Substandard reports were again rejected by Nelson Mandela Bay’s municipal public accounts committee on Tuesday, as councillors accused officials of hampering efforts to address historic unauthorised, irregular and wasteful expenditure.
Councillors rejected the write-off of more than R137m in untraceable expenditure, pushing back against officials who cited the five-year record-keeping rule of the Financial Intelligence Centre Act (Fica) to justify abandoning the recovery of contract documentation.
The public accounts committee has been trying for months to reduce the city’s unauthorised, irregular and wasteful expenditure, which totals about R30bn.
The amount is the highest of any municipality in the country and has placed the metro in the crosshairs of the National Treasury, which has previously threatened to withhold the city’s equitable-share allocations.
Of the R30bn, R2.6bn is set to be written off in terms of “limitation of scope” after audit files linked to the contracts could not be located.
Limitation-of-scope findings occur when auditors cannot gather sufficient evidence to verify financial records, potentially resulting in qualified audits.
Public accounts committee chair Luxolo Namette criticised the quality and number of reports presented, noting that only three items appeared on the agenda after one was found to be a duplicate.
“Technical committees were established in the 2024/2025 financial year, but no progress has been made,” Namette said.
“Deferred reports that were sent back to departments for corrections are still not coming back.”
The meeting nearly collapsed after councillors called for the remaining items to be deferred, arguing that the reports lacked sufficient information required before the committee could recommend them to the council.
DA councillor Gert Engelbrecht said it was evident that the reports had not even passed through the city manager’s office for vetting, as previously agreed.
“I stayed up under candlelight to go through these reports, yet the acting city manager cannot even read the agenda.
“We have been asking and pleading for competent agendas,” Engelbrecht said.
It was later agreed that the tabled reports would at least be discussed so councillors could make inputs.
One of the reports concerned a budget and treasury directorate item on a proposed R110m write-off of a municipal fleet-fuelling tender, which lapsed in the 2015/2016 financial year.
According to the report, the contract was among those audited by KPMG and had been referred for write-off under the limitation-of-scope provision.
Engelbrecht said that councillors had still not been provided with the KPMG audit report, which was one of the annexures they had requested.
ACDP councillor Lance Grootboom criticised how Section 22 of Fica was being used to justify why supply chain management files could not be reconstructed.
“First of all, it is Section 23 of Fica, and schedule one of the Act tells us which institutions must record in terms of accountability as it deals with money laundering and so forth.
“Municipalities take rates from residents of the city — we are not their accounting institution,” Grootboom said.
“We are not going to entertain this section because Fica is not applicable here and cannot be used as a basis for other reports, which we will have to consider under limitation of scope.”
According to the reports, about R2.6bn will have to be considered across departments in terms of the limitation-of-scope provision.
Councillors also rejected a report proposing the write-off of R27m linked to a service provider hired to carry out property valuations.
Acting city manager Lonwabo Ngoqo, who arrived later at the meeting, said the reports had never been submitted to his office.
“My office has now been provided with further support under Section 154 from [the co-operative governance department], which means we will be able to better deal with the concerns from councillors,” he said.
The Herald
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