eThekwini continues to develop and implement systems of clean governance

EThekwini Municipality notes the 2012/2013 audit report presented by the Auditor-General Kimi Makwetu on 30 July 2014.

The Municipality’s financial performance remains exceptionally well and the City is proud to maintain its enviable record of being one of the Municipalities in South Africa that has never received a qualified audit report. The Municipality received an unqualified audit with matters of emphasis in the 2012/2013 financial year.

The City’s finances are in a healthy state and with regards to debtors and debt management, the Municipality is proud that it has once again achieved the highest collection rate in the country for the 2013/2014 financial year.

The Municipality achieved an excellent collection rate of 103% in 2012/2013 and 101% in 2011/2012, and this has now improved to an outstanding 105% in 2013/2014. This upward trend can mainly be attributed to the strict adherence to the strong Credit Control and Debt Collection Policy of the Municipality.

Mayor Cllr James Nxumalo commended the City Manager, Sibusiso Sithole and his team for their commitment towards achieving a clean audit, significantly reducing irregular expenditure especially considering the size of the Municipality and our service delivery mandate as well as improving internal controls.

“The Executive Committee also thanks the Auditor-General and National Treasury for working closely with the Municipality on these issues. To residents, be rest assured of our commitment to a clean administration and good governance. We are continuously striving to improve and to remain one of the best run cities in the country,” he said.

Irregular Expenditure

In the 2012/13 audit, the Auditor-General placed specific emphasis on irregular expenditure. However, this must be put into perspective as the irregular expenditure concerned was not tantamount to wasteful expenditure, nor was it fraudulent.

There has been a declining trend in irregular expenditure which has been reduced to R50.55 million, or R25.75 million excluding the ICC, in the 2013/2014 financial year.

This reduction is a major improvement from R325.54 million in 2012/2013 and R785 million in 2011/2012 due to improved internal controls. This irregular expenditure relates to minor deviations relative to the Supply Chain Management processes and procedures. The City will be taking the necessary action to regularise such expenditure.

In addition, the Auditor-General is satisfied with the internal control improvements made around SCM issues.

Water loss

With regards to issue of water loss in distribution, the matter has been analysed and explored in depth.

The following action plans have been developed to address the matter:

• The Municipality will be changing the accounting treatment of water supplied to informal settlements: In line with other cities, all water supplied to informal settlements will not be regarded as water loss.
• Everyone who needs to be metered will be logged onto the system.
• Turnaround time to attend to water leaks on properties will be improved: There are still complaints that the Municipality is not responding expeditiously to water leaks. To address this we are looking at a team that will fix and charge consumers to repair leaks, pipes, replace washers, etc. We are flagging accounts with increased consumption and officials will be visiting those customers.
• Zonal water loss analysis (2/3 000 households) to be undertaken: Meters are currently in place on a reservoir basis. However, there is a need for an analysis for each zone to be able to plan interventions in terms of the specifics of the zone concerned.
• The Municipality will begin a process of blacklisting contractors found to be causing sabotage to get work. There are also concerns that the same leaks are being repaired several times. In addition, the same contractor is used to do the work. These cases will be investigated.
• Strategy around schools: We need to develop a schedule to shutdown water supply to schools after hours.

Electricity loss

Other concerns highlighted by the Auditor-General relates to electricity loss. It must be noted that eThekwini’s electricity loss in distribution is the best in the country.

Monthly meetings to address the issue are being held.

An action plan to address the issue is as follows:

• A cost-benefit analysis is being done in order to introduce monthly meter reading, as well as pre-paid meters or smart metering.
• A proactive asset management plan for the replacement of meters is being developed.
• The Municipality is developing a system of ensuring that all disconnection orders are implemented on the same day. This is being monitored closely through a statistical report.
• Our officials will conduct inspections to ensure that every meter is attached to a property.

Expenditure

Ratepayers and our customers should be rest assured of the City’s full compliance with regard to expenditure and income.

Regarding the issue of previous under-spending on the Municipality’s capital budget, the Municipality has achieved a capital spend of 105% in 2013/2014 which is outstanding and took a lot of work to achieve.

It is also interesting to note that in comparison Cape Town’s capital spend is 80.6%, as reported in the media. The key interventions were our weekly service delivery meetings and our weekly meetings to monitor the Top 150 capital projects.

The Municipality looks forward to keeping up the momentum and maintaining such an exceptional level of service delivery. The key is good planning and the Municipality has introduced procurement scheduling to ensure that all Supply Chain Management requirements were in the system at an early stage to avoid delays.

With regards to some of the issues raised in the audit report highlighted above, serious attention has been given to them and action plans have been developed and are being implemented to address them.

To ensure that the interventions are effective and achieve the desired objective, quarterly meetings are held with the Auditor-General to monitor progress. The Audit & Risk Committee and National Treasury also play an oversight role. Moreover, we have an Internal Control Department that looks at 100% compliance with payments and Supply Chain Management.

Based on all steps that have been taken by the Municipality, indications are that eThekwini Municipality will maintain its high standards of being one of the best run metros in the country.