ACCOUNTING WEEKLY

From wasteful expenditure to hands-on financial management at uMngeni Municipality  

Two years ago, media reports speculated that uMngeni located in KwaZulu-Natal was on the brink of financial collapse. The municipality has received three qualified audits in the last five years. In last year’s government elections, uMngeni flipped from ANC to DA control. I spoke to the communications manager Thando Mgaga about the state of affairs. 

Have staff or skills shortages impacted the ability of the accounting function at the municipality? Has the new administration been able to address this?

Yes this has. We have since employed a full-time asset manager and are procuring laptops for our internal audit unit. We have also strengthened the oversight committee with experienced individuals. Each department has been asked to identify where they require specialised skills training and development because this has not happened in the past. 

In municipalities with poor audit performances, an inability or desire to do everyday accounting tasks is often flagged as a contributing factor. Has this been the case with uMngeni?  

This has been a challenge; however the greater problem is the lack of systems, reporting, consequence management and internal controls. The new administration has taken a very hands-on approach to oversight on the finances. 

What challenges are you encountering at the municipality in trying to address accounting and financial controls and compliance with MFMA?  

1) The overpricing of goods and services. The political leadership is only involved after procurement in terms of the MFMA, which means you can only address wasteful or fruitless expenditure after it has occurred. 

2) Culture of some officials in the supply chain (as a whole) to rig the system to favour someone who is not necessarily the best or most efficient at doing the work. 

3) The lack of understanding of internal financial controls or general MFMA requirements by those outside the finance department. 

Would you say that accounting shortcomings at the municipality has affected constituents?  

Lack of value for money purchases, wasteful expenditure, duplications, and sub-quality procurement have all had an effect. This all leads to valuable funds being drained without having delivered the type of work that is required. 

Share:

More Posts

Send Us A Message

World class Practice Support

SAIBA members get Exclusive world-class Practice Support.