The Makhado Municipality this week officially admitted that the municipality’s financial chaos can be contributed to personnel who "do not have proper skills and knowledge of financial management."

Reacting to recent media reports over the deplorable state of the municipality’s financial affairs, especially after the release of a very grim auditor-general’s (AG) report, the municipality’s director: community services, Mr Peter Magwala, issued an official statement on Wednesday afternoon. The two-page statement addresses the problems the municipality faced which resulted in the AG’s expressing an adverse opinion with regard to the municipality’s financial situation for the 2005/6 financial year.

Confirming the findings of the AG’s report, Mr Magwala states that a number of factors contributed to the opinion by the AG. First of all, he mentions the fact that the municipality had been operating for the past three years without a chief financial officer.

"This resulted in the lack of proper management and control in the Finance Department, hence the shortcomings indicated by the auditor-general," says Mr Magwala.

Mr Magwala says that their attempts to appoint a qualified CFO over the past three years proved fruitless.

"Some of the best-qualified people withdrew during the process. The position has been advertised more than three times without getting a relevant qualified candidate. It is regrettable that the CFO who was supposed to have commenced with his duties on 1 February, 2007, declined the offer on 31 January 2007," says Mr Magwala.

Mr Magwala furthermore stated that the majority of personnel in the finance department "do not have the proper skills and knowledge regarding financial management." These are the people who were transferred from the Department of Local Government and Housing.

"The officials in question were sent to training sessions, workshops as well as other programmes on numerous occasions. Unfortunately, there has been no improvement in terms of performance, despite all efforts to capacitate en empower them."

Mr Magwala states that, following the AG’s report, the municipality’s audit committee has advised the municipal management to develop an action plan for addressing the abnormalities raised by the auditor-general.

"The plan was developed and was submitted to Council for consideration and adoption thereof. Furthermore, the management has resolved that the incompetent officials (those without financial skills/knowledge) will be transferred to other departments so that properly qualified people can be employed," says Mr Magwala.

Mr Magwala said that, on a more positive note, the AG indicated that the municipality’s cash-flow position has improved since the financial statements of the year which ended June 30, 2005.

"At that stage and year, the state of the finances of the municipality compelled the intervention from the Department of Local Government and Housing, as well as SALGA," says Mr Magwala. It was during this time (2005) that the municipality was on the brink of total financial collapse that they could not even pay salaries to their employees, as well as deliver services to communities.

"We have now financially recovered fully from the financial position in which we found ourselves in 2005, to the extent that we are able to fulfil our obligation as obliged by the constitution of the country," says Mr Magwala. He added that, at present, there is nothing that warrants the intervention of the provincial or national government.

Mr Magwala concluded by putting one issue on record.

"We wish to indicate that, throughout his report, the Auditor-general did not make any mention of embezzlement of funds. It is our opinion that the report of the Auditor-general was seriously misinterpreted and/or quoted out of context."