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Thulamela not as big a culprit regarding finances

 

Although the figures add up in that the Thulamela Municipality’s financial statements presented their financial position for the financial year ending 30 June 2016 fairly, the auditor-general (AG) was still a bit critical about some aspects of the municipality’s finances. Overall, however, Thulamela did fairly well with regard to their financial management.

Like the Musina Municipality, Thulamela obtained an unqualified opinion, with emphasis on certain matters, for the third consecutive financial year. This means the AG can state, without reservation, that the financial statements of the municipality fairly represent the financial position of the municipality and are in line with generally recognised accounting practices (GRAP), but the AG wants to bring something particular to the municipality’s attention.

In his report, the AG was quick to point out that significant uncertainties existed regarding Thulamela’s financial statements for the 2015/16 financial year, mainly because of the fact that they were defendants in various lawsuits and pending legal cases from individuals and companies. “The municipality is opposing the claims amounting to R21 947 903. The ultimate outcome of the matter cannot presently be determined and no provision for any liability that may result has been made in the financial statements,” the AG said.

Having said this, Thulamela was less of a culprit when it came to irregular, fruitless and wasteful expenditure. The AG found that Thulamela only incurred irregular expenditure amounting to R1 424 694 as a result of contravention of the municipality’s procurement policy. In stark contrast, the Makhado Municipality incurred a whopping R152 980 778 in irregular expenditure, while Musina’s unauthorised expenditure amounted to R5 757 290.

As for fruitless and wasteful expenditure, Thulamela once again had less to account for. The AG found that the municipality had incurred fruitless and wasteful expenditure amounting to R767 515 because of late payments to suppliers. During the same period, Makhado’s fruitless and wasteful expenditure totalled R22 992 036, while Musina’s amount totalled R10 766 174.

Like Makhado and Musina, Thulamela was also found wanting in terms of procurement and contract management. The AG found that awards had been made to providers whose directors/principal shareholders are in the service of other state institutions, in contravention of both the Municipal Finance Management Act (MFMA) and supply chain management (SCM) regulation. It was pointed out in the AG's report that similar awards were identified in the previous financial year, but that no effective steps had been taken to prevent or combat the abuse of the SCM process. The AG also found that:

* No appropriate audit evidence could be obtained that goods and services with a transaction value of below R200 000 were procured using price quotations as required by SCM regulations;

* Quotations were accepted from prospective providers who were not on the list of accredited prospective providers and did not meet the listing requirements prescribed by the SCM policy, in contravention of the SCM regulations; and

* Other SCM role players whose associates had a private or business interest in contracts awarded by the municipality had participated in the process relating to that contract, in contravention of SCM regulations.

Overall, Thulamela did fairly well. Regarding compliance with legislation, the AG pointed out that, although the financial statements submitted for auditing were not prepared in all material respects in accordance with the requirements of the MFMA, material misstatements of non-current assets, current assets, liabilities, revenue, expenditure and disclosure were corrected after these were identified by the auditors. This is why, according to the AG, the municipality received an unqualified audit opinion. The AG concluded his report by stating that: “Those (audit committee and internal audit) charged with governance provided adequate oversight over the effectiveness of the internal control environment, including financial and performance reporting and compliance with laws and regulations.”

News - Date: 23 July 2017

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Andries van Zyl

Andries joined the Zoutpansberger and Limpopo Mirror in April 1993 as a darkroom assistant. Within a couple of months he moved over to the production side of the newspaper and eventually doubled as a reporter. In 1995 he left the newspaper group and travelled overseas for a couple of months. In 1996, Andries rejoined the Zoutpansberger as a reporter. In August 2002, he was appointed as News Editor of the Zoutpansberger, a position he holds until today.

Email: [email protected]

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