27 June 2017
EThekwini Curbing Irregular Expenditure
Great strides are being made to curb irregular expenditure in eThekwini Municipality. This follows the tabling of a report at an Executive Committee meeting today, 27 June outlining irregular expenditure for the 2015/16 and 2016/17 financial years.
The report was to inform Council of the non-compliance with the Supply Chain Management (SCM) Policy which resulted in irregular expenditure incurred by the Municipality. The report also highlighted the processes being followed to deal with irregular expenditure.
In 2015/16, irregular expenditure of R34 079 576.54 was identified and reported. Of this ten contracts to the value of R25 871 208.60 were awarded via section 36 of the SCM Policy were deemed to be irregular. The Auditor General identified expenditure, relating to awards to people in the employ of the state totalling R1 490 943 as irregular.
There has been a significant decrease in irregular expenditure in eThekwini Municipality from R1.3 billion in 2011/2012 to R783 million in 2012/2013. This was further reduced to R334 million in 2013/2014. In 2014/2015, irregular expenditure was R212 million, and further reduced to R208.0 million in 2015/2016.
The total irregular expenditure to-date for the 2016/17 financial year amounts to R33 798 553.63 has been processed through the Bid Adjudication Committee (BAC). It is clear from the reducing trend in irregular expenditure that the Municipality is committed to reducing irregular expenditure.
The report states that the irregular expenditure is defined by the Municipal Finance Management Act as expenditure incurred by the Municipality in contravention of, or that is not in accordance with, a requirement of the Supply Chain Management Policy of the Municipality.
The process to approve irregular expenditure, which is consistent with the previous year, as laid out in the report includes:
• Reports that were prepared by the departments that incurred irregular expenditure after investigations by the line departments. These reports disclose the deviation from the SCM Policy, the reason for the deviation and the value of the expenditure.
• These reports together with the supporting documents were submitted to Internal Control for review and thereafter to the Bid Adjudication Committee (BAC).
• The BAC considered the irregular expenditure in terms of regulation 36(1)(b) of the SCM Policy, applied its mind to each report and considered the irregularity, whether or not value for money was received and whether corrective action needed to be taken.
• All reports were also submitted to Internal Audit and the City Integrity and Investigations Unit for independent investigations to be undertaken.
The Executive Committee noted in the report that the goods and services have been received and that value for money has been certified by the respective heads of departments.
The report further states that regularisation of expenditure relates only to contravention of the SCM Policy issued and that depending on the outcome of further investigations by the Speaker, Councillor William Mapena, the City Manager, Sipho Nzuza, the Ombuds Office, line departments and the Municipal Public Accounts Committee, further action may arise. This includes disciplinary action, recovery of monies and criminal charges being instituted where applicable.
Deputy City Manager for Finance Krish Kumar said there were checks and balances in place to curb irregular expenditure.
“The City Manager has been clear about using section 36 and irregular expenditure. We are confident there are sufficient controls put in place to further curb this,” he added.
Speaker Councillor Mapena said this was annual irregular expenditure and issues of disciplinary measures would be contained in the annual report.
Issued by the eThekwini Municipality’s Head of Communications Tozi Mthethwa.
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