ACTION PLAN ON AUDITOR GENERAL FINDINGS: YEAR ENDED 30 JUNE 2014 AR
Para No.
REPORT
FINDING PROPOSED ACTION TO BE
IMPLEMENTE D
RESPONSIBL
E PERSON TARGET
DATE CURRENT STATUS/PROGRE
SS Chapte
r 6 para no 8
Material losses
1. As
disclosed in note 31 to the financial statements, material electricity losses to the amount of
R2, 25
million (11%) was incurred as a result of distribution losses.
An electrician has been appointed on a permanent basis. As one of his
responsibiliti es he will undertake the investigation of electricity losses and monitor the performance of the overall system on a regular basis.
LMV Cele Monthly
Chapte r 6 para no 9
Going concern
2. Note 65 to the financial statements indicates that at 30
The going concern is as a result of funding capital projects, in
CFO 30/06/201 5
90 | P a g e June 2014
the
municipality’
s current liabilities of
R25, 87
million exceeded its cash
resources of
R13, 60
million by
R12, 27
million. The condition highlights the fact that the
municipality was not in a position to meet its current obligations as they fall due. This indicates the existence of a material uncertainty that may cast
significant doubt on the municipality’
s ability to operate as a going
concern.
particular the electricity program, using the equitable share. The going concern position will be restored once the municipality has been reimbursed by DOE. The municipality is currently negotiating the
reimburseme nt with DOE.
Chapte r 6 para no 22
Performance targets are not
measurable
3. The
FMPPI requires that performance targets be measurable.
The required performance could not be measured for a total of
Performance Target will be
revised to ensure that
the SMART principles are
applied to all.
A third party will be requested to
review the
Risk and Performanc
e Manager
31 January 2015
91 | P a g e 39% of the
targets.
Managemen t was aware
of the
requirement s of the FMPPI but chose not to apply the principles contained therein.
amended performance
targets to ensure they
are fully measurable
Chapte r 6 para no 23
Performance indicators not well defined
4. The
FMPPI requires that indicators should have clear
unambiguou
s data
definitions so that data is collected consistently and is easy to
understand and use. A total of 20%
were not well defined in that clear, unambiguou
s data
definitions were not available to allow for data to be collected consistently.
Managemen t was aware
of the
requirement s of the FMPPI but chose not to apply the principles
Performance Target will be
revised to ensure that
the SMART principles are
applied to all.
Risk and Performanc
e Manager
31 January 2015
92 | P a g e contained
therein.
Chapte r 6 para no 24
Reported performan ce not reliable
5. The
FMPPI requires that institutions should have appropriate systems to collect, collate, verify and store
performance information to ensure valid,
accurate and complete reporting of actual
achievement s against planned objectives, indicators and targets.
The
information presented with respect to the local economic development objectives
was not
reliable when
compared to the source information and
evidence provided.
This was due to the lack of
A web-based PMS system
will be implemented
which will help resolve
most of the findings.
Head of Departments
will review the performance
report and related POE on a quarterly
basis.
On-going review of the
POE will be done prior to submission to the Audit Unit
and the Auditor General.
Risk and Performanc
e Manager
27 February
2015
On-going
93 | P a g e standard
operating procedures for the accurate recording, monitoring and
reporting of actual
achievement s.
Chapte r 6 para no 28
Expenditure management
6.
Reasonable steps were not taken to prevent irregular expenditure, as required by section 62(1) (d) of the MFMA.
Measures have been put in place to reduce the occurrence of irregular expenditure by ensuring that a
minimum of 3 quotations for all orders below
R200 000 are obtained and contracts with suppliers are entered into where necessary.
SCM
Manager Monthly
Chapte r 6 para no 29
Expenditure management
7. Money owing by the municipality
was not
always paid within 30 days or an agreed period, as required by section 65(2) (e) of the MFMA.
The
municipality has put internal controls to ensure that at least 95% of suppliers’
invoices are paid within 30 days of receipt of invoices. The relevant officials have been
Expenditure
Accountant Monthly
94 | P a g e requested to
stamp the invoices with the date of receipt and capture that date on the accounting system and not the date of invoice.
Chapte r 6 para no 30
Annual financial statements
8. The
financial statements submitted for auditing were not prepared in all material respects in accordance with the requirement s of section 122 of the MFMA.
Material misstatemen ts of non- current assets, current assets, liabilities, revenue, and
expenditure items
identified by the auditors
in the
submitted financial statements were subsequentl y corrected, resulting in
The causes of year-end adjustments are currently being
addressed.
New internal controls have been put in place to prevent the reoccurrence of similar errors. The controls are monitored on a monthly basis.
CFO Monthly
95 | P a g e the financial
statements receiving an unqualified audit opinion.
Chapte r 6 para no 31
Asset
management
9. An
effective system of internal control for assets was not in place, as required by section 63(2) (c) of the MFMA.
The
municipality has employed more
personnel in the newly established asset
management unit to
strengthen the controls whilst waiting for National Treasury to approve the SCOA
compliant financial accounting system.
CFO 30/06/201 5
Chapte r 6 para no 32
Asset
management 10. Capital assets were sold without evidence of the approval of council, as required by section 14(2)(a) of the MFMA and
Municipal asset transfer regulation
This happened during era of the old
administratio n. Current administratio n complies with section 14(2) a) of the MFMA.
No action
required N/A
96 | P a g e Chapte
r 6 para no 33
Human resource management
11. An
approved staff
establishme nt was not in place, as required by section 66(1) (a) of the Local
Government:
Municipal Systems Act, 2000 (Act No. 32 of 2000) (MSA).
The
municipality has a staff established which was approved by Council in June 2013 and has since been reviewed.
Corporate Services Manager
30/06/201 5
Chapte r 6 para no 34
12. The acting
supply chain managemen t manager was
appointed for a period of more than six months in
contraventio n of section 56(1) (c) of the MSA.
The
municipality has
shortlisted candidates for the position of SCM Manager and
interviews will be done in February 2015.
CFO 31/03/201 5
Chapte r 6 para no 35
Procurement and Contract management
13. Sufficient appropriate audit evidence could not be obtained that goods and services with a transaction value of below R200 000 were
A register of quotations below R200 000 is kept by the SCM Unit and discloses the number of quotations received. The SCM Unit now
97 | P a g e procured by
means of obtaining the required price quotations, as required by Supply chain
managemen t (SCM) regulations 17(a) and (c).
ensures that the
Chapte r 6 para no 36
14. Bid adjudication
was not
always done by
committees which were composed in accordance with SCM regulation 29(2).
Chapte r 6 para no 38
Leadership 15.
Oversight processes were not adequate to ensure compliance with SCM processes
due to
vacancies in key posts in the finance and SCM sections.
Furthermore, consultants were
appointed to perform the Value Added Tax
reconciliatio
ns and
returns as managemen t did not
98 | P a g e have
adequate skills and sufficient knowledge
of key
legislative requirement s.
Chapte r 6 para no 39
Financial and performance management
16. The accounting officer did not
implement adequate monitoring and evaluation processes to ensure that all
requirement s of laws and
regulations are complied with
timeously.
Furthermore,
due to
inadequate monitoring, performance and financial related non- compliances were not identified timeously to implement corrective measures,
as was
evidenced
by the
material corrections required to the financial statements and
weaknesses
in the
A compliance review will be
done quarterly by the Risk and Performance Manager. The findings from the review
will be presented to
Manco Risk Committee and Audit Committee.
The checklist will be used to
performance the compliance
review.
Risk and Performanc
e Manager
31 March 2015
30 June 2015
99 | P a g e reported
performance information.