30 July 2019
Executive Committee Decisions
In an effort to ensure good governance and accountability, measures have been put in place to reduce irregular expenditure in the City. This follows the tabling of a report at an Executive Committee meeting held on 30 July which outlined irregular expenditure incurred during the 2018/19 financial year.
There has been a decrease of almost R151 million in irregular expenditure in 2018/19 compared to the 2017/18 financial year.
The tabled report noted that irregular expenditure, which is a result of non-compliance with supply chain management policy, was R581 492 759.38 for the 2018/19 financial year. Included in this amount is R138 272 435.63 relating to the previous financial years (prior to 2018/19) and R443 220 323.75 relating to the 2018/19 financial year. Irregular expenditure in the City was R733 million in the 2017/18 financial year.
It was noted during the meeting that goods and services were received and that value for money was received for the irregular expenditure incurred.
While there has been a noted decrease in irregular expenditure, the City has implemented measures to further reduce it. This includes the City’s process to address unauthorised, irregular, fruitless and wasteful expenditure which is currently being aligned to the amended Municipal Finance Management Act (MFMA) Circular 68, the report states. Once finalised, relevant reports will be submitted to the respective stakeholders as prescribed, including Council.
The report notes that a parallel process has been initiated to analyse all unauthorised, irregular, fruitless and wasteful expenditure, including amounts brought forward from the prior year. The report further states that based on the outcome of the analysis and the respective status of each item, the appropriate process will be followed to address this expenditure in line with the requirements of Section 32 of the MFMA and the amended MFMA Circular 68.
The tabled report further recommended that depending on the outcome of investigations by line departments, the City Integrity and Investigations Unit (CIIU) and the Municipal Public Accounts Committee, further action may arise including disciplinary action, recovery of monies and criminal charged being instituted where applicable.
Acting eThekwini Mayor Fawzia Peer said there was political will to ensure irregular expenditure did not increase in the City.
“I am happy that goods and services were delivered for this money. Irregular expenditure is very different from wasteful and fruitless expenditure. However, I encourage departments to plan in advance especially when contracts are expiring to avoid irregular expenditure,” said Acting Mayor Peer.
During the Acting Mayor’s report address to the Executive Committee, she further reiterated the City’s commitment to good governance.
“As the Municipality we remain committed to the principles and values of good and clean governance. The City Manager is currently tightening up the review and due diligence processes on all matters that affect supply chain management processes within the City. We do this because we want to ensure that we have good and sound supply chain management processes. We need to be clear about the lines of accountability and the chain of command in how our internal submissions for approvals move among our officials, so that no lines are blurred when it comes to the supply chain management processes,” she said.
Speaking on the tabled report, Deputy City Manager of Finance Krish Kumar said the City has zero tolerance with regards to irregular expenditure and continued to look at ways of reducing it.
He said eThekwini Municipality was one of the most transparent cities in terms of finances and had many checks and balances in place to ensure good governance.
He said no payment was made, in terms of irregular expenditure, where services were not rendered.
“Goods and services were delivered and we received value for money,” he said.
It is important to note that the Municipality has implemented stronger oversight measures. Steps and measures have been put in place to reduce irregular expenditure, especially the monitoring of compliance. This includes;
• All irregular expenditure being reported to ensure transparency,
• All instances of irregular expenditure are investigated by the CIIU,
• Based on the outcome of the CIIU report, consequence management will be instituted,
• In terms of consequence management, and where necessary, disciplinary action, criminal action, and/or recovery will be instituted and,
• The regularisation process is also robust and rigorous. It requires sign off from the relevant Head, Deputy City Manager and vetting by the Bid Adjudication Committee.
In addition, consequence management will be monitored on a monthly basis with reports being provided to the Municipal Public Accounts Committee (MPAC) to monitor progress being made. Instructions have also been issued to all Deputy City Managers and Heads that all disciplinary cases / consequence management must be expedited. The Financial Disciplinary Board will provide oversight and monitor progress in this regard.
Internal Audit has been engaged on auditing and strengthening SCM processes end-to-end and improving transversal SCM controls coupled with continuous control monitoring. There are also controls in place to detect and/or prevent irregular expenditure. The City remains committed to continue improving implementation of controls and any breaches in controls will be followed with consequence management action as eThekwini Municipality is still fully committed to achieving zero irregular expenditure. The focus going forward will be consequence management.
EThekwini Municipality will enter into an agreement with National Treasury in order to participate in the Graduate Internship Programme via the Infrastructure Skills Development Grant (ISDG). The City will also enter into an ISDG Service Level Agreement with Umgeni Water.
This follows the tabling of a report at an Executive Committee meeting held today, 30 July.
The report states that the programme is aimed at developing engineering and related technology graduates, equipping them to achieve professional registration in water and wastewater related skills to form a pool of such skills for municipalities. The cost of the programme will be borne by the ISDG.
The programme, implemented in 2012, saw 35 graduates be included from local tertiary institutions. This included seven BSc engineers and 28 technicians in the disciplines of civil, chemical, mechanical and electrical engineering as well as engineering surveying.
Five technicians are still in the programme with seven engineers and 20 technicians absorbed by eThekwini Municipality.
The report states that National Treasury has approved the business plan with an allocation of R36.3 million for the 2019/20 financial year to be shared by the City and Umgeni Water.
Highly skilled officials from the City’s Electricity Unit will offer technical support to Msunduzi Municipality following the tabling of a report at a meeting held today, 30 July.
The report states that there was a request from Msunduzi Municipality, via the Office of the City Manager, for technical support for the electricity business of the municipality. The report notes that Msunduzi Municipality is currently placed under administration and is undertaking improvement projects to stabilise and organise their departments.
The nature of the work requested by Msunduzi Municipality includes;
• Assessment of work that needs to be done to improve the assurance of electricity supply in relation to both primary and secondary sub-stations,
• Support in relation of components needed based on the assessments and,
• The supply and installation of meters especially for commercial and industrial electricity consumers.
The report noted that the City’s Electricity Unit successfully operates and maintains a similar electrical topology to that of Msunduzi Municipality, albeit on a larger scale, which as a result means they possess the necessary skills and experience in the requested support areas.
There is no financial implications for the City the report noted as “soft support” is being provided which includes the allocation of suitably skilled staff to engage and carry out the assessment exercise in conjunction with Msunduzi Municipality staff. The support to be provided by the City includes technical analysis, capacity building, skills transfer, information sharing and training.
Acting eThekwini Mayor Fawzia Peer welcomed the report saying there are a number of skilled personnel in the City adding that she was honoured and proud that eThekwini Municipality is able to assist another municipality.
She stressed however, that this assistance must not impact or hinder service delivery in the City.
Issued by the eThekwini Municipality’s Acting Head of Communications Mandla Nsele.