District Municipality (R32-million).
Thembani Loliwe, strategic manager in the office of the municipal manager, said the Garden Route DM's irregular expenditure mainly relates to two tenders: the supply of fuel (R10 220 772); and the appointment of a panel of service providers for hiring of machinery for their Roads Department which services the entire region (R24 812 563). "These two tenders were both rate-based. The procurement of both tenders were above R10-million. In terms of the SCM regulations, all tenders above R10-million should be advertised for a period of at least 30 days. The aforementioned tenders were advertised for 21 days instead of 30 days, which resulted in the office of the Auditor General reclassifying them as 'irregular'."
Loliwe said they could not forecast their total fuel consumption above the R10-million threshold, because the request for proposals was rate-based. "The regulation of the fuel industry was also taken into consideration in the formulation of the request for proposals. In retrospect, Council applied a sourcing strategy that was fair, transparent, competitive and cost-effective for these services. The administration consequently developed an action plan to address all Auditor General findings and bid committees were strengthened to address the recurrence of such issues," said Loliwe. "The Finance Department has been restructured to ensure that it is adequately resourced and to provide credible annual financial statements."