ATC130507: Report of the Select Committee on Cooperative Governance and Traditional Affairs on the request of extension of Intervention in terms of Section 139 (1)(B) of the Constitution – dated 7 May 2013
REPORT OF THE SELECT COMMITTEE
ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON THE REQUEST OF EXTENSION
OF INTERVENTION IN TERMS OF SECTION 139 (1
b) OF THE
CONSTITUTION DATED 7 MAY 2013
January 2013, the MEC for Cooperative Governance and Traditional Affairs at the
On the 30
April 2013, the
Committee scheduled a briefing session with the Provincial Department of
Cooperative Governance and Traditional Affairs, in order to brief Members on
the reasoning and justification for the request of extension of intervention in
on Extension of Intervention in
Provincial Department briefed the Members of the Committee on the reasoning and
justification for the request to extend intervention in
The success rate of the recovery actions
in finance-related actions was around 90%. This level of success in finance
translated directly into moving the audit opinion from a disclaimer in 2011 to a
qualified opinion in 2012. It was decided to close the recovery chapter on all
the successfully completed actions, and elevate all the actions on which there
were still challenges to the Exit Strategy.
Whilst the focus of the erstwhile
Recovery Plan was on the immediate pressures in the overall systems in the Municipality,
the focus of the Exit Strategy was on the sustainability of the gains and
benefits of the section 139 intervention in the affairs of the Municipality. A
large volume of the action targets in the Exit Strategy cover the on-going
of a normal Municipality.
The Exit Strategy has two objectives:-
(a) Pursuance of
the recovery actions inherited from the erstwhile Recovery Plan;
of the successes & gains of the Recovery Plan for sustainability post
As at 31 March 2013, the Municipality had
a cash balance of R81 million, inclusive of investments. There has never been
so much available money in the Municipality previously. However, there are
still no service delivery programmes. The current capital budget is about R34
million and the expenditure is standing at R7 million (20.5% of the budget). As
an act of best practice, the Municipality has prepared and submitted interim financial
statements for the mid-year results to the Auditor-General (AG). The AG has
indicated that the Municipalitys books were in a better shape than they were
in June 2012. The only challenge was with regard to PMS information. This
exercise helped the Municipality to be informed of areas that they still need
to work on, before the end of the financial year in June 2013. It is believed
that the Municipality will receive, at least, an unqualified opinion from the
AG in 2013.
Proceeding for Recovery of Irregular and Fruitless Expenditure
The civil proceedings for the recovery of
irregular expenditure and fruitless expenditure are well underway against the
former Municipal Manager, the former Acting Municipal Manager, former CFO,
former Manager in the Office of the Mayor and the former Consultant CFO,
totalling R42.785 million. The process was unfolding accordingly.
However, the recovery of about R317
000.00 from Councillors, is in abeyance pending the decision of the MEC/KwaZulu-Natal
Cabinet Sub-Committee on Municipal Interventions/Minister on the report to be
submitted in terms of section 32 of the Local Government: Municipal Finance
Management Act, (56 of 2003) by the Municipal Manager.
The following progress has been
registered with regard to the intervention:
4.1.1 The Public Participation
Programme has been approved by Council.
financial statements to the AG for the six months performance have been
4.1.3 The interim financial statement for 2013 has been
submitted to the AG to test progress.
4.1.4 There are now regular internal audit reports in terms
of the Internal Audit Plan.
4.1.5 The section 71 Performance Management System Report has
4.1.6 The Budget Adjustments for 2012/13 financial year were
approved by the Council.
4.1.7 The draft Budget for the 2013/14 financial year was
tabled in the Council.
4.1.8 Interim financial statements for the 2012/13 financial
year were finalised.
4.1.9 Manuals on Bank
Reconciliation Procedure Manual, Creditors Procedure Manual, and the Capital
Accounting Treatment Procedure Manual have been developed.
The Council is currently not functional.
No meaningful decisions have been taken by
after receiving a letter from Provincial Department of Cooperative Governance
and Traditional Affairs, which informed them that their application for salary
increases was turned down.
The Accounting Officer has transgressed
supply management policies, thus reducing
chances of a clean audit. Council has been informed accordingly.
