Question NW1137 to the Minister of Finance
18 April 2023 - NW1137
Buthelezi, Ms SA to ask the Minister of Finance
Noting recent reports that the Nelson Mandela Bay Metropolitan Municipality used the declaration of the state of disaster to circumvent proper procurement processes, which resulted in the awarding of a contract to the value of R24,6 million (details furnished), and noting that the Republic is currently in a state of disaster, what preventative measures has his department put in place to ensure that, in the event of spending related to a state of disaster, there is no repeat of situations similar to what happened at the specified municipality?
Reply:
National Treasury issued MFMA circular 117 on 04 May 2022 titled “SCM Circular on reporting of procurement in response to the National State of Disaster as a result of severe weather events”
The purpose of the circular was mainly to provide a framework in relation to procurement in response to the national state of disaster as a result of the severe weather events and a need for greater transparency on procurement and expenditure related to the disaster.
All municipalities and municipal entities affected by the flood disaster, must when procuring goods and services, follow section 217 of the Constitution, the Municipal Finance Management Act and its regulations and circulars as well as supply chain management policies of institutions.
In addition to MFMA circular 117, National Treasury issued MSCOA Circular 14 on 16 May 2022 to give effect to the recording of disaster events in mSCOA.
Reporting and monitoring
As contained in MFMA circular 117, all municipalities and municipal entities affected by the disaster are required to report all disaster-related transactions on a weekly basis effective from 13 May 2022. Furthermore, all municipalities and municipal entities are required to report monthly as per sections 71(1) and 87(11) of MFMA for both municipalities and municipal entities respectively.
National Treasury has advised all municipalities and municipal entities affected by the disaster to utilize their internal audit units to undertake preventative audits for quality assurance on procurement to respond to the effects of the damage caused by floods.
The reporting template provided in MFMA circular 117 requires affected municipalities and municipal entities to report weekly and both MFMA section 71(1) (municipalities) and section 87(11) (municipal entities) reports to provide real-time information that will allow Auditor General to conduct real-time audits.
The aim of the real-time audits is to prevent, detect, and report on the findings to ensure an immediate response to prevent leakage, potential fraud, financial mismanagement and wastage.
The Auditor-General of South Africa will further provide real-time insights into the management and usage of funds earmarked for disaster relief in accordance with the objectives and targets set for those funds.