KNYSNA NEWS - The Knysna Municipality received an unqualified audit report for the financial year 2016/2017, which was presented during a special council meeting at council chambers on 28 February.
Audit committee chairperson Ray Barrell gave the council a brief overview of findings, stating that the overall impression was good – taking into consideration the Knysna fires that had resulted in various challenges for the municipality, including the revaluation of municipal assets.
The report stated that the Attorney General (AG) conducted his audit after the end of a very difficult year for the Knysna Municipality, which had started in July 2016 with the suspension of the then municipal manager (MM and the appointment of a new MM (Kam Chetty) at the beginning of 2017, the resignation of the then CFO in August 2016 and the appointment of the new CFO (Mbulelo Memani).
To top it all, the report stated, were the fires that swept Knysna in June 2017 leaving many residential and business properties in ruins and also damaged or destroyed infrastructure.
“In view of all the events outlined above, it is perhaps not surprising that, because of the instability arising from these events, it became a struggle for the municipality to achieve a fifth consecutive clean audit.
In the event, the municipality did not achieve a clean audit for 2016/17.
It was stated that the AG commends the municipality for its achievement in submitting financial statements that were free from material financial misstatements.
The audit report went on to provide brief explanations on findings on various matters, such as internal controls, governance, the AG's management report, and specific focus areas.
Financially healthy
The financial viability of Knysna was assessed as good, and the report stated that financial indicators suggest that the municipality is in a healthy financial position.
The AG also drew attention to audited financial statements that disclose unauthorised, fruitless and wasteful and irregular expenditure, which he stressed must be investigated to determine if any official is liable for the losses incurred as a result of such expenditure, also that disciplinary steps must be taken against officials who caused or permitted such expenditure.
Councillors at the special meeting also expressed concern at the part of the report that referred to irregular expenditure, which stated, “R9.45-million of irregular expenditure incurred in the 2016-2017 financial year was due to the contravention of supply chain management (SCM) legislation – 75% of which was not detected by the municipality's own monitoring processes.
This R9.45-million, plus the R5.24-million irregular expenditure carried over from 2015/2016, must be investigated by MPAC, making a total of R14.69-million irregular expenditure.
Management was urged to attend to key findings in terms of water and sanitation, as well as issues raised regarding risks that require continuous monitoring.
The report concluded by stating that Knysna's financial status was assessed as improved overall, and also stated that management, the political leadership and council still need to pay particular attention to a range of issues.
These included optimising income, drastically improving controls in all directorates, urgently formulating, approving and implementing a comprehensive and effectively capacitated performance management system, adopting revised and best-practice ethics, anti-fraud and corruption policies and procedures, ruthlessly clamping down on deviations and other questionable supply chain practices and implementing effective consequence management, and improving communication with and public participation by its residents.
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