There are no performance agreements for the
Municipal Manager and other section 56 managers. Equally, there is no
performance review of the senior managers that has been done. There is
currently no technical capacity for infrastructure planning for new
infrastructure and maintenance of the existing infrastructure.
All though there is a positive bank
balance, Councillors want to focus on sponsorship
rather than tangible service delivery programmes. Their
focus is on sponsoring community functions/activities such as
, traditional dance, young maiden virginity
testing, sport festivals, Christmas/Easter functions, food parcels etc. Yet, there
are no sport facilities/public amenities in the whole of
The AG findings are still not monitored
by Council. The item is still not a
item on the Council Agenda and the Municipal Manager still does not report on
progress with regard to the implementation of the Action Plan on the AG
The Debtors Procedure Manual and the Operating Procedure
Manual on the Treatment of Conditional Capital Grants are still not in place. The
AG dash board is not monitored by the Council. The Mayor was required to make
quarterly reports to Council on the status of the dash board, which has not
The Municipal Manager is required to
submit a detailed monthly report to the Executive Committee (EXCO) specifically
on the underperformance areas/targets of the SDBIP, this has not been done. The
EXCO is required to submit a quarterly report to the Council on the
remedial/corrective action to address under-performance; this has also not been
done. In that respect, Council was not exercising effective oversight on
financial and performance matters in respect of underperformance or poor
The Council has not reviewed the functionality and
effectiveness of the Municipal
as an instrument of Council overall Oversight function. The 2013/14 IDP &
Budget process plan, indicating IDP &
budgeting milestones has not been finalised.
The Audit Committee is required to submit
quarterly reports to Council indicating the
of the implementation of Risk Controls. The Audit Committee is also required to
report to the Council on the efficient
and effectiveness of the Management responses to the Internal Audit reports
& implementation thereof, this has not happened. The Audit Committee is
further required to report quarterly to Council on the quality of Internal
Audit Reports and the usefulness thereof.
The risk controls have not been
incorporated into the performance agreements for all section 56/57 Managers,
and the risk register has not been implemented. EXCO has not assessed policies
and internal controls on SCM, Acquisition Plan, Capital Budget versus Project
Performance and PMS Reporting. Irregular Expenditure for 2010/11 & 2011/12
in terms of section 32 of MFMA have not been finalised. The strict SCM controls
in terms of the SCM Policy have not been implemented to prevent Irregular
Expenditure in future.
The quality of the SDBIP has not been
done, and the institutional SDBIP has not been broken down into Departmental
for monitoring by the relevant Portfolio
Committees. The Service Delivery component of the Mid-Year Report has not been
re-written. Further, training on Demand Management & Procurement Planning
has not happened and the bid Committee Training has not happened. Lastly, there
o adequate progress on MIG new projects in 2012/13
per SDBIP as well as on Councils own funded capital projects as per SDBIP.
Observations and Opinion
has observed that the intervention in
has noted the progress made by the Provincial Department of Cooperative Governance
and Traditional Affairs in respect of
Public Participation Programme;
submission of interim financial statements to the AG; Councils approval of
2012/2013 budget adjustments; tabling of draft 2013/2014 budget to the Council
and finalization of 2012/2013 interim financial statements.
Despite the progress made, the Committee
noted that the challenges the Municipality
which impacted on the successful implementation of the municipal turnaround
intervention has been extended previously, the Committee is of the opinion that
further extension of intervention in the Municipality is justifiable in order
to enable the Administrator under the leadership of the MEC for the Provincial
Department of Cooperative Governance and Traditional Affairs, to implement the
turn-around strategy in terms of its key performance areas, measurable outcomes
been briefed on the progress and challenges in respect of the intervention in
7.1.1 That the NCOP approves the request of the extension of
7.1.2 The Provincial Department of Cooperative Governance and
Traditional Affairs should table quarterly progress reports to the KwaZulu-Natal
Provincial Legislature and the NCOP.
7.1.3 The Provincial Department of Cooperative Governance and
Traditional Affairs should table an exit report to the KwaZulu-Natal Provincial
Legislature and the NCOP, after the intervention has ended.
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