Mayor Shandu welcomes AG report

The Mayor of iLembe District Municipality Councillor Thobani Shandu welcomed the audit outcomes report by the Auditor-General in a special sitting of Council held virtually on the 31st of January 2023.

Office of the AuditorGeneral's Senior Manager Martin Coates presented the District Municipality and its entity, Enterprise iLembe with a financially unqualified opinion with findings for the 2021/22 financial year.

Ilembe District Municipality has achieved an unqualified audit opinion for three consecutive years i.e. 2019/2020 and 2020/2021.

An unqualified opinion means the financial statements are credible, reliable and free of material misstatements with findings raised on either reporting on predetermined objectives or non-compliance with legislation, or both these aspects.

Speaking on the financial health, Coates said iLembe is financially sustainable but highlighted areas for improvement.

“This includes the debtcollection period which at 228 days is relatively high to the norm of 90 days. In terms of the expenditure, the creditors-payment period was calculated at 67 days. The entity ended the year with a surplus and 18% of the next year's budget will be used to pay for previous year,” he said.

The AG revealed that there was no unauthorized expenditure in 2021/22, as was the case in 2020/21, but noted a decrease of irregular expenditure over the last three years.

“The irregular expenditure related primarily to the security contract that was awarded which Council would be aware of,” said Coates.

A total of R7.3 million was highlighted as fruitless and wasteful expenditure a result of project delays and ongoing contractual disputes.

Mayor Shandu noted and welcomed the report by the AG voicing out concern over inefficiencies raised including the number of days creditors are paid and the number of days debtors pay the municipality.

“On behalf of Council, we appreciate the audit outcome received,” he said.

Municipal manager Sazi Mbhele said although the municipality and its entity achieved an unqualified opinion there are improvements to be made. The MM said an action will be developed to address the findings.

“The AG raised an issue of an old irregular expenditure (2017) that has not been processed, we commit to fast track to take it through MPAC and then back to council with recommendations, ” he said.

At the meeting included the midyear budget and performance assessment for the 2022/2023 financial year which was tabled by Mayor Shandu and presented by the Chief Financial Officer Mahendra Chandulal who raised concern on the municipality's collection rate.

“The debt continues to rise and the collection rate as of December 2022 was at 44% which is not ideal. Last year roundabout the same time the municipality was at 51%. There is a need to put more effort into the collection rate and we have discussed at management committee to come up with a revised action plan to get the rate to a more acceptable level,” he said.

Other items discussed in the council meeting included the 2021/22 annual report, the amendment of the Supply Chain Policy as well as the tabling of the audit committee reports.

Double standards

Also cautiously welcoming the report, the DA's Caucus Leader Cllr Krsna Sing said indications are that the municipality is moving in the right direction in terms of compliance.

However Sing still decried the R106 million recorded in terms of water loss.

“Another area where the council is bleeding is its inability or lack of capacity to collect current and arrear debts. The debt has grown by almost R 110 million from the previous year from R 549 million to R658 million. Council heavily relies on grant funding up to the tune of almost 72 % of the budget therefore aggressive campaign and ongoing incentives should be put in place to encourage consumers to pay.

“Government departments are also the culprits not paying their dues in time. In this financial year it was recorded a 100 % increase from the previous year from R 14 million to now sitting at R 28 million. This is unacceptable. We cannot have cosy relationship and apply double standards on debt collection. We are quick to disconnect residents and reluctant to disconnect government departments. We must act without fear or favour.

Attending to consumer queries and resolving them in the shortest possible time could also improve our collection revenue,” Sing stated.