About 60% of the total municipal revenue last year went into the pockets of the metros, but the way they manage this R160 billion leaves much to be desired, it says.
Cumulatively they spent R903.2 million without authorisation, in other words not in accordance with the approved budget or the conditions of a grant. R2.6 billion was incurred in contravention of legislative prescripts (irregular) and almost R45 million was fruitless and wasteful.
That totals more than R3.5 billion in questionable expenditure, which is 2.25% of revenue.
Cape Town was the only metro to receive a clean audit report after it addressed most of the issues identified in the previous year. Johannesburg, Ekurhuleni Tshwane and eThekwini got unqualified reports with findings and Buffalo City, Nelson Mandela Bay and Mangaung got qualified reports with findings.
Cape Town and Johannesburg were the only two that improved on the previous year’s outcomes.
AG Kimi Makwetu states in his consolidated report on the municipal audit outcomes there has been a slight improvement in the occurrence of misstatements in the financial statements of the eight metros. Even so, material misstatements were reported at all the metros, except Cape Town and Ekurhuleni. That means the audit outcomes may have been much worse had the local authorities not been given the opportunity to correct these misstatements during the auditing process.
The AG reported material findings relating to supply-chain management at seven of the eight metros and three showed material noncompliance with human resource legislation. He identified financial risk indicators at half the metros – Buffalo City, Nelson Mandela Bay, Mangaung and eThekwini – although they don’t seem to be material. Information technology controls were found to be inadequate in all eight metros, as was the case the previous year.
The AG further indicates that leadership regarding key controls in all impact areas (financial, performance and compliance) deteriorated from the previous year in Tshwane, necessitating intervention. The same goes for leadership in performance in Nelson Mandela Bay and Ekurhuleni.
Economist Mike Schüssler says South Africans cannot afford the inefficacy of municipalities any more. He says metros are economic hubs and are supposed to drive economic growth.
The AG quoted Treasury stating debt owed to all municipalities at the end of 2012/13 stood at R86.9 billion. The national energy regulator earlier told Business 18% of the electricity municipalities bought in 2012/13 was lost for technical reasons related to maintenance and electricity theft.
Johannesburg’s City Power reported 22% losses while losses in other metros were around 10%. Water losses are known to be a growing problem.
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Article source: http://citizen.co.za/224221/ailing-metros-bleed-cash-ag/