THE Nelson Mandela Bay metro was the highest contributor to fruitless and wasteful expenditure for the 2014-15 financial year, at R423m.
Local government is losing billions of rand in irregular, fruitless and wasteful and unauthorised expenditure. The ANC-appointed Danny Jordaan in May 2015 to turn around the ailing metro after a string of bad appointments.
In the past five years, fruitless and wasteful spending has almost doubled across municipalities in SA, and among the biggest culprits are hotly contested metros in the upcoming local government elections such as Nelson Mandela Bay and the City of Tshwane.
The general nature of fruitless and wasteful expenditure incurred related to interest on overdue accounts and late payments as well as penalties; litigation and claims, and other such as nonrefundable deposits for cancelled events and accommodation.
According to the auditor-general’s local government audit results released on Wednesday, irregular spending amounted to R14.75bn in the 2014-15 financial year, while fruitless and wasteful expenditure across the board amounted to R1.34bn and unauthorised spending R15.32bn Topping the list in irregular expenditure is Rustenburg in the North West, with R3.06bn This was followed by Nelson Mandela Bay metro, with R1.34bn, City of Tshwane with R1.10bn, Buffalo City metro with R479m and uThukela district with R324m.
According to the AG the irregular expediter incurred by the five was “100% supply-chain” related, except for Nelson Mandela Bay and Tshwane.
A total of 91 municipalities disclosed in their financial statements that they had incurred irregular expenditure, but they did not know the full amount as they still had to determine whether noncompliance of a similar nature had occurred in the current and previous years.
This meant that the amount could have been higher for 2014-15 if the investigations had been completed by year-end, the auditor-general said in the report.
In 2013-14 irregular expenditure amounted to R11.76bn.
Fruitless and wasteful expenditure Nelson Mandela Bay metro was the top contributor to fruitless and wasteful expenditure, with R423m.
Matjhabeng in the Free State accounted for R152m, Emalahleni R95m, Maluti-A-Phofung in the Free State R78m and Thaba Chweu in Mpumalanga R36m in such spend.
Of the R1.34bn in fruitless and wasteful expenditure across the board, R399m was incurred by municipalities in order to prevent further losses often related to the cost of cancelling irregular contracts or contracts of nonperformers.
Unauthorised expenditure The main contributors to unauthorised spending were Madibeng with R1.25bn, Mangaung metro with R1bn, City of Johannesburg with R959m, Maluti-A-Phofung with R958m and City of Tshwane with R786m.
According to the report, overspending of the budget or main sections within the budget were the reasons for 97% of the unauthorised expenditure.
Poorly prepared budgets, inadequate budget control and a lack of monitoring and oversight were some of the reasons cited for underspending.
With Natasha Marrian