AG questions reliability of performance report

Executive mayor, Cllr Sibusiso Mathonsi.

MBOMBELA – The City of Mbombela Local Municipality (CMLM) faces a liquidity risk due to unauthorised and irregular expenditure.

This is according to a report by the Auditor-General (AG), who also questioned the reliability of the City’s annual performance report, due to missing and incomplete information contained therein. These were tabled to council during a council meeting at the end of January.

The executive mayor, Cllr Sibusiso Mathonsi, and acting municipal manager, Neil Diamond, brushed aside the AG’s stated concerns.

Also read: City’s financial woes under scrutiny

Mathonsi said, due to material uncertainty, the council made a loss of R113 million during the 2016/17 financial year. He added that the Speaker’s office had been tasked with targeting areas of the 2017/18 budget where money could be saved.

Diamond recommended that the report be approved and referred to the Municipal Public Accounts Committee (Mpac). Representatives of the DA caucus, councillors Sanley van der Merwe and Steve Schormann, expressed their concern at the report’s findings.

“Considering the information contained in the report, it is not clear what situation we are facing as the CMLM and therefore we cannot approve the report because we don’t know what we are working with,” said Schormann at the meeting.

Based on the findings of the AG, the financial position of the City indicated a variance of 265 per cent in its actual liabilities, currently standing at R1,5 billion. This compared with a budgeted amount of R640 million.

Diamond recommended that the municipality reprioritise internally funded projects for critical service-delivery projects, and continue to aggressively implement the revenue-enhancement and cost-curtailment strategies which were approved by council earlier in the 2017/18 financial year.

Also read: City of Mbombela vows to keep the lights on

He added that no new projects must be included in the adjustment budget for 2017/18 financial year, given the current financial constraints.

DA councillor Kleinste Janse van Rensburg said it was clear that revenue-enhancement strategies, as well as cost-curtailment measures have not yet had an impact on the City’s ability to operate on a sound financial basis.

Mathonsi said the budgets will have to be cut to reduce current expenditure, to deal with cash-flow issues until sufficient funds are in the municipal coffers.

Despite being awarded an unqualified report, which means that the financial statements contain no material misstatements, but do not offer enough information or are non-compliant with legislation, Mathonsi said there is no ambiguity in the report. “We are dealing with facts,” he said.

Also read: Watchdog politicians feel their hands are tied

This halt in progress of a number of municipal projects has led to a number of departments underperforming during the 2017/18 financial year, as indicated in the mid-year budget-performance assessment which was tabled at the council meeting.

The project implementation unit did not meet 81 per cent of its target to date. Similarly, 81 per cent of water and sanitation project targets have not been met. With regard to city planning and development, 75 per cent of targets were not met and for community services 53 per cent of targets were not met.

Hancu Louw

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