Makhado boasts a mere 24% achievement rate

For the first time in many years the Makhado Municipality achieved a qualified audit opinion from the auditor general (AG) for its financial statements for the year ended June 2013.

This is a step better than the disclaimers and adverse opinions of the previous years, but not yet the unqualified or so-called “clean” audit that the municipality is striving for.

Some of the facts in the report that draw attention are the outstanding debt of the municipality that is more than R170m as a result of poor collection practices and irregular expenditure stated at above R47m. The achievement rate of 24% in terms of targets planned for is also not good news for the taxpayer. These facts, however, did not influence the AG in his opinion.

Why not, would be the question?

“It is important to understand that the auditor general’s report contains three sections which are, from the last to the first, Performance matters (legal and regulatory requirements), Emphasis of important matters and the Annual Financial Statements, and the qualified opinion was based only on the annual financial statements,” said professional accountant André van Niekerk of  Proforum Accountants in Makhado (Louis Trichardt), a member of SAIPA (the South African Institute of Professional Accountants). Van Niekerk was asked by the Zoutpansberger to shed some light on the findings of the report.

Performance matters relate to achievement of objectives, compliance with laws and regulations and general management and control. Five of the seven pages in the AG Report were devoted to performance matters. Van Niekerk analysed some of the great challenges.

A total number of 244 achievement targets were planned for, of which only 59 were achieved. This is a failure rate of 76%, or an achievement rate of only 24%. “This points to poor management of goals and daily management,” said Van Niekerk.

Due to a lack of proper budgeting and monitoring of performance management, a total of 86% of the unachieved targets were not disclosed in the annual performance report. “That means that it was hidden from publication, while 90% of the published measures taken to improve performance were unreliable or misleading and could not be substantiated by evidence. This can be interpreted as an attempt to decorate the report to give the impression that measures were taken to improve performance,” said Van Niekerk.

The performance targets set were not sufficient in that 43% of the targets were not specific, 35% were not measurable, 69% were not time bound and 34% were not well defined.

“Lack of management skills and performance targets and measurements resulted in poor service delivery of 24% of what it should have been. This fact was deliberately hidden. Lack of skills and leadership caused huge losses, irregular spending and weak procurement controls,” was Van Niekerk’s conclusion on performance matters.

Emphasis on important matters refers to matters that the AG specifically wants to point out, but his opinion is not modified in respect of these matters. Here the report highlights the debt of R170,4m and the nearly R47,4m of irregular expenditure of the municipality.

Concerning the Annual Financial Statements, the AG said that the statements were a fair reflection of the municipality’s financial position except in terms of three aspects where the AG could not determine whether the adjustments were necessary.  “The municipality did not disclose related-party transactions in the financial statements as required by international Public Sector Accounting Standard,” reports the AG. A related-party transaction can be defined as a business deal or arrangement between two parties who are joined by a special relationship prior to the deal. Failure to disclose this is serious since it could possibly be understood to be a corrupt practice.

Date:14 March 2014

By: Linda van der Westhuizen

Linda van der Westhuizen has been with Zoutnet since 2001. She has a heart for God, people and their stories. Linda believes that every person is unique and has a special story to tell. It follows logically that human interest stories is her speciality. Linda finds working with people and their leaders in the economic, educational, spiritual and political arena very rewarding. “I have a special interest in what God is doing in our town, province and nation and what He wants us to become,” says Linda.

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