The Auditor General South Africa (AGSA) has given the OR Tambo District Municipality (ORTDM) a qualified audit opinion for the 2021/2022 financial year.
According to AGSA, a qualified audit opinion is given when financial statements contain material misstatements in specific amounts, or there is insufficient evidence for the Auditor General to conclude that specific amounts included in the financial statements are not materially misstated.
Fruitless and wasteful expenditure, capital commitments, employee-related costs, prepayments and municipal plant, property and equipment were cited as some of the contributing factors to the opinion.
The audit outcome was tabled before a special council meeting of the district municipality, on January 31, by Auditor General South Africa senior manager responsible for the OR Tambo District, Feziwe Mdazana-Mbeki.
On capital commitments, Mdazana-Mbeki noted that the municipality had recorded some of its capital commitments at incorrect amounts for the year under review.
“This was due to inadequate systems and processes within the municipality to ensure that capital commitments were correctly recorded. Consequently, capital commitments as disclosed at R842,8 million (2020-21: R1,2 billion) in note 45 to the consolidated and separate financial statements were overstated. It was, however, impractical to determine the full extent of the misstatement,” the report read.
She further said that she was unable to obtain sufficient appropriate audit evidence for the restatement of the corresponding figure for fruitless and wasteful expenditure.
“As disclosed in note 54 to the consolidated and separate financial statements, the restatement was made to rectify a previous year’s misstatement, but the restatement could not be substantiated by supporting audit evidence.
“I was unable to confirm the restatement by alternative means. Consequently, I was unable to determine whether any adjustment was necessary to the fruitless and wasteful expenditure corresponding figure, stated at R50,8 million in the consolidated and separate financial statements. This has an impact on the closing balance of fruitless and wasteful expenditure for the current year, which is stated at R56,3 million,” the report noted.
The audit report also found that the district municipality did not have an adequate system in place to account for pre-payments, which meant that it did not record all of its pre-payments and some pre-payments were recorded at incorrect amounts.
“During the 2021 financial year, the municipality incorrectly paid the Covid-19 danger allowance to its employees who worked during the national lockdown using an un-approved rate.
“This led to an overstatement of employee-related costs by R42 million in the consolidated and separate financial statements. Management did not correct the matters giving rise to this overstatement. I could not determine the full extent of this misstatement on the corresponding figure of employee-related costs at R805,6 million as it was impractical to do so,” the report said on employee-related costs.
“We receive your report with the most positive attitude and know that it is a guide to help us become a better municipality,” said Mesuli Ngqondwana, ORTDM executive mayor.
