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Judge to oversee the financial recovery of ‘failed’ Makana Municipality

Availability of Information, Integrity of Information, Records Management Non-Compliance, Systemic Failure, Vital Records

The Eastern Cape government of Premier Oscar Mabuyane will have to report to a judge every three months on progress in implementing a financial recovery plan for the Makana Municipality. This is after the Supreme Court of Appeal settled a case brought by the community to dissolve the council for its ongoing failure to deliver services. “The financial statements were not submitted to the auditor-general for auditing within two months of the end of the financial year… an adequate management, accounting and information system that accounted for assets was not in place, an effective system of internal control for assets (including an asset register) was not in place, an adequate management, accounting and information system that accounted for revenue and debtors was not in place, an effective system of internal control for debtors and revenue was not in place, there was no audit evidence that interest had been charged on all accounts in arrears, an adequate management, accounting and information system that accounted for creditors made was not in place, reasonable steps were not taken to prevent irregular expenditure, the expenditure disclosed did not reflect the full extent of the irregular expenditure, the majority of the disclosed irregular expenditure was caused by non-compliance with supply chain management regulations, no reasonable steps were taken to prevent unauthorised expenditure of R100.1-million,” the report continues.

  • Management did not design and implement daily and monthly controls to ensure the financial statements and annual performance reports were supported by accurate and complete underlying records.
  • Management further did not prepare regular, accurate and credible quarterly financial reports that would be incorporated in the financial statements. There was not an efficient records management system to ensure that financial and non-financial information was easily retrievable.

According to the auditors, the municipality has been reported for several material irregularities, including a failure to keep full and proper records that was “likely to result in substantial harm to the municipality as it contributed to the material uncertainty regarding its ability to continue operations”.

Daily Maverick, 14 March 2022

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