The Nelson Mandela Bay municipality slid backwards in its 2024/2025 audit outcome.
This is despite protests by the municipality, as the auditor-general (AG) said the metro had regressed on its audit outcomes.
Presenting the Bay’s report card in council on Thursday, AG Eastern Cape business unit leader Thobile Nteta said efforts were being made to address the identified deficiencies, but the city continued to rely on the audit process to balance its books.
“Systems are not necessarily being implemented adequately.
“So this year, compared with last year, we ended up with qualification on service charges, non-current provisions.”
Nteta said this included contracted services, capital commitments and property planning.
“So really, there’s a lot of work to be done by the metro to start getting back on track.”
The metro scored an unqualified audit for the first time in 12 years for the 2022/2023 financial year.
This was its second consecutive qualified audit.
Nteta said the AG recorded noncompliance across most of the areas audited.
This included material noncompliance with financial statements, failure to prevent unauthorised, irregular, fruitless and wasteful expenditure, asset management, expenditure management, consequence management, revenue management, strategic planning and performance management, and procurement management.
“The municipality recorded R2bn in irregular expenditure in the current financial year, so you can see there are quite a lot of issues that the metro needs to deal with, and they need to be systematic about it.”
Some of the R2bn is historic.
Nteta said the metro’s maintenance budget was concerning, adding it was 2%, which was below the norm of 8%.
“The metro reported R1.65bn unauthorised expenditure; debt collection is sitting at 94.5 days, debt dependent provision 60%, Eskom and water board debt in arrears to the amount of R373m.
“Concern is the water losses. Water losses of R396m, which is 53% of the water produced, are significantly above the norm of 15 to 30%.
“In terms of infrastructure projects and environmental management, reported underspending is R452m on the conditional grants.
“We noted material audit adjustments that were processed, which reduced the number of qualifications, so had we not allowed those rectifications, those areas of qualification would be even more.
“Some of the root causes are that when we engage with management, there’s an acknowledgement of resource constraints in the budget and treasury departments.
“So some capacitation is required there, but there’s also incorrect application of accounting standards, inadequate review of financial statements.”
A big contribution of that fruitless expenditure was paying officials who are suspended for an extended period of time
— AG Eastern Cape business unit leader Thobile Nteta
On procurement and contract management, the AG found that some goods and services were procured without inviting competitive bids, as required by supply chain management regulations.
Nteta said the AG had issued a material financial irregularity on fruitless and wasteful expenditure.
“A big contribution of that fruitless expenditure was paying officials who are suspended for an extended period of time.”
Presenting the metro’s audit action plan, from the Section 154 support team, Luyanda Ndeya said identified issues were fixable with the right capacity.
He said many of the metro’s processes were manual and called for automation in areas such as budget and treasury, human resources, document management and supply chain management.
“We need to capacitate the budget and treasury department. These things can be resolved.
“If we only bring consultants to solve these findings, that’s a short-term solution, but when the consultants are not here, we’re still going to get these audit outcomes.”
Ndeya said the team had noted the abuse of deviation processes.
“In the metro, every division has purchase orders, and now we’re proposing to centralise this.”
Ndeya said the city needed to fill critical positions.
GOOD councillor Lawrence Troon said the city needed a consistent figure in the city manager’s office.
“Every city manager comes with his own management style.
“They don’t worry about your turnaround plan. Some of them come with no ethics.”
DA councillor Gert Engelbrecht said there was significant focus on the AG’s findings on unauthorised, irregular, fruitless and wasteful expenditure, yet the municipal public accounts committee (Mpac) continued to receive incompetent agendas.
“Our inputs on the previous annual report remain unaddressed.”
UDM councillor and Mpac chair Luxolo Namette said the audit was a direct reflection of governance and leadership.
“We cannot continue to rely on provincial and national government interventions to fix problems that are entirely without our control.
“What is required is a clear, time-bound and measurable internal turnaround plan.”
ANC councillor Xola Notshe said they had previously raised issues about the low maintenance budget.
“This is something we have highlighted in Mpac. We hope the items we highlight won’t gather dust elsewhere but will be acted on.”
ACDP councillor Lance Grootboom said it was concerning that the metro was regressing.
“We’re going backwards and not moving forward,” he said.
“That is telling us we’re not in a good place, but it’s telling us the current leadership in place is unable to hold the administration to account and unable to lead the administration.
“It means the current government doesn’t even understand these findings and can’t drive the administration to overcome these findings.
“It’s clear the ANC is unable to drive this administration.
“The city is going to go down. It’s already in ruins.”
The Herald
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