Damning AG report for Ndlambe Municipality details R23m losses
Ndlambe Municipality was not able to account for half the water it provided to residents and businesses in the 2017-2018 financial year, the latest auditor-general’s report has revealed.
The damning disclosure of material water losses amounting to R23-million comes as Ndlambe is emerging from a long drought and the municipality has been struggling to cope with power failures affecting pump stations and maintain an ageing pipe network that has seen prolonged water outages affecting Port Alfred.
Ndlambe received a qualified opinion for the audit, mostly because of inadequate VAT records and irregular expenditure, but material water losses fell under the AG’s “emphasis of matters”.
He said the losses represented 49.9% of total water purchased, a sharp increase from the previous financial year when losses represented 34.4% of total water purchased.
“The losses were due to metering inefficiencies, meter faults as well as unauthorised and unmetered consumption,” the AG said.
On the VAT matter, the AG said he was unable to obtain sufficient appropriate audit evidence for the VAT payable as disclosed in the municipality’s financial statements.
“The municipality did not have adequate systems to maintain records of VAT owed to the South African Revenue Service,” the AG said.
He was unable to obtain evidence required by alternate means. As a result, he was unable to determine whether any adjustments to the VAT payable of R10.5-million were required.
He said irregular expenditure disclosed in the municipality’s financial statements included R28-million that did not meet the definition of irregular expenditure contained in the Municipal Finance Management Act (MFMA).
“The municipality did not have adequate systems to identify and classify irregular expenditure. Due to the state of the accounting records, it was impractical for me to determine the full extent of adjustments required to the irregular expenditure of R441-million disclosed in the financial statements,” the AG said.
Ndlambe also incurred material losses of R28.4-million as a result of a movement in the debt impairment provision and a write-off of irrecoverable debt traders.
Unauthorised expenditure of R166.4-million was incurred due to overspending of the operational and capital budget.
As the AG says in every report he has issued to Ndlambe, once again he reminded them that unauthorised, irregular, and fruitless and wasteful expenditure incurred by the municipality was not investigated to determine if any person is liable for the expenditure, as required by the MFMA.
Under the section evaluating performance in basic delivery, the AG said the municipality’s indicators and targets were incomplete, inconsistent, not well defined and not verifiable.
As for water quality, the municipality has 45% Blue water compliance, which is an improvement, and an action plan has been developed and is being implemented.
The same is true for Green water compliance, where Ndlambe also scored 45% compliance.
There is a draft master plan for roads and stormwater.
The AG pointed out a legal compliance issue in the municipality’s processing of town planning applications. Only 50% of applications were processed within the legislated time.
By law 100% of the applications must be processed within 16 months, as legislated in the Spatial Planning and Land Use Management Act.
As for waste management, only 20% of waste separation is taking place at the source, and processing of waste at the landfill site is being carried out by a service provider on behalf of the municipality – without any formal agreement.
Ndlambe also contravened legal requirements in procurement and contract management – issues that the AG has raised in previous reports.
The council did not discuss the AG’s report when it met last Thursday. The report, contained in the draft annual report for 2017/18, was just for noting and will be sent to the Municipal Public Accounts Committee.