The fact of the matter is that the Auditor General’s report is a ‘backward looking’ statement of findings. In business, when one does a due diligence, reports such as these are used as a predictor of future performance and compliance.
The NMB Metro boasts of having R2 Billion in the bank. I must confess to taking that ‘success indicator’ with a pinch of salt as we do not know how much money is owed by the Metro, nor do we have sight of Audited Financial Statements to determine the true position at that time. We all know of people/businesses with lots of cash but who owe far more than what they have in the bank.
The ‘imminent administration’ is a control measure to ensure that municipalities comply with the regulations and not a huge bogeyman as our friend Retief made out. So, let’s have a look at what the real concerns are – emphasised and highlighted in the various sections below.
In the Auditor Generals report the Nelson Mandela Bay Municipality is mentioned six times – on pages 33, 34, 44, 115, 119 and 127. The Mandela Bay Development Agency (the relatively good news section of the report) is highlighted three times – on pages 6, 44 and 135.
With regards to the Nelson Mandela Bay Metro:
Page 33 states:
The following municipalities were the main contributors (43%) to irregular expenditure in 2014-15:
- Rustenburg (NW): R3 062 million – 2 645 instances (2013-14: R195 million – 31 instances)
- Nelson Mandela Bay metro (EC): R1 348 million – 142 instances (2013-14: R1 052 million – 4 982 instances) – the no. of instances has DECREASED but the amount has INCREASED
- City of Tshwane metro (GP): R1 100 million – 11 instances (2013-14: R150 million – 11 instances)
- Buffalo City metro (EC): R479 million – 359 instances (2013-14: R409 million – 77 instances)
- uThukela district (KZN): R324 million – 1 239 instances (2013-14: R107 million – 114 instances).
The irregular expenditure incurred by the main contributors listed above was 100% supply-chain related except for the Nelson Mandela Bay metro and City of Tshwane metro. The irregular expenditure incurred by the City of Tshwane metro was 97% supply-chain related, while that of Nelson Mandela Bay metro was almost 100% supply-chain related (i.e. less than 1% was not supply-chain related).
Page 34 states:
The following municipalities were the main contributors (59%) to fruitless and wasteful expenditure in 2014-15:
- Nelson Mandela Bay metro (EC): R423 million – 10 instances (2013-14: R11 million – seven instances) – Yes, it is kinda embarrassing that we are top of the list!
- Matjhabeng (FS): R152 million – 32 instances(2013-14: R103 million – one instance)
- Emalahleni (MP): R95 million – 40 instances (2013-14: R56 million – 40 instances)
- Maluti-A-Phofung (FS): R78 million – 113 instances (2013-14: R32 million – 59 instances)
- Thaba Chweu (MP): R36 million – 322 instances (2013-14: R29 million – 4 instances).
Page 34 states:
Figure 1 indicates the state of readiness of municipalities for implementation of the new mSCOA as assessed by us. It shows the number of municipalities where readiness/preparation is good, concerning or requires intervention. The pilot municipalities that were not assessed as good were Berg River, Drakenstein and Knysna (Western Cape), Nelson Mandela Bay metro, Buffalo City metro, Camdeboo and Senqu (Eastern Cape), Richmond (KwaZulu-Natal) and Tlokwe (North West).
Page 115 states:
Financially qualified with findings: Nelson Mandela Bay metro had repeat ‘Disclaimed with findings reports’ in the following areas:
- Compliance with legislation
- Material misstatement or limitations in submitted AFS
- Unauthorised, irregular, as well as fruitless and wasteful expenditure
- Consequence Management
- Audit Committees
- Procurement Management
- Officially Submitted Performance Reports
- Supply Chain Management
Page 119 states:
Financially qualified with findings: Nelson Mandela Bay metro
Page 127 states:
With regard to Assessment of auditees’ key controls at the time of the audit the Nelson Mandela Bay Metro was bottom of the list and the following areas were disclaimed with findings:
- Effective leadership culture
- Oversight responsibility
- Human Resource Management
- Policies and Procedures
- Action Plans
- Information Technology Governance
- Proper Record Keeping
- Processing and Reconciling Controls
- Information Technology Systems Controls
- Risk Management
On the same page we see that the ratings of the top three metropolitan municipalities are:
- Ekurheleni Metro
- eThekwini Metro
- City of Cape Town Metro
It must be said, though, that the City of Cape Town Metro is the only one with NO ‘Disclaimed with Findings’ rating on the above section of the report. What is disturbing though is that the Nelson Mandeal Bay Metro is rated LAST in the above section (below Buffalo City Metro).
Turning to the Mandela Bay Development Agency:
Page 6 states:
The MBDA appears as one of the few agencies with a Clean Audit for 2014-15.
The MBDA is ‘judged’ and found lacking in their ‘Quality of submitted performance reports’ and cited for R0.6 Million of ‘Fruitless and Wasteful Expenditure’
In the subsections under the main sections of; Leadership, Financial Performance and Governance the MBDA received:
- 12 ‘Unqualified with findings’ scores and
- 52 ‘Unqualified With NO findings’ scores
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