The Auditor General (A-G), in its report dated 13 February 2023 indicated that Mangaung Metro received a qualified audit outcome with findings.
This outcome is a regression from the previous financial year. The A-G mentioned that there were material matters of concern that required “significant and urgent intervention.” Such material matters include the lack of supporting documents to substantiate actual achievements. In terms of other projects reported, the documentation differed substantially from the work which was done. Additionally, limited measures were put in place to improve the reporting processes.
According to the A-G, the above is directly linked to the instability of the municipality. Frequent changes within its top structure further resulted in the insecurity of other officials. To make matter worse, management failed to investigate Unauthorised, Irregular, and Fruitless Wasteful Expenditures totalling: R 1, 4 billion; R 186 million; and R 93 million, lastly mentioned being three times more than the previous financial year. No reasonable steps were taken to address the expenditures, followed by no disciplinary action leading to a culture of disregard for good governance, in other words, no consequences whatsoever for discrepancies.
Current liabilities and employee costs remain a great concern and are the two major areas resulting in a qualified report. Substantiating documents relating to expenditure on overtime could not be presented. Furthermore, not all liabilities were recorded as a whole and it would seem as if the entire and true picture of the municipality’s financial state is not necessarily disclosed. Management has failed to effectively develop and apply standard operating procedures. It lacked in prioritizing urgent matters and could not effectively monitor reported performances. Most alarming is management’s failure to effectively examine land and scrutinise the municipality’s financial statements, resulting in material misstatements.
The A-G further indicated that Mangaung’s current liabilities exceeded its total assets by R 485 444 061 and stated that material uncertainty exists that may cast significant doubt on the Metro’s ability to effectively continue, which is of great and going concern.
The municipality continues to fail the residents through its failure to meet set targets for water, sewerage and wastewater treatment works. Funds budgeted are simply reallocated to other projects or the funds are simply just not utilised. This has a direct result in non-compliance with legislative requirements.
The municipality incurred a loss of R 1, 8 billion in the financial year. The municipality’s average payment to suppliers is 165 days, far exceeding the national norm of 30 days, directly leading to a lack of service delivery. Water losses amounted to R 406 million, 45% of the total water purchased. Electricity losses totalled an amount of R 241 million, 10, 9% of the total purchased.
The DA found that payments made were not in line with the contracts, and management was further unable to record and present for projects which they claimed to be completed. The financial statements were inadequate and not a true reflection of the current state of affairs.
Mangaung’s failure to meet set basic service delivery targets has not only failed its residents but is unlawful and non-compliant with set legislation for example the National Water Act. The DA is committed to bringing change across the country and therefore urges all residents to register to vote in the 2024 National and Provincial Government elections.